§291 — Special rules relating to corporate preference items
104 cases·27 followed·5 distinguished·1 criticized·71 cited—26% support
Statute Text — 26 U.S.C. §291
For purposes of this subtitle, in the case of a corporation—
In the case of section 1250 property which is disposed of during the taxable year, 20 percent of the excess (if any) of—
the amount which would be treated as ordinary income if such property was section 1245 property, over
the amount treated as ordinary income under section 1250 (determined without regard to this paragraph),
shall be treated as gain which is ordinary income under section 1250 and shall be recognized notwithstanding any other provision of this title. Under regulations prescribed by the Secretary, the provisions of this paragraph shall not apply to the disposition of any property to the extent section 1250(a) does not apply to such disposition by reason of section 1250(d).
In the case of iron ore and coal (including lignite), the amount allowable as a deduction under section 613 with respect to any property (as defined in section 614) shall be reduced by 20 percent of the amount of the excess (if any) of—
the amount of the deduction allowable under section 613 for the taxable year (determined without regard to this paragraph), over
the adjusted basis of the property at the close of the taxable year (determined without regard to the depletion deduction for the taxable year).
The amount allowable as a deduction under this chapter (determined without regard to this section) with respect to any financial institution preference item shall be reduced by 20 percent.
If an election is made under section 169 with respect to any certified pollution control facility, the amortizable basis of such facility for purposes of such section shall be reduced by 20 percent.
For purposes of this subtitle, in the case of a corporation—
The amount allowable as a deduction for any taxable year (determined without regard to this section)—
under section 263(c) in the case of an integrated oil company, or
under section 616(a) or 617(a),
shall be reduced by 30 percent.
The amount not allowable as a deduction under section 263(c), 616(a), or 617(a) (as the case may be) for any taxable year by reason of paragraph (1) shall be allowable as a deduction ratably over the 60-month period beginning with the month in which the costs are paid or incurred.
For purposes of section 1254, any deduction under paragraph (2) shall be treated as a deduction allowable under section 263(c), 616(a), or 617(a) (whichever is appropriate).
For purposes of this subsection, the term “integrated oil company” means, with respect to any taxable year, any producer of crude oil to whom subsection (c) of section 613A does not apply by reason of paragraph (2) or (4) of section 613A(d).
The portion of the adjusted basis of any property which is attributable to amounts to which paragraph (1) applied shall not be taken into account for purposes of determining depletion under section 611.
For purposes of this subtitle—
Section 168 shall apply with respect to that portion of the basis of any property not taken into account under section 169 by reason of subsection (a)(4).
Subsection (a)(1) shall not apply to any section 1250 property which is part of a certified pollution control facility (within the meaning of section 169(d)(1)) with respect to which an election under section 169 was made.
In the case of a real estate investment trust (as defined in section 856), the difference between the amounts described in subparagraphs (A) and (B) of subsection (a)(1) shall be reduced to the extent that a capital gain dividend (as defined in section 857(b)(3)(C),11 See References in Text note below. applied without regard to this section) is treated as paid out of such difference. Any capital gain dividend treated as having been paid out of such difference to a shareholder which is an applicable corporation retains its character in the hands of the shareholder as gain from the disposition of section 1250 property for purposes of applying subsection (a)(1) to such shareholder.
For purposes of this section—
The term “financial institution preference item” includes the following:
In the case of a financial institution which is a bank (as defined in section 585(a)(2)), the amount of interest on indebtedness incurred or continued to purchase or carry obligations acquired after December 31, 1982, and before August 8, 1986, the interest on which is exempt from taxes for the taxable year, to the extent that a deduction would (but for this paragraph or section 265(b)) be allowable with respect to such interest for such taxable year.
Unless the taxpayer (under regulations prescribed by the Secretary) establishes otherwise, the amount determined under clause (i) shall be an amount which bears the same ratio to the aggregate amount allowable (determined without regard to this section and section 265(b)) to the taxpayer as a deduction for interest for the taxable year as—
the taxpayer’s average adjusted basis (within the meaning of section 1016) of obligations described in clause (i), bears to
such average adjusted basis for all assets of the taxpayer.
For purposes of this subparagraph, the term “interest” includes amounts (whether or not designated as interest) paid in respect of deposits, investment certificates, or withdrawable or repurchasable shares.
For application of this subparagraph to certain obligations issued after
August 7, 1986
, see section 265(b)(3). That portion of any obligation not taken into account under paragraph (2)(A) of section 265(b) by reason of paragraph (7) of such section shall be treated for purposes of this section as having been acquired on
August 7, 1986
.
The terms “section 1245 property” and “section 1250 property” have the meanings given such terms by sections 1245(a)(3) and 1250(c), respectively.
104 Citing Cases
For all these reasons, therefore, we hold that, as ofthe date ofthe easement donation, the risk that the deed would be unenforceable by successors in interest to NAT was not "so remote as to be negligible." -28- [*28] B.
291 provides that [a] conveyance ofreal property, within the state, * * * may be recorded in the office ofthe clerk ofthe county where such real property is situated * * *.
291 provides that [a] conveyance ofreal property, within the state, * * * may be recorded in the office ofthe clerk ofthe county where such real property is situated * * *.
291 provides: A conveyance ofreal property, within the state, on being duly acknowledged by the person executing the same, or proved as required by this chapter, * * * may be recorded in the office ofthe clerk ofthe county where such real property is situated, and such county clerk shall, upon the request ofany
We hold that they are .
Pe-titioners emphasize that section 1.363(b)(4) which sets forth the computation of an S' corporation's taxable income, provides that section 291 applies .if the S corporation was a C corporation for any of the 3-immediately preceding taxable years .
We hold that the numerator does not include the tax-exempt obligations purchased and owned by Investments and sustain petitioner's reporting position .
We hold, therefore, that the mere fact the return was not filed within the time prescribed by section 235 does not, under the circumstances here presented, preclude the allowance of deductions claimed.” [Ardbern Co.
bly over a 60-month period. As an alternative, section 59(e) provides that a taxpayer may elect for regular tax purposes to amortize the expenditures that would otherwise be allowed as a deduction under section 616(a) over 10 years without regard to section 291. Section 56(a)(2) provides that if a taxpayer is subject to the AMT, when calculating AMTI the taxpayer must amortize over 10 years any mine development costs that it would otherwise have deducted currently under section 616(a), without r
While there is a specific penalty of 25 per centum fixed for failure to file tax returns, Section 291, Revenue Act of 1928, * * * there is no provision that there shall be an added penalty in the form of not allowing the delinquent taxpayer deductions to which it otherwise would be entitled.
857,6 section 406 of the Revenue Act of 1935, ch. 829, 49 Stat. 1027, removed the prerequisite of a return for a finding of reasonable cause, and it ceases to be a prerequisite today, see sec. 6651(a)(1); see also Bowlen v. Commissioner, 4 T.C. 486, 494 (1944); Estate of Kirchner v. Commissioner, 46 B.T.A. 578 (1942). The knowled
The sole adjustment and issue concerns respondent's disallowance of section 291 credits in the amounts of $10,170 and $4,394 for 1991 and 1992, respectively.2 1 Unless otherwise indicated, section references are to the Internal Revenue Code in effect for the taxable years at issue, and Rule references are to this Court's Rules of Practice and Procedure.