
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: 26USC281]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
               Subchapter B--Computation of Taxable Income
 
      PART X--TERMINAL RAILROAD CORPORATIONS AND THEIR SHAREHOLDERS
 
Sec. 281. Terminal railroad corporations and their shareholders


(a) Computation of taxable income of terminal railroad corporations

                           (1) In general

        In computing the taxable income of a terminal railroad 
    corporation--
            (A) such corporation shall not be considered to have 
        received or accrued--
                (i) the portion of any liability of any railroad 
            corporation, with respect to related terminal services 
            provided by such corporation, which is discharged by 
            crediting such liability with an amount of related terminal 
            income, or
                (ii) the portion of any charge which would be made by 
            such corporation for related terminal services provided by 
            it, but which is not made as a result of taking related 
            terminal income into account in computing such charge; and

            (B) no deduction otherwise allowable under this chapter 
        shall be disallowed as a result of any discharge of liability 
        described in subparagraph (A)(i) or as a result of any 
        computation of charges in the manner described in subparagraph 
        (A)(ii).

                           (2) Limitation

        In the case of any taxable year ending after the date of the 
    enactment of this section, paragraph (1) shall not apply to the 
    extent that it would (but for this paragraph) operate to create (or 
    increase) a net operating loss for the terminal railroad corporation 
    for the taxable year.

(b) Computation of taxable income of shareholders

    Subject to the limitation in subsection (a)(2), in computing the 
taxable income of any shareholder of a terminal railroad corporation, no 
amount shall be considered to have been received or accrued or paid or 
incurred by such shareholder as a result of any discharge of liability 
described in subsection (a)(1)(A)(i) or as a result of any computation 
of charges in the manner described in subsection (a)(1)(A)(ii).

(c) Agreement required

    In the case of any taxable year, subsections (a) and (b) shall apply 
with respect to any discharge of liability described in subsection 
(a)(1)(A)(i), and to any computation of charges in the manner described 
in subsection (a)(1)(A)(ii), only if such discharge or computation (as 
in the case may be) was provided for in a written agreement, to which 
all of the shareholders of the terminal railroad corporation were 
parties, entered into before the beginning of such taxable year.

(d) Definitions

    For purposes of this section--

                  (1) Terminal railroad corporation

        The term ``terminal railroad corporation'' means a domestic 
    railroad corporation which is not a member, other than as a common 
    parent corporation, of an affiliated group (as defined in section 
    1504) and--
            (A) all of the shareholders of which are rail carriers 
        subject to part A of subtitle IV of title 49;
            (B) the primary business of which is the providing of 
        railroad terminal and switching facilities and services to rail 
        carriers subject to part A of subtitle IV of title 49 and to the 
        shippers and passengers of such railroad corporations;
            (C) a substantial part of the services of which for the 
        taxable year is rendered to one or more of its shareholders; and
            (D) each shareholder of which computes its taxable income on 
        the basis of a taxable year beginning or ending on the same day 
        that the taxable year of the terminal railroad corporation 
        begins or ends.

                     (2) Related terminal income

        The term ``related terminal income'' means the income 
    (determined in accordance with regulations prescribed by the 
    Secretary) of a terminal railroad corporation derived--
            (A) from services or facilities of a character ordinarily 
        and regularly provided by terminal railroad corporations for 
        railroad corporations or for the employees, passengers, or 
        shippers of railroad corporations;
            (B) from the use by persons other than railroad corporations 
        of portions of a facility, or a service which is used primarily 
        for railroad purposes;
            (C) from any railroad corporation for services or facilities 
        provided by such terminal railroad corporation in connection 
        with railroad operations; and
            (D) from the United States in payment for facilities or 
        services in connection with mail handling.

    For purposes of subparagraph (B), a substantial addition, 
    constructed after the date of the enactment of this section, to a 
    facility shall be treated as a separate facility.

                    (3) Related terminal services

        The term ``related terminal services'' includes only services, 
    and the use of facilities, taken into account in computing related 
    terminal income.

(e) Regulations

    The Secretary shall prescribe such regulations as may be necessary 
to carry out the purposes of this section.

(Added Pub. L. 87-870, Sec. 1(a), Oct. 23, 1962, 76 Stat. 1158; amended 
Pub. L. 94-455, title XIX, Secs. 1901(a)(40), 1906(b)(13)(A), Oct. 4, 
1976, 90 Stat. 1771, 1834; Pub. L. 95-473, Sec. 2(a)(2)(D), (E), Oct. 
17, 1978, 92 Stat. 1464; Pub. L. 104-88, title III, Sec. 304(b), Dec. 
29, 1995, 109 Stat. 943.)

                       References in Text

    The date of the enactment of this section, referred to in subsecs. 
(a)(2), (d)(2), refers to the date of enactment of Pub. L. 87-870, which 
was approved Oct. 23, 1962.


                               Amendments

    1995--Subsec. (d)(1)(A), (B). Pub. L. 104-88 substituted ``rail 
carriers subject to part A of subtitle IV'' for ``domestic railroad 
corporations providing transportation subject to subchapter I of chapter 
105''.
    1978--Subsec. (d)(1)(A). Pub. L. 95-473, Sec. 2(a)(2)(D), 
substituted ``providing transportation subject to subchapter I of 
chapter 105 of title 49'' for ``subject to part I of the Interstate 
Commerce Act (49 U.S.C. 1 and following)''.
    Subsec. (d)(1)(B). Pub. L. 95-473, Sec. 2(a)(2)(E), substituted 
``providing transportation subject to subchapter I of chapter 105 of 
title 49'' for ``subject to part I of the Interstate Commerce Act''.
    1976--Subsec. (d)(1)(A). Pub. L. 94-455, Sec. 1901(a) (40)(A), 
inserted ``(49 U.S.C. 1 and following)'' after ``Interstate Commerce 
Act''.
    Subsecs. (e), (f). Pub. L. 94-455, Secs. 1901(a)(40)(B), 
1906(b)(13)(A), redesignated subsec. (f) as (e) and struck out ``or his 
delegate'' after ``Secretary''. Former subsec. (e), which made special 
provision for the application of this section to taxable years ending 
before Oct. 23, 1962, was struck out.


                    Effective Date of 1995 Amendment

    Amendment by Pub. L. 104-88 effective Jan. 1, 1996, see section 2 of 
Pub. L. 104-88, set out as an Effective Date note under section 701 of 
Title 49, Transportation.


                    Effective Date of 1976 Amendment

    Amendment by section 1901(a)(40) of Pub. L. 94-455 effective for 
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

    Section 2(a) of Pub. L. 87-870 provided that: ``The amendments made 
by the first section of this Act [enacting this section] shall apply 
with respect to taxable years beginning after December 31, 1953, and 
ending after August 16, 1954.''


     Internal Revenue Code of 1939; Inclusion of Terminal Railroad 
              Corporations and Their Shareholders Provision

    Section 2(b) of Pub. L. 87-870, as amended by Pub. L. 99-514, 
Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: ``Provisions 
having the same effect as section 281 of the Internal Revenue Code of 
1986 [formerly I.R.C. 1954] (as added by the first section of this Act) 
shall be deemed to be included in the Internal Revenue Code of 1939, 
effective with respect to all taxable years to which such Code 
applies.''
