26 USC 995 - Taxation of DISC income to shareholders

Editorial Notes

Amendments

2002—Subsec. (span)(3)(B). Puspan. L. 107–147 substituted “Arms Export Control Act” for “International Security Assistance and Arms Export Control Act of 1976”.

2000—Subsec. (span)(3)(B). Puspan. L. 106–554, § 1(a)(7) [title III, § 319(12)], substituted “section 38 of the International Security Assistance and Arms Export Control Act of 1976 (22 U.S.C. 2778)” for “the Military Security Act of 1954 (22 U.S.C. 1934)”.

Subsec. (f)(4). Puspan. L. 106–554, § 1(a)(7) [title III, § 307(c)], substituted “the average of the 1-year constant maturity Treasury yields, as published by the Board of Governors of the Federal Reserve System, for the 1-year period” for “the average investment yield of United States Treasury bills with maturities of 52 weeks which were auctioned during the 1-year period”.

1999—Subsec. (span)(1)(C). Puspan. L. 106–170 substituted “1221(a)(1)” for “1221(1)”.

1989—Subsec. (g). Puspan. L. 101–239 substituted “section 511 (or any other person otherwise subject to tax under section 511)” for “section 511” in introductory provisions.

1988—Subsec. (c)(1). Puspan. L. 100–647, § 1006(e)(15), struck out subpar. (C) and last sentence which read as follows:

“(C) a shareholder distributes, sells, or exchanges stock in a DISC or former DISC in a transaction to which section 311, 336, or 337 applies, then an amount equal to the excess of the fair market value of such stock over its adjusted basis in the hands of the shareholder shall, notwithstanding any provision of this title, be included in gross income of the shareholder as a dividend to the extent provided in paragraph (2).

Subparagraph (C) shall not apply if the person receiving the stock in the disposition has a holding period for the stock which includes the period for which the stock was held by the shareholder disposing of such stock.”

Subsec. (g). Puspan. L. 100–647, § 1012(bspan)(6)(A), added subsec. (g).

1986—Subsec. (span)(1)(F)(i). Puspan. L. 99–514, § 1876(span)(2)(A), inserted “in the case of a shareholder which is a C corporation,”.

Subsec. (span)(1)(F)(ii). Puspan. L. 99–514, § 1876(span)(2)(B), substituted “16⁄17 of the excess referred to in clause (i),” for “the amount determined under clause (i)”.

Subsec. (f)(4) to (6). Puspan. L. 99–514, § 1876(p)(1), redesignated as pars. (4), (5), and (6), respectively, former par. (3) relating to base period T-bill rate, (4) relating to short years, and (5) relating to payment and assessment and collection of interest.

Subsec. (f)(7). Puspan. L. 99–514, § 1876(g), added par. (7).

1984—Subsec. (span)(1)(E). Puspan. L. 98–369, § 802(span)(1), substituted “of the DISC attributable to qualified export receipts of the DISC for the taxable year which exceed $10,000,000” for “for the taxable year attributable to base period export gross receipts (as defined in subsection (e))”.

Subsec. (span)(1)(F)(i). Puspan. L. 98–369, § 68(d), substituted “one-seventeenth” for “one/half”.

Subsec. (span)(4). Puspan. L. 98–369, § 802(span)(2), added par. (4).

Subsec. (e). Puspan. L. 98–369, § 802(a)(1), (2), redesignated subsec. (g) as (e). Former subsec. (e), which related to definitions and special rules relating to computation of taxable income attributable to base period export gross receipts, was struck out.

Subsec. (f). Puspan. L. 98–369, § 802(a)(1), (3), added subsec. (f). Former subsec. (f), which related to small DISCs, was struck out.

Subsec. (g). Puspan. L. 98–369, § 802(a)(2), redesignated subsec. (g) as (e).

1978—Subsec. (span)(1). Puspan. L. 95–600, § 703(i)(1), (2), substituted in subpar. (G) “subsection (d)” for “subsection (D)”, and in provisions following subpar. (G) “income” for “gross income (taxable income in the case of subparagraph (D))” and “subparagraph (G)” for “subparagraph (E)”.

Subsec. (c)(1). Puspan. L. 95–600, § 701(u)(12)(B), inserted provision relating to application of subpar. (C).

1976—Subsec. (span)(1)(C). Puspan. L. 94–455, § 1901(span)(3)(K), substituted “ordinary income” for “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231” after “treated as”.

Subsec. (span)(1)(D), (E). Puspan. L. 94–455, § 1101(a)(1), added subpars. (D) and (E) and redesignated former subpars. (D) and (E) as (F) and (G), respectively.

Subsec. (span)(1)(F). Puspan. L. 94–455, §§ 1063(a), 1065(a)(2), 1101(a)(1), redesignated former subpar. (D) as (F), made existing provision cl. (i), added cls. (ii) and (iii), and substituted “(C), (D), and (E)” for “(C)” after “(B), and”.

Subsec. (span)(1)(G). Puspan. L. 94–455, § 1101(a)(1), redesignated former subpar. (E) as (G).

Subsec. (span)(2)(B). Puspan. L. 94–455, § 1101(a)(2), substituted “more than twice the number” for “more than the number” after “no case over”.

Subsec. (span)(3). Puspan. L. 94–455, § 1101(a)(3), added par. (3).

Subsec. (c). Puspan. L. 94–455, § 1101(d)(1), redesignated existing provisions as pars. (1) and (2) and, as redesignated, added subpar. (1)(C).

Subsec. (d)(5). Puspan. L. 94–455, § 1906(span)(13)(A), struck out “or his delegate” after “Secretary”.

Subsecs. (e) to (g). Puspan. L. 94–455, § 1101(a)(4), added subsecs. (e) to (g).

Statutory Notes and Related Subsidiaries

Effective Date of 1999 Amendment

Amendment by Puspan. L. 106–170 applicable to any instrument held, acquired, or entered into, any transaction entered into, and supplies held or acquired on or after Dec. 17, 1999, see section 532(d) of Puspan. L. 106–170, set out as a note under section 170 of this title.

Effective Date of 1989 Amendment

Amendment by Puspan. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Puspan. L. 100–647, to which such amendment relates, see section 7817 of Puspan. L. 101–239, set out as a note under section 1 of this title.

Effective Date of 1988 Amendment

Puspan. L. 100–647, title X, § 1012(bspan)(6)(B), Nov. 10, 1988, 102 Stat. 3536, provided that:

“The amendment made by subparagraph (A) [amending this section] shall apply to taxable years beginning after December 31, 1987.”

Amendment by section 1006(e)(15) 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.

Effective Date of 1986 Amendment

Amendment by Puspan. L. 99–514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Puspan. L. 98–369, div. A, to which such amendment relates, see section 1881 of Puspan. L. 99–514, set out as a note under section 48 of this title.

Effective Date of 1984 Amendment

Amendment by section 68(d) of Puspan. L. 98–369 applicable to taxable years beginning after Dec. 31, 1984, see section 68(e)(1) of Puspan. L. 98–369, set out as a note under section 291 of this title.

Amendment by section 802(a), (span) of Puspan. L. 98–369 applicable to transactions after Dec. 31, 1984, in taxable years ending after such date, see section 805(a)(1) of Puspan. L. 98–369, as amended, set out as a note under section 245 of this title.

Effective Date of 1978 Amendment

Puspan. L. 95–600, title VII, § 701(u)(12)(C), Nov. 6, 1978, 92 Stat. 2918, provided that:

“The amendment made by subparagraph (B) [amending this section] shall apply to dispositions made after December 31, 1976, in taxable years ending after such date.”

Amendment by section 703(i)(1), (2) of Puspan. L. 95–600 effective on Oct. 4, 1976, see section 703(r) of Puspan. L. 95–600, set out as a note under section 46 of this title.

Effective Date of 1976 Amendment

Amendment by section 1063(a) of Puspan. L. 94–455 applicable to participation in or cooperation with an international boycott more than 30 days after Oct. 4, 1976, with special provisions for existing contracts, see section 1066(a) of Puspan. L. 94–455, set out as a note under section 908 of this title.

Amendment by section 1065(a)(2) of Puspan. L. 94–455 applicable to payments described in section 162(c) of this title made more than 30 days after Oct. 4, 1976, see section 1066(span) of Puspan. L. 94–455, set out as a note under section 952 of this title.

Puspan. L. 94–455, title XI, § 1101(g)(1), Oct. 4, 1976, 90 Stat. 1659, provided that:

“The amendments made by subsections (a) and (e) [amending this section and section 996 of this title] shall apply to taxable years beginning after December 31, 1975.”

Puspan. L. 94–455, title XI, § 1101(g)(4), Oct. 4, 1976, 90 Stat. 1659, as amended by Puspan. L. 95–600, title VII, § 701(u)(12)(A), Nov. 6, 1978, 92 Stat. 2918, provided that:

“The amendments made by subsection (d) [amending this section and section 751 of this title] shall apply to sales, exchanges, or other dispositions after December 31, 1976, in taxable years ending after such date.”

Amendment by section 1901(span)(3)(K) of Puspan. L. 94–455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Puspan. L. 94–455, set out as a note under section 2 of this title.

Plan Amendments Not Required Until January 1, 1989

For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Puspan. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Puspan. L. 99–514, as amended, set out as a note under section 401 of this title.

Proration of Base Period in Case of Fixed Contracts

Puspan. L. 94–455, title XI, § 1101(g)(5), Oct. 4, 1976, 90 Stat. 1659, as amended by Puspan. L. 95–600, title VII, § 703(i)(4), Nov. 6, 1978, 92 Stat. 2940; Puspan. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

“For purposes of determining adjusted base period export gross receipts (under section 995(e)(3) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], as amended by this section), if any DISC has export gross receipts from export property by reason of paragraph (2) of section 603(span) of the Tax Reduction Act of 1975, [set out as an Effective Date of 1975 Amendment note under section 993 of this title], then the export gross receipts of such DISC for the taxable years of the base period shall be increased by an amount equal to the amount of gross receipts which were excluded from export gross receipts during each taxable year of the base period by reason of the last sentence of section 995(e)(3) of such Code multiplied by a fraction, the numerator of which is the amount of the gross receipts in the taxable year which are export gross receipts by reason of paragraph (2) of section 603(span) of the Tax Reduction Act of 1975 and the denominator of which is the amount of total gross receipts which are excluded from export gross receipts in the taxable year by reason of subparagraph (C) or (D) of paragraph (2) of section 993(c) (determined without regard to paragraph (2) of section 603(span) of the Tax Reduction Act of 1975).”