Source: https://irc.bloombergtax.com/public/uscode/doc/irc/section_1374
Timestamp: 2020-07-05 10:21:15
Document Index: 251829770

Matched Legal Cases: ['§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374', '§ 1374']

Internal Revenue Code, § 1374. Tax Imposed On Certain Built-In Gains
I.R.C. § 1374(a) General Rule —
I.R.C. § 1374(b) Amount Of Tax
I.R.C. § 1374(b)(1) In General —
I.R.C. § 1374(b)(2) Net Operating Loss Carryforwards From C Years Allowed —
I.R.C. § 1374(b)(3) Credits
I.R.C. § 1374(b)(3)(A) In General —
I.R.C. § 1374(b)(3)(B) Business Credit Carryforwards From C Years Allowed —
Editor's Note: Sec. 1374(b)(3)(B), below, before amendment by Pub. L. 115-97, Sec. 12002(c), is effective for taxable years beginning before January 1, 2022.
Editor's Note: Sec. 1374(b)(3)(B), below, after amendment by Pub. L. 115-97, Sec. 12002(c), is effective for taxable years beginning after December 31, 2021.
I.R.C. § 1374(c) Limitations
I.R.C. § 1374(c)(1) Corporations Which Were Always S Corporations —
I.R.C. § 1374(c)(2) Limitation On Amount Of Net Recognized Built-In Gain —
The amount of the net recognized built-in gain taken into account under this section for any taxable year shall not exceed the excess (if any) of—
I.R.C. § 1374(c)(2)(A) —
I.R.C. § 1374(c)(2)(B) —
I.R.C. § 1374(d) Definitions And Special Rules —
I.R.C. § 1374(d)(1) Net Unrealized Built-In Gain —
The term “net unrealized built-in gain” means the amount (if any) by which—
I.R.C. § 1374(d)(1)(A) —
I.R.C. § 1374(d)(1)(B) —
I.R.C. § 1374(d)(2) Net Recognized Built-In Gain
I.R.C. § 1374(d)(2)(A) In General —
The term “net recognized built-in gain” means, with respect to any taxable year in the recognition period, the lesser of—
I.R.C. § 1374(d)(2)(A)(i) —
I.R.C. § 1374(d)(2)(A)(ii) —
such corporation's taxable income for such taxable year (determined as provided in section 1375(b)(1)(B)).
I.R.C. § 1374(d)(2)(B) Carryover —
I.R.C. § 1374(d)(3) Recognized Built-In Gain —
The term “recognized built-in gain” means any gain recognized during the recognition period on the disposition of any asset except to the extent that the S corporation establishes that—
I.R.C. § 1374(d)(3)(A) —
I.R.C. § 1374(d)(3)(B) —
such gain exceeds the excess (if any) of—
I.R.C. § 1374(d)(3)(B)(i) —
I.R.C. § 1374(d)(3)(B)(ii) —
I.R.C. § 1374(d)(4) Recognized Built-In Losses —
The term “recognized built-in loss” means any loss recognized during the recognition period on the disposition of any asset to the extent that the S corporation establishes that—
I.R.C. § 1374(d)(4)(A) —
I.R.C. § 1374(d)(4)(B) —
such loss does not exceed the excess of—
I.R.C. § 1374(d)(4)(B)(i) —
I.R.C. § 1374(d)(4)(B)(ii) —
I.R.C. § 1374(d)(5) Treatment Of Certain Built-In Items
I.R.C. § 1374(d)(5)(A) Income Items —
I.R.C. § 1374(d)(5)(B) Deduction Items —
I.R.C. § 1374(d)(5)(C) Adjustment To Net Unrealized Built-In Gain —
I.R.C. § 1374(d)(6) Treatment Of Certain Property —
If the adjusted basis of any asset is determined (in whole or in part) by reference to the adjusted basis of any other asset held by the S corporation as of the beginning of the 1st taxable year referred to in paragraph (3)—
I.R.C. § 1374(d)(6)(A) —
I.R.C. § 1374(d)(6)(B) —
I.R.C. § 1374(d)(7) Recognition Period
I.R.C. § 1374(d)(7)(A) In General —
The term “recognition period” means the 5-year period beginning with the 1st day of the 1st taxable year for which the corporation was an S corporation. For purposes of applying this section to any amount includible in income by reason of distributions to shareholders pursuant to section 593(e), the preceding sentence shall be applied without regard to the phrase “5-year”.
I.R.C. § 1374(d)(7)(B) Installment Sales —
I.R.C. § 1374(d)(8) Treatment Of Transfer Of Assets From C Corporation To S Corporation
I.R.C. § 1374(d)(8)(A) In General —
Except to the extent provided in regulations, if—
I.R.C. § 1374(d)(8)(A)(i) —
I.R.C. § 1374(d)(8)(A)(ii) —
the S corporation's basis in such asset is determined (in whole or in part) by reference to the basis of such asset (or any other property) in the hands of a C corporation,
I.R.C. § 1374(d)(8)(B) Modifications —
I.R.C. § 1374(d)(8)(B)(i) In General —
I.R.C. § 1374(d)(8)(B)(ii) Subsection (c)(1) Not To Apply —
I.R.C. § 1374(d)(9) Reference To 1st Taxable Year —
I.R.C. § 1374(e) Regulations —
(Added by Pub. L. 97-354, Sec. 2, Oct. 19, 1982, 96 Stat. 1683, and amended Pub. L. 97-448, title III, Sec. 305(d)(3), Jan. 12, 1983, 96 Stat. 2400; Pub. L. 98-369, div. A, title I, Sec. 102(d)(1), title IV, Sec. 474(r)(27), title VII, Sec. 721(u), July 18, 1984, 98 Stat. 623, 844, 971; Pub. L. 99-514, title VI, Sec. 632(a), Oct. 22, 1986, 100 Stat. 2275; Pub. L. 100-647, title I, Sec. 1006(f)(1)-(5)(A), Nov. 10, 1988, 102 Stat. 3403, 3404; Pub. L. 101-239, title VII, Sec. 7811(c)(4), (5)(B), (8), Dec. 19, 1989, 103 Stat. 2407, 2408; Pub. L. 105-34, title XVI, Sec. 1601(f)(5)(B), Aug. 5, 1997, 111 Stat 788; Pub. L. 111-5, div. B, title I, Sec. 1251(a), Feb. 17, 2009, 123 Stat. 115; Pub. L. 111-240, title II, Sec. 2014(a), Sept. 27, 2010, 124 Stat. 2504; Pub. L. 112-240, title III, Sec. 326, Jan. 2, 2013, 126 Stat. 2313; Pub. L. 113-295, Div. A, title I, Sec. 138(a)(1), 136(a)(2), Dec. 19, 2014, 128 Stat. 4010; Pub. L. 114-113, Div. Q, title I, Sec. 127(a); Pub. L. 115-97, title I, Secs. 12002(c), 13001(b)(2)(N), Dec. 22, 2017, 131 Stat. 2054; Pub. L. 115-141, Div. U, title IV, Sec. 401(b)(33), Mar. 23, 2018, 132 Stat. 348.)
2018 - Subsec. (d)(2)(B). Pub. L. 115-141, Div. U, Sec. 401(b)(33), amended subpar. (B) by striking the last sentence “The preceding sentence shall apply only in the case of a corporation by reason of an election made on or after March 31, 1988.”
2017 - Subsec. (b)(3)(B). Pub. L. 115-97, Sec. 12002(c), amended par. (3) by striking the last sentence. Before being struck, it read as follows:
“A similar rule shall apply in the case of the minimum tax credit under section 53 to the extent attributable to taxable years for which the corporation was a C corporation.”
Subsec. (b)(4). Pub. L. 115-97, Sec. 13001(b)(2)(N), struck par. (4). Before being struck, it red as follows:
“(4) Coordination With Section 1201(a).—
For purposes of section 1201(a)—
“(A) the tax imposed by subsection (a) shall be treated as if it were imposed by section 11, and
“(B) the amount of the net recognized built-in gain shall be treated as the taxable income.”
2015 - Subsec. (d)(7). Pub. L. 114-113, Div. Q, Sec. 127(a), amended par. (7). Before amendment, it read as follows:
“(7) Recognition Period.—
“(A) In General .—The term “recognition period” means the 10-year period beginning with the 1st day of the 1st taxable year for which the corporation was an S corporation.
“(B) Special Rules For 2009, 2010, And 2011.—No tax shall be imposed on the net recognized built-in gain of an S corporation—
“(i) in the case of any taxable year beginning in 2009 or 2010, if the 7th taxable year in the recognition period preceded such taxable year, or
“(ii) in the case of any taxable year beginning in 2011, if the 5th year in the recognition period preceded such taxable year.
“The preceding sentence shall be applied separately with respect to any asset to which paragraph (8) applies.
“(C) Special Rule For 2012, 2013, And 2014.—or purposes of determining the net recognized built-in gain for taxable years beginning in 2012, 2013 or 2014, subparagraphs (A) and (D) shall be applied by substituting “5-year” for “10-year”.
“(D) Special Rule For Distributions To Shareholders.—For purposes of applying this section to any amount includible in income by reason of distributions to shareholders pursuant to section 593(e)—
“(i) subparagraph (A) shall be applied without regard to the phrase “10-year”, and
“(E) Installment Sales.—If an S corporation sells an asset and reports the income from the sale using the installment method under section 453, the treatment of all payments received shall be governed by the provisions of this paragraph applicable to the taxable year in which such sale was made.”
2014 - Subsec. (d)(7)(C). Pub. L. 113-295, Div. A, Sec. 138(a)(1) and (2), amended par. (C) by substituting “, 2013, And 2014” for “ 2012 And 2013” in the heading and by substituting “2012, 2013, or 2014” for “2012 or 2013”.
2013 - Subsec. (d)(2)(B). Pub. L. 112-240, Sec. 326(b), amended subpar. (B) by inserting “described in subparagraph (A)” after “, for any taxable year”.
Subsec. (d)(7)(C)-(E). Pub. L. 112-240, Sec. 326(a), amended par. (7) by redesignating subpar. (C) as subpar. (D) and by adding new subpar. (C) and (E).
2010 - Subsec. (d)(7)(B). Pub. L. 111-240, Sec. 2014(a), amended subpar. (B). Before amendment, it read as follows:
“(B) Special Rule for 2009 And 2010.—In the case of any taxable year beginning in 2009 or 2010, no tax shall be imposed on the net recognized built-in gain of an S corporation if the 7th taxable year in the recognition period preceded such taxable year. The preceding sentence shall be applied separately with respect to any asset to which paragraph (8) applies.”
2009 - Subsec. (d)(7). Pub. L. 111-5, Div. B, Sec. 1251(a), amended par. (7). Before amendment, it read as follows:
“(7) Recognition Period.— The term “recognition period” means the 10-year period beginning with the 1st day of the 1st taxable year for which the corporation was an S corporation. For purposes of applying this section to any amount includible in income by reason of section 593(e), the preceding sentence shall be applied without regard to the phrase “10-year”.”
1997 - Subsec. (d)(7). Pub. L. 105-34, Sec. 1601(f)(5)(B) inserted a new sentence at the end of paragraph (7).
1989 - Subsec. (b)(3)(B). Pub. L. 101-239, Sec. 7811(c)(8), inserted at end ‘A similar rule shall apply in the case of the minimum tax credit under section 53 to the extent attributable to taxable years for which the corporation was a C corporation.’
Subsec. (d)(2)(A)(i). Pub. L. 101-239, Sec. 7811(c)(4), struck out ‘(except as provided in subsection (b)(2))’ after ‘taxable year if’.
Subsec. (d)(5)(B). Pub. L. 101-239, Sec. 7811(c)(5)(B)(i), inserted ‘(determined without regard to any carryover)’ after ‘during the recognition period’.
Subsec. (d)(5)(C). Pub. L. 101-239, Sec. 7811(c)(5)(B)(ii), substituted ‘which would be treated as recognized built-in gains or losses under this paragraph if such amounts were properly taken into account (or allowable as a deduction) during the recognition period’ for ‘treated as recognized built-in gains or losses under this paragraph’.
1988 - Subsec. (a). Pub. L. 100-647, Sec. 1006(f)(1), inserted ‘net’ before ‘recognized’.
Subsec. (b)(1). Pub. L. 100-647, Sec. 1006(f)(2), added par. (1) and struck out former par. (1) which read as follows: ‘The tax imposed by subsection (a) shall be a tax computed by applying the highest rate of tax specified in section 11(b) to the lesser of -
‘(A) the recognized built-in gains of the S corporation for the taxable year, or
‘(B) the amount which would be the taxable income of the corporation for such taxable year if such corporation were not an S corporation.’
Subsec. (b)(2). Pub. L. 100-647, Sec. 1006(f)(2), added par. (2) and struck out former par. (2) which read as follows: ‘Notwithstanding section 1371(b)(1), any net operating loss carryforward arising in a taxable year for which the corporation was a C corporation shall be allowed as a deduction against the lesser of the amounts referred to in subparagraph (A) or (B) of paragraph (1). For purposes of determining the amount of any such loss which may be carried to subsequent taxable years, the lesser of the amounts referred to in subparagraph (A) or (B) of paragraph (1) shall be treated as taxable income.’
Subsec. (b)(4)(B). Pub. L. 100-647, Sec. 1006(f)(3), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: ‘the lower of the amounts specified in subparagraphs (A) and (B) of paragraph (1) shall be treated as the taxable income.’
Subsec. (c)(2). Pub. L. 100-647, Sec. 1006(f)(4), substituted ‘net recognized built-in gain’ for ‘recognized built-in gains’ in introductory provisions and in subpar. (B).
Subsec. (d)(2) to (9). Pub. L. 100-647, Sec. 1006(f)(5)(A), added pars. (2) to (9) and struck out former pars. (2), (3), and (4), which related to recognized built-in gain, recognition period, and taxable income, respectively.
Subsec. (e). Pub. L. 100-647, Sec. 1006(f)(5)(A), added subsec. (e).
1986 - Pub. L. 99-514 amended section generally, substituting provisions imposing tax on certain built-in gains for provisions imposing tax on certain capital gains which had declared in: subsec. (a), general rule for capital gains tax on S corporations; subsec. (b), amount of tax; subsec. (c), general rule as to exceptions from subsec. (a) in par. (1), exception as to new corporations in par. (2), provisions relating to property with substituted basis in par. (3), and treatment of certain gains of options and commodities dealers in par. (4); and subsec. (d), determination of taxable income of corporation.
1984 - Subsec. (b). Pub. L. 98-369, Sec. 474(r)(27), substituted ‘section 34’ for ‘section 39’ in provisions following par. (2).
Subsec. (c)(2). Pub. L. 98-369, Sec. 721(u), struck out ‘(and any predecessor corporation)’ before ‘has been in existence’ in subpar. (A), and inserted provision that to the extent provided in regulations, an S corporation and any predecessor corporation shall be treated as 1 corporation for purposes of this paragraph and paragraph (1).
Subsec. (c)(4). Pub. L. 98-369, Sec. 102(d)(1), added par. (4).
1983 - Subsec. (d). Pub. L. 97-448 substituted ‘this section’ for ‘subsections (a)(2) and (b)(2)’.
Amendment by Pub. L. 115-141, Div. U, Sec. 401(b)(33), effective March 23, 2018.
Amendment by Pub. L. 115-97, Sec. 12002(c), effective for taxable years beginning after December 31, 2021.
Amendment by Pub. L. 115-97, Sec. 13001(b)(2)(N), effective for taxable years beginning after December 31, 2017.
Amendment by Pub. L. 114-113, Div. Q, Sec. 127(a), effective for taxable years beginning after December 31, 2014.
Amendments by Div. A, 138(a)(1) and (2) of Pub. L. 113-295, effective for taxable years beginning after December 31, 2013.
Amendments by Section 326 of Pub. L. 112-240 effective for taxable years beginning after December 31, 2011.
Amendment by Section 2014(a) of Pub. L. 111-240 effective for taxable years beginning after December 31, 2010.
Amendment by Section 1251(a) of Pub. L. 111-5 effective for taxable years beginning after December 31, 2008.
Amendment by Section 1601 of Pub. L. 105-34 effective as if included in the related provisions of the Small Business Job Protection Act of 1996.
Amendment by Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1986, but only in cases where the return for the taxable year is filed pursuant to an S election made after Dec. 31, 1986, and with provision that, in the case of any taxable year of an S corporation which begins after Dec. 31, 1986, and to which the amendments by section 632 (other than subsec. (b) thereof) of Pub. L. 99-514 do not apply, subsec. (b)(1) of this section (as in effect on the date before Oct. 22, 1986) shall apply as if it read as follows: ‘an amount equal to 34 percent of the amount by which the net capital gain of the corporation for the taxable year exceeds $25,000, or’, and with other exceptions and special and transitional rules, see section 633 of Pub. L. 99-514, as amended, set out as an Effective Date note under section 336 of this title.
Amendment by section 102(d)(1) of Pub. L. 98-369 applicable to positions established after July 18, 1984, in taxable years ending after that date, except as otherwise provided, see section 102(f), (g) of Pub. L. 98-369 set out as a note under section 1256 of this title.
Amendment by section 474(r)(27) 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.
Amendment by section 721(u) 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.
Amendment by Pub. L. 97-448 effective on date of enactment of Subchapter S Revision Act of 1982 (Oct. 19, 1982), see section 311(c)(4) of Pub. L. 97-448, set out as a note under section 1368 of this title.
A prior section 1374, added Pub. L. 85-866, title I, Sec. 64(a), Sept. 2, 1958, 72 Stat. 1653, and amended Pub. L. 86-376, Sec. 2(b), Sept. 23, 1959, 73 Stat. 699; Pub. L. 94-455, title XIX, Sec. 1901(a)(150), Oct. 4, 1976, 90 Stat. 1788, related to allowance to shareholders of corporation net operating loss, prior to the general revision of this subchapter by section 2 of Pub. L. 97-354.