26 USC 50 - Other special rules

View all text of Subpart E [§ 46 - § 50B]

§ 50. Other special rules

(a) Recapture in case of dispositions, etc.Under regulations prescribed by the Secretary—

(1) Early disposition, etc.

(A) General rule

(B) Recapture percentage

(2) Property ceases to qualify for progress expenditures

(A) In general

(B) Certain excess credit recaptured

(D) Coordination with paragraph (1)

(E) Special rules

(3) Certain expansions in connection with advanced manufacturing facilities

(A) In general

(B) Exception

(4) Carrybacks and carryovers adjusted

(5) Subsection not to apply in certain casesParagraphs (1) and (2) shall not apply to—

(A) a transfer by reason of death, or

(B) a transaction to which section 381(a) applies.

For purposes of this subsection, property shall not be treated as ceasing to be investment credit property with respect to the taxpayer by reason of a mere change in the form of conducting the trade or business so long as the property is retained in such trade or business as investment credit property and the taxpayer retains a substantial interest in such trade or business.

(6) Definitions and special rules

(A) Investment credit property

(B) Transfer between spouses or incident to divorceIn the case of any transfer described in subsection (a) of section 1041—

(i) the foregoing provisions of this subsection shall not apply, and

(ii) the same tax treatment under this subsection with respect to the transferred property shall apply to the transferee as would have applied to the transferor.

(D) Applicable transactionFor purposes of this subsection—

(i) In general

(ii) Exception

(E) Applicable taxpayer

(b) Certain property not eligibleNo credit shall be determined under this subpart with respect to—

(1) Property used outside United States

(A) In general

(B) Exceptions

(2)No credit shall be determined under this subpart with respect to any property which is used predominantly to furnish lodging or in connection with the furnishing of lodging. The preceding sentence shall not apply to—

(A) nonlodging commercial facilities which are available to persons not using the lodging facilities on the same basis as they are available to persons using the lodging facilities;

(B) property used by a hotel or motel in connection with the trade or business of furnishing lodging where the predominant portion of the accommodations is used by transients;

(C) a certified historic structure to the extent of that portion of the basis which is attributable to qualified rehabilitation expenditures; and

(D) any energy property.

(3) Property used by certain tax-exempt organization

(4) Property used by governmental units or foreign persons or entities

(A) In generalNo credit shall be determined under this subpart with respect to any property used—

(i) by the United States, any State or political subdivision thereof, any possession of the United States, or any agency or instrumentality of any of the foregoing, or

(ii) by any foreign person or entity (as defined in section 168(h)(2)(C)), but only with respect to property to which section 168(h)(2)(A)(iii) applies (determined after the application of section 168(h)(2)(B)).

(B) Exception for short-term leases

(D) Special rules for partnerships, etc.

(E) Cross reference

(1) In general

(2) Certain dispositions

(3) Special ruleIn the case of any energy credit—

(A) only 50 percent of such credit shall be taken into account under paragraph (1),

(B) only 50 percent of any recapture amount attributable to such credit shall be taken into account under paragraph (2), and

(4) Recapture of reductions

(A) In general

(B) Special rule for section 1250

(5) Adjustment in basis of interest in partnership or S corporationThe adjusted basis of—

(A) a partner’s interest in a partnership, and

(B) stock in an S corporation,

shall be appropriately adjusted to take into account adjustments made under this subsection in the basis of property held by the partnership or S corporation (as the case may be).

(d) Certain rules made applicableFor purposes of this subpart, rules similar to the rules of the following provisions (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply:

(1) Section 46(e) (relating to limitations with respect to certain persons).

(2) Section 46(f) (relating to limitation in case of certain regulated companies). At the election of a taxpayer, this paragraph shall not apply to any energy storage technology (as defined in section 48(c)(6)), provided—

(A) no election under this paragraph shall be permitted if the making of such election is prohibited by a State or political subdivision thereof, by any agency or instrumentality of the United States, or by a public service or public utility commission or other similar body of any State or political subdivision that regulates public utilities as described in section 7701(a)(33)(A),

(B) an election under this paragraph shall be made separately with respect to each energy storage technology by the due date (including extensions) of the Federal tax return for the taxable year in which the energy storage technology is placed in service by the taxpayer, and once made, may be revoked only with the consent of the Secretary, and

(C) an election shall not apply with respect to any energy storage technology if such energy storage technology has a maximum capacity equal to or less than 500 kilowatt hours.

(3) Section 46(h) (relating to special rules for cooperatives).

(4) Paragraphs (2) and (3) of section 48(b) (relating to special rule for sale-leasebacks).

(5) Section 48(d) (relating to certain leased property).

(6) Section 48(f) (relating to estates and trusts).

(7) Section 48(r) (relating to certain 501(d) organizations).

Paragraphs (1)(A), (2)(A), and (4) of the section 46(e) referred to in paragraph (1) of this subsection shall not apply to any taxable year beginning after December 31, 1995. In the case of a real estate investment trust making an election under section 6418, paragraphs (1)(B) and (2)(B) of the section 46(e) referred to in paragraph (1) of this subsection shall not apply to any investment credit property of such real estate investment trust to which such election applies.

(Added Pub. L. 101–508, title XI, § 11813(a), Nov. 5, 1990, 104 Stat. 1388–546; amended Pub. L. 104–188, title I, §§ 1616(b)(1), 1702(h)(11), 1704(t)(29), Aug. 20, 1996, 110 Stat. 1856, 1874, 1889; Pub. L. 105–206, title VI, § 6004(g)(7), July 22, 1998, 112 Stat. 796; Pub. L. 108–357, title III, § 322(d)(2)(D), Oct. 22, 2004, 118 Stat. 1475; Pub. L. 109–135, title IV, § 412(o), Dec. 21, 2005, 119 Stat. 2638; Pub. L. 113–295, div. A, title II, § 220(d), Dec. 19, 2014, 128 Stat. 4036; Pub. L. 115–141, div. U, title IV, § 401(a)(25), (d)(3)(B)(ii), Mar. 23, 2018, 132 Stat. 1185, 1209; Pub. L. 117–167, div. A, § 107(b)(1)–(3)(B), (d)(3), Aug. 9, 2022, 136 Stat. 1397–1399; Pub. L. 117–169, title I, §§ 13102(f)(5), (i), 13702(b)(3), (4), 13801(c), Aug. 16, 2022, 136 Stat. 1917, 1997, 2012.)