§49 — At-risk rules
45 cases·5 followed·3 distinguished·1 questioned·1 overruled·35 cited—11% support
Statute Text — 26 U.S.C. §49
The credit base of any property to which this paragraph applies shall be reduced by the nonqualified nonrecourse financing with respect to such credit base (as of the close of the taxable year in which placed in service).
This paragraph applies to any property which—
is placed in service during the taxable year by a taxpayer described in section 465(a)(1), and
is used in connection with an activity with respect to which any loss is subject to limitation under section 465.
For purposes of this paragraph, the term “credit base” means—
the portion of the basis of any qualified rehabilitated building attributable to qualified rehabilitation expenditures,
the basis of any energy property,
the basis of any property which is part of a qualifying advanced coal project under section 48A,
the basis of any property which is part of a qualifying gasification project under section 48B,
the basis of any property which is part of a qualifying advanced energy project under section 48C,
the basis of any qualified property (as defined in subsection (b)(2) of section 48D) which is part of an advanced manufacturing facility (as defined in subsection (b)(3) of such section),
the basis of any qualified property which is part of a qualified facility under section 48E, and
the basis of any energy storage technology under section 48E.
For purposes of this paragraph and paragraph (2), the term “nonqualified nonrecourse financing” means any nonrecourse financing which is not qualified commercial financing.
For purposes of this paragraph, the term “qualified commercial financing” means any financing with respect to any property if—
such property is acquired by the taxpayer from a person who is not a related person,
the amount of the nonrecourse financing with respect to such property does not exceed 80 percent of the credit base of such property, and
such financing is borrowed from a qualified person or represents a loan from any Federal, State, or local government or instrumentality thereof, or is guaranteed by any Federal, State, or local government.
For purposes of this subparagraph, the term “nonrecourse financing” includes—
any amount with respect to which the taxpayer is protected against loss through guarantees, stop-loss agreements, or other similar arrangements, and
except to the extent provided in regulations, any amount borrowed from a person who has an interest (other than as a creditor) in the activity in which the property is used or from a related person to a person (other than the taxpayer) having such an interest.
For purposes of this paragraph, the term “qualified person” means any person which is actively and regularly engaged in the business of lending money and which is not—
a related person with respect to the taxpayer,
a person from which the taxpayer acquired the property (or a related person to such person), or
a person who receives a fee with respect to the taxpayer’s investment in the property (or a related person to such person).
For purposes of this subparagraph, the term “related person” has the meaning given such term by section 465(b)(3)(C). Except as otherwise provided in regulations prescribed by the Secretary, the determination of whether a person is a related person shall be made as of the close of the taxable year in which the property is placed in service.
Such term shall not include any convertible debt.
For purposes of this paragraph and paragraph (2)—
Except as otherwise provided in this subparagraph, in the case of any partnership or S corporation, the determination of whether a partner’s or shareholder’s allocable share of any financing is nonqualified nonrecourse financing shall be made at the partner or shareholder level.
A shareholder of an S corporation shall be treated as liable for his allocable share of any financing provided by a qualified person to such corporation if—
such financing is recourse financing (determined at the corporate level), and
such financing is provided with respect to qualified business property of such corporation.
For purposes of clause (ii), the term “qualified business property” means any property if—
such property is used by the corporation in the active conduct of a trade or business,
during the entire 12-month period ending on the last day of the taxable year, such corporation had at least 3 full-time employees who were not owner-employees (as defined in section 465(c)(7)(E)(i)) and substantially all the services of whom were services directly related to such trade or business, and
during the entire 12-month period ending on the last day of such taxable year, such corporation had at least 1 full-time employee substantially all of the services of whom were in the active management of the trade or business.
The determination of any partner’s or shareholder’s allocable share of any financing shall be made in the same manner as the credit allowable by section 38 with respect to such property.
Rules similar to the rules of subparagraph (F) of section 46(c)(8) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this paragraph.
If, at the close of a taxable year following the taxable year in which the property was placed in service, there is a net decrease in the amount of nonqualified nonrecourse financing with respect to such property, such net decrease shall be taken into account as an increase in the credit base for such property in accordance with subparagraph (C).
For purposes of this paragraph, nonqualified nonrecourse financing shall not be treated as decreased through the surrender or other use of property financed by nonqualified nonrecourse financing.
For purposes of determining the amount of credit allowable under section 38 and the amount of credit subject to the early disposition or cessation rules under section 50(a), any increase in a taxpayer’s credit base for any property by reason of this paragraph shall be taken into account as if it were property placed in service by the taxpayer in the taxable year in which the property referred to in subparagraph (A) was first placed in service.
Any credit allowable under this subpart for any increase in qualified investment by reason of this paragraph shall be treated as earned during the taxable year of the decrease in the amount of nonqualified nonrecourse financing.
If, as of the close of the taxable year, there is a net increase with respect to the taxpayer in the amount of nonqualified nonrecourse financing (within the meaning of subsection (a)(1)) with respect to any property to which subsection (a)(1) applied, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in credits allowed under section 38 for all prior taxable years which would have resulted from reducing the credit base (as defined in subsection (a)(1)(C)) taken into account with respect to such property by the amount of such net increase. For purposes of determining the amount of credit subject to the early disposition or cessation rules of section 50(a), the net increase in the amount of the nonqualified nonrecourse financing with respect to the property shall be treated as reducing the property’s credit base in the year in which the property was first placed in service.
For purposes of paragraph (1), the amount of nonqualified nonrecourse financing (within the meaning of subsection (a)(1)(D)) with respect to the taxpayer shall not be treated as increased by reason of a transfer of (or agreement to transfer) any evidence of any indebtedness if such transfer occurs (or such agreement is entered into) more than 1 year after the date such indebtedness was incurred.
Rules similar to the rules of section 47(d)(3) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this subsection.
Any increase in tax under paragraph (1) shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit allowable under this chapter.
45 Citing Cases
However, we hold that NÄT had the ability to honor its promises in the side letter because the subscribed änd recorded deed--which clearly is "the instrument creating the easement"-áeserved for NAT the power to do so.
t doctrine as follows: [The legislative reenactment doctrine] does not apply where nothing indicates that the legislature had its attention directed to the administrative interpretation upon reenactment. [2B Singer, Sutherland Statutory Construction § 49:09 (6th ed. 2000).] In this case, in reenacting section 882(c)(2) and its predecessor, no evidence indicates that Congress had “its attention directed” to any of the 1930s and 1940s court opinions involving a deadline for foreign corporations to
property in reliance on the availability of the credit.5 Pursuant to section 49(b)(1), the section 49(a) repeal of the credit does not apply 4 Sec. 11813 of the Omnibus Budget Reconciliation Act of 1990, Pub. L. 101-508, 104 Stat. 1388-536, repealed sec. 49 and replaced it with existing sec. 49 (at-risk rules). 5 See H. Rept. 99-426 at 146 (1985), 1986-3 C.B. (Vol. 2) 1, 146, in which the House Ways and Means Committee makes the following observation with respect to the repeal of the then existi
2166, which added section 49 to the Internal Revenue Code.
49-0303(1).] Under these New York statutes, a conservation easement is enforceable even though “[i]t is not appurtenant to an interest in real property” and even though “[i]t can be or has been assigned to another holder”. N.Y. Envtl. Conserv. Law sec. 49-0305(5). Since an easement with these characteristics would not have been enforceable und
49-0305(4) (McKinney 2008 & Supp. 2014)). The easements in this case were recorded on December 13, 2004. That sets the date on which we determine the easements' fair market value. The regulations tell us how. They tell us that where "there is a substantial record ofsales ofeasements comparable to the donated easement * * *, the fair market val
49:3-69 (West 2001). In the consentjudgment, the superior court specified the powers and responsibilities that Mr. Zazzali would have as receiver, ordering that he would: (i) immediately take into possession all ofdefendants' assets, including but not limited to holdings in all bank, brokerage, and trading accounts, and undertake all actions n
49:3-69 (West 2001). In the consentjudgment, the superior court specified the powers and responsibilities that Mr. Zazzali would have as receiver, ordering that he would: (i) immediately take into possession all ofdefendants' assets, including but not limited to holdings in all bank, brokerage, and trading accounts, and undertake all actions n
49:3-69 (West 2001). In the consentjudgment, the superior court specified the powers and responsibilities that Mr. Zazzali would have as receiver, ordering that he would: (i) immediately take into possession all ofdefendants' assets, including but not limited to holdings in all bank, brokerage, and trading accounts, and undertake all actions n
NAT, and Federal law determines the tax consequences. II. The Parties' Arguments Respondent contends that the easement is a "conservation easement" under New York State law.5 A conservation easement is defined under N.Y. Enytl. Conserv. Law (NYECL) sec. 49-0303(1) (McKinney Supp. 2017) as an easement, covenant, restriction or other interest in real property, created under and subject to the provisions ofthis title which limits or restricts development, management or use ofsuch real property for
49:3-69 (West 2001). In the consentjudgment, the superior court specified the powers and responsibilities that Mr. Zazzali would have as receiver, ordering that he would: (i) immediately take into possession all ofdefendants' assets, including but not limited to holdings in all bank, brokerage, and trading accounts, and undertake all actions n
ded as complete, and Federal tax law determines the tax consequences. Under New York law, an instrument purporting to create, convey, modify, or terminate a conservation easement is not effective unless recorded. N.Y. Enytl. Conserv. Law (NYEC Law) sec. 49-0305(4) (McKinney 2008 & Supp. 2014). In Rothman v. Commissioner, T.C. Memo. 2012-163, slip op. at 30, we stated that "[i]nsofar as New York law does not regard an easement contribution as effective until the recordation date, we conclude that
ded as complete, and Federal tax law determines the tax consequences. Under New York law, an instrument purporting to create, convey, modify, or terminate a conservation easement is not effective unless recorded. N.Y. Enytl. Conserv. Law (NYEC Law) sec. 49-0305(4) (McKinney 2008 & Supp. 2014). In Rothman v. Commissioner, T.C. Memo. 2012-163, slip op. at 30, we stated that "[i]nsofar as New York law does not regard an easement contribution as effective until the recordation date, we conclude that
49-0305(4) (McKinney 2008). Insofar as New York law does not regard an easement contribution as effective until the recordation date, we conclude that the contribution date for an easement on real property in New York is the recording date. To satisfy the temporal regulatory requirement, therefore, the appraisal must have been dated no earlier
49-0305 (McKinney 2008) . Pursuant to the statute, a conservation easement may be breated or - 62 - conveyed by a written instrument that complies with New York's statute of frauds. Id.; N.Y. Gen. Oblig. Law sec. 5-703 (McKinney 2008). A conservation easement may be held by a not- for-profit conservation organization and is of perpetual durat
8 (6th Cir. 1994); cf. Cannon v. Univ. of Chicago, 441 U.S. 677, 696-697 (1979) (“It is always appropriate to assume that our elected representatives, like other citizens, know the law”.). See generally 2A Sands, Sutherland on Statutory Construction § 49.09 (4th ed. 1973), and cases cited therein. The legislative reenactment doctrine applies with vigor where Congress reenacts statutory text mainly in its entirety, see Dutton v. Wolpoff & Abramson, 5 F.3d 649, 655 (3d Cir. 1993), or where a prior
2143.5 TRA section 211 generally repealed the regular investment tax credit by adding section 49 to the Code.
quare into a world headquarters. It is not necessary for us to determine in this case whether a taxpayer must have international affiliates to have a world headquarters. TRA sec. 211(a) amended subpt. E of pt. IV of subch. A of ch. 1 by adding a new sec. 49. Sec. 49(e)(1)(B) substituted “Dec. 31, 1985” for “Mar. 1, 1986” in TRA sec. 203(b)(1)(C). Payless contends that TRA sec. 203(b)(1)(C) was designed to protect those taxpayers who, although having committed to incur or having incurred substant
tions under section 4243 stated that the exemption applied to amounts paid for the retirement of indebtedness (a mortgage loan, for example) incurred by reason of the construction or reconstruction of any capital addition, improvement or facility.18 Sec. 49.4243-2(b)(iii), Excise Tax Regs. However, the regulations did not allow the exemption unless the funds were earmarked for capital purposes. Id. In Atlanta Athletic Club v. United States, 277 F.Supp. 669 (N.D. Ga. 1967), the court held that th
Respondent argues that petitioner has not substantiated the amounts nor established that such carryforwards would not have been absorbed in prior years. Petitioner further asserts that an investment tax credit flowed through from TSI's 1984 tax return to petitioner and may be offset against petitioner's tax liabilities for the years in
d Year into Current Year in Current Year 1984 $ 1,885 -0- 1985 2,585 $173 1986 2,577 -0- 1987 2,577 -0- 1988 11,675 -0- 1989 1,675 589 his reduction in the general business credit carryforward presumably reflects the 35-percent reduction required by sec. 49(c). During each of the above years, petitioner did not receive any new investment tax credits. C - 4 - Discussion Pursuant to the stipulation of settled issues, the parties agreed to be bound by the final decision of this Court in McDonald v.