26 U.S.C. § 126

Current through P.L. 117-262 (published on www.congress.gov on 12/21/2022)
Section 126 - Certain cost-sharing payments
(a) General rule

Gross income does not include the excludable portion of payments received under-

(1) The rural clean water program authorized by section 208(j) of the Federal Water Pollution Control Act (33 U.S.C. 1288(j)) .
(2) The rural abandoned mine program authorized by section 406 of the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1236) .
(3) The water bank program authorized by the Water Bank Act (16 U.S.C. 1301 et seq.).
(4) The emergency conservation measures program authorized by title IV of the Agricultural Credit Act of 1978.
(5) The agricultural conservation program authorized by the Soil Conservation and Domestic Allotment Act (16 U.S.C. 590a) .
(6) The resource conservation and development program authorized by the Bankhead-Jones Farm Tenant Act and by the Soil Conservation and Domestic Allotment Act (7 U.S.C. 1010; 16 U.S.C. 590a et seq.).
(7) Any small watershed program administered by the Secretary of Agriculture which is determined by the Secretary of the Treasury or his delegate to be substantially similar to the type of programs described in paragraphs (1) through (8).
(8) Any program of a State, possession of the United States, a political subdivision of any of the foregoing, or the District of Columbia under which payments are made to individuals primarily for the purpose of conserving soil, protecting or restoring the environment, improving forests, or providing a habitat for wildlife.
(b) Excludable portion

For purposes of this section-

(1) In general

The term "excludable portion" means that portion (or all) of a payment made to any person under any program described in subsection (a) which-

(A) is determined by the Secretary of Agriculture to be made primarily for the purpose of conserving soil and water resources, protecting or restoring the environment, improving forests, or providing a habitat for wildlife, and
(B) is determined by the Secretary of the Treasury or his delegate as not increasing substantially the annual income derived from the property.
(2) Payments not chargeable to capital account

The term "excludable portion" does not include that portion of any payment which is properly associated with an amount which is allowable as a deduction for the taxable year in which such amount is paid or incurred.

(c) Election for section not to apply
(1) In general

The taxpayer may elect not to have this section (and section 1255) apply to any excludable portion (or portion thereof).

(2) Manner and time for making election

Any election under paragraph (1) shall be made in the manner prescribed by the Secretary by regulations and shall be made not later than the due date prescribed by law (including extensions) for filing the return of tax under this chapter for the taxable year in which the payment was received or accrued.

(d) Denial of double benefits

No deduction or credit shall be allowed with respect to any expenditure which is properly associated with any amount excluded from gross income under subsection (a).

(e) Basis of property not increased by reason of excludable payments

Notwithstanding any provision of section 1016 to the contrary, no adjustment to basis shall be made with respect to property acquired or improved through the use of any payment, to the extent that such adjustment would reflect any amount which is excluded from gross income under subsection (a).

26 U.S.C. § 126

Added Pub. L. 95-600, title V, §543(a), Nov. 6, 1978, 92 Stat. 2888; amended Pub. L. 96-222, title I, §105(a)(7)(A), (C), (E), Apr. 1, 1980, 94 Stat. 220, 221; Pub. L. 113-295, div. A, title II, §221(a)(22), Dec. 19, 2014, 128 Stat. 4040; Pub. L. 115-141, div. U, title IV, §401(b)(9), Mar. 23, 2018, 132 Stat. 1202.

EDITORIAL NOTES

REFERENCES IN TEXTThe Water Bank Act, referred to in subsec. (a)(3), is Pub. L. 91-559, Dec. 19, 1970, 84 Stat. 1468, as amended, which is classified generally to chapter 29 (§1301 et seq.) of Title 16, Conservation. For complete classification of this Act to the Code, see Short Title note set out under section 1301 of Title 16 and Tables.The Agricultural Credit Act of 1978, referred to in subsec. (a)(4), is Pub. L. 95-334, Aug. 4, 1978, 92 Stat. 420, as amended. Title IV of the Agricultural Credit Act of 1978 is classified generally to chapter 42 (§2201 et seq.) of Title 16, Conservation. For complete classification of this Act to the Code, see Tables.The Soil Conservation and Domestic Allotment Act, referred to in subsec. (a)(5), (6), is act Apr. 27, 1935, ch. 85, 49 Stat. 163, as amended, which is classified generally to chapter 3B (§590a et seq.) of Title 16, Conservation. For complete classification of this Act to the Code, see section 590q of Title 16 and Tables.The Bankhead-Jones Farm Tenant Act, referred to in subsec. (a)(6), is act July 22, 1937, ch. 517, 50 Stat. 522, as amended, which is classified generally to chapter 33 (§1000 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 1000 of Title 7 and Tables.

PRIOR PROVISIONSA prior section 126 was renumbered section 140 of this title.

AMENDMENTS2018-Subsec. (a)(7) to (9). Pub. L. 115-141 redesignated pars. (8) and (9) as (7) and (8), respectively, and struck out former par. (7) which read as follows: "The forestry incentives program authorized by section 4 of the Cooperative Forestry Assistance Act of 1978 (16 U.S.C. 2103) ." 2014-Subsec. (a)(6) to (10). Pub. L. 113-295 redesignated pars. (7) to (10) as (6) to (9), respectively, and struck out former par. (6) which read as follows: "The great plains conservation program authorized by section 16 of the Soil Conservation and Domestic Policy Act (16 U.S.C. 590p(b)) ."1980-Subsec. (a). Pub. L. 96-222, §105(a)(7)(C), (E), inserted in par. (9) "or his delegate" after "Secretary of the Treasury" and substituted in par. (10) "Any program of a State, possession of the United States, a political subdivision of any of the foregoing, or the District of Columbia" for "Any State program". Subsec. (b). Pub. L. 96-222, §105(a)(7)(A), inserted provisions relating to payments not chargeable to capital account. Subsec. (c). Pub. L. 96-222, §105(a)(7)(A), substituted provisions allowing the taxpayer to elect not to have this section apply to any excludable portion for provisions relating to the application of subsec. (a) of this section with other sections.Subsecs. (d), (e). Pub. L. 96-222, §105(a)(7)(A), added subsecs. (d) and (e).

STATUTORY NOTES AND RELATED SUBSIDIARIES

EFFECTIVE DATE OF 2014 AMENDMENT Amendment by Pub. L. 113-295 effective Dec. 19, 2014, subject to a savings provision, see section 221(b) of Pub. L. 113-295 set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1980 AMENDMENT Amendment by Pub. L. 96-222 effective, except as otherwise provided, as if it had been included in provisions of the Revenue Act of 1978, Pub. L. 95-600, to which such amendment relates, see section 201 of Pub. L. 96-222 set out as a note under section 32 of this title.

EFFECTIVE DATEPub. L. 95-600, title V, §543(d), Nov. 6, 1978, 92 Stat. 2890, provided that: "The amendments made by this section [enacting this section and section 1255 of this title] shall apply with respect to grants made under the programs after September 30, 1979."

SAVINGS PROVISIONFor provisions that nothing in amendment by Pub. L. 115-141 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Mar. 23, 2018, for purposes of determining liability for tax for periods ending after Mar. 23, 2018, see section 401(e) of Pub. L. 115-141 set out as a note under section 23 of this title.

Secretary of the Treasury
The term "Secretary of the Treasury" means the Secretary of the Treasury, personally, and shall not include any delegate of his.
Secretary
The term "Secretary" means the Secretary of the Treasury or his delegate.
State
The term "State" shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
person
The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
taxable year
The term "taxable year" means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. "Taxable year" means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
taxpayer
The term "taxpayer" means any person subject to any internal revenue tax.