26 U.S.C. § 173 — Circulation expenditures

Page 890 TITLE 26—INTERNAL REVENUE CODE § 173 shall be waived solely for purposes of making such adjustment. ‘‘(3) TAX TREATMENT OF EXPENDITURES.—With re- spect to any payment by the Corporation of qualified expenses described in subsection (e)(1)(A) during any taxable year from the amount of any refund of the payment described in subsection (a)(1)— ‘‘(A) no deduction shall be allowed to the Cor- poration with respect to any amount paid or in- curred which is attributable to such amount, and ‘‘(B) the basis of any property shall be reduced by the portion of the cost of such property which is at- tributable to such amount. ‘‘(4) PAYMENTS TO A NON-AMTRAK STATE.—No deduc- tion shall be allowed to the Corporation under chap- ter 1 of the Internal Revenue Code of 1986 for any pay- ment to a non-Amtrak State required under sub- section (a)(2)(A)(ii). ‘‘(e) DEFINITIONS.—For purposes of this section— ‘‘(1) QUALIFIED EXPENSES.—The term ‘qualified ex- penses’ means expenses incurred for— ‘‘(A) in the case of the Corporation— ‘‘(i) the acquisition of equipment, rolling stock, and other capital improvements, the upgrading of maintenance facilities, and the maintenance of existing equipment, in intercity passenger rail service, and ‘‘(ii) the payment of interest and principal on obligations incurred for such acquisition, upgrad- ing, and maintenance, and ‘‘(B) in the case of a non-Amtrak State— ‘‘(i) the acquisition of equipment, rolling stock, and other capital improvements, the upgrading of maintenance facilities, and the maintenance of existing equipment, in intercity passenger rail service, ‘‘(ii) the acquisition of equipment, rolling stock, and other capital improvements, the up- grading of maintenance facilities, and the main- tenance of existing equipment, in intercity bus service, ‘‘(iii) the purchase of intercity passenger rail services from the Corporation, ‘‘(iv) capital expenditures related to State- owned rail operations in the State, ‘‘(v) any project that is eligible to receive fund- ing under section 5309, 5310, or 5311 of title 49, United States Code, ‘‘(vi) any project that is eligible to receive fund- ing under section 103, 130, 133, 144, 149, or 152 of title 23, United States Code, ‘‘(vii) the upgrading and maintenance of inter- city primary and rural air service facilities, and the purchase of intercity air service between pri- mary and rural airports and regional hubs, ‘‘(viii) the provision of passenger ferryboat serv- ice within the State, ‘‘(ix) the provision of harbor improvements within the State, and ‘‘(x) the payment of interest and principal on obligations incurred for such acquisition, upgrad- ing, maintenance, purchase, expenditures, provi- sion, and projects. In the case of a non-Amtrak State which provides its own intercity passenger rail service on the date of the enactment of this paragraph [Aug. 5, 1997], sub- paragraph (B) shall be applied by only taking into ac- count clauses (i) and (iv). ‘‘(2) NON-AMTRAK STATE.—The term ‘non-Amtrak State’ means any State which is not receiving inter- city passenger rail service from the Corporation as of the date of the enactment of this Act [Aug. 5, 1997]. ‘‘(f) AUTHORIZING REFORM REQUIRED.— ‘‘(1) IN GENERAL.—The Secretary of the Treasury shall not make payment of any refund of any pay- ment described in subsection (a)(1) earlier than the date of the enactment of Federal legislation, other than legislation included in this section, which is en- acted after July 29, 1997, and which authorizes re- forms of the National Railroad Passenger Corpora- tion. ‘‘(2) NO INTEREST.—Notwithstanding any other pro- vision of law, if the payment of any refund is delayed by reason of paragraph (1), no interest shall accrue with respect to such payment prior to the 45th day following the date of the enactment of Federal legis- lation described in paragraph (1). ‘‘(3) ESTIMATE OF REVENUE.—For purposes of esti- mating revenues under budget reconciliation, the im- pact of this section on Federal revenues shall be de- termined without regard to this subsection.’’ [Pub. L. 105–178, title IX, § 9007(b), June 9, 1998, 112 Stat. 506, provided that: ‘‘The amendments made by this section [amending section 977 of Pub. L. 105–34, set out above] shall take effect as if included in the enact- ment of section 977 of the Taxpayer Relief Act of 1997 [Pub. L. 105–34].’’] DEDUCTION FOR SPECIAL ASSESSMENTS Subsec. (f) of this section not applicable to deduction for special assessments, see section 2711(2) of Pub. L. 104–208, set out as a note under section 162 of this title. CARRYBACK OF DEFERRED STATUTORY OR TORT LIABIL- ITY LOSS TO TAXABLE YEAR BEGINNING BEFORE JAN- UARY 1, 1984 Pub. L. 101–508, title XI, § 11811(b)(2)(B), Nov. 5, 1990, 104 Stat. 1388–533, provided that: ‘‘The portion of any loss which is attributable to a deferred statutory or tort liability loss (as defined in section 172(k) of the In- ternal Revenue Code of 1986 as in effect on the day be- fore the date of the enactment of this Act [Nov. 5, 1990]) may not be carried back to any taxable year beginning before January 1, 1984, by reason of the amendment made by subparagraph (A) [amending this section].’’ PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989 For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title. REFUND OR CREDIT OF OVERPAYMENT; LIMITATIONS; INTEREST Pub. L. 85–866, title I, § 14, Sept. 2, 1958, 72 Stat. 1611, provided that if any refund or credit of any overpay- ment resulting from application of subsecs. (a) and (b) of Pub. L. 85–866, amending former subsecs. (f)(3), (4) and (g)(3), (4), was prevented on Sept. 2, 1958 or 6 months thereafter, by operation of any law or rule of law, refund was to be allowed if a claim was filed with- in six months of the date of such date but such refund was to be without interest. INTEREST ATTRIBUTABLE TO NET OPERATING LOSS CARRYBACK FOR CERTAIN TAXABLE YEARS ENDING IN 1954 For payment of interest attributable to net operating loss carryback, see section 83(e) of Pub. L. 85–866, set out as a note under section 6601 of this title. § 173. Circulation expenditures (a) General rule Notwithstanding section 263, all expenditures (other than expenditures for the purchase of land or depreciable property or for the acquisi- tion of circulation through the purchase of any part of the business of another publisher of a newspaper, magazine, or other periodical) to es- tablish, maintain, or increase the circulation of a newspaper, magazine, or other periodical shall be allowed as a deduction; except that the de- Page 891 TITLE 26—INTERNAL REVENUE CODE § 174 duction shall not be allowed with respect to the portion of such expenditures as, under regula- tions prescribed by the Secretary, is chargeable to capital account if the taxpayer elects, in ac- cordance with such regulations, to treat such portion as so chargeable. Such election, if made, must be for the total amount of such portion of the expenditures which is so chargeable to cap- ital account, and shall be binding for all subse- quent taxable years unless, upon application by the taxpayer, the Secretary permits a revoca- tion of such election subject to such conditions as he deems necessary. (b) Cross reference For election of 3-year amortization of expendi- tures allowable as a deduction under subsection (a), see section 59(e). (Aug. 16, 1954, ch. 736, 68A Stat. 65; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97–248, title II, § 201(d)(9)(A), for- merly § 201(c)(9)(A), Sept. 3, 1982, 96 Stat. 420, re- numbered § 201(d)(9)(A), Pub. L. 97–448, title III, § 306(a)(1)(A)(i), Jan. 12, 1983, 96 Stat. 2400; Pub. L. 98–369, div. A, title VII, § 711(a)(3)(C), July 18, 1984, 98 Stat. 942; Pub. L. 99–514, title VII, § 701(e)(4)(D), Oct. 22, 1986, 100 Stat. 2343; Pub. L. 100–647, title I, § 1007(g)(5), Nov. 10, 1988, 102 Stat. 3435.) Editorial Notes AMENDMENTS 1988—Subsec. (b). Pub. L. 100–647 substituted ‘‘section 59(e)’’ for ‘‘section 59(d)’’. 1986—Subsec. (b). Pub. L. 99–514 substituted ‘‘section 59(d)’’ for ‘‘section 58(i)’’. 1984—Subsec. (b). Pub. L. 98–369 substituted ‘‘3-year’’ for ‘‘10-year’’. 1982—Pub. L. 97–248, § 201(d)(9)(A), designated existing provisions as subsec. (a), added subsec. (a) heading, and added subsec. (b). 1976—Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’ in two places. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, with certain excep- tions and qualifications, see section 701(f) of Pub. L. 99–514, set out as an Effective Date note under section 55 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–369 effective as if included in the provision of the Tax Equity and Fiscal Responsi- bility Act of 1982, Pub. L. 97–248, to which such amend- ment relates, see section 715 of Pub. L. 98–369, set out as a note under section 31 of this title. EFFECTIVE DATE OF 1982 AMENDMENT Amendment by Pub. L. 97–248 applicable to taxable years beginning after Dec. 31, 1982, see section 201(e)(1) of Pub. L. 97–248, set out as a note under section 5 of this title. APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99–514 IN RELATION TO TREATY OBLIGATIONS OF UNITED STATES For applicability of amendment by Pub. L. 99–514 not- withstanding any treaty obligation of the United States in effect on Oct. 22, 1986, with provision that for such purposes any amendment by title I of Pub. L. 100–647 be treated as if it had been included in the pro- vision of Pub. L. 99–514 to which such amendment re- lates, see section 1012(aa)(2), (4) of Pub. L. 100–647, set out as a note under section 861 of this title. § 174. Amortization of research and experimental expenditures (a) In general In the case of a taxpayer’s specified research or experimental expenditures for any taxable year— (1) except as provided in paragraph (2), no deduction shall be allowed for such expendi- tures, and (2) the taxpayer shall— (A) charge such expenditures to capital ac- count, and (B) be allowed an amortization deduction of such expenditures ratably over the 5-year period (15-year period in the case of any specified research or experimental expendi- tures which are attributable to foreign re- search (within the meaning of section 41(d)(4)(F))) beginning with the midpoint of the taxable year in which such expenditures are paid or incurred. (b) Specified research or experimental expendi- tures For purposes of this section, the term ‘‘speci- fied research or experimental expenditures’’ means, with respect to any taxable year, re- search or experimental expenditures which are paid or incurred by the taxpayer during such taxable year in connection with the taxpayer’s trade or business. (c) Special rules (1) Land and other property This section shall not apply to any expendi- ture for the acquisition or improvement of land, or for the acquisition or improvement of property to be used in connection with the re- search or experimentation and of a character which is subject to the allowance under sec- tion 167 (relating to allowance for deprecia- tion, etc.) or section 611 (relating to allowance for depletion); but for purposes of this section allowances under section 167, and allowances under section 611, shall be considered as ex- penditures. (2) Exploration expenditures This section shall not apply to any expendi- ture paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of ore or other mineral (including oil and gas). (3) Software development For purposes of this section, any amount paid or incurred in connection with the devel- opment of any software shall be treated as a research or experimental expenditure.