# Pub. L. 97-354: changes to the Internal Revenue Code 1982-10-19, 96 Stat. 1691. Source: . ## Legislative history - Bill: [H.R. 6055](https://www.congress.gov/bill/97th-congress/house-bill/6055) ## § 31: Tax withheld on wages ## § 40: Alcohol, etc., used as fuel - § 40(d)(5): Pub. L. 97–354 substituted “Pass-thru in the case of estates and trusts” for “Pass-through in the case of subchapter S corporations, etc.” in par. heading, and substituted provisions relating to the applicability of rules similar to rules of subsec. (d) of section 52 for provisions relating to the applicability of rules similar to rules of subsecs. (d) and (e) of section 52. ## § 41: Credit for increasing research activities - § 41(f)(2)(A): Pub. L. 97–354, § 5(a)(3)(A), substituted “Pass-thru in the case of estates and trusts” for “Pass-through in the case of subchapter S corporations, etc.” in subpar. heading, and substituted provisions relating to the applicability of rules similar to rules of subsec. (d) of section 52 for provisions relating to the applicability of rules similar to rules of subsecs. (d) and (e) of section 52. - § 41(g)(1): Pub. L. 97–354, § 5(a)(3)(B), substituted “an S corporation” for “an electing small business corporation (within the meaning of section 1371(b))”. ## § 45K: Credit for producing fuel from a nonconventional source - § 45K(d): Pub. L. 97–354 substituted “Pass-thru in the case of estates and trusts” for “Pass-through in the case of subchapter S corporations, etc.” in par. heading, and substituted provisions relating to the applicability of rules similar to rules of subsec. (d) of section 52 for provisions relating to the applicability of rules similar to rules of subsecs. (d) and (e) of section 52. ## § 46: Amount of credit - § 46: 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)”. - § 46: Pub. L. 97–354, § 5(a)(5), substituted “S corporation” for “electing small business corporation (within the meaning of section 1371(b))”. - § 46: Pub. L. 97–354, § 5(a)(6), substituted “an S corporation” for “an electing small business corporation (as defined in section 1371)”. ## § 48: Energy credit - § 48(c)(2)(D): Pub. L. 97–354 substituted “Partnerships and S corporations” for “Partnerships” in subpar. heading, and inserted “A similar rule shall apply in the case of an S corporation and its shareholders”. - § 48(e): Pub. L. 97–354, § 5(a)(7), struck out subsec. (e) relating to apportionment among shareholders of qualified investments by an electing small business corporation. - § 48: Pub. L. 97–354, § 5(a)(8), substituted “an S corporation” for “an electing small business corporation (within the meaning of section 1371)”. ## § 52: Special rules - § 52(d), § 52(e), § 52: Pub. L. 97–354 struck out subsec. (d) relating to apportionment of credit among shareholders, and redesignated subsecs. (e) and (f) as (d) and (e), respectively. ## § 62: Adjusted gross income defined - § 62: Pub. L. 97–354 repealed par. (9) relating to the deduction allowed by section 1379(b)(3). ## § 108: Income from discharge of indebtedness - § 108(d)(6): Pub. L. 97–354 inserted “or S corporation shareholder level” in heading and inserted “In the case of an S corporation, subsections (a), (b), and (c) shall be applied at the shareholder level.” ## § 163: Interest - § 163(d)(4): Pub. L. 97–354 redesignated subpar. (D) as (B). Former subpars. (B) and (C), relating to partnerships and shareholders of electing small business corporations, respectively, were struck out. ## § 168: Accelerated cost recovery system - § 168(f): Pub. L. 97–354, § 5(a)(19), substituted “an S corporation” for “an electing small business corporation (within the meaning of section 1371(b))” in subsec. (f)(8)(B)(i)(I) as in effect before the enactment of the Tax Equity and Fiscal Responsibility Act of 1982 [Pub. L. 97–248]. - § 168(f): Pub. L. 97–354, § 5(a)(20), in par. (8) as amended by section 209(a) of Pub. L. 97–248, substituted “an S corporation” for “an electing small business corporation within the meaning of section 1371(b)”. ## § 170: Charitable, etc., contributions and gifts - § 170(e)(3)(A): Pub. L. 97–354, § 5(a)(21)(A), substituted “an S corporation” for “an electing small business corporation within the meaning of section 1371(b)”. - § 170(e)(4)(D)(i): Pub. L. 97–354, § 5(a)(21)(B), substituted “an S corporation” for “an electing small business corporation (as defined in section 1371(b))”. ## § 172: Net operating loss deduction - § 172(f): Pub. L. 97–354 struck out subsec. (f) relating to net operating loss of electing small business corporation. ## § 179: Election to expense certain depreciable business assets - § 179(d)(8): Pub. L. 97–354 substituted “partnerships and S corporations” for “partnerships” in heading, and inserted “A similar rule shall apply in the case of an S corporation and its shareholders.” ## § 183: Activities not engaged in for profit - § 183(a): Pub. L. 97–354 substituted “an S corporation” for “an electing small business corporation (as defined in section 1371(b))”. ## § 194: Treatment of reforestation expenditures - § 194(b)(2)(B): Pub. L. 97–354 substituted “Partnerships and S corporations” for “Partnerships” in heading, and inserted “A similar rule shall apply in the case of an S corporation and its shareholders.” ## § 267: Losses, expenses, and interest with respect to transactions between related taxpayers - § 267(b)(10), § 267(b)(11), § 267(b)(12): Pub. L. 97–354, § 3(h)(1), (3), added pars. (10) to (12). - § 267(f): Pub. L. 97–354, § 3(h)(2), added subsec. (f). ## § 280A: Disallowance of certain expenses in connection with business use of home, rental of vacation homes, etc. - § 280A(a), § 280A(e)(1): Pub. L. 97–354, § 5(a)(26)(A), (B), substituted “an S corporation” for “an electing small business corporation”. - § 280A(f)(2): Pub. L. 97–354, § 5(a)(26)(C), substituted “shareholders of S corporation” for “electing small business corporation” in subsec. heading, substituted “an S corporation” for “an electing small business corporation” and “any shareholder of the S corporation” for “any shareholder of the electing small business corporation”. ## § 291: Special rules relating to corporate preference items - § 291(a): Pub. L. 97–354, § 5(a)(27)(A), substituted “a corporation” for “an applicable corporation” wherever appearing. - § 291(b): Pub. L. 97–354, § 5(a)(27)(A), substituted “a corporation” for “an applicable corporation”. - § 291(e)(2), § 291(e): Pub. L. 97–354, § 5(a)(27)(B), redesignated par. (3) as (2). Former par. (2), defining “applicable corporation”, was struck out. ## § 447: Method of accounting for corporations engaged in farming - § 447(c)(1): Pub. L. 97–354, § 5(a)(28), substituted “an S corporation” for “an electing small business corporation (within the meaning of section 1371(b))”. - § 447: Pub. L. 97–354, § 5(a)(29), substituted in subpar. (A)(i) “an S corporation” for “an electing small business corporation (within the meaning of section 1371(b))”. ## § 464: Limitations on deductions for certain farming expenses - § 464(c): Pub. L. 97–354 substituted “an S corporation” for “an electing small business corporation (as defined in section 1371(b))”. ## § 465: Deductions limited to amount at risk - § 465(a)(1): Pub. L. 97–354, § 5(a)(31)(A), redesignated subpar. (C) as (B). Former subpar. (B), relating to an electing small business corporation, was struck out. - § 465(a)(3): Pub. L. 97–354, § 5(a)(31)(B), substituted “paragraph (1)(B)” for “paragraph (1)(C)” in heading and text. - § 465(c)(2): Pub. L. 97–354, § 5(a)(31)(C), substituted “an S corporation” for “an electing small business corporation” the first place appearing and “the S corporation” for “an electing small business corporation” the second place appearing. - § 465(c)(3)(B)(ii): Pub. L. 97–354, § 5(a)(31)(D), substituted “an S corporation” for “electing small business corporation (as defined in section 1371(b))”. - § 465(c)(4)(A): Pub. L. 97–354, § 5(a)(31)(E), substituted “subsection (a)(1)(B)” for “subsection (a)(1)(C)”. ## § 613A: Limitations on percentage depletion in case of oil and gas wells - § 613A(c): Pub. L. 97–354 added par. (13). ## § 992: Requirements of a domestic international sales corporation - § 992(d): Pub. L. 97–354 substituted “an S corporation” for “an electing small business corporation (as defined in section 1371(b))”. ## § 1016: Adjustments to basis - § 1016(a)(18): Pub. L. 97–354 substituted “section 1367” for “section 1376”, “indebtedness owed to” for “indebtedness owing”, and “an S corporation” for “an electing small business corporation (as defined in section 1371(b))”. ## § 1212: Capital loss carrybacks and carryovers - § 1212(a)(3), § 1212(a)(4): Pub. L. 97–354 struck out par. (3) relating to electing small business corporations, and redesignated par. (4) as (3). ## § 1254: Gain from disposition of interest in oil, gas, geothermal, or other mineral properties - § 1254(b)(2): Pub. L. 97–354 substituted “an S corporation” for “an electing small business corporation (as defined in section 1371(b))”. ## § 1256: Section 1256 contracts marked to market - § 1256(e)(3)(B): Pub. L. 97–354 substituted “an S corporation” for “an electing small business corporation within the meaning of section 1371(b)”. ## § 1361: S corporation defined - Enacted 26 U.S.C. § 1361. ## § 1362: Election; revocation; termination - Enacted 26 U.S.C. § 1362. ## § 1363: Effect of election on corporation - Enacted 26 U.S.C. § 1363. ## § 1366: Pass-thru of items to shareholders - Enacted 26 U.S.C. § 1366. ## § 1367: Adjustments to basis of stock of shareholders, etc. - Enacted 26 U.S.C. § 1367. ## § 1368: Distributions - Enacted 26 U.S.C. § 1368. ## § 1371: Coordination with subchapter C - Enacted 26 U.S.C. § 1371. ## § 1372: Partnership rules to apply for fringe benefit purposes - Enacted 26 U.S.C. § 1372. ## § 1373: Foreign income - Enacted 26 U.S.C. § 1373. ## § 1374: Tax imposed on certain built-in gains - Enacted 26 U.S.C. § 1374. ## § 1375: Tax imposed when passive investment income of corporation having accumulated earnings and profits exceeds 25 percent of gross receipts - Enacted 26 U.S.C. § 1375. ## § 1377: Definitions and special rule - Enacted 26 U.S.C. § 1377. ## § 1378: Taxable year of S corporation - Enacted 26 U.S.C. § 1378. ## § 1379: Transitional rules on enactment - Enacted 26 U.S.C. § 1379. ## § 6037: Return of S corporation - § 6037: Pub. L. 97–354 substituted “S corporation” for “electing small business corporation” in section catchline, substituted “Every S corporation” for “Every electing small business corporation (as defined in section 1371(b))”, and substituted “each shareholder’s pro rata share of each item of the corporation for the taxable year, and such other information” for “and such other information”. ## § 6042: Returns regarding payments of dividends and corporate earnings and profits - § 6042(b)(2): Pub. L. 97–354 redesignated cl. (A)(i) as subpar. (A) and cl. (A)(ii) as subpar. (B). Former subpar. (B), excluding from the term “dividends” any amount described in section 1373 (relating to undistributed taxable income of electing small business corporations), was struck out.