26 U.S.C. § 199 — Untitled legal text

Page 929 TITLE 26—INTERNAL REVENUE CODE [§ 199 this section [amending this section] shall apply to ex- penditures paid or incurred after December 31, 2009.’’ EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110–343, div. C, title III, § 318(b), Oct. 3, 2008, 122 Stat. 3873, provided that: ‘‘The amendment made by this section [amending this section] shall apply to ex- penditures paid or incurred after December 31, 2007.’’ EFFECTIVE DATE OF 2006 AMENDMENT Pub. L. 109–432, div. A, title I, § 109(c), Dec. 20, 2006, 120 Stat. 2939, provided that: ‘‘The amendments made by this section [amending this section] shall apply to ex- penditures paid or incurred after December 31, 2005.’’ EFFECTIVE DATE OF 2004 AMENDMENT Pub. L. 108–311, title III, § 308(b), Oct. 4, 2004, 118 Stat. 1179, provided that: ‘‘The amendment made by sub- section (a) [amending this section] shall apply to ex- penditures paid or incurred after December 31, 2003.’’ EFFECTIVE DATE OF 2000 AMENDMENT Pub. L. 106–554, § 1(a)(7) [title I, § 162(c)], Dec. 21, 2000, 114 Stat. 2763, 2763A–625, provided that: ‘‘The amend- ments made by this section [amending this section] shall apply to expenditures paid or incurred after the date of the enactment of this Act [Dec. 21, 2000].’’ EFFECTIVE DATE OF 1999 AMENDMENT Amendment by section 532(c)(2)(A) of Pub. L. 106–170 applicable to any instrument held, acquired, or entered into, any transaction entered into, and supplies held or acquired on or after Dec. 17, 1999, see section 532(d) of Pub. L. 106–170, set out as a note under section 170 of this title. EFFECTIVE DATE Pub. L. 105–34, title IX, § 941(c), Aug. 5, 1997, 111 Stat. 885, provided that: ‘‘The amendments made by this sec- tion [enacting this section] shall apply to expenditures paid or incurred after the date of the enactment of this Act [Aug. 5, 1997], in taxable years ending after such date.’’ [§ 198A. Repealed. Pub. L. 113–295, div. A, title II, § 221(a)(35), Dec. 19, 2014, 128 Stat. 4042] Section, added Pub. L. 110–343, div. C, title VII, § 707(a), Oct. 3, 2008, 122 Stat. 3923, related to expensing of qualified disaster expenses. Repeal was executed to this section, which is in part VI of subchapter B of chapter 1, to reflect the probable intent of Congress, notwithstanding directory language of Pub. L. 113–295, which repealed section 198A in part VI of subchapter A of chapter 1. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113–295, set out as an Effective Date of 2014 Amendment note under sec- tion 1 of this title. [§ 199. Repealed. Pub. L. 115–97, title I, § 13305(a), Dec. 22, 2017, 131 Stat. 2126] Section, added Pub. L. 108–357, title I, § 102(a), Oct. 22, 2004, 118 Stat. 1424; amended Pub. L. 109–135, title IV, § 403(a)(1)–(13), Dec. 21, 2005, 119 Stat. 2615–2619; Pub. L. 109–222, title V, § 514(a), (b), May 17, 2006, 120 Stat. 366; Pub. L. 109–432, div. A, title IV, § 401(a), Dec. 20, 2006, 120 Stat. 2953; Pub. L. 110–343, div. B, title IV, § 401(a), (b), div. C, title III, § 312(a), title V, § 502(c), Oct. 3, 2008, 122 Stat. 3851, 3869, 3876; Pub. L. 111–312, title VII, § 746(a), Dec. 17, 2010, 124 Stat. 3319; Pub. L. 112–240, title III, § 318(a), Jan. 2, 2013, 126 Stat. 2331; Pub. L. 113–295, div. A, title I, § 130(a), title II, §§ 219(b), 221(a)(37), Dec. 19, 2014, 128 Stat. 4018, 4035, 4043; Pub. L. 114–113, div. P, title III, § 305(a), div. Q, title I, § 170(a), Dec. 18, 2015, 129 Stat. 3040, 3069, related to deduction of income attrib- utable to domestic production activities. SUBSECTION (c)(3)(C) OF THIS SECTION PRIOR TO REPEAL Prior to repeal by section 13305(a) of Pub. L. 115–97, subsection (c)(3)(C) of this section read as follows: (c) Qualified production activities income (3) Special rules for determining costs (C) Transportation costs of independent refiners (i) In general In the case of any taxpayer who is in the trade or business of refining crude oil and who is not a major integrated oil company (as defined in section 167(h)(5)(B), determined without regard to clause (iii) thereof) for the taxable year, in computing oil related quali- fied production activities income under sub- section (d)(9)(B), the amount allocated to do- mestic production gross receipts under para- graph (1)(B) for costs related to the transpor- tation of oil shall be 25 percent of the amount properly allocable under such paragraph (de- termined without regard to this subpara- graph). (ii) Termination Clause (i) shall not apply to any taxable year beginning after December 31, 2021. See Amendment Relating to Consolidated Ap- propriations Act, 2016 note below. SUBSECTION (d)(8) OF THIS SECTION PRIOR TO REPEAL Prior to repeal by section 13305(a) of Pub. L. 115–97, subsection (d)(8) of this section read as follows: (d) Definitions and special rules (8) Treatment of activities in Puerto Rico (A) In general In the case of any taxpayer with gross re- ceipts for any taxable year from sources within the Commonwealth of Puerto Rico, if all of such receipts are taxable under section 1 or 11 for such taxable year, then for purposes of deter- mining the domestic production gross receipts of such taxpayer for such taxable year under sub- section (c)(4), the term ‘‘United States’’ shall in- clude the Commonwealth of Puerto Rico. (B) Special rule for applying wage limitation In the case of any taxpayer described in sub- paragraph (A), for purposes of applying the limitation under subsection (b) for any taxable year, the determination of W–2 wages of such taxpayer shall be made without regard to any exclusion under section 3401(a)(8) for remunera- tion paid for services performed in Puerto Rico. (C) Termination This paragraph shall apply only with respect to the first 11 taxable years of the taxpayer be- ginning after December 31, 2005, and before Jan- uary 1, 2017. See Extension of Deduction Allowable With Respect to Income Attributable to Domestic Pro- duction Activities in Puerto Rico note below. Page 930 TITLE 26—INTERNAL REVENUE CODE § 199A Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF REPEAL Repeal applicable to taxable years beginning after Dec. 31, 2017, except as provided by transition rule, see section 13305(c) of Pub. L. 115–97, set out as an Effective Date of 2017 Amendment note under section 74 of this title. AMENDMENT RELATING TO CONSOLIDATED APPROPRIATIONS ACT, 2016 Pub. L. 115–141, div. U, title I, § 102, Mar. 23, 2018, 132 Stat. 1169, provided that: ‘‘(a) AMENDMENT RELATING TO SECTION 305 OF DIVISION P.—For purposes of applying section 199(c)(3)(C)(i) of the Internal Revenue Code of 1986 (as in effect before its repeal by Public Law 115–97) [see Subsection (c)(3)(C) of this Section Prior to Repeal note above] to taxable years beginning after December 31, 2015, and before January 1, 2018, such section shall be applied— ‘‘(1) by inserting ‘who elects the application of this clause for any taxable year,’ after ‘In the case of any taxpayer’, ‘‘(2) by substituting ‘, and who’ for ‘and who’, ‘‘(3) by substituting ‘such taxable year’ for ‘the tax- able year’, and ‘‘(4) by substituting ‘(as defined in subsection (d)(9)(B))’ for ‘under subsection (d)(9)(B)’. ‘‘(b) EFFECTIVE DATE.—The amendment made by this section [amending this section] shall take effect as if included in section 305 of division P of the Consolidated Appropriations Act, 2016 [Pub. L. 114–113].’’ EXTENSION OF DEDUCTION ALLOWABLE WITH RESPECT TO INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION ACTIVITIES IN PUERTO RICO Pub. L. 115–123, div. D, title I, § 40309, Feb. 9, 2018, 132 Stat. 146, provided that: ‘‘For purposes of applying sec- tion 199(d)(8)(C) of the Internal Revenue Code of 1986 [see Subsection (d)(8) of this Section Prior to Repeal note above] with respect to taxable years beginning during 2017, such section shall be applied— ‘‘(1) by substituting ‘first 12 taxable years’ for ‘first 11 taxable years’, and ‘‘(2) by substituting ‘January 1, 2018’ for ‘January 1, 2017’.’’ § 199A. Qualified business income (a) Allowance of deduction In the case of a taxpayer other than a corpora- tion, there shall be allowed as a deduction for any taxable year an amount equal to the lesser of— (1) the combined qualified business income amount of the taxpayer, or (2) an amount equal to 20 percent of the ex- cess (if any) of— (A) the taxable income of the taxpayer for the taxable year, over (B) the net capital gain (as defined in sec- tion 1(h)) of the taxpayer for such taxable year. (b) Combined qualified business income amount For purposes of this section— (1) In general The term ‘‘combined qualified business in- come amount’’ means, with respect to any tax- able year, an amount equal to— (A) the sum of the amounts determined under paragraph (2) for each qualified trade or business carried on by the taxpayer, plus (B) 20 percent of the aggregate amount of the qualified REIT dividends and qualified publicly traded partnership income of the taxpayer for the taxable year. (2) Determination of deductible amount for each trade or business The amount determined under this para- graph with respect to any qualified trade or business is the lesser of— (A) 20 percent of the taxpayer’s qualified business income with respect to the quali- fied trade or business, or (B) the greater of— (i) 50 percent of the W–2 wages with re- spect to the qualified trade or business, or (ii) the sum of 25 percent of the W–2 wages with respect to the qualified trade or business, plus 2.5 percent of the unadjusted basis immediately after acqui- sition of all qualified property. (3) Modifications to limit based on taxable in- come (A) Exception from limit In the case of any taxpayer whose taxable income for the taxable year does not exceed the threshold amount, paragraph (2) shall be applied without regard to subparagraph (B). (B) Phase-in of limit for certain taxpayers (i) In general If— (I) the taxable income of a taxpayer for any taxable year exceeds the threshold amount, but does not exceed the sum of the threshold amount plus $50,000 ($100,000 in the case of a joint return), and (II) the amount determined under paragraph (2)(B) (determined without re- gard to this subparagraph) with respect to any qualified trade or business carried on by the taxpayer is less than the amount determined under paragraph (2)(A) with respect such trade or busi- ness, then paragraph (2) shall be applied with re- spect to such trade or business without re- gard to subparagraph (B) thereof and by reducing the amount determined under subparagraph (A) thereof by the amount determined under clause (ii). (ii) Amount of reduction The amount determined under this sub- paragraph is the amount which bears the same ratio to the excess amount as— (I) the amount by which the taxpayer’s taxable income for the taxable year ex- ceeds the threshold amount, bears to (II) $50,000 ($100,000 in the case of a joint return). (iii) Excess amount For purposes of clause (ii), the excess amount is the excess of— (I) the amount determined under para- graph (2)(A) (determined without regard to this paragraph), over (II) the amount determined under paragraph (2)(B) (determined without re- gard to this paragraph).