§ 543. Personal holding company income

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. 186 · 68A Stat. 186

   Enacted · 26 U.S.C. § 543

   Aug. 16, 1954, ch. 736, 68A Stat. 186

   Source evidence

   Code source credit
   Aug. 16, 1954, ch. 736, 68A Stat. 186

2. 1960

   Pub. L. 86–435 § 1(b)(1) · 74 Stat. 77

   Changed · 26 U.S.C. § 543(a)(1)

   Pub. L. 86–435, § 1(b)(1), excluded copyright royalties

   Source evidence

   Code amendment note
   Subsec. (a)(1). Pub. L. 86–435, § 1(b)(1), excluded copyright royalties.

   Enacted provision · exact public law section
   (1) by striking out “(other than mineral, oil, or gas royalties)” in paragraph (1) and inserting in lieu thereof “(other than mineral, oil, or gas royalties or copyright royalties)”; and

3. 1960

   Pub. L. 86–435 § 1(b)(2) · 74 Stat. 77

   Inserted · 26 U.S.C. § 543(a)(6)

   Pub. L. 86–435, § 1(b)(2), inserted sentence providing that copyright royalties constitute personal holding company income

   Source evidence

   Code amendment note
   Subsec. (a)(6). Pub. L. 86–435, § 1(b)(2), inserted sentence providing that copyright royalties constitute personal holding company income.

   Enacted provision · exact public law section
   (1) by striking out “(other than mineral, oil, or gas royalties)” in paragraph (1) and inserting in lieu thereof “(other than mineral, oil, or gas royalties or copyright royalties)”; and

4. 1960

   Pub. L. 86–435 § 1(a) · 74 Stat. 77

   Added · 26 U.S.C. § 543(a)(9)

   Pub. L. 86–435, § 1(a), added par. (9)

   Source evidence

   Code amendment note
   Subsec. (a)(9). Pub. L. 86–435, § 1(a), added par. (9).

   Enacted provision · exact public law section
   (1) by striking out “(other than mineral, oil, or gas royalties)” in paragraph (1) and inserting in lieu thereof “(other than mineral, oil, or gas royalties or copyright royalties)”; and

5. 1962

   Pub. L. 87–403 § 3(c) · 76 Stat. 4

   Changed · 26 U.S.C. § 543(a)(1)

   Pub. L. 87–403 prescribed conditions making inapplicable the provisions of the paragraph to dividend distribution of divested stock

   Source evidence

   Code amendment note
   Subsec. (a)(1). Pub. L. 87–403 prescribed conditions making inapplicable the provisions of the paragraph to dividend distribution of divested stock.

   Enacted provision · exact public law section
   (c) Section 543 of the Internal Revenue Code of 1954 (relating to personal holding company income) is amended (1) by adding at the end of paragraph (1) of subsection (a) the following new sentence: “This paragraph shall not apply to a dividend distribution of divested stock (as defined in subsection (e) of section 1111) but only if the stock with respect to which the distribution is made was owned by the distributee on September 6, 1961, or was owned by the distributee for at least 2 years prior to the date on which the antitrust order (as defined Ante, p. 4. in subsection (d) of section 1111) was entered.”; and (2) by adding at the end thereof the following new subsection: “(d) Special Adjustment on Disposition of Antitrust Stock Received as a Dividend.— If— “(1) a corporation received antitrust stock (as defined in section 301 (f)) in a distribution to which section 301 applied, “(2) the amount of the distribution determined under section 301(f)(2) exceeded the basis of the stock determined under section 301(f)(3), and “(3) such distribution was includible in personal holding company income under subsection (a)(1), then proper adjustment shall be made, under regulations prescribed by the Secretary or his delegate, to amounts includible in personal holding company income under subsection (a)(2) with respect to such stock (or other property the basis of which is determined by reference to the basis of such stock).”

6. 1962

   Pub. L. 87–403 § 3(c) · 76 Stat. 4

   Added · 26 U.S.C. § 543(d)

   Pub. L. 87–403 added subsec. (d)

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 87–403 added subsec. (d).

   Enacted provision · exact public law section
   (c) Section 543 of the Internal Revenue Code of 1954 (relating to personal holding company income) is amended (1) by adding at the end of paragraph (1) of subsection (a) the following new sentence: “This paragraph shall not apply to a dividend distribution of divested stock (as defined in subsection (e) of section 1111) but only if the stock with respect to which the distribution is made was owned by the distributee on September 6, 1961, or was owned by the distributee for at least 2 years prior to the date on which the antitrust order (as defined Ante, p. 4. in subsection (d) of section 1111) was entered.”; and (2) by adding at the end thereof the following new subsection: “(d) Special Adjustment on Disposition of Antitrust Stock Received as a Dividend.— If— “(1) a corporation received antitrust stock (as defined in section 301 (f)) in a distribution to which section 301 applied, “(2) the amount of the distribution determined under section 301(f)(2) exceeded the basis of the stock determined under section 301(f)(3), and “(3) such distribution was includible in personal holding company income under subsection (a)(1), then proper adjustment shall be made, under regulations prescribed by the Secretary or his delegate, to amounts includible in personal holding company income under subsection (a)(2) with respect to such stock (or other property the basis of which is determined by reference to the basis of such stock).”

7. 1964

   Revenue Act of 1964

   Pub. L. 88–272 § 225(d) · 78 Stat. 19

   1. Amended · 26 U.S.C. § 543(a)

      Pub. L. 88–272, § 225(d), amended subsec. (a) generally, and among other changes

   2. Substituted · 26 U.S.C. § 543(a)

      Pub. L. 88–272, § 225(d), substituted “adjusted ordinary gross income” for “gross income”, provided, relative to rental income, that in addition to the 50-percent test of par. (2)(A), now applied on the basis of adjusted income from rents and adjusted ordinary gross income, a second test for exclusion shall be whether the sum on the dividends paid during the taxable year, the dividends paid on the last day of the year, and the consent dividends for the taxable year, equals or exceeds the amount by which the personal holding company income for the year exceeds 10 percent of the ordinary gross income, relative to mineral, oil, and gas royalties, that in addition to the 50-percent test of par. (3)(A), now applied on the basis of adjusted ordinary gross income, and the 15-percent test of par. (3)(C), from which test have been excluded deductions “specifically allowable under sections other than section 162” and is also now applied on the basis of adjusted gross income, the royalties shall be excluded if the personal holding company income for the taxable year is not more than 10 percent of the ordinary gross income, relative to copyright royalties, retained the 50-percent test as in par. (4)(A), making it applicable to ordinary gross income, included in the computation of the income for the taxable year the adjusted income from rents and the adjusted income from mineral, oil, and gas royalties, excluded from the sum of deductions allocable to royalties, deductions specifically allowable under sections other than 162, and changed the requirement that deductions constitute 50 percent or more of gross income to provide that they must equal 25 percent of ordinary gross income reduced by royalties paid and by depreciation deductions with respect to copyrights, relative to produced film rents, that they be treated on their own basis and not as rentals, and defined “produced film rents”, relative to use of corporation property by shareholders, that personal holding company income includes copyright royalties and the adjusted income from mineral, oil, and gas royalties, eliminated gains from the sale or other disposition of any interest in an estate or trust, from the sale or exchange of stock or securities, and from futures transactions in any commodity, and also definition of “rents”. See subsec. (b)(3)

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 88–272, § 225(d), amended subsec. (a) generally, and among other changes, substituted “adjusted ordinary gross income” for “gross income”, provided, relative to rental income, that in addition to the 50-percent test of par. (2)(A), now applied on the basis of adjusted income from rents and adjusted ordinary gross income, a second test for exclusion shall be whether the sum on the dividends paid during the taxable year, the dividends paid on the last day of the year, and the consent dividends for the taxable year, equals or exceeds the amount by which the personal holding company income for the year exceeds 10 percent of the ordinary gross income, relative to mineral, oil, and gas royalties, that in addition to the 50-percent test of par. (3)(A), now applied on the basis of adjusted ordinary gross income, and the 15-percent test of par. (3)(C), from which test have been excluded deductions “specifically allowable under sections other than section 162” and is also now applied on the basis of adjusted gross income, the royalties shall be excluded if the personal holding company income for the taxable year is not more than 10 percent of the ordinary gross income, relative to copyright royalties, retained the 50-percent test as in par. (4)(A), making it applicable to ordinary gross income, included in the computation of the income for the taxable year the adjusted income from rents and the adjusted income from mineral, oil, and gas royalties, excluded from the sum of deductions allocable to royalties, deductions specifically allowable under sections other than 162, and changed the requirement that deductions constitute 50 percent or more of gross income to provide that they must equal 25 percent of ordinary gross income reduced by royalties paid and by depreciation deductions with respect to copyrights, relative to produced film rents, that they be treated on their own basis and not as rentals, and defined “produced film rents”, relative to use of corporation property by shareholders, that personal holding company income includes copyright royalties and the adjusted income from mineral, oil, and gas royalties, eliminated gains from the sale or other disposition of any interest in an estate or trust, from the sale or exchange of stock or securities, and from futures transactions in any commodity, and also definition of “rents”. See subsec. (b)(3).

   Enacted provision · exact public law section
   (d) Personal Mowing Company Income.— Subsections (a) and (b) of section 543 (relating to personal holding company income) are 26 USC 543. amended to read as follows: “(a) General Rule.— For purposes of this subtitle, the term ‘personal holding company income’ means the portion of the adjusted ordinary gross income which consists of: “(1) Dividends, etc.— Dividends, interest, royalties (other than mineral, oil, or gas royalties or copyright royalties), and annuities. This paragraph shall not apply to— “(A) interest constituting rent (as defined in subsection (b)(3)), “(B) interest on amounts set aside in a reserve fund under section 511 or 607 of the Merchant Marine Act, 1936, and 54 Stat. 1106; 49 Stat. 2005. 46 USC 1161, 1177. 76 Stat. 4. 26 USC 1111. “(C) a dividend distribution of divested stock (as defined in subsection (e) of section 1111), but only if the stock with respect, to which the distribution is made was owned by the distributee on September 6, 1961, or was owned by the distributee for at least 2 years before the date on which the antitrust order (as defined in subsection (d) of section 1111) was entered. “(2) Rents.— The adjusted income from rents: except that such adjusted income shall not be included if— “(A) such adjusted income constitutes 50 percent or more of the adjusted ordinary gross income, and “(B) the sum of— “(i) the dividends paid during the taxable year (determined under section 562), 26 USC 562. “(ii) the dividends considered as paid on the last day of the taxable year under section 563(c) (as limited by 26 USC 563. the second sentence of section 563(b)), and “(iii) the consent dividends for the taxable year (determined 68A Stat. 200. 26 USC 565. under section 565), equals or exceeds the amount, if any, by which the personal holding company income for the taxable year (computed without regard to this paragraph and paragraph (6), and computed by including as personal holding company income copyright royalties and the adjusted income from mineral, oil, and gas royalties) exceeds 10 percent of the ordinary gross income. “(3) Mineral, oil, and gas royalties.— The adjusted income from mineral, oil, and gas royalties; except that such adjusted income shall not be included if— “(A) such adjusted income constitutes 50 percent or more of the adjusted ordinary gross income, “(B) the personal holding company income for the taxable year (computed without regard to this paragraph, and computed by including as personal holding company income copyright royalties and the adjusted income from rents) is not more than 10 percent of the ordinary gross income, and “(C) the sum of the deductions which are allowable under section 162 (relating to trade or business expenses) other than— “(i) deductions for compensation for personal services rendered by the shareholders, and “(ii) deductions which are specifically allowable under 26 USC 162. sections other than section 162, equals or exceeds 15 percent of the adjusted ordinary gross income. “(4) Copyright royalties.— Copyright royalties; except that copyright royalties shall not be included if— “(A) such royalties (exclusive of royalties received for the use of, or right to use, copyrights or interests in copyrights on works created in whole, or in pa it, by any shareholder) constitute 50 percent or more of the ordinary gross income, “(B) the personal holding company income for the taxable year computed— “(i) without regard to copyright royalties, other than royalties received for the use of, or right to use, copyrights or interests in copyrights in works created in whole, or in part, by any shareholder owning more than 10 percent of the total outstanding capital stock of the corporation, “(ii) without regard to dividends from any corporation in which the taxpayer owns at least 50 percent of all classes of stock entitled to vote and at least 50 percent of the total value of all classes of stock and which corporation meets the requirements of this subparagraph and subparagraphs (A) and (C), and “(iii) by including as personal holding company income the adjusted income from rents and the adjusted income from mineral, oil, and gas royalties, is not more than 10 percent of the ordinary gross income, and “(C) the sum of the deductions which are properly allocable to such royalties and which are allowable under section 162, other than— “(i) deductions for compensation for personal services rendered by the shareholders, “(ii) deductions for royalties paid or accrued, and “(iii) deductions which are specifically allowable under sections other than section 162, equals or exceeds 25 percent of the amount by which the ordinary gross income exceeds the sum of the royalties paid or accrued and the amounts allowable as deductions under section 167 (relating to depreciation) with respect to copyright 68A Stat. 51; 76 Stat. 1034. 26 USC 167. royalties. For purposes of this subsection, the term ‘copyright royalties’ means compensation, however designated, for the use of, or the right to use, copyrights in works protected by copyright issued under title 17 of the United States Code (other than by reason of section 2 or 6 thereof) and to which copyright protection is also extended by the laws of any country other than the United States of America by virtue of any international treaty, convention, or agreement, or interests in any such copyrighted works, and includes payments from any person for performing rights in any such copyrighted work and payments (other than produced film rents as defined in paragraph (5)(B)) received for the use of, or right to use, films. For purposes of this paragraph, the term ‘shareholder’ shall include any person who owns stock within the meaning of section 544. 26 USC 544. “(5) Produced film rents.— “(A) Produced film rents: except that such rents shall not be included if such rents constitute 50 percent or more of the ordinary gross income. “(B) For purposes of this section, the term ‘produced film rents’ means payments received with respect to an interest in a film for the use of, or right to use, such film, but only to the extent that such interest was acquired before substantial completion of production of such film. “(6) Use of corporation property by shareholder.— Amounts received as compensation (however designated and from whomsoever received) for the use of, or right to use, property of the corporation in any case where, at any time during the taxable year, 25 percent or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for an individual entitled to the use of the property; whether such right is obtained directly from the corporation or by means of a sublease or other arrangement. This paragraph shall apply only to a corporation which has personal holding company income for the taxable year (computed without regard to this paragraph and paragraph (2), and computed by including as personal holding company income copyright royalties and the adjusted income from mineral, oil, and gas royalties) in excess of 10 percent of its ordinary gross income. “(7) Personal service contracts.— “(A) Amounts received under a contract under which the corporation is to furnish personal services; if some person other than the corporation has the right to designate (by name or by description) the individual who is to perform the services, or if the individual who is to perform the services is designated (by name or by description) in the contract; and “(B) amounts received from the sale or other disposition of such a contract. This paragraph shall apply with respect to amounts received for services under a particular contract only if at some time during the taxable year 25 percent or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for the individual who has performed, is to perform, or may be designated (by name or by description) as the one to perform, such services. “(8) Estates and trusts.— Amounts includible in computing the taxable income of the corporation under part I of subchapter 68A Stat. 215. 26 USC 641–683. J (sec. 641 and following, relating to estates, trusts, and beneficiaries). “(b) Definitions.— For purposes of this part— “(1) Ordinary gross income.— The term ‘ordinary gross income’ means the gross income determined by excluding— “(A) all gains from the sale or other disposition of capital assets, and “(B) all gains (other than those referred to in subparagraph (A)) from the sale or other disposition of property 26 USC 1231. described in section 1231(b). “(2) Adjusted ordinary gross income.— The term ‘adjusted ordinary gross income’ means the ordinary gross income adjusted as follows: “(A) Rents.— From the gross income from rents (as defined in the second sentence of paragraph (3) of this subsection) subtract the amount allowable as deductions for— “(i) exhaustion, wear and tear, obsolescence, and amortization of property other than tangible personal property which is not customarily retained by any one lessee for more than three years, “(ii) property taxes, “(iii) interest, and “(iv) rent, to the extent allocable, under regulations prescribed by the Secretary or his delegate, to such gross income from rents. The amount subtracted under this subparagraph shall not exceed such gross income from rents. “(B) Mineral royalties, etc.— From the gross income from mineral, oil, and gas royalties described in paragraph (4), and from the gross income from working interests in an oil or gas well, subtract the amount allowable as deductions for— “(i) exhaustion, wear and tear, obsolescence, amortization, and depletion, “(ii) property and severance taxes, “(iii) interest, and “(iv) rent, to the extent allocable, under regulations prescribed by the Secretary or his delegate, to such gross income from royalties or such gross income from working interests in oil or gas wells. The amount subtracted under this subparagraph with respect to royalties shall not exceed the gross income from such royalties, and the amount subtracted under this subparagraph with respect to working interests shall not exceed the gross income from such working interests. “(C) Interest.— There shall be excluded— “(i) interest received on a direct obligation of the United States held for sale to customers in the ordinary course of trade or business by a regular dealer who is making a primary market in such obligations, and “(ii) interest on a condemnation award, a judgment, and a tax refund. “(3) Adjusted income from rents.— The term ‘adjusted income from rents’ means the gross income from rents, reduced by the amount subtracted under paragraph (2) (A) of this subsection. For purposes of the preceding sentence, the term ‘rents’ means compensation, however designated, for the use of, or right to use, property, and the interest on debts owed to the corporation, to the extent such debts represent the price for which real property held primarily for sale to customers in the ordinary course of its trade or business was sold or exchanged by the corporation; but does not include amounts constituting personal holding company income under subsection (a)(6), nor copyright royalties (as defined in subsection (a) (4)), nor produced film rents (as defined in subsection (a) (5) (B)). “(4) Adjusted income from mineral, oil, and gas royalties.— The term ‘adjusted income from mineral, oil, and gas royalties’ means the gross income from mineral, oil, and gas royalties (including production payments and overriding royalties), reduced by the amount subtracted under paragraph (2) (B) of this subsection in respect of such royalties.”

8. 1964

   Revenue Act of 1964

   Pub. L. 88–272 § 225(d) · 78 Stat. 19

   Struck · 26 U.S.C. § 543(b)

   Pub. L. 88–272, § 225(d), added subsec. (b). Former subsec. (b), which provided that gross income and personal holding company income determined with respect to transactions relating to gains from stock and security transactions, and with respect to transactions relating to gains from commodity transactions, should include only the excess of gains over losses from such transactions, was struck out

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 88–272, § 225(d), added subsec. (b). Former subsec. (b), which provided that gross income and personal holding company income determined with respect to transactions relating to gains from stock and security transactions, and with respect to transactions relating to gains from commodity transactions, should include only the excess of gains over losses from such transactions, was struck out.

   Enacted provision · exact public law section
   (d) Personal Mowing Company Income.— Subsections (a) and (b) of section 543 (relating to personal holding company income) are 26 USC 543. amended to read as follows: “(a) General Rule.— For purposes of this subtitle, the term ‘personal holding company income’ means the portion of the adjusted ordinary gross income which consists of: “(1) Dividends, etc.— Dividends, interest, royalties (other than mineral, oil, or gas royalties or copyright royalties), and annuities. This paragraph shall not apply to— “(A) interest constituting rent (as defined in subsection (b)(3)), “(B) interest on amounts set aside in a reserve fund under section 511 or 607 of the Merchant Marine Act, 1936, and 54 Stat. 1106; 49 Stat. 2005. 46 USC 1161, 1177. 76 Stat. 4. 26 USC 1111. “(C) a dividend distribution of divested stock (as defined in subsection (e) of section 1111), but only if the stock with respect, to which the distribution is made was owned by the distributee on September 6, 1961, or was owned by the distributee for at least 2 years before the date on which the antitrust order (as defined in subsection (d) of section 1111) was entered. “(2) Rents.— The adjusted income from rents: except that such adjusted income shall not be included if— “(A) such adjusted income constitutes 50 percent or more of the adjusted ordinary gross income, and “(B) the sum of— “(i) the dividends paid during the taxable year (determined under section 562), 26 USC 562. “(ii) the dividends considered as paid on the last day of the taxable year under section 563(c) (as limited by 26 USC 563. the second sentence of section 563(b)), and “(iii) the consent dividends for the taxable year (determined 68A Stat. 200. 26 USC 565. under section 565), equals or exceeds the amount, if any, by which the personal holding company income for the taxable year (computed without regard to this paragraph and paragraph (6), and computed by including as personal holding company income copyright royalties and the adjusted income from mineral, oil, and gas royalties) exceeds 10 percent of the ordinary gross income. “(3) Mineral, oil, and gas royalties.— The adjusted income from mineral, oil, and gas royalties; except that such adjusted income shall not be included if— “(A) such adjusted income constitutes 50 percent or more of the adjusted ordinary gross income, “(B) the personal holding company income for the taxable year (computed without regard to this paragraph, and computed by including as personal holding company income copyright royalties and the adjusted income from rents) is not more than 10 percent of the ordinary gross income, and “(C) the sum of the deductions which are allowable under section 162 (relating to trade or business expenses) other than— “(i) deductions for compensation for personal services rendered by the shareholders, and “(ii) deductions which are specifically allowable under 26 USC 162. sections other than section 162, equals or exceeds 15 percent of the adjusted ordinary gross income. “(4) Copyright royalties.— Copyright royalties; except that copyright royalties shall not be included if— “(A) such royalties (exclusive of royalties received for the use of, or right to use, copyrights or interests in copyrights on works created in whole, or in pa it, by any shareholder) constitute 50 percent or more of the ordinary gross income, “(B) the personal holding company income for the taxable year computed— “(i) without regard to copyright royalties, other than royalties received for the use of, or right to use, copyrights or interests in copyrights in works created in whole, or in part, by any shareholder owning more than 10 percent of the total outstanding capital stock of the corporation, “(ii) without regard to dividends from any corporation in which the taxpayer owns at least 50 percent of all classes of stock entitled to vote and at least 50 percent of the total value of all classes of stock and which corporation meets the requirements of this subparagraph and subparagraphs (A) and (C), and “(iii) by including as personal holding company income the adjusted income from rents and the adjusted income from mineral, oil, and gas royalties, is not more than 10 percent of the ordinary gross income, and “(C) the sum of the deductions which are properly allocable to such royalties and which are allowable under section 162, other than— “(i) deductions for compensation for personal services rendered by the shareholders, “(ii) deductions for royalties paid or accrued, and “(iii) deductions which are specifically allowable under sections other than section 162, equals or exceeds 25 percent of the amount by which the ordinary gross income exceeds the sum of the royalties paid or accrued and the amounts allowable as deductions under section 167 (relating to depreciation) with respect to copyright 68A Stat. 51; 76 Stat. 1034. 26 USC 167. royalties. For purposes of this subsection, the term ‘copyright royalties’ means compensation, however designated, for the use of, or the right to use, copyrights in works protected by copyright issued under title 17 of the United States Code (other than by reason of section 2 or 6 thereof) and to which copyright protection is also extended by the laws of any country other than the United States of America by virtue of any international treaty, convention, or agreement, or interests in any such copyrighted works, and includes payments from any person for performing rights in any such copyrighted work and payments (other than produced film rents as defined in paragraph (5)(B)) received for the use of, or right to use, films. For purposes of this paragraph, the term ‘shareholder’ shall include any person who owns stock within the meaning of section 544. 26 USC 544. “(5) Produced film rents.— “(A) Produced film rents: except that such rents shall not be included if such rents constitute 50 percent or more of the ordinary gross income. “(B) For purposes of this section, the term ‘produced film rents’ means payments received with respect to an interest in a film for the use of, or right to use, such film, but only to the extent that such interest was acquired before substantial completion of production of such film. “(6) Use of corporation property by shareholder.— Amounts received as compensation (however designated and from whomsoever received) for the use of, or right to use, property of the corporation in any case where, at any time during the taxable year, 25 percent or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for an individual entitled to the use of the property; whether such right is obtained directly from the corporation or by means of a sublease or other arrangement. This paragraph shall apply only to a corporation which has personal holding company income for the taxable year (computed without regard to this paragraph and paragraph (2), and computed by including as personal holding company income copyright royalties and the adjusted income from mineral, oil, and gas royalties) in excess of 10 percent of its ordinary gross income. “(7) Personal service contracts.— “(A) Amounts received under a contract under which the corporation is to furnish personal services; if some person other than the corporation has the right to designate (by name or by description) the individual who is to perform the services, or if the individual who is to perform the services is designated (by name or by description) in the contract; and “(B) amounts received from the sale or other disposition of such a contract. This paragraph shall apply with respect to amounts received for services under a particular contract only if at some time during the taxable year 25 percent or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for the individual who has performed, is to perform, or may be designated (by name or by description) as the one to perform, such services. “(8) Estates and trusts.— Amounts includible in computing the taxable income of the corporation under part I of subchapter 68A Stat. 215. 26 USC 641–683. J (sec. 641 and following, relating to estates, trusts, and beneficiaries). “(b) Definitions.— For purposes of this part— “(1) Ordinary gross income.— The term ‘ordinary gross income’ means the gross income determined by excluding— “(A) all gains from the sale or other disposition of capital assets, and “(B) all gains (other than those referred to in subparagraph (A)) from the sale or other disposition of property 26 USC 1231. described in section 1231(b). “(2) Adjusted ordinary gross income.— The term ‘adjusted ordinary gross income’ means the ordinary gross income adjusted as follows: “(A) Rents.— From the gross income from rents (as defined in the second sentence of paragraph (3) of this subsection) subtract the amount allowable as deductions for— “(i) exhaustion, wear and tear, obsolescence, and amortization of property other than tangible personal property which is not customarily retained by any one lessee for more than three years, “(ii) property taxes, “(iii) interest, and “(iv) rent, to the extent allocable, under regulations prescribed by the Secretary or his delegate, to such gross income from rents. The amount subtracted under this subparagraph shall not exceed such gross income from rents. “(B) Mineral royalties, etc.— From the gross income from mineral, oil, and gas royalties described in paragraph (4), and from the gross income from working interests in an oil or gas well, subtract the amount allowable as deductions for— “(i) exhaustion, wear and tear, obsolescence, amortization, and depletion, “(ii) property and severance taxes, “(iii) interest, and “(iv) rent, to the extent allocable, under regulations prescribed by the Secretary or his delegate, to such gross income from royalties or such gross income from working interests in oil or gas wells. The amount subtracted under this subparagraph with respect to royalties shall not exceed the gross income from such royalties, and the amount subtracted under this subparagraph with respect to working interests shall not exceed the gross income from such working interests. “(C) Interest.— There shall be excluded— “(i) interest received on a direct obligation of the United States held for sale to customers in the ordinary course of trade or business by a regular dealer who is making a primary market in such obligations, and “(ii) interest on a condemnation award, a judgment, and a tax refund. “(3) Adjusted income from rents.— The term ‘adjusted income from rents’ means the gross income from rents, reduced by the amount subtracted under paragraph (2) (A) of this subsection. For purposes of the preceding sentence, the term ‘rents’ means compensation, however designated, for the use of, or right to use, property, and the interest on debts owed to the corporation, to the extent such debts represent the price for which real property held primarily for sale to customers in the ordinary course of its trade or business was sold or exchanged by the corporation; but does not include amounts constituting personal holding company income under subsection (a)(6), nor copyright royalties (as defined in subsection (a) (4)), nor produced film rents (as defined in subsection (a) (5) (B)). “(4) Adjusted income from mineral, oil, and gas royalties.— The term ‘adjusted income from mineral, oil, and gas royalties’ means the gross income from mineral, oil, and gas royalties (including production payments and overriding royalties), reduced by the amount subtracted under paragraph (2) (B) of this subsection in respect of such royalties.”

9. 1964

   Revenue Act of 1964

   Pub. L. 88–272 § 225(k)(2) · 78 Stat. 19

   Struck · 26 U.S.C. § 543(d)

   Pub. L. 88–272, § 225(k)(2), struck out subsec. (d) which related to special adjustment on disposition of antitrust stock received as a dividend

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 88–272, § 225(k)(2), struck out subsec. (d) which related to special adjustment on disposition of antitrust stock received as a dividend.

   Enacted provision · exact public law section
   (2) Section 543 (relating to personal holding company 76 Stat. 6. 26 USC 543. income) is amended by striking out subsection (d) (relating to special adjustment on disposition of antitrust stock received as a dividend).

10. 1964

    Pub. L. 88–484 § 3(a) · 78 Stat. 596

    Inserted · 26 U.S.C. § 543(a)(2)

    Pub. L. 88–484 inserted sentence requiring royalties received for the use of, or for the privilege of using, a patent, invention, model, or design (whether or not patented), secret formula or process, or any other similar property right to be treated as rent, if such property right is also used by the corporation receiving such royalties in the manufacture or production of tangible personal property held for lease to customers, and if the amount (computed without regard to this sentence) constituting rent from such leases to customers meets the requirements of subparagraph (A)

    Source evidence

    Code amendment note
    Subsec. (a)(2). Pub. L. 88–484 inserted sentence requiring royalties received for the use of, or for the privilege of using, a patent, invention, model, or design (whether or not patented), secret formula or process, or any other similar property right to be treated as rent, if such property right is also used by the corporation receiving such royalties in the manufacture or production of tangible personal property held for lease to customers, and if the amount (computed without regard to this sentence) constituting rent from such leases to customers meets the requirements of subparagraph (A).

    Enacted provision · exact public law section
    (a) Section 543(a)(2) of the Internal Revenue Code of 1954 (relating to rents) is amended by adding at the end thereof the following new sentence: “For purposes of applying this paragraph, royalties received for the use of, or for the privilege of using, a patent, invention, model, or design (whether or not. patented), secret formula or process, or any other similar property right shall be treated as rent, if such property right is also used by the corporation receiving such royalties in the manufacture or production of tangible personal property held for lease to customers, and if the amount, (computed without regard to this sentence) constituting rent from such leases to customers meets the requirements of subparagraph (A).”

11. 1966

    Pub. L. 89–809 § 206(b)(1) · 80 Stat. 1539

    Struck · 26 U.S.C. § 543(a)(2)

    Pub. L. 89–809, § 206(b)(1), struck out provision that royalties received for the use of, or for the privilege of using, a patent, invention, model, or design, secret formula, process, or other similar property right be treated as rent if such property right is also used by the corporation receiving such royalties in the manufacture or production of tangible personal property held for lease to customers and if the amount constituting rent from such leases to customers meets the requirement of subparagraph (A)

    Source evidence

    Code amendment note
    Subsec. (a)(2). Pub. L. 89–809, § 206(b)(1), struck out provision that royalties received for the use of, or for the privilege of using, a patent, invention, model, or design, secret formula, process, or other similar property right be treated as rent if such property right is also used by the corporation receiving such royalties in the manufacture or production of tangible personal property held for lease to customers and if the amount constituting rent from such leases to customers meets the requirement of subparagraph (A).

    Enacted provision · exact public law section
    (1) Section 543(a)(2) (relating to adjusted income from rents 78 Stat. 81. included in personal holding company income) is amended by striking out the last sentence thereof.

12. 1966

    Foreign Investors Tax Act of 1966

    Pub. L. 89–809 § 104(h)(2) · 80 Stat. 1539

    Added · 26 U.S.C. § 543(b)(1)(C)

    Pub. L. 89–809, § 104(h)(2), added subpar. (C)

    Source evidence

    Code amendment note
    Subsec. (b)(1)(C). Pub. L. 89–809, § 104(h)(2), added subpar. (C).

    Enacted provision · exact public law section
    (2) Section 543(b)(1) (relating to definition of ordinary gross income) is amended— (A) by striking out “and” at the end of subparagraph (A), (B) by striking out the period at the end of subparagraph (B) and inserting in lieu thereof “, and”, and (C) by inserting after subparagraph (B) the following new subparagraph: “(C) in the case of a foreign corporation all of the outstanding stock of which during the last half of the taxable year is owned by nonresident alien individuals (whether directly or indirectly through foreign estates, foreign trusts, foreign partnerships, or other foreign corporations), all items of income which would, but for this subparagraph, constitute personal holding company income under any paragraph of subsection (a) other than paragraph (7) thereof:”

13. 1966

    Pub. L. 89–809 § 206(b)(2) · 80 Stat. 1539

    Added · 26 U.S.C. § 543(b)(2)(D)

    Pub. L. 89–809, § 206(b)(2), added subpar. (D)

    Source evidence

    Code amendment note
    Subsec. (b)(2)(D). Pub. L. 89–809, § 206(b)(2), added subpar. (D).

    Enacted provision · exact public law section
    (2) Section 543(b)(2) (relating to definition of adjusted ordinary gross income) is amended by adding at the end thereof the following new subparagraph: “(D) Certain excluded rents.— From the gross income consisting of compensation described in subparagraph (D) of paragraph (3) subtract the amount allowable as deductions for the items described in clauses (i), (ii), (iii), and (iv) of subparagraph (A) to the extent allocable, under regulations prescribed by the Secretary or his delegate, to such gross income. The amount subtracted under this subparagraph shall not exceed such gross income.”

14. 1966

    Pub. L. 89–809 § 206(a) · 80 Stat. 1539

    1. Struck · 26 U.S.C. § 543(b)(3)

       Pub. L. 89–809, § 206(a), struck out “amounts constituting personal holding company income under subsection (a)(6), nor copyright royalties (as defined in subsection (a)(4)), nor produced film rents (as defined in subsection (a)(5)(B)).” after “but does not include”

    2. Added · 26 U.S.C. § 543(b)(3)

       Pub. L. 89–809, § 206(a), added subpars. (A) to (D)

    Source evidence

    Code amendment note
    Subsec. (b)(3). Pub. L. 89–809, § 206(a), struck out “amounts constituting personal holding company income under subsection (a)(6), nor copyright royalties (as defined in subsection (a)(4)), nor produced film rents (as defined in subsection (a)(5)(B)).” after “but does not include”, and added subpars. (A) to (D).

    Enacted provision · exact public law section
    (a) Rents From Leases of Certain Tangible Personal Property.— Section 543(b)(3) (relating to adjusted income from rents) is amended by striking out “but does not include amounts constituting personal holding company income under subsection (a)(6), nor copyright royalties (as defined in subsection (a)(4) nor produced film rents (as defined in subsection (a)(5)(B)).” and inserting in lieu thereof the following: “but such term does not include— “(A) amounts constituting personal holding company income under subsection (a)(6), “(B) copyright royalties (as defined in subsection (a)(4)), “(C) produced film rents (as defined in subsection (a)(5)(B)), or “(D) compensation, however designated, for the use of, or the right to use, any tangible personal property manu-factured or produced by the taxpayer, if during the taxable year the taxpayer is engaged in substantial manufacturing or production of tangible personal property of the same type.”

15. 1976

    Pub. L. 94–455 § 1901(b)(32)(D) · 90 Stat. 1520

    1. Inserted · 26 U.S.C. § 543(a)(1)

       Pub. L. 94–455, § 1901(b)(32)(D), inserted in subpar. (B) “(46 U.S.C. 1161 or 1177)” after “Merchant Marine Act, 1936”

    2. Struck · 26 U.S.C. § 543(a)(1)

       Pub. L. 94–455, § 1901(b)(32)(D), struck out subpar. (C) relating to a dividend distribution of divested stock

    Source evidence

    Code amendment note
    Subsec. (a)(1). Pub. L. 94–455, § 1901(b)(32)(D), inserted in subpar. (B) “(46 U.S.C. 1161 or 1177)” after “Merchant Marine Act, 1936”, and struck out subpar. (C) relating to a dividend distribution of divested stock.

    Enacted provision · exact public law section
    (D) Section 543(a)(1) is amended by inserting “and” at the end of subparagraph (A), and by striking out subparagraphs (B) and (C) and inserting in lieu thereof the following: “(B) interest on amounts set aside in a reserve fund under section 511 or 607 of the Merchant Marine Act, 1936 (46 U.S.C. 1161 or 1177).”

16. 1976

    Pub. L. 94–455 § 211(a) · 90 Stat. 1520

    Inserted · 26 U.S.C. § 543(a)(5)(B)

    Pub. L. 94–455, § 211(a), inserted “In the case of a producer who actually participates in the production of the film, such term includes an interest in the proceeds or profits from the film, but only to the extent such interest is attributable to such active participation”

    Source evidence

    Code amendment note
    Subsec. (a)(5)(B). Pub. L. 94–455, § 211(a), inserted “In the case of a producer who actually participates in the production of the film, such term includes an interest in the proceeds or profits from the film, but only to the extent such interest is attributable to such active participation”.

    Enacted provision · exact public law section
    (a) In General.— Subparagraph (B) of paragraph (5) of section 543(a)(defining produced film rents for purposes of personal holding company income) is amended by adding at the end thereof the following new sentence: “In the case of a producer who actively participates in the production of the film, such term includes an interest in the proceeds or profits from the film, but only to the extent such interest is attributable to such active participation.”

17. 1976

    Pub. L. 94–455 § 2106(a) · 90 Stat. 1520

    1. Redesignated · 26 U.S.C. § 543(a)(6)

       Pub. L. 94–455, § 2106(a), redesignated existing provisions as subpars. (A), (B), and (C) and, as redesignated

    2. Inserted · 26 U.S.C. § 543(a)(6)

       Pub. L. 94–455, § 2106(a), inserted in subpar. (A) “tangible” after “right to use” and in subpar. (C) inserted exclusions from income embodied in cl. (ii)

    Source evidence

    Code amendment note
    Subsec. (a)(6). Pub. L. 94–455, § 2106(a), redesignated existing provisions as subpars. (A), (B), and (C) and, as redesignated, inserted in subpar. (A) “tangible” after “right to use” and in subpar. (C) inserted exclusions from income embodied in cl. (ii).

    Enacted provision · exact public law section
    (a) In General.— Section 543(a)(6) (relating to definition of personal holding company income) is amended to read as follows: “(6) Use of corporate property by shareholder.— “(A) Amounts received as compensation (however designated and from whomever received) for the use of, or the right to use, tangible property of the corporation in any case where, at any time during the taxable year, 25 percent or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for an individual entitled to the use of the property (whether such right is obtained directly from the corporation or by means of a sublease or other arrangement). “(B) Subparagraph (A) shall apply only to a corporation which has personal holding company income in excess of 10 percent of its ordinary gross income. “(C) For purposes of the limitation in subparagraph (B), personal holding company income shall be computed— “(i) without regard to subparagraph (A) or paragraph (2), “(ii) by excluding amounts received as compensation for t he use of (or right to use) intangible property (other than mineral, oil. or gas royalties or copyright royalties) if a substantial part, of the tangible property used in connection with such intangible property is owned by the corporation and all such tangible and intangible property is used in the active conduct of a trade or business by an individual or individuals described in subparagraph (A), and “(iii) by including copyright royalties and adjusted income from mineral, oil, and gas royalties.”

18. 1976

    Pub. L. 94–455 § 1906(b)(13)(A) · 90 Stat. 1520

    Struck · 26 U.S.C. § 543(b)(2)(A); 26 U.S.C. § 543(b)(2)(B); 26 U.S.C. § 543(b)(2)(D)

    Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”

    Source evidence

    Code amendment note
    Subsec. (b)(2)(A), (B), (D). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

    Enacted provision · exact public law section
    (A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.

19. 1976

    Pub. L. 94–553 § 105(d) · 90 Stat. 2541

    Struck · 26 U.S.C. § 543(a)(4)

    Pub. L. 94–553 struck out “(other than by reason of section 2 or 6 thereof)” after “title 17 of the United States Code”

    Source evidence

    Code amendment note
    Subsec. (a)(4). Pub. L. 94–553 struck out “(other than by reason of section 2 or 6 thereof)” after “title 17 of the United States Code”.

    Enacted provision · exact public law section
    (d) Section 543(a)(4) of the Internal Be venue Code of 1954, as 26 USC 543. amended, is amended by striking out “(other than by reason of section 2 or 6 thereof)”.

20. 1982

    Pub. L. 97–248 title II § 222(e)(6) · 96 Stat. 324

    Added · 26 U.S.C. § 543

    Pub. L. 97–248 added subpar. (C)

    Source evidence

    Code amendment note
    (a)(1)(C). Pub. L. 97–248 added subpar. (C).

    Enacted provision · exact public law section
    (6) Paragraph (1) of section 543(a) (relating to personal holding 26 USC 543. company income) is amended— (A) by striking out “and” at the end of subparagraph (A), (B) by striking out the period at the end of subparagraph (B) and inserting in lieu thereof “, and”, and (C) by adding at the end thereof the following new subparagraph: “(C) dividends to which section 302(b)(4) would apply if the corporation were an individual.”

21. 1984

    Tax Reform Act of 1984

    Pub. L. 98–369 div. A title VII § 712(i)(3) · 98 Stat. 494

    Struck · 26 U.S.C. § 543(a)(1)(C)

    Pub. L. 98–369 struck out subpar. (C) providing for nonapplication of par. (1) to dividends to which section 302(b)(4) would apply if the corporation were an individual

    Source evidence

    Code amendment note
    Subsec. (a)(1)(C). Pub. L. 98–369 struck out subpar. (C) providing for nonapplication of par. (1) to dividends to which section 302(b)(4) would apply if the corporation were an individual.

    Enacted provision · exact public law section
    (3) Paragraph (1) of section 543(a) (defining personal holding company income) is amended by striking out subparagraph (C), by adding “and” at the end of subparagraph (A), and by striking out “, and” at the end of subparagraph (B) and inserting in lieu thereof a period.

22. 1986

    Tax Reform Act of 1986

    Pub. L. 99–514 § 1899A(18) · 100 Stat. 2085

    Substituted · 26 U.S.C. § 543(a)(1)(B)

    Pub. L. 99–514, § 1899A(18), substituted “46 U.S.C. App.” for “46 U.S.C.”

    Source evidence

    Code amendment note
    Subsec. (a)(1)(B). Pub. L. 99–514, § 1899A(18), substituted “46 U.S.C. App.” for “46 U.S.C.”.

    Enacted provision · exact public law section
    (18) Subparagraph (B) of section 543(a)(1) is amended by striking out “46 U.S.C.” and inserting in lieu thereof “46 U.S.C. App.”.

23. 1986

    Tax Reform Act of 1986

    Pub. L. 99–514 § 645(a)(1) · 100 Stat. 2085

    Added · 26 U.S.C. § 543(a)(1)(C)

    Pub. L. 99–514, § 645(a)(1), added subpar. (C)

    Source evidence

    Code amendment note
    Subsec. (a)(1)(C). Pub. L. 99–514, § 645(a)(1), added subpar. (C).

    Enacted provision · exact public law section
    (1) In general.— Paragraph (1) of section 543(a) (defining personal holding company income) is amended— (A) by striking out “and” at the end of subparagraph (A), (B) by striking out the period at the end of subparagraph (B) and inserting in lieu thereof“, and”, and (C) by adding at the end thereof the following new subparagraph: “(C) active business computer software royalties (within the meaning of subsection (d)).”

24. 1986

    Tax Reform Act of 1986

    Pub. L. 99–514 § 645(a)(4)(A) · 100 Stat. 2085

    Inserted · 26 U.S.C. § 543(a)(4)

    Pub. L. 99–514, § 645(a)(4)(A), inserted “This paragraph shall not apply to active business computer software royalties.”

    Source evidence

    Code amendment note
    Subsec. (a)(4). Pub. L. 99–514, § 645(a)(4)(A), inserted “This paragraph shall not apply to active business computer software royalties.”

    Enacted provision · exact public law section
    (A) Section 543(a)(4) (relating to copyright royalties) is amended by adding at the end thereof the following new sentence: “This paragraph shall not apply to active business computer software royalties.”.

25. 1986

    Tax Reform Act of 1986

    Pub. L. 99–514 § 645(a)(4)(B) · 100 Stat. 2085

    Added · 26 U.S.C. § 543(b)(3)(E)

    Pub. L. 99–514, § 645(a)(4)(B), added subpar. (E)

    Source evidence

    Code amendment note
    Subsec. (b)(3)(E). Pub. L. 99–514, § 645(a)(4)(B), added subpar. (E).

    Enacted provision · exact public law section
    (B) Section 543(b)(3) (relating to adjusted income from rents) is amended— (i) by striking out “or” at the end of subparagraph (C), (ii) by striking out the period at the end of subparagraph (D) and inserting in lieu thereof “, or”, and (iii) by adding at the end thereof the following new subparagraph:

26. 1986

    Tax Reform Act of 1986

    Pub. L. 99–514 § 645(a)(2) · 100 Stat. 2085

    Added · 26 U.S.C. § 543(d)

    Pub. L. 99–514, § 645(a)(2), added subsec. (d)

    Source evidence

    Code amendment note
    Subsec. (d). Pub. L. 99–514, § 645(a)(2), added subsec. (d).

    Enacted provision · exact public law section
    (2) Active business computer software royalties defined.— Section 543 is amended by adding at the end thereof the following new subsection: “(d) Active Business Computer Software Royalties.— “(1) ) In general.— For purposes of this section, the term ‘active business computer software royalties’ means any royalties— “(A) received by any corporation during the taxable year in connection with the licensing of computer software, and “(B) with respect to which the requirements of paragraphs (2), (3), (4), and (5) are met. “(2) Royalties must be received by corporation actively engaged in computer software business.— The requirements of this paragraph are met if the royalties described in paragraph (1)— “(A) are received by a corporation engaged in the active conduct of the trade or business of developing, manufacturing, or producing computer software, and “(B) are attributable to computer software which— “(i) is developed, manufactured, or produced by such corporation (or its predecessor) in connection with the trade or business described in subparagraph (A), or “(ii) is directly related to such trade or business. “(3) Royalties must constitute at least 50 percent of income.— The requirements of this paragraph are met if the royalties described in paragraph (1) constitute at least 50 percent of the ordinary gross income of the corporation for the t axable year. “(4) Deductions under sections 162 and 174 relating to royalties must equal or exceed 25 percent of ordinary gross income.— “(A) In general.— The requirements of this paragraph are met if— “(i) the sum of the deductions allowable to the corporation under sections 162, 174, and 195 for the taxable year which are properly allocable to the trade or business described in paragraph (2) equals or exceeds 25 percent of the ordinary gross income of such corporation for such taxable year, or “(ii) the average of such deductions for the 5-taxable year period ending with such taxable year equals or exceeds 25 percent of the average ordinary gross income of such corporation for such period. If a corporation has not been in existence during the 5-taxable year period described in clause (ii), then the period of existence of such corporation shall be substituted for such 5-taxable year period. “(B) Deductions allowable under section 162.— For purposes of subparagraph (A), a deduction shall not be treated as allowable under section 162 if it is specifically allowable under another section. “(C) Limitation on allowable deductions.— For purposes of subparagraph (A), no deduction shall be taken into account with respect to compensation for personal services rendered by the 5 individual shareholders holding the largest percentage (by value) of the outstanding stock of the corporation. For purposes of the preceding sentence— “(i) individuals holding less than 5 percent (by value) of the stock of such corporation shall not be taken into account, and “(ii) stock deemed to be owned by a shareholder solely by attribution from a partner under section 544(a)(2) shall be disregarded. “(5) Dividends must equal or exceed excess of personal holding company income over 10 percent of ordinary gross income.— “(A) In general.— The requirements of this paragraph are met if the sum of— “(i) the dividends paid during the taxable year (determined under section 562), “(ii) the dividends considered as paid on the last day of the taxable year under section 563(c) (as limited by the second sentence of section 563(b)), and “(iii) the consent dividends for the taxable year (determined under section 565), equals or exceeds the amount, if any, by which the personal holding company income for the taxable year exceeds 10 percent of the ordinary gross income of such corporation for such taxable year. “(B) Computation of personal holding company income.— For purposes of this paragraph, personal holding company income shall be computed— “(i) without regard to amounts described in subsection (a)(1)(C), “(ii) without regard to interest income during any taxable year— “(I) which is in the 5-taxable year period beginning with the later of the 1st taxable year of the corporation or the 1st taxable year in which the corporation conducted the trade or business described in paragraph (2)(A), and “(II) during which the corporation meets the requirements of paragraphs (2), (3), and (4), and “(iii) by including adjusted income from rents and adjusted income from mineral, oil, and gas royalties (within the meaning of paragraphs (2) and (3) of subsection (a)). “(6) Special rules for affiliated group members.— “(A) In general.— In any case in which— “(i) the taxpayer receives royalties in connection with the licensing of computer software, and “(ii) another corporation which is a member of the same affiliated group as the taxpayer meets the requirements of paragraphs (2), (3), (4), and (5) with respect to such computer software, the taxpayer shall be treated as having met such requirements. “(B) Affiliated group.— For purposes of this paragraph, the term ‘affiliated group’ has the meaning given such term by section 1504(a).”

27. 1988

    Technical and Miscellaneous Revenue Act of 1988

    Pub. L. 100–647 § 6279(a) · 102 Stat. 3342

    Added · 26 U.S.C. § 543(a)(1)(D)

    Pub. L. 100–647, § 6279(a), added subpar. (D)

    Source evidence

    Code amendment note
    Subsec. (a)(1)(D). Pub. L. 100–647, § 6279(a), added subpar. (D).

    Enacted provision · exact public law section
    (a) In General.— Paragraph (1) of section 543(a) of the 1986 Code is amended by striking out “and” at the end of subparagraph (B), by striking out the period at the end of subparagraph (C) and inserting in lieu thereof “, and” and by adding at the end thereof the following new subparagraph: “(D) interest received by a broker or dealer (within the meaning of section 3(a) (4) or (5) of the Securities and Exchange Act of 1934) in connection with— “(i) any securities or money market instruments held as property described in section 1221(1), “(ii) margin accounts, or “(iii) any financing for a customer secured by securities or money market instruments.”

28. 1988

    Technical and Miscellaneous Revenue Act of 1988

    Pub. L. 100–647 § 1010(f)(5) · 102 Stat. 3342

    1. Substituted · 26 U.S.C. § 543(c)

       Pub. L. 100–647, § 1010(f)(5), substituted “other than life insurance companies” for “other than life or mutual” in text

    2. Substituted · 26 U.S.C. § 543(c)

       Pub. L. 100–647, § 1010(f)(5), substituted “other than a life insurance company” for “other than life or mutual” in text

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 100–647, § 1010(f)(5), substituted “other than life insurance companies” for “other than life or mutual” in heading and “other than a life insurance company” for “other than life or mutual” in text.

    Enacted provision · exact public law section
    (5) Subsection (c) of section 543 of the 1986 Code (relating to gross income of insurance companies other than life or mutual) is amended— (A) by striking out “or Mutual” in the heading and inserting in lieu thereof “Insurance Companies”, and (B) by striking out “life or mutual” in the text and inserting in lieu thereof “a life insurance company”.

29. 1996

    Small Business Job Protection Act of 1996

    Pub. L. 104–188 title I § 1704(t)(6) · 110 Stat. 1755

    Substituted · 26 U.S.C. § 543(a)(2)(B)(ii)

    Pub. L. 104–188 substituted “563(d)” for “563(c)”

    Source evidence

    Code amendment note
    Subsec. (a)(2)(B)(ii). Pub. L. 104–188 substituted “563(d)” for “563(c)”.

    Enacted provision · exact public law section
    (6) Clause (ii) of section 543(a)(2)(B) is amended by striking “section 563(c)” and inserting “section 563(d)”.

30. 1998

    Internal Revenue Service Restructuring and Reform Act of 1998

    Pub. L. 105–206 title VI § 6023(9) · 112 Stat. 685

    Substituted · 26 U.S.C. § 543(d)(5)(A)(ii)

    Pub. L. 105–206 substituted “section 563(d)” for “section 563(c)”

    Source evidence

    Code amendment note
    Subsec. (d)(5)(A)(ii). Pub. L. 105–206 substituted “section 563(d)” for “section 563(c)”.

    Enacted provision · exact public law section
    (9) Clause (ii) of section 543(d)(5)(A) of the 1986 Code is amended by striking “section 563(c)” and inserting “section 563(d)”.

31. 1999

    Tax Relief Extension Act of 1999

    Pub. L. 106–170 title V § 532(c)(2)(E) · 113 Stat. 1860

    Substituted · 26 U.S.C. § 543(a)(1)(D)(i)

    Pub. L. 106–170 substituted “1221(a)(1)” for “1221(1)”

    Source evidence

    Code amendment note
    Subsec. (a)(1)(D)(i). Pub. L. 106–170 substituted “1221(a)(1)” for “1221(1)”.

    Enacted provision · exact public law section
    (E) 26 USC 543. Section 543(a)(1)(D)(i).

32. 2004

    Pub. L. 108–357 title IV § 413(c)(8) · 118 Stat. 1418

    1. Inserted · 26 U.S.C. § 543(b)(1)

       Pub. L. 108–357 inserted “and” at end of subpar. (A)

    2. Substituted · 26 U.S.C. § 543(b)(1)

       Pub. L. 108–357 substituted a period for “, and” at end of subpar. (B)

    3. Struck · 26 U.S.C. § 543(b)(1)

       Pub. L. 108–357 struck out subpar. (C) which read as follows: “in the case of a foreign corporation all of the outstanding stock of which during the last half of the taxable year is owned by nonresident alien individuals (whether directly or indirectly through foreign estates, foreign trusts, foreign partnerships, or other foreign corporations), all items of income which would, but for this subparagraph, constitute personal holding company income under any paragraph of subsection (a) other than paragraph (7) thereof:”

    Source evidence

    Code amendment note
    Subsec. (b)(1). Pub. L. 108–357 inserted “and” at end of subpar. (A), substituted a period for “, and” at end of subpar. (B), and struck out subpar. (C) which read as follows: “in the case of a foreign corporation all of the outstanding stock of which during the last half of the taxable year is owned by nonresident alien individuals (whether directly or indirectly through foreign estates, foreign trusts, foreign partnerships, or other foreign corporations), all items of income which would, but for this subparagraph, constitute personal holding company income under any paragraph of subsection (a) other than paragraph (7) thereof:”.

    Enacted provision · exact public law section
    (8) Paragraph (1) of section 543(b) is amended by inserting “and” at the end of subparagraph (A), by striking “, and” at the end of subparagraph (B) and inserting a period, and by striking subparagraph (C).

33. 2006

    Pub. L. 109–304 § 17(e)(3) · 120 Stat. 1485

    Substituted · 26 U.S.C. § 543(a)(1)(B)

    Pub. L. 109–304 substituted “chapter 533 or 535 of title 46, United States Code” for “section 511 or 607 of the Merchant Marine Act, 1936 (46 U.S.C. App. 1161 or 1177)”

    Source evidence

    Code amendment note
    Subsec. (a)(1)(B). Pub. L. 109–304 substituted “chapter 533 or 535 of title 46, United States Code” for “section 511 or 607 of the Merchant Marine Act, 1936 (46 U.S.C. App. 1161 or 1177)”.

    Enacted provision · exact public law section
    (3) In section 543(a)(1)(B), strike “section 511 or 607 of the Merchant Marine Act, 1936 (46 U.S.C. App. 1161 or 1177)” and substitute “chapter 533 or 535 of title 46, United States Code”.

34. 2014

    Tax Technical Corrections Act of 2014

    Pub. L. 113–295 div. B title II § 207(a) · 128 Stat. 4010

    1. Added · 26 U.S.C. § 543(a)(1)(C)(E)

       Pub. L. 113–295 added subpar. (C)

    2. Redesignated · 26 U.S.C. § 543(a)(1)(C)(E)

       Pub. L. 113–295 redesignated former subpars. (C) and (D) as (D) and (E), respectively

    Source evidence

    Code amendment note
    Subsec. (a)(1)(C) to (E). Pub. L. 113–295 added subpar. (C) and redesignated former subpars. (C) and (D) as (D) and (E), respectively.

    Enacted provision · exact public law section
    (a) Amendments Relating to Section 2102.— (1) Subsection (h) of section 2102 of the Creating Small Business Jobs Act of 2010 26 USC 6721 note. is amended by inserting “, and payee statements required to be furnished,” after “information returns required to be filed”. (2) Paragraphs (1) and (2) of subsection (b), and subsection (c)(1)(C), of section 6722 are each amended by striking “the required filing date” and inserting “the date prescribed for furnishing such statement”. (3) Subparagraph (B) of section 6722(c)(2) 26 USC 6722. is amended by striking “filed” and inserting “furnished”.

35. 2018

    Energy and Water Development and Related Agencies Appropriations Act, 2018

    Pub. L. 115–141 § 401(a)(134) · 132 Stat. 348

    Substituted · 26 U.S.C. § 543(a)(2)(B)(ii)

    Pub. L. 115–141, § 401(a)(134), substituted “section 563(c)” for “section 563(d)”

    Source evidence

    Code amendment note
    Subsec. (a)(2)(B)(ii). Pub. L. 115–141, § 401(a)(134), substituted “section 563(c)” for “section 563(d)”.

    Enacted provision · exact public law section
    Sec. 401. The Nuclear Regulatory Commission shall comply with the July 5, 2011, version of Chapter VI of its Internal Commission Procedures when responding to Congressional requests for information.

36. 2018

    Energy and Water Development and Related Agencies Appropriations Act, 2018

    Pub. L. 115–141 § 401(a)(135) · 132 Stat. 348

    Substituted · 26 U.S.C. § 543(d)(5)(A)(ii)

    Pub. L. 115–141, § 401(a)(135), substituted “section 563(c)” for “section 563(d)”

    Source evidence

    Code amendment note
    Subsec. (d)(5)(A)(ii). Pub. L. 115–141, § 401(a)(135), substituted “section 563(c)” for “section 563(d)”.

    Enacted provision · exact public law section
    Sec. 401. The Nuclear Regulatory Commission shall comply with the July 5, 2011, version of Chapter VI of its Internal Commission Procedures when responding to Congressional requests for information.

37. 2025

    Pub. L. 119–21 title VII § 70302(b)(8) · 139 Stat. 192

    Inserted · 26 U.S.C. § 543(d)(4)(A)(i)

    Pub. L. 119–21 inserted “174A,” after “174,”

    Unresolved: Pub. L. 119–21 was not found in the local Statutes at Large index.

    Source evidence

    Code amendment note
    Subsec. (d)(4)(A)(i). Pub. L. 119–21 inserted “174A,” after “174,”.

    Effective date note
    Amendment by Pub. L. 119–21 applicable to amounts paid or incurred in taxable years beginning after Dec. 31, 2024, subject to election for retroactive application by certain small businesses and election to deduct certain unamortized amounts paid or incurred in taxable years beginning before Jan. 1, 2025, see section 70302(e), (f) of Pub. L. 119–21, set out as an Effective Date note under section 174A of this title.

43 of 45 references resolved to an enrolled provision · 1 partial · 1 unresolved