26 U.S.C. § 280C — Certain expenses for which credits are al-

Page 1051 TITLE 26—INTERNAL REVENUE CODE § 280C Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1984 AMENDMENT Pub. L. 98–369, div. A, title X, § 1063(c), July 18, 1984, 98 Stat. 1047, as amended by Pub. L. 99–514, title XVIII, § 1878(h), Oct. 22, 1986, 100 Stat. 2904, provided that: ‘‘(1) The amendments made by this section [amending this section] shall apply to taxable years ending after December 31, 1983, but shall not apply to any demoli- tion (other than of a certified historic structure) com- mencing before July 19, 1984. ‘‘(2) For purposes of paragraph (1), if a demolition is delayed until the completion of the replacement struc- ture on the same site, the demolition shall be treated as commencing when construction of the replacement structure commences. ‘‘(3) The amendments made by this section [amending this section] shall not apply to any demolition com- mencing before September 1, 1984, pursuant to a bank headquarters building project if— ‘‘(A) on April 1, 1984, a corporation was retained to advise the bank on the final completion of the project, and ‘‘(B) on June 12, 1984, the Comptroller of the Cur- rency approved the project. ‘‘(4) The amendments made by this section shall not apply to the remaining adjusted basis at the time of demolition of any structure if— ‘‘(A) such structure was used in the manufacture, storage, or distribution of lead alkyl antiknock prod- ucts and intermediate and related products at facili- ties located in or near Baton Rouge, Louisiana, and Houston, Texas, owned by the same corporation, and ‘‘(B) demolition of at least one such structure at the Baton Rouge facility commenced before January 1, 1984.’’ EFFECTIVE DATE OF 1981 AMENDMENT Amendment by Pub. L. 97–34 applicable to expendi- tures incurred after Dec. 31, 1981, in taxable years end- ing after such date, see section 212(e) of Pub. L. 97–34, set out as a note under section 46 of this title. EFFECTIVE DATE OF 1978 AMENDMENT Amendment by Pub. L. 95–600 effective as if included within the enactment of this section by section 2124 of Pub. L. 94–455, see section 701(f)(8) of Pub. L. 95–600, set out as an Effective and Termination Dates of 1978 Amendments note under section 167 of this title. EFFECTIVE DATE Pub. L. 94–455, title XXI, § 2124(b)(3), Oct. 4, 1976, 90 Stat. 1918, which had provided that enactment of this section by subsec. (b) shall apply with respect to demolitions commencing after June 30, 1976, and before Jan. 1, 1981, was repealed by Pub. L. 96–541, § 2(e)(2), Dec. 17, 1980, 94 Stat. 3205. See subsec. (c) of this sec- tion. § 280C. Certain expenses for which credits are al- lowable (a) Rule for employment credits No deduction shall be allowed for that portion of the wages or salaries paid or incurred for the taxable year which is equal to the sum of the credits determined for the taxable year under sections 45A(a), 45P(a), 45S(a), 51(a), and 1396(a). In the case of a corporation which is a member of a controlled group of corporations (within the meaning of section 52(a)) or a trade or business which is treated as being under common control with other trades or businesses (within the meaning of section 52(b)), this subsection shall be applied under rules prescribed by the Sec- retary similar to the rules applicable under sub- sections (a) and (b) of section 52. (b) Credit for qualified clinical testing expenses for certain drugs (1) In general No deduction shall be allowed for that por- tion of the qualified clinical testing expenses (as defined in section 45C(b)) otherwise allow- able as a deduction for the taxable year which is equal to the amount of the credit allowable for the taxable year under section 45C (deter- mined without regard to section 38(c)). (2) Similar rule where taxpayer capitalizes rather than deducts expenses If— (A) the amount of the credit allowable for the taxable year under section 45C (deter- mined without regard to section 38(c)), ex- ceeds (B) the amount allowable as a deduction for the taxable year for qualified clinical testing expenses (determined without regard to paragraph (1)), the amount chargeable to capital account for the taxable year for such expenses shall be re- duced by the amount of such excess. (3) Election of reduced credit (A) In general In the case of any taxable year for which an election is made under this paragraph— (i) paragraphs (1) and (2) shall not apply, and (ii) the amount of the credit under sec- tion 45C(a) shall be the amount determined under subparagraph (B). (B) Amount of reduced credit The amount of credit determined under this subparagraph for any taxable year shall be the amount equal to the excess of— (i) the amount of credit determined under section 45C(a) without regard to this paragraph, over (ii) the product of— (I) the amount described in clause (i), and (II) the maximum rate of tax under section 11(b). (C) Election An election under this paragraph for any taxable year shall be made not later than the time for filing the return of tax for such year (including extensions), shall be made on such return, and shall be made in such man- ner as the Secretary shall prescribe. Such an election, once made, shall be irrevocable. (4) Controlled groups In the case of a corporation which is a mem- ber of a controlled group of corporations (within the meaning of section 41(f)(5)) or a trade or business which is treated as being under common control with other trades or business (within the meaning of section 41(f)(1)(B)), this subsection shall be applied under rules prescribed by the Secretary simi- lar to the rules applicable under subpara- graphs (A) and (B) of section 41(f)(1). (c) Credit for increasing research activities (1) In general If— Page 1052 TITLE 26—INTERNAL REVENUE CODE § 280C (A) the amount of the credit determined for the taxable year under section 41(a)(1), exceeds (B) the amount allowable as a deduction for such taxable year for qualified research expenses or basic research expenses, the amount chargeable to capital account for the taxable year for such expenses shall be re- duced by the amount of such excess. (2) Election of reduced credit (A) In general In the case of any taxable year for which an election is made under this paragraph— (i) paragraph (1) shall not apply, and (ii) the amount of the credit under sec- tion 41(a) shall be the amount determined under subparagraph (B). (B) Amount of reduced credit The amount of credit determined under this subparagraph for any taxable year shall be the amount equal to the excess of— (i) the amount of credit determined under section 41(a) without regard to this paragraph, over (ii) the product of— (I) the amount described in clause (i), and (II) the maximum rate of tax under section 11(b). (C) Election An election under this paragraph for any taxable year shall be made not later than the time for filing the return of tax for such year (including extensions), shall be made on such return, and shall be made in such man- ner as the Secretary may prescribe. Such an election, once made, shall be irrevocable. (3) Controlled groups Paragraph (3) of subsection (b) shall apply for purposes of this subsection. (d) Credit for low sulfur diesel fuel production The deductions otherwise allowed under this chapter for the taxable year shall be reduced by the amount of the credit determined for the tax- able year under section 45H(a). (e) Mine rescue team training credit No deduction shall be allowed for that portion of the expenses otherwise allowable as a deduc- tion for the taxable year which is equal to the amount of the credit determined for the taxable year under section 45N(a). (f) Credit for security of agricultural chemicals No deduction shall be allowed for that portion of the expenses otherwise allowable as a deduc- tion taken into account in determining the cred- it under section 45O for the taxable year which is equal to the amount of the credit determined for such taxable year under section 45O(a). (g) Credit for health insurance premiums No deduction shall be allowed for the portion of the premiums paid by the taxpayer for cov- erage of 1 or more individuals under a qualified health plan which is equal to the amount of the credit determined for the taxable year under section 36B(a) with respect to such premiums. (h) Credit for employee health insurance ex- penses of small employers No deduction shall be allowed for that portion of the premiums for qualified health plans (as defined in section 1301(a) of the Patient Protec- tion and Affordable Care Act), or for health in- surance coverage in the case of taxable years be- ginning in 2010, 2011, 2012, or 2013, paid by an em- ployer which is equal to the amount of the cred- it determined under section 45R(a) with respect to the premiums. (Added Pub. L. 95–30, title II, § 202(c)(1), May 23, 1977, 91 Stat. 147; amended Pub. L. 95–600, title III, § 322(d)(1), Nov. 6, 1978, 92 Stat. 2838; Pub. L. 96–178, § 6(c)(4), Jan. 2, 1980, 93 Stat. 1298; Pub. L. 96–222, title I, § 103(a)(7)(D)(iv), Apr. 1, 1980, 94 Stat. 212; Pub. L. 97–414, § 4(b)(1), (2)(A), Jan. 4, 1983, 96 Stat. 2055; Pub. L. 98–369, div. A, title IV, § 474(r)(10), July 18, 1984, 98 Stat. 841; Pub. L. 99–514, title II, § 231(d)(3)(E), title XVIII, § 1847(b)(8), Oct. 22, 1986, 100 Stat. 2179, 2856; Pub. L. 100–647, title IV, § 4008(a), Nov. 10, 1988, 102 Stat. 3652; Pub. L. 101–239, title VII, §§ 7110(c)(1), 7814(e)(2)(A), Dec. 19, 1989, 103 Stat. 2325, 2413; Pub. L. 103–66, title XIII, §§ 13302(b)(1), 13322(c)(1), Aug. 10, 1993, 107 Stat. 555, 563; Pub. L. 104–188, title I, § 1205(d)(7), Aug. 20, 1996, 110 Stat. 1776; Pub. L. 106–170, title V, § 502(c)(2), Dec. 17, 1999, 113 Stat. 1919; Pub. L. 106–554, § 1(a)(7) [title III, § 311(a)(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A–639; Pub. L. 108–357, title III, § 339(c), Oct. 22, 2004, 118 Stat. 1484; Pub. L. 109–135, title I, § 103(b)(2), title II, § 201(b)(2), Dec. 21, 2005, 119 Stat. 2595, 2607; Pub. L. 109–432, div. A, title IV, § 405(c), Dec. 20, 2006, 120 Stat. 2957; Pub. L. 110–172, § 7(a)(1)(B), Dec. 29, 2007, 121 Stat. 2481; Pub. L. 110–234, title XV, § 15343(c), May 22, 2008, 122 Stat. 1519; Pub. L. 110–245, title I, § 111(c), June 17, 2008, 122 Stat. 1635; Pub. L. 110–246, § 4(a), title XV, § 15343(c), June 18, 2008, 122 Stat. 1664, 2281; Pub. L. 111–148, title I, §§ 1401(b), 1421(d)(1), title IX, § 9023(c)(2), title X, § 10105(e)(3), Mar. 23, 2010, 124 Stat. 219, 242, 880, 906; Pub. L. 115–97, title I, §§ 13001(b)(1)(A), 13206(d)(2), 13401(b), 13403(d)(1), Dec. 22, 2017, 131 Stat. 2096, 2112, 2133, 2137; Pub. L. 115–141, div. U, title IV, § 401(a)(62), (d)(3)(B)(iii), (6)(B)(iv), Mar. 23, 2018, 132 Stat. 1187, 1209, 1211.) Editorial Notes REFERENCES IN TEXT Section 1301(a) of the Patient Protection and Afford- able Care Act, referred to in subsec. (h), is classified to section 18021(a) of Title 42, The Public Health and Wel- fare. CODIFICATION Pub. L. 110–234 and Pub. L. 110–246 made identical amendments to this section. The amendments by Pub. L. 110–234 were repealed by section 4(a) of Pub. L. 110–246. AMENDMENTS 2018—Subsec. (a). Pub. L. 115–141, § 401(d)(6)(B)(iv), substituted ‘‘and 1396(a)’’ for ‘‘1396(a), 1400P(b), and 1400R’’. Pub. L. 115–141, § 401(a)(62), substituted ‘‘1396(a),’’ for ‘‘and 1396(a),’’. Subsec. (g). Pub. L. 115–141, § 401(d)(3)(B)(iii), struck out subsec. (g) relating to qualifying therapeutic dis- covery project credit. Page 1053 TITLE 26—INTERNAL REVENUE CODE § 280C 2017—Subsec. (a). Pub. L. 115–97, § 13403(d)(1), inserted ‘‘45S(a),’’ after ‘‘45P(a),’’. Subsec. (b)(3), (4). Pub. L. 115–97, § 13401(b), added par. (3) and redesignated former par. (3) as (4). Subsec. (c)(1). Pub. L. 115–97, § 13206(d)(2)(A), added par. (1) and struck out former par. (1). Prior to amend- ment, text read as follows: ‘‘No deduction shall be al- lowed for that portion of the qualified research ex- penses (as defined in section 41(b)) or basic research ex- penses (as defined in section 41(e)(2)) otherwise allow- able as a deduction for the taxable year which is equal to the amount of the credit determined for such taxable year under section 41(a).’’ Subsec. (c)(2). Pub. L. 115–97, § 13206(d)(2)(B)–(D), re- designated par. (3) as (2), substituted ‘‘paragraph (1)’’ for ‘‘paragraphs (1) and (2)’’ in subpar. (A)(i), and struck out former par. (2) which related to rule where tax- payer capitalizes rather than deducts expenses. Subsec. (c)(3). Pub. L. 115–97, § 13206(d)(2)(C), redesig- nated par. (4) as (3). Former par. (3) redesignated (2). Subsec. (c)(3)(B)(ii)(II). Pub. L. 115–97, § 13001(b)(1)(A), substituted ‘‘section 11(b)’’ for ‘‘section 11(b)(1)’’. Subsec. (c)(4). Pub. L. 115–97, § 13206(d)(2)(C), redesig- nated par. (4) as (3). 2010—Subsec. (g). Pub. L. 111–148, § 9023(c)(2), added subsec. (g) relating to qualifying therapeutic discovery project credit. Pub. L. 111–148, § 1401(b), added subsec. (g) relating to credit for health insurance premiums. Subsec. (h). Pub. L. 111–148, § 10105(e)(3), substituted ‘‘2010, 2011’’ for ‘‘2011’’. Pub. L. 111–148, § 1421(d)(1), added subsec. (h). 2008—Subsec. (a). Pub. L. 110–245 inserted ‘‘45P(a),’’ after ‘‘45A(a),’’. Subsec. (f). Pub. L. 110–246, § 15343(c), added subsec. (f). 2007—Subsec. (d). Pub. L. 110–172 amended heading and text generally. Prior to amendment, text read as follows: ‘‘No deduction shall be allowed for that portion of the expenses otherwise allowable as a deduction for the taxable year which is equal to the amount of the credit determined for the taxable year under section 45H(a).’’ 2006—Subsec. (e). Pub. L. 109–432 added subsec. (e). 2005—Subsec. (a). Pub. L. 109–135, § 201(b)(2), sub- stituted ‘‘1400P(b), and 1400R’’ for ‘‘and 1400P(b)’’. Pub. L. 109–135, § 103(b)(2), substituted ‘‘1396(a), and 1400P(b)’’ for ‘‘and 1396(a)’’. 2004—Subsec. (d). Pub. L. 108–357 added subsec. (d). 2000—Subsec. (c)(1). Pub. L. 106–554 struck out ‘‘or credit’’ after ‘‘deduction’’ in two places. 1999—Subsec. (c)(1). Pub. L. 106–170 inserted ‘‘or cred- it’’ after ‘‘deduction’’ in two places. 1996—Subsec. (b)(1). Pub. L. 104–188, § 1205(d)(7), sub- stituted ‘‘section 45C(b)’’ for ‘‘section 28(b)’’, ‘‘section 45C’’ for ‘‘section 28’’, and ‘‘section 38(c)’’ for ‘‘sub- section (d)(2) thereof’’. Subsec. (b)(2)(A). Pub. L. 104–188, § 1205(d)(7)(B), (C), substituted ‘‘section 45C’’ for ‘‘section 28’’ and ‘‘section 38(c)’’ for ‘‘subsection (d)(2) thereof’’. 1993—Subsec. (a). Pub. L. 103–66, § 13322(c)(1), sub- stituted ‘‘45A(a), 51(a), and’’ for ‘‘51(a)’’. Pub. L. 103–66, § 13302(b)(1), substituted ‘‘Rule for em- ployment credits’’ for ‘‘Rule for targeted jobs credit’’ in heading and ‘‘the sum of the credits determined for the taxable year under sections 51(a) and 1396(a)’’ for ‘‘the amount of the credit determined for the taxable year under section 51(a)’’ in text. 1989—Subsec. (c)(1), (2)(A). Pub. L. 101–239, § 7110(c)(1), struck out ‘‘50 percent of’’ before ‘‘the amount of the credit’’. Subsec. (c)(3). Pub. L. 101–239, § 7814(e)(2)(A), added par. (3). Former par. (3) redesignated (4). Subsec. (c)(3)(B)(ii)(I). Pub. L. 101–239, § 7110(c)(1), struck out ‘‘50 percent of’’ before ‘‘the amount de- scribed’’. Subsec. (c)(4). Pub. L. 101–239, § 7814(e)(2)(A), redesig- nated par. (3) as (4). 1988—Subsec. (c). Pub. L. 100–647 added subsec. (c). 1986—Subsec. (b)(1), (2)(A). Pub. L. 99–514, § 1847(b)(8), substituted ‘‘section 28(b)’’ for ‘‘section 29(b)’’ in par. (1) and ‘‘section 28’’ for ‘‘section 29’’ in pars. (1) and (2)(A). Subsec. (b)(3). Pub. L. 99–514, § 231(d)(3)(E), substituted ‘‘section 41(f)(5)’’, ‘‘section 41(f)(1)(B)’’, and ‘‘section 41(f)(1)’’ for ‘‘section 30(f)(5)’’, ‘‘section 30(f)(1)(B)’’, and ‘‘section 30(f)(1)’’, respectively. 1984—Subsec. (a). Pub. L. 98–369, § 474(r)(10)(A), (B), re- designated subsec. (b) as (a), in heading substituted ‘‘targeted jobs credit’’ for ‘‘section 44B credit’’, and in text substituted ‘‘No deduction shall be allowed for that portion of the wages or salaries paid or incurred for the taxable year which is equal to the amount of the credit determined for the taxable year under sec- tion 51(a)’’ for ‘‘No deduction shall be allowed for that portion of the wage or salaries paid or incurred for the taxable year which is equal to the amount of the credit allowable for the taxable year under section 44B (relat- ing to credit for employment of certain new employees) determined without regard to the provisions of section 53 (relating to limitation based on amount of tax)’’. Former subsec. (a), which had provided that no deduc- tion would be allowed for that portion of the work in- centive program expenses paid or incurred for the tax- able year which was equal to the amount of the credit allowable for the taxable year under section 40 (relat- ing to credit for expenses of work incentive programs) determined without regard to the provisions of section 50A(a)(2) (relating to limitation based on amount of tax), and that in the case of a corporation which was a member of a controlled group of corporations (within the meaning of section 50B(g)(1) or a trade or business which was treated as being under common control with other trades or businesses within the meaning of sec- tion 50B(g)(2), this subsection would be applied under rules prescribed by the Secretary similar to the rules applicable under paragraphs (1) and (2) of section 50B(g), was struck out. Subsec. (b). Pub. L. 98–369, § 474(r)(10)(A), redesignated subsec. (c) as (b). Former subsec. (b) redesignated (a). Subsec. (b)(1), (2)(A). Pub. L. 98–369, § 474(r)(10)(C), substituted ‘‘29’’ for ‘‘44H’’. Subsec. (b)(3). Pub. L. 98–369, § 474(r)(10)(D), sub- stituted ‘‘section 30(f)(5)’’ for ‘‘section 44F(f)(5)’’, ‘‘sec- tion 30(f)(1)(B)’’ for ‘‘section 44F(f)(1)(B)’’, and ‘‘section 30(f)(1)’’ for ‘‘section 44F(f)(1)’’. Subsec. (c). Pub. L. 98–369, § 474(r)(10)(A), redesignated subsec. (c) as (b). 1983—Pub. L. 97–414, § 4(b)(2)(A), substituted ‘‘Certain expenses for which credits are allowable’’ for ‘‘Portion of wages for which credit is claimed under section 40 or 44B’’ in section catchline. Subsec. (c). Pub. L. 97–414, § 4(b)(1), added subsec. (c). 1978—Pub. L. 95–600, as amended by Pub. L. 96–178 and Pub. L. 96–222, substituted ‘‘section 40 or 44B’’ for ‘‘sec- tion 44B’’ in section catchline, and in text designated existing provisions as subsec. (b) and added subsec. (a). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2017 AMENDMENT Amendment by section 13001(b)(1)(A) of Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 13001(c)(1) of Pub. L. 115–97, set out as a note under section 11 of this title. Amendment by section 13206(d)(2) of Pub. L. 115–97 ap- plicable to amounts paid or incurred in taxable years beginning after Dec. 31, 2021, see section 13206(e) of Pub. L. 115–97, set out as a note under section 41 of this title. Amendment by section 13401(b) of Pub. L. 115–97 ap- plicable to taxable years beginning after Dec. 31, 2017, see section 13401(c) of Pub. L. 115–97, set out as a note under section 45C of this title. Amendment by section 13403(d)(1) of Pub. L. 115–97 ap- plicable to wages paid in taxable years beginning after Dec. 31, 2017, see section 13403(e) of Pub. L. 115–97, set out as a note under section 38 of this title. EFFECTIVE DATE OF 2010 AMENDMENT Amendment by section 1401(b) of Pub. L. 111–148 ap- plicable to taxable years ending after Dec. 31, 2013, see Page 1054 TITLE 26—INTERNAL REVENUE CODE § 280C section 1401(e) of Pub. L. 111–148, set out as a note under section 36B of this title. Amendment by section 1421(d)(1) of Pub. L. 111–148 ap- plicable to amounts paid or incurred in taxable years beginning after Dec. 31, 2009, see section 1421(f)(1) of Pub. L. 111–148, set out as a note under section 38 of this title. Amendment by section 9023(c)(2) of Pub. L. 111–148 ap- plicable to amounts paid or incurred after Dec. 31, 2008, in taxable years beginning after such date, see section 9023(f) of Pub. L. 111–148, set out as a note under section 46 of this title. Amendment by section 10105(e)(3) of Pub. L. 111–148 effective as if included in the enactment of section 1421 of Pub. L. 111–148, see section 10105(e)(5) of Pub. L. 111–148, set out as a note under section 45R of this title. EFFECTIVE DATE OF 2008 AMENDMENT Amendment of this section and repeal of Pub. L. 110–234 by Pub. L. 110–246 effective May 22, 2008, the date of enactment of Pub. L. 110–234, except as other- wise provided, see section 4 of Pub. L. 110–246, set out as an Effective Date note under section 8701 of Title 7, Agriculture. Amendment by section 15343(c) of Pub. L. 110–246 ap- plicable to amounts paid or incurred after June 18, 2008, see section 15343(e) of Pub. L. 110–246, set out as a note under section 38 of this title. Amendment by Pub. L. 110–245 applicable to amounts paid after June 17, 2008, see section 111(e) of Pub. L. 110–245, set out as a note under section 38 of this title. EFFECTIVE DATE OF 2007 AMENDMENT Amendment by Pub. L. 110–172 effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 7(e) of Pub. L. 110–172, set out as a note under section 1092 of this title. EFFECTIVE DATE OF 2006 AMENDMENT Amendment by Pub. L. 109–432 applicable to taxable years beginning after Dec. 31, 2005, see section 405(e) of Pub. L. 109–432, set out as a note under section 38 of this title. EFFECTIVE DATE OF 2004 AMENDMENT Amendment by Pub. L. 108–357 applicable to expenses paid or incurred after Dec. 31, 2002, in taxable years ending after such date, see section 339(f) of Pub. L. 108–357, set out as a note under section 38 of this title. EFFECTIVE DATE OF 2000 AMENDMENT Pub. L. 106–554, § 1(a)(7) [title III, § 311(d)], Dec. 21, 2000, 114 Stat. 2763, 2763A–640, provided that: ‘‘Sub- section (c) [not classified to the Code] and the amend- ments made by this section [amending this section and former section 30A and section 857 of this title] shall take effect as if included in the provisions of the Ticket to Work and Work Incentives Improvement Act of 1999 [Pub. L. 106–170, see Tables for classification] to which they relate.’’ EFFECTIVE DATE OF 1999 AMENDMENT Amendment by Pub. L. 106–170 applicable to amounts paid or incurred after June 30, 1999, see section 502(c)(3) of Pub. L. 106–170, set out as a note under section 41 of this title. EFFECTIVE DATE OF 1996 AMENDMENT Amendment by Pub. L. 104–188 applicable to amounts paid or incurred in taxable years ending after June 30, 1996, see section 1205(e) of Pub. L. 104–188, set out as a note under section 45K of this title. EFFECTIVE DATE OF 1993 AMENDMENT Amendment by section 13322(c)(1) of Pub. L. 103–66 ap- plicable to wages paid or incurred after Dec. 31, 1993, see section 13322(f) of Pub. L. 103–66, set out as a note under section 38 of this title. EFFECTIVE DATE OF 1989 AMENDMENT Amendment by section 7110(c)(1) of Pub. L. 101–239 ap- plicable to taxable years beginning after Dec. 31, 1989, see section 7110(e) of Pub. L. 101–239, set out as a note under section 41 of this title. Amendment by section 7814(e)(2)(A) of Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Rev- enue Act of 1988, Pub. L. 100–647, to which such amend- ment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title. EFFECTIVE DATE OF 1988 AMENDMENT Amendment by Pub. L. 100–647 applicable to taxable years beginning after Dec. 31, 1988, see section 4008(d) of Pub. L. 100–647, set out as a note under section 41 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Amendment by section 231(d)(3)(E) of Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1985, see section 231(g) of Pub. L. 99–514, set out as a note under section 41 of this title. Amendment by section 1847(b)(8) of Pub. L. 99–514 ef- fective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98–369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99–514, set out as a note under section 48 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–369 applicable to taxable years beginning after Dec. 31, 1983, and to carrybacks from such years, see section 475(a) of Pub. L. 98–369, set out as a note under section 21 of this title. EFFECTIVE DATE OF 1983 AMENDMENT Amendment by Pub. L. 97–414 applicable to amounts paid or incurred after December 31, 1982, in taxable years ending after such date, see section 4(d) of Pub. L. 97–414, set out as an Effective Date note under section 28 of this title. EFFECTIVE DATE OF 1978 AMENDMENT Pub. L. 95–600, title III, § 322(e), Nov. 6, 1978, 92 Stat. 2839, as amended by Pub. L. 96–178, § 6(a), (b), Jan. 2, 1980, 93 Stat. 1297; Pub. L. 96–222, title I, § 103(a)(7)(A), (B), Apr. 1, 1980, 94 Stat. 211; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘(1) IN GENERAL.—Except as otherwise provided in this subsection, the amendments made by this section [amending this section and sections 50A and 50B of this title] shall apply to work incentive program expenses paid or incurred after December 31, 1978, in taxable years ending after such date; except that so much of the amendment made by subsection (a) as affects sec- tion 50A(a)(2) of the Internal Revenue Code of 1986 [for- merly I.R.C. 1954] shall apply to taxable years begin- ning after December 31, 1978. For purposes of applying section 50A(a)(2) of the Internal Revenue Code of 1986 with respect to a taxable year beginning before Janu- ary 1, 1979, the rules of sections 50A(a)(4), 50A(a)(5), and 50B(e)(3) of such Code (as in effect on the day before the date of the enactment of this Act [Nov. 6, 1978] shall apply. ‘‘(2) SPECIAL RULES FOR CERTAIN ELIGIBLE EMPLOY- EES.— ‘‘(A) ELIGIBLE EMPLOYEES HIRED BEFORE SEPTEMBER 27, 1978.—In the case of any eligible employee (as de- fined in section 50B(h)) hired before September 27, 1978, no credit shall be allowed under section 40 with respect to second-year work incentive program ex- penses (as defined in section 50B(a)) attributable to service performed by such employee. ‘‘(B) ELIGIBLE EMPLOYEES HIRED AFTER SEPTEMBER 26, 1978.—In the case of any eligible employee (as de- fined in section 50B(h)) hired after September 26, 1978, for purposes of applying the amendments made by Page 1055 TITLE 26—INTERNAL REVENUE CODE § 280F this section, such individual shall be treated for pur- poses of the credit allowed by section 40 as having first begun work for the taxpayer not earlier than January 1, 1979, and any wages paid or incurred after December 31, 1978, with respect to such individual shall be considered to be attributable to services ren- dered after that date.’’ [Pub. L. 96–178, § 6(d), Jan. 2, 1980, 93 Stat. 1298, pro- vided that: ‘‘Any amendment made by this section to the Revenue Act of 1978 [amending section 322(e)(1) and (2) of Pub. L. 95–600, set out above] shall take effect as if it had been included in the provision of the Revenue Act of 1978 [Pub. L. 95–600] to which such amendment relates.’’] EFFECTIVE DATE Section applicable to taxable years beginning after Dec. 31, 1976, and to credit carrybacks from such years, see section 202(e) of Pub. L. 95–30, set out as a note under section 51 of this title. SAVINGS PROVISION For provisions that amendment made by section 401(d)(3)(B)(iii) of Pub. L. 115–141 not apply to expendi- tures made in taxable years beginning before Jan. 1, 2011, in the case of the repeal of section 48D(e)(1) of this title, see section 401(d)(3)(C) of Pub. L. 115–141, set out as a note under section 49 of this title. For provisions that amendment made by section 401(d)(6)(B)(iv) of Pub. L. 115–141 not apply, in the case of certain repeals, to various types of wages, bonds, property, or other items before specific dates, see sec- tion 401(d)(6)(C) of Pub. L. 115–141, set out as a note under former section 1400L of this title. For provisions that nothing in amendment by section 401(d)(3)(B)(iii), (6)(B)(iv) of Pub. L. 115–141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115–141, set out as a note under section 23 of this title. TIME AND FORM OF CERTAIN ELECTIONS UNDER SUBSECTION (c)(2) Pub. L. 101–239, title VII, § 7814(e)(2)(B), Dec. 19, 1989, 103 Stat. 2413, provided that: ‘‘In the case of a taxable year for which the last date for making the election under section 280C(c)(3) of the Internal Revenue Code of 1986 (as added by subparagraph (A)) [see 26 U.S.C. 280C(c)(2)] is on or before the date which is 75 days after the date of the enactment of this Act [Dec. 19, 1989], such an election for such year may be made— ‘‘(i) at any time before the date which is 75 days after such date of enactment, and ‘‘(ii) in such form and manner as the Secretary of the Treasury or his delegate may prescribe.’’ 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. [§ 280D. Repealed. Pub. L. 100–418, title I, § 1941(b)(4)(A), Aug. 23, 1988, 102 Stat. 1324] Section, added Pub. L. 96–499, title XI, § 1131(d)(1), Dec. 5, 1980, 94 Stat. 2693, related to portion of chapter 45 windfall profit tax on domestic crude oil for which credit or refund was allowable under section 6429. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal applicable to crude oil removed from the premises on or after Aug. 23, 1988, see section 1941(c) of Pub. L. 100–418, set out as an Effective Date of 1988 Amendment note under section 164 of this title. § 280E. Expenditures in connection with the ille- gal sale of drugs No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which com- prise such trade or business) consists of traf- ficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted. (Added Pub. L. 97–248, title III, § 351(a), Sept. 3, 1982, 96 Stat. 640.) Editorial Notes REFERENCES IN TEXT The Controlled Substances Act, referred to in text, is title II of Pub. L. 91–513, Oct. 27, 1970, 84 Stat. 1242, which is classified principally to subchapter I (§ 801 et seq.) of chapter 13 of Title 21, Food and Drugs. Sched- ules I and II are set out in section 812 of Title 21. For complete classification of this Act to the Code, see Short Title note set out under section 801 of Title 21 and Tables. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Pub. L. 97–248, title III, § 351(c), Sept. 3, 1982, 96 Stat. 640, provided that: ‘‘The amendments made by this sec- tion [enacting this section] shall apply to amounts paid or incurred after the date of the enactment of this Act [Sept. 3, 1982] in taxable years ending after such date.’’ § 280F. Limitation on depreciation for luxury automobiles; limitation where certain prop- erty used for personal purposes (a) Limitation on amount of depreciation for lux- ury automobiles (1) Depreciation (A) Limitation The amount of the depreciation deduction for any taxable year for any passenger auto- mobile shall not exceed— (i) $10,000 for the 1st taxable year in the recovery period, (ii) $16,000 for the 2nd taxable year in the recovery period, (iii) $9,600 for the 3rd taxable year in the recovery period, and (iv) $5,760 for each succeeding taxable year in the recovery period. (B) Disallowed deductions allowed for years after recovery period (i) In general Except as provided in clause (ii), the un- recovered basis of any passenger auto- mobile shall be treated as an expense for the 1st taxable year after the recovery pe- riod. Any excess of the unrecovered basis