§ 46 Amount of credit

OLRC 119-134 · eCFR 2026-10-19 · 9 regs · 33 amending Acts · cited by 16 sections

Enacted 1962 · Pub. L. 87-834 Amended · 33 Acts

1962196419661967196919711974197519761978198019811982198319841986198819891990200420052009201020142022(1) (2) (3) (4) (5) (6) (7)
Connections Cited by 16 · Cites 1
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§ 46 Amount of credit
§ 1.46-1 Determination of amount.§ 1.46-2 Carryback and carryover of unused credit.§ 1.46-3 Qualified investment.§ 1.46-4 Limitations with respect to certain persons.§ 1.46-5 Qualified progress expenditures.§ 1.46-6 Limitation in case of certain regulated companies.§ 1.46-7 Statutory provisions; plan requirements for taxpayers electing additional investment credit, etc.§ 1.46-8 Requirements for taxpayers electing additional one-percent investment credit (TRASOP's).§ 1.46-9 Requirements for taxpayers electing an extra one-half percent additional investment credit.
Amended 1964, 1966, 1967, 1969, 1971, 1974, 1975, 1976, 1978, 1980, 1981, 1982, 1983, 1984, 1986, 1988, 1989, 1990, 2004, 2005
  • 2005 Pub. L. 109-58 Pub. L. 109–58 struck out “and” at end of par. (1), struck out period at end of par. (2), and added pars. (3) and (4).
  • 2004 Pub. L. 108-357 Pub. L. 108–357 inserted “and” at end of par. (1), substituted a period for “, and” at end of par. (2), and struck out par. (3) which read as follows: “the reforestation credit.”
  • 1990 Pub. L. 101-508 Pub. L. 101–508, § 11813(a), amended section generally, substituting present provisions for provisions relating to amount of investment credit, determination of percentages, qualified investments and qualified progress expenditures, limitations with respect to certain persons, a limitation in the case of certain regulated companies, a 50 percent credit in the case of certain vessels, and special rule for cooperatives.
  • 1990 Pub. L. 101-508 Pub. L. 101–508, § 11406, substituted “Dec. 31, 1991” for “Sept. 30, 1990” in table items (viii) C. and (ix) B.
  • 1989 Pub. L. 101-239 Pub. L. 101–239, § 7106, substituted “Sept. 30, 1990” for “Dec. 31, 1989” in table items (viii) C., (ix) B., and (x).
  • 1989 Pub. L. 101-239 Pub. L. 101–239, § 7814(d), made technical correction to language of Pub. L. 100–647, § 4006, see 1988 Amendment note below.
  • 1988 Pub. L. 100-647 Pub. L. 100–647, § 4006, as amended by Pub. L. 101–239, § 7814(d), substituted “1989” for “1988” in table items (viii) C., (ix) B., and (x).
  • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1013(a)(44), substituted “private activity bonds” for “industrial development bonds” in heading, and in text substituted “a private activity bond (within the meaning of section 141)” for “an industrial development bond (within the meaning of section 103(b)(2))”.
  • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1002(a)(17), substituted “property to which section 168 applies” for “recovery property” in heading, substituted “property to which section 168 applies” for “recovery property” and “168(e)” for “168(c)” in subpar. (A), substituted “168(e)” for “168(c)” in subpar. (B), and inserted “(as in effect on the day before the date of the enactment of the Tax Reform Act of 1986)” after “section 168(f)(3)(B)” in concluding provisions.
  • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1002(a)(25)(A), substituted “property to which section 168 applies” for “recovery property (within the meaning of section 168)”.
  • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1002(a)(25)(B), substituted “to which section 168 does not apply” for “which is not recovery property (within the meaning of section 168)”.
  • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1002(a)(15), substituted “property to which section 168 applies” for “recovery property (within the meaning of section 168)”, “class life” for “present class life”, and “168(i)(1)” for “168(g)(2)”.
  • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1002(a)(4)(A), substituted “168(i)(3)” for “168(j)(6)”.
  • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1009(a)(1), inserted provisions at end which provided that any such election shall terminate effective with respect to the 1st taxable year of the organization making such election which begins after 1986, and which defined “regular investment tax credit property”.
  • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1002(a)(4)(B), substituted “paragraphs (5) and (6) of section 168(h)” for “paragraphs (8) and (9) of section 168(j)”.
  • 1988 Pub. L. 100-647 Pub. L. 100–647, § 1002(a)(4)(C), (D), substituted “168(h)” for “168(j)” and “168(h)(2)” for “168(j)(4)”.
  • 1986 Pub. L. 99-514 Pub. L. 99–514, § 1847(b)(11), substituted “48(l)(3)(A)(viii)” for “48(l)(3)(A)(vii)” in table item (ii).
  • 1986 Pub. L. 99-514 Pub. L. 99–514, § 421(a), inserted table items (viii) to (xi).
  • 1986 Pub. L. 99-514 Pub. L. 99–514, § 421(b), added subpar. (E).
  • 1986 Pub. L. 99-514 Pub. L. 99–514, § 251(a), in amending par. (4) generally, substituted in subpar. (A) definition of “rehabilitation percentage” for former table specifying specific rehabilitation percentages, reenacted subpar. (B), and struck out subpar. (C) which related to definitions.
  • 1986 Pub. L. 99-514 Pub. L. 99–514, § 1844(a), substituted “this subparagraph” for “clause (i)”.
  • 1986 Pub. L. 99-514 Pub. L. 99–514, § 201(d)(7)(B), substituted “section 465(b)(3)(C)” for “section 168(e)(4)”.
  • 1986 Pub. L. 99-514 Pub. L. 99–514, § 1844(b)(3), substituted “an increase in the credit base for” for “additional qualified investment in”.
  • 1986 Pub. L. 99-514 Pub. L. 99–514, § 1844(b)(5), substituted “any increase in a taxpayer’s credit base for any property by reason of this paragraph shall be taken into account as if it were property placed in service by the taxpayer in the taxable year in which the property referred to in subparagraph (A) was first placed in service” for “any increase in a taxpayer’s qualified investment in property by reason of this paragraph shall be deemed to be additional qualified investment made by the taxpayer in the year in which the property referred to in subparagraph (A) was first placed in service”.
  • 1986 Pub. L. 99-514 Pub. L. 99–514, § 1802(a)(6), (8), added subpars. (D) and (E).
  • 1986 Pub. L. 99-514 Pub. L. 99–514, § 1848(a), struck out par. (9) which related to a special rule for additional credit.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(o)(1), amended subsec. (a) generally, so as to contain provisions relating to amount of investment credit, which formerly constituted only par. (2)(A)(i), (ii), and (iv) of subsec. (a).
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 713(c)(1)(C), substituted “premature distributions to key employees” for “premature distributions to owner-employees”.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(o)(1), amended subsec. (b) generally, substituting provisions relating to determination of percentages for purposes of subsec. (a), for provisions relating to carryback and carryover of unused credits.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 13(b)(2)(B), inserted “recovery” before first reference to “property”.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 431(a), substituted “Certain nonrecourse financing excluded from credit base” for “Limitation to amount at risk” in heading.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 431(a), substituted provisions reducing the credit base of any property to which this paragraph applies by the nonqualified nonrecourse financing with respect to such property for provisions relating to limitation of the basis to the amount at risk in the case of new or used section 38 property placed in service during the taxable year by a taxpayer described in section 465(a)(1) and used in connection with an activity with respect to which any loss was subject to limitation under section 465.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 431(a), substituted provisions relating to the property to which this paragraph applies for provisions defining “at risk” and stating the circumstances under which a taxpayer would be considered to be at risk for purposes of this paragraph.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 431(a), substituted provisions defining “credit base” for provisions relating to a special rule for partnerships and subchapter S corporations.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 431(a), substituted provisions defining “nonqualified nonrecourse financing” for provisions defining “qualified person”.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 16(a), repealed amendments made by Pub. L. 97–34, § 302(c). See 1981 Amendment note below.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 431(a), substituted provisions relating to the application of this paragraph to partnerships and subchapter S corporations for provisions defining “related person”.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 431(d)(1), substituted provisions that subpar. (A) shall not apply with respect to qualified energy property for provisions that subpar. (A) would not apply to amounts borrowed with respect to qualified energy property (other than amounts described in subpar. (B)).
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(o)(2), substituted “subsection (b)(2)” for “section 46(a)(2)(C)”.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 431(d)(2), substituted provisions that qualified energy property means energy property to which (but for this subpar.) subpar. (A) applies and not more than 75 percent of the basis of which is attributable to nonqualified nonrecourse financing for provisions that qualified energy property meant energy property to which (but for this subpar.) subpar. (A) applied and with respect to which the taxpayer was at risk (within the meaning of section 465(b) without regard to par. (5) thereof) in an amount equal to at least 25 percent of the basis of the property.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 431(d)(3), substituted “nonqualified nonrecourse financing” for “nonrecourse financing (other than financing described in section 46(c)(8)(B)(ii))”.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 431(b)(1), substituted provisions relating to subsequent decreases in nonqualified nonrecourse financing with respect to the property for provisions relating to subsequent increases in the taxpayer’s amount at risk with respect to the property.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(o)(3)(A), struck out “and the $25,000 amount specified under subparagraphs (A) and (B) of subsection (a)(3)”, and substituted “such qualified investment” for “such items”, in provisions following subpar. (B).
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(o)(3)(B), substituted “qualified investment” for “the items described therein” in introductory provisions.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 31(b), added par. (4).
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(o)(4)(A), substituted “no credit determined under subsection (a) shall be allowed by section 38” for “no credit shall be allowed by section 38” in introductory provisions.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(o)(4)(B), substituted “the credit determined under subsection (a) and allowable by section 38” for “the credit allowable by section 38”.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(o)(4)(A), substituted “no credit determined under subsection (a) shall be allowed by section 38” for “no credit shall be allowed by section 38” in introductory provisions.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(o)(4)(B), substituted “the credit determined under subsection (a) and allowable by section 38” for “the credit allowable by section 38”.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(o)(4)(C), substituted “the credit determined under subsection (a) and allowed by section 38” for “the credit allowed by section 38” in introductory provisions.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(o)(5), substituted “the credit determined under subsection (a) and allowable under section 38” for “the credit allowable under section 38” in two places, and “(within the meaning of the first sentence of subsection (c)(3)(B))” for “(within the meaning of subsection (a)(7)(C))”.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(o)(6), substituted “the limitation of section 38(c)” for “the limitation of subsection (a)(3)”.
  • 1984 Pub. L. 98-369 Pub. L. 98–369, § 474(o)(7), substituted “the credit determined under subsection (a) and allowable to the organization under section 38” for “the credit allowable to the organization under section 38” and “the limitation contained in section 38(c)” for “the limitation contained in subsection (a)(3)”.
  • 1983 Pub. L. 97-424 Pub. L. 97–424, § 546(b), added section VII to the table.
  • 1983 Pub. L. 97-448 Pub. L. 97–448, § 202(f), substituted “before January 1, 1983, all engineering studies in connection with the commencement of the construction of the project have been completed and all environmental and construction permits required under Federal, State, or local law in connection with the commencement of the construction of the project have been applied for, and” for “before January 1, 1983, the taxpayer has completed all engineering studies in connection with the commencement of the construction of the project, and has applied for all environmental and construction permits required under Federal, State, or local law in connection with the commencement of the construction of the project, and”.
  • 1983 Pub. L. 97-448 Pub. L. 97–448, § 102(f)(5)(A), substituted “a qualified rehabilitated building” for “any building”.
  • 1983 Pub. L. 97-448 Pub. L. 97–448, § 102(f)(5)(B), substituted “means a qualified rehabilitated building which meets the requirements of section 48(g)(3)” for “has the meaning given to such term by section 48(g)(3)”.
  • 1983 Pub. L. 98-21 Pub. L. 98–21 substituted “relating to credit for the elderly and the permanently and totally disabled” for “relating to credit for the elderly”.
  • 1983 Pub. L. 97-448 Pub. L. 97–448, § 102(e)(1), substituted “in the case of property other than 3-year property (within the meaning of section 168(c))” for “in the case of 15-year public utility, 10-year, or 5-year property (within the meaning of section 168(c))” in subpar. (A) and, in provisions following subpar. (B), substituted “shall be treated as property which is not 3-year property” for “shall be treated as 5-year property”.
  • 1983 Pub. L. 97-424 Pub. L. 97–424, § 541(b), added par. (10).
  • 1982 Pub. L. 97-248 Pub. L. 97–248, § 205(b)(1), substituted “85 percent” for “the following percentage”, substituted a period for the colon, and struck out table of percentages at end of subpar. (B).
  • 1982 Pub. L. 97-354 Pub. L. 97–354, § 5(a)(4), substituted “section 1374 (relating to tax on certain capital gains of S corporations)” for “section 1378 (relating to tax on certain capital gains of subchapter S corporations)”.
  • 1982 Pub. L. 97-248 Pub. L. 97–248, §§ 201(d)(8)(A), formerly 201(c)(8)(A), 265(b)(2)(A), substituted “(relating to corporate minimum tax)” for “(relating to minimum tax for tax preferences)” after “section 56”, and inserted “section 72(q)(1) (relating to 5-percent tax on premature distributions under annuity contracts),” after “owner-employees)”.
  • 1982 Pub. L. 97-248 Pub. L. 97–248, § 205(b)(2), redesignated par. (9) as (7), and, in par. (7)(B), as so redesignated, substituted reference to 85 percent for former reference to the percentage determined under subsec. (a)(3)(B) in cl. (i), struck out former cl. (ii), which provided that pars. (7) and (8) would not apply in certain instances, and redesignated former cl. (iii) as (ii). Former par. (7), which provided for alternative limitations in the case of certain utilities, was struck out.
  • 1982 Pub. L. 97-248 Pub. L. 97–248, § 205(b)(2)(A), struck out par. (8) which provided for alternative limitations in the case of certain railroads and airlines.
  • 1982 Pub. L. 97-248 Pub. L. 97–248, § 205(b)(2)(A), redesignated par. (9) as (7).
  • 1982 Pub. L. 97-354 Pub. L. 97–354, § 5(a)(5), substituted “S corporation” for “electing small business corporation (within the meaning of section 1371(b))”.
  • 1982 Pub. L. 97-354 Pub. L. 97–354, § 5(a)(6), substituted “an S corporation” for “an electing small business corporation (as defined in section 1371)”.
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 212(a)(1), added cl. (iv).
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 332(a), substituted “December 31, 1982” for “December 31, 1983” in cls. (i) and (ii) and added cl. (iii).
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 212(a)(2), added subpar. (F).
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 207(c)(1), inserted provision after subpar. (D) directing that, in the case of an unused credit for an unused credit year ending after Dec. 31, 1973, this paragraph be applied by substituting “15” for “7” in subpar. (B) and by substituting “18” for “10” and “17” for “9” in second sentence.
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 211(e)(1), inserted references in provisions preceding table to exceptions provided in paragraphs (3), (6), and (7).
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 211(e)(2), substituted “Notwithstanding paragraph (2) or (3)” for “Notwithstanding paragraph (2)” and inserted “or which is recovery property (within the meaning of section 168),” after “3 years or more,”.
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 211(a)(1), added par. (7).
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 211(f)(1), added par. (8).
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 302(c)(3), (d)(1), provided that, applicable to taxable years beginning after Dec. 31, 1984, subsection (c)(8)(D)(i)(I) of this section (relating to limitation to amount at risk) is amended by striking out “clause (i), (ii), or (iii) of subparagraph (A) or subparagraph (B) of section 128(c)(2)” and inserting in lieu thereof “subparagraph (A) or (B) of section 128(c)(1)”. Section 16(a) of Pub. L. 98–369, repealed section 302(c) of Pub. L. 97–34, and provided that this title shall be applied and administered as if section 302(c), and the amendments made by section 302(c), had not been enacted.
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 211(f)(1), added par. (9).
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 211(b)(1), designated existing provisions as subpar. (A), substituted “an amount equal to the aggregate of the applicable percentage of each qualified progress expenditure for the taxable year” for “an amount equal to his aggregate qualified progress expenditures for the taxable year” in subpar. (A) as so designated, and added subpar. (B).
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 211(b)(2), struck out “having a useful life of 7 years or more” after “it is reasonable to believe will be new section 38 property”.
  • 1981 Pub. L. 97-34 Pub. L. 97–34, § 211(d), in provisions following subpar. (B), inserted provision that, for purposes of subpar. (B), in the case of any recovery property (within the meaning of section 168), the useful life be the present class life for such property (as defined in section 168(g)(2)).
  • 1980 Pub. L. 96-222 Pub. L. 96–222, § 101(a)(7)(L)(iii)(I), substituted “employee plan” for “ESOP”.
  • 1980 Pub. L. 96-223 Pub. L. 96–223, § 221(a), revised provisions relating to energy percentage by substituting a tabular format embracing separate coverage for solar, wind, or geothermal property, ocean thermal property, qualified hydroelectric generating property, and biomass property using percentages varying between 10 and 15 percent and covering periods from Oct. 1, 1978, to Dec. 31, 1985, with longer periods for certain long-term projects and certain hydroelectric generating property for provisions that had set the energy percentage at 10 percent for the period beginning Oct. 1, 1978, and ending Dec. 31, 1982, and zero with respect to any other period.
  • 1980 Pub. L. 96-223 Pub. L. 96–223, § 222(e)(2), inserted provision that in the case of any qualified hydroelectric generating property which is a fish passageway, the special rule for certain energy property embraced in the first sentence would not apply to any period after 1979 for which the energy percentage for such property is greater than zero.
  • 1980 Pub. L. 96-222 Pub. L. 96–222, § 101(a)(7)(L)(v)(I), (M)(i), substituted in heading “employee plan” for “ESOP” and in cls. (i) and (ii) inserted “and ending on” before “December 31, 1983”.
  • 1980 Pub. L. 96-222 Pub. L. 96–222, § 103(a)(2)(B)(i), redesignated par. (10) as (9). A former par. (9) was previously repealed by section 312(b)(2) of Pub. L. 95–600.
  • 1980 Pub. L. 96-223 Pub. L. 96–223, § 223(b)(1)(A), inserted “and” at end of cl. (i), substituted a period for “(other than solar wind energy property), and” at end of cl. (ii), and struck out cl. (iii) which had provided for the application of so much of the credit allowed by section 38 as was attributable to the application of the energy percentage to solar or wind energy property.
  • 1980 Pub. L. 96-223 Pub. L. 96–223. § 223(b)(1)(B), struck out “other than solar or wind energy property” after “energy property” in heading.
  • 1980 Pub. L. 96-222 Pub. L. 96–222, § 103(a)(2)(B)(ii), (iii), substituted “paragraph (3)(B) shall be applied by substituting ‘100 percent’ for the percentage determined under the table contained in such paragraph” for “paragraph (3)(C) shall be applied by substituting ‘100 percent’ for ‘50 percent’ ” in cl. (i) and “(7) and (8)” for “(7), (8), and (9)” in cl. (ii).
  • 1980 Pub. L. 96-223 Pub. L. 96–223, § 223(b)(1)(C), struck out subpar. (C) which related to a refundable credit for solar or wind energy property.
  • 1980 Pub. L. 96-222 Pub. L. 96–222, § 103(a)(2)(B)(i), redesignated par. (10) as (9).
  • 1980 Pub. L. 96-222 Pub. L. 96–222, § 103(a)(3), inserted provisions requiring that this subparagraph not apply for purposes of applying the energy percentage.
  • 1980 Pub. L. 96-222 Pub. L. 96–222, § 103(a)(4)(A), inserted provisions requiring that this paragraph not apply with respect to any property which is treated as section 38 property by reason of section 48(a)(1)(E).
  • 1980 Pub. L. 95-600 Pub. L. 95–600, § 312(c)(2), as amended by Pub. L. 96–222, § 103(a)(2)(A), substituted “ ‘described in section 50 (as in effect before its repeal by the Revenue Act of 1978)’ ” for “ ‘described in section 50’ ”.
  • 1980 Pub. L. 96-222 Pub. L. 96–222, § 107(a)(3)(A), substituted “subsection (a)(7)(C)” for “subsection (a)(7)(D)”.
  • 1980 Pub. L. 96-222 Pub. L. 96–222, § 101(a)(7)(A), substituted in provisions preceding subpar. (A) “subparagraph (E) of subsection (a)(2)” for “subparagraph (B) of subsection (a)(2)” and in subpar. (A) “a tax credit employee stock ownership plan which meets the requirements of section 409A” for “an employee ownership plan which meets the requirements of section 301(d) of the Tax Reduction Act of 1975”.
  • 1978 Pub. L. 95-618 Pub. L. 95–618, § 301(a)(1), among other changes, inserted provisions relating to an alternative energy property tax credit which would pay for a certain percentage of the cost of equipment which uses sources of energy other than oil and gas and of associated pollution control, handling, and preparation equipment.
  • 1978 Pub. L. 95-600 Pub. L. 95–600, § 311(a), made 10 percent limitation on investment tax credit permanent.
  • 1978 Pub. L. 95-600 Pub. L. 95–600, § 141(e), (f)(2), substituted “December 31, 1983” for “and ending on December 31, 1980” wherever appearing, “section 48(n)(1)(B)” for “section 301(e) of the Tax Reduction Act of 1975” and “section 409A” for “section 301(d) of the Tax Reduction Act of 1975”.
  • 1978 Pub. L. 95-600 Pub. L. 95–600, § 312(a), increased the present 50 percent tax liability limitation to 90 percent, to be phased in at an additional 10 percentage points per year beginning with taxable years which end in 1979.
  • 1978 Pub. L. 95-600 Pub. L. 95–600, § 312(b)(1), in subpar. (A) substituted “the taxable year ending in 1979” for “a taxable year ending after calendar year 1974 and before calendar year 1981”, “subparagraph (B)” for “subparagraph (C)”, and “for ‘60 percent’ the taxpayer’s” for “for 50 percent his” and inserted “the application of this paragraph results in a percentage higher than 60 percent,” before “then subparagraph (B)”; in subpar. (B) substituted “70 percent” for “50 percent plus the tentative percentage for such year”; struck out former subpar. (C), which related to the determination of the tentative percentage, and redesignated former subpar. (D) as (C).
  • 1978 Pub. L. 95-600 Pub. L. 95–600, § 312(b)(2), in subpar. (A) substituted “the taxable year ending in 1979” for “a taxable year ending after calendar year 1976, and before calendar year 1983”, “subparagraph (B)” for “subparagraph (C)”, and “for ‘60 percent’ (‘70 percent’ in the case of a taxable year ending in 1980) the taxpayer’s” for “for 50 percent his” and inserted reference to airline property and “the application of this paragraph results in a percentage higher than 60 percent (70 percent in the case of a taxable year ending in 1980),” before “then subparagraph (B)”; in subpar. (B) inserted reference to airline property and substituted “90 percent (80 percent in the case of a taxable year ending in 1980)” for “50 percent plus the tentative percentage for such year”; in subpar. (C) table struck out tentative percentage of 50 for 1977 or 1978, 20 for 1981, and 10 for 1982; and added subpar. (E).
  • 1978 Pub. L. 95-600 Pub. L. 95–600, § 312(b)(2), struck out par. (9) which related to the alternative limitation in the case of certain airlines.
  • 1978 Pub. L. 95-618 Pub. L. 95–618, § 301(c)(1), added par. (10).
  • 1978 Pub. L. 95-618 Pub. L. 95–618, § 301(a)(2)(A), substituted “For the period beginning on January 1, 1981, in the case of any property” for “To the extent that subsection (a)(2)(C) applies to property” and inserted provisions that the preceding sentence not apply for purposes of applying the energy percentage.
  • 1978 Pub. L. 95-600 Pub. L. 95–600, § 311(c)(1), substituted “To the extent that the credit allowed by section 38 with respect to any public utility property is determined at the rate of 7 percent” for “For the period beginning on January 1, 1981”.
  • 1978 Pub. L. 95-600 Pub. L. 95–600, § 313(a), increased the investment credit available to pollution control facilities which a taxpayer has elected to amortize over a five-year period to a full investment credit from a one-half investment credit.
  • 1978 Pub. L. 95-618 Pub. L. 95–618, § 241(a), added par. (6).
  • 1978 Pub. L. 95-600 Pub. L. 95–600, § 316(b)(1), struck out subpar. (C) which related to a cooperative organization described in section 1381(a).
  • 1978 Pub. L. 95-600 Pub. L. 95–600, § 316(b)(2), struck out subpar. (C) which related to a cooperative organization.
  • 1978 Pub. L. 95-600 Pub. L. 95–600, § 312(c)(2), struck out “described in section 50” after “with respect to any property”. See 1980 Amendment note above.
  • 1978 Pub. L. 95-618 Pub. L. 95–618, § 301(a)(2)(B), substituted “, the Tax Reform Act of 1976, and the Energy Tax Act of 1978” for “and the Tax Reform Act of 1976”.
  • 1978 Pub. L. 95-600 Pub. L. 95–600, §§ 311(c)(2), 703(a)(1), substituted “subsection (a)(7)(D)” for “subsection (a)(6)(D)” and inserted reference to the Revenue Act of 1978.
  • 1978 Pub. L. 95-600 Pub. L. 95–600, § 703(a)(2), substituted “Merchant Marine Act, 1936” for “Merchant Marine Act, 1970”.
  • 1978 Pub. L. 95-600 Pub. L. 95–600, § 316(a), added subsec. (h).
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 802(a)(2), added par. (1) and struck out former par. (1) which related to the percentage of allowable credit under section 38.
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 802(a)(2), added par. (2). Former par. (2) redesignated (3).
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 802(a)(1), redesignated former par. (2) as (3). Former par. (3) redesignated (4).
  • 1976 Pub. L. 94-455 Pub. L. 94–455, §§ 503(b)(4), 802(a)(1), (b)(1), 1901(a)(4)(A), (b)(1)(C), as amended by Pub. L. 95–600, § 703(j)(9), redesignated former par. (3) as (4), and in par. (4) as so redesignated, redesignated former subpar. (C) as (B) and substituted in provisions preceding subpar. (A) “paragraph (3)” for “paragraph (2)”, in subpar. (B) as so redesignated “credit for the elderly” for “retirement income”, and in provisions following subpar. (B) “section 408(f)” for “section 408(e)”. Former par. (4) redesignated (5).
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 802(a)(1), (b)(1), redesignated former par. (4) as (5) and substituted “paragraph (3)” for “paragraph (2)”. Former par. (5) redesignated (6).
  • 1976 Pub. L. 94-455 Pub. L. 94–455, §§ 802(a)(1), (b)(1), 1906(b)(13)(A), redesignated former par. (5) as (6) and substituted “paragraph (3)” for “paragraph (2)” and struck out “or his delegate” after “Secretary”. Former par. (6) redesignated (7).
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 802(a)(1), (b)(1), redesignated former par. (6) as (7) and substituted “paragraph (3)” for “paragraph (2)”.
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 1701(b), added par. (8).
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 1703, added par. (9).
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 802(b)(2), among other changes, inserted requirement that tax credits carried over are applied first to the tax liability for that year, after which tax credits earned currently are then applied.
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 802(b)(3), substituted “subsection (a)(2)(C)” for “subsection (a)(1)(C)”.
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(a)(4)(B), substituted “47 U.S.C. 222(a)(5)” for “47 U.S.C., sec. 222(a)(5)”.
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 2112(a)(2), added par. (5).
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 802(b)(4), substituted “subsection (a)(3)” for “subsection (a)(2)”.
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 1607(b)(1)(B), substituted in subpar. (B) “857(b)(2)(B)” for “857(b)(2)(C)” and inserted in provisions following subpar. (C) reference to determine without regard to any deduction for capital gains dividends (as defined in section 857(b)(3)(C)) and by excluding any net capital gain.
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 803(b)(1)(A), (B), substituted “paragraphs (1), (2), and (9)” for “paragraphs (1) and (2)” and “paragraph (1), (2), or (9)” for “paragraph (1) or (2)” wherever appearing.
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 803(b)(1)(C), substituted “paragraph (2) or the election described in paragraph (9),” for “paragraph (2),”.
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.
  • 1976 Pub. L. 94-455 Pub. L. 94–455, §§ 802(b)(5), 1906(b)(13)(A), inserted reference to the Tax Reform Act of 1976 and struck out “or his delegate” after “Secretary”.
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 803(a), added par. (9).
  • 1976 Pub. L. 94-455 Pub. L. 94–455, § 805(a), added subsec. (g).
  • 1975 Pub. L. 94-12 Pub. L. 94–12, § 301(a), designated existing provisions as subpar. (A), substituted “Except as otherwise provided in this paragraph, in the case of a property described in subparagraph (D), the” for “The”, “10 percent” for “7 percent”, and “(as determined under subsections (c) and (d))” for “(as defined in subsection (c))” in subpar. (A) as so designated, and added subpars. (B), (C), and (D).
  • 1975 Pub. L. 94-12 Pub. L. 94–12, § 301(b)(2), added par. (6).
  • 1975 Pub. L. 94-12 Pub. L. 94–12, § 301(b)(1), substituted “To the extent that subsection (a)(1)(C) applies to property which is public utility property, the” for “In the case of section 38 property which is public utility property, the”.
  • 1975 Pub. L. 94-12 Pub. L. 94–12, § 302(b)(1), added par. (4).
  • 1975 Pub. L. 94-12 Pub. L. 94–12, § 302(a), added subsec. (d) and redesignated former subsec. (d) as (e). Former subsec. (e) redesignated (f) and amended.
  • 1975 Pub. L. 94-12 Pub. L. 94–12, §§ 301(b)(3), 302(a), redesignated former subsec. (e) as (f) and in subsec. (f) as so redesignated added par. (8).
  • 1974 Pub. L. 93-406 Pub. L. 93–406 inserted reference to section 402(e) (relating to tax on lump sum distributions), section 72(m)(5)(B) (relating to 10 percent tax on premature distributions to owner-employees), and section 408(e) (relating to additional tax on income from certain retirement accounts).
  • 1971 Pub. L. 92-178 Pub. L. 92–178, § 106(b), inserted concluding sentence “In the case of an unused credit for an unused credit year ending before January 1, 1971, which is an investment credit carryover to a taxable year beginning after December 31, 1970 (determined without regard to this sentence), this paragraph shall be applied by substituting ‘10 taxable years’ for ‘7 taxable years’ in subparagraph (B) and by substituting ‘13 taxable years’ for ‘10 taxable years’ and ‘12 taxable years’ for ‘9 taxable years’ in the preceding sentence.”
  • 1971 Pub. L. 92-178 Pub. L. 92–178, § 106(a), added par. (3).
  • 1971 Pub. L. 92-178 Pub. L. 92–178, § 106(c)(1), substituted “Certain taxable years ending in 1969, 1970, or 1971” for “Taxable years beginning after December 31, 1968, and ending after April 18, 1969” in heading; substituted “ending after April 18, 1969, and before January 1, 1972,” for “ending after April 18, 1969,”; and provided that “In the case of a taxable year ending after August 15, 1971, and before January 1, 1972, the percentage contained in the preceding sentence shall be increased by 6 percentage points for each month (or portion thereof) in the taxable year after August 15, 1971”.
  • 1971 Pub. L. 92-178 Pub. L. 92–178, § 106(c)(2), substituted “ending after April 18, 1969, and before January 1, 1971,” for “ending after April 18, 1969,” and “following the 7th taxable year after the unused credit year” for “following the last taxable year for which such portion may be added under paragraph (1)”, respectively.
  • 1971 Pub. L. 92-178 Pub. L. 92–178, § 102(a)(1), (b), substituted “3 years”, “5 years”, and “7 years” for “4 years” (once), “6 years” (twice), and “8 years” (twice), respectively in tables of first sentence and substituted in second sentence “subpart” for “paragraph” and “useful life of any property shall be the useful life used in computing the allowance for depreciation under section 167 for the taxable year in which the property is placed in service” for “useful life of any property shall be determined as of the time such property is placed in service by the taxpayer”.
  • 1971 Pub. L. 92-178 Pub. L. 92–178, § 105(a), substituted the fraction of “4⁄7” for “3⁄7”.
  • 1971 Pub. L. 92-178 Pub. L. 92–178, § 105(b)(1), (2), struck out cl. (iii) provisions respecting telephone service, redesignated cl. (iv) as (iii), included in cl. (iii) provision of former cl. (iii) respecting telephone service, included other communication services (other than international telegraph service), and defined term “public utility property” to also mean communication property of type used by persons engaged in providing telephone or microwave communication services to which cl. (iii) applies, if such property is used predominantly for communication purposes, respectively.
  • 1971 Pub. L. 92-178 Pub. L. 92–178, § 105(b)(3), added subpar. (C).
  • 1971 Pub. L. 92-178 Pub. L. 92–178, § 107(a)(1), struck out provisions respecting reduction in basis or cost of certain replacement property.
  • 1971 Pub. L. 92-178 Pub. L. 92–178, § 108(a), added par. (3).
  • 1971 Pub. L. 92-178 Pub. L. 92–178, § 105(c), added subsec. (e).
  • 1969 Pub. L. 91-172 Pub. L. 91–172, § 301(b)(4), inserted “section 56 (relating to minimum tax for tax preference),”.
  • 1969 Pub. L. 91-172 Pub. L. 91–172, § 401(e)(1), reenacted subsection with minor changes and substituted reference to section 1563(a) for reference to section 1504.
  • 1969 Pub. L. 91-172 Pub. L. 91–172, § 703(b), added pars. (5) and (6).
  • 1967 Pub. L. 90-225 Pub. L. 90–225 struck out par. (3) which provided that to the extent that the excess described in par. (1) of this subsection arises by reason of net operating loss carryback, subpar. (A) of par. (1) of this subsection shall not apply.
  • 1966 Pub. L. 89-800 Pub. L. 89–800, § 3(a), inserted “for taxable years ending on or before the last day of the suspension period (as defined in section 48(j)),” at beginning of subpar. (B), and added subpar. (C) and provisions following subpar. (C) covering the application of subpar. (C) and the reduction of the amount otherwise determined under par. (2) by the credit allowable but for the application of section 48(h)(1).
  • 1966 Pub. L. 89-389 Pub. L. 89–389 inserted reference to tax imposed for the taxable year by section 1378 (relating to tax on certain capital gains of subchapter S corporations) in the list of taxes not to be considered tax imposed by this chapter for purposes of par. (3).
  • 1966 Pub. L. 89-384 Pub. L. 89–384 added any additional tax imposed for the taxable year by section 1351 (relating to recoveries of foreign expropriation losses) to the list of taxes not to be considered a tax imposed by this chapter for purposes of par. (3).
  • 1966 Pub. L. 89-800 Pub. L. 89–800, § 3(b), substituted “7 taxable years” for “5 taxable years” in subpar. (B) and “10 taxable years” and “other 9 taxable years” for “8 taxable years” and “other 7 taxable years”, respectively, in text following subpar. (B).
  • 1964 Pub. L. 88-272 Pub. L. 88–272 struck out subpar. (B) relating to section 34, and redesignated subpars. (C) and (D) as (B) and (C), respectively.

Cases: Campbell v. Commissioner, 868 F.2d 833 (6th Cir. 1989); Hokanson v. Commissioner, 730 F.2d 1245 (9th Cir. 1984); McNamara v. Commissioner, 827 F.2d 168 (7th Cir. 1987)

Forms: Form 3468

Final rules 2

    For purposes of section 38, the amount of the investment credit determined under this section for any taxable year shall be the sum of—

    (1) the rehabilitation credit,

    (2) the energy credit,

    Amended 2010
    • 2010 Pub. L. 111-148 Pub. L. 111–148, § 9023(b)(1), inserted a comma at end.

    (3) the qualifying advanced coal project credit,

    (4) the qualifying gasification project credit,

    Amended 2014

    (5) the qualifying advanced energy project credit,

    Amended 2009

    (6) the advanced manufacturing investment credit, and

    Amended 2010, 2022
    • 2022 Pub. L. 117-167 Pub. L. 117–167 amended par. (6) generally. Prior to amendment, text read as follows: “the qualifying therapeutic discovery project credit.”
    • 2010 Pub. L. 111-148 Pub. L. 111–148, § 9023(b)(2), (3), added par. (6).

    (7) the clean electricity investment credit.

    Amended 2022