
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC110]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
         PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
 
Sec. 110. Qualified lessee construction allowances for short-
        term leases
        

(a) In general

    Gross income of a lessee does not include any amount received in 
cash (or treated as a rent reduction) by a lessee from a lessor--
        (1) under a short-term lease of retail space, and
        (2) for the purpose of such lessee's constructing or improving 
    qualified long-term real property for use in such lessee's trade or 
    business at such retail space,

but only to the extent that such amount does not exceed the amount 
expended by the lessee for such construction or improvement.

(b) Consistent treatment by lessor

    Qualified long-term real property constructed or improved in 
connection with any amount excluded from a lessee's income by reason of 
subsection (a) shall be treated as nonresidential real property of the 
lessor (including for purposes of section 168(i)(8)(B)).

(c) Definitions

    For purposes of this section--

                (1) Qualified long-term real property

        The term ``qualified long-term real property'' means 
    nonresidential real property which is part of, or otherwise present 
    at, the retail space referred to in subsection (a) and which reverts 
    to the lessor at the termination of the lease.

                        (2) Short-term lease

        The term ``short-term lease'' means a lease (or other agreement 
    for occupancy or use) of retail space for 15 years or less (as 
    determined under the rules of section 168(i)(3)).

                          (3) Retail space

        The term ``retail space'' means real property leased, occupied, 
    or otherwise used by a lessee in its trade or business of selling 
    tangible personal property or services to the general public.

(d) Information required to be furnished to Secretary

    Under regulations, the lessee and lessor described in subsection (a) 
shall, at such times and in such manner as may be provided in such 
regulations, furnish to the Secretary--
        (1) information concerning the amounts received (or treated as a 
    rent reduction) and expended as described in subsection (a), and
        (2) any other information which the Secretary deems necessary to 
    carry out the provisions of this section.

(Added Pub. L. 105-34, title XII, Sec. 1213(a), Aug. 5, 1997, 111 Stat. 
1000.)


                            Prior Provisions

    A prior section 110, act Aug. 16, 1954, ch. 736, 68A Stat. 33, 
related to income taxes paid by lessee corporations, prior to repeal by 
Pub. L. 101-508, title XI, Sec. 11801(a)(6), Nov. 5, 1990, 104 Stat. 
1388-520.


                             Effective Date

    Section 1213(e) of Pub. L. 105-34 provided that: ``The amendments 
made by this section [enacting this section and amending sections 168 
and 6724 of this title] shall apply to leases entered into after the 
date of the enactment of this Act [Aug. 5, 1997].''

                  Section Referred to in Other Sections

    This section is referred to in sections 168, 6724 of this title.
