Amended 1966, 1990
- 1990 Pub. L. 101-508 Pub. L. 101–508 redesignated subsec. (d) as (c) and struck out former subsec. (c) which related to a special adjustment to taxable income for amounts used or set aside to pay or retire qualified indebtedness.
- 1966 Pub. L. 89-809 Pub. L. 89–809, § 104(h)(3)(B), added subsec. (d).
Cases: Litchfield Securities Corp. v. United States, 325 F.2d 667 (2d Cir. 1963)
Forms: Form 1120
(a) Definition For purposes of this part, the term “undistributed personal holding company income” means the taxable income of a personal holding company adjusted in the manner provided in subsections (b), (c), and (d), minus the dividends paid deduction as defined in section 561. In the case of a personal holding company which is a foreign corporation, not more than 10 percent in value of the outstanding stock of which is owned (within the meaning of section 958(a)) during the last half of the taxable year by United States persons, the term “undistributed personal holding company income” means the amount determined by multiplying the undistributed personal holding company income (determined without regard to this sentence) by the percentage in value of its outstanding stock which is the greatest percentage in value of its outstanding stock so owned by United States persons on any one day during such period.
Amended 1964, 1966
- 1966 Pub. L. 89-809 Pub. L. 89–809, § 104(h)(3)(A), substituted “in the manner provided in subsections (b), (c), and (d)” for “in the manner provided in subsection (b) and (c)” and inserted provisions governing the case of a personal holding company which is a foreign corporation, not more than 10 percent in value of the outstanding stock of which is owned (within the meaning of section 958(a)) during the last half of the taxable year by United States persons.
- 1964 Pub. L. 88-272 Pub. L. 88–272, § 225(i)(1), inserted reference to subsection (c).
Cases: L. C. Bohart Plumbing & Heating Co. v. Commissioner, 64 T.C. 602 (1975)
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(b) Adjustments to taxable income For the purposes of subsection (a), the taxable income shall be adjusted as follows:
Amended 1962, 1966, 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(b)(20)(B)(i), redesignated par. (8) as (6).
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1951(b)(9)(A), struck out par. (9) relating to the deduction of the amount of a lien in favor of the United States.
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(b)(32)(E), struck out par. (10) relating to deduction for distributions of divested stock, and struck out par. (11) relating to special adjustment on the disposition of antitrust stock received as a dividend.
- 1966 Pub. L. 89-719 Pub. L. 89–719 substituted “section 6323(f)” for “section 6323(a)(1), (2), or (3)”.
- 1962 Pub. L. 87-403 Pub. L. 87–403 added pars. (10) and (11).
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(1) Taxes There shall be allowed as a deduction Federal income and excess profits taxes and income, war profits and excess profits taxes of foreign countries and possessions of the United States (to the extent not allowable as a deduction under section 275(a)(4)), accrued during the taxable year or deemed to be paid by a domestic corporation under section 960 for the taxable year, but not including the accumulated earnings tax imposed by section 531 or the personal holding company tax imposed by section 541.
Amended 1962, 1964, 1976, 2014, 2017
- 2017 Pub. L. 115-97 Pub. L. 115–97 substituted “section 960” for “section 902(a) or 960(a)(1)”.
- 2014 Pub. L. 113-295 Pub. L. 113–295 substituted “section 531 or the personal holding company tax imposed by section 541.” for “section 531, the personal holding company tax imposed by section 541, or the taxes imposed by corresponding sections of a prior income tax law.”
- 1976 Pub. L. 94-455 Pub. L. 94–455, §§ 1033(b)(4), 1901(a)(77)(A), struck out “(other than excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 31, 1940)” after “Federal income and excess profits taxes”; substituted “902(a) or 960(a)(1)” for “902(a)(1) or 960(a)(1)(C)” after “corporation under section”; and struck out provisions after “prior income tax law” relating to election by taxpayer who paid Federal income and excess profits taxes to deduct payments, when made, for purposes of computing subchapter A net income or, for a taxable year ending after June 30, 1954, to deduct such taxes when accrued, such election being irrevocable and applied to taxable year for which election was made and to all subsequent taxable years.
- 1964 Pub. L. 88-272 Pub. L. 88–272, §§ 207(b)(5), 209(c)(2), substituted “section 275(a)(4)” for “section 164(b)(6)” in par. (1), and inserted reference to section 170(b)(5) in par. (2).
- 1962 Pub. L. 87-834 Pub. L. 87–834 substituted “accrued during the taxable year or deemed to be paid by a domestic corporation under section 902(a)(1) or 960(a)(1)(C) for the taxable year” for “accrued during the taxable year”.
Cases: Kluger Associates, Inc. v. Commissioner, 617 F.2d 323 (2d Cir. 1980)
(2) Charitable contributions The deduction for charitable contributions provided under section 170 shall be allowed, but in computing such deduction the limitations in section 170(b)(1)(A), (B), (D), and (E) shall apply, and section 170(b)(2) and (d)(1) shall not apply. For purposes of this paragraph, the term “contribution base” when used in section 170(b)(1) means the taxable income computed with the adjustments (other than the 10-percent limitation) provided in section 170(b)(2) and (d)(1) and without deduction of the amount disallowed under paragraph (6) of this subsection.
Amended 1958, 1964, 1969, 1976, 1983, 2006
- 2006 Pub. L. 109-280 Pub. L. 109–280, which directed the substitution of “(D), and (E)” for “and (D)” in section 545(b)(2), without specifying the act to be amended, was executed by making the substitution in subsec. (b)(2) of this section, which is section 545 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress.
- 1983 Pub. L. 97-448 Pub. L. 97–448 substituted “10-percent” for “5-percent”.
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(b)(20)(B)(ii), substituted “paragraph (6)” for “paragraph (8)” after “amount disallowed under”.
- 1969 Pub. L. 91-172 Pub. L. 91–172 substituted “section 170(b)(1)(A), (B), and (D)”, “section 170(b)(2) and (d)(1)” for “section 170(b)(1)(A) and (B)” and “section 170(b)(2) and (5)”, respectively, in provisions of first sentence setting out the sections appropriate to the computation of the deduction, and in provisions of second sentence describing applicability of terms for purposes of this paragraph, substituted “contribution base” and “section 170(b)(2) and (d)(1)” for “adjusted gross income” and “the first sentence of section 170(b)(2) and (5),” respectively.
- 1964 Pub. L. 88-272 Pub. L. 88–272, §§ 207(b)(5), 209(c)(2), substituted “section 275(a)(4)” for “section 164(b)(6)” in par. (1), and inserted reference to section 170(b)(5) in par. (2).
- 1958 Pub. L. 85-866 Pub. L. 85–866, § 32(a), substituted in first sentence “, but in computing such deduction the limitations in section 170(b)(1)(A) and (B) shall apply, and section 170(b) shall not apply” for “but with the limitations in section 170(b)(1)(A) and (B) (in lieu of the limitation in section 170(b)(2)”, and inserted in second sentence “(other than the 5-percent limitation)” and “the first sentence” after “with the adjustments” and “provided in”, respectively.
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(3) Special deductions disallowed The special deductions for corporations provided in part VIII (except section 248) of subchapter B (section 241 and following, relating to the deduction for dividends received by corporations, etc.) shall not be allowed.
(4) Net operating loss The net operating loss deduction provided in section 172 shall not be allowed, but there shall be allowed as a deduction the amount of the net operating loss (as defined in section 172(c)) for the preceding taxable year computed without the deductions provided in part VIII (except section 248) of subchapter B.
Amended 1958
- 1958 Pub. L. 85-866 Pub. L. 85–866, § 32(b), inserted “computed without the deductions provided in part VIII (except section 248) of subchapter B”.
(5) Net capital gains There shall be allowed as a deduction the net capital gain for the taxable year, minus the taxes imposed by this subtitle attributable to such net capital gain. The taxes attributable to such net capital gain shall be an amount equal to the difference between—
Amended 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(b)(33)(D), substituted “Net” for “Long-term” after “(5)”.
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(A) the taxes imposed by this subtitle (except the tax imposed by this part) for such year, and
(B) such taxes computed for such year without including such excess in taxable income.
(6) Expenses and depreciation applicable to property of the taxpayer The aggregate of the deductions allowed under section 162 (relating to trade or business expenses) and section 167 (relating to depreciation), which are allocable to the operation and maintenance of property owned or operated by the corporation, shall be allowed only in an amount equal to the rent or other compensation received for the use of, or the right to use, the property, unless it is established (under regulations prescribed by the Secretary) to the satisfaction of the Secretary—
Amended 1976
- 1976 Pub. L. 94-455 Pub. L. 94–455, §§ 1901(b)(20)(B)(i), 1906(b)(13)(A), struck out par. (6) relating to deduction allowed to bank affiliates, redesignated former par. (8) as (6) and, as redesignated, struck out “or his delegate” in two places after “Secretary”.
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(A) that the rent or other compensation received was the highest obtainable, or, if none was received, that none was obtainable;
(B) that the property was held in the course of a business carried on bona fide for profit; and
(C) either that there was reasonable expectation that the operation of the property would result in a profit, or that the property was necessary to the conduct of the business.
(7) Special rule for capital gains and losses of foreign corporations In the case of a foreign corporation, paragraph (5) shall be applied by taking into account only gains and losses which are effectively connected with the conduct of a trade or business within the United States and are not exempt from tax under treaty.
Amended 1976, 1986
- 1986 Pub. L. 99-514 Pub. L. 99–514 added par. (7).
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(a)(77)(B), struck out par. (7) relating to payment of indebtedness incurred prior to January 1, 1934.
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(c) Certain foreign corporations 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), the taxable income for purposes of subsection (a) shall be the income which constitutes personal holding company income under section 543(a)(7), reduced by the deductions attributable to such income, and adjusted, with respect to such income, in the manner provided in subsection (b).
Amended 1964, 1976, 1990
- 1990 Pub. L. 101-508 Pub. L. 101–508 redesignated subsec. (d) as (c) and struck out former subsec. (c) which related to a special adjustment to taxable income for amounts used or set aside to pay or retire qualified indebtedness.
- 1976 Pub. L. 94-455 Pub. L. 94–455, § 1901(a)(77)(C), substituted “February 26, 1964” for “the date of enactment of this subsection” after “years ending before”.
- 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, § 1901(b)(20)(B)(iii), substituted “subsection (b)(6)” for “subsection (b)(8)” after “company income under”.
- 1964 Pub. L. 88-272 Pub. L. 88–272, § 225(i)(2), added subsec. (c).