26 U.S.C. § 465
In the case of-
engaged in an activity to which this section applies, any loss from such activity for the taxable year shall be allowed only to the extent of the aggregate amount with respect to which the taxpayer is at risk (within the meaning of subsection (b)) for such activity at the close of the taxable year.
Any loss from an activity to which this section applies not allowed under this section for the taxable year shall be treated as a deduction allocable to such activity in the first succeeding taxable year.
For purposes of paragraph (1)(B)-
For purposes of this section, a taxpayer shall be considered at risk for an activity with respect to amounts including-
For purposes of this section, a taxpayer shall be considered at risk with respect to amounts borrowed for use in an activity to the extent that he-
No property shall be taken into account as security if such property is directly or indirectly financed by indebtedness which is secured by property described in paragraph (1).
Except to the extent provided in regulations, for purposes of paragraph (1)(B), amounts borrowed shall not be considered to be at risk with respect to an activity if such amounts are borrowed from any person who has an interest in such activity or from a related person to a person (other than the taxpayer) having such an interest.
Subparagraph (A) shall not apply to an interest as a creditor in the activity.
In the case of amounts borrowed by a corporation from a shareholder, subparagraph (A) shall not apply to an interest as a shareholder.
For purposes of this subsection, a person (hereinafter in this paragraph referred to as the "related person") is related to any person if-
For purposes of clause (i), in applying section 267(b) or 707(b)(1), "10 percent" shall be substituted for "50 percent".
Notwithstanding any other provision of this section, a taxpayer shall not be considered at risk with respect to amounts protected against loss through nonrecourse financing, guarantees, stop loss agreements, or other similar arrangements.
If in any taxable year the taxpayer has a loss from an activity to which subsection (a) applies, the amount with respect to which a taxpayer is considered to be at risk (within the meaning of subsection (b)) in subsequent taxable years with respect to that activity shall be reduced by that portion of the loss which (after the application of subsection (a)) is allowable as a deduction.
For purposes of this section-
Notwithstanding any other provision of this subsection, in the case of an activity of holding real property, a taxpayer shall be considered at risk with respect to the taxpayer's share of any qualified nonrecourse financing which is secured by real property used in such activity.
For purposes of this paragraph, the term "qualified nonrecourse financing" means any financing-
In the case of a partnership, a partner's share of any qualified nonrecourse financing of such partnership shall be determined on the basis of the partner's share of liabilities of such partnership incurred in connection with such financing (within the meaning of section 752).
For purposes of this paragraph-
The term "qualified person" has the meaning given such term by section 49(a)(1)(D)(iv).
For purposes of clause (i), section 49(a)(1)(D)(iv) shall be applied without regard to subclause (I) thereof (relating to financing from related persons) if the financing from the related person is commercially reasonable and on substantially the same terms as loans involving unrelated persons.
For purposes of this paragraph-
The activity of holding real property includes the holding of personal property and the providing of services which are incidental to making real property available as living accommodations.
The activity of holding real property shall not include the holding of mineral property.
This section applies to any taxpayer engaged in the activity of-
as a trade or business or for the production of income.
For purposes of this section-
Except as provided in subparagraph (B), a taxpayer's activity with respect to each-
shall be treated as a separate activity.
In the case of any partnership or S corporation, all activities with respect to section 1245 properties which-
shall be treated as a single activity.
Rules similar to the rules of subparagraphs (B) and (C) of paragraph (3) shall apply for purposes of this paragraph.
This section also applies to each activity-
Except as provided in subparagraph (C), for purposes of this section, activities described in subparagraph (A) which constitute a trade or business shall be treated as one activity if-
The Secretary shall prescribe regulations under which activities described in subparagraph (A) shall be aggregated or treated as separate activities.
In the case of an activity described in subparagraph (A), subsection (b)(3) shall apply only to the extent provided in regulations prescribed by the Secretary.
In the case of a corporation described in subsection (a)(1)(B) actively engaged in equipment leasing-
For purposes of subparagraph (A), a corporation shall not be considered to be actively engaged in equipment leasing unless 50 percent or more of the gross receipts of the corporation for the taxable year is attributable, under regulations prescribed by the Secretary, to equipment leasing.
For purposes of subparagraph (A), the component members of a controlled group of corporations shall be treated as a single corporation.
In the case of the component members of a qualified leasing group, paragraph (4) shall be applied-
For purposes of this paragraph, the term "qualified leasing group" means a controlled group of corporations which, for the taxable year and each of the 2 immediately preceding taxable years, satisfied each of the following 3 requirements:
During the entire year, the group had at least 3 full-time employees substantially all of the services of whom were services directly related to the equipment leasing activity of the qualified leasing members.
During the year, the qualified leasing members in the aggregate entered into at least 5 separate equipment leasing transactions.
During the year, the qualified leasing members in the aggregate had at least $1,000,000 in gross receipts from equipment leasing.
The term "qualified leasing group" does not include any controlled group of corporations to which, without regard to this paragraph, paragraph (4) applies.
For purposes of this paragraph, a corporation shall be treated as a qualified leasing member for the taxable year only if for each of the taxable years referred to in subparagraph (B)-
For purposes of paragraphs (4) and (5)-
The term "equipment leasing" means-
The term "equipment leasing" does not include the leasing of master sound recordings, and other similar contractual arrangements with respect to tangible or intangible assets associated with literary, artistic, or musical properties.
The terms "controlled group of corporations" and "component member" have the same meanings as when used in section 1563. The determination of the taxable years taken into account with respect to any controlled group of corporations shall be made in a manner consistent with the manner set forth in section 1563.
In the case of a taxpayer which is a qualified C corporation-
For purposes of subparagraph (A), the term "qualified C corporation" means any corporation described in subparagraph (B) of subsection (a)(1) which is not-
For purposes of this paragraph, the term "qualifying business" means any active business if-
In the case of an active business of a partnership, if-
then the taxpayer's proportionate share (determined on the basis of its profits interest) of the activities of the partnership in such business shall be treated as activities of the taxpayer (and clause (i) of subparagraph (C) shall not apply in determining whether such business is a qualifying business of the taxpayer).
For purposes of clause (i), the term "qualified corporate partner" means any corporation if-
For purposes of subclause (III), any contribution of property other than money shall be taken into account at its fair market value.
For purposes of clause (iii) of subparagraph (C), there shall not be taken into account any deduction in respect of compensation for personal services rendered by any employee (other than a non-owner employee) of the taxpayer or any member of such employee's family (within the meaning of section 318(a)(1)).
For purposes of clause (iii) of subparagraph (C), in the case of a bank (as defined in section 581) or a financial institution to which section 591 applies-
Clause (iii) of subparagraph (C) shall not apply to any insurance business of a qualified life insurance company.
For purposes of subclause (I), the term "insurance business" means any business which is not a noninsurance business (within the meaning of section 453B(e)(3)).
For purposes of subclause (I), the term "qualified life insurance company" means any company which would be a life insurance company as defined in section 816 if unearned premiums were not taken into account under subsections (a)(2) and (c)(2) of section 816.
For purposes of this paragraph-
The term "non-owner employee" means any employee who does not own, at any time during the taxable year, more than 5 percent in value of the outstanding stock of the taxpayer. For purposes of the preceding sentence, section 318 shall apply, except that "5 percent" shall be substituted for "50 percent" in section 318(a)(2)(C).
The term "excluded business" means-
A business involving the use, exploitation, sale, lease, or other disposition of property described in subclause (II) of clause (ii) shall not constitute an excluded business by reason of such subclause if the taxpayer is at risk with respect to all amounts paid or incurred (or chargeable to capital account) in such business.
For purposes of subclause (II) of clause (ii), the provision of radio, television, cable television, or similar services pursuant to a license or franchise granted by the Federal Communications Commission or any other Federal, State, or local authority shall not constitute an excluded business by reason of such subclause.
For purposes of this paragraph-
Except as provided in subparagraph (G), the component members of an affiliated group of corporations shall be treated as a single taxpayer.
The term "affiliated group of corporations" means an affiliated group (as defined in section 1504(a)) which files or is required to file consolidated income tax returns.
The term "component member" means an includible corporation (as defined in section 1504) which is a member of the affiliated group.
Nothing in this paragraph shall permit any loss of a member of an affiliated group to be used as an offset against the income of any other member of such group which is a personal holding company (as defined in section 542(a)) or a personal service corporation (as defined in section 269A(b) but determined by substituting "5 percent" for "10 percent" in section 269A(b)(2)).
For purposes of this section, the term "loss" means the excess of the deductions allowable under this chapter for the taxable year (determined without regard to the first sentence of subsection (a)) and allocable to an activity to which this section applies over the income received or accrued by the taxpayer during the taxable year from such activity (determined without regard to subsection (e)(1)(A)).
If zero exceeds the amount for which the taxpayer is at risk in any activity at the close of any taxable year-
The excess referred to in paragraph (1) shall not exceed-
1 So in original. Probably should be followed by a comma.
26 U.S.C. § 465
EDITORIAL NOTES
AMENDMENTS2017-Subsec. (c)(7)(D)(v)(II). Pub. L. 115-97 substituted "section 453B(e)(3)" for "section 806(b)(3)". 2014-Subsec. (c)(3)(A). Pub. L. 113-295 substituted "This" for "In the case of taxable years beginning after December 31, 1978, this".2004-Subsec. (c)(7)(B). Pub. L. 108-357 inserted "or" at end of cl. (i), redesignated cl. (iii) as (ii), and struck out former cl. (ii) which read as follows: "a foreign personal holding company (as defined in section 552(a)), or".1990-Subsec. (b)(6)(D). Pub. L. 101-508, §11813(b) (15), substituted "49(a)(1)(D)(iv)" for "46(c)(8)(D)(iv)" wherever appearing.Subsec. (c)(1)(E). Pub. L. 101-508, §11815(b)(3), substituted "section 613(e)(2)" for "section 613(e)(3)".1986-Subsec. (b)(3)(C). Pub. L. 99-514, §201(d)(7)(A), struck out "defined" after "person" in heading and amended text generally. Prior to amendment, text read as follows: "For purposes of subparagraph (A), the term 'related person' has the meaning given such term by section 168(e)(4)."Subsec. (b)(6). Pub. L. 99-514, §503(b), added par. (6).Subsec. (c)(3)(D), (E). Pub. L. 99-514, §503(a), redesignated subpar. (E) as (D) and struck out former subpar. (D) which read as follows: "In the case of activities described in subparagraph (A), the holding of real property (other than mineral property) shall be treated as a separate activity, and subsection (a) shall not apply to losses from such activity. For purposes of the preceding sentence, personal property and services which are incidental to making real property available as living accommodations shall be treated as part of the activity of holding such real property."Subsec. (c)(7)(D)(v)(II). Pub. L. 99-514, §1011(b)(1), substituted "section 806(b)(3)" for "section 806(c)(3)".1984-Subsec. (a)(1)(B). Pub. L. 98-369, §721(x)(2), substituted "a C corporation" for "a corporation".Subsec. (b)(3). Pub. L. 98-369, §432(c), designated existing provisions as subpar. (A), in subpar. (A) as so designated struck out subpar. designations "(A)" and "(B)" and substituted provisions that, except as provided by regulation, amounts borrowed shall not be considered to be at risk if such amounts are borrowed from any person who has an interest in the activity or from a related person to a person (other than the taxpayer) having such an interest for provision that such amounts would not be considered to be at risk if borrowed from a person who had an interest (other than as a creditor) in such activity or who had a relationship to the taxpayer specified in section 267(b) of this title, and added subpars. (B) and (C).Subsec. (c)(2). Pub. L. 98-369, §432(b), designated existing provisions as subpar. (A), in subpar. (A) as so designated, redesignated former subpars. (A) to (E) as cls. (i) to (v), respectively, struck out provision that a partner's interest in a partnership or a shareholder's interest in an S corporation had to be treated as a single activity to the extent that the partnership or the S corporation was engaged in activities described in any subparagraph of this paragraph, and added subpar. (B).Subsec. (c)(7). Pub. L. 98-369, §432(a), added par. (7).1982-Subsec. (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. Subsec. (a)(3). Pub. L. 97-354, §5(a)(31)(B), substituted "paragraph (1)(B)" for "paragraph (1)(C)" in heading and text. Subsec. (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.Subsec. (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))". Subsec. (c)(4)(A). Pub. L. 97-354, §5(a)(31)(E), substituted "subsection (a)(1)(B)" for "subsection (a)(1)(C)". 1980-Subsec. (a)(1)(C), (3). Pub. L. 96-222, §102(a)(1)(A), struck out in par. (1)(C) "(determined by reference to the rules contained in section 318 rather than under section 544)" after "of section 542(a)" and added par. (3).Subsec. (b)(5). Pub. L. 96-222, §102(a)(1)(D)(iii), substituted "to which subsection (a) applies" for "to which this section applies".Subsec. (c)(3)(D). Pub. L. 96-222, §102(a)(1)(D)(ii), struck out provisions relating to equipment leasing by closely-held corporations.Subsec. (c)(4) to (6). Pub. L. 96-222, §102(a)(1)(D)(i), added pars. (4) to (6). Subsec. (d). Pub. L. 96-222, §102(a)(1)(B), inserted "(determined without regard to subsection (e)(1)(A)" after "from such activity". Subsec. (e)(2)(A). Pub. L. 96-222, §102(a)(1)(C), inserted "by reason of losses" after "with respect to the activity". 1978-Pub. L. 95-600, §201(c)(1), substituted "Deductions limited to amount at risk" for "Deductions limited to amount at risk in case of certain activities" in section catchline. Subsec. (a). Pub. L. 95-600, §202, redesignated existing provisions as par. (1), substituted provisions relating to limitations with respect to an individual, an electing small business corporation defined under section 1371(b) of this title, and a corporation meeting the stock ownership requirements of section 542(a)(2) of this title and the rules of section 318 of this title, for provisions relating to limitations with respect to a taxpayer other than a corporation which is neither an electing small business corporation defined under section 1371(b) of this title, nor a personal holding company defined under section 542 of this title, and added par. (2). Subsec. (c)(1)(E). Pub. L. 95-618, §402(d)(1), added subpar. (E).Subsec. (c)(2)(E). Pub. L. 95-618, §402(d)(2), added subpar. (E).Subsec. (c)(3). Pub. L. 95-600, §201(a), added par. (3).Subsec. (d). Pub. L. 95-600, §701(k)(2), substituted "(determined without regard to the first sentence of subsection (a))" for "(determined without regard to this section)".Subsec. (e). Pub. L. 95-600, §203, added subsec. (e).
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 2017 AMENDMENT Amendment by Pub. L. 115-97 applicable to taxable years beginning after Dec. 31, 2017, see section 13512(c) of Pub. L. 115-97, set out as a note under section 453B of this title.
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 2004 AMENDMENT Amendment by Pub. L. 108-357 applicable to taxable years of foreign corporations beginning after Dec. 31, 2004, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end, see section 413(d)(1) of Pub. L. 108-357, set out as an Effective and Termination Dates of 2004 Amendments note under section 1 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT Amendment by section 11813(b)(15) of Pub. L. 101-508 applicable to property placed in service after Dec. 31, 1990, but not applicable to any transition property (as defined in section 49(e) of this title), any property with respect to which qualified progress expenditures were previously taken into account under section 46(d) of this title, and any property described in section 46(b)(2)(C) of this title, as such sections were in effect on Nov. 4, 1990, see section 11813(c) of Pub. L. 101-508, set out as a note under section 45K of this title.
EFFECTIVE DATE OF 1986 AMENDMENT Amendment by section 201(d)(7)(A) of Pub. L. 99-514 applicable to property placed in service after Dec. 31, 1986, in taxable years ending after such date, with exceptions, see sections 203 and 204 of Pub. L. 99-514, set out as a note under section 168 of this title.Amendment by section 201(d)(7)(A) of Pub. L. 99-514 not applicable to any property placed in service before Jan. 1, 1994, if such property placed in service as part of specified rehabilitations, and not applicable to certain additional rehabilitations, see section 251(d)(2), (3) of Pub. L. 99-514, set out as a note under section 46 of this title.Pub. L. 99-514, title V, §503(c), Oct. 22, 1986, 100 Stat. 2244, provided that: "(1) IN GENERAL.-Except as provided in this subsection, the amendments made by this section [amending this section] shall apply to losses incurred after December 31, 1986, with respect to property placed in service by the taxpayer after December 31, 1986."(2) SPECIAL RULE FOR LOSSES OF S CORPORATION, PARTNERSHIP, OR PASS-THRU ENTITY.-In the case of an interest in an S corporation, a partnership, or other pass-thru entity acquired after December 31, 1986, the amendments made by this section shall apply to losses after December 31, 1986, which are attributable to property placed in service by the S corporation, partnership, or pass-thru entity on, before, or after January 1, 1986."(3) SPECIAL RULE FOR ATHLETIC STADIUM.-The amendments made by this section shall not apply to any losses incurred by a taxpayer with respect to the holding of a multi-use athletic stadium in Pittsburgh, Pennsylvania, which the taxpayer acquired in a sale for which a letter of understanding was entered into before April 16, 1986."Amendment by section 1011(b)(1) of Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1986, see section 1011(c)(1) of Pub. L. 99-514, set out as a note under section 453B of this title.
EFFECTIVE DATE OF 1984 AMENDMENT Pub. L. 98-369, div. A, title IV, §432(d), July 18, 1984, 98 Stat. 815, as amended by Pub. L. 99-514, §2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 1983; except that any loss from an activity described in section 465(c)(7)(A) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as amended by this section) which (but for the amendments made by this section) would have been treated as a deduction for the taxpayer's first taxable year beginning after December 31, 1983, under section 465(a)(2) of such Code shall be allowed as a deduction for such first taxable year notwithstanding such amendments."Amendment by section 721(x)(2) of Pub. L. 98-369 effective as if included in the Subchapter S Revision Act of 1982, Pub. L. 97-354, see section 721(y)(1) of Pub. L. 98-369, set out as a note under section 1361 of this title.
EFFECTIVE DATE OF 1982 AMENDMENT Amendment by Pub. L. 97-354 applicable to taxable years beginning after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as an Effective Date note under section 1361 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 the 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 DATE OF 1978 AMENDMENT Amendment by Pub. L. 95-618 applicable with respect to wells commenced on or after Oct. 1, 1978, in taxable years ending on or after such date, see section 402(e) of Pub. L. 95-618, set out as a note under section 263 of this title.Pub. L. 95-600, title II, §204(a), Nov. 6, 1978, 92 Stat. 2817, provided that: "The amendments made by this subtitle [amending this section and section 704 of this title and enacting provisions set out as notes under this section and section 704 of this title] shall apply to taxable years beginning after December 31, 1978."Pub. L. 95-600, title VII, §701(k)(3), Nov. 6, 1978, 92 Stat. 2906, provided that: "The amendments made by this subsection [amending this section and provisions set out below] shall take effect on October 4, 1976."
EFFECTIVE DATE AND TRANSITIONAL RULES Pub. L. 94-455, title II, §204(c), Oct. 4, 1976, 90 Stat. 1532, as amended by Pub. L. 95-600, title VII, §701(k)(1), Nov. 6, 1978, 92 Stat. 2906; Pub. L. 99-514, §2, Oct. 22, 1986, 100 Stat. 2095, provided that:"(1) IN GENERAL.-Except as provided in paragraphs (2) and (3), the amendments made by this section [enacting this section] shall apply to losses attributable to amounts paid or incurred in taxable years beginning after December 31, 1975. For purposes of this subsection, any amount allowed or allowable for depreciation or amortization for any period shall be treated as an amount paid or incurred in such period."(2) SPECIAL TRANSITIONAL RULES FOR MOVIES AND VIDEO TAPES.-"(A) IN GENERAL.-In the case of any activity described in section 465(c)(1)(A) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], the amendments made by this section shall not apply to-"(i) deductions for depreciation or amortization with respect to property the principal production of which began before September 11, 1975, and for the purchase of which there was on September 11, 1975, and at all times thereafter a binding contract, and"(ii) deductions attributable to producing or distributing property the principal production of which began before September 11, 1975."(B) EXCEPTION FOR CERTAIN AGREEMENTS WHERE PRINCIPAL PHOTOGRAPHY BEGIN BEFORE 1976.-In the case of any activity described in section 465(c)(1)(A) of the Internal Revenue Code of 1986, the amendments made by this section shall not apply to deductions attributable to the producing of a film the principal photography of which began on or before December 31, 1975, if-"(i) on September 10, 1975, there was an agreement with the director or a principal motion picture star, or on or before September 10, 1975, there had been expended (or committed to the production) an amount not less than the lower of $100,000 or 10 percent of the estimated costs of producing the film, and"(ii) the production takes place in the United States.Subparagraph (A) shall apply only to taxpayers who held their interests on September 10, 1975. Subparagraph (B) shall apply only to taxpayers who held their interests on December 31, 1975."(3) SPECIAL TRANSITIONAL RULES FOR LEASING ACTIVITIES.-"(A) RULE FOR LEASES OTHER THAN OPERATING LEASES.-In the case of any activity described in section 465(c)(1)(C) of the Internal Revenue Code of 1986, the amendments made by this section shall not apply with respect to-"(i) leases entered into before January 1, 1976, and"(ii) leases where the property was ordered by the lessor or lessee before January 1, 1976."(B) HOLDING OF INTERESTS FOR PURPOSES OF SUBPARAGRAPH (A).-Subparagraph (A) shall apply only to taxpayers who held their interests in the property on December 31, 1975."(C) SPECIAL RULE FOR OPERATING LEASES.-In the case of a lease described in section 46(e)(3)(B) of the Internal Revenue Code of 1986-"(i) subparagraph (A) shall be applied by substituting 'May 1, 1976' for 'January 1, 1976' each place it appears therein, and"(ii) subparagraph (B) shall be applied by substituting 'April 30, 1976' for 'December 31, 1975'."
SAVINGS PROVISIONFor provisions that nothing in amendment by Pub. L. 101-508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101-508, set out as a note under section 45K of this title.
TRANSITIONAL RULES FOR RECAPTURE PROVISIONS AND LEASING ACTIVITIESPub. L. 95-600, title II, §204(b), Nov. 6, 1978, 92 Stat. 2817, as amended by Pub. L. 96-222, title I, §102(a)(1)(E), Apr. 1, 1980, 94 Stat. 208; Pub. L. 99-514, §2, Oct. 22, 1986, 100 Stat. 2095, provided that:"(1) RECAPTURE PROVISIONS.-If the amount for which the taxpayer is at risk in any activity as of the close of the taxpayer's last taxable year beginning before January 1, 1979, is less than zero, section 465(e)(1) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by section 203 of this Act) shall be applied with respect to such activity of the taxpayer by substituting such negative amount for zero."(2) SPECIAL TRANSITIONAL RULES FOR LEASING ACTIVITIES.-"(A) RULE FOR LEASES.-In the case of any activity described in section 465(c)(1)(C) of such Code in which a corporation described in section 465(a)(1)(C) of such Code is engaged, the amendments made by this subtitle [amending sections 465 and 704 of this title and enacting provisions set out as notes under sections 465 and 704 of this title] shall not apply with respect to-"(i) leases entered into before November 1, 1978, and"(ii) leases where the property was ordered by the lessor or lessee before November 1, 1978."(B) HOLDING OF INTERESTS FOR PURPOSES OF SUBPARAGRAPH (A).-Subparagraph (A) shall apply only to taxpayers who held their interests in the property on October 31, 1978."
- Internal Revenue Code of 1986
- The term "Internal Revenue Code of 1986" means this title, and the term "Internal Revenue Code of 1939" means the Internal Revenue Code enacted February 10, 1939, as amended.
- 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.
- corporation
- The term "corporation" includes associations, joint-stock companies, and insurance companies.
- person
- The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.
- shareholder
- The term "shareholder" includes a member in an association, joint-stock company, or insurance company.
- stock
- The term "stock" includes shares in an association, joint-stock company, or insurance company.
- 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.
- trade or business
- The term "trade or business" includes the performance of the functions of a public office.