Source: https://www.law.cornell.edu/uscode/text/26/514?qt-us_code_tabs=1
Timestamp: 2016-02-08 05:05:51
Document Index: 140291468

Matched Legal Cases: ['§\u202f514', '§\u202f5', '§\u202f121', '§\u202f7', '§\u202f1308', '§\u202f1901', '§\u202f2', '§\u202f110', '§\u202f174', '§\u202f1034', '§\u202f201', '§\u202f1603', '§\u202f1878', '§\u202f10214', '§\u202f1016', '§\u202f2004', '§\u202f7811', '§\u202f13144', '§\u202f247', '§\u202f702', '§\u202f412', '§\u202f866', '§\u202f661', '§\u202f702', '§\u202f247', '§\u202f13144', '§\u202f13144', '§\u202f13144', '§\u202f1016', '§\u202f1018', '§\u202f1878', '§\u202f1016', '§\u202f2004', '§\u202f2004', '§\u202f10214', '§\u202f10214', '§\u202f1878', '§\u202f1018', '§\u202f1878', '§\u202f1018', '§\u202f1878', '§\u202f1018', '§\u202f201', '§\u202f1878', '§\u202f1603', '§\u202f1034', '§\u202f174', '§\u202f1034', '§\u202f1906', '§\u202f1901', '§\u202f1901', '§\u202f1308', '§\u202f1906', '§\u202f1901', '§\u202f1901', '§\u202f1901', '§\u202f121', '§\u202f121', '§\u202f121', '§\u202f121', '§\u202f866', '§\u202f247', '§\u202f13144', '§\u202f1016', '§\u202f10214', '§\u202f1034', '§\u202f110', '§\u202f110', '§\u202f1308', '§\u202f1607']

§ 514.
(a) Unrelated debt-financed income and deductionsIn computing under section 512 the unrelated business taxable income for any taxable year—
(1) Percentage of income taken into account
(2) Percentage of deductions taken into account
(3) Deductions allowable
(b) Definition of debt-financed property
(1) In generalFor purposes of this section, the term “debt-financed property” means any property which is held to produce income and with respect to which there is an acquisition indebtedness (as defined in subsection (c)) at any time during the taxable year (or, if the property was disposed of during the taxable year, with respect to which there was an acquisition indebtedness at any time during the 12-month period ending with the date of such disposition), except that such term does not include—
(2) Special rule for related uses
(3) Special rules when land is acquired for exempt use within 10 years
(A) Neighborhood land
(B) Other casesIf the first sentence of subparagraph (A) is inapplicable only because—
(C) LimitationsSubparagraphs (A) and (B)—
(D) Refund of taxes when subparagraph (B) applies
(E) Special rule for churches
(c) Acquisition indebtedness
(1) General ruleFor purposes of this section, the term “acquisition indebtedness” means, with respect to any debt-financed property, the unpaid amount of—
(2) Property acquired subject to mortgage, etc.For purposes of this subsection—
(C) Liens for taxes or assessmentsWhere State law provides that—
(3) Extension of obligations
(4) Indebtedness incurred in performing exempt purpose
For purposes of this section, the term “acquisition indebtedness” does not include indebtedness the incurrence of which is inherent in the performance or exercise of the purpose or function constituting the basis of the organization’s exemption, such as the indebtedness incurred by a credit union described in section 501(c)(14) in accepting deposits from its members.
(5) AnnuitiesFor purposes of this section, the term “acquisition indebtedness” does not include an obligation to pay an annuity which—
(C) is payable under a contract which—
(6) Certain Federal financing
(A) In generalFor purposes of this section, the term “acquisition indebtedness” does not include—
(ii) indebtedness incurred by a small business investment company licensed after the date of the enactment of the American Jobs Creation Act of 2004 under the Small Business Investment Act of 1958 if such indebtedness is evidenced by a debenture—
(B) LimitationSubparagraph (A)(ii) shall not apply with respect to any small business investment company during any period that—
(7) Average acquisition indebtedness
(8) Securities subject to loansFor purposes of this section—
(9) Real property acquired by a qualified organization
(B) ExceptionsThe provisions of subparagraph (A) shall not apply in any case in which—
(iv) the real property is acquired by a qualified trust from, or is at any time after the acquisition leased by such trust to, any person who—
(vi) the real property is held by a partnership unless the partnership meets the requirements of clauses (i) through (v) and unless—
(C) Qualified organizationFor purposes of this paragraph, the term “qualified organization” means—
(D) Other pass-thru entities; tiered entities
(E) Certain allocations permitted
(i) In generalA partnership meets the requirements of this subparagraph if—
(I) Chargebacks
(II) Preferred rates of return, etc.
(F) Special rules for organizations described in section 501(c)(25)
(i) In generalIn computing under section 512 the unrelated business taxable income of a disqualified holder of an interest in an organization described in section 501(c)(25), there shall be taken into account—
(ii) Description of amountsFor purposes of clause (i)—
(iii) Disqualified holder
(G) Special rules for purposes of the exceptionsExcept as otherwise provided by regulations—
(i) Small leases disregarded
(ii) Commercially reasonable financing
(H) Qualifying sales by financial institutions
(ii) Qualifying saleFor purposes of this clause, there is a qualifying sale by a financial institution if—
(iii) Property to which subparagraph appliesProperty is described in this clause if such property is foreclosure property, or is real property which—
(iv) Financial institutionFor purposes of this subparagraph, the term “financial institution” means—
(v) Foreclosure property
(d) Basis of debt-financed property acquired in corporate liquidation
(e) Allocation rules
(f) Personal property leased with real property
For purposes of this section, the term “real property” includes personal property of the lessor leased by it to a lessee of its real estate if the lease of such personal property is made under, or in connection with, the lease of such real estate.
(Aug. 16, 1954, ch. 736, 68A Stat. 172; Pub. L. 86–667, § 5, July 14, 1960, 74 Stat. 536; Pub. L. 91–172, title I, § 121(d)(1), (3)(A), (B), Dec. 30, 1969, 83 Stat. 543, 548; Pub. L. 93–625, § 7(b)(2), Jan. 3, 1975, 88 Stat. 2115; Pub. L. 94–455, title XIII, § 1308(a), title XIX, §§ 1901(a)(72), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1729, 1776, 1834; Pub. L. 95–345, § 2(c), Aug. 15, 1978, 92 Stat. 482; Pub. L. 96–605, title I, § 110(a), Dec. 28, 1980, 94 Stat. 3525; Pub. L. 98–369, div. A, title I, § 174(b)(5)(B), title X, § 1034(a), (b), July 18, 1984, 98 Stat. 707, 1039, 1040; Pub. L. 99–514, title II, § 201(d)(9), title XVI, § 1603(b), title XVIII, § 1878(e), Oct. 22, 1986, 100 Stat. 2141, 2768, 2903; Pub. L. 100–203, title X, § 10214(a), (b), Dec. 22, 1987, 101 Stat. 1330–407; Pub. L. 100–647, title I, §§ 1016(a)(5)(A), (6), 1018(u)(13), title II, § 2004(h), Nov. 10, 1988, 102 Stat. 3574, 3575, 3590, 3603; Pub. L. 101–239, title VII, § 7811(l), Dec. 19, 1989, 103 Stat. 2412; Pub. L. 103–66, title XIII, § 13144(a), (b), Aug. 10, 1993, 107 Stat. 441, 442; Pub. L. 108–357, title II, § 247(a), title VII, § 702(b), Oct. 22, 2004, 118 Stat. 1449, 1546; Pub. L. 109–135, title IV, § 412(ee)(2), Dec. 21, 2005, 119 Stat. 2639; Pub. L. 109–280, title VIII, § 866(a), Aug. 17, 2006, 120 Stat. 1025.)
The Small Business Investment Act of 1958, referred to in subsec. (c)(6)(A)(ii), is Pub. L. 85–699, Aug. 21, 1958, 72 Stat. 689, as amended, which is classified principally to chapter 14B (§ 661 et seq.) of Title 15, Commerce and Trade. Section 303(a) of the Act is classified to section 683(a) of Title 15. For complete classification of this Act to the Code, see Short Title note set out under section 661 of Title 15 and Tables.
2006—Subsec. (c)(9)(C)(iv). Pub. L. 109–280 added cl. (iv).
2005—Subsec. (b)(1)(E). Pub. L. 109–135 substituted “section 512(b)(19)” for “section 512(b)(18)”.
2004—Subsec. (b)(1)(E). Pub. L. 108–357, § 702(b), added subpar. (E).
Subsec. (c)(6). Pub. L. 108–357, § 247(a), reenacted heading without change and amended text of par. (6) generally. Prior to amendment, text read as follows: “For purposes of this section, the term ‘acquisition indebtedness’ does not include an obligation, to the extent that it is insured by the Federal Housing Administration, to finance the purchase, rehabilitation, or construction of housing for low and moderate income persons.”
1993—Subsec. (c)(9)(A). Pub. L. 103–66, § 13144(b)(1), inserted at end “For purposes of this paragraph, an interest in a mortgage shall in no event be treated as real property.”
Subsec. (c)(9)(B). Pub. L. 103–66, § 13144(b)(2), struck out at end “For purposes of this paragraph, an interest in a mortgage shall in no event be treated as real property.”
Subsec. (c)(9)(G), (H). Pub. L. 103–66, § 13144(a), added subpars. (G) and (H).
1989—Subsec. (c)(9)(E), (F). Pub. L. 101–239 redesignated the subpar. (E), relating to special rules for organizations described in section 501(c)(25), as (F).
1988—Subsec. (c)(9)(B). Pub. L. 100–647, § 1016(a)(6), substituted “this paragraph” for “clause (vi)” in last sentence.
Pub. L. 100–647, § 1018(u)(13)(A), amended directory language of Pub. L. 99–514, § 1878(e)(1), (3), to clarify that general amendment by section 1878(e)(3) included concluding provision as well as cl. (vi) and that amendment by section 1878(e)(1) should have been to the concluding provisions as amended by section 1878(e)(3).
Subsec. (c)(9)(E). Pub. L. 100–647, § 1016(a)(5)(A), added subpar. (E) relating to special rules for organizations described in section 501(c)(25).
Subsec. (c)(9)(E)(i). Pub. L. 100–647, § 2004(h)(2), in subsec. (c)(9)(E), relating to certain allocations permitted, redesignated subcls. (II) and (III) as (I) and (II), respectively, and struck out former subcl. (I) which read as follows: “the allocation of items to any partner other than a qualified organization cannot result in such partner having a share of the overall partnership loss for any taxable year greater than such partner’s share of the overall partnership income for the taxable year for which such partner’s income share will be the smallest,”.
Subsec. (c)(9)(E)(iii). Pub. L. 100–647, § 2004(h)(1), in subsec. (c)(9)(E) relating to certain allocations permitted, added cl. (iii).
1987—Subsec. (c)(9)(B)(vi). Pub. L. 100–203, § 10214(a), amended cl. (vi) generally. Prior to amendment, cl. (vi) read as follows: “the real property is held by a partnership (which does not fail to meet the requirements of clauses (i) through (v)), and—
“(II) the principal purpose of any allocation to any partner of the partnership which is a qualified organization which is not a qualified allocation (within the meaning of section 168(h)(6)) is the avoidance of income tax.”
Subsec. (c)(9)(E). Pub. L. 100–203, § 10214(b), added subpar. (E).
1986—Subsec. (c)(9)(B). Pub. L. 99–514, § 1878(e)(1), as amended by Pub. L. 100–647, § 1018(u)(13)(A), which directed amendment of penultimate sentence by substituting “is unrelated business taxable income” for “would be unrelated business taxable income (determined without regard to this paragraph)”, was executed by making the substitution for “would be unrelated business taxable income (determined without regard to this paragraph”, as the probable intent of Congress.
Pub. L. 99–514, § 1878(e)(3), as amended by Pub. L. 100–647, § 1018(u)(13)(B), amended concluding provisions generally. Prior to amendment, concluding provisions read as follows: “For purposes of clause (vi)(I), an organization shall not be treated as a qualified organization if any income of such organization would be unrelated business taxable income (determined without regard to this paragraph).”
Subsec. (c)(9)(B)(vi). Pub. L. 99–514, § 1878(e)(3), as amended by Pub. L. 100–647, § 1018(u)(13)(B), amended cl. (vi) generally. Prior to amendment, cl. (vi) read as follows: “the real property is held by a partnership unless the partnership meets the requirements of clauses (i) through (v) and unless—
“(II) each allocation to a partner of the partnership which is a qualified organization is a qualified allocation (within the meaning of section 168(j)(9)).”
Subsec. (c)(9)(B)(vi)(II). Pub. L. 99–514, § 201(d)(9), substituted “section 168(h)(6)” for “section 168(j)(9)”.
Subsec. (c)(9)(C)(i). Pub. L. 99–514, § 1878(e)(2), substituted “section 509(a)(3)” for “section 509(a)”.
Subsec. (c)(9)(C)(iii). Pub. L. 99–514, § 1603(b), added cl. (iii).
1984—Subsec. (c)(9). Pub. L. 98–369, § 1034(a), amended par. (9) generally, substituting provisions relating to real property acquired by a qualified organization for provisions relating to real property acquired by a qualified trust, with “qualified organization” expanded to include trusts constituting qualified trusts under section 401 of this title as well as organizations described in section 170(b)(1)(A)(ii) of this title and their affiliated support organizations described in section 509(a) of this title.
Subsec. (c)(9)(B)(iii). Pub. L. 98–369, § 174(b)(5)(B), inserted reference to section 707(b).
Subsec. (g). Pub. L. 98–369, § 1034(b), added subsec. (g).
1980—Subsec. (c)(9). Pub. L. 96–605 added par. (9).
1978—Subsec. (c)(8). Pub. L. 95–345 added par. (8).
1976—Subsecs. (a)(1), (b)(3)(A), (B)(ii). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Subsec. (b)(3)(C)(iii). Pub. L. 94–455, § 1901(a)(72)(C), substituted “(as defined in this section immediately before the enactment of the Tax Reform Act of 1976)” for “as (defined in subsection (f))” after “is a business lease”.
Subsec. (c)(1). Pub. L. 94–455, § 1901(a)(72)(A), struck out exception following subpar. (C) that in any taxable year beginning before January 1, 1972, any acquisition indebtedness incurred prior to June 28, 1966, would not be taken into account except for business lease indebtedness of certain organizations.
Subsec. (c)(2)(C). Pub. L. 94–455, § 1308(a), added subpar. (C).
Subsecs. (c)(7), (e). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
Subsec. (f). Pub. L. 94–455, § 1901(a)(72(B), struck out subsec. (f) relating to definition of business lease, special rules applicable to such leases, and exceptions to the definition and applicable rules, and redesignated subsec. (h) as (f).
Subsec. (g). Pub. L. 94–455, § 1901(a)(72)(B), struck out subsec. (g) relating to definition and special rules applicable to business lease indebtedness.
Subsec. (h). Pub. L. 94–455, § 1901(a)(72)(B), redesignated subsec. (h) as (f).
1975—Subsec. (b)(3)(D). Pub. L. 93–625 struck out last sentence providing for allowance and payment of interest on any overpayment for a taxable year resulting from application of subpar. (B) after actual use condition was satisfied at rate of 4 in lieu of 6 percent per annum.
1969—Subsec. (a). Pub. L. 91–172, § 121(d)(1), substituted “Unrelated debt-financed income” for “Business leases” in heading and substituted in text material covering unrelated debt-financed income and deductions for material covering business lease rents and deductions.
Subsecs. (b) to (e). Pub. L. 91–172, § 121(d)(1), (3)(A), added subsecs. (b), (c), (d) and (e). Former subsecs. (b), (c), and (d) redesignated (f), (g), and (h), respectively.
Subsec. (f). Pub. L. 91–172, § 121(d)(3)(A), (B), redesignated subsec. (b) as subsec. (f), and, in par. (1) of subsec. (f) as so redesignated, substituted reference to subsec. (g) for reference to subsec. (c).
Subsecs. (g), (h). Pub. L. 91–172, § 121(d)(3)(A), redesignated subsecs. (c) and (d) as (g) and (h), respectively.
1960—Subsec. (c)(8). Pub. L. 86–667 added par. (8).
Pub. L. 109–280, title VIII, § 866(b), Aug. 17, 2006, 120 Stat. 1025, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning on or after the date of enactment of this Act [Aug. 17, 2006].”
Pub. L. 108–357, title II, § 247(b), Oct. 22, 2004, 118 Stat. 1449, provided that: “The amendment made by this section [amending this section] shall apply to indebtedness incurred after the date of the enactment of this Act [Oct. 22, 2004] by a small business investment company licensed after the date of the enactment of this Act.”
Amendment by section 702(b) of Pub. L. 108–357 applicable to any gain or loss on the sale, exchange, or other disposition of any property acquired by the taxpayer after Dec. 31, 2004, see section 702(d) of Pub. L. 108–357, set out as a note under section 512 of this title.
Pub. L. 103–66, title XIII, § 13144(c), Aug. 10, 1993, 107 Stat. 442, provided that:
The amendments made by this section [amending this section] shall apply to acquisitions on or after January 1, 1994.
“(2)Small leases.—
The provisions of section 514(c)(9)(G)(i) of the Internal Revenue Code of 1986 shall, in addition to any leases to which the provisions apply by reason of paragraph (1), apply to leases entered into on or after January 1, 1994.”
Pub. L. 100–647, title I, § 1016(a)(5)(B), Nov. 10, 1988, 102 Stat. 3575, provided that: “The amendment made by subparagraph (A) [amending this section] shall apply with respect to interests in the organization acquired after June 10, 1987, except that such amendment shall not apply to any such interest acquired after June 10, 1987, pursuant to a binding written contract in effect on June 10, 1987, and at all times thereafter before such acquisition.”
Amendment by sections 1016(a)(6) and 1018(u)(13) 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.
Amendment by section 2004(h) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provisions of the Revenue Act of 1987, Pub. L. 100–203, title X, to which such amendment relates, see section 2004(u) of Pub. L. 100–647, set out as a note under section 56 of this title.
Pub. L. 100–203, title X, § 10214(c), Dec. 22, 1987, 101 Stat. 1330–408, provided that: “The amendments made by this section [amending this section] shall apply to—
property acquired by the partnership after October 13, 1987, and
partnership interests acquired after October 13, 1987,
Amendment by section 201(d)(9) of Pub. L. 99–514 applicable to property placed in service after Dec. 31, 1986, in taxable years ending after such date, with exceptions, see sections 203 and 204 of Pub. L. 99–514, set out as a note under section 168 of this title.
Amendment by section 201(d)(9) of Pub. L. 99–514 not applicable to any property placed in service before Jan. 1, 1994, if such property placed in service as part of specified rehabilitations, and not applicable to certain additional rehabilitations, see section 251(d)(2), (3) of Pub. L. 99–514, set out as a note under section 46 of this title.
Amendment by section 1603(b) of Pub. L. 99–514 applicable to taxable years beginning after Dec. 31, 1986, see section 1603(c) of Pub. L. 99–514, set out as a note under section 501 of this title.
Amendment by section 1878(e) 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.
Amendment by section 174(b)(5)(B) of Pub. L. 98–369 applicable to transactions after Dec. 31, 1983, in taxable years ending after that date, see section 174(c)(2)(A) of Pub. L. 98–369, set out as a note under section 267 of this title.
Pub. L. 98–369, div. A, title X, § 1034(c), July 18, 1984, 98 Stat. 1040, provided that:
The amendments made by this section [amending this section] shall apply to indebtedness incurred after the date of the enactment of this Act [July 18, 1984].
The amendment made by subsection (a) [amending this section] shall not apply to any indebtedness incurred before January 1, 1985, by a partnership described in subparagraph (B) if such indebtedness is incurred with respect to property acquired (directly or indirectly) by such partnership before such date.
before October 21, 1983, the partnership was organized, a request for exemption with respect to such partnership was filed with the Department of Labor, and a private placement memorandum stating the maximum number of units in the partnership that would be offered had been circulated,
the interest in the property to be acquired, directly or indirectly (including through acquiring an interest in another partnership) by such partnership was described in such private placement memorandum, and
the marketing of partnership interests in such partnership is completed not later than 2 years after the later of the date of enactment of this Act [July 18, 1984] or the date of publication in the Federal Register of such exemption by the Department of Labor and the aggregate number of units in such partnership sold does not exceed the amount described in clause (i).
The amendment made by subsection (a) [amending this section] shall not apply to any indebtedness incurred before January 1, 1986, by a partnership described in subparagraph (B) if such indebtedness is incurred with respect to property acquired (directly or indirectly) by such partnership before such date.
before March 6, 1984, the partnership was organized and publicly announced, the maximum amount of interests which would be sold in such partnership, and
the marketing of partnership interests in such partnership is completed not later than the 90th day after the date of the enactment of this Act [July 18, 1984] and the aggregate amount of interests in such partnership sold does not exceed the maximum amount described in clause (i).
“(C)Binding contracts.—
For purposes of this paragraph, property shall be deemed to have been acquired before January 1, 1986, if such property is acquired pursuant to a written contract which, on January 1, 1986, and at all times thereafter, required the acquisition of such property and such property is placed in service not later than 6 months after the date such contract was entered into.”
Pub. L. 96–605, title I, § 110(c), Dec. 28, 1980, 94 Stat. 3526, provided that: “The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1980.”
Pub. L. 96–605, title I, § 110(b), Dec. 28, 1980, 94 Stat. 3526, provided that: “The amendment made by subsection (a) [amending this section] shall not be considered a precedent with respect to extending such amendment (or similar rules) to any other person.”
Pub. L. 94–455, title XIII, § 1308(b), Oct. 4, 1976, 90 Stat. 1729, provided that: “The amendment made by this section [amending this section] shall apply to taxable years ending after December 31, 1969.”
Amendment by section 1901(a)(72) of Pub. L. 94–455 applicable with respect to 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.
Amendment by Pub. L. 91–172 applicable to taxable years beginning after Dec. 31, 1969, and to the manner of treatment to be accorded indebtednesses secured by certain mortgages on properties bargain-purchased before Oct. 9, 1969, see section 121(g) of Pub. L. 91–172, set out as a note under section 511 of this title.
Amendment by Pub. L. 86–667 applicable to taxable years beginning after Dec. 31, 1959, see section 6 of Pub. L. 86–667, set out as a note under section 501 of this title.
Pub. L. 99–514, title XVI, § 1607, Oct. 22, 1986, 100 Stat. 2771, provided that: “For purposes of applying section 514(c) of the Internal Revenue Code of 1986, with respect to a disposition during calendar year 1986 or calendar year 1987 of land acquired during calendar year 1984, the term ‘acquisition indebtedness’ does not include indebtedness incurred in connection with bonds issued after January 1, 1984, and before July 19, 1984, on behalf of an organization which is a community college and which is described in section 511(a)(2)(B) of such Code.”