
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: 26USC274]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
                      PART IX--ITEMS NOT DEDUCTIBLE
 
Sec. 274. Disallowance of certain entertainment, etc., expenses


(a) Entertainment, amusement, or recreation

                           (1) In general

        No deduction otherwise allowable under this chapter shall be 
    allowed for any item--

        (A) Activity

            With respect to an activity which is of a type generally 
        considered to constitute entertainment, amusement, or 
        recreation, unless the taxpayer establishes that the item was 
        directly related to, or, in the case of an item directly 
        preceding or following a substantial and bona fide business 
        discussion (including business meetings at a convention or 
        otherwise), that such item was associated with, the active 
        conduct of the taxpayer's trade or business, or

        (B) Facility

            With respect to a facility used in connection with an 
        activity referred to in subparagraph (A).

    In the case of an item described in subparagraph (A), the deduction 
    shall in no event exceed the portion of such item which meets the 
    requirements of subparagraph (A).

                          (2) Special rules

        For purposes of applying paragraph (1)--
            (A) Dues or fees to any social, athletic, or sporting club 
        or organization shall be treated as items with respect to 
        facilities.
            (B) An activity described in section 212 shall be treated as 
        a trade or business.
            (C) In the case of a club, paragraph (1)(B) shall apply 
        unless the taxpayer establishes that the facility was used 
        primarily for the furtherance of the taxpayer's trade or 
        business and that the item was directly related to the active 
        conduct of such trade or business.

                (3) Denial of deduction for club dues

        Notwithstanding the preceding provisions of this subsection, no 
    deduction shall be allowed under this chapter for amounts paid or 
    incurred for membership in any club organized for business, 
    pleasure, recreation, or other social purpose.

(b) Gifts

                           (1) Limitation

        No deduction shall be allowed under section 162 or section 212 
    for any expense for gifts made directly or indirectly to any 
    individual to the extent that such expense, when added to prior 
    expenses of the taxpayer for gifts made to such individual during 
    the same taxable year, exceeds $25. For purposes of this section, 
    the term ``gift'' means any item excludable from gross income of the 
    recipient under section 102 which is not excludable from his gross 
    income under any other provision of this chapter, but such term does 
    not include--
            (A) an item having a cost to the taxpayer not in excess of 
        $4.00 on which the name of the taxpayer is clearly and 
        permanently imprinted and which is one of a number of identical 
        items distributed generally by the taxpayer, or
            (B) a sign, display rack, or other promotional material to 
        be used on the business premises of the recipient.

                          (2) Special rules

            (A) In the case of a gift by a partnership, the limitation 
        contained in paragraph (1) shall apply to the partnership as 
        well as to each member thereof.
            (B) For purposes of paragraph (1), a husband and wife shall 
        be treated as one taxpayer.

(c) Certain foreign travel

                           (1) In general

        In the case of any individual who travels outside the United 
    States away from home in pursuit of a trade or business or in 
    pursuit of an activity described in section 212, no deduction shall 
    be allowed under section 162, or section 212 for that portion of the 
    expenses of such travel otherwise allowable under such section 
    which, under regulations prescribed by the Secretary, is not 
    allocable to such trade or business or to such activity.

                            (2) Exception

        Paragraph (1) shall not apply to the expenses of any travel 
    outside the United States away from home if--
            (A) such travel does not exceed one week, or
            (B) the portion of the time of travel outside the United 
        States away from home which is not attributable to the pursuit 
        of the taxpayer's trade or business or an activity described in 
        section 212 is less than 25 percent of the total time on such 
        travel.

                    (3) Domestic travel excluded

        For purposes of this subsection, travel outside the United 
    States does not include any travel from one point in the United 
    States to another point in the United States.

(d) Substantiation required

    No deduction or credit shall be allowed--
        (1) under section 162 or 212 for any traveling expense 
    (including meals and lodging while away from home),
        (2) for any item with respect to an activity which is of a type 
    generally considered to constitute entertainment, amusement, or 
    recreation, or with respect to a facility used in connection with 
    such an activity,
        (3) for any expense for gifts, or
        (4) with respect to any listed property (as defined in section 
    280F(d)(4)),

unless the taxpayer substantiates by adequate records or by sufficient 
evidence corroborating the taxpayer's own statement (A) the amount of 
such expense or other item, (B) the time and place of the travel, 
entertainment, amusement, recreation, or use of the facility or 
property, or the date and description of the gift, (C) the business 
purpose of the expense or other item, and (D) the business relationship 
to the taxpayer of persons entertained, using the facility or property, 
or receiving the gift. The Secretary may by regulations provide that 
some or all of the requirements of the preceding sentence shall not 
apply in the case of an expense which does not exceed an amount 
prescribed pursuant to such regulations. This subsection shall not apply 
to any qualified nonpersonal use vehicle (as defined in subsection (i)).

(e) Specific exceptions to application of subsection (a)

    Subsection (a) shall not apply to--

                (1) Food and beverages for employees

        Expenses for food and beverages (and facilities used in 
    connection therewith) furnished on the business premises of the 
    taxpayer primarily for his employees.

                (2) Expenses treated as compensation

        Expenses for goods, services, and facilities, to the extent that 
    the expenses are treated by the taxpayer, with respect to the 
    recipient of the entertainment, amusement, or recreation, as 
    compensation to an employee on the taxpayer's return of tax under 
    this chapter and as wages to such employee for purposes of chapter 
    24 (relating to withholding of income tax at source on wages).

                       (3) Reimbursed expenses

        Expenses paid or incurred by the taxpayer, in connection with 
    the performance by him of services for another person (whether or 
    not such other person is his employer), under a reimbursement or 
    other expense allowance arrangement with such other person, but this 
    paragraph shall apply--
            (A) where the services are performed for an employer, only 
        if the employer has not treated such expenses in the manner 
        provided in paragraph (2), or
            (B) where the services are performed for a person other than 
        an employer, only if the taxpayer accounts (to the extent 
        provided by subsection (d)) to such person.

           (4) Recreational, etc., expenses for employees

        Expenses for recreational, social, or similar activities 
    (including facilities therefor) primarily for the benefit of 
    employees (other than employees who are highly compensated employees 
    (within the meaning of section 414(q))). For purposes of this 
    paragraph, an individual owning less than a 10-percent interest in 
    the taxpayer's trade or business shall not be considered a 
    shareholder or other owner, and for such purposes an individual 
    shall be treated as owning any interest owned by a member of his 
    family (within the meaning of section 267(c)(4)). This paragraph 
    shall not apply for purposes of subsection (a)(3).

         (5) Employees, stockholder, etc., business meetings

        Expenses incurred by a taxpayer which are directly related to 
    business meetings of his employees, stockholders, agents, or 
    directors.

               (6) Meetings of business leagues, etc.

        Expenses directly related and necessary to attendance at a 
    business meeting or convention of any organization described in 
    section 501(c)(6) (relating to business leagues, chambers of 
    commerce, real estate boards, and boards of trade) and exempt from 
    taxation under section 501(a).

                    (7) Items available to public

        Expenses for goods, services, and facilities made available by 
    the taxpayer to the general public.

                 (8) Entertainment sold to customers

        Expenses for goods or services (including the use of facilities) 
    which are sold by the taxpayer in a bona fide transaction for an 
    adequate and full consideration in money or money's worth.

      (9) Expenses includible in income of persons who are not 
                                  employees

        Expenses paid or incurred by the taxpayer for goods, services, 
    and facilities to the extent that the expenses are includible in the 
    gross income of a recipient of the entertainment, amusement, or 
    recreation who is not an employee of the taxpayer as compensation 
    for services rendered or as a prize or award under section 74. The 
    preceding sentence shall not apply to any amount paid or incurred by 
    the taxpayer if such amount is required to be included (or would be 
    so required except that the amount is less than $600) in any 
    information return filed by such taxpayer under part III of 
    subchapter A of chapter 61 and is not so included.

For purposes of this subsection, any item referred to in subsection (a) 
shall be treated as an expense.

(f) Interest, taxes, casualty losses, etc.

    This section shall not apply to any deduction allowable to the 
taxpayer without regard to its connection with his trade or business (or 
with his income-producing activity). In the case of a taxpayer which is 
not an individual, the preceding sentence shall be applied as if it were 
an individual.

(g) Treatment of entertainment, etc., type facility

    For purposes of this chapter, if deductions are disallowed under 
subsection (a) with respect to any portion of a facility, such portion 
shall be treated as an asset which is used for personal, living, and 
family purposes (and not as an asset used in the trade or business).

(h) Attendance at conventions, etc.

                           (1) In general

        In the case of any individual who attends a convention, seminar, 
    or similar meeting which is held outside the North American area, no 
    deduction shall be allowed under section 162 for expenses allocable 
    to such meeting unless the taxpayer establishes that the meeting is 
    directly related to the active conduct of his trade or business and 
    that, after taking into account in the manner provided by 
    regulations prescribed by the Secretary--
            (A) the purpose of such meeting and the activities taking 
        place at such meeting,
            (B) the purposes and activities of the sponsoring 
        organizations or groups,
            (C) the residences of the active members of the sponsoring 
        organization and the places at which other meetings of the 
        sponsoring organization or groups have been held or will be 
        held, and
            (D) such other relevant factors as the taxpayer may present,

    it is as reasonable for the meeting to be held outside the North 
    American area as within the North American area.

                   (2) Conventions on cruise ships

        In the case of any individual who attends a convention, seminar, 
    or other meeting which is held on any cruise ship, no deduction 
    shall be allowed under section 162 for expenses allocable to such 
    meeting, unless the taxpayer meets the requirements of paragraph (5) 
    and establishes that the meeting is directly related to the active 
    conduct of his trade or business and that--
            (A) the cruise ship is a vessel registered in the United 
        States; and
            (B) all ports of call of such cruise ship are located in the 
        United States or in possessions of the United States.

    With respect to cruises beginning in any calendar year, not more 
    than $2,000 of the expenses attributable to an individual attending 
    one or more meetings may be taken into account under section 162 by 
    reason of the preceding sentence.

                           (3) Definitions

        For purposes of this subsection--

        (A) North American area

            The term ``North American area'' means the United States, 
        its possessions, and the Trust Territory of the Pacific Islands, 
        and Canada and Mexico.

        (B) Cruise ship

            The term ``cruise ship'' means any vessel sailing within or 
        without the territorial waters of the United States.

     (4) Subsection to apply to employer as well as to traveler

            (A) Except as provided in subparagraph (B), this subsection 
        shall apply to deductions otherwise allowable under section 162 
        to any person, whether or not such person is the individual 
        attending the convention, seminar, or similar meeting.
            (B) This subsection shall not deny a deduction to any person 
        other than the individual attending the convention, seminar, or 
        similar meeting with respect to any amount paid by such person 
        to or on behalf of such individual if includible in the gross 
        income of such individual. The preceding sentence shall not 
        apply if the amount is required to be included in any 
        information return filed by such person under part III of 
        subchapter A of chapter 61 and is not so included.

                     (5) Reporting requirements

        No deduction shall be allowed under section 162 for expenses 
    allocable to attendance at a convention, seminar, or similar meeting 
    on any cruise ship unless the taxpayer claiming the deduction 
    attaches to the return of tax on which the deduction is claimed--
            (A) a written statement signed by the individual attending 
        the meeting which includes--
                (i) information with respect to the total days of the 
            trip, excluding the days of transportation to and from the 
            cruise ship port, and the number of hours of each day of the 
            trip which such individual devoted to scheduled business 
            activities,
                (ii) a program of the scheduled business activities of 
            the meeting, and
                (iii) such other information as may be required in 
            regulations prescribed by the Secretary; and

            (B) a written statement signed by an officer of the 
        organization or group sponsoring the meeting which includes--
                (i) a schedule of the business activities of each day of 
            the meeting,
                (ii) the number of hours which the individual attending 
            the meeting attended such scheduled business activities, and
                (iii) such other information as may be required in 
            regulations prescribed by the Secretary.

     (6) Treatment of conventions in certain Caribbean countries

        (A) In general

            For purposes of this subsection, the term ``North American 
        area'' includes, with respect to any convention, seminar, or 
        similar meeting, any beneficiary country if (as of the time such 
        meeting begins)--
                (i) there is in effect a bilateral or multilateral 
            agreement described in subparagraph (C) between such country 
            and the United States providing for the exchange of 
            information between the United States and such country, and
                (ii) there is not in effect a finding by the Secretary 
            that the tax laws of such country discriminate against 
            conventions held in the United States.

        (B) Beneficiary country

            For purposes of this paragraph, the term ``beneficiary 
        country'' has the meaning given to such term by section 
        212(a)(1)(A) of the Caribbean Basin Economic Recovery Act; 
        except that such term shall include Bermuda.

        (C) Authority to conclude exchange of information agreements

            (i) In general

                The Secretary is authorized to negotiate and conclude an 
            agreement for the exchange of information with any 
            beneficiary country. Except as provided in clause (ii), an 
            exchange of information agreement shall provide for the 
            exchange of such information (not limited to information 
            concerning nationals or residents of the United States or 
            the beneficiary country) as may be necessary or appropriate 
            to carry out and enforce the tax laws of the United States 
            and the beneficiary country (whether criminal or civil 
            proceedings), including information which may otherwise be 
            subject to nondisclosure provisions of the local law of the 
            beneficiary country such as provisions respecting bank 
            secrecy and bearer shares. The exchange of information 
            agreement shall be terminable by either country on 
            reasonable notice and shall provide that information 
            received by either country will be disclosed only to persons 
            or authorities (including courts and administrative bodies) 
            involved in the administration or oversight of, or in the 
            determination of appeals in respect of, taxes of the United 
            States or the beneficiary country and will be used by such 
            persons or authorities only for such purposes.
            (ii) Nondisclosure of qualified confidential 
                    information sought for civil tax purposes

                An exchange of information agreement need not provide 
            for the exchange of qualified confidential information which 
            is sought only for civil tax purposes if--
                    (I) the Secretary of the Treasury, after making all 
                reasonable efforts to negotiate an agreement which 
                includes the exchange of such information, determines 
                that such an agreement cannot be negotiated but that the 
                agreement which was negotiated will significantly assist 
                in the administration and enforcement of the tax laws of 
                the United States, and
                    (II) the President determines that the agreement as 
                negotiated is in the national security interest of the 
                United States.
            (iii) Qualified confidential information defined

                For purposes of this subparagraph, the term ``qualified 
            confidential information'' means information which is 
            subject to the nondisclosure provisions of any local law of 
            the beneficiary country regarding bank secrecy or ownership 
            of bearer shares.
            (iv) Civil tax purposes

                For purposes of this subparagraph, the determination of 
            whether information is sought only for civil tax purposes 
            shall be made by the requesting party.

        (D) Coordination with other provisions

            Any exchange of information agreement negotiated under 
        subparagraph (C) shall be treated as an income tax convention 
        for purposes of section 6103(k)(4). The Secretary may exercise 
        his authority under subchapter A of chapter 78 to carry out any 
        obligation of the United States under an agreement referred to 
        in subparagraph (C).

        (E) Determinations published in the Federal Register

            The following shall be published in the Federal Register--
                (i) any determination by the President under 
            subparagraph (C)(ii) (including the reasons for such 
            determination),
                (ii) any determination by the Secretary under 
            subparagraph (C)(ii) (including the reasons for such 
            determination), and
                (iii) any finding by the Secretary under subparagraph 
            (A)(ii) (and any termination thereof).

             (7) Seminars, etc. for section 212 purposes

        No deduction shall be allowed under section 212 for expenses 
    allocable to a convention, seminar, or similar meeting.

(i) Qualified nonpersonal use vehicle

    For purposes of subsection (d), the term ``qualified nonpersonal use 
vehicle'' means any vehicle which, by reason of its nature, is not 
likely to be used more than a de minimis amount for personal purposes.

(j) Employee achievement awards

                          (1) General rule

        No deduction shall be allowed under section 162 or section 212 
    for the cost of an employee achievement award except to the extent 
    that such cost does not exceed the deduction limitations of 
    paragraph (2).

                      (2) Deduction limitations

        The deduction for the cost of an employee achievement award made 
    by an employer to an employee--
            (A) which is not a qualified plan award, when added to the 
        cost to the employer for all other employee achievement awards 
        made to such employee during the taxable year which are not 
        qualified plan awards, shall not exceed $400, and
            (B) which is a qualified plan award, when added to the cost 
        to the employer for all other employee achievement awards made 
        to such employee during the taxable year (including employee 
        achievement awards which are not qualified plan awards), shall 
        not exceed $1,600.

                           (3) Definitions

        For purposes of this subsection--

        (A) Employee achievement award

            The term ``employee achievement award'' means an item of 
        tangible personal property which is--
                (i) transferred by an employer to an employee for length 
            of service achievement or safety achievement,
                (ii) awarded as part of a meaningful presentation, and
                (iii) awarded under conditions and circumstances that do 
            not create a significant likelihood of the payment of 
            disguised compensation.

        (B) Qualified plan award

            (i) In general

                The term ``qualified plan award'' means an employee 
            achievement award awarded as part of an established written 
            plan or program of the taxpayer which does not discriminate 
            in favor of highly compensated employees (within the meaning 
            of section 414(q)) as to eligibility or benefits.
            (ii) Limitation

                An employee achievement award shall not be treated as a 
            qualified plan award for any taxable year if the average 
            cost of all employee achievement awards which are provided 
            by the employer during the year, and which would be 
            qualified plan awards but for this subparagraph, exceeds 
            $400. For purposes of the preceding sentence, average cost 
            shall be determined by including the entire cost of 
            qualified plan awards, without taking into account employee 
            achievement awards of nominal value.

                          (4) Special rules

        For purposes of this subsection--

        (A) Partnerships

            In the case of an employee achievement award made by a 
        partnership, the deduction limitations contained in paragraph 
        (2) shall apply to the partnership as well as to each member 
        thereof.

        (B) Length of service awards

            An item shall not be treated as having been provided for 
        length of service achievement if the item is received during the 
        recipient's 1st 5 years of employment or if the recipient 
        received a length of service achievement award (other than an 
        award excludable under section 132(e)(1)) during that year or 
        any of the prior 4 years.

        (C) Safety achievement awards

            An item provided by an employer to an employee shall not be 
        treated as having been provided for safety achievement if--
                (i) during the taxable year, employee achievement awards 
            (other than awards excludable under section 132(e)(1)) for 
            safety achievement have previously been awarded by the 
            employer to more than 10 percent of the employees of the 
            employer (excluding employees described in clause (ii)), or
                (ii) such item is awarded to a manager, administrator, 
            clerical employee, or other professional employee.

(k) Business meals

                           (1) In general

        No deduction shall be allowed under this chapter for the expense 
    of any food or beverages unless--
            (A) such expense is not lavish or extravagant under the 
        circumstances, and
            (B) the taxpayer (or an employee of the taxpayer) is present 
        at the furnishing of such food or beverages.

                           (2) Exceptions

        Paragraph (1) shall not apply to--
            (A) any expense described in paragraph (2), (3), (4), (7), 
        (8), or (9) of subsection (e), and
            (B) any other expense to the extent provided in regulations.

(l) Additional limitations on entertainment tickets

                      (1) Entertainment tickets

        (A) In general

            In determining the amount allowable as a deduction under 
        this chapter for any ticket for any activity or facility 
        described in subsection (d)(2), the amount taken into account 
        shall not exceed the face value of such ticket.

        (B) Exception for certain charitable sports events

            Subparagraph (A) shall not apply to any ticket for any 
        sports event--
                (i) which is organized for the primary purpose of 
            benefiting an organization which is described in section 
            501(c)(3) and exempt from tax under section 501(a),
                (ii) all of the net proceeds of which are contributed to 
            such organization, and
                (iii) which utilizes volunteers for substantially all of 
            the work performed in carrying out such event.

                         (2) Skyboxes, etc.

        In the case of a skybox or other private luxury box leased for 
    more than 1 event, the amount allowable as a deduction under this 
    chapter with respect to such events shall not exceed the sum of the 
    face value of non-luxury box seat tickets for the seats in such box 
    covered by the lease. For purposes of the preceding sentence, 2 or 
    more related leases shall be treated as 1 lease.

(m) Additional limitations on travel expenses

                   (1) Luxury water transportation

        (A) In general

            No deduction shall be allowed under this chapter for 
        expenses incurred for transportation by water to the extent such 
        expenses exceed twice the aggregate per diem amounts for days of 
        such transportation. For purposes of the preceding sentence, the 
        term ``per diem amounts'' means the highest amount generally 
        allowable with respect to a day to employees of the executive 
        branch of the Federal Government for per diem while away from 
        home but serving in the United States.

        (B) Exceptions

            Subparagraph (A) shall not apply to--
                (i) any expense allocable to a convention, seminar, or 
            other meeting which is held on any cruise ship, and
                (ii) any expense described in paragraph (2), (3), (4), 
            (7), (8), or (9) of subsection (e).

                   (2) Travel as form of education

        No deduction shall be allowed under this chapter for expenses 
    for travel as a form of education.

         (3) Travel expenses of spouse, dependent, or others

        No deduction shall be allowed under this chapter (other than 
    section 217) for travel expenses paid or incurred with respect to a 
    spouse, dependent, or other individual accompanying the taxpayer (or 
    an officer or employee of the taxpayer) on business travel, unless--
            (A) the spouse, dependent, or other individual is an 
        employee of the taxpayer,
            (B) the travel of the spouse, dependent, or other individual 
        is for a bona fide business purpose, and
            (C) such expenses would otherwise be deductible by the 
        spouse, dependent, or other individual.

(n) Only 50 percent of meal and entertainment expenses allowed as 
        deduction

                           (1) In general

        The amount allowable as a deduction under this chapter for--
            (A) any expense for food or beverages, and
            (B) any item with respect to an activity which is of a type 
        generally considered to constitute entertainment, amusement, or 
        recreation, or with respect to a facility used in connection 
        with such activity,

    shall not exceed 50 percent of the amount of such expense or item 
    which would (but for this paragraph) be allowable as a deduction 
    under this chapter.

                           (2) Exceptions

        Paragraph (1) shall not apply to any expense if--
            (A) such expense is described in paragraph (2), (3), (4), 
        (7), (8), or (9) of subsection (e),
            (B) in the case of an expense for food or beverages, such 
        expense is excludable from the gross income of the recipient 
        under section 132 by reason of subsection (e) thereof (relating 
        to de minimis fringes),
            (C) such expense is covered by a package involving a ticket 
        described in subsection (l)(1)(B),
            (D) in the case of an employer who pays or reimburses moving 
        expenses of an employee, such expenses are includible in the 
        income of the employee under section 82, or
            (E) such expense is for food or beverages--
                (i) required by any Federal law to be provided to crew 
            members of a commercial vessel,
                (ii) provided to crew members of a commercial vessel--
                    (I) which is operating on the Great Lakes, the Saint 
                Lawrence Seaway, or any inland waterway of the United 
                States, and
                    (II) which is of a kind which would be required by 
                Federal law to provide food and beverages to crew 
                members if it were operated at sea,

                (iii) provided on an oil or gas platform or drilling rig 
            if the platform or rig is located offshore, or
                (iv) provided on an oil or gas platform or drilling rig, 
            or at a support camp which is in proximity and integral to 
            such platform or rig, if the platform or rig is located in 
            the United States north of 54 degrees north latitude.

    Clauses (i) and (ii) of subparagraph (E) shall not apply to vessels 
    primarily engaged in providing luxury water transportation 
    (determined under the principles of subsection (m)). In the case of 
    the employee, the exception of subparagraph (A) shall not apply to 
    expenses described in subparagraph (D).

    (3) Special rule for individuals subject to Federal hours of 
                                   service

        (A) In general

            In the case of any expenses for food or beverages consumed 
        while away from home (within the meaning of section 162(a)(2)) 
        by an individual during, or incident to, the period of duty 
        subject to the hours of service limitations of the Department of 
        Transportation, paragraph (1) shall be applied by substituting 
        ``the applicable percentage'' for ``50 percent''.

        (B) Applicable percentage

            For purposes of this paragraph, the term ``applicable 
        percentage'' means the percentage determined under the following 
        table:

For taxable years beginning                               The applicable
  in calendar year--                                     percentage is--
    1998 or 1999........................                             55 
    2000 or 2001........................                             60 
    2002 or 2003........................                             65 
    2004 or 2005........................                             70 
    2006 or 2007........................                             75 
    2008 or thereafter..................                             80.

(o) Regulatory authority

    The Secretary shall prescribe such regulations as he may deem 
necessary to carry out the purposes of this section, including 
regulations prescribing whether subsection (a) or subsection (b) applies 
in cases where both such subsections would otherwise apply.

(Added Pub. L. 87-834, Sec. 4(a)(1), Oct. 16, 1962, 76 Stat. 974; 
amended Pub. L. 88-272, title II, Sec. 217(a), Feb. 26, 1964, 78 Stat. 
56; Pub. L. 94-455, title VI, Sec. 602(a), title XIX, 
Sec. 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1572, 1834; Pub. L. 95-600, 
title III, Sec. 361(a), (b), title VII, Sec. 701(g)(1)-(3), Nov. 6, 
1978, 92 Stat. 2847, 2903, 2904; Pub. L. 96-222, title I, 
Sec. 103(a)(10)(A), (B) Apr. 1, 1980, 94 Stat. 212; Pub. L. 96-598, 
Sec. 5(a), Dec. 24, 1980, 94 Stat. 3488; Pub. L. 96-605, title I, 
Sec. 108(a), Dec. 28, 1980, 94 Stat. 3524; Pub. L. 96-608, Sec. 4(a), 
Dec. 28, 1980, 94 Stat. 3552; Pub. L. 97-34, title II, Sec. 265(a), (b), 
Aug. 13, 1981, 95 Stat. 265; Pub. L. 97-248, title III, Secs. 307(a)(1), 
308(a), Sept. 3, 1982, 96 Stat. 589, 591; Pub. L. 97-424, title V, 
Sec. 543(a), Jan. 6, 1983, 96 Stat. 2195; Pub. L. 98-67, title I, 
Sec. 102(a), title II, Sec. 222(a), Aug. 5, 1983, 97 Stat. 369, 395; 
Pub. L. 98-369, div. A, title I, Sec. 179(b)(1), title VIII, 
Sec. 801(c), July 18, 1984, 98 Stat. 718, 995; Pub. L. 99-44, 
Secs. 1(a), 2, 6(b), May 24, 1985, 99 Stat. 77, 79; Pub. L. 99-514, 
title I, Secs. 122(c), (d), 142(a)-(c), title XI, Sec. 1114(b)(6), Oct. 
22, 1986, 100 Stat. 2110, 2117-2120, 2451; Pub. L. 100-647, title I, 
Secs. 1001(g)(1)-(4)(A), (5), 1018(u)(2), title VI, Sec. 6003(a), Nov. 
10, 1988, 102 Stat. 3351, 3352, 3590, 3684; Pub. L. 101-239, title VII, 
Secs. 7816(a), 7841(d)(18), Dec. 19, 1989, 103 Stat. 2420, 2429; Pub. L. 
101-508, title XI, Sec. 11802(b), Nov. 5, 1990, 104 Stat. 1388-529; Pub. 
L. 103-66, title XIII, Secs. 13209(a), (b), 13210(a), (b), 13272(a), 
Aug. 10, 1993, 107 Stat. 469, 542; Pub. L. 105-34, title IX, 
Sec. 969(a), Aug. 5, 1997, 111 Stat. 896.)

                       References in Text

    Section 212(a)(1)(A) of the Caribbean Basin Economic Recovery Act, 
referred to in subsec. (h)(6)(B), is classified to section 2702(a)(1)(A) 
of Title 19, Customs Duties.


                               Amendments

    1997--Subsec. (n)(3). Pub. L. 105-34 added par. (3).
    1993--Subsec. (a)(3). Pub. L. 103-66, Sec. 13210(a), added par. (3).
    Subsec. (e)(4). Pub. L. 103-66, Sec. 13210(b), inserted at end 
``This paragraph shall not apply for purposes of subsection (a)(3).''
    Subsec. (m)(3). Pub. L. 103-66, Sec. 13272(a), added par. (3).
    Subsec. (n). Pub. L. 103-66, Sec. 13209(a), (b), substituted ``50'' 
for ``80'' in heading and in concluding provisions of par. (1).
    1990--Subsec. (l)(2). Pub. L. 101-508, Sec. 11802(b)(1), in amending 
par. (2) generally, struck out ``(A) In general'' and subpar. (B) which 
provided for phasein deductions of skybox tickets in the 1987 and 1988 
taxable years.
    Subsec. (n)(2). Pub. L. 101-508, Sec. 11802(b)(2)(A)(ii), (iii), 
substituted ``described in subparagraph (D)'' for ``described in 
subparagraph (E)'' and ``of subparagraph (E)'' for ``of subparagraph 
(F)'' in concluding provisions.
    Subsec. (n)(2)(D) to (F). Pub. L. 101-508, Sec. 11802(b)(2)(A)(i), 
redesignated subpars. (E) and (F) as (D) and (E), respectively, and 
struck out former subpar. (D) which read as follows: ``in the case of an 
expense for food or beverages before January 1, 1989, such expense is an 
integral part of a qualified meeting,''.
    Subsec. (n)(3). Pub. L. 101-508, Sec. 11802(b)(2)(B), struck out 
par. (3) ``Qualified meeting'' which read as follows: ``For purposes of 
paragraph (2)(D), the term `qualified meeting' means any convention, 
seminar, annual meeting, or similar business program with respect to 
which--
        ``(A) an expense for food or beverages is not separately stated,
        ``(B) more than 50 percent of the participants are away from 
    home,
        ``(C) at least 40 individuals attend, and
        ``(D) such food and beverages are part of a program which 
    includes a speaker.''
    1989--Subsec. (n)(2). Pub. L. 101-239, Sec. 7816(a), added a new 
subpar. (E), substantially identical to former subpar. (E), and moved 
sentence formerly appearing between subpars. (E) and (F) to end of 
concluding provisions after subpar. (F).
    Subsec. (n)(2)(F)(i). Pub. L. 101-239, Sec. 7841(d)(18), inserted 
``any'' before ``Federal law''.
    1988--Subsec. (b)(1). Pub. L. 100-647, Sec. 1018(u)(2), related to 
execution of amendment by Pub. L. 99-514, Sec. 122(c)(2), see 1986 
Amendment note below.
    Subsec. (h)(1), (2). Pub. L. 100-647, Sec. 1001(g)(5), substituted 
``trade or business and that'' for ``trade or business that''.
    Subsec. (k)(2). Pub. L. 100-647, Sec. 1001(g)(2), amended par. (2) 
generally. Prior to amendment, par. (2) read as follows: ``Paragraph (1) 
shall not apply to any expense if subsection (a) does not apply to such 
expense by reason of paragraph (2), (3), (4), (7), (8), or (9) of 
subsection (e).''
    Subsec. (m)(1)(B)(ii). Pub. L. 100-647, Sec. 1001(g)(3), amended cl. 
(ii) generally. Prior to amendment, cl. (ii) read as follows: ``any 
expense to which subsection (a) does not apply by reason of paragraph 
(2), (3), (4), (7), (8), or (9) of subsection (e).''
    Subsec. (n)(2). Pub. L. 100-647, Sec. 6003(a), struck out ``or'' at 
end of subpar. (D), substituted ``, or'' for the period at end of 
subpar. (E), and added subpar. (F) and flush sentence at end.
    Pub. L. 100-647, Sec. 1001(g)(4)(A), struck out ``or'' at end of 
subpar. (C), substituted ``, or'' for the period at end of subpar. (D), 
and added subpar. (E) and flush sentence at end.
    Pub. L. 100-647, Sec. 1001(g)(1), amended subpar. (A) generally. 
Prior to amendment, subpar. (A) read as follows: ``subsection (a) does 
not apply to such expense by reason of paragraph (2), (3), (4), (7), 
(8), or (9) of subsection (e),''.
    1986--Subsec. (b)(1). Pub. L. 99-514, Sec. 122(c)(1)-(3), and Pub. 
L. 100-647, Sec. 1018(u)(2), made conforming amendments to subpars. (A) 
and (B) and struck out subpar. (C) which read as follows: ``an item of 
tangible personal property which is awarded to an employee by reason of 
length of service, productivity, or safety achievement, but only to the 
extent that--
        ``(i) the cost of such item to the taxpayer does not exceed 
    $400, or
        ``(ii) such item is a qualified plan award.''
    Subsec. (b)(3). Pub. L. 99-514, Sec. 122(c)(4), struck out par. (3) 
relating to qualified plan award, defining such term in subpar. (A), and 
providing for average amount of awards in subpar. (B) and maximum amount 
per item in subpar. (C).
    Subsec. (e)(1). Pub. L. 99-514, Sec. 142(a)(2)(A), redesignated par. 
(2) as (1) and struck out former par. (1), business meals, which read as 
follows: ``Expenses for food and beverages furnished to any individual 
under circumstances which (taking into account the surroundings in which 
furnished, the taxpayer's trade, business, or income-producing activity 
and the relationship to such trade, business, or activity of the persons 
to whom the food and beverages are furnished) are of a type generally 
considered to be conducive to a business discussion.''
    Subsec. (e)(2). Pub. L. 99-514, Sec. 142(a)(2)(A), redesignated par. 
(3) as (2). Former par. (2) redesignated (1).
    Subsec. (e)(3). Pub. L. 99-514, Sec. 142(a)(2), redesignated par. 
(4) as (3) and substituted ``paragraph (2)'' for ``paragraph (3)'' in 
subpar. (A). Former par. (3) redesignated (2).
    Subsec. (e)(4). Pub. L. 99-514, Sec. 1114(b)(6), which directed the 
substitution of ``highly compensated employees (within the meaning of 
section 414(q))'' for ``officers, shareholders or other owners, or 
highly compensated employees'' in par. (5) was executed to par. (4) to 
reflect the probable intent of Congress, in view of the redesignation of 
par. (5) as (4) by section 142(a)(2)(A) of Pub. L. 99-514.
    Pub. L. 99-514, Sec. 142(a)(2)(A), redesignated par. (5) as (4). 
Former par. (4) redesignated (3).
    Subsec. (e)(5) to (10). Pub. L. 99-514, Sec. 142(a)(2)(A), 
redesignated pars. (5) to (10) as pars. (4) to (9), respectively.
    Subsec. (h). Pub. L. 99-514, Sec. 142(c), struck out ``or 212'' 
after ``section 162'' in introductory provisions of pars. (1), (2), and 
(5), in closing provisions of par. (2), and in par. (4)(A), struck out 
``or to an activity described in section 212 and'' after ``active 
conduct of his trade or business'' in introductory provisions of pars. 
(1) and (2), and added par. (7).
    Subsec. (j). Pub. L. 99-514, Sec. 122(d), added subsec. (j). Former 
subsec. (j) redesignated (k).
    Subsec. (k). Pub. L. 99-514, Sec. 142(a)(1), added subsec. (k). 
Former subsec. (k) redesignated (o).
    Subsecs. (l) to (n). Pub. L. 99-514, Sec. 142(b), added subsecs. (l) 
to (n).
    Subsec. (o). Pub. L. 99-514, Sec. 142(a)(1), redesignated former 
subsec. (k) as (o).
    1985--Subsec. (d). Pub. L. 99-44, Sec. 2(a), inserted at end ``This 
subsection shall not apply to any qualified nonpersonal use vehicle (as 
defined in subsection (i)).''
    Pub. L. 99-44, Sec. 1(a), substituted ``adequate records or by 
sufficient evidence corroborating the taxpayer's own statement'' for 
``adequate contemporaneous records'', and provided that the Internal 
Revenue Code of 1954 [now 1986] [this title] shall be applied as if 
``contemporaneous'' had not been added to subsec. (d). See Effective 
Date of 1985 Amendment note below.
    Subsecs. (i), (j). Pub. L. 99-44, Sec. 2(b), added subsec. (i) and 
redesignated former subsec. (i) as (j).
    1984--Subsec. (d). Pub. L. 98-369, Sec. 179(b), substituted, in 
introductory provisions, ``No deduction or credit'' for ``No deduction'' 
and, in provisions following par. (4), ``adequate contemporaneous 
records'' for ``adequate records or by sufficient evidence corroborating 
his own statement'' and ``the facility or property'' for ``the 
facility'' in two places, and added par. (4).
    Subsec. (h)(6)(D). Pub. L. 98-369, Sec. 801(c), substituted in 
heading ``with other provisions'' for ``with section 6103'' and in text 
inserted provision that the Secretary may exercise his authority under 
subchapter A of chapter 78 to carry out any obligations of the United 
States under an agreement referred to in subpar. (C).
    1983--Subsec. (e)(3). Pub. L. 98-67, Sec. 102(a), repealed 
amendments made by Pub. L. 97-248. See 1982 Amendment note below.
    Subsec. (h)(2). Pub. L. 97-424, Sec. 543(a)(1), inserted provisions 
relating to requirements of par. (5) and the description in section 212, 
and inserted the $2,000 limit relating to section 162 or 212.
    Subsec. (h)(5). Pub. L. 97-424, Sec. 543(a)(2), added par. (5).
    Subsec. (h)(6). Pub. L. 98-67, Sec. 227(a), added par. (6).
    1982--Subsec. (e)(3). Pub. L. 97-248 provided that, applicable to 
payments of interest, dividends, and patronage dividends paid or 
credited after June 30, 1983, par. (3) is amended by inserting 
``subchapter A of'' before ``chapter 24''. Section 102(a), (b) of Pub. 
L. 98-67, title I, Aug. 5, 1983, 97 Stat. 369, repealed subtitle A 
(Secs. 301-308) of title III of Pub. L. 97-248 as of the close of June 
30, 1983, and provided that the Internal Revenue Code of 1954 [now 1986] 
[this title] shall be applied and administered (subject to certain 
exceptions) as if such subtitle A (and the amendments made by such 
subtitle A) had not been enacted.
    1981--Subsec. (b)(1)(C). Pub. L. 97-34, Sec. 265(a), excluded from 
term ``gift'' an award for productivity, designated existing provisions 
as cl. (i), and as so designated, increased the limitation to $400 from 
$100, and added cl. (ii).
    Subsec. (b)(3). Pub. L. 97-34, Sec. 265(b), added par. (3).
    1980--Subsec. (a)(2)(C). Pub. L. 96-222, Sec. 103(a)(10)(A), struck 
out ``country'' after ``the case of a''.
    Subsec. (e)(10). Pub. L. 96-605 and Pub. L. 96-598 made identical 
amendments by adding par. (10).
    Subsec. (h) Pub. L. 96-608 substituted provision disallowing any 
deductions for expenses allocable to a convention, seminar, or other 
similar meeting outside the North American area unless, taking certain 
factors into account, it is as reasonable for the meeting to be held 
outside the North American area as within it, disallowing any deductions 
for a convention, seminar, or similar meeting held on any cruise ship, 
and defining North American area and cruise ship, for provision allowing 
deductions with respect to not more than 2 foreign conventions per year, 
limiting deductible transportation cost to not to exceed the cost of 
coach or economy air fare, permitting transportation costs to be fully 
deductible only if at least one-half of the days are devoted to business 
related activities, disallowing deductions for subsistence expenses 
unless the individual attends two-thirds of the business activities, 
limiting deductible subsistence costs to not to exceed the per diem rate 
for United States civil servants, defining foreign convention and 
subsistence expenses, providing that if transportation expenses or 
subsistence expenses are not separately stated or do not reflect the 
proper allocation all amounts paid be treated as subsistence expenses, 
and prescribing special reporting and substantiation requirements.
    1978--Subsec. (a)(1). Pub. L. 95-600, Sec. 361(a), substituted 
provisions allowing no deduction for expenses paid or incurred with 
respect to a facility which is used in conjunction with an activity 
which is of a type generally considered to constitute entertainment, 
amusement, or recreation for provisions allowing a deduction for 
expenses paid or incurred with respect to a facility if the facility 
used is primarily for the furtherance of the taxpayer's business, and 
the expense is ``directly related'' to the active conduct of taxpayer's 
business.
    Subsec. (a)(2)(C). Pub. L. 95-600, Sec. 361(b), as amended by Pub. 
L. 96-222, Sec. 103(a)(10)(B), added subpar. (C).
    Subsec. (h)(3). Pub. L. 95-600, Sec. 701(g)(3), substituted ``at 
least one-half'' for ``more than one-half'' in first sentence.
    Subsec. (h)(6)(D). Pub. L. 95-600, Sec. 701(g)(1), designated 
existing provisions as cl. (i), inserted introductory phrase ``Except as 
provided in clause (ii)'' and substituted ``For the purposes'' for ``For 
purpose'', and added cl. (ii).
    Subsec. (h)(6)(E). Pub. L. 95-600, Sec. 701(g)(2), added subpar. 
(E).
    1976--Subsecs. (c)(1), (d). Pub. L. 94-455, Sec. 1906(b)(13)(A), 
struck out ``or his delegate'' after ``Secretary''.
    Subsec. (h). Pub. L. 94-455, Sec. 602(a), added subsec. (h). Former 
subsec. (h) redesignated (i).
    Subsec. (i). Pub. L. 94-455, Secs. 602(a), 1906(b)(13)(A), 
redesignated former subsec. (h) as (i) and struck out ``or his 
delegate'' after ``Secretary''.
    1964--Subsec. (c). Pub. L. 88-272 limited subsec. (c) to individuals 
traveling outside the United States.


                    Effective Date of 1997 Amendment

    Section 969(b) of Pub. L. 105-34 provided that: ``The amendment made 
by subsection (a) [amending this section] shall apply to taxable years 
beginning after December 31, 1997.''


                    Effective Date of 1993 Amendment

    Section 13209(c) of Pub. L. 103-66 provided that: ``The amendments 
made by this section [amending this section] shall apply to taxable 
years beginning after December 31, 1993.''
    Section 13210(c) of Pub. L. 103-66 provided that: ``The amendments 
made by this section [amending this section] shall apply to amounts paid 
or incurred after December 31, 1993.''
    Section 13272(b) of Pub. L. 103-66 provided that: ``The amendment 
made by this section [amending this section] shall apply to amounts paid 
or incurred after December 31, 1993.''


                    Effective Date of 1989 Amendment

    Amendment by section 7816(a) of Pub. L. 101-239 effective, except as 
otherwise provided, as if included in the provision of the Technical and 
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such 
amendment 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 section 1001(g)(1)-(4)(A), (5) of 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.
    Section 6003(b) of Pub. L. 100-647 provided that:
    ``(1) Clauses (i) and (ii) of section 274(n)(2)(F) of the 1986 Code, 
as added by subsection (a), shall apply to taxable years beginning after 
December 31, 1988.
    ``(2) Clauses (iii) and (iv) of section 274(n)(2)(F) of the 1986 
Code, as added by subsection (a), shall apply to taxable years beginning 
after December 31, 1987.''


                    Effective Date of 1986 Amendment

    Amendment by section 122(c), (d) of Pub. L. 99-514 applicable to 
prizes and awards granted after Dec. 31, 1986, see section 151(c) of 
Pub. L. 99-514, set out as a note under section 1 of this title.
    Amendment by section 142(a)-(c) of Pub. L. 99-514 applicable to 
taxable years beginning after Dec. 31, 1986, see section 151(a) of Pub. 
L. 99-514, set out as a note under section 1 of this title.
    Amendment by section 1114(b)(6) of Pub. L. 99-514 applicable to 
years beginning after Dec. 31, 1986, see section 1114(c)(1) of Pub. L. 
99-514, set out as a note under section 414 of this title.


                    Effective Date of 1985 Amendment

    Section 6(a)-(c) of Pub. L. 99-44, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(a) Repeals.--The amendment and repeals made by subsections (a) 
and (b) of section 1 [amending this section and repealing section 
179(b)(2), (3) of Pub. L. 98-369 which had amended sections 6653 and 
6695 of this title] shall take effect as if included in the amendments 
made by section 179(b) of the Tax Reform Act of 1984 [Pub. L. 98-369].
    ``(b) Restoration of Prior Law for 1985.--For taxable years 
beginning in 1985, section 274(d) of the Internal Revenue Code of 1986 
[formerly I.R.C. 1954] shall apply as it read before the amendments made 
by section 179(b)(1) of the Tax Reform Act of 1984 [Pub. L. 98-369, see 
1984 Amendments note above].
    ``(c) Exception From Substantiation Requirements for Qualified 
Nonpersonal Use Vehicles.--The amendments made by section 2 [amending 
this section] shall apply to taxable years beginning after December 31, 
1985.''


                    Effective Date of 1984 Amendment

    Amendment by section 179(b)(1) of Pub. L. 98-369 applicable to 
taxable years beginning after Dec. 31, 1984, see section 179(d)(2) of 
Pub. L. 98-369, set out as an Effective Date note under section 280F of 
this title.
    Amendment by section 801(c) of Pub. L. 98-369 applicable to 
transactions after Dec. 31, 1984, in taxable years ending after such 
date, see section 805(a)(1) of Pub. L. 98-369, as amended, set out as a 
note under section 245 of this title.


                    Effective Date of 1983 Amendments

    Section 222(b) of Pub. L. 98-67 provided that: ``The amendment made 
by subsection (a) [amending this section] shall apply to conventions, 
seminars, or other meetings which begin after June 30, 1983.''
    Section 543(b) of Pub. L. 97-424 provided that: ``The amendments 
made by this section [amending this section] shall apply to taxable 
years beginning after December 31, 1982.''


                    Effective Date of 1981 Amendment

    Section 265(c) of Pub. L. 97-34 provided that: ``The amendments made 
by this section [amending this section] shall apply to taxable years 
ending on or after the date of the enactment of this Act [Aug. 13, 
1981].''


                    Effective Date of 1980 Amendments

    Section 4(b) of Pub. L. 96-608, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ``The amendment 
made by subsection (a) of this section [amending this section] shall 
apply to conventions, seminars, and meetings beginning after December 
31, 1980, except that in the case of any convention, seminar, or meeting 
beginning after such date which was scheduled on or before such date, a 
person, in such manner as the Secretary of the Treasury or his delegate 
may prescribe, may elect to have the provisions of section 274(h) of the 
Internal Revenue Code of 1986 [formerly I.R.C. 1954] be applied to such 
convention seminar or meeting without regard to such amendment.''
    Section 5(b) of Pub. L. 96-598 and section 108(b) of Pub. L. 96-605 
provided that: ``The amendment made by this section [amending this 
section] shall apply to any expenses paid or incurred after December 31, 
1980, in taxable years ending after such date.''
    Amendment by Pub. L. 96-222 effective, except as otherwise provided, 
as if it had been included in the provisions of the Revenue Act of 1978, 
Pub. L. 95-600, to which such amendment relates, see section 201 of Pub. 
L. 96-222, set out as a note under section 32 of this title.


                    Effective Date of 1978 Amendment

    Section 361(c) of Pub. L. 95-600 provided that: ``The amendments 
made by this section [amending this section] shall apply to items paid 
or incurred after December 31, 1978, in taxable years ending after such 
date.''
    Section 701(g)(4) of Pub. L. 95-600 provided that: ``The amendments 
made by this subsection [amending this section] shall apply to 
conventions beginning after December 31, 1976.''


                    Effective Date of 1976 Amendment

    Section 602(b) of Pub. L. 94-455 provided that: ``The amendments 
made by this section [amending this section] shall apply to conventions 
beginning after December 31, 1976.''


                    Effective Date of 1964 Amendment

    Section 217(b) of Pub. L. 88-272 provided that: ``The amendment made 
by subsection (a) [amending this section] shall apply with respect to 
taxable years ending after December 31, 1962, but only in respect of 
periods after such date.''


                             Effective Date

    Section applicable with respect to taxable years ending after Dec. 
31, 1962, but only in respect of periods after such date, see section 
4(c) of Pub. L. 87-834, set out as an Effective Date of 1962 Amendment 
note under section 162 of this title.


                               Regulations

    Secretary of the Treasury or his delegate to issue before Feb. 1, 
1988, final regulations to carry out amendments made by section 1114 of 
Pub. L. 99-514, see section 1141 of Pub. L. 99-514, set out as a note 
under section 401 of this title.
    Section 5 of Pub. L. 99-44 provided that: ``Not later than October 
1, 1985, the Secretary of the Treasury or his delegate shall prescribe 
regulations to carry out the provisions of this Act [amending sections 
274, 280F, 3402, 6653, and 6695 of this title, and enacting provisions 
set out as notes under sections 274, 280F, 3402, and 6653 of this title] 
which shall fully reflect such provisions.''
    Section 1(c) of Pub. L. 99-44 provided that: ``Regulations issued 
before the date of the enactment of this Act [May 24, 1985] to carry out 
the amendments made by paragraphs (1)(C), (2), and (3) of section 179(b) 
of the Tax Reform Act of 1984 [Pub. L. 98-369, amending sections 274, 
6653, and 6695 of this title] shall have no force and effect.''


                            Savings Provision

    For provisions that nothing in amendment by Pub. L. 101-508 be 
construed to affect treatment of certain transactions occurring, 
property acquired, or items of income, loss, deduction, or credit taken 
into account prior to Nov. 5, 1990, for purposes of determining 
liability for tax for periods ending after Nov. 5, 1990, see section 
11821(b) of Pub. L. 101-508, set out as a note under section 29 of this 
title.

          Termination of Trust Territory of the Pacific Islands

    For termination of Trust Territory of the Pacific Islands, see note 
set out preceding section 1681 of Title 48, Territories and Insular 
Possessions.


           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 [Secs. 1101-1147 and 1171-1177] or title XVIII 
[Secs. 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.


                   Certain Recordkeeping Requirements

    For treatment of use of automobile by I.R.S. special agent for 
purposes of this section and section 132 of this title, see section 1567 
of Pub. L. 99-514, set out as a note under section 132 of this title.


           Substantiation by Adequate Contemporaneous Records

    Section 1(a) of Pub. L. 99-44, as amended by Pub. L. 99-514, Sec. 2, 
Oct. 22, 1986, 100 Stat. 2095, provided in part that: ``the Internal 
Revenue Code of 1986 [formerly I.R.C. 1954] shall be applied and 
administered as if the word `contemporaneous' had not been added [by 
Pub. L. 98-369] to such subsection (d) [subsec. (d) of this section].''


       Use of Facilities in Case of Independent Contractors, Etc.

    Section 103(a)(10)(C) of Pub. L. 96-222, as amended by Pub. L. 99-
514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
    ``(i) In general.--Subsection (a) of section 274 of the Internal 
Revenue Code of 1986 [formerly I.R.C. 1954] (relating to disallowance of 
certain entertainment, etc., expenses) shall not apply to expenses paid 
or incurred by the taxpayer for goods, services, and facilities to the 
extent that the expenses are includible in the gross income of a 
recipient of the entertainment, amusement, or recreation who is not an 
employee of the taxpayer as compensation for services rendered or as a 
prize or award under section 74 of such Code.
    ``(ii) Information return requirement.--Clause (i) shall not apply 
to any amount paid or incurred by the taxpayer if such amount is 
required to be included in any information return filed by such taxpayer 
under part III of subchapter A of chapter 61 of such Code [section 6031 
et seq. of this title] and is not so included.
    ``(iii) Application of subparagraph.--This subparagraph shall only 
apply with respect to expenses paid or incurred during 1979 or 1980.''

                  Section Referred to in Other Sections

    This section is referred to in sections 62, 74, 276, 414, 936, 3121, 
3306, 3401, 7701 of this title; title 42 section 409.
