Internal Revenue Code:Sec. 59. Other definitions and special rules
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Location in Internal Revenue Code
TITLE 26 - INTERNAL REVENUE CODE
Subtitle A - Income Taxes
CHAPTER 1 - NORMAL TAXES AND SURTAXES
Subchapter A - Determination of Tax Liability
PART VI - ALTERNATIVE MINIMUM TAX
Statute
Sec. 59. Other definitions and special rules
(a) Alternative minimum tax foreign tax credit
For purposes of this part -
(1) In general
The alternative minimum tax foreign tax credit for any taxable
year shall be the credit which would be determined under section
27(a) for such taxable year if -
(A) the pre-credit tentative minimum tax were the tax against
which such credit was taken for purposes of section 904 for the
taxable year and all prior taxable years beginning after
December 31, 1986,
(B) section 904 were applied on the basis of alternative
minimum taxable income instead of taxable income, and
(C) the determination of whether any income is high-taxed
income for purposes of section 904(d)(2) were made on the basis
of the applicable rate specified in subparagraph (A)(i) or
(B)(i) of section 55(b)(1) (whichever applies) in lieu of the
highest rate of tax specified in section 1 or 11 (whichever
applies).
[(2) Deleted by PL 108-357Sec421(a)]
(2) Pre-credit tentative minimum tax
For purposes of this subsection, the term ''pre-credit
tentative minimum tax'' means -
(A) in the case of a taxpayer other than a corporation, the
amount determined under the first sentence of section
55(b)(1)(A)(i), or
(B) in the case of a corporation, the amount determined under
section 55(b)(1)(B)(i).
(3) Election to use simplified section 904 limitation
(A) In general
In determining the alternative minimum tax foreign tax credit
for any taxable year to which an election under this paragraph
applies -
(i) subparagraph (B) of paragraph (1) shall not apply, and
(ii) the limitation of section 904 shall be based on the
proportion which -
(I) the taxpayer's taxable income (as determined for
purposes of the regular tax) from sources without the
United States (but not in excess of the taxpayer's entire
alternative minimum taxable income), bears to
(II) the taxpayer's entire alternative minimum taxable
income for the taxable year.
(B) Election
(i) In general
An election under this paragraph may be made only for the
taxpayer's first taxable year which begins after December 31,
1997, and for which the taxpayer claims an alternative
minimum tax foreign tax credit.
(ii) Election revocable only with consent
An election under this paragraph, once made, shall apply to
the taxable year for which made and all subsequent taxable
years unless revoked with the consent of the Secretary.
(b) Minimum tax not to apply to income eligible for credits under
section 30A or 936
In the case of any corporation for which a credit is allowable
for the taxable year under section 30A or 936, alternative minimum
taxable income shall not include any income with respect to which a
credit is determined under section 30A or 936.
(c) Treatment of estates and trusts
In the case of any estate or trust, the alternative minimum
taxable income of such estate or trust and any beneficiary thereof
shall be determined by applying part I of subchapter J with the
adjustments provided in this part.
(d) Apportionment of differently treated items in case of certain
entities
(1) In general
The differently treated items for the taxable year shall be
apportioned (in accordance with regulations prescribed by the
Secretary) -
(A) Regulated investment companies and real estate investment
trusts
In the case of a regulated investment company to which part I
of subchapter M applies or a real estate investment company to
which part II of subchapter M applies, between such company or
trust and shareholders and holders of beneficial interest in
such company or trust.
(B) Common trust funds
In the case of a common trust fund (as defined in section
584(a)), pro rata among the participants of such fund.
(2) Differently treated items
For purposes of this section, the term ''differently treated
item'' means any item of tax preference or any other item which
is treated differently for purposes of this part than for
purposes of computing the regular tax.
(e) Optional 10-year writeoff of certain tax preferences
(1) In general
For purposes of this title, any qualified expenditure to which
an election under this paragraph applies shall be allowed as a
deduction ratably over the 10-year period (3-year period in the
case of circulation expenditures described in section 173)
beginning with the taxable year in which such expenditure was
made (or, in the case of a qualified expenditure described in
paragraph (2)(C), over the 60-month period beginning with the
month in which such expenditure was paid or incurred).
(2) Qualified expenditure
For purposes of this subsection, the term ''qualified
expenditure'' means any amount which, but for an election under
this subsection, would have been allowable as a deduction
(determined without regard to section 291) for the taxable year
in which paid or incurred under -
(A) section 173 (relating to circulation expenditures),
(B) section 174(a) (relating to research and experimental
expenditures),
(C) section 263(c) (relating to intangible drilling and
development expenditures),
(D) section 616(a) (relating to development expenditures), or
(E) section 617(a) (relating to mining exploration
expenditures).
(3) Other sections not applicable
Except as provided in this subsection, no deduction shall be
allowed under any other section for any qualified expenditure to
which an election under this subsection applies.
(4) Election
(A) In general
An election may be made under paragraph (1) with respect to
any portion of any qualified expenditure.
(B) Revocable only with consent
Any election under this subsection may be revoked only with
the consent of the Secretary.
(C) Partners and shareholders of S corporations
In the case of a partnership, any election under paragraph
(1) shall be made separately by each partner with respect to
the partner's allocable share of any qualified expenditure. A
similar rule shall apply in the case of an S corporation and
its shareholders.
(5) Dispositions
(A) Application of section 1254
In the case of any disposition of property to which section
1254 applies (determined without regard to this section), any
deduction under paragraph (1) with respect to amounts which are
allocable to such property shall, for purposes of section 1254,
be treated as a deduction allowable under section 263(c),
616(a), or 617(a), whichever is appropriate.
(B) Application of section 617(d)
In the case of any disposition of mining property to which
section 617(d) applies (determined without regard to this
subsection), any deduction under paragraph (1) with respect to
amounts which are allocable to such property shall, for
purposes of section 617(d), be treated as a deduction allowable
under section 617(a).
(6) Amounts to which election apply not treated as tax preference
Any portion of any qualified expenditure to which an election
under paragraph (1) applies shall not be treated as an item of
tax preference under section 57(a) and section 56 shall not apply
to such expenditure.
(f) Coordination with section 291
Except as otherwise provided in this part, section 291 (relating
to cutback of corporate preferences) shall apply before the
application of this part.
(g) Tax benefit rule
The Secretary may prescribe regulations under which differently
treated items shall be properly adjusted where the tax treatment
giving rise to such items will not result in the reduction of the
taxpayer's regular tax for the taxable year for which the item is
taken into account or for any other taxable year.
(h) Coordination with certain limitations
The limitations of sections 704(d), 465, and 1366(d) (and such
other provisions as may be specified in regulations) shall be
applied for purposes of computing the alternative minimum taxable
income of the taxpayer for the taxable year with the adjustments of
sections 56, 57, and 58.
(i) Special rule for amounts treated as tax preference
For purposes of this subtitle (other than this part), any amount
shall not fail to be treated as wholly exempt from tax imposed by
this subtitle solely by reason of being included in alternative
minimum taxable income.
(j) Treatment of unearned income of minor children
(1) In general
In the case of a child to whom section 1(g) applies, the
exemption amount for purposes of section 55 shall not exceed the
sum of -
(A) such child's earned income (as defined in section
911(d)(2)) for the taxable year, plus
(B) $5,000.
(2) Inflation adjustment
In the case of any taxable year beginning in a calendar year
after 1998, the dollar amount in paragraph (1)(B) shall be
increased by an amount equal to the product of -
(A) such dollar amount, and
(B) the cost-of-living adjustment determined under section
1(f)(3) for the calendar year in which the taxable year begins,
determined by substituting ''1997'' for ''1992'' in
subparagraph (B) thereof.
If any increase determined under the preceding sentence is not a
multiple of $50, such increase shall be rounded to the nearest
multiple of $50.
Sources
(Added Pub. L. 99-514, title VII, Sec. 701(a), Oct. 22, 1986, 100
Stat. 2336; amended Pub. L. 100-647, title I, Sec. 1007(e),
1014(e)(5)(A), Nov. 10, 1988, 102 Stat. 3432, 3561; Pub. L.
101-239, title VII, Sec. 7611(f)(5)(B), (6), 7612(e)(1),
7811(d)(1)(A), (j)(7), Dec. 19, 1989, 103 Stat. 2373, 2374, 2408,
2412; Pub. L. 101-508, title XI, Sec. 11101(d)(3), 11531(b)(2),
11702(d), 11801(c)(2)(D), Nov. 5, 1990, 104 Stat. 1388-405,
1388-490, 1388-514, 1388-523; Pub. L. 102-486, title XIX, Sec.
1915(c)(3), Oct. 24, 1992, 106 Stat. 3024; Pub. L. 104-188, title
I, Sec. 1601(b)(2)(D), 1702(a)(1), 1703(e), 1704(m)(3), Aug. 20,
1996, 110 Stat. 1833, 1868, 1875, 1883; Pub. L. 105-34, title X,
Sec. 1057(a), title XI, Sec. 1103(a), title XII, Sec. 1201(b)(1),
Aug. 5, 1997, 111 Stat. 945, 966, 994; Pub. L. 105-206, title VI,
Sec. 6011(a), 6023(2), July 22, 1998, 112 Stat. 817, 824.)
Amendment of Section
ADJUSTMENT OF ALTERNATIVE MINIMUM TAX EXEMPTION AMOUNT FOR TAX
YEARS BEGINNING IN 2002
For adjustment of alternative minimum tax exemption amount
under subsec. (j) of this section in the case of a child to whom
the ''kiddie tax'' applies for tax years beginning in 2002, see
section 3.06 of Revenue Procedure 2001-59, set out as a note
under section 1 of this title.
Miscellaneous
AMENDMENTS
2004 - Pub. L. 108-357 Sec. 421(a). Subsection (a) of section 59
is amended by striking paragraph (2) and by redesignating
paragraphs (3) and (4) as paragraphs (2) and (3), respectively.
Effective Date.--The <<NOTE: 26 USC 53 note.>> amendments made by
this section shall apply to taxable years beginning
after December 31, 2004.
1998 - Subsec. (a)(3), (4). Pub. L. 105-206, Sec. 6011(a),
redesignated par. (3), relating to election to use simplified
section 904 limitation, as (4).
Subsec. (b). Pub. L. 105-206, Sec. 6023(2), substituted ''credits
under section 30A or 936'' for ''section 936 credit'' in heading.
1997 - Subsec. (a)(2)(C). Pub. L. 105-34, Sec. 1057(a), struck
out subpar. (C) which read as follows:
''(C) Exception. - Subparagraph (A) shall not apply to any
domestic corporation if -
''(i) more than 50 percent of the stock of such domestic
corporation (by vote and value) is owned by United States persons
who are not members of an affiliated group (as defined in section
1504 of such Code) which includes such corporation,
''(ii) all of the activities of such corporation are conducted
in 1 foreign country with which the United States has an income
tax treaty in effect and such treaty provides for the exchange of
information between such foreign country and the United States,
''(iii) all of the current earnings and profits of such
corporation are distributed at least annually (other than current
earnings and profits retained for normal maintenance or capital
replacements or improvements of an existing business), and
''(iv) all of such distributions by such corporation to United
States persons are used by such persons in a trade or business
conducted in the United States.''
Subsec. (a)(3). Pub. L. 105-34, Sec. 1103(a), added par. (3)
relating to election to use simplified section 904 limitation.
Subsec. (j). Pub. L. 105-34, Sec. 1201(b)(1), amended subsec. (j)
generally, restating limitation on exemption amount, adding
provisions for inflation adjustment of such amount, and deleting
provisions relating to limitation based on parental minimum tax and
unused parental minimum tax exemption.
1996 - Subsec. (a)(1)(A). Pub. L. 104-188, Sec. 1703(e)(1),
substituted ''the pre-credit tentative minimum tax'' for ''the
amount determined under section 55(b)(1)(A)''.
Subsec. (a)(1)(C). Pub. L. 104-188, Sec. 1703(e)(2), substituted
''specified in subparagraph (A)(i) or (B)(i) of section 55(b)(1)
(whichever applies)'' for ''specified in section 55(b)(1)(A)''.
Subsec. (a)(2)(A)(i). Pub. L. 104-188, Sec. 1703(e)(1),
substituted ''the pre-credit tentative minimum tax'' for ''the
amount determined under section 55(b)(1)(A)''.
Subsec. (a)(2)(A)(ii). Pub. L. 104-188, Sec. 1703(e)(3),
substituted ''which would be the pre-credit tentative minimum tax''
for ''which would be determined under section 55(b)(1)(A)''.
Subsec. (a)(3). Pub. L. 104-188, Sec. 1703(e)(4), added par. (3).
Subsec. (b). Pub. L. 104-188, Sec. 1601(b)(2)(D), substituted
''section 30A or 936, alternative minimum taxable income shall not
include any income with respect to which a credit is determined
under section 30A or 936.'' for ''section 936, alternative minimum
taxable income shall not include any amount with respect to which
the requirements of subparagraph (A) or (B) of section 936(a)(1)
are met.''
Subsec. (j)(1)(B). Pub. L. 104-188, Sec. 1704(m)(3), substituted
''twice the amount in effect for the taxable year under section
63(c)(5)(A)'' for ''$1,000''.
Subsec. (j)(3)(B). Pub. L. 104-188, Sec. 1702(a)(1), substituted
''section 1(g)(3)(B)'' for ''section 1(i)(3)(B)''.
1992 - Subsec. (a)(2)(A)(ii). Pub. L. 102-486 substituted ''and
section 57(a)(2)(E)'' for ''and the alternative tax energy
preference deduction under section 56(h)''.
1990 - Subsec. (a)(1)(B) to (D). Pub. L. 101-508, Sec.
11801(c)(2)(D), inserted ''and'' at end of subpar. (B),
redesignated subpar. (D) as (C), and struck out former subpar. (C)
which read as follows: ''for purposes of section 904, any increase
in alternative minimum taxable income by reason of section
56(c)(1)(A) (relating to adjustment for book income) shall have the
same proportionate source (and character) as alternative minimum
taxable income determined without regard to such increase, and''.
Subsec. (a)(2)(A)(ii). Pub. L. 101-508, Sec. 11531(b)(2),
inserted before period at end ''and the alternative tax energy
preference deduction under section 56(h)''.
Subsec. (j). Pub. L. 101-508, Sec. 11101(d)(3)(A), substituted
''section 1(g)'' for ''section 1(i)'' in pars. (1), (2)(A),
(B)(i)(I), (II), (D), and (3).
Subsec. (j)(1)(B). Pub. L. 101-508, Sec. 11702(d)(1), inserted
''(or, if greater, the child's share of the unused parental minimum
tax exemption)'' before period at end.
Subsec. (j)(2)(C). Pub. L. 101-508, Sec. 11101(d)(3)(B),
substituted ''section 1(g)(3)(B)'' for ''section 1(i)(3)(B)''.
Subsec. (j)(2)(D). Pub. L. 101-508, Sec. 11702(d)(3), substituted
''paragraphs (3)(D), (5), and (6)'' for ''paragraphs (5) and (6)''.
Subsec. (j)(3). Pub. L. 101-508, Sec. 11702(d)(2), added par.
(3).
1989 - Subsec. (a)(2)(C). Pub. L. 101-239, Sec. 7612(e)(1), added
subpar. (C).
Subsec. (e)(1). Pub. L. 101-239, Sec. 7611(f)(5)(B), inserted
before period at end ''(or, in the case of a qualified expenditure
described in paragraph (2)(C), over the 60-month period beginning
with the month in which such expenditure was paid or incurred)''.
Subsec. (g). Pub. L. 101-239, Sec. 7811(d)(1)(A), substituted
''for the taxable year for which the item is taken into account or
for any other taxable year'' for ''for any taxable year''.
Subsec. (i). Pub. L. 101-239, Sec. 7611(f)(6), substituted
''amounts'' for ''interest'' in heading and ''any amount shall''
for ''interest shall'' in text.
Subsec. (j)(2)(D). Pub. L. 101-239, Sec. 7811(j)(7), substituted
''Other rules'' for ''Others rules'' in heading.
1988 - Subsec. (a)(1)(D). Pub. L. 100-647, Sec. 1007(e)(3), added
subpar. (D).
Subsec. (e)(2). Pub. L. 100-647, Sec. 1007(e)(1), inserted
''(determined without regard to section 291)'' after ''as a
deduction''.
Subsec. (h). Pub. L. 100-647, Sec. 1007(e)(2), substituted
''taxable year with the adjustments of sections 56, 57, and 58''
for ''taxable year -
''(1) with the adjustments of section 56, and
''(2) by not taking into account any deduction to the extent
such deduction is an item of tax preference under section
57(a)''.
Subsec. (i). Pub. L. 100-647, Sec. 1007(e)(4), inserted ''(other
than this part)'' after ''of this subtitle'' and substituted
''subtitle'' for ''title'' before ''solely''.
Subsec. (j). Pub. L. 100-647, Sec. 1014(e)(5)(A), added subsec.
(j).
EFFECTIVE DATE OF 1998 AMENDMENT
Amendment by section 6023(2) of Pub. L. 105-206 effective July
22, 1998, see section 6023(32) of Pub. L. 105-206, set out as a
note under section 34 of this title.
Amendment by section 6011(a) of Pub. L. 105-206 effective, except
as otherwise provided, as if included in the provisions of the
Taxpayer Relief Act of 1997, Pub. L. 105-34, to which such
amendment relates, see section 6024 of Pub. L. 105-206, set out as
a note under section 1 of this title.
EFFECTIVE DATE OF 1997 AMENDMENT
Section 1057(b) of Pub. L. 105-34 provided that: ''The amendment
made by this section (amending this section) shall apply to taxable
years beginning after the date of the enactment of this Act (Aug.
5, 1997).''
Section 1103(b) of Pub. L. 105-34 provided that: ''The amendment
made by this section (amending this section) shall apply to taxable
years beginning after December 31, 1997.''
Section 1201(c) of Pub. L. 105-34 provided that: ''The amendments
made by this section (amending this section and sections 63 and
6103 of this title) shall apply to taxable years beginning after
December 31, 1997.''
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by section 1601(b)(2)(D) of Pub. L. 104-188 applicable
to taxable years beginning after Dec. 31, 1995, except as otherwise
provided, see section 1601(c) of Pub. L. 104-188, set out as an
Effective Date note under section 30A of this title.
Amendment by section 1702(a)(1) 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.
Amendment by section 1703(e) of Pub. L. 104-188 effective as if
included in the provision of the Revenue Reconciliation Act of
1993, Pub. L. 103-66, Sec. 13001-13444, to which such amendment
relates, see section 1703(o) of Pub. L. 104-188, set out as a note
under section 39 of this title.
Amendment by section 1704(m)(3) of Pub. L. 104-188 applicable to
taxable years beginning after Dec. 31, 1995, see section 1704(m)(4)
of Pub. L. 104-188, set out as a note under section 1 of this
title.
EFFECTIVE DATE OF 1992 AMENDMENT
Amendment by Pub. L. 102-486 applicable to taxable years
beginning after Dec. 31, 1992, see section 1915(d) of Pub. L.
102-486, set out as a note under section 56 of this title.
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by section 11101(d)(3) of Pub. L. 101-508 applicable to
taxable years beginning after Dec. 31, 1990, see section 11101(e)
of Pub. L. 101-508, set out as a note under section 1 of this
title.
Amendment by section 11531(b)(2) of Pub. L. 101-508 applicable to
taxable years beginning after Dec. 31, 1990, see section 11531(c)
of Pub. L. 101-508, set out as a note under section 56 of this
title.
Section 11702(j) of Pub. L. 101-508 provided that: ''Any
amendment made by this section (amending this section and sections
135, 216, 355, 367, 447, 453B, 468B, 2056, 2056A, 2523, 4980B, and
6114 of this title) shall take effect as if included in the
provision of the Technical and Miscellaneous Revenue Act of 1988
(Pub. L. 100-647) to which such amendment relates.''
EFFECTIVE DATE OF 1989 AMENDMENT
Amendment by section 7611(f)(6) of Pub. L. 101-239 applicable to
taxable years beginning after Dec. 31, 1989, see section 7611(g)(1)
of Pub. L. 101-239, set out as a note under section 56 of this
title.
Amendment by section 7611(f)(5)(B) of Pub. L. 101-239 applicable
to costs paid or incurred in taxable years beginning after Dec. 31,
1989, see section 7611(g)(2) of Pub. L. 101-239, set out as a note
under section 56 of this title.
Section 7612(e)(2) of Pub. L. 101-239 provided that:
''(A) In general. - The amendment made by paragraph (1) (amending
this section) shall apply to taxable years beginning after March
31, 1990.
''(B) Special rule for year which includes march 31, 1990. - In
the case of any taxable year (of a corporation described in
subparagraph (C) of section 59(a)(2) of the Internal Revenue Code
of 1986 (as added by paragraph (1))) which begins after December
31, 1989, and includes March 31, 1990, the amount determined under
clause (ii) of section 59(a)(2)(A) of such Code shall be an amount
which bears the same ratio to the amount which would have been
determined under such clause without regard to this subparagraph as
the number of days in such taxable year on or before March 31,
1990, bears to the total number of days in such taxable year.''
Amendment by section 7811(d)(1)(A), (j)(7) of Pub. L. 101-239
effective, except as otherwise provided, as if included in the
provision of the Technical and Miscellaneous Revenue Act of 1988,
Pub. L. 100-647, to which such amendment relates, see section 7817
of Pub. L. 101-239, set out as a note under section 1 of this
title.
EFFECTIVE DATE OF 1988 AMENDMENT
Amendment by section 1007(e) of Pub. L. 100-647 effective, except
as otherwise provided, as if included in the provision of the Tax
Reform Act of 1986, Pub. L. 99-514, to which such amendment
relates, see section 1019(a) of Pub. L. 100-647, set out as a note
under section 1 of this title.
Section 1014(e)(5)(B) of Pub. L. 100-647 provided that: ''The
amendment made by subparagraph (A) (amending this section) shall
apply to taxable years beginning after December 31, 1988.''
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31,
1986, with certain exceptions and qualifications, see section
701(f) of Pub. L. 99-514, set out as a note under section 55 of
this title.
SAVINGS PROVISION
For provisions that nothing in amendment by section 11801 of Pub.
L. 101-508 be construed to affect treatment of certain transactions
occurring, property acquired, or items of income, loss, deduction,
or credit taken into account prior to Nov. 5, 1990, for purposes of
determining liability for tax for periods ending after Nov. 5,
1990, see section 11821(b) of Pub. L. 101-508, set out as a note
under section 29 of this title.
CONSIDERATION OF CERTAIN TAXES TREATED AS PAID OR ACCRUED UNDER
SECTION 904(C) IN DETERMINATION OF ALTERNATIVE MINIMUM TAX FOREIGN
TAX CREDIT
Section 1007(f)(5) of Pub. L. 100-647 provided that: ''In
determining the amount of the alternative minimum tax foreign tax
credit under section 59 of the 1986 Code, there shall not be taken
into account any taxes paid or accrued in a taxable year beginning
after December 31, 1986, which are treated under section 904(c) of
the 1986 Code as paid or accrued in a taxable year beginning on or
before December 31, 1986.''
APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION
TO TREATY OBLIGATIONS OF UNITED STATES
For applicability of amendment by section 701(a) of Pub. L.
99-514 (enacting this section) notwithstanding any treaty
obligation of the United States in effect on Oct. 22, 1986, with
provision that for such purposes any amendment by title I of Pub.
L. 100-647 be treated as if it had been included in the provision
of Pub. L. 99-514 to which such amendment relates, see section
1012(aa)(2), (4) of Pub. L. 100-647, set out as a note under
section 861 of this title.
References
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 53, 173, 174, 263, 263A,
616, 617, 904, 1016 of this title.
