Source: https://www.charitableplanning.com/library/documents/497822
Timestamp: 2019-04-19 20:18:54+00:00

Document:
then any deduction allowable under this chapter in respect of such amount shall be allowable as of the day as of which such amount is includible in the gross income of the person to whom the payment is made (or, if later, as of the day on which it would be so allowable but for this paragraph). For purposes of this paragraph, in the case of a personal service corporation (within the meaning of section 441(i)(2)), such corporation and any employee-owner (within the meaning of section 269A(b)(2), as modified by section 441(i)(2)) shall be treated as persons specified in subsection (b).
The Secretary shall by regulations apply the matching principle of paragraph (2) in cases in which the person to whom the payment is to be made is not a United States person.
The Secretary may by regulation exempt transactions from the application of clause (i), including any transaction which is entered into by a payor in the ordinary course of a trade or business in which the payor is predominantly engaged and in which the payment of the accrued amounts occurs within 8½ months after accrual or within such other period as the Secretary may prescribe.
then such gain shall be recognized only to the extent that it exceeds so much of such loss as is properly allocable to the property sold or otherwise disposed of by the taxpayer.
Paragraph (1) shall not apply if the loss sustained by the transferor is not allowable to the transferor as a deduction by reason of section 1091 (relating to wash sales).
Paragraph (1) shall not apply to the extent any loss sustained by the transferor (if allowed) would not be taken into account in determining a tax imposed under section 1 or 11 or a tax computed as provided by either of such sections.
shall be treated as persons specified in a paragraph of subsection (b). Subparagraph (C) shall apply to a transaction only if such transaction is related either to the operations of the partnership described in such subparagraph or to an interest in such partnership.
(ii) such redemption is upon the demand of another regulated investment company.
then such gain shall be recognized only to the extent that it exceeds so much of such loss as is properly allocable to the property sold or otherwise disposed of by the taxpayer. This subsection shall not apply if the loss sustained by the transferor is not allowable to the transferor as a deduction by reason of section 1091 (relating to wash sales)."
2014—Subsec. (d). Pub. L. 113–295, in concluding provisions, struck out "This subsection applies with respect to taxable years ending after December 31, 1953. " after "by the taxpayer." and "or by reason of section 118 of the Internal Revenue Code of 1939" after "sales)".
Subsec. (d)(1). Pub. L. 113–295 struck out "(or by reason of section 24(b) of the Internal Revenue Code of 1939)" after "subsection (a)(1)".
Subsec. (d)(2). Pub. L. 113–295 struck out "after December 31, 1953," before "the taxpayer".
2010—Subsec. (f)(3)(D). Pub. L. 111–325 added subpar. (D).
2004—Subsec. (a)(3). Pub. L. 108–357 designated existing provisions as subpar. (A), inserted heading, and added subpar. (B).
1999—Subsec. (f)(3)(B)(i), (iii). Pub. L. 106–170 substituted "1221(a)(1)" for "1221(1)".
1997—Subsec. (b)(13). Pub. L. 105–34, §1308(a), added par. (13).
Subsec. (f)(4). Pub. L. 105–34, §1604(e)(1), added par. (4).
1988—Subsec. (a)(1). Pub. L. 100–647, §1006(e)(9), struck out "(other than a loss in case of a distribution in corporate liquidation)" after "exchange of property" and inserted at end "The preceding sentence shall not apply to any loss of the distributing corporation (or the distributee) in the case of a distribution in complete liquidation."
Subsec. (a)(2). Pub. L. 100–647, §1008(e)(6), made technical correction to directory language of Pub. L. 99–514, §806(c)(2), see 1986 Amendment note below.
1986—Subsec. (a)(2). Pub. L. 99–514, §806(c)(2), as amended by Pub. L. 100–647, §1008(e)(6), inserted at end "For purposes of this paragraph, in the case of a personal service corporation (within the meaning of section 441(i)(2)), such corporation and any employee-owner (within the meaning of section 269A(b)(2), as modified by section 441(i)(2)) shall be treated as persons specified in subsection (b)."
Subsec. (a)(3). Pub. L. 99–514, §1812(c)(1), added par. (3).
Subsec. (b)(12). Pub. L. 99–514, §1812(c)(4)(A), substituted "same persons own" for "same persons owns".
Subsec. (e)(5)(D). Pub. L. 99–514, §803(b)(5), substituted in cl. (i) "interest in property described in clause (i), (ii), (iii), or (iv) of section 1250(a)(1)(B)" for "interest in low-income housing (as defined in paragraph (5) of section 189(e))" and in cl. (ii) "such property" for "low-income housing (as so defined)".
Subsec. (e)(6). Pub. L. 99–514, §1812(c)(3)(C), added par. (6).
Subsec. (f)(3)(B). Pub. L. 99–514, §1812(c)(2), inserted "(or persons described in subsection (b)(10))".
Subsec. (g). Pub. L. 99–514, §1842(a), added subsec. (g).
1984—Subsec. (a). Pub. L. 98–369, §174(a), amended subsec. (a) generally, substituting "In general" for "Deduction disallowed" in heading, "Deduction for losses disallowed" for "Losses" in par. (1) heading, and provisions dealing with matching of deduction and payee income item in the case of expenses and interest for provisions dealing with unpaid expenses and interest in par. (2).
Subsec. (b)(3). Pub. L. 98–369, §174(b)(2)(A), substituted "Two corporations which are members of the same controlled group (as defined in subsection (f))" for "Two corporations more than 50 percent in value of the outstanding stock of each of which is owned, directly or indirectly, by or for the same individual, if either one of such corporations, with respect to the taxable year of the corporation preceding the date of the sale or exchange was, under the law applicable to such taxable year, a personal holding company or a foreign personal holding company".
Subsec. (b)(10). Pub. L. 98–369, §174(b)(3), substituted "A corporation" for "An S corporation" in introductory provisions and "the corporation" for "the S corporation" in subpar. (A).
Subsec. (b)(12). Pub. L. 98–369, §174(b)(4), substituted "the same persons" for "the same individual".
Subsec. (e). Pub. L. 98–369, §174(b)(1), added subsec. (e).
Pub. L. 98–369, §174(a)(2), struck out subsec. (e) which provided that for purposes of subsection (a)(2) where the last day of the 2½ month period falls on Saturday, Sunday, or a legal holiday, such last day be treated as falling on the next succeeding day which is not a Saturday, Sunday, or a legal holiday, and the determination of what constitutes a legal holiday be made under section 7503 with respect to the payor's return of tax under this chapter for the preceding taxable year.
Subsec. (f). Pub. L. 98–369, §174(b)(2)(B), added subsec. (f).
Pub. L. 98–369, §174(b)(1), struck out subsec. (f) which related to special rules for unpaid expenses and interest of S corporations and treatment under such provisions of certain shareholders, etc., as related persons.
Pub. L. 98–369, §721(s), in closing provision of par. (1) substituted "then any deduction allowable under such sections in respect of such amount shall be allowable as of the day as of which such payment is includible in the gross income of the person to whom the payment is made (or, if later, as of the day on which it would be so allowable but for this paragraph)" for "then no deduction shall be allowed in respect of expenses otherwise deductible under section 162 or 212, or of interest otherwise deductible under section 163, before the day as of which the amount thereof is includible in the gross income of the person to whom the payment is made".
1982—Subsec. (b)(10) to (12). Pub. L. 97–354, §3(h)(1), (3), added pars. (10) to (12).
Subsec. (f). Pub. L. 97–354, §3(h)(2), added subsec. (f).
Pub. L. 114–113, div. Q, title III, §345(b), Dec. 18, 2015, 129 Stat. 3115, provided that: "The amendment made by this section [amending this section] shall apply to sales and other dispositions of property acquired after December 31, 2015, by the taxpayer in a sale or exchange to which section 267(a)(1) of the Internal Revenue Code of 1986 applied."
Pub. L. 111–325, title III, §306(c), Dec. 22, 2010, 124 Stat. 3550, provided that: "The amendments made by this section [amending this section and section 302 of this title] shall apply to distributions after the date of the enactment of this Act [Dec. 22, 2010]."
Amendment by Pub. L. 108–357 applicable to payments accrued on or after Oct. 22, 2004, see section 841(c) of Pub. L. 108–357, set out as a note under section 163 of this title.
Pub. L. 105–34, title XIII, §1308(c), Aug. 5, 1997, 111 Stat. 1042, provided that: "The amendments made by this section [amending this section and section 1239 of this title] shall apply to taxable years beginning after the date of the enactment of this Act [Aug. 5, 1997]."
Pub. L. 105–34, title XVI, §1604(e)(2), Aug. 5, 1997, 111 Stat. 1098, provided that: "The amendment made by paragraph (1) [amending this section] shall take effect as if included in section 174(b) of the Tax Reform Act of 1984 [Pub. L. 98–369]."
If any interest costs incurred after Dec. 31, 1986, are attributable to costs incurred before Jan. 1, 1987, the amendment by section 803(b)(5) of Pub. L. 99–514 is applicable to such interest costs only to the extent such interest costs are attributable to costs which were required to be capitalized under section 263 of the Internal Revenue Code of 1954 and which would have been taken into account in applying section 189 of the Internal Revenue Code of 1954 (as in effect before its repeal by section 803 of Pub. L. 99–514) or, if applicable, section 266 of such Code, see section 7831(d)(2) of Pub. L. 101–239, set out as an Effective Date note under section 263A of this title.
Amendment by section 803(b)(5) of Pub. L. 99–514 applicable, except as otherwise provided, to costs incurred after Dec. 31, 1986, in taxable years ending after that date, see section 803(d) of Pub. L. 99–514, set out as a note under section 263A of this title.
Amendment by section 806(c)(2) of Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, with special provisions applicable to taxpayers who are required to change their accounting periods, see section 806(e) of Pub. L. 99–514, set out as a note under section 1378 of this title.
Amendment by sections 1812(c)(1), (2), (3)(C), (4)(A) and 1842(a) 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.
"(1) Subsections (a) and (b)(1).—The amendments made by subsections (a) and (b)(1) [amending this section] shall apply to amounts allowable as deductions under chapter 1 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] for taxable years beginning after December 31, 1983. For purposes of the preceding sentence, the allowability of a deduction shall be determined without regard to any disallowance or postponement of deductions under section 267 of such Code.
"(A) In general.—Except as provided in subparagraph (B), the amendments made by subsection (b) (other than paragraph (1) thereof) [amending this section and sections 170, 368, 514, and 1235 of this title] shall apply to transactions after December 31, 1983, in taxable years ending after such date.
"(B) Exception for transfers to foreign corporations on or before march 1, 1984.—The amendments made by subsection (b)(2) [amending this section] shall not apply to property transferred to a foreign corporation on or before March 1, 1984.
"(ii) pursuant to a contract which was binding on September 29, 1983, and at all times thereafter before the amount is paid or incurred.
"(B) Treatment of renegotiations, extensions, etc.—If any indebtedness (or contract described in subparagraph (A)) is renegotiated, extended, renewed, or revised after September 29, 1983, subparagraph (A) shall not apply to any amount paid or incurred on such indebtedness (or pursuant to such contract) after the date of such renegotiation, extension, renewal, or revision."
Amendment by section 721(s) of Pub. L. 98–369 effective as if included in the Subchapter S Revision Act of 1982, Pub. L. 97–354, see section 721(y)(1) of Pub. L. 98–369, set out as a note under section 1361 of this title.
Pub. L. 95–628, §2(b), Nov. 10, 1978, 92 Stat. 3627, provided that: "The amendment made by subsection (a) [amending this section] shall apply with respect to payments made after the date of the enactment of this Act [Nov. 10, 1978]."
Nothing in section 806 of Pub. L. 99–514 [amending this section] or in any legislative history relating thereto to be construed as requiring the Secretary of the Treasury or his delegate to permit an automatic change of a taxable year, see section 1008(e)(9) of Pub. L. 100–647, set out as a note under section 1378 of this title.
Pub. L. 99–514, title XVIII, §1812(c)(5), Oct. 22, 1986, 100 Stat. 2835, provided that: "Clause (i) of section 174(c)(3)(A) of the Tax Reform Act of 1984 [section 174(c)(3)(A)(i) of Pub. L. 98–369, set out as a note above] shall be applied by substituting &apos;December 31, 1983&apos; for &apos;September 29, 1983&apos; in the case of indebtedness which matures on January 1, 1999, the payments on which from January 1989 through November 1993 equal U/L plus $77,600, the payments on which from December 1993 to maturity equal U/L plus $50,100, and which accrued interest at 13.75 percent through December 31, 1989."

References: §1308
 §1604
 §1006
 §1008
 §806
 §806
 §1008
 §1812
 §1812
 §803
 §1812
 §1812
 §1842
 §174
 §174
 §174
 §174
 §174
 §174
 §174
 §174
 §721
 §3
 §3
 §345
 §306
 §1308
 §1604
 §2
 §1812