26-U.S.C.-1367
§1367 – Adjustments to Basis of Stock of Shareholders, Etc.
Pathway
Title 26 > Subtitle A > Chapter 1 > Subchapter S > Part II > Section 1367
Details
- Reference: Section 1367
- Legend: §1367 – Adjustments to Basis of Stock of Shareholders, Etc.
- USCode Year: 2013
Provision Content
(a) General rule
(1) Increases in basis
The basis of each shareholders stock in an S corporation shall be increased for any period by the sum of the following items determined with respect to that shareholder for such period:
(A) the items of income described in subparagraph (A) of section 1366(a)(1),
(B) any nonseparately computed income determined under subparagraph (B) of section 1366(a)(1), and
(C) the excess of the deductions for depletion over the basis of the property subject to depletion.
(2) Decreases in basis
The basis of each shareholders stock in an S corporation shall be decreased for any period (but not below zero) by the sum of the following items determined with respect to the shareholder for such period:
(A) distributions by the corporation which were not includible in the income of the shareholder by reason of section 1368,
(B) the items of loss and deduction described in subparagraph (A) of section 1366(a)(1),
(C) any nonseparately computed loss determined under subparagraph (B) of section 1366(a)(1),
(D) any expense of the corporation not deductible in computing its taxable income and not properly chargeable to capital account, and
(E) the amount of the shareholders deduction for depletion for any oil and gas property held by the S corporation to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such shareholder under section 613A(c)(11)(B).
The decrease under subparagraph (B) by reason of a charitable contribution (as defined in section 170(c)) of property shall be the amount equal to the shareholders pro rata share of the adjusted basis of such property. The preceding sentence shall not apply to contributions made in taxable years beginning after December 31, 2013.
(b) Special rules
(1) Income items
An amount which is required to be included in the gross income of a shareholder and shown on his return shall be taken into account under subparagraph (A) or (B) of subsection (a)(1) only to the extent such amount is included in the shareholders gross income on his return, increased or decreased by any adjustment of such amount in a redetermination of the shareholders tax liability.
(2) Adjustments in basis of indebtedness
(A) Reduction of basis
If for any taxable year the amounts specified in subparagraphs (B), (C), (D), and (E) of subsection (a)(2) exceed the amount which reduces the shareholders basis to zero, such excess shall be applied to reduce (but not below zero) the shareholders basis in any indebtedness of the S corporation to the shareholder.
(B) Restoration of basis
If for any taxable year beginning after December 31, 1982, there is a reduction under subparagraph (A) in the shareholders basis in the indebtedness of an S corporation to a shareholder, any net increase (after the application of paragraphs (1) and (2) of subsection (a)) for any subsequent taxable year shall be applied to restore such reduction in basis before any of it may be used to increase the shareholders basis in the stock of the S corporation.
(3) Coordination with sections 165(g) and 166(d)
This section and section 1366 shall be applied before the application of sections 165(g) and 166(d) to any taxable year of the shareholder or the corporation in which the security or debt becomes worthless.
(4) Adjustments in case of inherited stock
(A) In general
If any person acquires stock in an S corporation by reason of the death of a decedent or by bequest, devise, or inheritance, section 691 shall be applied with respect to any item of income of the S corporation in the same manner as if the decedent had held directly his pro rata share of such item.
(B) Adjustments to basis
The basis determined under section 1014 of any stock in an S corporation shall be reduced by the portion of the value of the stock which is attributable to items constituting income in respect of the decedent.
(Added Pub. L. 97–354, §2, Oct. 19, 1982, 96 Stat. 1679; amended Pub. L. 98–369, div. A, title VII, §§721(d), (w), 722(e)(2), July 18, 1984, 98 Stat. 967, 971, 974; Pub. L. 104–188, title I, §§1313(a), 1702(h)(14), Aug. 20, 1996, 110 Stat. 1785, 1874; Pub. L. 109–280, title XII, §1203(a), Aug. 17, 2006, 120 Stat. 1066; Pub. L. 110–343, div. C, title III, §307(a), Oct. 3, 2008, 122 Stat. 3869; Pub. L. 111–312, title VII, §752(a), Dec. 17, 2010, 124 Stat. 3321; Pub. L. 112–240, title III, §325(a), Jan. 2, 2013, 126 Stat. 2333.)
Amendments
2013—Subsec. (a)(2). Pub. L. 112–240 substituted December 31, 2013 for December 31, 2011 in concluding provisions.
2010—Subsec. (a)(2). Pub. L. 111–312 substituted December 31, 2011 for December 31, 2009 in concluding provisions.
2008—Subsec. (a)(2). Pub. L. 110–343 substituted December 31, 2009 for December 31, 2007 in concluding provisions.
2006—Subsec. (a)(2). Pub. L. 109–280, which directed the addition of concluding provisions to section 1367(a)(2), without specifying the act to be amended, was executed to subsec. (a)(2) of this section, which is section 1367 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress.
1996—Subsec. (a)(2)(E). Pub. L. 104–188, §1702(h)(14), substituted section 613A(c)(11)(B) for section 613A(c)(13)(B).
Subsec. (b)(4). Pub. L. 104–188, §1313(a), added par. (4).
1984—Subsec. (a)(2)(E). Pub. L. 98–369, §722(e)(2), substituted for any oil and gas property held by the S corporation to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such shareholder under section 613A(c)(13)(B) for under section 611 with respect to oil and gas wells.
Subsec. (b)(2)(B). Pub. L. 98–369, §721(w), substituted for any taxable year beginning after December 31, 1982, there is for for any taxable year there is.
Subsec. (b)(3). Pub. L. 98–369, §721(d), inserted and 166(d) in heading and text.
Effective Date of 2013 Amendment
Pub. L. 112–240, title III, §325(b), Jan. 2, 2013, 126 Stat. 2333, provided that: The amendment made by this section [amending this section] shall apply to contributions made in taxable years beginning after December 31, 2011.
Effective Date of 2010 Amendment
Pub. L. 111–312, title VII, §752(b), Dec. 17, 2010, 124 Stat. 3321, provided that: The amendment made by this section [amending this section] shall apply to contributions made in taxable years beginning after December 31, 2009.
Effective Date of 2008 Amendment
Pub. L. 110–343, div. C, title III, §307(b), Oct. 3, 2008, 122 Stat. 3869, provided that: The amendment made by this section [amending this section] shall apply to contributions made in taxable years beginning after December 31, 2007.
Effective Date of 2006 Amendment
Pub. L. 109–280, title XII, §1203(b), Aug. 17, 2006, 120 Stat. 1066, provided that: The amendment made by this section [amending this section] shall apply to contributions made in taxable years beginning after December 31, 2005.
Effective Date of 1996 Amendment
Pub. L. 104–188, title I, §1313(b), Aug. 20, 1996, 110 Stat. 1785, provided that: The amendment made by subsection (a) [amending this section] shall apply in the case of decedents dying after the date of the enactment of this Act [Aug. 20, 1996].
Amendment by section 1702(h)(14) of Pub. L. 104–188 effective, except as otherwise expressly provided, as if included in the provision of the Revenue Reconciliation Act of 1990, Pub. L. 101–508, title XI, to which such amendment relates, see section 1702(i) of Pub. L. 104–188, set out as a note under section 38 of this title.
Effective Date of 1984 Amendment
Amendment by section 721(d), (w) of Pub. L. 98–369 effective as if included in the Subchapter S Revision Act of 1982, Pub. L. 97–354, see section 721(y)(1) of Pub. L. 98–369, set out as a note under section 1361 of this title.
Pub. L. 98–369, div. A, title VII, §722(e)(3)(B), July 18, 1984, 98 Stat. 974, provided that: The amendment made by paragraph (2) [amending this section] shall apply to taxable years beginning after December 31, 1982.
Effective Date
Section applicable to taxable years beginning after Dec. 31, 1982, see section 6(a) of Pub. L. 97–354, set out as a note under section 1361 of this title.
U.S. Encyclopedia of Law Coverage
26-U.S.C.-1363 in the Legal Encyclopedia: Income Taxes
In this entry about 26-U.S.C.-1363, find legal reference material, bibliographies and premiere content related to income taxes in the American Encyclopedia of Law, presenting a comprehensive view of the United States income taxes-specific issues, written by authorities in the field.
Part I – In General in the Legal Encyclopedia: Tax Liability
In this entry about Part I – In General, find legal reference material, bibliographies and premiere content related to tax liability in the American Encyclopedia of Law, presenting a comprehensive view of the United States tax liability-specific issues, written by authorities in the field.
Subchapter S – in the Legal Encyclopedia: Taxation
In this entry about Subchapter S – , find legal reference material, bibliographies and premiere content related to taxation in the American Encyclopedia of Law, presenting a comprehensive view of the United States taxation-specific issues, written by authorities in the field.
Part I – In General in the Legal Encyclopedia: Liability
In this entry about Part I – In General, find legal reference material, bibliographies and premiere content related to liability in the American Encyclopedia of Law, presenting a comprehensive view of the United States liability-specific issues, written by authorities in the field.
Leave a Reply