§7701 — Definitions
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Statute Text — 26 U.S.C. §7701
When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof—
The term “person” shall be construed to mean an+d include an individual, a trust, estate, partnership, association, company or corporation.
The term “partnership” includes a syndicate, group, pool, joint venture, or other unincorporated organization, through or by means of which any business, financial operation, or venture is carried on, and which is not, within the meaning of this title, a trust or estate or a corporation; and the term “partner” includes a member in such a syndicate, group, pool, joint venture, or organization.
The term “corporation” includes associations, joint-stock companies, and insurance companies.
The term “domestic” when applied to a corporation or partnership means created or organized in the United States or under the law of the United States or of any State unless, in the case of a partnership, the Secretary provides otherwise by regulations.
The term “foreign” when applied to a corporation or partnership means a corporation or partnership which is not domestic.
The term “fiduciary” means a guardian, trustee, executor, administrator, receiver, conservator, or any person acting in any fiduciary capacity for any person.
The term “stock” includes shares in an association, joint-stock company, or insurance company.
The term “shareholder” includes a member in an association, joint-stock company, or insurance company.
The term “United States” when used in a geographical sense includes only the States and the District of Columbia.
The term “State” shall be construed to include the District of Columbia, where such construction is necessary to carry out provisions of this title.
The term “Secretary of the Treasury” means the Secretary of the Treasury, personally, and shall not include any delegate of his.
The term “Secretary” means the Secretary of the Treasury or his delegate.
The term “or his delegate”—
when used with reference to the Secretary of the Treasury, means any officer, employee, or agency of the Treasury Department duly authorized by the Secretary of the Treasury directly, or indirectly by one or more redelegations of authority, to perform the function mentioned or described in the context; and
when used with reference to any other official of the United States, shall be similarly construed.
The term “delegate,” in relation to the performance of functions in Guam or American Samoa with respect to the taxes imposed by chapters 1, 2, and 21, also includes any officer or employee of any other department or agency of the United States, or of any possession thereof, duly authorized by the Secretary (directly, or indirectly by one or more redelegations of authority) to perform such functions.
The term “Commissioner” means the Commissioner of Internal Revenue.
The term “taxpayer” means any person subject to any internal revenue tax.
The term “military or naval forces of the United States” and the term “Armed Forces of the United States” each includes all regular and reserve components of the uniformed services which are subject to the jurisdiction of the Secretary of Defense, the Secretary of the Army, the Secretary of the Navy, or the Secretary of the Air Force, and each term also includes the Coast Guard. The members of such forces include commissioned officers and personnel below the grade of commissioned officers in such forces.
The term “withholding agent” means any person required to deduct and withhold any tax under the provisions of section 1441, 1442, 1443, or 1461.
As used in section 2516, if the husband and wife therein referred to are divorced, wherever appropriate to the meaning of such section, the term “wife” shall be read “former wife” and the term “husband” shall be read “former husband”; and, if the payments described in such section are made by or on behalf of the wife or former wife to the husband or former husband instead of vice versa, wherever appropriate to the meaning of such section, the term “husband” shall be read “wife” and the term “wife” shall be read “husband.”
The term “international organization” means a public international organization entitled to enjoy privileges, exemptions, and immunities as an international organization under the International Organizations Immunities Act (22 U.S.C. 288–288f).
The term “domestic building and loan association” means a domestic building and loan association, a domestic savings and loan association, and a Federal savings and loan association—
which is subject by law to supervision and examination by State or Federal authority having supervision over such associations;
the business of which consists principally of acquiring the savings of the public and investing in loans; and
at least 60 percent of the amount of the total assets of which (at the close of the taxable year) consists of—
cash,
obligations of the United States or of a State or political subdivision thereof, and stock or obligations of a corporation which is an instrumentality of the United States or of a State or political subdivision thereof, but not including obligations the interest on which is excludable from gross income under section 103,
certificates of deposit in, or obligations of, a corporation organized under a State law which specifically authorizes such corporation to insure the deposits or share accounts of member associations,
loans secured by a deposit or share of a member,
loans (including redeemable ground rents, as defined in section 1055) secured by an interest in real property which is (or, from the proceeds of the loan, will become) residential real property or real property used primarily for church purposes, loans made for the improvement of residential real property or real property used primarily for church purposes, provided that for purposes of this clause, residential real property shall include single or multifamily dwellings, facilities in residential developments dedicated to public use or property used on a nonprofit basis for residents, and mobile homes not used on a transient basis,
loans secured by an interest in real property located within an urban renewal area to be developed for predominantly residential use under an urban renewal plan approved by the Secretary of Housing and Urban Development under part A or part B of title I of the Housing Act of 1949, as amended, or located within any area covered by a program eligible for assistance under section 103 of the Demonstration Cities and Metropolitan Development Act of 1966, as amended, and loans made for the improvement of any such real property,
loans secured by an interest in educational, health, or welfare institutions or facilities, including structures designed or used primarily for residential purposes for students, residents, and persons under care, employees, or members of the staff of such institutions or facilities,
property acquired through the liquidation of defaulted loans described in clause (v), (vi), or (vii),
loans made for the payment of expenses of college or university education or vocational training, in accordance with such regulations as may be prescribed by the Secretary,
property used by the association in the conduct of the business described in subparagraph (B), and
any regular or residual interest in a REMIC, but only in the proportion which the assets of such REMIC consist of property described in any of the preceding clauses of this subparagraph; except that if 95 percent or more of the assets of such REMIC are assets described in clauses (i) through (x), the entire interest in the REMIC shall qualify.
At the election of the taxpayer, the percentage specified in this subparagraph shall be applied on the basis of the average assets outstanding during the taxable year, in lieu of the close of the taxable year, computed under regulations prescribed by the Secretary. For purposes of clause (v), if a multifamily structure securing a loan is used in part for nonresidential purposes, the entire loan is deemed a residential real property loan if the planned residential use exceeds 80 percent of the property’s planned use (determined as of the time the loan is made). For purposes of clause (v), loans made to finance the acquisition or development of land shall be deemed to be loans secured by an interest in residential real property if, under regulations prescribed by the Secretary, there is reasonable assurance that the property will become residential real property within a period of 3 years from the date of acquisition of such land; but this sentence shall not apply for any taxable year unless, within such 3-year period, such land becomes residential real property. For purposes of determining whether any interest in a REMIC qualifies under clause (xi), any regular interest in another REMIC held by such REMIC shall be treated as a loan described in a preceding clause under principles similar to the principles of clause (xi); except that, if such REMIC’s are part of a tiered structure, they shall be treated as 1 REMIC for purposes of clause (xi).
For the purpose of applying the provisions of section 79 with respect to group-term life insurance purchased for employees, for the purpose of applying the provisions of sections 104, 105, and 106 with respect to accident and health insurance or accident and health plans, and for the purpose of applying the provisions of subtitle A with respect to contributions to or under a stock bonus, pension, profit-sharing, or annuity plan, and with respect to distributions under such a plan, or by a trust forming part of such a plan, and for purposes of applying section 125 with respect to cafeteria plans, the term “employee” shall include a full-time life insurance salesman who is considered an employee for the purpose of chapter 21.
The term “levy” includes the power of distraint and seizure by any means.
The term “Attorney General” means the Attorney General of the United States.
The term “taxable year” means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the taxable income is computed under subtitle A. “Taxable year” means, in the case of a return made for a fractional part of a year under the provisions of subtitle A or under regulations prescribed by the Secretary, the period for which such return is made.
The term “fiscal year” means an accounting period of 12 months ending on the last day of any month other than December.
The terms “paid or incurred” and “paid or accrued” shall be construed according to the method of accounting upon the basis of which the taxable income is computed under subtitle A.
The term “trade or business” includes the performance of the functions of a public office.
The term “Tax Court” means the United States Tax Court.
Any term used in this subtitle with respect to the application of, or in connection with, the provisions of any other subtitle of this title shall have the same meaning as in such provisions.
The term “Internal Revenue Code of 1986” means this title, and the term “Internal Revenue Code of 1939” means the Internal Revenue Code enacted February 10, 1939, as amended.
The term “United States person” means—
a citizen or resident of the United States,
a domestic partnership,
a domestic corporation,
any estate (other than a foreign estate, within the meaning of paragraph (31)), and
any trust if—
a court within the United States is able to exercise primary supervision over the administration of the trust, and
one or more United States persons have the authority to control all substantial decisions of the trust.
The term “foreign estate” means an estate the income of which, from sources without the United States which is not effectively connected with the conduct of a trade or business within the United States, is not includible in gross income under subtitle A.
The term “foreign trust” means any trust other than a trust described in subparagraph (E) of paragraph (30).
The term “cooperative bank” means an institution without capital stock organized and operated for mutual purposes and without profit, which—
is subject by law to supervision and examination by State or Federal authority having supervision over such institutions, and
meets the requirements of subparagraphs (B) and (C) of paragraph (19) of this subsection (relating to definition of domestic building and loan association).
In determining whether an institution meets the requirements referred to in subparagraph (B) of this paragraph, any reference to an association or to a domestic building and loan association contained in paragraph (19) shall be deemed to be a reference to such institution.
The term “regulated public utility” means—
A corporation engaged in the furnishing or sale of—
electric energy, gas, water, or sewerage disposal services, or
transportation (not included in subparagraph (C)) on an intrastate, suburban, municipal, or interurban electric railroad, on an intrastate, municipal, or suburban trackless trolley system, or on a municipal or suburban bus system, or
transportation (not included in clause (ii)) by motor vehicle—
if the rates for such furnishing or sale, as the case may be, have been established or approved by a State or political subdivision thereof, by an agency or instrumentality of the United States, by a public service or public utility commission or other similar body of the District of Columbia or of any State or political subdivision thereof, or by a foreign country or an agency or instrumentality or political subdivision thereof.
A corporation engaged as a common carrier in the furnishing or sale of transportation of gas by pipe line, if subject to the jurisdiction of the Federal Energy Regulatory Commission.
A corporation engaged as a common carrier (i) in the furnishing or sale of transportation by railroad, if subject to the jurisdiction of the Surface Transportation Board, or (ii) in the furnishing or sale of transportation of oil or other petroleum products (including shale oil) by pipe line, if subject to the jurisdiction of the Federal Energy Regulatory Commission or if the rates for such furnishing or sale are subject to the jurisdiction of a public service or public utility commission or other similar body of the District of Columbia or of any State.
A corporation engaged in the furnishing or sale of telephone or telegraph service, if the rates for such furnishing or sale meet the requirements of subparagraph (A).
A corporation engaged in the furnishing or sale of transportation as a common carrier by air, subject to the jurisdiction of the Secretary of Transportation.
A corporation engaged in the furnishing or sale of transportation by a water carrier subject to jurisdiction under subchapter II of chapter 135 of title 49.
A rail carrier subject to part A of subtitle IV of title 49, if (i) substantially all of its railroad properties have been leased to another such railroad corporation or corporations by an agreement or agreements entered into before
January 1, 1954
, (ii) each lease is for a term of more than 20 years, and (iii) at least 80 percent or more of its gross income (computed without regard to dividends and capital gains and losses) for the taxable year is derived from such leases and from sources described in subparagraphs (A) through (F), inclusive. For purposes of the preceding sentence, an agreement for lease of railroad properties entered into before
January 1, 1954
, shall be considered to be a lease including such term as the total number of years of such agreement may, unless sooner terminated, be renewed or continued under the terms of the agreement, and any such renewal or continuance under such agreement shall be considered part of the lease entered into before
January 1, 1954
.
A common parent corporation which is a common carrier by railroad subject to part A of subtitle IV of title 49 if at least 80 percent of its gross income (computed without regard to capital gains or losses) is derived directly or indirectly from sources described in subparagraphs (A) through (F), inclusive. For purposes of the preceding sentence, dividends and interest, and income from leases described in subparagraph (G), received from a regulated public utility shall be considered as derived from sources described in subparagraphs (A) through (F), inclusive, if the regulated public utility is a member of an affiliated group (as defined in section 1504) which includes the common parent corporation.
The term “regulated public utility” does not (except as provided in subparagraphs (G) and (H)) include a corporation described in subparagraphs (A) through (F), inclusive, unless 80 percent or more of its gross income (computed without regard to dividends and capital gains and losses) for the taxable year is derived from sources described in subparagraphs (A) through (F), inclusive. If the taxpayer establishes to the satisfaction of the Secretary that (i) its revenue from regulated rates described in subparagraph (A) or (D) and its revenue derived from unregulated rates are derived from the operation of a single interconnected and coordinated system or from the operation of more than one such system, and (ii) the unregulated rates have been and are substantially as favorable to users and consumers as are the regulated rates, then such revenue from such unregulated rates shall be considered, for purposes of the preceding sentence, as income derived from sources described in subparagraph (A) or (D).
The term “enrolled actuary” means a person who is enrolled by the Joint Board for the Enrollment of Actuaries established under subtitle C of the title III of the Employee Retirement Income Security Act of 1974.
The term “tax return preparer” means any person who prepares for compensation, or who employs one or more persons to prepare for compensation, any return of tax imposed by this title or any claim for refund of tax imposed by this title. For purposes of the preceding sentence, the preparation of a substantial portion of a return or claim for refund shall be treated as if it were the preparation of such return or claim for refund.
A person shall not be a “tax return preparer” merely because such person—
furnishes typing, reproducing, or other mechanical assistance,
prepares a return or claim for refund of the employer (or of an officer or employee of the employer) by whom he is regularly and continuously employed,
prepares as a fiduciary a return or claim for refund for any person, or
prepares a claim for refund for a taxpayer in response to any notice of deficiency issued to such taxpayer or in response to any waiver of restriction after the commencement of an audit of such taxpayer or another taxpayer if a determination in such audit of such other taxpayer directly or indirectly affects the tax liability of such taxpayer.
The term “individual retirement plan” means—
an individual retirement account described in section 408(a), and
an individual retirement annuity described in section 408(b).
The term “joint return” means a single return made jointly under section 6013 by a husband and wife.
If any citizen or resident of the United States does not reside in (and is not found in) any United States judicial district, such citizen or resident shall be treated as residing in the District of Columbia for purposes of any provision of this title relating to—
jurisdiction of courts, or
enforcement of summons.
The term “Indian tribal government” means the governing body of any tribe, band, community, village, or group of Indians, or (if applicable) Alaska Natives, which is determined by the Secretary, after consultation with the Secretary of the Interior, to exercise governmental functions.
No determination under subparagraph (A) with respect to Alaska Natives shall grant or defer any status or powers other than those enumerated in section 7871. Nothing in the Indian Tribal Governmental Tax Status Act of 1982, or in the amendments made thereby, shall validate or invalidate any claim by Alaska Natives of sovereign authority over lands or people.
The term “TIN” means the identifying number assigned to a person under section 6109.
The term “substituted basis property” means property which is—
transferred basis property, or
exchanged basis property.
The term “transferred basis property” means property having a basis determined under any provision of subtitle A (or under any corresponding provision of prior income tax law) providing that the basis shall be determined in whole or in part by reference to the basis in the hands of the donor, grantor, or other transferor.
The term “exchanged basis property” means property having a basis determined under any provision of subtitle A (or under any corresponding provision of prior income tax law) providing that the basis shall be determined in whole or in part by reference to other property held at any time by the person for whom the basis is to be determined.
The term “nonrecognition transaction” means any disposition of property in a transaction in which gain or loss is not recognized in whole or in part for purposes of subtitle A.
In determining whether there is a collective bargaining agreement between employee representatives and 1 or more employers, the term “employee representatives” shall not include any organization more than one-half of the members of which are employees who are owners, officers, or executives of the employer. An agreement shall not be treated as a collective bargaining agreement unless it is a bona fide agreement between bona fide employee representatives and 1 or more employers.
A vehicle shall not be treated as a highway vehicle if such vehicle is specially designed for the primary function of transporting a particular type of load other than over the public highway and because of this special design such vehicle’s capability to transport a load over the public highway is substantially limited or impaired.
For purposes of clause (i), a vehicle’s design is determined solely on the basis of its physical characteristics.
For purposes of clause (i), in determining whether substantial limitation or impairment exists, account may be taken of factors such as the size of the vehicle, whether such vehicle is subject to the licensing, safety, and other requirements applicable to highway vehicles, and whether such vehicle can transport a load at a sustained speed of at least 25 miles per hour. It is immaterial that a vehicle can transport a greater load off the public highway than such vehicle is permitted to transport over the public highway.
A trailer or semitrailer shall not be treated as a highway vehicle if it is specially designed to function only as an enclosed stationary shelter for the carrying on of an off-highway function at an off-highway site.
The term “qualified blood collector organization” means an organization which is—
described in section 501(c)(3) and exempt from tax under section 501(a),
primarily engaged in the activity of the collection of human blood,
registered with the Secretary for purposes of excise tax exemptions, and
registered by the Food and Drug Administration to collect blood.
An individual shall not cease to be treated as a United States citizen before the date on which the individual’s citizenship is treated as relinquished under section 877A(g)(4).
Under regulations prescribed by the Secretary, subparagraph (A) shall not apply to an individual who became at birth a citizen of the United States and a citizen of another country.
The term “prohibited foreign entity” means a specified foreign entity or a foreign-influenced entity.
Subject to subclause (II), for any taxable year, the determination as to whether an entity is a specified foreign entity or foreign-influenced entity shall be made as of the last day of such taxable year.
For purposes of the first taxable year beginning after the date of enactment of this paragraph, the determination as to whether an entity is a specified foreign entity described in clauses (i) through (iv) of subparagraph (B) shall be made as of the first day of such taxable year.
For purposes of this paragraph, the term “specified foreign entity” means—
a foreign entity of concern described in subparagraph (A), (B), (D), or (E) of section 9901(8) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (
Public Law 116–283
;
15 U.S.C. 4651
),
an entity identified as a Chinese military company operating in the United States in accordance with section 1260H of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (
Public Law 116–283
;
10 U.S.C. 113
note),
an entity included on a list required by clause (i), (ii), (iv), or (v) of
section 2(d)(2)(B) of Public Law 117–78
(
135 Stat. 1527
),
an entity specified under section 154(b) of the National Defense Authorization Act for Fiscal Year 2024 (
Public Law 118–31
; 10 U.S.C. note prec. 4651), or
a foreign-controlled entity.
For purposes of subparagraph (B), the term “foreign-controlled entity” means—
the government (including any level of government below the national level) of a covered nation,
an agency or instrumentality of a government described in clause (i),
a person who is a citizen or national of a covered nation, provided that such person is not an individual who is a citizen, national, or lawful permanent resident of the United States,
an entity or a qualified business unit (as defined in section 989(a)) incorporated or organized under the laws of, or having its principal place of business in, a covered nation, or
an entity (including subsidiary entities) controlled (as determined under subparagraph (G)) by an entity described in clause (i), (ii), (iii), or (iv).
For purposes of subparagraph (A), the term “foreign-influenced entity” means an entity—
with respect to which, during the taxable year—
a specified foreign entity has the direct authority to appoint a covered officer of such entity,
a single specified foreign entity owns at least 25 percent of such entity,
one or more specified foreign entities own in the aggregate at least 40 percent of such entity, or
at least 15 percent of the debt of such entity has been issued, in the aggregate, to 1 or more specified foreign entities, or
which, during the previous taxable year, made a payment to a specified foreign entity pursuant to a contract, agreement, or other arrangement which entitles such specified foreign entity (or an entity related to such specified foreign entity) to exercise effective control over—
any qualified facility or energy storage technology of the taxpayer (or any person related to the taxpayer), or
with respect to any eligible component produced by the taxpayer (or any person related to the taxpayer)—
the extraction, processing, or recycling of any applicable critical mineral, or
the production of an eligible component which is not an applicable critical mineral.
Subject to subclause (II), for purposes of clause (i)(II), the term “effective control” means 1 or more agreements or arrangements similar to those described in subclauses (II) and (III) which provide 1 or more contractual counterparties of a taxpayer with specific authority over key aspects of the production of eligible components, energy generation in a qualified facility, or energy storage which are not included in the measures of control through authority, ownership, or debt held which are described in clause (i)(I).
The Secretary shall issue such guidance as is necessary to carry out the purposes of this clause, including the establishment of rules to prevent entities from evading, circumventing, or abusing the application of the restrictions described subparagraph (C) and subclauses (II) and (III) of this clause through a contract, agreement, or other arrangement.
During any period prior to the date that the guidance described in subclause (I)(bb) is issued by the Secretary, for purposes of clause (i)(II), the term “effective control” means the unrestricted contractual right of a contractual counterparty to—
determine the quantity or timing of production of an eligible component produced by the taxpayer,
determine the amount or timing of activities related to the production of electricity undertaken at a qualified facility of the taxpayer or the storage of electrical energy in energy storage technology of the taxpayer,
determine which entity may purchase or use the output of a production unit of the taxpayer that produces eligible components,
determine which entity may purchase or use the output of a qualified facility of the taxpayer,
restrict access to data critical to production or storage of energy undertaken at a qualified facility of the taxpayer, or to the site of production or any part of a qualified facility or energy storage technology of the taxpayer, to the personnel or agents of such contractual counterparty, or
on an exclusive basis, maintain, repair, or operate any plant or equipment which is necessary to the production by the taxpayer of eligible components or electricity.
In addition to subclause (II), for purposes of clause (i)(II), the term “effective control” means, with respect to a licensing agreement for the provision of intellectual property (or any other contract, agreement or other arrangement entered into with a contractual counterparty related to such licensing agreement) with respect to a qualified facility, energy storage technology, or the production of an eligible component, any of the following:
A contractual right retained by the contractual counterparty to specify or otherwise direct 1 or more sources of components, subcomponents, or applicable critical minerals utilized in a qualified facility, energy storage technology, or in the production of an eligible component.
A contractual right retained by the contractual counterparty to direct the operation of any qualified facility, any energy storage technology, or any production unit that produces an eligible component.
A contractual right retained by the contractual counterparty to limit the taxpayer’s utilization of intellectual property related to the operation of a qualified facility or energy storage technology, or in the production of an eligible component.
A contractual right retained by the contractual counterparty to receive royalties under the licensing agreement or any similar agreement (or payments under any related agreement) beyond the 10th year of the agreement (including modifications or extensions thereof).
A contractual right retained by the contractual counterparty to direct or otherwise require the taxpayer to enter into an agreement for the provision of services for a duration longer than 2 years (including any modifications or extensions thereof).
Such contract, agreement, or other arrangement does not provide the licensee with all the technical data, information, and know-how necessary to enable the licensee to produce the eligible component or components subject to the contract, agreement, or other arrangement without further involvement from the contractual counterparty or a specified foreign entity.
Such contract, agreement, or other arrangement was entered into (or modified) on or after the date of enactment of this paragraph.
Item (aa) shall not apply in the case of a bona fide purchase or sale of intellectual property.
For purposes of item (aa), any purchase or sale of intellectual property where the agreement provides that ownership of the intellectual property reverts to the contractual counterparty after a period of time shall not be considered a bona-fide purchase or sale.
For purposes of subclauses (I), (II), and (III), the term “taxpayer” shall include any person related to the taxpayer.
For purposes of this clause, the term “contractual counterparty” means an entity with which the taxpayer has entered into a contract, agreement, or other arrangement.
Not later than December 31, 2026, the Secretary shall issue such guidance as is necessary to carry out the purposes of this subparagraph, including establishment of rules to prevent entities from evading, circumventing, or abusing the application of the restrictions against impermissible technology licensing arrangements with specified foreign entities, such as through temporary transfers of intellectual property, retention by a specified foreign entity of a reversionary interest in transferred intellectual property, or otherwise.
Subparagraph (C)(v) shall not apply in the case of any entity the securities of which are regularly traded on—
a national securities exchange which is registered with the Securities and Exchange Commission,
the national market system established pursuant to section 11A of the Securities and
1
1 So in original. The word “and” probably should not appear.
Exchange Act of 1934, or
any other exchange or other market which the Secretary has determined in guidance issued under section 1296(e)(1)(A)(ii) has rules adequate to carry out the purposes of part VI of subchapter P of chapter 1 of subtitle A.
Subparagraph (D)(i)(I) shall not apply in the case of any entity—
the securities of which are regularly traded in a manner described in subclause (I), or
for which not less than 80 percent of the equity securities of such entity are owned directly or indirectly by an entity which is described in item (aa).
Subclause (I)(cc) shall not apply with respect to any exchange or market which—
is incorporated or organized under the laws of a covered nation, or
has its principal place of business in a covered nation.
In the case of an entity described in clause (i)(I), such entity shall be deemed to be a foreign-controlled entity under subparagraph (C)(v) if such entity is controlled (as determined under subparagraph (G)) by—
1 or more specified foreign entities (as determined without regard to subparagraph (B)(v)) that are each required to report their beneficial ownership pursuant to a rule described in clause (iii)(I)(bb), or
1 or more foreign-controlled entities (as determined without regard to subparagraph (C)(v)) that are each required to report their beneficial ownership pursuant to a rule described in such clause.
In the case of an entity described in clause (i)(II), such entity shall be deemed to be a foreign-influenced entity under subparagraph (D)(i)(I) if—
during the taxable year—
a specified foreign entity has the authority to appoint a covered officer of such entity,
a single specified foreign entity required to report its beneficial ownership under Rule 13d-3 of the Securities and
1
Exchange Act of 1934 (or, in the case of an exchange or market described in clause (i)(I)(cc), an equivalent rule) owns not less than 25 percent of such entity, or
1 or more specified foreign entities that are each required to report their beneficial ownership under Rule 13d-3 of the Securities and
1
Exchange Act of 1934 own, in the aggregate, not less than 40 percent of such entity, or
such entity has issued debt, as part of an original issuance, in excess of 15 percent of its publicly-traded debt to 1 or more specified foreign entities.
For purposes of this paragraph, the term “covered officer” means, with respect to an entity—
a member of the board of directors, board of supervisors, or equivalent governing body,
an executive-level officer, including the president, chief executive officer, chief operating officer, chief financial officer, general counsel, or senior vice president, or
an individual having powers or responsibilities similar to those of officers or members described in clause (i) or (ii).
For purposes of subparagraph (C)(v), the term “control” means—
in the case of a corporation, ownership (by vote or value) of more than 50 percent of the stock in such corporation,
in the case of a partnership, ownership of more than 50 percent of the profits interests or capital interests in such partnership, or
in any other case, ownership of more than 50 percent of the beneficial interests in the entity.
For purposes of this paragraph, section 318(a)(2) shall apply for purposes of determining ownership of stock in a corporation. Similar principles shall apply for purposes of determining ownership of interests in any other entity.
For purposes of this paragraph—
The term “applicable critical mineral” has the same meaning given such term under section 45X(c)(6).
The term “covered nation” has the same meaning given such term under section 4872(f)(2) of title 10, United States Code.
The term “eligible component” has the same meaning given such term under section 45X(c)(1).
The term “energy storage technology” has the same meaning given such term under section 48E(c)(2).
The term “qualified facility” means—
a qualified facility, as defined in section 45Y(b)(1), and
a qualified facility, as defined in section 48E(b)(3).
The term “related” shall have the same meaning given such term under sections 267(b) and 707(b).
For purposes of applying any provision under this paragraph, the beginning of construction with respect to any property shall be determined pursuant to rules similar to the rules under Internal Revenue Service Notice 2013–29 and Internal Revenue Service Notice 2018-59 (as well as any subsequently issued guidance clarifying, modifying, or updating either such Notice), as in effect on January 1, 2025.
The Secretary may prescribe such regulations and guidance as may be necessary or appropriate to carry out the provisions of this paragraph, including rules to prevent the circumvention of any rules or restrictions with respect to prohibited foreign entities.
The term “material assistance from a prohibited foreign entity” means—
with respect to any qualified facility or energy storage technology, a material assistance cost ratio which is less than the threshold percentage applicable under subparagraph (B), or
with respect to any facility which produces eligible components, a material assistance cost ratio which is less than the threshold percentage applicable under subparagraph (C).
For purposes of subparagraph (A)(i), the threshold percentage shall be—
in the case of a qualified facility the construction of which begins—
during calendar year 2026, 40 percent,
during calendar year 2027, 45 percent,
during calendar year 2028, 50 percent,
during calendar year 2029, 55 percent, and
after
December 31, 2029
, 60 percent, and
in the case of energy storage technology the construction of which begins—
during calendar year 2026, 55 percent,
during calendar year 2027, 60 percent,
during calendar year 2028, 65 percent,
during calendar year 2029, 70 percent, and
after
December 31, 2029
, 75 percent.
For purposes of subparagraph (A)(ii), the threshold percentage shall be—
in the case of any solar energy component (as such term is defined in section 45X(c)(3)(A)) which is sold—
during calendar year 2026, 50 percent,
during calendar year 2027, 60 percent,
during calendar year 2028, 70 percent,
during calendar year 2029, 80 percent, and
after
December 31, 2029
, 85 percent,
in the case of any wind energy component (as such term is defined in section 45X(c)(4)(A)) which is sold—
during calendar year 2026, 85 percent, and
during calendar year 2027, 90 percent,
in the case of any inverter described in subparagraphs (B) through (G) of section 45X(c)(2) which is sold—
during calendar year 2026, 50 percent,
during calendar year 2027, 55 percent,
during calendar year 2028, 60 percent,
during calendar year 2029, 65 percent, and
after
December 31, 2029
, 70 percent,
in the case of any qualifying battery component (as such term is defined in section 45X(c)(5)(A)) which is sold—
during calendar year 2026, 60 percent,
during calendar year 2027, 65 percent,
during calendar year 2028, 70 percent,
during calendar year 2029, 80 percent, and
after
December 31, 2029
, 85 percent, and
subject to clause (ii), in the case of any applicable critical mineral (as such term is defined in section 45X(c)(6)) which is sold—
after
December 31, 2025
, and before
January 1, 2030
, 0 percent,
during calendar year 2030, 25 percent,
during calendar year 2031, 30 percent,
during calendar year 2032, 40 percent, and
after
December 31, 2032
, 50 percent.
Not later than
December 31, 2027
, the Secretary shall issue threshold percentages for each of the applicable critical minerals described in section 45X(c)(6)), which shall—
apply in lieu of the threshold percentage determined under clause (i)(V) for each calendar year, and
equal or exceed the threshold percentage which would otherwise apply with respect to such applicable critical mineral under such clause for such calendar year, taking into account—
domestic geographic availability,
supply chain constraints,
domestic processing capacity needs, and
national security concerns.
For purposes of subparagraph (A)(i), the term “material assistance cost ratio” means the amount (expressed as a percentage) equal to the quotient of—
an amount equal to—
the total direct costs to the taxpayer attributable to all manufactured products (including components) which are incorporated into the qualified facility or energy storage technology upon completion of construction, minus
the total direct costs to the taxpayer attributable to all manufactured products (including components) which are—
incorporated into the qualified facility or energy storage technology upon completion of construction, and
mined, produced, or manufactured by a prohibited foreign entity, divided by
the amount described in subclause (I)(aa).
For purposes of subparagraph (A)(ii), the term “material assistance cost ratio” means the amount (expressed as a percentage) equal to the quotient of—
an amount equal to—
with respect to an eligible component, the total direct material costs that are paid or incurred (within the meaning of section 461 and any regulations issued under section 263A) by the taxpayer for production of such eligible component, minus
with respect to an eligible component, the total direct material costs that are paid or incurred (within the meaning of section 461 and any regulations issued under section 263A) by the taxpayer for production of such eligible component that are mined, produced, or manufactured by a prohibited foreign entity, divided by
the amount described in subclause (I)(aa).
Not later than
December 31, 2026
, the Secretary shall issue safe harbor tables (and such other guidance as deemed necessary) to—
identify the percentage of total direct costs of any manufactured product which is attributable to a prohibited foreign entity,
identify the percentage of total direct material costs of any eligible component which is attributable to a prohibited foreign entity, and
provide all rules necessary to determine the amount of a taxpayer’s material assistance from a prohibited foreign entity within the meaning of this paragraph.
For purposes of this paragraph, prior to the date on which the Secretary issues the safe harbor tables described in subclause (I), and for construction of a qualified facility or energy storage technology which begins on or before the date which is 60 days after the date of issuance of such tables, a taxpayer may—
use the tables included in Internal Revenue Service Notice 2025–08 to establish the percentage of the total direct costs of any listed eligible component and any manufactured product, and
rely on a certification by the supplier of the manufactured product, eligible component, or constituent element, material, or subcomponent of an eligible component—
of the total direct costs or the total direct material costs, as applicable, of such product or component that was not produced or manufactured by a prohibited foreign entity, or
that such product or component was not produced or manufactured by a prohibited foreign entity.
Notwithstanding subclauses (I) and (II)—
if the taxpayer knows (or has reason to know) that a manufactured product or eligible component was produced or manufactured by a prohibited foreign entity, the taxpayer shall treat all direct costs with respect to such manufactured product, or all direct material costs with respect to such eligible component, as attributable to a prohibited foreign entity, and
if the taxpayer knows (or has reason to know) that the certification referred to in subclause (II)(bb) pertaining to a manufactured product or eligible component is inaccurate, the taxpayer may not rely on such certification.
In a manner consistent with Treasury Regulation section 1.45X–4(c)(4)(i) (as in effect on the date of enactment of this paragraph), the certification referred to in subclause (II)(bb) shall—
include—
the supplier’s employer identification number, or
any such similar identification number issued by a foreign government,
be signed under penalties of perjury,
be retained by the supplier and the taxpayer for a period of not less than 6 years and shall be provided to the Secretary upon request, and
be from the supplier from which the taxpayer purchased any manufactured product, eligible component, or constituent elements, materials, or subcomponents of an eligible component, stating—
that such property was not produced or manufactured by a prohibited foreign entity and that the supplier does not know (or have reason to know) that any prior supplier in the chain of production of that property is a prohibited foreign entity,
for purposes of section 45X, the total direct material costs for each component, constituent element, material, or subcomponent that were not produced or manufactured by a prohibited foreign entity, or
for purposes of section 45Y or section 48E, the total direct costs attributable to all manufactured products that were not produced or manufactured by a prohibited foreign entity.
Upon the election of the taxpayer (in such form and manner as the Secretary shall designate), in the case of any manufactured product, eligible component, or constituent element, material, or subcomponent of an eligible component which is—
acquired by the taxpayer, or manufactured or assembled by or for the taxpayer, pursuant to a binding written contract which was entered into prior to
June 16, 2025
, and
placed into service before
January 1, 2030
(or, in the case of an applicable facility, as defined in section 45Y(d)(4)(B), before
January 1, 2028
) in a facility the construction of which began before
August 1, 2025
, or
in the case of a constituent element, material, or subcomponent, used in a product sold before
January 1, 2030
,
The Secretary shall prescribe such regulations and guidance as may be necessary or appropriate to prevent circumvention of the rules under this subparagraph, including prevention of—
any abuse of the exception provided under clause (iv) through the stockpiling of any manufactured product, eligible component, or constituent element, material, or subcomponent of an eligible component during any period prior to the application of the requirements under this paragraph, or
any evasion with respect to the requirements of this subparagraph where the facts and circumstances demonstrate that the beginning of construction of a qualified facility or energy storage technology has not in fact occurred.
the cost to the taxpayer with respect to such product, component, element, material, or subcomponent shall not be included for purposes of determining the material assistance cost ratio under this subparagraph.
For purposes of this paragraph—
The term “eligible component” means—
any property described in section 45X(c)(1), or
any component which is identified by the Secretary pursuant to regulations or guidance issued under subparagraph (G).
The term “energy storage technology” has the same meaning given such term under section 48E(c)(2).
The term “manufactured product” means—
a manufactured product which is a component of a qualified facility, as described in section 45Y(g)(11)(B) and any guidance issued thereunder, or
any product which is identified by the Secretary pursuant to regulations or guidance issued under subparagraph (G).
The term “qualified facility” means—
a qualified facility, as defined in section 45Y(b)(1),
a qualified facility, as defined in section 48E(b)(3), and
any qualified interconnection property (as defined in section 48E(b)(4)) which is part of the qualified investment with respect to a qualified facility (as described in section 48E(b)(1)).
Rules similar to the rules under subparagraphs (H) and (J) of paragraph (51) shall apply for purposes of this paragraph.
The Secretary may prescribe such regulations and guidance as may be necessary or appropriate to carry out the provisions of this paragraph, including—
identification of components or products for purposes of clauses (i) and (iii) of subparagraph (E), and
for purposes of subparagraph (A)(ii), rules to address facilities which produce more than one eligible component.
For purposes of this title (other than subtitle B)—
An alien individual shall be treated as a resident of the United States with respect to any calendar year if (and only if) such individual meets the requirements of clause (i), (ii), or (iii):
Such individual is a lawful permanent resident of the United States at any time during such calendar year.
Such individual meets the substantial presence test of paragraph (3).
Such individual makes the election provided in paragraph (4).
An individual is a nonresident alien if such individual is neither a citizen of the United States nor a resident of the United States (within the meaning of subparagraph (A)).
If an alien individual is a resident of the United States under paragraph (1)(A) with respect to any calendar year, but was not a resident of the United States at any time during the preceding calendar year, such alien individual shall be treated as a resident of the United States only for the portion of such calendar year which begins on the residency starting date.
In the case of an individual who is a lawfully permanent resident of the United States at any time during the calendar year, but does not meet the substantial presence test of paragraph (3), the residency starting date shall be the first day in such calendar year on which he was present in the United States while a lawful permanent resident of the United States.
In the case of an individual who meets the substantial presence test of paragraph (3) with respect to any calendar year, the residency starting date shall be the first day during such calendar year on which the individual is present in the United States.
In the case of an individual who makes the election provided by paragraph (4) with respect to any calendar year, the residency starting date shall be the 1st day during such calendar year on which the individual is treated as a resident of the United States under that paragraph.
An alien individual shall not be treated as a resident of the United States during a portion of any calendar year if—
such portion is after the last day in such calendar year on which the individual was present in the United States (or, in the case of an individual described in paragraph (1)(A)(i), the last day on which he was so described),
during such portion the individual has a closer connection to a foreign country than to the United States, and
the individual is not a resident of the United States at any time during the next calendar year.
For purposes of subparagraphs (A)(iii) and (B), an individual shall not be treated as present in the United States during any period for which the individual establishes that he has a closer connection to a foreign country than to the United States.
Clause (i) shall not apply to more than 10 days on which the individual is present in the United States.
Except as otherwise provided in this paragraph, an individual meets the substantial presence test of this paragraph with respect to any calendar year (hereinafter in this subsection referred to as the “current year”) if—
such individual was present in the United States on at least 31 days during the calendar year, and
the sum of the number of days on which such individual was present in the United States during the current year and the 2 preceding calendar years (when multiplied by the applicable multiplier determined under the following table) equals or exceeds 183 days:
| In the case of days in: | The applicable multiplier is: |
|---|---|
| Current year | 1 |
| 1st preceding year | ⅓ |
| 2nd preceding year | ⅙ |
An individual shall not be treated as meeting the substantial presence test of this paragraph with respect to any current year if—
such individual is present in the United States on fewer than 183 days during the current year, and
it is established that for the current year such individual has a tax home (as defined in section 911(d)(3) without regard to the second sentence thereof) in a foreign country and has a closer connection to such foreign country than to the United States.
Subparagraph (B) shall not apply to any individual with respect to any current year if at any time during such year—
such individual had an application for adjustment of status pending, or
such individual took other steps to apply for status as a lawful permanent resident of the United States.
An individual shall not be treated as being present in the United States on any day if—
such individual is an exempt individual for such day, or
such individual was unable to leave the United States on such day because of a medical condition which arose while such individual was present in the United States.
An alien individual shall be deemed to meet the requirements of this subparagraph if such individual—
is not a resident of the United States under clause (i) or (ii) of paragraph (1)(A) with respect to a calendar year (hereinafter referred to as the “election year”),
was not a resident of the United States under paragraph (1)(A) with respect to the calendar year immediately preceding the election year,
is a resident of the United States under clause (ii) of paragraph (1)(A) with respect to the calendar year immediately following the election year, and
is both—
present in the United States for a period of at least 31 consecutive days in the election year, and
present in the United States during the period beginning with the first day of such 31-day period and ending with the last day of the election year (hereinafter referred to as the “testing period”) for a number of days equal to or exceeding 75 percent of the number of days in the testing period (provided that an individual shall be treated for purposes of this subclause as present in the United States for a number of days during the testing period not exceeding 5 days in the aggregate, notwithstanding his absence from the United States on such days).
An alien individual who meets the requirements of subparagraph (A) shall, if he so elects, be treated as a resident of the United States with respect to the election year.
An alien individual who makes the election provided by subparagraph (B) shall be treated as a resident of the United States for the portion of the election year which begins on the 1st day of the earliest testing period during such year with respect to which the individual meets the requirements of clause (iv) of subparagraph (A).
The rules of subparagraph (D)(i) of paragraph (3) shall apply for purposes of determining an individual’s presence in the United States under this paragraph.
An election under subparagraph (B) shall be made on the individual’s tax return for the election year, provided that such election may not be made before the individual has met the substantial presence test of paragraph (3) with respect to the calendar year immediately following the election year.
An election once made under subparagraph (B) remains in effect for the election year, unless revoked with the consent of the Secretary.
For purposes of this subsection—
An individual is an exempt individual for any day if, for such day, such individual is—
a foreign government-related individual,
a teacher or trainee,
a student, or
a professional athlete who is temporarily in the United States to compete in a sports event—
which is organized for the primary purpose of benefiting an organization which is described in section 501(c)(3) and exempt from tax under section 501(a),
all of the net proceeds of which are contributed to such organization, and,
2
2 So in original. The comma probably should not appear.
which utilizes volunteers for substantially all of the work performed in carrying out such event.
The term “foreign government-related individual” means any individual temporarily present in the United States by reason of—
diplomatic status, or a visa which the Secretary (after consultation with the Secretary of State) determines represents full-time diplomatic or consular status for purposes of this subsection,
being a full-time employee of an international organization, or
being a member of the immediate family of an individual described in clause (i) or (ii).
The term “teacher or trainee” means any individual—
who is temporarily present in the United States under subparagraph (J) or (Q) of section 101(15) of the Immigration and Nationality Act (other than as a student), and
who substantially complies with the requirements for being so present.
The term “student” means any individual—
who is temporarily present in the United States—
under subparagraph (F) or (M) of section 101(15) of the Immigration and Nationality Act, or
as a student under subparagraph (J) or (Q) of such section 101(15), and
who substantially complies with the requirements for being so present.
An individual shall not be treated as an exempt individual by reason of clause (ii) of subparagraph (A) for the current year if, for any 2 calendar years during the preceding 6 calendar years, such person was an exempt person under clause (ii) or (iii) of subparagraph (A). In the case of an individual all of whose compensation is described in section 872(b)(3), the preceding sentence shall be applied by substituting “4 calendar years” for “2 calendar years”.
For any calendar year after the 5th calendar year for which an individual was an exempt individual under clause (ii) or (iii) of subparagraph (A), such individual shall not be treated as an exempt individual by reason of clause (iii) of subparagraph (A), unless such individual establishes to the satisfaction of the Secretary that such individual does not intend to permanently reside in the United States and that such individual meets the requirements of subparagraph (D)(ii).
For purposes of this subsection, an individual is a lawful permanent resident of the United States at any time if—
such individual has the status of having been lawfully accorded the privilege of residing permanently in the United States as an immigrant in accordance with the immigration laws, and
such status has not been revoked (and has not been administratively or judicially determined to have been abandoned).
An individual shall cease to be treated as a lawful permanent resident of the United States if such individual commences to be treated as a resident of a foreign country under the provisions of a tax treaty between the United States and the foreign country, does not waive the benefits of such treaty applicable to residents of the foreign country, and notifies the Secretary of the commencement of such treatment.
For purposes of this subsection—
Except as provided in subparagraph (B), (C), or (D), an individual shall be treated as present in the United States on any day if such individual is physically present in the United States at any time during such day.
If an individual regularly commutes to employment (or self-employment) in the United States from a place of residence in Canada or Mexico, such individual shall not be treated as present in the United States on any day during which he so commutes.
If an individual, who is in transit between 2 points outside the United States, is physically present in the United States for less than 24 hours, such individual shall not be treated as present in the United States on any day during such transit.
An individual who is temporarily present in the United States on any day as a regular member of the crew of a foreign vessel engaged in transportation between the United States and a foreign country or a possession of the United States shall not be treated as present in the United States on such day unless such individual otherwise engages in any trade or business in the United States on such day.
The Secretary may prescribe regulations under which an individual who (but for subparagraph (B) or (D) of paragraph (3)) would meet the substantial presence test of paragraph (3) is required to submit an annual statement setting forth the basis on which such individual claims the benefits of subparagraph (B) or (D) of paragraph (3), as the case may be.
For purposes of this title, an alien individual who has not established a taxable year for any prior period shall be treated as having a taxable year which is the calendar year.
If—
an individual is treated under paragraph (1) as a resident of the United States for any calendar year, and
after the application of subparagraph (A), such individual has a taxable year other than a calendar year,
he shall be treated as a resident of the United States with respect to any portion of a taxable year which is within such calendar year.
If—
an alien individual was treated as a resident of the United States during any period which includes at least 3 consecutive calendar years (hereinafter referred to as the “initial residency period”), and
such individual ceases to be treated as a resident of the United States but subsequently becomes a resident of the United States before the close of the 3rd calendar year beginning after the close of the initial residency period,
such individual shall be taxable for the period after the close of the initial residency period and before the day on which he subsequently became a resident of the United States in the manner provided in section 877(b). The preceding sentence shall apply only if the tax imposed pursuant to section 877(b) exceeds the tax which, without regard to this paragraph, is imposed pursuant to section 871.
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection.
The terms “includes” and “including” when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined.
Where not otherwise distinctly expressed or manifestly incompatible with the intent thereof, references in this title to possessions of the United States shall be treated as also referring to the Commonwealth of Puerto Rico.
For purposes of chapter 1—
A contract which purports to be a service contract shall be treated as a lease of property if such contract is properly treated as a lease of property, taking into account all relevant factors including whether or not—
the service recipient is in physical possession of the property,
the service recipient controls the property,
the service recipient has a significant economic or possessory interest in the property,
the service provider does not bear any risk of substantially diminished receipts or substantially increased expenditures if there is nonperformance under the contract,
the service provider does not use the property concurrently to provide significant services to entities unrelated to the service recipient, and
the total contract price does not substantially exceed the rental value of the property for the contract period.
An arrangement (including a partnership or other pass-thru entity) which is not described in paragraph (1) shall be treated as a lease if such arrangement is properly treated as a lease, taking into account all relevant factors including factors similar to those set forth in paragraph (1).
Notwithstanding paragraphs (1) and (2), and except as provided in paragraph (4), any contract or arrangement between a service provider and a service recipient—
with respect to—
the operation of a qualified solid waste disposal facility,
the sale to the service recipient of electrical or thermal energy produced at a cogeneration or alternative energy facility,
the operation of a water treatment works facility, or
the operation of a storage facility, and
which purports to be a service contract,
shall be treated as a service contract.
For purposes of subparagraph (A), the term “qualified solid waste disposal facility” means any facility if such facility provides solid waste disposal services for residents of part or all of 1 or more governmental units and substantially all of the solid waste processed at such facility is collected from the general public.
For purposes of subparagraph (A), the term “cogeneration facility” means a facility which uses the same energy source for the sequential generation of electrical or mechanical power in combination with steam, heat, or other forms of useful energy.
For purposes of subparagraph (A), the term “alternative energy facility” means a facility for producing electrical or thermal energy if the primary energy source for the facility is not oil, natural gas, coal, or nuclear power.
For purposes of subparagraph (A), the term “water treatment works facility” means any treatment works within the meaning of section 212(2) of the Federal Water Pollution Control Act.
For purposes of subparagraph (A), the term “storage facility” means a facility which uses energy storage technology within the meaning of section 48(c)(6).
Paragraph (3) shall not apply to any qualified solid waste disposal facility, cogeneration facility, alternative energy facility, water treatment works facility, or storage facility used under a contract or arrangement if—
the service recipient (or a related entity) operates such facility,
the service recipient (or a related entity) bears any significant financial burden if there is nonperformance under the contract or arrangement (other than for reasons beyond the control of the service provider),
the service recipient (or a related entity) receives any significant financial benefit if the operating costs of such facility are less than the standards of performance or operation under the contract or arrangement, or
the service recipient (or a related entity) has an option to purchase, or may be required to purchase, all or a part of such facility at a fixed and determinable price (other than for fair market value).
For purposes of this paragraph, the term “related entity” has the same meaning as when used in section 168(h).
For purposes of subparagraph (A), there shall not be taken into account—
any right of a service recipient to inspect any facility, to exercise any sovereign power the service recipient may possess, or to act in the event of a breach of contract by the service provider, or
any allocation of any financial burden or benefits in the event of any change in any law.
For purposes of clause (ii) of subparagraph (A), there shall not be taken into account any temporary shut-down of the facility for repairs, maintenance, or capital improvements, or any financial burden caused by the bankruptcy or similar financial difficulty of the service provider.
For purposes of clause (iii) of subparagraph (A), there shall not be taken into account any significant financial benefit merely because payments by the service recipient under the contract or arrangement are decreased by reason of increased production or efficiency or the recovery of energy or other products.
This subsection shall not apply to any property described in clause (i), (ii), (iii), or (iv) of section 1250(a)(1)(B) (relating to low-income housing) if—
such property is operated by or for an organization described in paragraph (3) or (4) of section 501(c), and
at least 80 percent of the units in such property are leased to low-income tenants (within the meaning of section 167(k)(3)(B)) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).
The Secretary may prescribe such regulations as may be necessary or appropriate to carry out the provisions of this subsection.
The Secretary shall prescribe such regulations as may be necessary or appropriate to prevent the avoidance of those provisions of this title which deal with—
the linking of borrowing to investment, or
diminishing risks,
through the use of related persons, pass-thru entities, or other intermediaries.
For purposes of subtitle A, in determining the amount of gain or loss (or deemed gain or loss) with respect to any property, the fair market value of such property shall be treated as being not less than the amount of any nonrecourse indebtedness to which such property is subject.
For purposes of this title, in the case of a qualified motor vehicle operating agreement which contains a terminal rental adjustment clause—
such agreement shall be treated as a lease if (but for such terminal rental adjustment clause) such agreement would be treated as a lease under this title, and
the lessee shall not be treated as the owner of the property subject to an agreement during any period such agreement is in effect.
For purposes of this subsection—
The term “qualified motor vehicle operating agreement” means any agreement with respect to a motor vehicle (including a trailer) which meets the requirements of subparagraphs (B), (C), and (D) of this paragraph.
An agreement meets the requirements of this subparagraph if under such agreement the sum of—
the amount the lessor is personally liable to repay, and
the net fair market value of the lessor’s interest in any property pledged as security for property subject to the agreement,
equals or exceeds all amounts borrowed to finance the acquisition of property subject to the agreement. There shall not be taken into account under clause (ii) any property pledged which is property subject to the agreement or property directly or indirectly financed by indebtedness secured by property subject to the agreement.
An agreement meets the requirements of this subparagraph if such agreement contains a separate written statement separately signed by the lessee—
under which the lessee certifies, under penalty of perjury, that it intends that more than 50 percent of the use of the property subject to such agreement is to be in a trade or business of the lessee, and
which clearly and legibly states that the lessee has been advised that it will not be treated as the owner of the property subject to the agreement for Federal income tax purposes.
An agreement meets the requirements of this subparagraph if the lessor does not know that the certification described in subparagraph (C)(i) is false.
For purposes of this subsection, the term “terminal rental adjustment clause” means a provision of an agreement which permits or requires the rental price to be adjusted upward or downward by reference to the amount realized by the lessor under the agreement upon sale or other disposition of such property.
The term “terminal rental adjustment clause” also includes a provision of an agreement which requires a lessee who is a dealer in motor vehicles to purchase the motor vehicle for a predetermined price and then resell such vehicle where such provision achieves substantially the same results as a provision described in subparagraph (A).
A taxable mortgage pool shall be treated as a separate corporation which may not be treated as an includible corporation with any other corporation for purposes of section 1501.
For purposes of this title—
Except as otherwise provided in this paragraph, a taxable mortgage pool is any entity (other than a REMIC) if—
substantially all of the assets of such entity consists of debt obligations (or interests therein) and more than 50 percent of such debt obligations (or interests) consists of real estate mortgages (or interests therein),
such entity is the obligor under debt obligations with 2 or more maturities, and
under the terms of the debt obligations referred to in clause (ii) (or underlying arrangement), payments on such debt obligations bear a relationship to payments on the debt obligations (or interests) referred to in clause (i).
Any portion of an entity which meets the definition of subparagraph (A) shall be treated as a taxable mortgage pool.
Nothing in this subsection shall be construed to treat any domestic building and loan association (or portion thereof) as a taxable mortgage pool.
To the extent provided in regulations, equity interest of varying classes which correspond to maturity classes of debt shall be treated as debt for purposes of this subsection.
If—
a real estate investment trust is a taxable mortgage pool, or
a qualified REIT subsidiary (as defined in section 856(i)(2)) of a real estate investment trust is a taxable mortgage pool,
under regulations prescribed by the Secretary, adjustments similar to the adjustments provided in section 860E(d) shall apply to the shareholders of such real estate investment trust.
For purposes of this title—
the Thrift Savings Fund shall be treated as a trust described in section 401(a) which is exempt from taxation under section 501(a);
any contribution to, or distribution from, the Thrift Savings Fund shall be treated in the same manner as contributions to or distributions from such a trust; and
subject to section 401(k)(4)(B) and any dollar limitation on the application of section 402(e)(3), contributions to the Thrift Savings Fund shall not be treated as distributed or made available to an employee or Member nor as a contribution made to the Fund by an employee or Member merely because the employee or Member has, under the provisions of subchapter III of chapter 84 of title 5, United States Code, and section 8351 of such title 5, an election whether the contribution will be made to the Thrift Savings Fund or received by the employee or Member in cash.
Notwithstanding any other provision of law, the Thrift Savings Fund is not subject to the nondiscrimination requirements applicable to arrangements described in section 401(k) or to matching contributions (as described in section 401(m)), so long as it meets the requirements of this section.
Paragraph (1) shall not be construed to provide that any amount of the employee’s or Member’s basic pay which is contributed to the Thrift Savings Fund shall not be included in the term “wages” for the purposes of section 209 of the Social Security Act or section 3121(a) of this title.
For purposes of this subsection, the terms “Member”, “employee”, and “Thrift Savings Fund” shall have the same respective meanings as when used in subchapter III of chapter 84 of title 5, United States Code.
No provision of law not contained in this title shall apply for purposes of determining the treatment under this title of the Thrift Savings Fund or any contribution to, or distribution from, such Fund.
In the case of any payment which, except for
section 13143(b) of title 5
, United States Code, might be made to any officer or employee of the Federal Government but which is made instead on behalf of such officer or employee to an organization described in section 170(c)—
such payment shall not be treated as received by such officer or employee for all purposes of this title and for all purposes of any tax law of a State or political subdivision thereof, and
no deduction shall be allowed under any provision of this title (or of any tax law of a State or political subdivision thereof) to such officer or employee by reason of having such payment made to such organization.
For purposes of this subsection, a Senator, a Representative in, or a Delegate or Resident Commissioner to, the Congress shall be treated as an officer or employee of the Federal Government.
The Secretary may prescribe regulations recharacterizing any multiple-party financing transaction as a transaction directly among any 2 or more of such parties where the Secretary determines that such recharacterization is appropriate to prevent avoidance of any tax imposed by this title.
Any designation by the Commodity Futures Trading Commission of a contract market which could not have been made under the law in effect on the day before the date of the enactment of the Commodity Futures Modernization Act of 2000 shall apply for purposes of this title except to the extent provided in regulations prescribed by the Secretary.
For purposes of this title, any organization which is otherwise a convention or association of churches shall not fail to so qualify merely because the membership of such organization includes individuals as well as churches or because individuals have voting rights in such organization.
In the case of any transaction to which the economic substance doctrine is relevant, such transaction shall be treated as having economic substance only if—
the transaction changes in a meaningful way (apart from Federal income tax effects) the taxpayer’s economic position, and
the taxpayer has a substantial purpose (apart from Federal income tax effects) for entering into such transaction.
The potential for profit of a transaction shall be taken into account in determining whether the requirements of subparagraphs (A) and (B) of paragraph (1) are met with respect to the transaction only if the present value of the reasonably expected pre-tax profit from the transaction is substantial in relation to the present value of the expected net tax benefits that would be allowed if the transaction were respected.
Fees and other transaction expenses shall be taken into account as expenses in determining pre-tax profit under subparagraph (A). The Secretary shall issue regulations requiring foreign taxes to be treated as expenses in determining pre-tax profit in appropriate cases.
For purposes of paragraph (1), any State or local income tax effect which is related to a Federal income tax effect shall be treated in the same manner as a Federal income tax effect.
For purposes of paragraph (1)(B), achieving a financial accounting benefit shall not be taken into account as a purpose for entering into a transaction if the origin of such financial accounting benefit is a reduction of Federal income tax.
For purposes of this subsection—
The term “economic substance doctrine” means the common law doctrine under which tax benefits under subtitle A with respect to a transaction are not allowable if the transaction does not have economic substance or lacks a business purpose.
In the case of an individual, paragraph (1) shall apply only to transactions entered into in connection with a trade or business or an activity engaged in for the production of income.
The determination of whether the economic substance doctrine is relevant to a transaction shall be made in the same manner as if this subsection had never been enacted.
The term “transaction” includes a series of transactions.
For other definitions, see the following sections of Title 1 of the United States Code:
Singular as including plural, section 1.
Plural as including singular, section 1.
Masculine as including feminine, section 1.
Officer, section 1.
Oath as including affirmation, section 1.
County as including parish, section 2.
Vessel as including all means of water transportation, section 3.
Vehicle as including all means of land transportation, section 4.
Company or association as including successors and assigns, section 5.
For effect of cross references in this title, see section 7806(a).
Treasury Regulations
- Treas. Reg. §Treas. Reg. §1.7701-1 Definitions; spouse, husband and wife, husband, wife, marriage
- Treas. Reg. §Treas. Reg. §1.7701-1(a) In general.
- Treas. Reg. §Treas. Reg. §1.7701-1(b) Applicability date.
- Treas. Reg. §Treas. Reg. §156.7701-1 Tax return preparer
- Treas. Reg. §Treas. Reg. §156.7701-1(a) In general.
- Treas. Reg. §Treas. Reg. §156.7701-1(b) Effective/applicability date.
- Treas. Reg. §Treas. Reg. §157.7701-1 Tax return preparer
- Treas. Reg. §Treas. Reg. §157.7701-1(a) In general.
- Treas. Reg. §Treas. Reg. §157.7701-1(b) Effective/applicability date.
- Treas. Reg. §Treas. Reg. §20.7701-1 Tax return preparer
- Treas. Reg. §Treas. Reg. §20.7701-1(a) In general.
- Treas. Reg. §Treas. Reg. §20.7701-1(b) Effective/applicability date.
- Treas. Reg. §Treas. Reg. §20.7701-2 Definitions; spouse, husband and wife, husband, wife, marriage
- Treas. Reg. §Treas. Reg. §20.7701-2(a) In general.
- Treas. Reg. §Treas. Reg. §20.7701-2(b) Applicability date.
- Treas. Reg. §Treas. Reg. §25.7701-1 Tax return preparer
- Treas. Reg. §Treas. Reg. §25.7701-1(a) In general.
- Treas. Reg. §Treas. Reg. §25.7701-1(b) Effective/applicability date.
- Treas. Reg. §Treas. Reg. §25.7701-2 Definitions; spouse, husband and wife, husband, wife, marriage
- Treas. Reg. §Treas. Reg. §25.7701-2(a) In general.
- Treas. Reg. §Treas. Reg. §25.7701-2(b) Applicability date.
- Treas. Reg. §Treas. Reg. §26.7701-1 Tax return preparer
- Treas. Reg. §Treas. Reg. §26.7701-1(a) In general.
- Treas. Reg. §Treas. Reg. §26.7701-1(b) Effective/applicability date.
- Treas. Reg. §Treas. Reg. §26.7701-2 Definitions; spouse, husband and wife, husband, wife, marriage
310 Citing Cases
Ho's testimony is not licensed clinical social work under New York law, we overrule respondent's objection.
In the absence of such explicit congressional action and in' the light of the prohibition in section 7701, the Commissioner cannot by regulation overrule the historical Federal gift tax valuation regime contained in the Internal Revenue Code and substantial and well-established precedent in the Supreme Court, the Courts of Appeals, and this Court, and we reject respondent's position in the instant case advocating an interpretation that would do so .
As petitioner did not offer any relevant or credible testimony on direct or cross-examination for the Court to consider, the Court will overrule respondent’s objection, and deny respondent’s oral motion to strike, as moot.
However, we find Portillo to be distinguishable from the instant case.
212 deductions, unlike sec. 162(a) deductions, are generally deductible only to the extent they exceed 2% of an individual's adjusted gross income, see sec. 67, and may also be limited by application ofthe alternative minimum tax, see sec. 56(b). ¹°The taxable year for which business expenses may be deducted depends upon whetherthe taxpayeruses the cash basis or accrual basis method of accounting. See sec. 7701(a)(25) ("The terms 'paid or incurred' and 'paid or accrued' shall be construed accord
Petitioner therefore asserts that the amounts he received from all third-party payors are not gain or profit from a trade or business as defined in section 7701(a)(26), taxable income, or gross income. Petitioner also contends that (1) he is not a person statutorily made liable for the income tax;9 (2) the income tax is an excise tax; (3) he did not have income within the meaning ofthe Sixteenth Amendment; and (4) the income tax does not apply to the receipts ofall American citizens.
Petitioner therefore asserts that the amounts he received from all third- party payors are not gain or profit from a trade or business as defined in section 7701(a)(26), taxable income, or gross income. Petitioner also contends that (1) he is not a person statutorilymade liable for the income tax, (2) the income tax is an excise tax, (3) he did not have income within the meaning ofthe Sixteenth Amendment, and (4) the income tax does not apply to the receipts ofall American citizens.
Petitioner therefore asserts that the amounts he received from all third- party payors are not gain or profit from a trade or business as defined in section 7701(a)(26), taxable income, or gross income. Petitioner also contends that (1) he is not a person statutorilymade liable for the income tax, (2) the income tax is an excise tax, (3) he did not have income within the meaning ofthe Sixteenth Amendment, and (4) the income tax does not apply to the receipts ofall American citizens.
7701(a)(37) (an individual retirement plan is commonly referred to as an IRA). It is clear that the retirement plan established by Robicon, from which petitioner withdrew the $1,168.39 distribution, was a qualified retirement plan described in section 401(a), and, therefore, the exception contained in section 72(t)(2)(D) does not apply.
Moreover, unlike petitioners in the present case, the taxpayers in Larotonda never 5(...continued) incompatible with the intent thereof-- * * * * * * * (37) Individual Retirement Plan.–-The term “individual retirement plan” means-- (A) an individual retirement account described in section 408(a), and (B) an individual retirement annuity described in section 408(b). In contrast, as indicated above, sec. 7701(j)(1) refers to sec.
In that regard, section 7701(a)(1) defines “person” to mean and include “an individual, a trust, estate, partnership, association, company or corporation.” D. Petitioners’ Arguments Petitioners, in addition to arguing that the Bufferd v. Commissioner, supra, does not apply to situations involving C corporations, also argue that constructive dividends are analogous to section 6672 responsible person penalties.
We otherwise decide the factual issues in this case on the preponderance of the evidence, and we need not decide which party has 4 The notice of deficiency imposed a section 6662(a) accuracy-related penalty of $1,295, which respondent conceded before trial.
e depreciation because depreciation is not described in section 162 and is not an amount “paid or incurred during the taxable year.” We need not address whether (for purposes of applying section 280E) depreciation might be described in section 162 because, regardless of the answer to that question, we disagree with 8SJW does not challenge the constitutionality of section 280E, so we need not address that question further.
e depreciation because depreciation is not described in section 162 and is not an amount “paid or incurred during the taxable year.” We need not address whether (for purposes of applying section 280E) depreciation might be described in section 162 because, regardless of the answer to that question, we disagree with 8SJW does not challenge the constitutionality of section 280E, so we need not address that question further.
e depreciation because depreciation is not described in section 162 and is not an amount “paid or incurred during the taxable year.” We need not address whether (for purposes of applying section 280E) depreciation might be described in section 162 because, regardless of the answer to that question, we disagree with 8SJW does not challenge the constitutionality of section 280E, so we need not address that question further.
This definition is explicitly nonexclusive, however, pursuant to section 7701(c), which provides that "[t]he terms 'includes' and 'including' when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning ofthe term defined." See also McNamee v.
Since section 468 itselfdoesn't define the term, we hold that the general definition under section 7701(a)(14) applies.
Since section 468 itselfdoesn't define the term, we hold that the general definition under section 7701(a)(14) applies.
For the reasons set forth below, we hold for respondent.
section 301.7701-2(b)(1), and, second, because it is treated 26Because we hold against Uniband on both these grounds, we need not address the Commissioner's further contention that the 1996 consolidated return, even ifotherwise valid, was untimely.
We hold that section 7491(a) (1) does not apply to shift the burden of proof to respondent.
(Emphasis added.) Petitioners contend that, pursuant to section 7701(a) (1) and (14), the definition of a "taxpayer" is limited to petitioners (i.e., the persons subject to the tax) and does not include Mues--petitioners' employee.
We hold that for their taxable year 2005 petitioners are subject to the 10-percent additional tax with respect to Ms .
Section 7701, underpinning the check-the-box regulations, defines entities for purposes of the Internal Revenue Code “where not otherwise distinctly expressed or manifestly incompatible with the intent thereof”. Section 7701 does not make it clear whether an LLC falls within the definition of a partnership, a corporation, or a disregarded entity ta
Petitioner cannot plausibly contend that the basket securities un- derlying the Barrier Contracts qualified for this “Exception.” Portfolio managers for Weiss-affiliated accounts did not distinguish between trades intended for the MAPS account and those intended for other pro- prietary accounts, including OGI’s prime brokerage account. GWA’s trading of the basket securities was basically a subset of the trading in which the Weiss-affiliated companies generally engaged. See supra p. 77. GWA regul
Petitioner, therefore, was not the beneficiary of an individual retirement plan under section 7701(a)(37), which defines an individual retirement plan as an individual retirement account under section 408(a) or an individual retirement annuity under section 408(b) . The school system plan in which petitioner participated was not a section 408(a) or (b) plan but a section 403(b) plan . A section 403(b) plan (such as the school system plan) is altogether different from a section 408(a) or (b) plan
It is qualified under Section 401(a) of - 6 - the Internal Revenue Code.” Petitioner, therefore, was not the beneficiary of an individual retirement plan under section 7701(a)(37), which defines an individual retirement plan as an individual retirement account under section 408(a) or an individual retirement annuity under section 408(b). In short, petitioners’ claim that the withdrawal at issue is excluded from the 10-percent additional tax is incorrect. The section 72(t)(2)(E) exclusion from t
Section 7701 provides: SEC. 7701. DEFINITIONS. (a) When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof–- * * * * * * * (19)Domestic building and loan association.-- The term “domestic building and loan association” means a domestic building and loan association, a domestic savings and
over form doctrines (including the step transaction doctrine) and under the statutory anti-abuse rule in sec. 269(a). We need not decide these arguments because of our other holdings. Congress noted when codifying the economic substance doctrine in sec. 7701 in 2010 that under present law courts could “bifurcate a transaction in which independent activities with non-tax objectives are combined with an unrelated item having only tax avoidance objectives to disallow those tax motivated benefits.”
Section 7701(a)(11)(B) explicitly defines the term “Secretary,” as used in the Internal Revenue Code, to mean “the Secretary of the Treasury or his delegate.” See, e.g., Winslow v. Commissioner, 139 T.C. 270, 273 (2012) (holding that Congress has permitted the Secretary to delegate his authority with respect to preparation of SFRs); Nicklaus v. Com
Section 7701 '3Petzoldt v. Commissioner, 92 T.C. at 694. 14Petzoldt v. Commissioner, 92 T.C. at 695. '5Badaracco v. Commissioner, 464 U.S. 386, 393 (1984). ¹6Goldring v. Commissioner, 20 T.C. 79, 81 (1953). - 8 - [*8] provides various definitions, and section 7701(a)(26), specifically, provides that "[t]he term 'trade or business' includes the per
IRC section 162 makes no changes to the code wide definition in section 7701 as applies to petitioner .
" means "any officer, employee, or agency of the Treasury Department duly authorized by the Secretary of the Treasury directly, or indirectly by one or more redelegations of authority, to perform the function mentioned or described in the context", sec. 7701 (a) (12) (A) . - 8 - held that because the Commissioner has no authority to abate assessments of interest on employment taxes under section 6404(e), he cannot commit an abuse of discretion by refusing to do so because "a person with no discr
Congress, however, did not elect to place such limitations in section 7701, and it is not within our province to do what Congress failed to do or elected not to do.
See § 7701(a)(1); Treas. Reg. §§ 301.7701-1(a), -2(b)(1). Neither petitioner nor her brother was at any time “the person for whom the services [were] performed,” foreclosing her from petitioning this Court for review under section 7436 of her own liability. See generally § 7436(b)(1). Petitioner is not seeking to challenge any determination on behalf o
l’s advice is another way of showing reasonable cause and good faith. Treas. Reg. § 1.6664-4(b)(1), (c). There is, however, a difference between tax preparation and tax advice. A tax preparer is “any person who prepares [a return] for compensation.” § 7701(a)(36)(A). A tax adviser, in contrast, is a person who analyzes an issue and communicates his conclusions to the taxpayer. See Treas. Reg. § 1.6664-4(c)(2); see also Woodsum v. Commissioner, 136 T.C. 585, 592–93 (2011) (advice reflects adviser
§ 7701(a)(11); Internal Revenue Manual 5.1.12.27.1, .6, .8 (Dec. 20, 2017). Adams v. Commissioner, 160 T.C. 1, 6 n.4 (2023), aff’d, 122 F.4th 429 (D.C. Cir. 2024). 4 debt exists is correct?3 As we will explain, the text of the statute read in view of our precedents directs that the scope of review is de novo. That is, in appropriate circumstances
§ 1.6013-1(a)(1); see also § 7701(a)(38) (“The term ‘joint return’ means a single return made jointly under section 6013 by a husband and wife.”).
§ 7701(a)(11); and then citing IRM 5.1.12.27.1, .6, .8 (Dec. 20, 2017)). 5 The inflation-adjusted amount for 2023, the year of the certification here, was $59,000. See Rev. Proc. 2022-38, § 3.59, 2022-45 I.R.B. 445, 456. 5 [*5] computer interface called the Integrated Data Retrieval System (IDRS) to retrieve data from those systems.” Id. In suppor
63, 73 (1929); see also Harriss v.
See § 7701(a)(11); Statement of Procedural Rules, 26 C.F.R. § 601.203(a)(1). 18 [*18] some lower amount. See Murphy, 125 T.C. at 309. A doubt as to collectibility offer with special circumstances is appropriate when a taxpayer does not have the ability to pay the liability in full and, on account of those special circumstances, the taxpayer has offere
The Act also added a new subsection (o) to section 7701 of the Code, codifying the “economic substance” doctrine.
We agree with respondent’s bottom line, but we find it sufficient to address just one of his arguments, namely, his contention that Corning Place did not make any charitable contribu- tion during the 2016 tax year for which its return was filed.10 Section 170(a) provides that “[t]here shall be allowed as a deduc- tion any charitable contribution .
See § 7701(a)(11)(B), (12)(A)(i). 5 Also included in this series were, e.g., I.R.S. Notice 2020-17, 2020-15 I.R.B. 590 (postponing the due date for making federal income tax payments), I.R.S. Notice 2020-18, 2020-15 I.R.B. 590 (postponing the due date for filing federal income tax returns), and I.R.S. Notice 2020-20, 2020-16 I.R.B. 660 (postponing the
Therefore, our holding that the section 7 Section 7602 grants authority to “the Secretary,” which section 7701(a)(11)(B) defines as the Secretary of the Treasury or his delegate.
There is no authority in the Code or caselaw for an equitable or hardship exception to the imposition of additional tax under section 72(t) on early 4 An individual retirement plan is an IRA or an annuity as defined in section 408(a) and (b).
as those terms are defined under section 7701 and the penalty, addition to tax, or additional amount which relates to an adjustment to a partnership item.” 66 regulations thereunder, or a foreign organization described in section 501(c), or other foreign person.
§ 7701(a)(11); Internal Revenue Manual 5.1.12.27.1, .6, .8 (Dec. 20, 2017). 8 (i) a notice of lien has been filed pursuant to section 6323 and the administrative rights under section 6320 with respect to such filing have been exhausted or have lapsed, or (ii) a levy is made pursuant to section 6331. I.R.C. § 7345(b)(1). The threshold amount descri
Congress established the “mirror tax system” as the tax law of the USVI in 1921. Act of July 12, 1921, ch. 44, § 1, 42 Stat. 122, 123 (codified as amended at 48 U.S.C. § 1397 (2006)); see also United States v. Calhoun, 566 F.2d 969, 975 (5th Cir. 1978) (“This statute effectively established separate and distinct taxing jurisdictions i
ir claims. The Patacsils also did not reasonably rely on the advice of a tax professional. The key distinction here is the difference between tax preparation and tax advice. A tax preparer is “any person who prepares [the return] for compensation.” § 7701(a)(36)(A). A tax adviser, in contrast, is a person who analyzes an issue and communicates his conclusions to the taxpayer. See Treas. Reg. § 1.6664-4(c)(2); see also Woodsum v. Commissioner, 136 T.C. 585, 592–93 (2011) (advice reflects adviser’
§ 7701(a)(11); Internal Revenue Manual (IRM) 5.1.12.27.1, .6, .8 (Dec. 20, 2017). 3 The inflation-adjusted amount for 2018, the year of the certification here, was $51,000. See Rev. Proc. 2017-58, § 3.53, 2017-45 I.R.B. 489, 499. Although section 7345(b)(2) sets forth certain exceptions to the term “seriously delinquent tax debt,” Mr. Meduty does n
ount equal to 20% of the excess of the taxpayer’s qualified research expenses (QREs) over the base amount. QREs are limited to amounts “paid or incurred by the taxpayer during the taxable year in carrying on any trade or business.”21 § 41(b)(1); see § 7701(a)(25). QREs may be either in-house research expenses or contract research expenses. § 41(b)(1). In-house research expenses include (1) “any wages paid or incurred to an employee for qualified services performed by such employee” and (2) “any
Thus, Gold Crown’s identifying itself as a “transferee” did not serve as notice to respondent that it was “acting for another person in a fiduciary capacity.” See § 6903(a); see also §§ 6901(h), 7701(a)(6); Treas.
Nor did he dispute that his $3,099 retirement distribution was an “early distribution” within the meaning of section 72(t).
For example, Treasury Regulation § 301.7623-1(c)(1) requires the 7 Section 7623(b)(1) refers to the “Secretary” rather than the IRS, and section 7701(a)(11)(B) defines “Secretary” as the Secretary of the Treasury or his delegate.
Specifically, petitioner contends that he is a “citizen,” not an “individual.” Petitioner relies on section 7701(a)(1), defining “person” as an “individual.” Petitioner then argues that because “citizen” and “person” are listed together in various Code sections, the two are mutually exclusive and thus so are “citizen” and “individual.” Petitioner’s theory that citizens do not need to pay federal income tax has been consistently rejected as frivol
§ 1.446-1(e)(2)(i); see also § 7701(a)(11)(B) and (12).
“A partnership is generally said to be created when persons join together their money, goods, labor, or skill for the purpose of carrying on a trade, profession, or business and when there is community of interest in the profits and losses.” Commissioner v. Tower, 327 U.S. 280, 286 (1946). “A partnership is, in other words, an organiz
21 Section 7701(a)(11)(B) defines “Secretary” to include not only the Secretary of the Treasury but also his delegates, who include the Commissioner and IRS employees. 38 [*38] (Emphases in original.) See also Hewlett-Packard Co. & Subs. v. United States, 71 F.3d 398, 402–03 (Fed. Cir. 1995) (similar “opinion of the Secretary” language in section 471
“includ[ing] a syndicate, group, pool, joint venture, or other unincorporated organization through or by means of which any business, financial operation, or venture is carried on, and which is not . . . a corporation or a trust or estate.” See also § 7701(a)(2). “Partnership” for tax purposes is generally a more inclusive term than “partnership” at common law, and for tax purposes it may include entities not traditionally considered partnerships. Dickerson v. Commissioner, T.C. Memo. 2012-60. “
Section 7602 grants authority to “the Secretary,” which section 7701(a)(11)(B) defines as the Secretary of the Treasury or his delegate.
RNR’s Entity Status Under the Internal Revenue Code Respondent contends that RNR is a foreign corporation, and not a sole proprietorship, under section 7701 for 2012, 2013 and 2014.
persons that are related to the transferor within the meaning of paragraph (h) of this section.” Nothing in Temporary Treasury Regulation § 1.367(d)-1T(e)(1), however, describes as a “subsequent U.S.
7701(a)(11); Internal Revenue Manual pt. 5.1.12.27.1, .6, .8 (Dec. 20, 2017). - 5 - was docketed at No. 10671-20. On November 16, 2020, we granted respondent’s motion to close the case at docket No. 10671-20 on the ground of duplication with the instant case. In their earlier petition, petitioners alleged that they had submitted to the IRS an
Silver has filed numerous documents asserting common tax-protester arguments, such as: (1) he is not a taxpayer within the meaning of section 7701(a)(14), which defines a taxpayer as “any person subject to any internal revenue tax”; (2) he did not receive taxable compensation in tax year 2012 but rather exchanged his labor and services for remuneration paid to him; (3) his wages are not taxable because they were paid by a private
7701(a)(11)(B). - 10 - [*10] income within the meaning of section 6501(e)(1)(A) is a facts-and- circumstances inquiry. Citing this Court’s recent decision in Beverly Clark Collection, LLC v. Commissioner, T.C. Memo. 2019-150, aff’d, ___ F. App’x ___, 2021 WL 2581370 (9th Cir. June 23, 2021), petitioners assert that they did not “omit” their d
6671(a); see also Blaga v.
638 provides that, for purposes ofapplying Federal income tax provisions "with respect to mines, oil and gas wells, and other natural deposits," the term "United States" includes "the seabed and subsoil ofthose submarine areas" within the OCS.
Paragraph (2)(A) provides that where the WBO determines that the 8Sec.
7701(a)(11); IRM pt. 5.1.12.27.1, 6, 8 (Dec. 20, 2017). - 7 - On May 24, 2019, respondent filed a motion to dismiss this case for lack of jurisdiction insofar as petitioner seeks redetennination ofher underlying liability for the penalties. Respondent noted petitioner's allegation, set forth in her peti- tion, that she had requested a CDP hea
- 8 - collection action and offers ofcollection alternatives. Sec. 6330(c)(2)(A), (3)(B). The person may also raise at the hearing challenges to the existence or amount of the underlying liability ifthe person did not receive a statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to disput
Each Form 4852 included the following statement: I am a private-sectorworker, not an "employee" as defined in IRC 3401(c) and IRC 3121.
7701(a)(11)(B). - 7 - [*7] Pursuant to section 6330(d)(1), within 30 days ofthe issuance ofa notice of determination, the taxpayer may appeal the determination to this Court. Where the validity ofthe underlying tax liability is properly in issue, the Court will review the matter de novo. Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v.
Had the Ghanaian partnerships engaged in a trade or business, they would have been foreign partnerships under section 7701(a)(4) and (5) and would not have been required to file U.S.
2014); see also Caltex Oil Venture v.
2)(C) (cross-referencing sec. 3121(b)(15) and (y)). Petitioner husband does not dispute that he received wages from the IMF, as shown on his Forms W-2, Wage and Tax Statement. Nor does he dispute that the IMF is an "international organization." See sec. 7701(a)(18); Chien v. Com- missioner, T.C. Memo. 2012-277, 104 T.C.M. (CCH) 385, 388. Instead, he asserts that his wages are exempt from self-employmenttax because they were attributa- ble to services that he performed abroad. See sec. 1402(c)(2)
7701(a)(4) and (5). Canada Square is a foreign corporation because it was organized under the laws ofCanada, and Beekman is domestic corporation because it was organized under the laws ofDelaware. - 96 - [*96] domestic corporation.¹°¹ The rate oftax imposed on the dividend is reduced to 5% by the U.S.-Canada tax treaty for shareholders owning
The Forms 4852 included the following tax protester statements: I am a private-sectorworker, not an "employee" as defined in IRC 3401(c) and IRC 3121.
itioner's status as a U.S. resident. Instead, to qualify under article 18, it requires petitioner to have been "temporarilypresent" in the United States. Thus, - 17 - our application ofarticle 18 is not affected by the definition ofU.S. resident in section 7701. G. Conclusion Approximately 70% ofpetitioner's stipend paid during 2011 was funded through the PRFR and SIR grants and is excludible from U.S. tax under article 18. The parties agree that the remaining 30% ofhis salary is taxable to peti
- 17 - [*17] II. Merits ofCARDS Under the Economic Substance Doctrine Taxpayers have the right to structure their transactions in a manner which decreases the amount ofwhat otherwise would be their taxes. Gregory v. Helvering, 293 U.S. 465, 469 (1935). However, even ifa transaction is in formal compliance with the Code, the ec
7701(a)(4) and (5). Canada Square is a foreign corporation because it was organized under the laws ofCanada, and Beekman is domestic corporation because it was organized under the laws ofDelaware. - 96 - [*96] domestic corporation.¹°¹ The rate oftax imposed on the dividend is reduced to 5% by the U.S.-Canada tax treaty for shareholders owning
71(b)(2)(A); see also sec.
7701(a)(11)(B). - 16 - [*16] evidence. See Banister v. Commissioner, T.C. Memo. 2008-201, affd, 418 F. App'x 637 (9th Cir. 2011). Ifthe Commissioner introduces some evidence that the taxpayerreceived unreported income, the burden shifts to the taxpayer, who must establish by a preponderance ofthe evidence that the unreported income adjustment
In the Naval Service Appropriations Act of 1922, ch. 44, sec. 1, 42 Stat. at 123 (1921) (codified as amended at 48 U.S.C. sec. 1397 (2006)), Congress created a tax system for the USVI. This tax system, usually referred to as the mirror code, 4(...continued) relationship with his or her employer (Employer) and (iii) purport to becom
5, 1987); see also Huffv.
7701(a)(11)(B). - 34 - [*34] Petitioners rely on a series ofcases from the U.S. Court ofAppeals for the Ninth Circuit holding that the Commissioner's adoption ofa litigation position that substantially deviates from the position in the notice ofdeficiency results in a forfeiture ofany presumption ofcorrectness in the notice and places the bur
this case, it seems clear that it should be construed in gender- and spouse-neutral fashion. See 1 U.S.C. sec. 1 (2012) ("In determining the meaning ofany Act of Congress, * * * words importing the masculine gender include the feminine as well[.]"); sec. 7701(a)(17); Grutman v. Commissioner, 80 T.C. 464, 471 n.2 (1983) ("In the instant, case we use the terms 'husband' as the paying spouse and (continued...) - 11 - [*11] regulatory exception applies to Mr. Barry's claimed legal expenses, and the
ax under - 17 - the applicable revenue law[.]"). Petitioner contends that because "taxpayer" is a defined term and includes both individuals and nonindividuals, Congress intended "taxpayer" in section 6343(a)(1)(D) to have the same definition as in section 7701. When looking at a statute, its plainness or ambiguity is determined not only by the language itselfbut also by "the specific context in which that language is used, and the broader context ofthe statute as a whole." Robinson v. Shell Oil
7701(a)(11)(B). - 25 - [*25] not list the burden ofproofas an issue. Accordingly, the burden ofproofis not at issue. II. Merits ofCARDS Under the Economic Substance Doctrine Taxpayers have the right to structure their transactions in a manner which decreases the amount ofwhat otherwise would be their taxes. Gregory v. Helvering, 293 U.S. 465,
Code shall not apply with respect to the assessment or collection ofthe penalties provided by section 6695. A tax return preparer nevertheless may request an appeal ofan initial determination ofa section 3The term "tax return preparer" is defined in sec. 7701(a)(36). Petitioner does not dispute that he is a tax return preparer within the meaning ofthis provision. 4We note that sec. 6695(g) was amended in the Consolidated Appropriations Act, 2016, Pub. L. No. 114-113, div. Q, sec. 207(a)(1) and (
7701(a)(11)(B). - 25 - [*25] not list the burden ofproofas an issue. Accordingly, the burden ofproofis not at issue. II. Merits ofCARDS Under the Economic Substance Doctrine Taxpayers have the right to structure their transactions in a manner which decreases the amount ofwhat otherwise would be their taxes. Gregory v. Helvering, 293 U.S. 465,
7701(a)(1) defines "person" to mean and include "an individual, a trust, estate, partnership, association, company or corporation." - 10 - [*10] 702-703 (1997), 1997-4 C.B. (Vol. 2) 1457, 2172-2173; see also Robinson v. Commissioner, 117 T.C. at 317. Therefore, the controlling return for each period oflimitation for assessment in this case is
7701(a)(11)(B). - 16 - otherwise have an opportunity to dispute the tax liability. Sec. 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 609 (2000). Following a hearing, the Appeals Office must issue a notice of determination regarding the appropriateness ofthe collection action. The Appeals Office is required to take into consideration: (1
nerally defined as any service performed by an employee for an employer, but a specific exception excludes services performed in the employ ofan international organization such as the IMF. 7No relevant facts are in dispute. -10- [*10] Sec. 3121(b); sec. 7701(a)(18); Exec. Order No. 9751, 11 Fed. Reg. 7713 (July 13, 1946). Because ofthis exception regarding international organizations, Charles Sisson's earnings from the IMF are not considered wages under FICA. The self-employmenttax also has a sp
7701(a)(11)(B); see sec. 1.482-1(a)(2), Income Tax Regs. - 16 - treating the allocated amount as a deemed dividend from the CFC to the U.S. parent; or "in appropriate cases, pursuant to such applicable revenue procedures as may be provided by the Commissioner * * * repayment ofthe allocated amount without further income tax consequences." I_d
7701(a)(11)(B) and (12)(A)(i). In practice the Secretaryhas delegated the tax collection powers to the IRS. See, e.g., sec. 301.6331-1(a)(1), Proced. & Admin. Regs. For simplicity, we refer to the IRS rather than the Secretary when referring (continued...) - 44 - [*44] Secs. 6331(a), 6332; Saltzman, supra, para. 14A.04, at 14-30 to 14-31.¹7 T
7701(a)(l 1)(B). "Sec. 170(f)(8)(D) provides an exception to the contemporaneous written acknowledgment requirement. Petitioners did not assert that this exception applies. - 8 - [*8] 443), but it must meet the requirements ofsection 170(f)(8)(B). The doctrine ofsubstantial compliance does not apply to excuse compliance with the strict substa
- 7 - [*7] hearing, the Appeals officer must: (1) verify that all requirements of applicable law and administrative procedure have been met, (2) consider any relevant issues raised by the taxpayer, including any appropriate spousal defenses, challenges to the appropriateness ofcollection actions, and offers ofcollection altern
7701(a)(11)(B). - 60 - [*60] F.2d 1188, 1192 (10th Cir. 1991); Erickson v. Commissioner, 937 F.2d 1548, 1551 (10th Cir. 1991), af[g T.C. Memo. 1989-552. The parties have stipulated that Mr. Durland received the amounts that respondent determined to be income to him for the years at issue and that these amounts were not reported on Mr. Durland
Accordingly, the executor ofan estate is personally liable for the unpaid claims ofthe United States to the extent ofa distribution from the estate when (1) the executor distributed assets ofthe estate; (2) the estate was insolvent at the time ofthe distribution or the distribution rendered the estate insolvent; and (3) the executo
enalty that is owing, that determination may result in the issuance ofa notice ofdeficiency. Section 6212(a) authorizes "the Secretary" to issue a notice ofdeficiency; but "[t]he term 'Secretary' means the Secretary ofthe Treasury or his delegate", sec. 7701(a)(11)(B) (emphasis added); and by Delegation Order 4-8, Rev. 1, IRM pt. 1.2.43.2 (Feb. 10, 2004), the Secretary delegated to personnel in the IRS that authorityto issue a notice ofdeficiency. Those IRS personnel do not include ChiefCounsel
7701(a)(11)(B). - 60 - [*60] F.2d 1188, 1192 (10th Cir. 1991); Erickson v. Commissioner, 937 F.2d 1548, 1551 (10th Cir. 1991), af[g T.C. Memo. 1989-552. The parties have stipulated that Mr. Durland received the amounts that respondent determined to be income to him for the years at issue and that these amounts were not reported on Mr. Durland
7701(a)(11)(B). - 11 - [*11] otherwise have an opportunity to dispute the tax liability. Sec. 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 609 (2000). Following a hearing, the Appeals Office must issue a notice of determination regarding the appropriateness ofthe collection action. The Appeals Office is required to take into considerati
Section 7701(a)(1) provides that "[t]he term 'person' shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation." Respondent issued notices ofdetermination to TFT Galveston Portfolio determining that the individuals in question were TFT Galveston Portfolio's employees a
Section 7701(a)(1) provides that "[t]he term 'person' shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation." Respondent issued notices ofdetermination to TFT Galveston Portfolio determining that the individuals in question were TFT Galveston Portfolio's employees a
7806(b) provides that "[n]o inference, implication, or presumption oflegislative construction shall be drawn or made by reason ofthe location or grouping ofany particular section or provision or portion of" the Code and that "descriptive matter relating to the contents of* * * [the Code cannot] be given any legal effect
- 12 - [*12] meetings, and interviews. See also Higbee v. Commissioner, 116 T.C. 438, 440-441 (2001). The U.S. Court ofAppeals for the Ninth Circuit, to which an appeal in this case would lie absent a stipulation to the contrary, see sec. 7482(b)(1)(A), (2), has held that for the presumption ofcorrectness to attach to the noti
Section 7701(a)(1) provides that "[t]he term 'person' shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation." Respondent issued notices ofdetermination to TFT Galveston Portfolio determining that the individuals in question were TFT Galveston Portfolio's employees a
Section 7701(a)(1) provides that "[t]he term 'person' shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation." Respondent issued notices ofdetermination to TFT Galveston Portfolio determining that the individuals in question were TFT Galveston Portfolio's employees a
7701(a)(11)(B). - 13 - [*13] otherwise have an opportunityto dispute the tax liability. Sec. 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 609 (2000). Following a hearing, the Appeals Office must issue a notice of determination regarding the appropriateness ofthe proposed collection action. The Appeals Office is required to take into con
Section 7701(a)(1) provides that "[t]he term 'person' shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation." Respondent issued notices ofdetermination to TFT Galveston Portfolio determining that the individuals in question were TFT Galveston Portfolio's employees a
Section 7701(a)(1) provides that "[t]he term 'person' shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation." Respondent issued notices ofdetermination to TFT Galveston Portfolio determining that the individuals in question were TFT Galveston Portfolio's employees a
at 182; see also Sego v.
In an attemptto harmonize the dual nature ofthe Virgin Islands, Congress establishedthe "mirrortax system" as the tax law ofthe Virgin Islands. Act ofJuly 12, 1921, ch. 44, sec. 1, 42 Stat. 123 (codified as amended at 48 U.S.C. sec. 1397 (2006)). Under the mirror tax system, the Virgin Islands uses the Code with "Virgin Islands" ef
In an attemptto harmonize the dual nature ofthe Virgin Islands, Congress establishedthe "mirrortax system" as the tax law ofthe Virgin Islands. Act ofJuly 12, 1921, ch. 44, sec. 1, 42 Stat. 123 (codified as amended at 48 U.S.C. sec. 1397 (2006)). Under the mirror tax system, the Virgin Islands uses the Code with "Virgin Islands" ef
The Court then again 4(...continued) 3406; (2) the term "withholding agent" is strictly limited to persons required to deduct and withhold tax as defined in section 7701(a)(16) and is limited to non- resident aliens, foreign corporations, and foreign organizations; (3) the IRS did not have the authority to assess tax because the regulations (under which the IRS assessed the tax) are only a grant ofinterpretive rulemaking power and therefore have no aut
Section 7701(a)(1) provides that "[t]he term 'person' shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation." Respondent issued notices ofdetermination to TFT Galveston Portfolio determining that the individuals in question were TFT Galveston Portfolio's employees a
7701(a)(11)(B). ¹8Ifa taxpayer asserts a reasonable dispute with respect to an item ofincome reported on an information return filed by a third party and the taxpayer has fully cooperated with the Secretary, the Secretary bears the burden ofproducing reasonable and probative evidence, in addition to the information return, concerning the defic
- 6 - [*6] Petitioner contends that the burden ofproofshould shift to respondent under section 7491(a). However, the record shows that petitioner did not meet the requirements ofsection 7491(a)(1) and (2). Accordingly, the burden ofproof remains on petitioner. II. Involuntary Conversion Income A. Petitioner's Gain From the Inv
- 11 - described in section 404(k); (7) to an employee for medical care; or (8) to an alternate payee pursuant to a qualified domestic relations order. Sec. 72(t)(2); see also sec. 72(t)(2)(A)(vii), (B)-(G) (setting forth other exceptions not applicable here). When petitioner received the distribution, he had not reached the age
- 20 - [*20] requirements ofsection 7491(a) have been satisfied. Ree.e Rolfs v. Commissioner, 135 T.C. 471, 483 (2010), aff'd, 668 F.3d 888 (7th Cir. 2012). Petitioners contend that the burden ofproofshould shift to respondent pursuantto section 7491(a) because they introduced credible evidence and cooperated with respondent.
- 34 - [*34] Section 7701(a)(7) provides that the term "stock" includes shares in an association,joint-stock company, or insurance company.
7701(a)(11)(B). - 8 - involved." Deputy v. du Pont, 308 U.S. 488, 495 (1940). An expense is necessary ifit is appropriate and helpful for the development ofthe business. h Commissioner v. Heininger, 320 U.S. 467, 471 (1943). Personal, living, or family expenses generally are not deductible. h sec. 262(a). A taxpayermust maintain records to su
27The term "holder" includes any individual whose efforts created such property. Sec. 1235(b)(1). - 22 - rights"28 to the property. See sec. 1235(a); see also Juda v. Commissioner, 90 T.C. 1263, 1281 (1988), aff'd, 877 F.2d 1075 (1st Cir. 1989). For purposes ofsection 1235, the term "all substantial rights"29 means "all rights
7701(a)(11)(B). .. 9 _ [*9] II. Purchases and Sales ofSecurities A. Trader or Investor Section 165 generally allows a deduction for any loss sustained during the taxable yearthat is not compensated by insurance or otherwise. However, section 165(f) provides that losses from sales or exchanges ofcapital assets are allowed only to the extent al
The maximum amount allowable as a deduction under section 219(a) to an individual for any taxable year cannot exceed the lesser of"the deductible amount" or an amount equal to the "compensation" includible in the individual's gross income for such taxable year. Sec. 219(b)(1). For taxable year 2010 the deductible amount is $5,000
We agree withjrespondent Section 7701(a)(25) provides that the term "paid or incurred" shall be construed according to the method ofaccounting used by:the taxpayer.
7701(a)(11)(B). -8 - [*8] meetings, and interviews. See also Higbee v. Commissioner, 116 T.C. 438, 440-441 (2001). The U.S. Court ofAppeals for the Ninth Circuit, to which an appeal in this case_would lie absent a stipulation to the contrary, see sec. 7482(b)(1)(A), (2), has held that for the presumption ofcorrectness to attach to the notice
7701(a)(11)(B). - 8 - [*8] action, and collection alternatives, such as an installment agreement. Sec. 6330(c)(2)(A). Additionally, the taxpayermay contest the validity ofthe underlying tax liability, but only ifthe taxpayer did not otherwise have an opportunity to dispute the tax liability. Sec. 6330(c)(2)(B); Sego v. Commissioner, 114 T.C.
Similarly, section 7701(a)(1) provides: "The term 'person' shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation." Indeed, throughout the Code, the term "individual" is generally used in contrast with corporations, partnerships, or other entities.
7701(a)(11)(B). - 13 - [*13] income, Edwards v. Commissioner, 680 F.2d 1268, 1270-1271 (9th Cir. 1982). Ifthe Commissioner introduces some evidence that the taxpayerreceived unreported income, the burden shifts to the taxpayer, who must establish by a preponderance ofthe evidence that the unreported income adjustment was arbitrary or erroneou
"Ifthe taxpayer is a partnership, a corporation, or a trust (other than a qualified revocable trust as defined in sec.
7701(a)(11)(B). - 8 - [*8] business or for investment.ifthe property is exchanged solely for property of a like kind that is to be held either for productive use in a trade or business or for investment. Sec. 1031(a)(1). When money or unqualified property is received in an otherwise qualifying like-kind exchange, a taxpayer's realized gain is
whatever source derived" and includes compensation paid for services, whether furnished by the taxpayer as an employee, a self-employedperson, or an independent contractor. A 5The term ''Secretary" means "the Secreta ofthe Treasury or his delegate", sec. 7701(a)(11)(B), and the term "or his delegat " means "any officer, employee, or agency ofthe Treasury Department duly authorized by the Secretary ofthe Treasury directly, or indirectly by one or more r delegations ofauthority, to perform the fun
Congress established the "mirror tax system" as the tax law ofthe Virgin Islands in 1921. Act ofJuly 12, 1921, ch. 44, sec. 1, 42 Stat. at 123 (codified as amended at 48 U.S.C. sec. 1397 (2006)); see Danbury, Inc. v. Olive, 820 F.2d 618, 620 (3d Cir. 1987). Under the mirror tax system, the Virgin Islands uses the Code with "Virgin
7701(a)(11)(B). - 9 - [*9] Petitioners reported income and expenses from Mr. Martell's business, The Net Tech, on the Schedule C attached to their 2007 return. Additionally, Mr. Martell worked as a salesman for SG Wholesale. Respondent introduced checks written to Mr. Martell by several ofhis customers that petitioners deposited into their ba
mic substance doctrine are not avoided simply by coupling a routine transaction with a transaction lacking economic substance. See, e.a., Lona Term Capital Holdinas, 330 F. Supp. 2d at 8Congress noted when codifyingthe economic substance doctrine in sec. 7701 in 2010 that under present law courts could "bifurcate a transaction in which independent activities with non-tax objectives are combined with an unrelated item having only tax avoidance objectives to disallow those tax motivated benefits."
7701(a)(11)(B). - 12 - [*12] 3d, sec. 1.01 (2006); see also Senor v. Bangor Mills, Inc., 211 F.2d 685, 688 (3d Cir. 1954); Weitz v. Commissioner, 56 T.C.M. (CCH) at 1427. Deductions for charitable contributions ofmoney are subject to the recordkeeping requirements ofsection 1.170A-13(a), Income Tax Regs. For contributions of$250 or more, the
7701(a)(11)(B). - 11 - [*11] hearings are governed by section 6330(c), (d) (other than paragraph (2)(B)), (e), and (g). Sec. 6320(c). The Secretary is authorized to collect tax by levy upon the taxpayer's property ifany taxpayer liable to pay any tax neglects or refuses to pay such tax within 10 days after notice and demand for payment. Sec.
7701(a)(11)(B). - 20 - [*20] Appeals Office for abuse ofdiscretion. Lunsford v. Commissioner, 117 T.C. 183, 185 (2001); Sego v. Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114 T.C. 176, 182 (2000). In reviewing for abuse ofdiscretion, we must uphold the Appeals Office's determination unless it is arbitrary, capricious, or wi
7701(a)(11)(B). - 10 - [*10] Commissioner, 394 F.3d 1030, 1039 (8th Cir. 2005), aff'a T.C. Memo. 2003-212; Knudsen v. Commissioner, 131 T.C. 185, 188-189 (2008). II. Whether Sternett Motorsports Was Operated for Profit A. Section 183 Generally A taxpayerwho is carrying on a trade or business may deduct ordinary and necessary expenses incurred
ed on the vessel or aircraft it touches at a port in the United States, ifthe employee is employed on and in connection with such vessel or aircraft when outside the United States, or (B) outside the United States by a citizen or resident ofthe United States as an employee for an American employer (as defined in subsection (h)), or (C) ifit is service, regardless ofwhere or by whom performed, which is designated as employment or recognized as equivalent to employment under an agreement entered i
733 (1949); see also - 27 - Connors v.
uld find sufficient upon vvhich to base a decision on the issue in the taxpayer's favor, absent any contrary evidence. See Higbee v. Commissioner, 116 T.C. 438, 442 (2001). 37The term "Secretary" means "the Secretary ofthe Treasury or his delegate", sec. 7701(a)(11)(B), and the term "or his delegate" means "any officer, employee, or agency ofthe Treasury Department duly authorized by the Secretary ofthe Treasury directly, or indirectly by one or more redelegations ofauthority, to (continued...)
7701(a)(11)(B). - 13 - [*13] a spouse who filed ajoint return with an understatement or underpayment of tax. See also sec. 1.6015-4(a), Income Tax Regs The parties agree that petitioner is not entitled to reliefunder section 6015(b) or (c) because she is seeking relieffrom an underpayment oftax, not an understatement oftax or a deficiency in
- 18 - Business entitie are generally classified for Federal tax purpos s by section 7701 and the "check-t e-box" regulations ofsections 301.7701-1 through 301.7701-5, Proced.
7701(a)(11)(B). - 10 - tax liability nless the taxpayer did not receive a notice ofdeficiency for the tax liability in uestion or did not otherwise;have an opportunityto dispute the tax liability. Reek sec. 6330(c)(2)(B); Sego v. Commissioner, 114 T.C. 604, 609 (2000). Follosving a hearing, the Appeals Office must issue a notice of determinat
39 _ requirements under section 6020(b) Wheeler v. Commissioner, 127 T.C. 200 208-209 (2006), aff'd, 521 F.3d 1289 (10th Cir. 2008). A return made by the Secretary under section 6020(b) is'treated as the return filed by the taxpayer for purposes ofsection 6651(a)(2). Sec. 6651(g)(2). Respondent'satisfiedhis burden by introducing
7701(a)(4) and (5). Vilanova is a corporation organized under the law ofthe Republic ofPanama, and petitioner is a corporation organized under the law ofFlorida. - 60 - [*60] withhold that ta:(cid:16)04a1t the source. Ifthe payor does not do so, it becomes liable for such taxes under section 1461. Petitioner paid a constructive dividend to th
- 9 - raised by the taxpayer, and (3) whether the proposed levy action appropriately balances the need for efficient collection oftaxes with a taxpayer's concerns regarding the intrusiveness ofthe proposed levy action. Sec. 6330(c)(3). Section 6330(d)(1) grants this Courtjurisdiction to reviewthe determination made by the Appe
Similarly, section 7701(a)(1) provides: "The term 'person' shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation." Indeed, throughout the Code, the term "individual" is generally used in contrast with corporations, partnerships, or other entities.
7701(a)(11)(B). -14- [*14] conduct and scope ofsection 6320 hearings are governed by section 6330(c), (d) (other than paragraph (2)(B)), and (e). Sec. 6320(c). At the hearing, a taxpayermay raise any relevant issue, including appropriate spousal defenses, challenges to the appropriateness ofthe collection action, and collection alternatives,
Section 151(e) provides as follows: "Identifying information required.--No exemptionshall be allowed underthis section withrespect to any individual unless the TIN ofsuch individual is included on the return claiming the exemption." Section 7701(a)(41) defihes the term "TIN" to mean "the identifyingnumber assigned to a person under section 6109," which in turn is the Social Security account number assigned to the person.
- 6 - [*6] held that for the presumption ofcorrectness to attach to the notice of deficiency in unreported income cases, the Commissioner must establish "some evidentiary foundation" connecting the taxpayerwith the income-producing activity, see Weimerskirch v. Commissioner, 596 F.2d 358, 361-362 (9th Cir. 1979), rev'g 67 T.C.
For examplei section 7701(a (26), provides: -"The term 'trade or business' -includes the perfordiance of the functions of a public office."5 Slingsby 11 argues jthat this provision means that.
Section 6011(a) provides that any person liable for any tax imposed by the Internal Revenue Code must file a return according to the forms and regulations prescribed by the Secretary." See also sec.
7701(a) (11) (B). - 17 - I Congress. See sec. 7442. We have jurisdiction lto determine whether petitioner qualifies for section 6015(f) relief. See sec. 6015(e); see also Kollar v. Commissioner, 13-1 T.C. 191, 196 (2008). III. The Standard and Scope of Review . In Porter v. Commissioner, 132 T.C. 203, 210 (2009), we held that in determining w
are not taxable income because earnings are not profits or gains from some "federally privileged activity" and therefore "he is not a taxpayer" as defined by section 7701(a)(14) .
1405, 1412 (1987) .(cid:127) Section 7701(a)(2 ) defines a partnership as "a syndicate, group, pool, joint venture, or other unincorporated Organization, through or by means of which any business,, financial operation, or venture is carried on, and which is not * * * a trust or estate or a 22 corporation" .
They reiterated that they had filed a valid amended tax return for the tIx year 2002 because they were not employees according to sections 3401(a) and 3121(a) and had not conducted a "trade o r business " within the meaning of section 7701(a)(26) .
The letter, titled "An Affidavit", stated: From 1995 to 2007: I have not been an "employee" (as defined in 26 U.S.C.
7701(a)(1) provides : "The term `person' shall be construed to mean and include an * * * estate" . - 22 - and Appraisal Form to my attention for me to affix my appraisal evaluation of the property . The attached inventory and appraisal form shows the value of the Warrendale property as $95,000, but the accompanying appraiser's certificate is
Section 7701(a)(1)- includes "individual": in its list of those whom the Code regards as "persons," along with "a'trust, estate, partnership, association, company or corporation ." But when property is held by a custodian for the benefit of another, who counts under section 1361(b)(1,)(B) as an "individual per- son?"--the'holder, the' beneficiary,
Section 469(j)(8) provides that, for purposes of section 469, any activity where payments are principally for the use of tangible property is a rental activity .
After reviewing the history of the regulations and their purpose in filling gaps left in the definitions of entities set out in section 7701, the Court of Appeals analyzed the Is regulations under Chevron U .S .A ., Inc .
7701(a)(11)(B) defines "Secretary" as "the Secretary of the Treasury or his delegate." - 27 - Letter rulings and technical advice memoranda are issued by the Commissioner's Office of Chief Counsel. That office, however, only drafts and proposes revenue rulings and revenue procedures. See IRS Deleg. Order 190 (Rev. 4, Oct. 8, 1996), Internal R
ion 302(b) tests may be applied to a 9For purposes of the Internal Revenue Code, unless otherwise indicated, "The term 'person' shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation." Sec. 7701(a) (1). 1°Secs. 302 and 304 are in subpt. A, entitled "Effects on Recipients", of subch. C, pt. I. ' - 15c- shareholder who indirectly or constructively·holds stock but has neither.transferred any stock nor received the proceeds of the stoc
This is evident in the report of the Committee on the Budget, which provides: Penalty free IRA withdrawals for education expenses--The bill provides that individuals may make penalty-free withdrawals from their IRAs to pay for the undergraduate and graduate higher education expenses of themselves, their spouses, their children and grandchildren or the children or grandchildren of their spouses.
eral income tax purposes is defined in section 761(a) as “a * * * joint venture - 16 - or other unincorporated organization through or by means of which any business, * * * or venture is carried on, and which is not, within the meaning of this * * * [subtitle], a corporation or a trust or estate.” See also sec.
That section provides that distributions from qualified retirement plans are not subject to the additional 10-percent tax if they are made pursuant to a QDRO within the meaning of section 414(p)(1).
The general definition of "corporation" in section 7701(a)(3) and section 301.7701-2(b)(1), Proced.
Section 72(t)(2)(E) provides that the additional tax on early distributions does not apply to “Distributions to an individual from an individual retirement plan to the extent such distributions do not exceed the qualified higher education expenses * * * of the taxpayer for the taxable year.” (Emphasis added.) An “individual retirem
We find this factor is neutral. 9. Conclusion as to Employment Status On balance, considering the record and weighing all of the factors, we conclude that during the years in issue petitioner was a common law employee, rather than a statutory employee under section 3121(d)(3)(B). Therefore, petitioner is not entitled to report gro
Tax Treatment of Early IRA Distributions Section 408(d)(1) provides that any amount paid or distributed out of an individual retirement plan shall be included in gross income by the distributee in the year of distribution in the manner provided under section 72.
Section 72(t)(2)(E) provides that the 10-percent additional tax on early distributions does not apply to “Distributions to an individual from an individual retirement plan to the extent such distributions do not exceed the qualified higher education expenses * * * of the taxpayer for the taxable year.” An individual retirement plan
In this case, Mr. Ahmad received an early distribution from the Ohio PERS, which is a “qualified retirement plan” under section 4974(c). Freese v. Commissioner, T.C. Memo. 1996-224. Since Mr. Ahmad received his distribution from a qualified retirement plan rather than an individual retirement plan, the section 72(t)(2)(E) exceptio
y interest therein" of which the decedent has made a transfer wherein he "has retained for his life" either "(1) the possession or enjoyment of, or the right to the income from, the property, or (2) the right, either alone or in conjunction with any person, to designate the persons who shall possess or enjoy the property or the income therefrom." Section 7701(a)(1) defines "person" to include "an individual, a trust, estate, partnership, association, company or corporation." A.
7121(a) and (b); see also sec.
s * * * of the taxpayer for the taxable year.” (Emphasis added.) An “individual retirement plan” is defined as: “(A) an individual retirement account described in section 408(a), and (B) an individual retirement annuity described in section 408(b).” Sec. 7701(a)(37) (an individual retirement plan is commonly referred to as an IRA). Section 72(t)(2)(E) was added by section 203(a) of the Taxpayer Relief Act of 1997, Pub. L. 105-34, 111 Stat. 788, 809. The Report of the Committee on the Budget refe
Section 301(c) provides that a distribution which is a dividend (as defined in section 316) is includable in gross income.
he law of each country or possession. The per se corporation under United Kingdom law is a public limited company. H&C was not such a company. 7 The check-the-box regulations, like the classification regulations that they replaced, were issued under sec. 7701(a)(2) and (3), which defines the terms “partnership” and “corporation”. Some commentators have questioned whether the regulations constitute a valid exercise of the Treasury Secretary’s authority under sec. 7805(a) to issue interpretive reg
7701(a)(37) defines an individual retirement plan as an individual retirement account described in sec. 408(a) and (continued...) - 17 - Also as relevant to the present case, the maximum allowable deduction in any taxable year for a married individual is $2,000. Sec. 219(c). The amount of the deduction, however, may be limited where the taxpa
Instead, they are treated like common law employees solely for purposes of applying the Federal Insurance Contributions Act (FICA) under section 3121(d)(3). As independent contractors under common law principles, statutory employees are not treated as employees under sections 62 or 67. Also, statutory employees are not subject to
Section 7701(a)(41) defines the term “TIN” for purposes of the Internal Revenue Code to mean “the identifying number assigned to a person under section 6109.” Section 6109(d) specifies that the SSN issued to an individual is the identifying number of the individual, except as otherwise specified under applicable regulations. The regulations provide
Congress, however, did not elect to place such limitations in section 7701, and it is not within our province to do what Congress failed to do or elected not to do.
- 20 - that the income attributable to the sale of this goodwill constitutes foreign source income pursuant to section 865(d)(3).15 This argument mistakes goodwill for the intangible assets which embody it. Goodwill represents an expectancy that "old customers will resort to the old place" of business. Houston Chronicle Publishin
A "foreign person" is any person who is not a "United States person" under section 7701(a)(30), including a corporation.
7701(a)(4) and (5). - 16 - all persons * * * having the control, receipt, custody, disposal, or payment of any of the items of income specified in subsection (b) [which includes "royalties"] (to the extent that any of such items constitutes gross income from sources within the United States), of any nonresident alien individual or of any fore
Section 7701(a)(2) defines a partnership as "a syndicate, group, pool, joint venture, or other unincorporated organization, through or by means of which any business, financial operation, or venture is carried on". Whether a partnership exists is a question of fact. To be a partnership, the parties, in good faith and acting with a business purpose,