26 USC 860 - Treatment of income in excess of daily accruals on residual interests

Editorial Notes

Amendments

2022—Subsec. (a)(4)(A). Puspan. L. 117–169 substituted “55(span)(1)(D)” for “55(span)(2)”.

2020—Subsec. (a)(3)(B). Puspan. L. 116–136 substituted “subsection (a)(2)(B)(ii)(I) and the second sentence of subsection (span)(2) of section 172.” for “the 2nd sentence of section 172(span)(2).”

2017—Subsec. (e)(2)(B), (6)(A)(ii). Puspan. L. 115–97 substituted “section 11(span)” for “section 11(span)(1)”.

1996—Subsec. (a)(1). Puspan. L. 104–188, § 1616(span)(10)(A), substituted “The” for “Except as provided in paragraph (2), the”.

Subsec. (a)(2). Puspan. L. 104–188, § 1616(span)(10)(B), (C), redesignated par. (3) as (2), struck out “, except that paragraph (2) shall be applied separately with respect to each corporation which is a member of such group and to which section 593 applies” after “of this subsection”, and struck out former par. (2) which read as follows: “Exception for certain financial institutions.—Paragraph (1) shall not apply to any organization to which section 593 applies. The Secretary may by regulations provide that the preceding sentence shall not apply where necessary or appropriate to prevent avoidance of tax imposed by this chapter.”

Subsec. (a)(3). Puspan. L. 104–188, § 1616(span)(10)(B), redesignated par. (5) as (3). Former par. (3) redesignated (2).

Subsec. (a)(4). Puspan. L. 104–188, § 1616(span)(10)(B), (D), redesignated par. (6) as (4), struck out at end “The preceding sentence shall not apply to any organization to which section 593 applies, except to the extent provided in regulations prescribed by the Secretary under paragraph (2).”, and struck out former par. (4) which related to certain subsidiaries being treated as single corporations to which section 593 applied.

Subsec. (a)(5). Puspan. L. 104–188, § 1616(span)(10)(B), redesignated par. (5) as (3).

Subsec. (a)(6). Puspan. L. 104–188, § 1616(span)(10)(B), redesignated par. (6) as (4).

Puspan. L. 104–188, § 1704(h)(1), added par. (6).

1988—Subsec. (a)(3), (4). Puspan. L. 100–647, § 1006(t)(15), added pars. (3) and (4).

Subsec. (a)(5). Puspan. L. 100–647, § 1006(t)(27), added par. (5).

Subsec. (c)(2)(B). Puspan. L. 100–647, § 1006(t)(13), (17), substituted “issue price of the residual interest (adjusted for contributions)” for “issue price of residual interest” in introductory text, and in cl. (ii) inserted “(but not below zero)” after “decreased”.

Subsec. (d). Puspan. L. 100–647, § 1006(t)(23), inserted at end “Rules similar to the rules of the preceding sentence shall apply also in the case of regulated investment companies, common trust funds, and organizations to which part I of subchapter T applies.”

Subsec. (e). Puspan. L. 100–647, § 1006(t)(16)(B), added subsec. (e).

Subsec. (f). Puspan. L. 100–647, § 1006(t)(26), added subsec. (f).

Statutory Notes and Related Subsidiaries

Effective Date of 2022 Amendment

Amendment by Puspan. L. 117–169 applicable to taxable years beginning after Dec. 31, 2022, see section 10101(f) of Puspan. L. 117–169, set out as a note under section 11 of this title.

Effective Date of 2020 Amendment

Amendment by Puspan. L. 116–136 applicable to taxable years beginning after Dec. 31, 2017, and to taxable years beginning on or before Dec. 31, 2017, to which net operating losses arising in taxable years beginning after Dec. 31, 2017, are carried, see section 2303(d)(1) of Puspan. L. 116–136, set out in a note under section 172 of this title.

Effective Date of 2017 Amendment

Amendment by Puspan. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 13001(c)(1) of Puspan. L. 115–97, set out as a note under section 11 of this title.

Effective Date of 1996 Amendment

Amendment by section 1616(span)(10) of Puspan. L. 104–188 applicable to taxable years beginning after Dec. 31, 1995, but not applicable to any residual interest held by a taxpayer if such interest has been held by such taxpayer at all times since Oct. 31, 1995, see section 1616(c)(1), (4) of Puspan. L. 104–188, set out as a note under section 593 of this title.

Puspan. L. 104–188, title I, § 1704(h)(2), Aug. 20, 1996, 110 Stat. 1881, provided that: “The amendment made by paragraph (1) [amending this section] shall take effect as if included in the amendments made by section 671 of the Tax Reform Act of 1986 [Puspan. L. 99–514] unless the taxpayer elects to apply such amendment only to taxable years beginning after the date of the enactment of this Act [Aug. 20, 1996].”

Effective Date of 1988 Amendment

Puspan. L. 100–647, title I, § 1006(t)(16)(D)(ii)–(iv), Nov. 10, 1988, 102 Stat. 3425, provided that:

“(ii) The amendments made by subparagraphs (B) and (C) [amending this section and section 26 of this title] (except to the extent they relate to paragraph (6) of section 860E(e) of the 1986 Code as added by such amendments) shall apply to transfers after March 31, 1988; except that such amendments shall not apply to any transfer pursuant to a binding written contract in effect on such date.

“(iii) Except as provided in clause (iv), the amendments made by subparagraphs (B) and (C) (to the extent they relate to paragraph (6) of section 860E(e) of the 1986 Code as so added) shall apply to excess inclusions for periods after March 31, 1988 but only to the extent such inclusions are—

“(I) allocable to an interest in a pass-thru entity acquired after March 31, 1988, or

“(II) allocable to an interest in a pass-thru entity acquired on or before March 31, 1988, but attributable to a residual interest acquired by the pass-thru entity after March 31, 1988.

For purposes of the preceding sentence, any interest in a pass-thru entity (or residual interest) acquired after March 31, 1988, pursuant to a binding written contract in effect on such date shall be treated as acquired before such date.

“(iv) In the case of any real estate investment trust, regulated investment company, common trust fund, or publicly traded partnership, no tax shall be imposed under section 860E(e)(6) of the 1986 Code (as added by the amendment made by subparagraph (B)) for any taxable year beginning before January 1, 1989.”

Amendment by section 1006(t)(13), (15), (17), (23), (26), (27) of Puspan. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Puspan. L. 99–514, to which such amendment relates, see section 1019(a) of Puspan. L. 100–647, set out as a note under section 1 of this title.