26 U.S.C. § 1551 — Untitled legal text

Page 2555 TITLE 26—INTERNAL REVENUE CODE [§ 1551 1 Section numbers editorially supplied. losses of such Native Corporation (or such other corporation), and ‘‘(B) which is attributable to an asserted over- statement of losses by, or misassignment of income (or income attributable to property contributed) to, an affiliated group of which the Native Corporation (or such other corporation) is a member. Such notice shall only include information with re- spect to the transaction between the taxpayer and the Native Corporation. ‘‘(2) RIGHTS OF NATIVE CORPORATION.— ‘‘(A) IN GENERAL.—If a Native Corporation re- ceives a notice under paragraph (1), the Native Cor- poration shall have the right to— ‘‘(i) submit to the Secretary of the Treasury or his delegate a written statement regarding the proposed adjustment, and ‘‘(ii) meet with the Secretary of the Treasury or his delegate with respect to such proposed adjust- ment. The Secretary of the Treasury or his delegate may discuss such proposed adjustment with the Native Corporation or its designated representative. ‘‘(B) EXTENSION OF STATUTE OF LIMITATIONS.—Sub- paragraph (A) shall not apply if the Secretary of the Treasury or his delegate determines that an ex- tension of the statute of limitation[s] is necessary to permit the participation described in subpara- graph (A) and the taxpayer and the Secretary or his delegate have not agreed to such extension. ‘‘(3) JUDICIAL PROCEEDINGS.—In the case of any pro- ceeding in a Federal court or the United States Tax Court involving a proposed adjustment under para- graph (1), the Native Corporation, subject to the rules of such court, may file an amicus brief concerning such adjustment. ‘‘(4) FAILURES.—For purposes of the 1986 Code, any failure by the Secretary of the Treasury or his dele- gate to comply with the provisions of this subsection shall not affect the validity of the determination of the Internal Revenue Service of any adjustment of tax liability of any taxpayer described in paragraph (1). ‘‘(d) DISQUALIFIED INCOME DEFINED.—For purposes of subsection (a), the term ‘disqualified income’ means any income assigned (or attributable to property con- tributed) after April 26, 1988, by a person who is not a Native Corporation or a corporation all the stock of which is owned directly by a Native Corporation. ‘‘(e) BASIS DETERMINATION.—For purposes of deter- mining basis for Federal tax purposes, no provision in any law enacted after the date of the enactment of this Act [Nov. 10, 1988] shall affect the date on which the transfer to the Native Corporation is made. The pre- ceding sentence shall apply to all taxable years wheth- er beginning before, on, or after such date of enact- ment.’’ 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. TRANSACTION RULES Pub. L. 94–455, title XV, § 1507(c)(2), Oct. 4, 1976, 90 Stat. 1740, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ‘‘(A) LIMITATIONS ON CARRYOVERS OR CARRYBACKS FOR GROUPS ELECTING UNDER SECTION 1504(c)(2).—If an affili- ated group elects to file a consolidated return pursuant to section 1501(c)(2) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] a carryover of a loss or credit from a taxable year ending before January 1, 1981, and losses or credits which may be carried back to taxable years ending before such date, shall be taken into ac- count as if this section had not been enacted. ‘‘(B) NONTERMINATION OF AFFILIATED GROUP.—The mere election to file a consolidated return pursuant to such section 1504(c)(2) shall not cause the termination of an affiliated group filing consolidated returns.’’ § 1505. Cross references (1) For suspension of running of statute of limita- tions when notice in respect of a deficiency is mailed to one corporation, see section 6503(a)(1). (2) For allocation of income and deductions of re- lated trades or businesses, see section 482. (Aug. 16, 1954, ch. 736, 68A Stat. 370.) Subchapter B—Related Rules Part Sec.1 I. In general .............................................. 1551 II. Certain controlled corporations ............ 1561 PART I—IN GENERAL Sec. [1551. Repealed.] 1552. Earnings and profits. Editorial Notes AMENDMENTS 2017—Pub. L. 115–97, title I, § 13001(b)(5)(A), Dec. 22, 2017, 131 Stat. 2098, which directed amendment of the table of sections for part I of subchapter B of chapter 5 by striking out item 1551 ‘‘Disallowance of the bene- fits of the graduated corporate rates and accumulated earnings credit’’, was executed to the table of sections for part I of subchapter B of this chapter to reflect the probable intent of Congress. 1978—Pub. L. 95–600, title III, § 301(b)(18)(C), Nov. 6, 1978, 92 Stat. 2823, in item 1551 substituted ‘‘the benefits of the graduated corporate rates’’ for ‘‘surtax exemp- tion’’. 1964—Pub. L. 88–272, title II, § 235(c)(4), Feb. 26, 1964, 78 Stat. 127, inserted table of parts, and heading for part I. [§ 1551. Repealed. Pub. L. 115–97, title I, § 13001(b)(5)(A), Dec. 22, 2017, 131 Stat. 2098] Section, act Aug. 16, 1954, ch. 736, 68A Stat. 371; Pub. L. 85–866, title II, § 205(a), Sept. 2, 1958, 72 Stat. 1680; Pub. L. 88–272, title II, § 235(b), Feb. 26, 1964, 78 Stat. 125; Pub. L. 94–12, title III, § 304(b), Mar. 29, 1975, 89 Stat. 45; Pub. L. 94–455, title XIX, §§ 1901(a)(158), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1790, 1834; Pub. L. 95–600, title III, § 301(b)(18)(A), (B), Nov. 6, 1978, 92 Stat. 2823; Pub. L. 97–34, title II, § 232(b)(2), Aug. 13, 1981, 95 Stat. 250; Pub. L. 99–514, title XVIII, § 1899A(36), Oct. 22, 1986, 100 Stat. 2960; Pub. L. 113–295, div. A, title II, § 221(a)(94), Dec. 19, 2014, 128 Stat. 4051, related to disallowance of the bene- fits of the graduated corporate rates and accumulated earnings credit. Repeal was executed to this section, which is in part I of subchapter B of chapter 6, to re- flect the probable intent of Congress, notwithstanding directory language of Pub. L. 115–97, which repealed section 1551 in part I of subchapter B of chapter 5. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal applicable to taxable years beginning after Dec. 31, 2017, see section 13001(c)(1) of Pub. L. 115–97, set out as an Effective Date of 2017 Amendment note under section 11 of this title. Page 2556 TITLE 26—INTERNAL REVENUE CODE § 1552 § 1552. Earnings and profits (a) General rule Pursuant to regulations prescribed by the Sec- retary the earnings and profits of each member of an affiliated group required to be included in a consolidated return for such group filed for a taxable year shall be determined by allocating the tax liability of the group for such year among the members of the group in accord with whichever of the following methods the group shall elect in its first consolidated return filed for such a taxable year: (1) The tax liability shall be apportioned among the members of the group in accord- ance with the ratio which that portion of the consolidated taxable income attributable to each member of the group having taxable in- come bears to the consolidated taxable in- come. (2) The tax liability of the group shall be al- located to the several members of the group on the basis of the percentage of the total tax which the tax of such member if computed on a separate return would bear to the total amount of the taxes for all members of the group so computed. (3) The tax liability of the group (excluding the tax increases arising from the consolida- tion) shall be allocated on the basis of the con- tribution of each member of the group to the consolidated taxable income of the group. Any tax increases arising from the consolidation shall be distributed to the several members in direct proportion to the reduction in tax li- ability resulting to such members from the fil- ing of the consolidated return as measured by the difference between their tax liabilities de- termined on a separate return basis and their tax liabilities based on their contributions to the consolidated taxable income. (4) The tax liability of the group shall be al- located in accord with any other method se- lected by the group with the approval of the Secretary. (b) Failure to elect If no election is made in such first return, the tax liability shall be allocated among the sev- eral members of the group pursuant to the method prescribed in subsection (a)(1). (Aug. 16, 1954, ch. 736, 68A Stat. 371; Pub. L. 88–272, title II, § 234(b)(8), Feb. 26, 1964, 78 Stat. 116; Pub. L. 94–455, title XIX, §§ 1901(a)(159), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1790, 1834.) Editorial Notes AMENDMENTS 1976—Subsec. (a). Pub. L. 94–455, §§ 1901(a)(159), 1906(b)(13)(A), struck out ‘‘beginning after December 31, 1953, and ending after the date of enactment of this title’’ after ‘‘group filed for a taxable year’’, and ‘‘or his delegate’’ after ‘‘Secretary’’ in two places. 1964—Subsec. (a)(3). Pub. L. 88–272 struck out ‘‘(deter- mined without regard to the 2 percent increase pro- vided by section 1503(a))’’, before ‘‘based on their con- tributions’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1976 AMENDMENT Amendment by section 1901(a)(159) of Pub. L. 94–455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title. EFFECTIVE DATE OF 1964 AMENDMENT Amendment by Pub. L. 88–272 applicable to taxable years beginning after Dec. 31, 1963, see section 234(c) of Pub. L. 88–272, set out as a note under section 1503 of this title. PART II—CERTAIN CONTROLLED CORPORATIONS Sec. 1561. Limitation on accumulated earnings credit in the case of certain controlled corporations. [1562. Repealed.] 1563. Definitions and special rules. [1564. Repealed.] Editorial Notes AMENDMENTS 2017—Pub. L. 115–97, title I, § 13001(b)(6)(B), Dec. 22, 2017, 131 Stat. 2098, which directed amendment of the table of sections for part II of subchapter B of chapter 5 by substituting ‘‘Limitation on accumulated earnings credit in the case of certain controlled corporations’’ for ‘‘Limitations on certain multiple tax benefits in the case of certain controlled corporations’’ in item 1561, was executed to the table of sections for part II of sub- chapter B of this chapter to reflect the probable intent of Congress. 1990—Pub. L. 101–508, title XI, § 11801(b)(12), Nov. 5, 1990, 104 Stat. 1388–522, struck out item 1564 ‘‘Transi- tional rules in the case of certain controlled corpora- tions’’. 1969—Pub. L. 91–172, title IV, § 401(a)(3), (b)(2)(E), Dec. 30, 1969, 83 Stat. 600, 602, substituted ‘‘Sec. 1561. Limita- tions on certain multiple tax benefits in the case of certain controlled corporations.’’ for ‘‘Sec. 1561. Surtax exemptions in case of certain controlled corpora- tions.’’, and struck out item 1562, effective with respect to taxable years beginning after Dec. 31, 1974, and added item 1564. 1964—Pub. L. 88–272, title II, § 235(a), Feb. 26, 1964, 78 Stat. 116, added designation of part II, and items 1561 to 1563. § 1561. Limitation on accumulated earnings cred- it in the case of certain controlled corpora- tions (a) In general The component members of a controlled group of corporations on a December 31 shall, for their taxable years which include such December 31, be limited for purposes of this subtitle to one $250,000 ($150,000 if any component member is a corporation described in section 535(c)(2)(B)) amount for purposes of computing the accumu- lated earnings credit under section 535(c)(2) and (3). Such amount shall be divided equally among the component members of such group on such December 31 unless the Secretary prescribes reg- ulations permitting an unequal allocation of such amount. (b) Certain short taxable years If a corporation has a short taxable year which does not include a December 31 and is a compo- nent member of a controlled group of corpora- tions with respect to such taxable year, then for purposes of this subtitle, the amount to be used in computing the accumulated earnings credit under section 535(c)(2) and (3) of such corpora- tion for such taxable year shall be the amount