
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC381]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
          Subchapter C--Corporate Distributions and Adjustments
 
                           PART V--CARRYOVERS
 
Sec. 381. Carryovers in certain corporate acquisitions


(a) General rule

    In the case of the acquisition of assets of a corporation by another 
corporation--
        (1) in a distribution to such other corporation to which section 
    332 (relating to liquidations of subsidiaries) applies; or
        (2) in a transfer to which section 361 (relating to 
    nonrecognition of gain or loss to corporations) applies, but only if 
    the transfer is in connection with a reorganization described in 
    subparagraph (A), (C), (D), (F), or (G) of section 368(a)(1),

the acquiring corporation shall succeed to and take into account, as of 
the close of the day of distribution or transfer, the items described in 
subsection (c) of the distributor or transferor corporation, subject to 
the conditions and limitations specified in subsections (b) and (c). For 
purposes of the preceding sentence, a reorganization shall be treated as 
meeting the requirements of subparagraph (D) or (G) of section 368(a)(1) 
only if the requirements of subparagraphs (A) and (B) of section 
354(b)(1) are met.

(b) Operating rules

    Except in the case of an acquisition in connection with a 
reorganization described in subparagraph (F) of section 368(a)(1)--
        (1) The taxable year of the distributor or transferor 
    corporation shall end on the date of distribution or transfer.
        (2) For purposes of this section, the date of distribution or 
    transfer shall be the day on which the distribution or transfer is 
    completed; except that, under regulations prescribed by the 
    Secretary, the date when substantially all of the property has been 
    distributed or transferred may be used if the distributor or 
    transferor corporation ceases all operations, other than liquidating 
    activities, after such date.
        (3) The corporation acquiring property in a distribution or 
    transfer described in subsection (a) shall not be entitled to carry 
    back a net operating loss or a net capital loss for a taxable year 
    ending after the date of distribution or transfer to a taxable year 
    of the distributor or transferor corporation.

(c) Items of the distributor or transferor corporation

    The items referred to in subsection (a) are:

                  (1) Net operating loss carryovers

        The net operating loss carryovers determined under section 172, 
    subject to the following conditions and limitations:
            (A) the taxable year of the acquiring corporation to which 
        the net operating loss carryovers of the distributor or 
        transferor corporation are first carried shall be the first 
        taxable year ending after the date of distribution or transfer.
            (B) In determining the net operating loss deduction, the 
        portion of such deduction attributable to the net operating loss 
        carryovers of the distributor or transferor corporation to the 
        first taxable year of the acquiring corporation ending after the 
        date of distribution or transfer shall be limited to an amount 
        which bears the same ratio to the taxable income (determined 
        without regard to a net operating loss deduction) of the 
        acquiring corporation in such taxable year as the number of days 
        in the taxable year after the date of distribution or transfer 
        bears to the total number of days in the taxable year.
            (C) For the purpose of determining the amount of the net 
        operating loss carryovers under section 172(b)(2), a net 
        operating loss for a taxable year (hereinafter in this 
        subparagraph referred to as the ``loss year'') of a distributor 
        or transferor corporation which ends on or before the end of a 
        loss year of the acquiring corporation shall be considered to be 
        a net operating loss for a year prior to such loss year of the 
        acquiring corporation. For the same purpose, the taxable income 
        for a ``prior taxable year'' (as the term is used in section 
        172(b)(2)) shall be computed as provided in such section; except 
        that, if the date of distribution or transfer is on a day other 
        than the last day of a taxable year of the acquiring 
        corporation--
                (i) such taxable year shall (for the purpose of this 
            subparagraph only) be considered to be 2 taxable years 
            (hereinafter in this subparagraph referred to as the ``pre-
            acquisition part year'' and the ``post-acquisition part 
            year'');
                (ii) the pre-acquisition part year shall begin on the 
            same day as such taxable year begins and shall end on the 
            date of distribution or transfer;
                (iii) the post-acquisition part year shall begin on the 
            day following the date of distribution or transfer and shall 
            end on the same day as the end of such taxable year;
                (iv) the taxable income for such taxable year (computed 
            with the modifications specified in section 172(b)(2)(A) but 
            without a net operating loss deduction) shall be divided 
            between the pre-acquisition part year and the post-
            acquisition part year in proportion to the number of days in 
            each;
                (v) the net operating loss deduction for the pre-
            acquisition part year shall be determined as provided in 
            section 172(b)(2)(B), but without regard to a net operating 
            loss year of the distributor or transferor corporation; and
                (vi) the net operating loss deduction for the post-
            acquisition part year shall be determined as provided in 
            section 172(b)(2)(B).

                      (2) Earnings and profits

        In the case of a distribution or transfer described in 
    subsection (a)--
            (A) the earnings and profits or deficit in earnings and 
        profits, as the case may be, of the distributor or transferor 
        corporation shall, subject to subparagraph (B), be deemed to 
        have been received or incurred by the acquiring corporation as 
        of the close of the date of the distribution or transfer; and
            (B) a deficit in earnings and profits of the distributor, 
        transferor, or acquiring corporation shall be used only to 
        offset earnings and profits accumulated after the date of 
        transfer. For this purpose, the earnings and profits for the 
        taxable year of the acquiring corporation in which the 
        distribution or transfer occurs shall be deemed to have been 
        accumulated after such distribution or transfer in an amount 
        which bears the same ratio to the undistributed earnings and 
        profits of the acquiring corporation for such taxable year 
        (computed without regard to any earnings and profits received 
        from the distributor or transferor corporation, as described in 
        subparagraph (A) of this paragraph) as the number of days in the 
        taxable year after the date of distribution or transfer bears to 
        the total number of days in the taxable year.

                     (3) Capital loss carryover

        The capital loss carryover determined under section 1212, 
    subject to the following conditions and limitations:
            (A) The taxable year of the acquiring corporation to which 
        the capital loss carryover of the distributor or transferor 
        corporation is first carried shall be the first taxable year 
        ending after the date of distribution or transfer.
            (B) The capital loss carryover shall be a short-term capital 
        loss in the taxable year determined under subparagraph (A) but 
        shall be limited to an amount which bears the same ratio to the 
        capital gain net income (determined without regard to a short-
        term capital loss attributable to capital loss carryover), if 
        any, of the acquiring corporation in such taxable year as the 
        number of days in the taxable year after the date of 
        distribution or transfer bears to the total number of days in 
        the taxable year.
            (C) For purposes of determining the amount of such capital 
        loss carryover to taxable years following the taxable year 
        determined under subparagraph (A), the capital gain net income 
        in the taxable year determined under subparagraph (A) shall be 
        considered to be an amount equal to the amount determined under 
        subparagraph (B).

                      (4) Method of accounting

        The acquiring corporation shall use the method of accounting 
    used by the distributor or transferor corporation on the date of 
    distribution or transfer unless different methods were used by 
    several distributor or transferor corporations or by a distributor 
    or transferor corporation and the acquiring corporation. If 
    different methods were used, the acquiring corporation shall use the 
    method or combination of methods of computing taxable income adopted 
    pursuant to regulations prescribed by the Secretary.

                           (5) Inventories

        In any case in which inventories are received by the acquiring 
    corporation, such inventories shall be taken by such corporation (in 
    determining its income) on the same basis on which such inventories 
    were taken by the distributor or transferor corporation, unless 
    different methods were used by several distributor or transferor 
    corporations or by a distributor or transferor corporation and the 
    acquiring corporation. If different methods were used, the acquiring 
    corporation shall use the method or combination of methods of taking 
    inventory adopted pursuant to regulations prescribed by the 
    Secretary.

           (6) Method of computing depreciation allowance

        The acquiring corporation shall be treated as the distributor or 
    transferor corporation for purposes of computing the depreciation 
    allowance under sections 167 and 168 on property acquired in a 
    distribution or transfer with respect to so much of the basis in the 
    hands of the acquiring corporation as does not exceed the adjusted 
    basis in the hands of the distributor or transferor corporation.

     [(7) Repealed. June 15, 1955, ch. 143, Sec. 2(1), 69 Stat. 
                                    134]

                       (8) Installment method

        If the acquiring corporation acquires installment obligations 
    (the income from which the distributor or transferor corporation 
    reports on the installment basis under section 453) the acquiring 
    corporation shall, for purposes of section 453, be treated as if it 
    were the distributor or transferor corporation.

            (9) Amortization of bond discount or premium

        If the acquiring corporation assumes liability for bonds of the 
    distributor or transferor corporation issued at a discount or 
    premium, the acquiring corporation shall be treated as the 
    distributor or transferor corporation after the date of distribution 
    or transfer for purposes of determining the amount of amortization 
    allowable or includible with respect to such discount or premium.

    (10) Treatment of certain mining development and exploration 
              expenses of distributor of transferor corporation

        The acquiring corporation shall be entitled to deduct, if it 
    were the distributor or transferor corporation, expenses deferred 
    under section 616 (relating to certain development expenditures) if 
    the distributor or transferor corporation has so elected.

      (11) Contributions to pension plans, employees' annuity 
               plans, and stock bonus and profit-sharing plans

        The acquiring corporation shall be considered to be the 
    distributor or transferor corporation after the date of distribution 
    or transfer for the purpose of determining the amounts deductible 
    under section 404 with respect to pension plans, employees' annuity 
    plans, and stock bonus and profit-sharing plans.

                 (12) Recovery of tax benefit items

        If the acquiring corporation is entitled to the recovery of any 
    amounts previously deducted by (or allowable as credits to) the 
    distributor or transferor corporation, the acquiring corporation 
    shall succeed to the treatment under section 111 which would apply 
    to such amounts in the hands of the distributor or transferor 
    corporation.

           (13) Involuntary conversions under section 1033

        The acquiring corporation shall be treated as the distributor or 
    transferor corporation after the date of distribution or transfer 
    for purposes of applying section 1033.

         (14) Dividend carryover to personal holding company

        The dividend carryover (described in section 564) to taxable 
    years ending after the date of distribution or transfer.

             [(15) Repealed. Pub. L. 101-508, title XI, 
             Sec. 11801(c)(10)(A), Nov. 5, 1990, 104 Stat. 1388-
                                    526]

       (16) Certain obligations of distributor or transferor 
                                 corporation

        If the acquiring corporation--
            (A) assumes an obligation of the distributor or transferor 
        corporation which, after the date of the distribution or 
        transfer, gives rise to a liability, and
            (B) such liability, if paid or accrued by the distributor or 
        transferor corporation, would have been deductible in computing 
        its taxable income,

    the acquiring corporation shall be entitled to deduct such items 
    when paid or accrued, as the case may be, as if such corporation 
    were the distributor or transferor corporation. A corporation which 
    would have been an acquiring corporation under this section if the 
    date of distribution or transfer had occurred on or after the 
    effective date of the provisions of this subchapter applicable to a 
    liquidation or reorganization, as the case may be, shall be 
    entitled, even though the date of distribution or transfer occurred 
    before such effective date, to apply this paragraph with respect to 
    amounts paid or accrued in taxable years beginning after December 
    31, 1953, on account of such obligations of the distributor or 
    transferor corporation. This paragraph shall not apply if such 
    obligations are reflected in the amount of stock, securities, or 
    property transferred by the acquiring corporation to the transferor 
    corporation for the property of the transferor corporation.

        (17) Deficiency dividend of personal holding company

        If the acquiring corporation pays a deficiency dividend (as 
    defined in section 547(d)) with respect to the distributor or 
    transferor corporation, such distributor or transferor corporation 
    shall, with respect to such payments, be entitled to the deficiency 
    dividend deduction provided in section 547.

    (18) Percentage depletion on extraction of ores or minerals 
                  from the waste or residue of prior mining

        The acquiring corporation shall be considered to be the 
    distributor or transferor corporation for the purpose of determining 
    the applicability of section 613(c)(3) (relating to extraction of 
    ores or minerals from the ground).

      (19) Charitable contributions in excess of prior years' 
                                 limitation

        Contributions made in the taxable year ending on the date of 
    distribution or transfer and the 4 prior taxable years by the 
    distributor or transferor corporation in excess of the amount 
    deductible under section 170(b)(2) for such taxable years shall be 
    deductible by the acquiring corporation for its taxable years which 
    begin after the date of distribution or transfer, subject to the 
    limitations imposed in section 170(b)(2). In applying the preceding 
    sentence, each taxable year of the distributor or transferor 
    corporation beginning on or before the date of distribution or 
    transfer shall be treated as a prior taxable year with reference to 
    the acquiring corporation's taxable years beginning after such date.

          [(20), (21) Repealed. Pub. L. 94-455, title XIX, 
             Sec. 1901(a)(54), (b)(16), Oct. 4, 1976, 90 Stat. 
                                 1773, 1796]

                  (22) Successor insurance company

        If the acquiring corporation is an insurance company taxable 
    under subchapter L, there shall be taken into account (to the extent 
    proper to carry out the purposes of this section and of subchapter 
    L, and under such regulations as may be prescribed by the Secretary) 
    the items required to be taken into account for purposes of 
    subchapter L in respect of the distributor or transferor 
    corporation.

    (23) Deficiency dividend of regulated investment company or 
                        real estate investment trust

        If the acquiring corporation pays a deficiency dividend (as 
    defined in section 860(f)) with respect to the distributor or 
    transferor corporation, such distributor or transferor corporation 
    shall, with respect to such payments, be entitled to the deficiency 
    dividend deduction provided in section 860.

                    (24) Credit under section 38

        The acquiring corporation shall take into account (to the extent 
    proper to carry out the purposes of this section and section 38, and 
    under such regulations as may be prescribed by the Secretary) the 
    items required to be taken into account for purposes of section 38 
    in respect of the distributor or transferor corporation.

                    (25) Credit under section 53

        The acquiring corporation shall take into account (to the extent 
    proper to carry out the purposes of this section and section 53, and 
    under such regulations as may be prescribed by the Secretary) the 
    items required to be taken into account for purposes of section 53 
    in respect of the distributor or transferor corporation.

                   (26) Enterprise zone provisions

        The acquiring corporation shall take into account (to the extent 
    proper to carry out the purposes of this section and subchapter U, 
    and under such regulations as may be prescribed by the Secretary) 
    the items required to be taken into account for purposes of 
    subchapter U in respect of the distributor or transferor 
    corporation.

(d) Operations loss carrybacks and carryovers of life insurance 
        companies

            For application of this part to operations loss carrybacks 
        and carryovers of life insurance companies, see section 810.

(Aug. 16, 1954, ch. 736, 68A Stat. 124; June 15, 1955, ch. 143, 
Sec. 2(1), 69 Stat. 134; Jan. 28, 1956, ch. 15, Sec. 1, 70 Stat. 7; Pub. 
L. 85-866, title I, Sec. 29(c), Sept. 2, 1958, 72 Stat. 1628; Pub. L. 
86-69, Sec. 3(c), June 25, 1959, 73 Stat. 139; Pub. L. 87-834, 
Sec. 2(d), Oct. 16, 1962, 76 Stat. 971; Pub. L. 88-272, title II, 
Secs. 209(d)(2), 225(i)(3), Feb. 26, 1964, 78 Stat. 46, 92; Pub. L. 90-
240, Sec. 5(d), Jan. 2, 1968, 81 Stat. 778; Pub. L. 91-172, title V, 
Secs. 504(c)(2), 512(c), 521(f), Dec. 30, 1969, 83 Stat. 633, 639, 654; 
Pub. L. 92-178, title VI, Sec. 601(c)(3), Dec. 10, 1971, 85 Stat. 557; 
Pub. L. 94-455, title XVI, Sec. 1601(e), title XIX, Secs. 1901(a)(54), 
(b)(16), (17), (21)(B), (33)(N), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 
1746, 1773, 1796, 1797, 1802, 1834; Pub. L. 95-30, title II, 
Sec. 202(d)(3)(A), May 23, 1977, 91 Stat. 148; Pub. L. 95-600, title 
III, Sec. 362(d)(2), Nov. 6, 1978, 92 Stat. 2851; Pub. L. 96-223, title 
II, Sec. 232(b)(2)(B), Apr. 2, 1980, 94 Stat. 276; Pub. L. 96-471, 
Sec. 2(b)(2), Oct. 19, 1980, 94 Stat. 2253; Pub. L. 96-589, Sec. 4(g), 
Dec. 24, 1980, 94 Stat. 3404; Pub. L. 97-34, title II, Secs. 208, 
221(b)(1)(B), title III, Sec. 331(d)(1)(B), Aug. 13, 1981, 95 Stat. 226, 
246, 294; Pub. L. 97-248, title II, Sec. 224(c)(7), Sept. 3, 1982, 96 
Stat. 489; Pub. L. 97-448, title I, Secs. 102(h)(3), 103(g)(2)(F), Jan. 
12, 1983, 96 Stat. 2372, 2379; Pub. L. 98-369, div. A, title II, 
Sec. 211(b)(4), title IV, Sec. 474(r)(11), July 18, 1984, 98 Stat. 754, 
841; Pub. L. 99-514, title II, Sec. 231(d)(3)(F), title IV, 
Sec. 411(b)(2)(C)(iii), title VII, Sec. 701(e)(1), title XVIII, 
Sec. 1812(a)(3), Oct. 22, 1986, 100 Stat. 2179, 2227, 2342, 2833; Pub. 
L. 100-203, title X, Sec. 10202(c)(3), Dec. 22, 1987, 101 Stat. 1330-
392; Pub. L. 100-647, title I, Sec. 1002(a)(13), Nov. 10, 1988, 102 
Stat. 3355; Pub. L. 101-239, title VII, Sec. 7841(d)(10), Dec. 19, 1989, 
103 Stat. 2428; Pub. L. 101-508, title XI, Secs. 11801(c)(10)(A), 
11812(b)(6), Nov. 5, 1990, 104 Stat. 1388-526, 1388-535; Pub. L. 103-66, 
title XIII, Sec. 13302(e), Aug. 10, 1993, 107 Stat. 556; Pub. L. 104-
188, title I, Sec. 1704(t)(26), Aug. 20, 1996, 110 Stat. 1888.)


                               Amendments

    1996--Subsec. (c)(26), (27). Pub. L. 104-188 amended directory 
language of Pub. L. 101-239. See 1989 Amendment note below.
    1993--Subsec. (c)(26). Pub. L. 103-66 added par. (26).
    1990--Subsec. (c)(6). Pub. L. 101-508, Sec. 11812(b)(6)(A), 
substituted ``sections 167 and 168'' for ``subsections (b), (j), and (k) 
of section 167''.
    Subsec. (c)(15). Pub. L. 101-508, Sec. 11801(c)(10)(A), struck out 
par. (15) ``Indebtedness of certain personal holding companies'' which 
read as follows: ``The acquiring corporation shall be considered to be 
the distributor or transferor corporation for the purpose of determining 
the applicability of subsection (c) of section 545, relating to 
deduction with respect to payment of certain indebtedness.''
    Subsec. (c)(24) to (26). Pub. L. 101-508, Sec. 11812(b)(6)(B), 
redesignated pars. (25) and (26) as (24) and (25), respectively, and 
struck out former par. (24) ``Method of computing depreciation 
deduction'' which read as follows: ``The acquiring corporation shall be 
treated as the distributor or transferor corporation for purposes of 
computing the deduction allowable under section 168(a) on property 
acquired in a distribution or transfer with respect to so much of the 
basis in the hands of the acquiring corporation as does not exceed the 
adjusted basis in the hands of the distributor or transferor 
corporation.''
    1989--Subsec. (c)(26), (27). Pub. L. 101-239, as amended by Pub. L. 
104-188, redesignated par. (27) as (26).
    1988--Subsec. (c)(24). Pub. L. 100-647 substituted ``depreciation 
deduction'' for ``recovery allowance for recovery property'' in heading.
    1987--Subsec. (c)(8). Pub. L. 100-203 struck out ``or 453A'' after 
``section 453'' in two places.
    1986--Subsec. (c)(10). Pub. L. 99-514, Sec. 411(b)(2)(C)(iii), 
struck out last sentence which read: ``For the purpose of applying the 
limitation provided in section 617(h), if, for any taxable year, the 
distributor or transferor corporation was allowed a deduction under 
section 617(a), the acquiring corporation shall be deemed to have been 
allowed such deduction.''
    Subsec. (c)(12). Pub. L. 99-514, Sec. 1812(a)(3), amended par. (12) 
generally. Prior to amendment, par. (12), recovery of bad debts, prior 
taxes, or delinquency amounts, read as follows: ``If the acquiring 
corporation is entitled to the recovery of bad debts, prior taxes, or 
delinquency amounts previously deducted or credited by the distributor 
or transferor corporation, the acquiring corporation shall include in 
its income such amounts as would have been includible by the distributor 
or transferor corporation in accordance with section 111 (relating to 
the recovery of bad debts, prior taxes, and delinquency amounts).''
    Subsec. (c)(25), (26). Pub. L. 99-514, Sec. 231(d)(3)(F), 
redesignated par. (26) as (25). Former par. (25), relating to credit 
under section 30, was struck out.
    Subsec. (c)(27). Pub. L. 99-514, Sec. 701(e)(1), added par. (27).
    1984--Subsec. (c)(23). Pub. L. 98-369, Sec. 474(r)(11)(B), 
redesignated par. (25) as (23). Former par. (23), relating to credit 
under section 38 for investment in certain depreciable property, was 
struck out.
    Subsec. (c)(24). Pub. L. 98-369, Sec. 474(r)(11)(B), redesignated 
par. (28) as (24). Former par. (24), relating to credit under section 40 
for work incentive program expenses, was struck out.
    Subsec. (c)(25). Pub. L. 98-369, Sec. 474(r)(11)(B), (C), 
redesignated par. (29) as (25), and substituted ``30'' for ``44F'' 
wherever appearing in heading and text. Former par. (25) redesignated 
(23).
    Subsec. (c)(26). Pub. L. 98-369, Sec. 474(r)(11)(D), added par. 
(26). Former par. (26), relating to credit under section 44B for 
employment of certain new employees, was struck out.
    Subsec. (c)(27). Pub. L. 98-369, Sec. 474(r)(11)(A), struck out par. 
(27) relating to credit under section 44E for alcohol used as fuel.
    Subsec. (c)(28), (29). Pub. L. 98-369, Sec. 474(r)(11)(B), 
redesignated pars. (28) and (29) as (24) and (25), respectively.
    Subsec. (c)(30). Pub. L. 98-369, Sec. 474(r)(11)(A), struck out par. 
(30) relating to credit under section 44G.
    Subsec. (d). Pub. L. 98-369, Sec. 211(b)(4), substituted ``section 
810'' for ``section 812(f)''.
    1983--Subsec. (c)(28), (29). Pub. L. 97-448, Sec. 102(h)(3), 
redesignated par. (28), relating to credit under section 44F, as (29). 
Former par. (29) redesignated (30).
    Subsec. (c)(30). Pub. L. 97-448, Sec. 103(g)(2)(F), redesignated 
former par. (29), relating to credit under section 44G, as (30).
    1982--Subsec. (a)(1). Pub. L. 97-248 struck out ``, except in a case 
in which the basis of the assets distributed is determined under section 
334(b)(2)'' after ``applies''.
    1981--Subsec. (c)(28). Pub. L. 97-34, Sec. 208, added par. (28) 
relating to recovery allowance for recovery property.
    Pub. L. 97-34, Sec. 221(b)(1)(B), added par. (28) relating to credit 
under section 44F.
    Subsec. (c)(29). Pub. L. 97-34, Sec. 331(d)(1)(B), added par. (29).
    1980--Subsec. (a). Pub. L. 96-589, Sec. 4(g)(2), inserted provisions 
that a reorganization shall be treated as meeting the requirements of 
subparagraph (D) or (G) of section 368(a)(1) only if the requirements of 
subparagraphs (A) and (B) of section 354(b)(1) are met.
    Subsec. (a)(2). Pub. L. 96-589, Sec. 4(g)(1), substituted 
``subparagraph (A), (C), (D), (F), or (G) of section 368(a)(1)'' for 
``subparagraph (A), (C), (D) (but only if the requirements of 
subparagraphs (A) and (B) of section 354(b)(1) are met), or (F) of 
section 368(a)(1)''.
    Subsec. (c)(8). Pub. L. 96-471 substituted ``reports on the 
installment basis under section 453 or 453A'' for ``has elected, under 
section 453, to report on the installment basis'' and ``for purposes of 
section 453 or 453A'' for ``for purposes of section 453.''
    Subsec. (c)(27). Pub. L. 96-223 added par. (27).
    1978--Subsec. (c)(25). Pub. L. 95-600 substituted ``regulated 
investment company or real estate investment trust'' for ``real estate 
investment trust'' in heading, and in text ``section 860(f)'' for 
``section 859(d)'' and ``section 860'' for ``section 859''.
    1977--Subsec. (c)(26). Pub. L. 95-30 added par. (26).
    1976--Subsec. (b)(2). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck 
out ``or his delegate'' after ``Secretary''.
    Subsec. (c)(3). Pub. L. 94-455, Sec. 1901(b)(33)(N), substituted in 
subpars. (B) and (C) ``capital gain net income'' for ``net capital 
gain''.
    Subsec. (c)(4), (5). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out 
``or his delegate'' after ``Secretary''.
    Subsec. (c)(10). Pub. L. 94-455, Sec. 1901(b)(21(B), among other 
changes, substituted reference to section 616 (relating to certain 
development expenditures) if the distributor or transferor corporation 
has so elected for reference to sections 615 and 616 (relating to pre-
1970 exploration expenditures and development expenditures, 
respectively) if the distributor or transferor corporation has so 
elected and struck out provisions that if, for any taxable year, the 
distributor of transferor corporation was allowed or made the election 
of the deduction under section 615 of this title, the acquiring 
corporation shall be deemed to have been allowed or to have made such 
election of the deduction under section 615 of this title.
    Subsec. (c)(15). Pub. L. 94-455, Sec. 1901(b)(17), substituted 
``subsection (c)'' for ``subsections (b)(7) and (c)''.
    Subsec. (c)(20). Pub. L. 94-455, Sec. 1901(a)(54), struck out par. 
(20) which related to carry-over of unused pension trust deductions in 
certain cases.
    Subsec. (c)(21). Pub. L. 94-455, Sec. 1901(b)(16), struck out par. 
(21) which related to pre-1954 adjustments resulting from change in 
method of accounting.
    Subsec. (c)(22) to (24). Pub. L. 94-455, Sec. 1906(b)(13)(A), struck 
out ``or his delegate'' after ``Secretary''.
    Subsec. (c)(25). Pub. L. 94-455, Sec. 1601(e), added par. (25).
    1971--Subsec. (c)(24). Pub. L. 92-178 added par. (24).
    1969--Subsec. (b)(3). Pub. L. 91-172, Sec. 512(c), substituted ``a 
net operating loss or a net capital loss'' for ``a net operating loss''.
    Subsec. (c)(6). Pub. L. 91-172, Sec. 521(f), substituted 
``subsections (b), (j) and (k) of section 167'' for ``paragraphs (2), 
(3) and (4) of section 167(b)'' and inserted reference to adjusted basis 
in the hand of the distributor or transferor corporation.
    Subsec. (c)(10). Pub. L. 91-172, Sec. 504(c)(2), substituted 
``Treatment of certain mining exploration and development expenses of 
distributor or transferor corporation'' for ``Treatment of certain 
expenses deferred by the election of distributor or transferor 
corporation'' in heading, limited deduction of expenses deferred under 
sections 615 and 616 of this title by the acquiring corporation as if it 
were the distributor or transferor corporation to pre-1970 exploration 
and development expenditures, and inserted provision that if distributor 
or transferor corporation, for any taxable year, was allowed the 
deduction in sections 615(a) or 617(a) of this title or made the 
election provided in section 615(b) of this title, acquiring corporation 
shall be deemed to have been allowed such deduction or deductions or to 
have made such election, as the case may be, for the purpose of applying 
the limitation provided in section 617 of this title.
    1968--Subsec. (c)(22). Pub. L. 90-240 substituted successor 
insurance companies for successor life insurance companies as the 
business enterprise covered, substituted reference to insurance 
companies taxable under subchapter L for reference to life insurance 
companies as defined in section 801(a), and substituted reference to the 
purposes of this section and of subchapter L for reference to the 
purposes of this section and part I of subchapter L.
    1964--Subsec. (c)(15). Pub. L. 88-272, Sec. 225(i)(3), substituted 
``subsections (b)(7) and (c) of section 545, relating to deductions with 
respect to payment of certain indebtedness'' for ``section 545(b)(7), 
relating to a deduction for payment of certain indebtedness incurred 
before Jan. 1, 1934''.
    Subsec. (c)(19). Pub. L. 88-272, Sec. 209(d)(2), permitted 
deductions for contributions made in the taxable year and in 4 prior 
taxable years, instead of one prior taxable year, and provided that each 
taxable year beginning on or before the distribution or transfer date 
shall be treated as a prior taxable year with reference to the acquiring 
corporation's taxable years beginning after such date.
    1962--Subsec. (c)(23). Pub. L. 87-834 added par. (23).
    1959--Subsec. (c)(22). Pub. L. 86-69, Sec. 3(c)(1), added par. (22).
    Subsec. (d). Pub. L. 86-69, Sec. 3(c)(2), added subsec. (d).
    1958--Subsec. (c)(21). Pub. L. 85-866 added par. (21).
    1956--Subsec. (c)(20). Act Jan. 28, 1956 added par. (20).
    1955--Subsec. (c)(7). Act June 15, 1955, repealed par. (7) which 
related to carryover of prepaid income.


                    Effective Date of 1990 Amendment

    Amendment by section 11812(b)(6) of Pub. L. 101-508 applicable to 
property placed in service after Nov. 5, 1990, but not applicable to any 
property to which section 168 of this title does not apply by reason of 
subsec. (f)(5) of section 168, and not applicable to rehabilitation 
expenditures described in section 252(f)(5) of Pub. L. 99-514, see 
section 11812(c) of Pub. L. 101-508, set out as a note under section 42 
of this title.


                    Effective Date of 1988 Amendment

    Amendment by 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.


                    Effective Date of 1987 Amendment

    Amendment by Pub. L. 100-203 applicable to dispositions in taxable 
years beginning after Dec. 31, 1987, with special rules for nondealers 
and coordination with Tax Reform Act of 1986, see section 10202(e)(1), 
(3), (5) of Pub. L. 100-203, set out as a note under section 453 of this 
title.


                    Effective Date of 1986 Amendment

    Amendment by section 231(d)(3)(F) of Pub. L. 99-514 applicable to 
taxable years beginning after Dec. 31, 1985, see section 231(g) of Pub. 
L. 99-514, set out as a note under section 41 of this title.
    Amendment by section 411(b)(2)(C)(iii) of Pub. L. 99-514 applicable, 
except as otherwise provided, to costs paid or incurred after Dec. 31, 
1986, in taxable years ending after such date, see section 411(c) of 
Pub. L. 99-514, set out as a note under section 263 of this title.
    Amendment by section 701(e)(1) of Pub. L. 99-514 applicable to 
taxable years beginning after Dec. 31, 1986, with certain exceptions and 
qualifications, see section 701(f) of Pub. L. 99-514, set out as an 
Effective Date note under section 55 of this title.
    Amendment by section 1812(a)(3) of Pub. L. 99-514 effective, except 
as otherwise provided, as if included in the provisions of the Tax 
Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment 
relates, see section 1881 of Pub. L. 99-514, set out as a note under 
section 48 of this title.


                    Effective Date of 1984 Amendment

    Amendment by section 211(b)(4) of Pub. L. 98-369 applicable to 
taxable years beginning after Dec. 31, 1983, see section 215 of Pub. L. 
98-369, set out as an Effective Date note under section 801 of this 
title.
    Amendment by section 474(r)(11) of Pub. L. 98-369 applicable to 
taxable years beginning after Dec. 31, 1983, and to carrybacks from such 
years, see section 475(a) of Pub. L. 98-369, set out as a note under 
section 21 of this title.


                    Effective Date of 1983 Amendment

    Amendment by Pub. L. 97-448 effective, except as otherwise provided, 
as if it had been included in the provision of the Economic Recovery Tax 
Act of 1981, Pub. L. 97-34, to which such amendment relates, see section 
109 of Pub. L. 97-448, set out as a note under section 1 of this title.


                    Effective Date of 1982 Amendment

    Amendment by Pub. L. 97-248 applicable to any target corporation 
with respect to which the acquisition date occurs after Aug. 31, 1982, 
with special rules for certain acquisitions before Sept. 1, 1982, and 
certain acquisitions of financial institutions in which there was a 
binding contract on July 22, 1982, to acquire control, see section 
224(d) of Pub. L. 97-248, set out as an Effective Date note under 
section 338 of this title.


                    Effective Date of 1981 Amendment

    Amendment by section 208 of Pub. L. 97-34 applicable to property 
placed in service after Dec. 31, 1980, in taxable years ending after 
that date, see section 209(a) of Pub. L. 97-34, set out as an Effective 
Date note under section 168 of this title.
    Amendment by section 221(b)(1)(B) of Pub. L. 97-34 applicable to 
amounts paid or incurred after June 30, 1981, see section 221(d) of Pub. 
L. 97-34, as amended, set out as an Effective Date note under section 41 
of this title.
    Amendment by section 331(d)(1)(B) of Pub. L. 97-34 applicable to 
taxable years beginning after Dec. 31, 1981, see section 339 of Pub. L. 
97-34, set out as a note under section 401 of this title.


                    Effective Date of 1980 Amendments

    Amendment by Pub. L. 96-589 applicable to bankruptcy cases or 
similar judicial proceeding commencing after Dec. 31, 1980, with 
exception permitting the debtor to make the amendment applicable to such 
cases or proceeding commencing after Sept. 30, 1979, see section 
7(c)(1), (f) of Pub. L. 96-589, set out as a note under section 108 of 
this title.
    For effective date of amendment by Pub. L. 96-471, see section 
6(a)(1) of Pub. L. 96-471, set out as an Effective Date note under 
section 453 of this title.
    Amendment by Pub. L. 96-223 applicable to sales or uses after Sept. 
30, 1980, in taxable years ending after such date, see section 232(h)(1) 
of Pub. L. 96-223, set out as an Effective Date note under section 40 of 
this title.


                    Effective Date of 1978 Amendment

    Amendment by Pub. L. 95-600 applicable with respect to 
determinations (as defined in section 860(e) of this title) after Nov. 
6, 1978, see section 362(e) of Pub. L. 95-600, set out as an Effective 
Date note under section 860 of this title.


                    Effective Date of 1977 Amendment

    Amendment by Pub. L. 95-30 applicable to taxable years beginning 
after Dec. 31, 1976, and to credit carrybacks from such years, see 
section 202(e) of Pub. L. 95-30, set out as an Effective Date note under 
section 51 of this title.


                    Effective Date of 1976 Amendment

    For effective date of amendment by section 1601(e) of Pub. L. 94-
455, see section 1608(a) of Pub. L. 94-455, set out as a note under 
section 857 of this title.
    Amendment by section 1901(a)(54), (b)(16), (17), (21)(B), (33)(N) 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 of 1971 Amendment

    Section 601(f) of Pub. L. 92-178 provided that: ``The amendments 
made by this section [enacting sections 40, 50A, and 50B of this title 
and amending this section and sections 56, 6411, 6501, 6511, 6601, and 
6611 of this title] shall apply to taxable years beginning after 
December 31, 1971.''


                    Effective Date of 1969 Amendment

    Amendment by section 504(c)(2) of Pub. L. 91-172 applicable with 
respect to exploration expenditures paid or incurred after Dec. 31, 
1969, see section 504(d)(1) of Pub. L. 91-172, set out as a note under 
section 243 of this title.
    Amendment by section 512(c) of Pub. L. 91-172 applicable with 
respect to net capital losses sustained in taxable years beginning after 
Dec. 31, 1969, see section 512(g) of Pub. L. 91-172, set out as a note 
under section 1212 of this title.
    Amendment by section 521(f) of Pub. L. 91-172 applicable with 
respect to taxable years ending after July 24, 1969, see section 521(g) 
of Pub. L. 91-172, set out as a note under section 167 of this title.


                    Effective Date of 1968 Amendment

    Amendment by Pub. L. 90-240 applicable to taxable years beginning 
after Dec. 31, 1966, see section 5(e) of Pub. L. 90-240, set out as a 
note under section 832 of this title.


                    Effective Date of 1964 Amendment

    Amendment by section 225(i)(3) of Pub. L. 88-272 applicable to 
taxable years beginning after Dec. 31, 1963, see section 225(l) of Pub. 
L. 88-272 set out as a note under section 316 of this title.
    Amendment by section 209(d)(2) of Pub. L. 88-272 applicable to 
taxable years beginning after Dec. 31, 1963, with respect to 
contributions paid or treated as paid under section 170(a)(2) of this 
title, in taxable years beginning after Dec. 31, 1961, see section 
209(f)(2) of Pub. L. 88-272, set out as a note under section 170 of this 
title.


                    Effective Date of 1962 Amendment

    Amendment by Pub. L. 87-834 applicable with respect to taxable years 
ending after Dec. 31, 1961, see section 2(h) of Pub. L. 87-834, set out 
as an Effective Date note under section 46 of this title.


                    Effective Date of 1959 Amendment

    Section 4 of Pub. L. 86-69 provided that: ``Except as otherwise 
provided in this Act, the amendments made by this Act [amending this 
section, part I (Sec. 801 et seq.) of subchapter L, and sections 841, 
842, 891, 1016, 1201, 1232, 1504, 4371, and 6501 of this title] shall 
apply only with respect to taxable years beginning after December 31, 
1957.''


                    Effective Date of 1958 Amendment

    For effective date of amendment by Pub. L. 85-866, see section 29(d) 
of Pub. L. 85-866, set out as a note under section 481 of this title.


                    Effective Date of 1956 Amendment

    Section 2 of act Jan. 28, 1956, provided that: ``The amendments made 
by the first section of this Act [amending this section] shall reply 
with respect to taxable years beginning after December 31, 1953, and 
ending after August 16, 1954.''


                    Effective Date of 1955 Amendment

    Section 3 of act June 15, 1955, provided that: ``The amendments made 
by this Act [amending this section and repealing sections 452 and 462 of 
this title] shall apply with respect to taxable years beginning after 
December 31, 1953, and ending after August 16, 1954.''


                            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.
    Section 4 of act June 15, 1955, as amended by act Oct. 22, 1986, 
Pub. L. 99-514, Sec. 2, 100 Stat. 2095, provided:
    ``(a) Filing of Statement.--If--
        ``(1) the amount of any tax required to be paid for any taxable 
    year ending on or before the date of the enactment of this Act [June 
    15, 1955] is increased by reason of the enactment of this Act 
    [amending this section and repealing sections 452 and 462], and
        ``(2) the last date prescribed for payment of such tax (or any 
    installment thereof) is before December 15, 1955, then the taxpayer 
    shall, on or before December 15, 1955, file a statement which shows 
    the increase in the amount of such tax required to be paid by reason 
    of the enactment of this Act.
    ``(b) Form and Effect of Statement.--
        ``(1) Form of statement, etc.--The statement required by 
    subsection (a) shall be filed at the place fixed for filing the 
    return. Such statement shall be in such form, and shall include such 
    information necessary or appropriate to show the increase in the 
    amount of the tax required to be paid for the taxable year by reason 
    of the enactment of this Act, as the Secretary of the Treasury or 
    his delegate shall by regulations prescribe.
        ``(2) Treatment as amount shown on return.--The amount shown on 
    a statement filed under subsection (a) as the increase in the amount 
    of the tax required to be paid for the taxable year by reason of the 
    enactment of this Act shall, for all purposes of the internal 
    revenue laws, be treated as tax shown on the return. Notwithstanding 
    the preceding sentence, that portion of the amount of increase in 
    tax for any taxable year which is attributable to a decrease (by 
    reason of the enactment of this Act) in the net operating loss for a 
    succeeding taxable year shall not be treated as tax shown on the 
    return.
        ``(3) Waiver of interest in case of payment on or before 
    december 15, 1955.--If the taxpayer, on or before December 15, 1955, 
    files the statement referred to in subsection (a) and pays in full 
    that portion of the amount shown thereon for which the last date 
    prescribed for payment is before December 15, 1955, then for 
    purposes of computing interest (other than interest on overpayments) 
    such portion shall be treated as having been paid on the last date 
    prescribed for payment. This paragraph shall not apply if the amount 
    shown on the statement as the increase in the amount of the tax 
    required to be paid for the taxable year by reason of the enactment 
    of this Act is greater than the actual increase unless the taxpayer 
    establishes, to the satisfaction of the Secretary of the Treasury or 
    his delegate, that his computation of the greater amount was based 
    upon a reasonable interpretation and application of sections 452 and 
    462 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] 
    [sections 452 and 462 of this title], as those sections existed 
    before the enactment of this Act.
    ``(c) Special Rules.--
        ``(1) Interest for period before enactment.--Interest shall not 
    be imposed on the amount of any increase in tax resulting from the 
    enactment of this Act for any period before the day after the date 
    of the enactment of this Act [June 15, 1955].
        ``(2) Estimated tax.--Any addition to the tax under section 
    294(d) of the Internal Revenue Code of 1939 [section 294(d) of 
    former Title 26, Internal Revenue Code], shall be computed as if 
    this Act had not been enacted. In the case of any installment for 
    which the last date prescribed for payment is before December 15, 
    1955, any addition to the tax under section 6654 of the Internal 
    Revenue Code of 1986 [section 6654 of this title], shall be computed 
    as if this Act had not been enacted.
        ``(3) Treatment of certain payments which taxpayer is required 
    to make.--If--
            ``(A) the taxpayer is required to make a payment (or an 
        additional payment) to another person by reason of the enactment 
        of this Act, and
            ``(B) the Internal Revenue Code of 1986 [this title] 
        prescribes a period, which expires after the close of the 
        taxable year, within which the taxpayer must make such payment 
        (or additional payment) if the amount thereof is to be taken 
        into account (as a deduction or otherwise) in computing taxable 
        income for such taxable year,
    then, subject to such regulations as the Secretary of the Treasury 
    or his delegate may prescribe, if such payment (or additional 
    payment) is made on or before December 15, 1955, it shall be treated 
    as having been made within the period prescribed by such Code.
        ``(4) Treatment of certain dividends.--Subject to such 
    regulations as the Secretary of the Treasury or his delegate may 
    prescribe, for purposes of section 561(a)(1) of the Internal Revenue 
    Code of 1986 [section 561(a)(1) of this title], dividends paid after 
    the 15th day of the third month following the close of the taxable 
    year and on or before December 15, 1955, may be treated as having 
    been paid on the last day of the taxable year, but only to the 
    extent (A) that such dividends are attributable to an increase in 
    taxable income for the taxable year resulting from the enactment of 
    this Act, and (B) elected by the taxpayer.
        ``(5) Determination of date prescribed.--For purposes of this 
    section, the determination of the last date prescribed for payment 
    or for filing a return shall be made without regard to any extension 
    of time therefor and without regard to any provision of this 
    section.
        ``(6) Regulations.--For requirement that the Secretary of the 
    Treasury or his delegate shall prescribe all rules and regulations 
    as may be necessary by reason of the enactment of this Act, see 
    section 7805(a) of the Internal Revenue Code of 1986 [section 
    7805(a) of this title].''


  Applicability of Certain Amendments by Pub. L. 99-514 in Relation to 
                   Treaty Obligations of United States

    For applicability of amendment by section 701(e)(1) of Pub. L. 99-
514 notwithstanding any treaty obligation of the United States in effect 
on Oct. 22, 1986, with provision that for such purposes any amendment by 
title I of Pub. L. 100-647 be treated as if it had been included in the 
provision of Pub. L. 99-514 to which such amendment relates, see section 
1012(aa)(2), (4) of Pub. L. 100-647, set out as a note under section 861 
of this title.


           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.

                  Section Referred to in Other Sections

    This section is referred to in sections 45A, 50, 55, 172, 394, 593, 
597, 807, 809, 810, 832, 904, 1388, 1396, 1847, 7518 of this title; 
title 46 App. section 1177.
