§ 264. Certain amounts paid in connection with insurance contracts

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1954

   Aug. 16, 1954, ch. 736, 68A Stat. 77 · 68A Stat. 77

   Enacted · 26 U.S.C. § 264

   Aug. 16, 1954, ch. 736, 68A Stat. 77

   Source evidence

   Code source credit
   Aug. 16, 1954, ch. 736, 68A Stat. 77

2. 1964

   Revenue Act of 1964

   Pub. L. 88–272 title II § 215(a) · 78 Stat. 19

   Added · 26 U.S.C. § 264(a)

   Pub. L. 88–272 added par. (3) and sentence providing that par. (3) shall apply only to contracts purchased after August 6, 1963

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 88–272 added par. (3) and sentence providing that par. (3) shall apply only to contracts purchased after August 6, 1963.

   Enacted provision · exact public law section
   (a) Disallowance of Interest Deduction.— Section 264(a) 26 USC 264. (relating to certain amounts paid in connection with insurance contracts) is amended— (1) by inserting after paragraph (2) the following new paragraph: “(3) Except as provided in subsection (c), any amount paid or accrued on indebtedness incurred or continued to purchase or carry a life insurance, endowment, or annuity contract (other than a single premium contract or a contract treated as a single premium contract) pursuant to a plan of purchase which contemplates the systematic direct or indirect borrowing of part or all of the increases in the cash value of such contract (either from the insurer or otherwise).” (2) by adding at the end thereof the following new sentence: “Paragraph (3) shall apply only in respect of contracts purchased after August 6, 1963.”

3. 1964

   Revenue Act of 1964

   Pub. L. 88–272 title II § 215(a) · 78 Stat. 19

   Added · 26 U.S.C. § 264(c)

   Pub. L. 88–272 added subsec. (c)

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 88–272 added subsec. (c).

   Enacted provision · exact public law section
   (a) Disallowance of Interest Deduction.— Section 264(a) 26 USC 264. (relating to certain amounts paid in connection with insurance contracts) is amended— (1) by inserting after paragraph (2) the following new paragraph: “(3) Except as provided in subsection (c), any amount paid or accrued on indebtedness incurred or continued to purchase or carry a life insurance, endowment, or annuity contract (other than a single premium contract or a contract treated as a single premium contract) pursuant to a plan of purchase which contemplates the systematic direct or indirect borrowing of part or all of the increases in the cash value of such contract (either from the insurer or otherwise).” (2) by adding at the end thereof the following new sentence: “Paragraph (3) shall apply only in respect of contracts purchased after August 6, 1963.”

4. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 title X § 1003(a) · 100 Stat. 2085

   Added · 26 U.S.C. § 264(a)

   Pub. L. 99–514 added par. (4) and last sentence providing that par. (4) shall apply with respect to contracts purchased after June 20, 1986

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 99–514 added par. (4) and last sentence providing that par. (4) shall apply with respect to contracts purchased after June 20, 1986.

   Enacted provision · exact public law section
   (a) In General.— Section 264(a) (relating to disallowance of deduction for certain amounts paid in connection with insurance contracts) is amended by adding after paragraph (3) the following new paragraph: “(4) Any interest paid or accrued on any indebtedness with respect to 1 or more life insurance policies owned by the taxpayer covering the life of any individual who— “(A) is an officer or employee of, or “(B) is financially interested in, any trade or business carried on by the taxpayer to the extent that the aggregate amount of such indebtedness with respect to policies covering such individual exceeds $50,000.”

5. 1996

   Pub. L. 104–191 § 501(a)(1) · 110 Stat. 1936

   1. Substituted · 26 U.S.C. § 264(a)(4)

      Pub. L. 104–191, § 501(a)(1), (b)(1), in introductory provisions, substituted “Except as provided in subsection (d), any” for “Any”

   2. Inserted · 26 U.S.C. § 264(a)(4)

      Pub. L. 104–191, § 501(a)(1), (b)(1), in introductory provisions, inserted “, or any endowment or annuity contracts owned by the taxpayer covering any individual,” after “the life of any individual”

   Source evidence

   Code amendment note
   Subsec. (a)(4). Pub. L. 104–191, § 501(a)(1), (b)(1), in introductory provisions, substituted “Except as provided in subsection (d), any” for “Any” and inserted “, or any endowment or annuity contracts owned by the taxpayer covering any individual,” after “the life of any individual”.

   Enacted provision · exact public law section
   (1) by inserting “, or any endowment or annuity contracts owned by the taxpayer covering any individual,” after “the life of any individual”, and

6. 1996

   Pub. L. 104–191 § 501(a)(2) · 110 Stat. 1936

   Struck · 26 U.S.C. § 264(a)(4)

   Pub. L. 104–191, § 501(a)(2), struck out “to the extent that the aggregate amount of such indebtedness with respect to policies covering such individual exceeds $50,000” after “carried on by the taxpayer” in concluding provisions

   Target inherited from the preceding amendment note.

   Source evidence

   Code amendment note
   Pub. L. 104–191, § 501(a)(2), struck out “to the extent that the aggregate amount of such indebtedness with respect to policies covering such individual exceeds $50,000” after “carried on by the taxpayer” in concluding provisions.

   Enacted provision · exact public law section
   (2) by striking all that follows “carried on by the taxpayer” and inserting a period.

7. 1996

   Pub. L. 104–191 § 501(b)(2) · 110 Stat. 1936

   Added · 26 U.S.C. § 264(d)

   Pub. L. 104–191, § 501(b)(2), added subsec. (d)

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 104–191, § 501(b)(2), added subsec. (d).

   Enacted provision · exact public law section
   (2) by adding at the end the following new subsection: “(d) Special Rules for Application of Subsection (A)(4).— “(1) Exception for key persons.— Subsection (a)(4) shall not apply to any interest paid or accrued on any indebtedness with respect to policies or contracts covering an individual who is a key person to the extent that the aggregate amount of such indebtedness with respect to policies and contracts covering such individual does not exceed $50,000. “(2) Interest rate cap on key persons and pre-i986 contracts.— “(A) In general.— No deduction shall be allowed by reason of paragraph (1) or the last sentence of subsection (a) with respect to interest paid or accrued for any month beginning after December 31, 1995, to the extent the amount of such interest exceeds the amount which would have been determined if the applicable rate of interest were used for such month. “(B) Applicable rate of interest.— For purposes of subparagraph (A)— “(i) In general.— The applicable rate of interest for any month is the rate of interest described as Moody’s Corporate Bond Yield Average-Monthly Average Corporates as published by Moody’s Investors Service, Inc., or any successor thereto, for such month, “(ii) Pre-1986 contracts.— In the case of indebtedness on a contract purchased on or before June 20, 1986— “(I) which is a contract providing a fixed rate of interest, the applicable rate of interest for any month shall be the Moody’s rate described in clause (i) for the month in which the contract was purchased, or “(II) which is a contract providing a variable rate of interest, the applicable rate of interest for any month in an applicable period shall be such Moody’s rate for the third month preceding the first month in such period. For purposes of subclause (II), the taxpayer shall elect an applicable period for such contract on its return of tax imposed by this chapter for its first taxable year ending on or after October 13, 1995. Such applicable period shall be for any number of months (not greater than 12) specified in the election and may not be changed by the taxpayer without the consent of the Secretary. “(3) Key person.— For purposes of paragraph (1), the term ‘key person’ means an officer or 20-percent owner, except that the number of individuals who may be treated as key persons with respect to any taxpayer shall not exceed the greater of— “(A) 5 individuals, or “(B) the lesser of 5 percent of the total officers and employees of the taxpayer or 20 individuals. “(4) 20-percent owner.— For purposes of this subsection, the term ‘20-percent owner’ means— “(A) if the taxpayer is a corporation, any person who owns directly 20 percent or more of the outstanding stock of the corporation or stock possessing 20 percent or more of the total combined voting power of all stock of the corporation, or “(B) if the taxpayer is not a corporation, any person who owns 20 ‘percent or more of the capital or profits interest in the employer. “(5) Aggregation rules.— “(A) In general.— For purposes of paragraph (4)(A) and applying the $50,000 limitation in paragraph (1)— “(i) all members of a controlled group shall be treated as one taxpayer, and “(ii) such limitation shall be allocated among the members of such group in such manner as the Secretary may prescribe. “(B) Controlled group.— For purposes of this paragraph, all persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as members of a controlled group.”.

8. 1997

   Pub. L. 105–34 § 1084(a)(1) · 111 Stat. 788

   Amended · 26 U.S.C. § 264(a)(1)

   Pub. L. 105–34, § 1084(a)(1), amended par. (1) generally. Prior to amendment, par. (1) read as follows: “Premiums paid on any life insurance policy covering the life of any officer or employee, or of any person financially interested in any trade or business carried on by the taxpayer, when the taxpayer is directly or indirectly a beneficiary under such policy.”

   Source evidence

   Code amendment note
   Subsec. (a)(1). Pub. L. 105–34, § 1084(a)(1), amended par. (1) generally. Prior to amendment, par. (1) read as follows: “Premiums paid on any life insurance policy covering the life of any officer or employee, or of any person financially interested in any trade or business carried on by the taxpayer, when the taxpayer is directly or indirectly a beneficiary under such policy.”

   Enacted provision · exact public law section
   (1) In general.— Paragraph (1) of section 264(a) is amended to read as follows: “(1) Premiums on any life insurance policy, or endowment or annuity contract, if the taxpayer is directly or indirectly a beneficiary under the policy or contract.”.

   Effective date note
   Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

9. 1997

   Pub. L. 105–34 § 1602(f)(1) · 111 Stat. 788

   1. Added · 26 U.S.C. § 264(a)(4)

      Pub. L. 105–34, § 1602(f)(1), added subpars. (A) and (B) and concluding provisions

   2. Struck · 26 U.S.C. § 264(a)(4)

      Pub. L. 105–34, § 1602(f)(1), struck out former subpars. (A) and (B) and concluding provisions which read as follows:

   Source evidence

   Code amendment note
   Subsec. (a)(4). Pub. L. 105–34, § 1602(f)(1), added subpars. (A) and (B) and concluding provisions and struck out former subpars. (A) and (B) and concluding provisions which read as follows:

   “(A) is an officer or employee of, or “(B) is financially interested in, any trade or business carried on by the taxpayer.”

   Enacted provision · exact public law section
   (1) Paragraph (4) of section 264(a) is amended by striking subparagraph (A) and all that follows through “by the taxpayer.” and inserting the following: “(A) is or was an officer or employee, or “(B) is or was financially interested in, any trade or business carried on (currently or formerly) by the taxpayer.”.

   Effective date note
   Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

10. 1997

    Pub. L. 105–34 § 1084(b)(1) · 111 Stat. 788

    Substituted · 26 U.S.C. § 264(a)(4)

    Pub. L. 105–34, § 1084(b)(1), substituted “individual.” for “individual, who—

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 105–34, § 1084(b)(1), substituted “individual.” for “individual, who—

    “(A) is or was an officer or employee, or “(B) is or was financially interested in, any trade or business carried on (currently or formerly) by the taxpayer.”

    Enacted provision · exact public law section
    (1) In general.— Paragraph (4) of section 264(a) is amended by striking “individual, who” and all that follows and inserting “individual.”.

    Effective date note
    Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

11. 1997

    Pub. L. 105–34 § 1084(a)(2) · 111 Stat. 788

    1. Added · 26 U.S.C. § 264(b); 26 U.S.C. § 264(c)

       Pub. L. 105–34, § 1084(a)(2), added subsec. (b)

    2. Redesignated · 26 U.S.C. § 264(b); 26 U.S.C. § 264(c)

       Pub. L. 105–34, § 1084(a)(2), redesignated former subsec. (b) as (c). Former subsec. (c) redesignated (d)

    Source evidence

    Code amendment note
    Subsecs. (b), (c). Pub. L. 105–34, § 1084(a)(2), added subsec. (b) and redesignated former subsec. (b) as (c). Former subsec. (c) redesignated (d).

    Enacted provision · exact public law section
    (2) Exceptions.— Section 264 is amended by redesignating subsections (b), (c), and (d) as subsections (c), (d), and (e), respectively, and by inserting after subsection (a) the following new subsection: “(b) Exceptions to Subsection (a)(1).— Subsection (a)(1) shall not apply to— “(1) any annuity contract described in section 72(b)(5), and “(2) any annuity contract to which section 72(u) applies.”.

    Effective date note
    Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

12. 1997

    Pub. L. 105–34 § 1084(a)(2) · 111 Stat. 788

    Redesignated · 26 U.S.C. § 264(d)

    Pub. L. 105–34, § 1084(a)(2), redesignated subsec. (c) as (d). Former subsec. (d) redesignated (e)

    Source evidence

    Code amendment note
    Subsec. (d). Pub. L. 105–34, § 1084(a)(2), redesignated subsec. (c) as (d). Former subsec. (d) redesignated (e).

    Enacted provision · exact public law section
    (2) Exceptions.— Section 264 is amended by redesignating subsections (b), (c), and (d) as subsections (c), (d), and (e), respectively, and by inserting after subsection (a) the following new subsection: “(b) Exceptions to Subsection (a)(1).— Subsection (a)(1) shall not apply to— “(1) any annuity contract described in section 72(b)(5), and “(2) any annuity contract to which section 72(u) applies.”.

    Effective date note
    Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

13. 1997

    Pub. L. 105–34 § 1602(f)(2) · 111 Stat. 788

    Amended · 26 U.S.C. § 264(d)(2)(B)(ii)

    Pub. L. 105–34, § 1602(f)(2), amended concluding provisions generally. Prior to amendment, concluding provisions read as follows: “For purposes of subclause (II), the taxpayer shall elect an applicable period for such contract on its return of tax imposed by this chapter for its first taxable year ending on or after October 13, 1995. Such applicable period shall be for any number of months (not greater than 12) specified in the election and may not be changed by the taxpayer without the consent of the Secretary.”

    Source evidence

    Code amendment note
    Subsec. (d)(2)(B)(ii). Pub. L. 105–34, § 1602(f)(2), amended concluding provisions generally. Prior to amendment, concluding provisions read as follows: “For purposes of subclause (II), the taxpayer shall elect an applicable period for such contract on its return of tax imposed by this chapter for its first taxable year ending on or after October 13, 1995. Such applicable period shall be for any number of months (not greater than 12) specified in the election and may not be changed by the taxpayer without the consent of the Secretary.”

    Enacted provision · exact public law section
    (2) The last 2 sentences of section 264(d)(2)(B)(ii) are amended to read as follows: “For purposes of subclause (II), the term ‘applicable period’ means the 12-month period beginning on the date the policy is issued (and each successive 12-month period thereafter) unless the taxpayer elects a number of months (not greater than 12) other than such 12-month period to be its applicable period. Such an election Applicability. shall be made not later than the 90th day after the date of the enactment of this sentence and, if made, shall apply to the taxpayer’s first taxable year ending on or after October 13, 1995, and all subsequent taxable years unless revoked with the consent of the Secretary.”.

    Effective date note
    Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

14. 1997

    Pub. L. 105–34 § 1602(f)(3) · 111 Stat. 788

    Substituted · 26 U.S.C. § 264(d)(4)(B)

    Pub. L. 105–34, § 1602(f)(3), substituted “interest in the taxpayer” for “interest in the employer”

    Source evidence

    Code amendment note
    Subsec. (d)(4)(B). Pub. L. 105–34, § 1602(f)(3), substituted “interest in the taxpayer” for “interest in the employer”.

    Enacted provision · exact public law section
    (3) Subparagraph (B) of section 264(d)(4) is amended by striking “the employer” and inserting “the taxpayer”.

    Effective date note
    Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

15. 1997

    Pub. L. 105–34 § 1084(a)(2) · 111 Stat. 788

    Redesignated · 26 U.S.C. § 264(e)

    Pub. L. 105–34, § 1084(a)(2), redesignated subsec. (d) as (e)

    Source evidence

    Code amendment note
    Subsec. (e). Pub. L. 105–34, § 1084(a)(2), redesignated subsec. (d) as (e).

    Enacted provision · exact public law section
    (2) Exceptions.— Section 264 is amended by redesignating subsections (b), (c), and (d) as subsections (c), (d), and (e), respectively, and by inserting after subsection (a) the following new subsection: “(b) Exceptions to Subsection (a)(1).— Subsection (a)(1) shall not apply to— “(1) any annuity contract described in section 72(b)(5), and “(2) any annuity contract to which section 72(u) applies.”.

    Effective date note
    Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

16. 1997

    Pub. L. 105–34 § 1084(c) · 111 Stat. 788

    Added · 26 U.S.C. § 264(f)

    Pub. L. 105–34, § 1084(c), added subsec. (f)

    Source evidence

    Code amendment note
    Subsec. (f). Pub. L. 105–34, § 1084(c), added subsec. (f).

    Enacted provision · exact public law section
    (c) Pro Rata Allocation of Interest Expense to Policy Cash Values.— Section 264 is amended by adding at the end the following new subsection: “(f) Pro Rata Allocation of Interest Expense to Policy Cash Values.— “(1) In general.— No deduction shall be allowed for that portion of the taxpayer’s interest expense which is allocable to unborrowed policy cash values. “(2) Allocation.— For purposes of paragraph (1), the portion of the taxpayer’s interest expense which is allocable to unborrowed policy cash values is an amount which bears the same ratio to such interest expense as— “(A) the taxpayer’s average unborrowed policy cash values of life insurance policies, and annuity and endowment contracts, issued after June 8, 1997, bears to “(B) the sum of— “(i) in the case of assets of the taxpayer which are life insurance policies or annuity or endowment contracts, the average unborrowed policy cash values of such policies and contracts, and “(ii) in the case of assets of the taxpayer not described in clause (i), the average adjusted bases (within the meaning of section 1016) of such assets. “(3) Unborrowed policy cash value.— For purposes of this subsection, the term ‘unborrowed policy cash value’ means, with respect to any life insurance policy or annuity or endowment contract, the excess of— “(A) the cash surrender value of such policy or contract determined without regard to any surrender charge, over “(B) the amount of any loan with respect to such policy or contract. “(4) Exception for certain policies and contracts.— “(A) Policies and contracts covering 2o-percent owners, officers, directors, and employees.— Paragraph (1) shall not apply to any policy or contract owned by an entity engaged in a trade or business if such policy or contract covers only 1 individual and if such individual is (at the time first covered by the policy or contract)— “(i) a 20-percent owner of such entity, or “(ii) an individual (not described in clause (i)) who is an officer, director, or employee of such trade or business. A policy or contract covering a 20-percent owner of such entity shall not be treated as failing to meet the requirements of the preceding sentence by reason of covering the joint lives of such owner and such owner’s spouse. “(B) Contracts subject to current income inclusion.— Paragraph (1) shall not apply to any annuity contract to which section 72(u) applies. “(C) Coordination with paragraph (2).— Any policy or contract to which paragraph (1) does not apply by reason of this paragraph shall not be taken into account under paragraph (2). “(D) 20-percent owner.— For purposes of subparagraph (A), the term ‘20-percent owner’ has the meaning given such term by subsection (e)(4). “(5) Exception for policies and contracts held by natural persons; treatment of partnerships and s corporations.— “(A) Policies and contracts held by natural persons.— “(i) In general.— This subsection shall not apply to any policy or contract held by a natural person. “(ii) Exception where business is beneficiary.— If a trade or business is directly or indirectly the beneficiary under any policy or contract, such policy or contract shall be treated as held by such trade or business and not by a natural person. “(iii) Special rules.— “(I) Certain trades or businesses not taken into account.— Clause (ii) shall not apply to any trade or business carried on as a sole proprietorship and to any trade or business performing services as an employee. “(II) Limitation on unborrowed cash value.— The amount of the unborrowed cash value of any policy or contract which is taken into account by reason of clause (ii) shall not exceed the benefit to which the trade or business is directly or indirectly entitled under the policy or contract. “(iv) Reporting.— The Secretary shall require such reporting from policyholders and issuers as is necessary to carry out clause (ii). Any report required under the preceding sentence shall be treated as a statement referred to in section 6724(d)(1). “(B) Treatment of partnerships and s corporations.— In the case of a partnership or S corporation, this subsection shall be applied at the partnership and corporate levels. “(6) Special rules.— “(A) Coordination with subsection (a) and section 265.— If interest on any indebtedness is disallowed under subsection (a) or section 265— “(i) such disallowed interest shall not be taken into account for purposes of applying this subsection, and “(ii) the amount otherwise taken into account under paragraph (2)(B) shall be reduced (but not below zero) by the amount of such indebtedness. “(B) Coordination with section 263a.— This subsection shall be applied before the application of section 263A (relating to capitalization of certain expenses where taxpayer produces property). “(7) Interest expense.— The term ‘interest expense’ means the aggregate amount allowable to the taxpayer as a deduction for interest (within the meaning of section 265(b)(4)) for the taxable year (determined without regard to this subsection, section 265(b), and section 291). “(8) Aggregation rules.— “(A) In general.— All members of a controlled group (within the meaning of subsection (d)(5)(B)) shall be treated as 1 taxpayer for purposes of this subsection. “(B) Treatment of insurance companies.— This subsection shall not apply to an insurance company subject to tax under subchapter L, and subparagraph (A) shall be applied without regard to any member of an affiliated group which is an insurance company.”.

    Effective date note
    Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

17. 1998

    Internal Revenue Service Restructuring and Reform Act of 1998

    Pub. L. 105–206 § 6010 · 112 Stat. 685

    Substituted · 26 U.S.C. § 264(a)(3)

    Pub. L. 105–206, § 6010(o)(1), substituted “subsection (d)” for “subsection (c)”

    Source evidence

    Code amendment note
    Subsec. (a)(3). Pub. L. 105–206, § 6010(o)(1), substituted “subsection (d)” for “subsection (c)”.

    Enacted provision · exact public law section
    SEC. 6010. AMENDMENTS RELATED TO TITLE X OF 1997 ACT. (a) Amendments Related to Section 1001 of 1997 Act.— (1) Paragraph (2) of section 1259(b) of the 1986 Code is amended— (A) by striking “debt” each place it appears in clauses (i), (ii), and (iii) of subparagraph (A) and inserting “position”; (B) by striking “and” at the end of subparagraph (A); and (C) by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph: “(B) any hedge with respect to a position described in subparagraph (A), and”. (2) Section 1259(d)(1) of the 1986 Code is amended by inserting “(including cash)” after “property”. (3) Subparagraph (D) of section 475(f)(1) of the 1986 Code is amended by adding at the end the following new sentence: “Subsection (d)(3) shall not apply under the preceding sentence for purposes of applying sections 1402 and 7704.”. (4) Subparagraph (C) of section 1001(d)(3) of the 1997 Act is amended by striking “within the 30-day period beginning 26 USC 475 note. on” and inserting “before the close of the 30th day after”. (b) Amendment Related to Section 1011 of 1997 Act.— Paragraph (1) of section 1059(g) of the 1986 Code is amended by striking “and in the case of stock held by pass-thru entities” and inserting “, in the case of stock held by pass-thru entities, and in the case of consolidated groups”. (c) Amendments Related to Section 1012 of 1997 Act.— (1) Paragraph (1) of section 1012(d) of the 1997 Act is 26 USC 351 note. amended by striking “1997, pursuant” and inserting “1997; except that the amendment made by subsection (a) shall apply to such distributions only if pursuant”. (2) Subparagraph (A) of section 355(e)(3) of the 1986 Code is amended— (A) by striking “shall not be treated as described in” and inserting “shall not be taken into account in applying”; and (B) by striking clause (iv) and inserting the following new clause: “(iv) The acquisition of stock in the distributing corporation or any controlled corporation to the extent that the percentage of stock owned directly or indirectly in such corporation by each person owning stock in such corporation immediately before the acquisition does not decrease.”. (3) (A) Subsection (c) of section 351 of the 1986 Code is amended to read as follows: “(c) Special Rules Where Distribution to Shareholders.— “(1) In general.— In determining control for purposes of this section, the fact that any corporate transferor distributes part or all of the stock in the corporation which it receives in the exchange to its shareholders shall not be taken into account. “(2) Special rule for section 355.— If the requirements of section 355 (or so much of section 356 as relates to section 355) are met with respect to a distribution described in paragraph (1), then, solely for purposes of determining the tax treatment of the transfers of property to the controlled corporation by the distributing corporation, the fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock shall not be taken into account in determining control for purposes of this section.”. (B) Clause (ii) of section 368(a)(2)(H) of the 1986 Code is amended to read as follows: “(ii) in the case of a transaction with respect to which the requirements of section 355 (or so much of section 356 as relates to section 355) are met, the fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock shall not be taken into account.”. (d) Amendments Related to Section 1013 of 1997 Act.— (1) Paragraph (5) of section 304(b) of the 1986 Code is amended by striking subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B). (2) Subsection (b) of section 304 of the 1986 Code is amended by adding at the end the following new paragraph: “(6) Regulations. Avoidance of multiple inclusions, etc.— In the case of any acquisition to which subsection (a) applies in which the acquiring corporation or the issuing corporation is a foreign corporation, the Secretary shall prescribe such regulations as are appropriate in order to eliminate a multiple inclusion of any item in income by reason of this subpart and to provide appropriate basis adjustments (including modifications to the application of sections 959 and 961).”. (e) Amendments Related to Section 1014 of 1997 Act.— (1) Paragraph (1) of section 351(g) of the 1986 Code is amended by adding “and” at the end of subparagraph (A) and by striking subparagraphs (B) and (C) and inserting the following new subparagraph: “(B) if (and only if) the transferor receives stock other than nonqualified preferred stock— “(i) subsection (b) shall apply to such transferor; and “(ii) such nonqualified preferred stock shall be treated as other property for purposes of applying subsection (b).”. (2) Clause (ii) of section 354(a)(2)(C) of 1986 Code is amended by adding at the end the following new subclause: “(III) Extension of statute of limitations.— The statutory period for the assessment of any deficiency attributable to a corporation failing to be a family-owned corporation shall not expire before the expiration of 3 years after the date the Secretary is notified by the corporation (in such manner as the Secretary may prescribe) of such failure, and such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.”. (f) Amendment Related to Section 1024 of 1997 Act.— Section 6331(h)(1) of the 1986 Code is amended by striking “The effect of a levy” and inserting “If the Secretary approves a levy under this subsection, the effect of such levy”. (g) Amendments Related to Section 1031 of 1997 Act.— (1) Subsection (1) of section 4041 of the 1986 Code is amended by striking “subsection (e) or (f)” and inserting “subsection (f) or (g)”. (2) Subsection (b) of section 9502 of the 1986 Code is amended by moving the sentence added at the end of paragraph (1) to the end of such subsection. (3) Subsection (c) of section 6421 of the 1986 Code is amended— (A) by striking “(2)(A)” and inserting “(2)”; and (B) by adding at the end the following sentence: “Subsection (a) shall not apply to gasoline to which this subsection applies.”. (h) Amendments Related to Section 1032 of 1997 Act.— (1) Section 1032(a) of the 1997 Act is amended by striking 26 USC 4083. “Subsection (a) of section 4083” and inserting “Paragraph (1) of section 4083(a)”. (2) Section 1032(e)(12)(A) of the 1997 Act shall be applied 26 USC 7232. as if “gasoline, diesel fuel,” were the material proposed to be stricken. (3) Paragraph (1) of section 4082(d) of the 1986 Code is amended to read as follows: “(1) Aviation-grade kerosene.— Subsection (a)(2) shall Regulations. not apply to aviation-grade kerosene (as determined under regulations prescribed by the Secretary) which the Secretary determines is destined for use as a fuel in an aircraft.”. (4) Paragraph (3) of section 4082(d) of the 1986 Code is amended by striking “a removal, entry, or sale of kerosene to” and inserting “kerosene received by”. (5) Paragraph (1) of section 4101(e) of the 1986 Code is amended by striking “dyed diesel fuel and kerosene” and inserting “such fuel in a dyed form”. (i) Amendment Related to Section 1034 of 1997 Act.— Paragraph (3) of section 4251(d) of the 1986 Code is amended by striking “other similar arrangement” and inserting “any other similar arrangement”. (j) Amendments Related to Section 1041 of 1997 Act.— (1) Subparagraph (A) of section 512(b)(13) of the 1986 Code is amended by inserting “or accrues” after “receives”. (2) Subclause (I) of section 512(b)(13)(B)(i) of the 1986 Code is amended by striking “(as defined in section 513A(a)(5)(A))”. (3) Paragraph (2) of section 1041(b) of the 1997 Act is 26 USC 512 note. amended to read as follows: (2) Binding contracts.— The amendments made by this section shall not apply to any amount received or accrued during the first 2 taxable years beginning on or after the date of the enactment of this Act if such amount is received or accrued pursuant to a written binding contract in effect on June 8, 1997, and at all times thereafter before such amount is received or accrued. The preceding sentence shall not apply to any amount which would (but for the exercise of an option to accelerate payment of such amount) be received or accrued after such 2 taxable years.”. (k) Amendments Related to Section 1053 of 1997 Act.— (1) Section 853 of the 1986 Code is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Treatment of Taxes Not Allowed as a Credit Under Section 901(k).— This section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section 901 by reason of section 901(k).”. (2) Subsection (c) of section 853 of the 1986 Code is amended by striking the last sentence. (3) Subparagraph (A) of section 901(k)(4) of the 1986 Code is amended by striking “securities business” and inserting “business as a securities dealer”. (l) Amendment Related to Section 1055 of 1997 Act.— Section 6611(g)(1) of the 1986 Code is amended by striking “(e), and (h)” and inserting “and (e)”. (m) Amendment Related to Section 1061 of 1997 Act.— Subsection (c) of section 751 of the 1986 Code is amended by striking “731” each place it appears and inserting “731, 732,”. (n) Amendment Related to Section 1083 of 1997 Act.— 26 USC 39. Section 1083(a)(2) of the 1997 Act is amended— (1) by striking “21” and inserting “20”; and (2) by striking “22” and inserting “21”. (o) Amendments Related to Section 1084 of 1997 Act.— (1) Paragraph (3) of section 264(a) of the 1986 Code is amended by striking “subsection (c)” and inserting “subsection (d)”. (2) Paragraph (4) of section 264(a) of the 1986 Code is amended by striking “subsection (d)” and inserting “subsection (e)”. (3) (A) Paragraph (4) of section 264(f) of the 1986 Code is amended by adding at the end the following new subparagraph: “(E) Master contracts.— If coverage for each insured under a master contract is treated as a separate contract for purposes of sections 817(h), 7702, and 7702A, coverage for each such insured shall be treated as a separate contract for purposes of subparagraph (A). For purposes of the preceding sentence, the term ‘master contract’ shall not include any group life insurance contract (as defined in section 848(e)(2)).”. (B) The second sentence of section 1084(d) of the 1997 26 USC 101 note. Act is amended by striking “but” and all that follows and inserting “except that, in the case of a master contract (within the meaning of section 264(f)(4)(E) of the Internal Revenue Code of 1986), the addition of covered lives shall be treated as a new contract only with respect to such additional covered lives.”. (4) (A) Clause (iv) of section 264(f)(5)(A) of the 1986 Code is amended by striking the second sentence. (B) Subparagraph (B) of section 6724(d)(1) of the 1986 Code is amended by striking “or” at the end of clause (xv), by striking the period at the end of clause (xvi) and inserting “; or”, and by adding at the end the following new clause: “(xvii) section 264(f)(5)(A)(iv) (relating to reporting with respect to certain life insurance and annuity con- tracts).”. (C) Paragraph (2) of section 6724(d) of the 1986 Code is amended by striking “or” at the end of subparagraph (Y), by striking the period at the end of subparagraph (Z) and inserting “or”, and by adding at the end the following new subparagraph: “(AA) section 264(f)(5)(A)(iv) (relating to reporting with respect to certain life insurance and annuity contracts).”. (5) Subparagraph (A) of section 264(f)(8) of the 1986 Code is amended by striking “subsection (d)(5)(B)” and inserting “subsection (e)(5)(B)”. (p) Amendments Related to Section 1085 of 1997 Act.— (1) Paragraph (5) of section 32(c) of the 1986 Code is amended— (A) by inserting before the period at the end of subparagraph (A) “and increased by the amounts described in subparagraph (C)”; (B) by adding “or” at the end of clause (iii) of subparagraph (B); and (C) by striking all that follows subclause (II) of subparagraph (B)(iv) and inserting the following: “(III) other trades or businesses. For purposes of clause (iv), there shall not be taken into account items which are attributable to a trade or business which consists of the performance of services by the taxpayer as an employee. “(C) Certain amounts included.— An amount is described in this subparagraph if it is— “(i) interest received or accrued during the taxable year which is exempt from tax imposed by this chapter; or “(ii) amounts received as a pension or annuity, and any distributions or payments received from an individual retirement plan, by the taxpayer during the taxable year to the extent not included in gross income. Clause (ii) shall not include any amount which is not includible in gross income by reason of a trustee-to-trustee transfer or a rollover distribution.”. (2) Clause (v) of section 32(c)(2)(B) of the 1986 Code is amended by inserting “shall be taken into account” before but only”. (3) The text of paragraph (3) of section 1085(a) of the 1997 Act is amended to read as follows: “Paragraph (2) of 26 USC 6213. section 6213(g) (relating to the definition of mathematical or clerical errors) is amended by striking “and” at the end of subparagraph (I), by striking the period at the end of subparagraph (J) and inserting “, and”, and by inserting after subparagraph (J) the following new subparagraph: “(K) an omission of information required by section 32(k)(2) (relating to taxpayers making improper prior claims of earned income credit).”. (q) Amendment Related to Section 1088 of 1997 Act.— Section 1088(b)(2)(C) of the 1997 Act is amended by inserting “more 26 USC 453C note. than 1 year” before “after”. (r) Amendment Related to Section 1089 of 1997 Act.— Paragraphs (1)(C) and (2)(C) of section 664(d) of the 1986 Code are each amended by adding “, and” at the end.

    Effective date note
    Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

18. 1998

    Internal Revenue Service Restructuring and Reform Act of 1998

    Pub. L. 105–206 § 6010 · 112 Stat. 685

    Substituted · 26 U.S.C. § 264(a)(4)

    Pub. L. 105–206, § 6010(o)(2), substituted “subsection (e)” for “subsection (d)”

    Source evidence

    Code amendment note
    Subsec. (a)(4). Pub. L. 105–206, § 6010(o)(2), substituted “subsection (e)” for “subsection (d)”.

    Enacted provision · exact public law section
    SEC. 6010. AMENDMENTS RELATED TO TITLE X OF 1997 ACT. (a) Amendments Related to Section 1001 of 1997 Act.— (1) Paragraph (2) of section 1259(b) of the 1986 Code is amended— (A) by striking “debt” each place it appears in clauses (i), (ii), and (iii) of subparagraph (A) and inserting “position”; (B) by striking “and” at the end of subparagraph (A); and (C) by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph: “(B) any hedge with respect to a position described in subparagraph (A), and”. (2) Section 1259(d)(1) of the 1986 Code is amended by inserting “(including cash)” after “property”. (3) Subparagraph (D) of section 475(f)(1) of the 1986 Code is amended by adding at the end the following new sentence: “Subsection (d)(3) shall not apply under the preceding sentence for purposes of applying sections 1402 and 7704.”. (4) Subparagraph (C) of section 1001(d)(3) of the 1997 Act is amended by striking “within the 30-day period beginning 26 USC 475 note. on” and inserting “before the close of the 30th day after”. (b) Amendment Related to Section 1011 of 1997 Act.— Paragraph (1) of section 1059(g) of the 1986 Code is amended by striking “and in the case of stock held by pass-thru entities” and inserting “, in the case of stock held by pass-thru entities, and in the case of consolidated groups”. (c) Amendments Related to Section 1012 of 1997 Act.— (1) Paragraph (1) of section 1012(d) of the 1997 Act is 26 USC 351 note. amended by striking “1997, pursuant” and inserting “1997; except that the amendment made by subsection (a) shall apply to such distributions only if pursuant”. (2) Subparagraph (A) of section 355(e)(3) of the 1986 Code is amended— (A) by striking “shall not be treated as described in” and inserting “shall not be taken into account in applying”; and (B) by striking clause (iv) and inserting the following new clause: “(iv) The acquisition of stock in the distributing corporation or any controlled corporation to the extent that the percentage of stock owned directly or indirectly in such corporation by each person owning stock in such corporation immediately before the acquisition does not decrease.”. (3) (A) Subsection (c) of section 351 of the 1986 Code is amended to read as follows: “(c) Special Rules Where Distribution to Shareholders.— “(1) In general.— In determining control for purposes of this section, the fact that any corporate transferor distributes part or all of the stock in the corporation which it receives in the exchange to its shareholders shall not be taken into account. “(2) Special rule for section 355.— If the requirements of section 355 (or so much of section 356 as relates to section 355) are met with respect to a distribution described in paragraph (1), then, solely for purposes of determining the tax treatment of the transfers of property to the controlled corporation by the distributing corporation, the fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock shall not be taken into account in determining control for purposes of this section.”. (B) Clause (ii) of section 368(a)(2)(H) of the 1986 Code is amended to read as follows: “(ii) in the case of a transaction with respect to which the requirements of section 355 (or so much of section 356 as relates to section 355) are met, the fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock shall not be taken into account.”. (d) Amendments Related to Section 1013 of 1997 Act.— (1) Paragraph (5) of section 304(b) of the 1986 Code is amended by striking subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B). (2) Subsection (b) of section 304 of the 1986 Code is amended by adding at the end the following new paragraph: “(6) Regulations. Avoidance of multiple inclusions, etc.— In the case of any acquisition to which subsection (a) applies in which the acquiring corporation or the issuing corporation is a foreign corporation, the Secretary shall prescribe such regulations as are appropriate in order to eliminate a multiple inclusion of any item in income by reason of this subpart and to provide appropriate basis adjustments (including modifications to the application of sections 959 and 961).”. (e) Amendments Related to Section 1014 of 1997 Act.— (1) Paragraph (1) of section 351(g) of the 1986 Code is amended by adding “and” at the end of subparagraph (A) and by striking subparagraphs (B) and (C) and inserting the following new subparagraph: “(B) if (and only if) the transferor receives stock other than nonqualified preferred stock— “(i) subsection (b) shall apply to such transferor; and “(ii) such nonqualified preferred stock shall be treated as other property for purposes of applying subsection (b).”. (2) Clause (ii) of section 354(a)(2)(C) of 1986 Code is amended by adding at the end the following new subclause: “(III) Extension of statute of limitations.— The statutory period for the assessment of any deficiency attributable to a corporation failing to be a family-owned corporation shall not expire before the expiration of 3 years after the date the Secretary is notified by the corporation (in such manner as the Secretary may prescribe) of such failure, and such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.”. (f) Amendment Related to Section 1024 of 1997 Act.— Section 6331(h)(1) of the 1986 Code is amended by striking “The effect of a levy” and inserting “If the Secretary approves a levy under this subsection, the effect of such levy”. (g) Amendments Related to Section 1031 of 1997 Act.— (1) Subsection (1) of section 4041 of the 1986 Code is amended by striking “subsection (e) or (f)” and inserting “subsection (f) or (g)”. (2) Subsection (b) of section 9502 of the 1986 Code is amended by moving the sentence added at the end of paragraph (1) to the end of such subsection. (3) Subsection (c) of section 6421 of the 1986 Code is amended— (A) by striking “(2)(A)” and inserting “(2)”; and (B) by adding at the end the following sentence: “Subsection (a) shall not apply to gasoline to which this subsection applies.”. (h) Amendments Related to Section 1032 of 1997 Act.— (1) Section 1032(a) of the 1997 Act is amended by striking 26 USC 4083. “Subsection (a) of section 4083” and inserting “Paragraph (1) of section 4083(a)”. (2) Section 1032(e)(12)(A) of the 1997 Act shall be applied 26 USC 7232. as if “gasoline, diesel fuel,” were the material proposed to be stricken. (3) Paragraph (1) of section 4082(d) of the 1986 Code is amended to read as follows: “(1) Aviation-grade kerosene.— Subsection (a)(2) shall Regulations. not apply to aviation-grade kerosene (as determined under regulations prescribed by the Secretary) which the Secretary determines is destined for use as a fuel in an aircraft.”. (4) Paragraph (3) of section 4082(d) of the 1986 Code is amended by striking “a removal, entry, or sale of kerosene to” and inserting “kerosene received by”. (5) Paragraph (1) of section 4101(e) of the 1986 Code is amended by striking “dyed diesel fuel and kerosene” and inserting “such fuel in a dyed form”. (i) Amendment Related to Section 1034 of 1997 Act.— Paragraph (3) of section 4251(d) of the 1986 Code is amended by striking “other similar arrangement” and inserting “any other similar arrangement”. (j) Amendments Related to Section 1041 of 1997 Act.— (1) Subparagraph (A) of section 512(b)(13) of the 1986 Code is amended by inserting “or accrues” after “receives”. (2) Subclause (I) of section 512(b)(13)(B)(i) of the 1986 Code is amended by striking “(as defined in section 513A(a)(5)(A))”. (3) Paragraph (2) of section 1041(b) of the 1997 Act is 26 USC 512 note. amended to read as follows: (2) Binding contracts.— The amendments made by this section shall not apply to any amount received or accrued during the first 2 taxable years beginning on or after the date of the enactment of this Act if such amount is received or accrued pursuant to a written binding contract in effect on June 8, 1997, and at all times thereafter before such amount is received or accrued. The preceding sentence shall not apply to any amount which would (but for the exercise of an option to accelerate payment of such amount) be received or accrued after such 2 taxable years.”. (k) Amendments Related to Section 1053 of 1997 Act.— (1) Section 853 of the 1986 Code is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Treatment of Taxes Not Allowed as a Credit Under Section 901(k).— This section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section 901 by reason of section 901(k).”. (2) Subsection (c) of section 853 of the 1986 Code is amended by striking the last sentence. (3) Subparagraph (A) of section 901(k)(4) of the 1986 Code is amended by striking “securities business” and inserting “business as a securities dealer”. (l) Amendment Related to Section 1055 of 1997 Act.— Section 6611(g)(1) of the 1986 Code is amended by striking “(e), and (h)” and inserting “and (e)”. (m) Amendment Related to Section 1061 of 1997 Act.— Subsection (c) of section 751 of the 1986 Code is amended by striking “731” each place it appears and inserting “731, 732,”. (n) Amendment Related to Section 1083 of 1997 Act.— 26 USC 39. Section 1083(a)(2) of the 1997 Act is amended— (1) by striking “21” and inserting “20”; and (2) by striking “22” and inserting “21”. (o) Amendments Related to Section 1084 of 1997 Act.— (1) Paragraph (3) of section 264(a) of the 1986 Code is amended by striking “subsection (c)” and inserting “subsection (d)”. (2) Paragraph (4) of section 264(a) of the 1986 Code is amended by striking “subsection (d)” and inserting “subsection (e)”. (3) (A) Paragraph (4) of section 264(f) of the 1986 Code is amended by adding at the end the following new subparagraph: “(E) Master contracts.— If coverage for each insured under a master contract is treated as a separate contract for purposes of sections 817(h), 7702, and 7702A, coverage for each such insured shall be treated as a separate contract for purposes of subparagraph (A). For purposes of the preceding sentence, the term ‘master contract’ shall not include any group life insurance contract (as defined in section 848(e)(2)).”. (B) The second sentence of section 1084(d) of the 1997 26 USC 101 note. Act is amended by striking “but” and all that follows and inserting “except that, in the case of a master contract (within the meaning of section 264(f)(4)(E) of the Internal Revenue Code of 1986), the addition of covered lives shall be treated as a new contract only with respect to such additional covered lives.”. (4) (A) Clause (iv) of section 264(f)(5)(A) of the 1986 Code is amended by striking the second sentence. (B) Subparagraph (B) of section 6724(d)(1) of the 1986 Code is amended by striking “or” at the end of clause (xv), by striking the period at the end of clause (xvi) and inserting “; or”, and by adding at the end the following new clause: “(xvii) section 264(f)(5)(A)(iv) (relating to reporting with respect to certain life insurance and annuity con- tracts).”. (C) Paragraph (2) of section 6724(d) of the 1986 Code is amended by striking “or” at the end of subparagraph (Y), by striking the period at the end of subparagraph (Z) and inserting “or”, and by adding at the end the following new subparagraph: “(AA) section 264(f)(5)(A)(iv) (relating to reporting with respect to certain life insurance and annuity contracts).”. (5) Subparagraph (A) of section 264(f)(8) of the 1986 Code is amended by striking “subsection (d)(5)(B)” and inserting “subsection (e)(5)(B)”. (p) Amendments Related to Section 1085 of 1997 Act.— (1) Paragraph (5) of section 32(c) of the 1986 Code is amended— (A) by inserting before the period at the end of subparagraph (A) “and increased by the amounts described in subparagraph (C)”; (B) by adding “or” at the end of clause (iii) of subparagraph (B); and (C) by striking all that follows subclause (II) of subparagraph (B)(iv) and inserting the following: “(III) other trades or businesses. For purposes of clause (iv), there shall not be taken into account items which are attributable to a trade or business which consists of the performance of services by the taxpayer as an employee. “(C) Certain amounts included.— An amount is described in this subparagraph if it is— “(i) interest received or accrued during the taxable year which is exempt from tax imposed by this chapter; or “(ii) amounts received as a pension or annuity, and any distributions or payments received from an individual retirement plan, by the taxpayer during the taxable year to the extent not included in gross income. Clause (ii) shall not include any amount which is not includible in gross income by reason of a trustee-to-trustee transfer or a rollover distribution.”. (2) Clause (v) of section 32(c)(2)(B) of the 1986 Code is amended by inserting “shall be taken into account” before but only”. (3) The text of paragraph (3) of section 1085(a) of the 1997 Act is amended to read as follows: “Paragraph (2) of 26 USC 6213. section 6213(g) (relating to the definition of mathematical or clerical errors) is amended by striking “and” at the end of subparagraph (I), by striking the period at the end of subparagraph (J) and inserting “, and”, and by inserting after subparagraph (J) the following new subparagraph: “(K) an omission of information required by section 32(k)(2) (relating to taxpayers making improper prior claims of earned income credit).”. (q) Amendment Related to Section 1088 of 1997 Act.— Section 1088(b)(2)(C) of the 1997 Act is amended by inserting “more 26 USC 453C note. than 1 year” before “after”. (r) Amendment Related to Section 1089 of 1997 Act.— Paragraphs (1)(C) and (2)(C) of section 664(d) of the 1986 Code are each amended by adding “, and” at the end.

    Effective date note
    Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

19. 1998

    Internal Revenue Service Restructuring and Reform Act of 1998

    Pub. L. 105–206 § 6010 · 112 Stat. 685

    Added · 26 U.S.C. § 264(f)(4)(E)

    Pub. L. 105–206, § 6010(o)(3)(A), added subpar. (E)

    Source evidence

    Code amendment note
    Subsec. (f)(4)(E). Pub. L. 105–206, § 6010(o)(3)(A), added subpar. (E).

    Enacted provision · exact public law section
    SEC. 6010. AMENDMENTS RELATED TO TITLE X OF 1997 ACT. (a) Amendments Related to Section 1001 of 1997 Act.— (1) Paragraph (2) of section 1259(b) of the 1986 Code is amended— (A) by striking “debt” each place it appears in clauses (i), (ii), and (iii) of subparagraph (A) and inserting “position”; (B) by striking “and” at the end of subparagraph (A); and (C) by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph: “(B) any hedge with respect to a position described in subparagraph (A), and”. (2) Section 1259(d)(1) of the 1986 Code is amended by inserting “(including cash)” after “property”. (3) Subparagraph (D) of section 475(f)(1) of the 1986 Code is amended by adding at the end the following new sentence: “Subsection (d)(3) shall not apply under the preceding sentence for purposes of applying sections 1402 and 7704.”. (4) Subparagraph (C) of section 1001(d)(3) of the 1997 Act is amended by striking “within the 30-day period beginning 26 USC 475 note. on” and inserting “before the close of the 30th day after”. (b) Amendment Related to Section 1011 of 1997 Act.— Paragraph (1) of section 1059(g) of the 1986 Code is amended by striking “and in the case of stock held by pass-thru entities” and inserting “, in the case of stock held by pass-thru entities, and in the case of consolidated groups”. (c) Amendments Related to Section 1012 of 1997 Act.— (1) Paragraph (1) of section 1012(d) of the 1997 Act is 26 USC 351 note. amended by striking “1997, pursuant” and inserting “1997; except that the amendment made by subsection (a) shall apply to such distributions only if pursuant”. (2) Subparagraph (A) of section 355(e)(3) of the 1986 Code is amended— (A) by striking “shall not be treated as described in” and inserting “shall not be taken into account in applying”; and (B) by striking clause (iv) and inserting the following new clause: “(iv) The acquisition of stock in the distributing corporation or any controlled corporation to the extent that the percentage of stock owned directly or indirectly in such corporation by each person owning stock in such corporation immediately before the acquisition does not decrease.”. (3) (A) Subsection (c) of section 351 of the 1986 Code is amended to read as follows: “(c) Special Rules Where Distribution to Shareholders.— “(1) In general.— In determining control for purposes of this section, the fact that any corporate transferor distributes part or all of the stock in the corporation which it receives in the exchange to its shareholders shall not be taken into account. “(2) Special rule for section 355.— If the requirements of section 355 (or so much of section 356 as relates to section 355) are met with respect to a distribution described in paragraph (1), then, solely for purposes of determining the tax treatment of the transfers of property to the controlled corporation by the distributing corporation, the fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock shall not be taken into account in determining control for purposes of this section.”. (B) Clause (ii) of section 368(a)(2)(H) of the 1986 Code is amended to read as follows: “(ii) in the case of a transaction with respect to which the requirements of section 355 (or so much of section 356 as relates to section 355) are met, the fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock shall not be taken into account.”. (d) Amendments Related to Section 1013 of 1997 Act.— (1) Paragraph (5) of section 304(b) of the 1986 Code is amended by striking subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B). (2) Subsection (b) of section 304 of the 1986 Code is amended by adding at the end the following new paragraph: “(6) Regulations. Avoidance of multiple inclusions, etc.— In the case of any acquisition to which subsection (a) applies in which the acquiring corporation or the issuing corporation is a foreign corporation, the Secretary shall prescribe such regulations as are appropriate in order to eliminate a multiple inclusion of any item in income by reason of this subpart and to provide appropriate basis adjustments (including modifications to the application of sections 959 and 961).”. (e) Amendments Related to Section 1014 of 1997 Act.— (1) Paragraph (1) of section 351(g) of the 1986 Code is amended by adding “and” at the end of subparagraph (A) and by striking subparagraphs (B) and (C) and inserting the following new subparagraph: “(B) if (and only if) the transferor receives stock other than nonqualified preferred stock— “(i) subsection (b) shall apply to such transferor; and “(ii) such nonqualified preferred stock shall be treated as other property for purposes of applying subsection (b).”. (2) Clause (ii) of section 354(a)(2)(C) of 1986 Code is amended by adding at the end the following new subclause: “(III) Extension of statute of limitations.— The statutory period for the assessment of any deficiency attributable to a corporation failing to be a family-owned corporation shall not expire before the expiration of 3 years after the date the Secretary is notified by the corporation (in such manner as the Secretary may prescribe) of such failure, and such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.”. (f) Amendment Related to Section 1024 of 1997 Act.— Section 6331(h)(1) of the 1986 Code is amended by striking “The effect of a levy” and inserting “If the Secretary approves a levy under this subsection, the effect of such levy”. (g) Amendments Related to Section 1031 of 1997 Act.— (1) Subsection (1) of section 4041 of the 1986 Code is amended by striking “subsection (e) or (f)” and inserting “subsection (f) or (g)”. (2) Subsection (b) of section 9502 of the 1986 Code is amended by moving the sentence added at the end of paragraph (1) to the end of such subsection. (3) Subsection (c) of section 6421 of the 1986 Code is amended— (A) by striking “(2)(A)” and inserting “(2)”; and (B) by adding at the end the following sentence: “Subsection (a) shall not apply to gasoline to which this subsection applies.”. (h) Amendments Related to Section 1032 of 1997 Act.— (1) Section 1032(a) of the 1997 Act is amended by striking 26 USC 4083. “Subsection (a) of section 4083” and inserting “Paragraph (1) of section 4083(a)”. (2) Section 1032(e)(12)(A) of the 1997 Act shall be applied 26 USC 7232. as if “gasoline, diesel fuel,” were the material proposed to be stricken. (3) Paragraph (1) of section 4082(d) of the 1986 Code is amended to read as follows: “(1) Aviation-grade kerosene.— Subsection (a)(2) shall Regulations. not apply to aviation-grade kerosene (as determined under regulations prescribed by the Secretary) which the Secretary determines is destined for use as a fuel in an aircraft.”. (4) Paragraph (3) of section 4082(d) of the 1986 Code is amended by striking “a removal, entry, or sale of kerosene to” and inserting “kerosene received by”. (5) Paragraph (1) of section 4101(e) of the 1986 Code is amended by striking “dyed diesel fuel and kerosene” and inserting “such fuel in a dyed form”. (i) Amendment Related to Section 1034 of 1997 Act.— Paragraph (3) of section 4251(d) of the 1986 Code is amended by striking “other similar arrangement” and inserting “any other similar arrangement”. (j) Amendments Related to Section 1041 of 1997 Act.— (1) Subparagraph (A) of section 512(b)(13) of the 1986 Code is amended by inserting “or accrues” after “receives”. (2) Subclause (I) of section 512(b)(13)(B)(i) of the 1986 Code is amended by striking “(as defined in section 513A(a)(5)(A))”. (3) Paragraph (2) of section 1041(b) of the 1997 Act is 26 USC 512 note. amended to read as follows: (2) Binding contracts.— The amendments made by this section shall not apply to any amount received or accrued during the first 2 taxable years beginning on or after the date of the enactment of this Act if such amount is received or accrued pursuant to a written binding contract in effect on June 8, 1997, and at all times thereafter before such amount is received or accrued. The preceding sentence shall not apply to any amount which would (but for the exercise of an option to accelerate payment of such amount) be received or accrued after such 2 taxable years.”. (k) Amendments Related to Section 1053 of 1997 Act.— (1) Section 853 of the 1986 Code is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Treatment of Taxes Not Allowed as a Credit Under Section 901(k).— This section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section 901 by reason of section 901(k).”. (2) Subsection (c) of section 853 of the 1986 Code is amended by striking the last sentence. (3) Subparagraph (A) of section 901(k)(4) of the 1986 Code is amended by striking “securities business” and inserting “business as a securities dealer”. (l) Amendment Related to Section 1055 of 1997 Act.— Section 6611(g)(1) of the 1986 Code is amended by striking “(e), and (h)” and inserting “and (e)”. (m) Amendment Related to Section 1061 of 1997 Act.— Subsection (c) of section 751 of the 1986 Code is amended by striking “731” each place it appears and inserting “731, 732,”. (n) Amendment Related to Section 1083 of 1997 Act.— 26 USC 39. Section 1083(a)(2) of the 1997 Act is amended— (1) by striking “21” and inserting “20”; and (2) by striking “22” and inserting “21”. (o) Amendments Related to Section 1084 of 1997 Act.— (1) Paragraph (3) of section 264(a) of the 1986 Code is amended by striking “subsection (c)” and inserting “subsection (d)”. (2) Paragraph (4) of section 264(a) of the 1986 Code is amended by striking “subsection (d)” and inserting “subsection (e)”. (3) (A) Paragraph (4) of section 264(f) of the 1986 Code is amended by adding at the end the following new subparagraph: “(E) Master contracts.— If coverage for each insured under a master contract is treated as a separate contract for purposes of sections 817(h), 7702, and 7702A, coverage for each such insured shall be treated as a separate contract for purposes of subparagraph (A). For purposes of the preceding sentence, the term ‘master contract’ shall not include any group life insurance contract (as defined in section 848(e)(2)).”. (B) The second sentence of section 1084(d) of the 1997 26 USC 101 note. Act is amended by striking “but” and all that follows and inserting “except that, in the case of a master contract (within the meaning of section 264(f)(4)(E) of the Internal Revenue Code of 1986), the addition of covered lives shall be treated as a new contract only with respect to such additional covered lives.”. (4) (A) Clause (iv) of section 264(f)(5)(A) of the 1986 Code is amended by striking the second sentence. (B) Subparagraph (B) of section 6724(d)(1) of the 1986 Code is amended by striking “or” at the end of clause (xv), by striking the period at the end of clause (xvi) and inserting “; or”, and by adding at the end the following new clause: “(xvii) section 264(f)(5)(A)(iv) (relating to reporting with respect to certain life insurance and annuity con- tracts).”. (C) Paragraph (2) of section 6724(d) of the 1986 Code is amended by striking “or” at the end of subparagraph (Y), by striking the period at the end of subparagraph (Z) and inserting “or”, and by adding at the end the following new subparagraph: “(AA) section 264(f)(5)(A)(iv) (relating to reporting with respect to certain life insurance and annuity contracts).”. (5) Subparagraph (A) of section 264(f)(8) of the 1986 Code is amended by striking “subsection (d)(5)(B)” and inserting “subsection (e)(5)(B)”. (p) Amendments Related to Section 1085 of 1997 Act.— (1) Paragraph (5) of section 32(c) of the 1986 Code is amended— (A) by inserting before the period at the end of subparagraph (A) “and increased by the amounts described in subparagraph (C)”; (B) by adding “or” at the end of clause (iii) of subparagraph (B); and (C) by striking all that follows subclause (II) of subparagraph (B)(iv) and inserting the following: “(III) other trades or businesses. For purposes of clause (iv), there shall not be taken into account items which are attributable to a trade or business which consists of the performance of services by the taxpayer as an employee. “(C) Certain amounts included.— An amount is described in this subparagraph if it is— “(i) interest received or accrued during the taxable year which is exempt from tax imposed by this chapter; or “(ii) amounts received as a pension or annuity, and any distributions or payments received from an individual retirement plan, by the taxpayer during the taxable year to the extent not included in gross income. Clause (ii) shall not include any amount which is not includible in gross income by reason of a trustee-to-trustee transfer or a rollover distribution.”. (2) Clause (v) of section 32(c)(2)(B) of the 1986 Code is amended by inserting “shall be taken into account” before but only”. (3) The text of paragraph (3) of section 1085(a) of the 1997 Act is amended to read as follows: “Paragraph (2) of 26 USC 6213. section 6213(g) (relating to the definition of mathematical or clerical errors) is amended by striking “and” at the end of subparagraph (I), by striking the period at the end of subparagraph (J) and inserting “, and”, and by inserting after subparagraph (J) the following new subparagraph: “(K) an omission of information required by section 32(k)(2) (relating to taxpayers making improper prior claims of earned income credit).”. (q) Amendment Related to Section 1088 of 1997 Act.— Section 1088(b)(2)(C) of the 1997 Act is amended by inserting “more 26 USC 453C note. than 1 year” before “after”. (r) Amendment Related to Section 1089 of 1997 Act.— Paragraphs (1)(C) and (2)(C) of section 664(d) of the 1986 Code are each amended by adding “, and” at the end.

    Effective date note
    Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

20. 1998

    Internal Revenue Service Restructuring and Reform Act of 1998

    Pub. L. 105–206 § 6010 · 112 Stat. 685

    Struck · 26 U.S.C. § 264(f)(5)(A)(iv)

    Pub. L. 105–206, § 6010(o)(4)(A), struck out at end “Any report required under the preceding sentence shall be treated as a statement referred to in section 6724(d)(1).”

    Source evidence

    Code amendment note
    Subsec. (f)(5)(A)(iv). Pub. L. 105–206, § 6010(o)(4)(A), struck out at end “Any report required under the preceding sentence shall be treated as a statement referred to in section 6724(d)(1).”

    Enacted provision · exact public law section
    SEC. 6010. AMENDMENTS RELATED TO TITLE X OF 1997 ACT. (a) Amendments Related to Section 1001 of 1997 Act.— (1) Paragraph (2) of section 1259(b) of the 1986 Code is amended— (A) by striking “debt” each place it appears in clauses (i), (ii), and (iii) of subparagraph (A) and inserting “position”; (B) by striking “and” at the end of subparagraph (A); and (C) by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph: “(B) any hedge with respect to a position described in subparagraph (A), and”. (2) Section 1259(d)(1) of the 1986 Code is amended by inserting “(including cash)” after “property”. (3) Subparagraph (D) of section 475(f)(1) of the 1986 Code is amended by adding at the end the following new sentence: “Subsection (d)(3) shall not apply under the preceding sentence for purposes of applying sections 1402 and 7704.”. (4) Subparagraph (C) of section 1001(d)(3) of the 1997 Act is amended by striking “within the 30-day period beginning 26 USC 475 note. on” and inserting “before the close of the 30th day after”. (b) Amendment Related to Section 1011 of 1997 Act.— Paragraph (1) of section 1059(g) of the 1986 Code is amended by striking “and in the case of stock held by pass-thru entities” and inserting “, in the case of stock held by pass-thru entities, and in the case of consolidated groups”. (c) Amendments Related to Section 1012 of 1997 Act.— (1) Paragraph (1) of section 1012(d) of the 1997 Act is 26 USC 351 note. amended by striking “1997, pursuant” and inserting “1997; except that the amendment made by subsection (a) shall apply to such distributions only if pursuant”. (2) Subparagraph (A) of section 355(e)(3) of the 1986 Code is amended— (A) by striking “shall not be treated as described in” and inserting “shall not be taken into account in applying”; and (B) by striking clause (iv) and inserting the following new clause: “(iv) The acquisition of stock in the distributing corporation or any controlled corporation to the extent that the percentage of stock owned directly or indirectly in such corporation by each person owning stock in such corporation immediately before the acquisition does not decrease.”. (3) (A) Subsection (c) of section 351 of the 1986 Code is amended to read as follows: “(c) Special Rules Where Distribution to Shareholders.— “(1) In general.— In determining control for purposes of this section, the fact that any corporate transferor distributes part or all of the stock in the corporation which it receives in the exchange to its shareholders shall not be taken into account. “(2) Special rule for section 355.— If the requirements of section 355 (or so much of section 356 as relates to section 355) are met with respect to a distribution described in paragraph (1), then, solely for purposes of determining the tax treatment of the transfers of property to the controlled corporation by the distributing corporation, the fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock shall not be taken into account in determining control for purposes of this section.”. (B) Clause (ii) of section 368(a)(2)(H) of the 1986 Code is amended to read as follows: “(ii) in the case of a transaction with respect to which the requirements of section 355 (or so much of section 356 as relates to section 355) are met, the fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock shall not be taken into account.”. (d) Amendments Related to Section 1013 of 1997 Act.— (1) Paragraph (5) of section 304(b) of the 1986 Code is amended by striking subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B). (2) Subsection (b) of section 304 of the 1986 Code is amended by adding at the end the following new paragraph: “(6) Regulations. Avoidance of multiple inclusions, etc.— In the case of any acquisition to which subsection (a) applies in which the acquiring corporation or the issuing corporation is a foreign corporation, the Secretary shall prescribe such regulations as are appropriate in order to eliminate a multiple inclusion of any item in income by reason of this subpart and to provide appropriate basis adjustments (including modifications to the application of sections 959 and 961).”. (e) Amendments Related to Section 1014 of 1997 Act.— (1) Paragraph (1) of section 351(g) of the 1986 Code is amended by adding “and” at the end of subparagraph (A) and by striking subparagraphs (B) and (C) and inserting the following new subparagraph: “(B) if (and only if) the transferor receives stock other than nonqualified preferred stock— “(i) subsection (b) shall apply to such transferor; and “(ii) such nonqualified preferred stock shall be treated as other property for purposes of applying subsection (b).”. (2) Clause (ii) of section 354(a)(2)(C) of 1986 Code is amended by adding at the end the following new subclause: “(III) Extension of statute of limitations.— The statutory period for the assessment of any deficiency attributable to a corporation failing to be a family-owned corporation shall not expire before the expiration of 3 years after the date the Secretary is notified by the corporation (in such manner as the Secretary may prescribe) of such failure, and such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.”. (f) Amendment Related to Section 1024 of 1997 Act.— Section 6331(h)(1) of the 1986 Code is amended by striking “The effect of a levy” and inserting “If the Secretary approves a levy under this subsection, the effect of such levy”. (g) Amendments Related to Section 1031 of 1997 Act.— (1) Subsection (1) of section 4041 of the 1986 Code is amended by striking “subsection (e) or (f)” and inserting “subsection (f) or (g)”. (2) Subsection (b) of section 9502 of the 1986 Code is amended by moving the sentence added at the end of paragraph (1) to the end of such subsection. (3) Subsection (c) of section 6421 of the 1986 Code is amended— (A) by striking “(2)(A)” and inserting “(2)”; and (B) by adding at the end the following sentence: “Subsection (a) shall not apply to gasoline to which this subsection applies.”. (h) Amendments Related to Section 1032 of 1997 Act.— (1) Section 1032(a) of the 1997 Act is amended by striking 26 USC 4083. “Subsection (a) of section 4083” and inserting “Paragraph (1) of section 4083(a)”. (2) Section 1032(e)(12)(A) of the 1997 Act shall be applied 26 USC 7232. as if “gasoline, diesel fuel,” were the material proposed to be stricken. (3) Paragraph (1) of section 4082(d) of the 1986 Code is amended to read as follows: “(1) Aviation-grade kerosene.— Subsection (a)(2) shall Regulations. not apply to aviation-grade kerosene (as determined under regulations prescribed by the Secretary) which the Secretary determines is destined for use as a fuel in an aircraft.”. (4) Paragraph (3) of section 4082(d) of the 1986 Code is amended by striking “a removal, entry, or sale of kerosene to” and inserting “kerosene received by”. (5) Paragraph (1) of section 4101(e) of the 1986 Code is amended by striking “dyed diesel fuel and kerosene” and inserting “such fuel in a dyed form”. (i) Amendment Related to Section 1034 of 1997 Act.— Paragraph (3) of section 4251(d) of the 1986 Code is amended by striking “other similar arrangement” and inserting “any other similar arrangement”. (j) Amendments Related to Section 1041 of 1997 Act.— (1) Subparagraph (A) of section 512(b)(13) of the 1986 Code is amended by inserting “or accrues” after “receives”. (2) Subclause (I) of section 512(b)(13)(B)(i) of the 1986 Code is amended by striking “(as defined in section 513A(a)(5)(A))”. (3) Paragraph (2) of section 1041(b) of the 1997 Act is 26 USC 512 note. amended to read as follows: (2) Binding contracts.— The amendments made by this section shall not apply to any amount received or accrued during the first 2 taxable years beginning on or after the date of the enactment of this Act if such amount is received or accrued pursuant to a written binding contract in effect on June 8, 1997, and at all times thereafter before such amount is received or accrued. The preceding sentence shall not apply to any amount which would (but for the exercise of an option to accelerate payment of such amount) be received or accrued after such 2 taxable years.”. (k) Amendments Related to Section 1053 of 1997 Act.— (1) Section 853 of the 1986 Code is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Treatment of Taxes Not Allowed as a Credit Under Section 901(k).— This section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section 901 by reason of section 901(k).”. (2) Subsection (c) of section 853 of the 1986 Code is amended by striking the last sentence. (3) Subparagraph (A) of section 901(k)(4) of the 1986 Code is amended by striking “securities business” and inserting “business as a securities dealer”. (l) Amendment Related to Section 1055 of 1997 Act.— Section 6611(g)(1) of the 1986 Code is amended by striking “(e), and (h)” and inserting “and (e)”. (m) Amendment Related to Section 1061 of 1997 Act.— Subsection (c) of section 751 of the 1986 Code is amended by striking “731” each place it appears and inserting “731, 732,”. (n) Amendment Related to Section 1083 of 1997 Act.— 26 USC 39. Section 1083(a)(2) of the 1997 Act is amended— (1) by striking “21” and inserting “20”; and (2) by striking “22” and inserting “21”. (o) Amendments Related to Section 1084 of 1997 Act.— (1) Paragraph (3) of section 264(a) of the 1986 Code is amended by striking “subsection (c)” and inserting “subsection (d)”. (2) Paragraph (4) of section 264(a) of the 1986 Code is amended by striking “subsection (d)” and inserting “subsection (e)”. (3) (A) Paragraph (4) of section 264(f) of the 1986 Code is amended by adding at the end the following new subparagraph: “(E) Master contracts.— If coverage for each insured under a master contract is treated as a separate contract for purposes of sections 817(h), 7702, and 7702A, coverage for each such insured shall be treated as a separate contract for purposes of subparagraph (A). For purposes of the preceding sentence, the term ‘master contract’ shall not include any group life insurance contract (as defined in section 848(e)(2)).”. (B) The second sentence of section 1084(d) of the 1997 26 USC 101 note. Act is amended by striking “but” and all that follows and inserting “except that, in the case of a master contract (within the meaning of section 264(f)(4)(E) of the Internal Revenue Code of 1986), the addition of covered lives shall be treated as a new contract only with respect to such additional covered lives.”. (4) (A) Clause (iv) of section 264(f)(5)(A) of the 1986 Code is amended by striking the second sentence. (B) Subparagraph (B) of section 6724(d)(1) of the 1986 Code is amended by striking “or” at the end of clause (xv), by striking the period at the end of clause (xvi) and inserting “; or”, and by adding at the end the following new clause: “(xvii) section 264(f)(5)(A)(iv) (relating to reporting with respect to certain life insurance and annuity con- tracts).”. (C) Paragraph (2) of section 6724(d) of the 1986 Code is amended by striking “or” at the end of subparagraph (Y), by striking the period at the end of subparagraph (Z) and inserting “or”, and by adding at the end the following new subparagraph: “(AA) section 264(f)(5)(A)(iv) (relating to reporting with respect to certain life insurance and annuity contracts).”. (5) Subparagraph (A) of section 264(f)(8) of the 1986 Code is amended by striking “subsection (d)(5)(B)” and inserting “subsection (e)(5)(B)”. (p) Amendments Related to Section 1085 of 1997 Act.— (1) Paragraph (5) of section 32(c) of the 1986 Code is amended— (A) by inserting before the period at the end of subparagraph (A) “and increased by the amounts described in subparagraph (C)”; (B) by adding “or” at the end of clause (iii) of subparagraph (B); and (C) by striking all that follows subclause (II) of subparagraph (B)(iv) and inserting the following: “(III) other trades or businesses. For purposes of clause (iv), there shall not be taken into account items which are attributable to a trade or business which consists of the performance of services by the taxpayer as an employee. “(C) Certain amounts included.— An amount is described in this subparagraph if it is— “(i) interest received or accrued during the taxable year which is exempt from tax imposed by this chapter; or “(ii) amounts received as a pension or annuity, and any distributions or payments received from an individual retirement plan, by the taxpayer during the taxable year to the extent not included in gross income. Clause (ii) shall not include any amount which is not includible in gross income by reason of a trustee-to-trustee transfer or a rollover distribution.”. (2) Clause (v) of section 32(c)(2)(B) of the 1986 Code is amended by inserting “shall be taken into account” before but only”. (3) The text of paragraph (3) of section 1085(a) of the 1997 Act is amended to read as follows: “Paragraph (2) of 26 USC 6213. section 6213(g) (relating to the definition of mathematical or clerical errors) is amended by striking “and” at the end of subparagraph (I), by striking the period at the end of subparagraph (J) and inserting “, and”, and by inserting after subparagraph (J) the following new subparagraph: “(K) an omission of information required by section 32(k)(2) (relating to taxpayers making improper prior claims of earned income credit).”. (q) Amendment Related to Section 1088 of 1997 Act.— Section 1088(b)(2)(C) of the 1997 Act is amended by inserting “more 26 USC 453C note. than 1 year” before “after”. (r) Amendment Related to Section 1089 of 1997 Act.— Paragraphs (1)(C) and (2)(C) of section 664(d) of the 1986 Code are each amended by adding “, and” at the end.

    Effective date note
    Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

21. 1998

    Internal Revenue Service Restructuring and Reform Act of 1998

    Pub. L. 105–206 § 6010 · 112 Stat. 685

    Substituted · 26 U.S.C. § 264(f)(8)(A)

    Pub. L. 105–206, § 6010(o)(5), substituted “subsection (e)(5)(B)” for “subsection (d)(5)(B)”

    Source evidence

    Code amendment note
    Subsec. (f)(8)(A). Pub. L. 105–206, § 6010(o)(5), substituted “subsection (e)(5)(B)” for “subsection (d)(5)(B)”.

    Enacted provision · exact public law section
    SEC. 6010. AMENDMENTS RELATED TO TITLE X OF 1997 ACT. (a) Amendments Related to Section 1001 of 1997 Act.— (1) Paragraph (2) of section 1259(b) of the 1986 Code is amended— (A) by striking “debt” each place it appears in clauses (i), (ii), and (iii) of subparagraph (A) and inserting “position”; (B) by striking “and” at the end of subparagraph (A); and (C) by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph: “(B) any hedge with respect to a position described in subparagraph (A), and”. (2) Section 1259(d)(1) of the 1986 Code is amended by inserting “(including cash)” after “property”. (3) Subparagraph (D) of section 475(f)(1) of the 1986 Code is amended by adding at the end the following new sentence: “Subsection (d)(3) shall not apply under the preceding sentence for purposes of applying sections 1402 and 7704.”. (4) Subparagraph (C) of section 1001(d)(3) of the 1997 Act is amended by striking “within the 30-day period beginning 26 USC 475 note. on” and inserting “before the close of the 30th day after”. (b) Amendment Related to Section 1011 of 1997 Act.— Paragraph (1) of section 1059(g) of the 1986 Code is amended by striking “and in the case of stock held by pass-thru entities” and inserting “, in the case of stock held by pass-thru entities, and in the case of consolidated groups”. (c) Amendments Related to Section 1012 of 1997 Act.— (1) Paragraph (1) of section 1012(d) of the 1997 Act is 26 USC 351 note. amended by striking “1997, pursuant” and inserting “1997; except that the amendment made by subsection (a) shall apply to such distributions only if pursuant”. (2) Subparagraph (A) of section 355(e)(3) of the 1986 Code is amended— (A) by striking “shall not be treated as described in” and inserting “shall not be taken into account in applying”; and (B) by striking clause (iv) and inserting the following new clause: “(iv) The acquisition of stock in the distributing corporation or any controlled corporation to the extent that the percentage of stock owned directly or indirectly in such corporation by each person owning stock in such corporation immediately before the acquisition does not decrease.”. (3) (A) Subsection (c) of section 351 of the 1986 Code is amended to read as follows: “(c) Special Rules Where Distribution to Shareholders.— “(1) In general.— In determining control for purposes of this section, the fact that any corporate transferor distributes part or all of the stock in the corporation which it receives in the exchange to its shareholders shall not be taken into account. “(2) Special rule for section 355.— If the requirements of section 355 (or so much of section 356 as relates to section 355) are met with respect to a distribution described in paragraph (1), then, solely for purposes of determining the tax treatment of the transfers of property to the controlled corporation by the distributing corporation, the fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock shall not be taken into account in determining control for purposes of this section.”. (B) Clause (ii) of section 368(a)(2)(H) of the 1986 Code is amended to read as follows: “(ii) in the case of a transaction with respect to which the requirements of section 355 (or so much of section 356 as relates to section 355) are met, the fact that the shareholders of the distributing corporation dispose of part or all of the distributed stock shall not be taken into account.”. (d) Amendments Related to Section 1013 of 1997 Act.— (1) Paragraph (5) of section 304(b) of the 1986 Code is amended by striking subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B). (2) Subsection (b) of section 304 of the 1986 Code is amended by adding at the end the following new paragraph: “(6) Regulations. Avoidance of multiple inclusions, etc.— In the case of any acquisition to which subsection (a) applies in which the acquiring corporation or the issuing corporation is a foreign corporation, the Secretary shall prescribe such regulations as are appropriate in order to eliminate a multiple inclusion of any item in income by reason of this subpart and to provide appropriate basis adjustments (including modifications to the application of sections 959 and 961).”. (e) Amendments Related to Section 1014 of 1997 Act.— (1) Paragraph (1) of section 351(g) of the 1986 Code is amended by adding “and” at the end of subparagraph (A) and by striking subparagraphs (B) and (C) and inserting the following new subparagraph: “(B) if (and only if) the transferor receives stock other than nonqualified preferred stock— “(i) subsection (b) shall apply to such transferor; and “(ii) such nonqualified preferred stock shall be treated as other property for purposes of applying subsection (b).”. (2) Clause (ii) of section 354(a)(2)(C) of 1986 Code is amended by adding at the end the following new subclause: “(III) Extension of statute of limitations.— The statutory period for the assessment of any deficiency attributable to a corporation failing to be a family-owned corporation shall not expire before the expiration of 3 years after the date the Secretary is notified by the corporation (in such manner as the Secretary may prescribe) of such failure, and such deficiency may be assessed before the expiration of such 3-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment.”. (f) Amendment Related to Section 1024 of 1997 Act.— Section 6331(h)(1) of the 1986 Code is amended by striking “The effect of a levy” and inserting “If the Secretary approves a levy under this subsection, the effect of such levy”. (g) Amendments Related to Section 1031 of 1997 Act.— (1) Subsection (1) of section 4041 of the 1986 Code is amended by striking “subsection (e) or (f)” and inserting “subsection (f) or (g)”. (2) Subsection (b) of section 9502 of the 1986 Code is amended by moving the sentence added at the end of paragraph (1) to the end of such subsection. (3) Subsection (c) of section 6421 of the 1986 Code is amended— (A) by striking “(2)(A)” and inserting “(2)”; and (B) by adding at the end the following sentence: “Subsection (a) shall not apply to gasoline to which this subsection applies.”. (h) Amendments Related to Section 1032 of 1997 Act.— (1) Section 1032(a) of the 1997 Act is amended by striking 26 USC 4083. “Subsection (a) of section 4083” and inserting “Paragraph (1) of section 4083(a)”. (2) Section 1032(e)(12)(A) of the 1997 Act shall be applied 26 USC 7232. as if “gasoline, diesel fuel,” were the material proposed to be stricken. (3) Paragraph (1) of section 4082(d) of the 1986 Code is amended to read as follows: “(1) Aviation-grade kerosene.— Subsection (a)(2) shall Regulations. not apply to aviation-grade kerosene (as determined under regulations prescribed by the Secretary) which the Secretary determines is destined for use as a fuel in an aircraft.”. (4) Paragraph (3) of section 4082(d) of the 1986 Code is amended by striking “a removal, entry, or sale of kerosene to” and inserting “kerosene received by”. (5) Paragraph (1) of section 4101(e) of the 1986 Code is amended by striking “dyed diesel fuel and kerosene” and inserting “such fuel in a dyed form”. (i) Amendment Related to Section 1034 of 1997 Act.— Paragraph (3) of section 4251(d) of the 1986 Code is amended by striking “other similar arrangement” and inserting “any other similar arrangement”. (j) Amendments Related to Section 1041 of 1997 Act.— (1) Subparagraph (A) of section 512(b)(13) of the 1986 Code is amended by inserting “or accrues” after “receives”. (2) Subclause (I) of section 512(b)(13)(B)(i) of the 1986 Code is amended by striking “(as defined in section 513A(a)(5)(A))”. (3) Paragraph (2) of section 1041(b) of the 1997 Act is 26 USC 512 note. amended to read as follows: (2) Binding contracts.— The amendments made by this section shall not apply to any amount received or accrued during the first 2 taxable years beginning on or after the date of the enactment of this Act if such amount is received or accrued pursuant to a written binding contract in effect on June 8, 1997, and at all times thereafter before such amount is received or accrued. The preceding sentence shall not apply to any amount which would (but for the exercise of an option to accelerate payment of such amount) be received or accrued after such 2 taxable years.”. (k) Amendments Related to Section 1053 of 1997 Act.— (1) Section 853 of the 1986 Code is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Treatment of Taxes Not Allowed as a Credit Under Section 901(k).— This section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section 901 by reason of section 901(k).”. (2) Subsection (c) of section 853 of the 1986 Code is amended by striking the last sentence. (3) Subparagraph (A) of section 901(k)(4) of the 1986 Code is amended by striking “securities business” and inserting “business as a securities dealer”. (l) Amendment Related to Section 1055 of 1997 Act.— Section 6611(g)(1) of the 1986 Code is amended by striking “(e), and (h)” and inserting “and (e)”. (m) Amendment Related to Section 1061 of 1997 Act.— Subsection (c) of section 751 of the 1986 Code is amended by striking “731” each place it appears and inserting “731, 732,”. (n) Amendment Related to Section 1083 of 1997 Act.— 26 USC 39. Section 1083(a)(2) of the 1997 Act is amended— (1) by striking “21” and inserting “20”; and (2) by striking “22” and inserting “21”. (o) Amendments Related to Section 1084 of 1997 Act.— (1) Paragraph (3) of section 264(a) of the 1986 Code is amended by striking “subsection (c)” and inserting “subsection (d)”. (2) Paragraph (4) of section 264(a) of the 1986 Code is amended by striking “subsection (d)” and inserting “subsection (e)”. (3) (A) Paragraph (4) of section 264(f) of the 1986 Code is amended by adding at the end the following new subparagraph: “(E) Master contracts.— If coverage for each insured under a master contract is treated as a separate contract for purposes of sections 817(h), 7702, and 7702A, coverage for each such insured shall be treated as a separate contract for purposes of subparagraph (A). For purposes of the preceding sentence, the term ‘master contract’ shall not include any group life insurance contract (as defined in section 848(e)(2)).”. (B) The second sentence of section 1084(d) of the 1997 26 USC 101 note. Act is amended by striking “but” and all that follows and inserting “except that, in the case of a master contract (within the meaning of section 264(f)(4)(E) of the Internal Revenue Code of 1986), the addition of covered lives shall be treated as a new contract only with respect to such additional covered lives.”. (4) (A) Clause (iv) of section 264(f)(5)(A) of the 1986 Code is amended by striking the second sentence. (B) Subparagraph (B) of section 6724(d)(1) of the 1986 Code is amended by striking “or” at the end of clause (xv), by striking the period at the end of clause (xvi) and inserting “; or”, and by adding at the end the following new clause: “(xvii) section 264(f)(5)(A)(iv) (relating to reporting with respect to certain life insurance and annuity con- tracts).”. (C) Paragraph (2) of section 6724(d) of the 1986 Code is amended by striking “or” at the end of subparagraph (Y), by striking the period at the end of subparagraph (Z) and inserting “or”, and by adding at the end the following new subparagraph: “(AA) section 264(f)(5)(A)(iv) (relating to reporting with respect to certain life insurance and annuity contracts).”. (5) Subparagraph (A) of section 264(f)(8) of the 1986 Code is amended by striking “subsection (d)(5)(B)” and inserting “subsection (e)(5)(B)”. (p) Amendments Related to Section 1085 of 1997 Act.— (1) Paragraph (5) of section 32(c) of the 1986 Code is amended— (A) by inserting before the period at the end of subparagraph (A) “and increased by the amounts described in subparagraph (C)”; (B) by adding “or” at the end of clause (iii) of subparagraph (B); and (C) by striking all that follows subclause (II) of subparagraph (B)(iv) and inserting the following: “(III) other trades or businesses. For purposes of clause (iv), there shall not be taken into account items which are attributable to a trade or business which consists of the performance of services by the taxpayer as an employee. “(C) Certain amounts included.— An amount is described in this subparagraph if it is— “(i) interest received or accrued during the taxable year which is exempt from tax imposed by this chapter; or “(ii) amounts received as a pension or annuity, and any distributions or payments received from an individual retirement plan, by the taxpayer during the taxable year to the extent not included in gross income. Clause (ii) shall not include any amount which is not includible in gross income by reason of a trustee-to-trustee transfer or a rollover distribution.”. (2) Clause (v) of section 32(c)(2)(B) of the 1986 Code is amended by inserting “shall be taken into account” before but only”. (3) The text of paragraph (3) of section 1085(a) of the 1997 Act is amended to read as follows: “Paragraph (2) of 26 USC 6213. section 6213(g) (relating to the definition of mathematical or clerical errors) is amended by striking “and” at the end of subparagraph (I), by striking the period at the end of subparagraph (J) and inserting “, and”, and by inserting after subparagraph (J) the following new subparagraph: “(K) an omission of information required by section 32(k)(2) (relating to taxpayers making improper prior claims of earned income credit).”. (q) Amendment Related to Section 1088 of 1997 Act.— Section 1088(b)(2)(C) of the 1997 Act is amended by inserting “more 26 USC 453C note. than 1 year” before “after”. (r) Amendment Related to Section 1089 of 1997 Act.— Paragraphs (1)(C) and (2)(C) of section 664(d) of the 1986 Code are each amended by adding “, and” at the end.

    Effective date note
    Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

22. 1998

    Pub. L. 105–277 div. J title IV § 4003(i) · 112 Stat. 2681

    Inserted · 26 U.S.C. § 264(f)(3)

    Pub. L. 105–277 inserted concluding provisions

    Source evidence

    Code amendment note
    Subsec. (f)(3). Pub. L. 105–277 inserted concluding provisions.

    Enacted provision · exact public law section
    (i) Amendment Related to Section 1084 of 1997 Act.— Paragraph (3) of section 264(f) of the 1986 Code is amended by adding at the end the following flush sentence: “If the amount described in subparagraph (A) with respect to any policy or contract does not reasonably approximate its actual value, the amount taken into account under subparagraph (A) shall be the greater of the amount of the insurance company liability or the insurance company reserve with respect to such policy or contract (as determined for purposes of the annual statement approved by the National Association of Insurance Commissioners) or shall be such other amount as is determined by the Secretary.”

    Effective date note
    Amendment by Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.

24 of 25 references resolved to an enrolled provision · 1 partial