Acc 333 - Abridged Internal Revenue Code (1993)

Internal Revenue Code of 1986, as amended, Selected Sections, as of June 1, 1993. Professor Richard B. Malamud. You may copy as desired, however, the author assumes no responsibility for accuracy and advises anyone intending to use these sections for other than class reference to go to the library and check the actual section for accuracy, complete text and notes, and subsequent changes. Sec. 2 DEFINITIONS AND SPECIAL RULES (a) Definition of Surviving Spouse-- (1) In general.--For purposes of section 1, the term "surviving spouse' means a taxpayer-- (A) whose spouse died during either of his two taxable years immediately preceding the taxable year, and (B) who maintains as his home a household for the taxable year the principal place of abode (as a member of such household) of a dependent (i) who (within the meaning of section 152) is a son, stepson, daughter, or stepdaughter of the taxpayer, and (ii) with respect to whom the taxpayer is entitled to a deduction for the taxable year under section 151. For purposes of this paragraph, an individual shall be considered as maintaining a household only if over half of the cost of maintaining the household during the taxable year is furnished by such individual. (2) Limitations--Notwithstanding paragraph (1), for purposes of section 1 a taxpayer shall not be considered to be a surviving spouse-- (A) if the taxpayer has remarried at any time before the close of the taxable year, or (B) unless, for the taxpayer's taxable year during which his spouse died, a joint return could have been made under the provisions of section 6013 (without regard to subsection (a)(3) thereof). . . . (b) Definition of Head of Household-- (1) In general--For purposes of this subtitle, an individual shall be considered a head of a household if, and only if, such individual is not married at the close of his taxable year, is not a surviving spouse (as defined in subsection (a)), and either-- (A) maintains as his home a household which constitutes for more than one-half of such taxable year the principal place of abode, as a member of such household, of-- (i) a son, stepson, or stepdaughter of the taxpayer, or a descendant of a son or daughter of the taxpayer, but if such son, stepson, daughter, or stepdaughter, or descendant is married at the close of the taxpayer's taxable year, only if the taxpayer is entitled to a deduction for the taxable year for such person under section 151 (or would be entitled but for paragraph (2) or (4) of section 152(e)), or (ii) any other person who is a dependent of the taxpayer, if the taxpayer is entitled to a deduction for the taxable year for such person under section 151, or (B) maintains a household which constitutes for such taxable year the principal place of abode of the father or mother of the taxpayer, if the taxpayer is entitled to a deduction for the taxable year for such father or mother under section 151. For purposes of this paragraph, an individual shall be considered as maintaining a household only if half of the cost of maintaining the household during the taxable year is furnished by such individual. ... Sec 61. GROSS INCOME (a) General Definition.--Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items: (1) Compensation for services including fees, commissions, fringe benefits, and similar items; (2) Gross income derived form business; (3) Gains derived from dealing in property; (4) Interest; (5) Rents; (6) Royalties; (7) Dividends; (8) Alimony and separate maintenance payments; (9) Annuities; (10) Income from life insurance and endowment contracts; (11) Pensions; (12) Income from discharge of indebtedness; (13) Distributive share of partnership gross income; (14) Income in respect of a decedent; and (15) Income from an interest in an estate or trust. Sec. 62. ADJUSTED GROSS INCOME DEFINED. (a) General Rule--For purposes of this subtitle, the term "adjusted gross income" means, in the case of an individual, gross income minus the following deductions: (1) Trade and business deductions.-- The deductions allowed by this chapter (other than by part VII of this subchapter) which are attributable to a trade or business carried on by the taxpayer, if such trade or business does not consist of the performance of services by the taxpayer as an employee. (2) Certain trade and business deductions of employees. (A) Reimbursed expenses of employees. The deductions allowed by part VI (section 161 and following) which consist of expenses paid or incurred by the taxpayer, in connection with the performance by him of services as an employee, under a reimbursement or other expense allowance arrangement with his employer. The fact that the reimbursement may be provided by a third party shall not be determinative of whether or not the preceding sentence applies. . . . (B) Certain expenses of performing artists-- . . . (3) Losses from sale or exchange of property.-- . . . (4) Deductions attributable to rents and royalties.-- . . . (5) Certain deduction of life tenants and income beneficiaries of property.-- . . . (6) Pension and profit-sharing and annuity plans of self-employed individuals.-- . . . (7) Retirement Savings.-- . . . (8) Certain portion of lump-sum distributions from pension plans taxed under section 402(d).-- (9) Penalties forfeited because of premature withdrawal of funds from time savings accounts or deposits.-- . . . (10) Alimony.-- The deduction allowed by section 215. (11) Reforestation expenses.-- . . . (12) Certain required repayments of supplemental unemployment compensation benefits.-- . . . (13) Jury duty pay remitted to employer.-- . . . Sec. 63 TAXABLE INCOME DEFINED (a) In general.--Except as provided in subsection (b), for purposes of this subtitle, the term "taxable income' means gross income minus the deductions allowed by this chapter (other than the standard deduction). (b) Individuals who do not itemize their deductions.-- In the case of an individual who does not elect to itemize his deductions for the taxable year, for purposes of this code subtitle, the term 'taxable income' means adjusted gross income minus-- (1) the standard deduction, and (2) the deduction form personal exemptions provided in section 151. . . . Sec. 67. 2-PERCENT FLOOR ON MISCELLANEOUS ITEMIZED DEDUCTIONS. (a) General rule.--In the case of an individual, the miscellaneous itemized deductions for any taxable year shall be allowed only to the extent that the aggregate of such deductions exceeds 2 percent of adjusted gross income. (b) Miscellaneous itemized deductions. For purposes of this section, the term "miscellaneous itemized deductions" means the itemized deductions other than -- (1) the deduction under section 163 (relating to interest), (2) the deduction under section 164 (relating to taxes), (3) the deduction under section 165(a) for losses described in subsection (c)(3) or (d) of section 165, (4) the deductions under section 170 (relating to charitable, etc., contributions and gifts) and section 642(c) (relating to deduction for amounts paid or permanently set aside for a charitable purpose), (5) the deduction under section 213 (relating to medical, dental, etc., expenses), (6) the deduction under section 217 (relating to moving expenses), (7) any deduction allowable for impairment-related work expenses, (8) the deduction under section 691(c) (relating to deduction for estate tax in case of income in respect of the decedent), (9) any deduction allowable in connection with personal property used in a short sale, (10) the deduction under section 1341 (relating to computation of tax where taxpayer restores substantial amount held under claim of right), (11) the deduction under section 72(b)(3) (relating to deduction where annuity payments cease before investment recovered), (12) the deduction under section 171 (relating to deduction for amortizable bond premium), and (13) the deduction under section 216 (relating to deductions in connection with cooperative housing corporations). (c) Disallowance of indirect deduction through pass-thru entity. . . . Sec. 85. UNEMPLOYMENT COMPENSATION (a) General Rule.--In the case of an individual, gross income includes unemployment compensation. Sec. 86. SOCIAL SECURITY AND TIER 1 RAILROAD RETIREMENT BENEFITS. (a) In General.--Gross income for the taxable year of any taxpayer described in subsection (b) (...) includes social security benefits in an amount equal to the lesser of-- (1) one-half of the social security benefits received during the taxable year, or (2) one-half of the excess described in subsection (b)(1). (b) Taxpayers to whom subsection (a) applies.-- (1) In General.--A taxpayer is described in this subsection if-- (A) the sum of-- (i) the modified adjusted gross income of the taxpayer for the taxable year, plus (ii) one-half of the social security benefits received during the taxable year, exceeds (B) the base amount. (2) Modified Adjusted Gross Income.-- For purposes of this subsection, the term "modified adjusted gross income" means adjusted gross income-- (A) ... (B) increased by the amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax. (c) Base amount.--For purposes of this section, the term "base amount" means-- (1) except as otherwise provided in this subsection, $25,000, (2) $32,000 in the case of a joint return, and (3) zero, in the case of a taxpayer who-- (A) is married at the close of the taxable year (...) but does not file a joint return for such year, and (B) does not live apart from his spouse at all times during the taxable year. PART III--ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME SEC. 101 CERTAIN DEATH BENEFITS . . . SEC. 102 GIFTS AND INHERITANCES (a) General rule.--Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance. SEC. 103 INTEREST ON STATE AND LOCAL BONDS (a) Exclusion.--Except as provided in subsection (b), gross income does not include interest on any State or local bond. . . . SEC. 104 COMPENSATION FOR INJURIES AND SICKNESS . . . SEC. 105 AMOUNTS RECEIVED UNDER ACCIDENT AND HEALTH PLANS . . . SEC. 106 CONTRIBUTIONS BY EMPLOYER TO ACCIDENT AND HEALTH PLANS . . . SEC. 107 RENTAL VALUE OF PARSONAGES . . . SEC. 108 INCOME FROM DISCHARGE OF INDEBTEDNESS . . . SEC. 109 IMPROVEMENTS MADE BY LESSEE ON LESSOR'S PROPERTY . . . SEC. 111 RECOVERY OF TAX BENEFIT ITEMS . . . SEC. 112 CERTAIN COMBAT PAY OF MEMBERS OF THE ARMED FORCES . . . SEC. 115 INCOME OF STATES, MUNICIPALITIES, ETC. . . . SEC. 117 QUALIFIED SCHOLARSHIPS (a) General rule.--Gross income does not include any amount received as a qualified scholarship by an individual who is a candidate for a degree at an educational organization described in section 170(b)(1)(A)(ii). (b) Qualified scholarship.--For purposes of this section-- (1) In general.--The term "qualified scholarship" means any amount received by an individual as a scholarship or fellowship grant to the extent the individual establishes that, in accordance with the conditions of the grant, such amount was used for qualified tuition and related expense. (2) Qualified tuition and related expenses.--For purposes of paragraph (1), the term "qualified tuition and related expenses" means-- (A) tuition and fees required for the enrollment or attendance of a student at an educational organization described in section 170(b)(1)(A)(ii), and (B) fees, books, supplies, and equipment required for courses of instruction at such an educational organization. . . . SEC. 118 CONTRIBUTIONS TO CAPITAL OF A CORPORATION . . . SEC. 119 MEALS OR LODGING FURNISHED FOR THE CONVENIENCE OF THE EMPLOYER . . . SEC. 120 AMOUNTS RECEIVED UNDER QUALIFIED GROUP LEGAL SERVICES PLANS . . . SEC. 121 ONE-TIME EXCLUSION OF GAIN FROM SALE OF PRINCIPAL RESIDENCE BY INDIVIDUAL WHO HAS ATTAINED AGE 55 (a) General rule.--At the election of the taxpayer, gross income does not include gain from the sale or exchange of property if-- (1) the taxpayer has attained the age of 55 before the date of such sale or exchange, and (2) during the 5-year period ending on the date of the sale or exchange, such property has been owned and used by the taxpayer as his principal residence for periods aggregating 3 years of more. (b) Limitation.-- (1) Dollar limitation.--The amount of the gain excluded from gross income under subsection (a) shall not exceed $125,000 ($62,500 in the case of a separate return by a married individual). (2) Application to only one sale or exchange.-- Subsection (a) shall not apply to any sale or exchange by the taxpayer or his spouse under subsection (a) with respect to any other sale or exchange is in effect. (3) (this does not apply to elections made prior to July 26, 1978). . . SEC. 122 CERTAIN REDUCED UNIFORMED SERVICES RETIREMENT PAY . . . SEC. 123 AMOUNT RECEIVED UNDER INSURANCE CONTRACTS FOR CERTAIN LIVING EXPENSES . . . SEC. 125 CAFETERIA PLANS . . . SEC. 126 CERTAIN COST SHARING PAYMENTS . . . SEC. 127 EDUCATIONAL ASSISTANCE PROGRAMS . . . SEC. 129 DEPENDENT CARE ASSISTANCE PROGRAMS . . . SEC. 130 CERTAIN PERSONAL INJURY LIABILITY ASSIGNMENTS . . . SEC. 131 CERTAIN FOSTER CARE PAYMENTS . . . SEC. 132 CERTAIN FRINGE BENEFITS (a) Exclusion from gross income.--Gross income shall not include any fringe benefit which qualifies as a -- (1) no-additional-cost service, (2) qualified employee discount, (3) working condition fringe, or (4) de minimis fringe. (b) No-additional-cost service defined.--For purposes of this section, the term "no-additional-cost service" means any service provided by an employer to an employee for use by such employee if-- (1) such service is offered for sale to customers in the ordinary course of the line of business of the employer in which the employee is performing services, and (2) the employer incurs no substantial additional cost (including forgone revenue) in providing such service to the employee (determined without regard to any amount paid by the employee for such service). (c) Qualified employee discount defined.--For purposes of this section -- (1) Qualified employee discount.--The term "qualified employee discount" means any employee discount with respect to qualified property or services to the extent such discount does not exceed -- (A) in the case of property, the gross profit percentage of the price at which the property is being offered by the employer to customers, or (B) in the case of services, 20 percent of the price at which the services are being offered by the employer to customers. (2) Gross profit percentage. (A) In general. The term "gross profit percentage" means the percent which -- (i) the excess of the aggregate sales price of property sold by the employer to customers over the aggregate cost of such property to the employer, is of (ii) the aggregate sale price of such property. (B) Determination of gross profit percentage.-- Gross profit percentage shall be determined on the basis of -- (i) all property offered to customers in the ordinary course of the line of business of the employer in which the employee is performing services (or a reasonable classification of property selected by the employer), and (ii) the employer's experience during a representative period. (3) Employee discount defined.--The term "employee discount" means the amount by which-- (A) the price at which the property or services are provided by the employer to an employee, for use by such employee, is less than (B) the price at which such property or services are being offered by the employer to customers. (4) Qualified property or services. The term "qualified property or services" means any property (other than real property and other than personal property of a kind held for investment) or services which are offered for sale to customers in the ordinary course of the line of business of the employer in which the employee is performing services. (d) Working condition fringe defined.--For purposes of this section, the term "working condition fringe" means any property or services provided to an employee of the employer to the extent that, if the employee paid for such property or services, such payment would be allowable as a deduction under section 162 or 167. (e) De minimis fringe defined.--For purposes of this section -- (1) In general. The term "de minimis fringe" means any property or service the value of which is (after taking into account the frequency with which similar fringes are provided by the employer to the employer's employees) so small as to make accounting for it unreasonable or administratively impracticable.. . . SEC. 133 INTEREST ON LOANS USED TO ACQUIRE EMPLOYER SECURITIES . . . SEC. 134 CERTAIN MILITARY BENEFITS . . . SEC. 135 INCOME FROM UNITED STATES SAVINGS BOND USED TO PAY HIGHER EDUCTION TUITION AND FEES . . . SEC. 136 ENERGY CONSERVATION SUBSIDIES PROVIDED BY PUBLIC UTILITIES . . . PART V -- PERSONAL EXEMPTIONS SEC. 151 ALLOWANCE OF DEDUCTIONS FOR PERSONAL EXEMPTIONS (a) Allowance of deductions.--In the case of an individual, the exemptions provided by this section shall be allowed as deductions in computing taxable income. (b) Taxpayer and Spouse.--An exemption of the exemption amount for the taxpayer, and an additional exemption of the exemption amount for the spouse of the taxpayer if a joint return is not made by the taxpayer and his spouse, and if the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and in not the dependent of another taxpayer. (c) Additional exemption for dependent.-- (1) In general.--An exemption of the exemption amount for each dependent (as defined in section 152)-- (A) whose gross income for the calendar year in which the taxable year of the taxpayer begins is less than the exemption amount, or (B) who is a child of the taxpayer and who (i)has not attained the age of 19 at the close of the calendar year in which the taxable year of the taxpayer begins, or (ii) is a student who has not attained the age of 24 at the close of such calendar year. . . . SEC. 152 DEPENDENT DEFINED (a) General definition.--For purposes of this subtitle, the term "dependent" means any of the following individuals over half of whose support, for the calendar year in which the taxable year of the taxpayer begins, was received from the taxpayer (or is treated under subsection (c) or (e) as received form the taxpayer): (1) A son or daughter of the taxpayer, or a descendant of either, (2) A stepson or stepdaughter of the taxpayer, (3) A brother, sister, stepbrother, or stepsister of the taxpayer, (4) The father or mother of the taxpayer, or an ancestor of either, (5) A stepfather or stepmother of the taxpayer, (6) A son or daughter of a brother or sister of the taxpayer, (7) A brother or sister or the father or mother of the taxpayer, (8) A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law of the taxpayer, or (9) An individual (other than an individual who at any time during the taxable year was the spouse, ...) who, for the taxable year of the taxpayer, has as his principal place of abode the home of the taxpayer and is a member of taxpayer's household. ... (c) Multiple support agreements.-- . . . (d) Support test in case of child divorced parents, etc.-- PART VI--ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS SEC. 161 ALLOWANCE OF DEDUCTIONS SEC. 162 TRADE OR BUSINESS EXPENSES (a) In general.-- There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business including-- ... (1) a reasonable allowance for salaries or other compensation for personal services actually rendered; (2) traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) while away from home in the pursuit of a trade or business; and (3) rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, . . . (b) Charitable contributions and gifts excepted. (c) Illegal bribes, kickbacks, and other payments. (1) Illegal payments to government officials or employees. No deduction shall be allowed under subsection (a) for any payment made, directly or indirectly, to an official or employee of any government, or of any agency or instrumentality of any government, if the payment constitutes an illegal bribe or kickback or, if the payment is to an official or employee of a foreign government, the payment is unlawful under the Foreign Corrupt Practices Act of 1977. . . . (2) Other illegal payments. No deduction shall be allowed under subsection (a) for any payment (other than a payment described in paragraph (1)) made, directly or indirectly, to any person, if the payment constitutes an illegal bribe, illegal kickback, or other illegal payment under any law of the United States, or under any law of a State . . . (3) Kickbacks, rebates, and bribes under medicare and medicaid. ... (e) Appearances, etc. with respect to legislation.-- . . . (2) Limitation. The provisions of paragraph (1) shall not be construed as allowing the deduction of any amount paid or incurred (whether by way of contribution, gift, or otherwise)-- (A) for participation in, or intervention in, any political campaign on behalf of any candidate for public office, or (B) in connection with any attempt to influence the general public, or segments, thereof, with respect to legislative matters, elections, or referendums. (f) Fines and penalties.--No deduction shall be allowed under subsection (a) for any fine or similar penalty paid to a government for the violation of any law. SEC. 163 INTEREST (a) General rule.--There shall be allowed as a deduction all interest paid or accrued within the taxable year on indebtedness. . . . (d) Limitation on investment interest. (1) In general. In the case of a taxpayer other than a corporation, the amount allowed as a deduction under this chapter for investment interest for any taxable year shall not exceed the net investment income of the taxpayer for the taxable year. (2) Carryforward of disallowed interest. The amount not allowed as a deduction for any taxable year by reason of paragraph (1) shall be treated as investment interest paid or accrued by the taxpayer in the succeeding taxable (3) Investment interest. For purposes of this subsection -- (A) In general.-- The term "investment interest" means any interest allowable as a deduction under this chapter (determined without regard to paragraph (1)) which is paid or accrued on indebtedness properly allocable to property held for investment. (B) Exceptions.--The term "investment interest" shall not include-- (i) any qualified residence interest (as defined in subsection (h)(3)), or (ii) any interest which is taken into account under section 469 in computing income or loss from a passive activity of the taxpayer. (C) Personal property used in short sale. For purposes of this paragraph, the term "interest" includes any amount allowable as a deduction in connection with personal property used in a short sale. (4) Net investment income. For purposes of this subsection-- (A) In general. The term "net investment income" means the excess of-- (i) investment income, over (ii) investment expenses. (B) Investment income. The term "investment income" means the sum of-- (i) gross income (other than gain taken into account under clause (ii)) from property held for investment, and (ii) any net gain attributable to the disposition of property held for investment. (C) Investment expenses. The term "investment expenses" means the deductions allowed under this chapter (other than for interest) which are directly connected with the production of investment income. (D) Income and expenses from passive activities. Investment income and investment expenses shall not include any income or expenses taken into account under section 469 in computing income or loss from a passive activity. (5) Property held for investment.--For purposes of this subsection-- (A) In general. The term "property held for investment" shall include -- (i) any property which produces income of a type described in section 469(e)(1), and (ii) any interest held by a taxpayer in an activity involving the conduct of a trade or business-- (I) which is not a passive activity, and (II) with respect to which the taxpayer does not materially participate. (B) Investment expenses. In the case of property described in subparagraph (A)(i), expenses shall be allocated to such property in the same manner as under section 469. (C) Terms. For purposes of this paragraph, the terms "activity", "passive activity", and "materially participate" have the meanings given such terms by section 469. (h) Disallowance of deduction for personal interest. (1) In general.--In the case of a taxpayer other than a corporation, no deduction shall be allowed under this chapter for personal interest paid or accrued during the taxable year. (2) Personal interest. For purposes of this subsection, the term "personal interest" means any interest allowable as a deduction under this chapter other than-- (A) interest paid or accrued on indebtedness properly allocable to a trade or business (other than the trade or business of performing services as an employee), (B) any investment interest (within the meaning of subsection (d)), (C) any interest which is taken into account under section 469 in computing income or loss from a passive activity of the taxpayer, (D) any qualified residence interest (within the meaning of paragraph (3)), and (E) any interest payable under section 6601 on any unpaid portion of the tax imposed by section 2001 for the period during which an extension of time for payment of such tax is in effect under section 6163 or 6166 or under section 6166A (as in effect before its repeal by the Economic Recovery Tax Act of 1981). (3) Qualified residence interest.--For purposes of this subsection-- (A) In general. The term "qualified residence interest" means any interest which is paid or accrued during the taxable year on-- (i) acquisition indebtedness with respect to any qualified residence of the taxpayer, or (ii) home equity indebtedness with respect to any qualified residence of the taxpayer. For purposes of the preceding sentence, the determination of whether any property is a qualified residence of the taxpayer shall be made as of the time the interest is accrued. (B) Acquisition indebtedness. (i) In general.--The term "acquisition indebtedness" means any indebtedness which-- (I) is incurred in acquiring, constructing, or substantially improving any qualified residence of the taxpayer, and (II) is secured by such residence. Such term also includes any indebtedness secured by such residence resulting from the refinancing of indebtedness meeting the requirements of the preceding sentence (or this sentence); but only to the extent the amount of the indebtedness resulting from such refinancing does not exceed the amount of the refinanced indebtedness. (ii) $ 1,000,000 Limitation. The aggregate amount treated as acquisition indebtedness for any period shall not exceed $ 1,000,000 ($ 500,000 in the case of a married individual filing a separate return). (C) Home equity indebtedness. (i) In general. The term "home equity indebtedness" means any indebtedness (other than acquisition indebtedness) secured by a qualified residence to the extent the aggregate amount of such indebtedness does not exceed-- (I) the fair market value of such qualified residence, reduced by (II) the amount of acquisition indebtedness with respect to such residence. (ii) Limitation. The aggregate amount treated as home equity indebtedness for any period shall not exceed $ 100,000 ($ 50,000 in the case of a separate return by a married individual). (D) Treatment of indebtedness incurred on or before October 13, 1987. . . . (5)[4] Other definitions and special rules.--For purposes of this subsection-- (A) Qualified residence. (i) In general.--The term "qualified residence" means-- (I) the principal residence (within the meaning of section 1034) of the taxpayer, and (II) 1 other residence of the taxpayer which is selected by the taxpayer for purposes of this subsection for the taxable year and which is used by the taxpayer as a residence (within the meaning of section 280A(d)(1)). (ii) Married individuals filing separate returns. If a married couple does not file a joint return for the taxable year-- (I) such couple shall be treated as 1 taxpayer for purposes of clause (i), and (II) each individual shall be entitled to take into account 1 residence unless both individuals consent in writing to 1 individual taking into account the principal residence and 1 other residence. (iii) Residence not rented. For purposes of clause (i)(II), notwithstanding section 280A(d)(1), if the taxpayer does not rent a dwelling unit at any time during a taxable year, such unit may be treated as a residence for such taxable year. (B) Special rule for cooperative housing corporations. Any indebtedness secured by stock held by the taxpayer as a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as so defined) shall be treated as secured by the house or apartment which the taxpayer is entitled to occupy as such a tenant-stockholder. If stock described in the preceding sentence may not be used to secure indebtedness, indebtedness shall be treated as so secured if the taxpayer establishes to the satisfaction of the Secretary that such indebtedness was incurred to acquire such stock. SEC. 164 TAXES (a) General rule.--Except as otherwise provided in this section, the following taxes shall be allowed as a deduction for the taxable year within which paid or accrued: (1) State and local, and foreign, real property taxes. (2) State and local personal property taxes. (3) State and local, and foreign, income war profits, and excess profits taxes. . . . (d) Apportionment of taxes on real property between seller and purchaser. (1) General rule. For purposes of subsection (a), if real property is sold during any real property tax year, then-- (A) so much of the real property tax as is properly allocable to that part of such year which ends on the day before the date of the sale shall be treated as a tax imposed on the seller, and (B) so much of such tax as is properly allocable to that part of such year which begins on the date of the sale shall be treated as a tax imposed on the purchaser. SEC. 165 LOSSES (a) General rule.--There shall be allowed a deduction any loss sustained during the taxable year and not compensated for by insurance or otherwise. . . . (c) Limitation of loses of individuals.--In the case of an individual, the deduction under subsection (a) shall be limited to-- (1) losses incurred in a trade or business; (2) losses incurred in any transaction entered into for profit, though not connected with a trade or business; and (3) . . . losses . . . if such losses arise from fire, storm, shipwreck, or other casualty, or from theft. (d) Wagering losses.--Losses from wagering transactions shall be allowed only to the extent of the gains from such transactions. (e) Theft losses.--For purposes of subsection (a), any loss arising from theft shall be treated as sustained during the taxable year in which the taxpayer discovers such loss. ... (h) Treatment of casualty gains and losses.-- (1) $100 limitation per casualty.--Any loss of an individual described in subsection (c)(3) shall be allowed only to the extent that the amount of the loss to such individual arising from each casualty, or from each theft, exceeds $100. (2) Net casualty loss allowed only to the extent it exceeds 10 percent of adjusted gross income.-- . . . SEC. 166 BAD DEBTS SEC. 167 DEPRECIATION SEC. 168 ACCELERATED COST RECOVERY SYSTEM SEC. 169 AMORTIZATION OF POLLUTION CONTROL FACILITATES SEC. 170 CHARITABLE, ETC. CONTRIBUTIONS AND GIFTS SEC. 171 AMORTIZATION OF BOND PREMIUM SEC. 172 NET OPERATING LOSS DEDUCTION ... Sec. 179. ELECTION TO EXPENSE CERTAIN DEPRECIABLE BUSINESS ASSETS. (a) Treatment as expenses.--A taxpayer may elect to treat the cost of any section 179 property as an expense which is not chargeable to capital account. Any cost so treated shall be allowed as a deduction for the taxable year in which the section 179 property is placed in service. (b) Limitations. (1) Dollar limitation. The aggregate cost which may be taken into account under subsection (a) for any taxable year shall not exceed $ 10,000. (2) Reduction in limitation. The limitation under paragraph (1) for any taxable year shall be reduced (but not below zero) by the amount by which the cost of section 179 property placed in service during such taxable year exceeds $ 200,000. (3) Limitation based on income from trade or business. (A) In general.--The amount allowed as a deduction under subsection (a) for any taxable year (determined after the application of paragraphs (1) and (2)) shall not exceed the aggregate amount of taxable income of the taxpayer for such taxable year which is derived from the active conduct by the taxpayer of any trade or business during such taxable year. (B) Carryover of disallowed deduction. The amount allowable as a deduction under subsection (a) for any taxable year shall be increased by the lesser of (i) the aggregate amount disallowed under subparagraph (A) for all prior taxable years (to the extent not previously allowed as a deduction by reason of this subparagraph), or (ii) the excess (if any) of-- (I) the limitation of paragraphs (1) and (2) (or if lesser, the aggregate amount of taxable income referred to in subparagraph (A)), over (II) the amount allowable as a deduction under subsection (a) for such taxable year without regard to this subparagraph. SEC. 183 ACTIVITIES NOT ENGAGED IN FOR PROFIT ... SEC. 195 START UP COSTS PART VII--ADDITIONAL ITEMIZED DEDUCTIONS FOR INDIVIDUALS SEC. 212. EXPENSES FOR PRODUCTION OF INCOME. In the case of an individual, there shall be allowed as a deduction all the ordinary and necessary expense paid or incurred during the taxable year-- (1) for the production or collection of income, (2) for the management, conservation, or maintenance of property held for the production of income, or (3) in connection with the determination, collection, or refund of any tax. SEC. 213. MEDICAL, DENTAL, ETC. EXPENSES. (a) Allowance of deduction.--There shall be allowed as a deduction the expenses paid during the taxable year, not compensated for by insurance or otherwise, for the medical care of the taxpayer, his spouse, or a dependent (as defined in section 152), to the extent that such expenses exceed 7.5 percent of adjusted gross income. (b) Limitation with respect to medicine and drugs.--An amount paid during the taxable year for medicine or a drug shall be taken into account under subsection (a) only if such medicine or drug is a prescribed drug or is insulin. . . . (d) . . . (9) Cosmetic surgery.-- (A) In general.--The term "medical care" does not include cosmetic surgery or other similar procedures, unless the surgery or procedure is necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease. ... SEC. 215. ALIMONY ETC. PAYMENTS. (a) General rule.--In the case of an individual, there shall be allowed as a deduction an amount equal to the alimony or separate maintenance payments paid during such individual's taxable year. . . . SEC. 217. MOVING EXPENSES. SEC. 219. RETIREMENT SAVINGS. SEC. 267. LOSSES, EXPENSES, AND INTEREST WITH RESPECT TO TRANSACTIONS BETWEEN RELATED TAXPAYERS. (a) In general.-- (1) Deduction for losses disallowed.--No deduction shall be allowed in respect of any loss from the sale or exchange of property, directly or indirectly, between persons specified in any of the paragraphs of subsection (b). The preceding sentence shall not apply to any loss of the distributing corporation (or the distributee) in the case of a distribution in complete liquidation. (2) Matching of deduction and payee income item in the case of expenses and interest. If -- (A) by reason of the method of accounting of the person to whom the payment is to be made, the amount thereof is not (unless paid) includible in the gross income of such person, and (B) at the close of the taxable year of the taxpayer for which (but for this paragraph) the amount would be deductible under this chapter, both the taxpayer and the person to whom the payment is to be made are persons specified in any of the paragraphs of subsection (b), then any deduction allowable under this chapter in respect of such amount shall be allowable as of the day as of which such amount is includible in the gross income of the person to whom the payment is made (or, if later, as of the day on which it would be so allowable but for this paragraph). (b) Relationships. SEC. 280A. DISSALLOWANCE OF CERTAIN EXPENSES IN CONNECTION WITH BUSINESS USE OF HOME, RENTAL OF VALCATION HOMES, ETC. (a) General rule.--Except as otherwise provided in this section, in the case of a taxpayer who is an individual or an S Corporation, no deduction otherwise allowable under this chapter shall be allowed with respect to the use of a dwelling unit which is used by the taxpayer during the taxable year as a residence. . . . (c) Exception for cdrtain business or rental use; limitation on deductions fro such use.-- (1) Certain business use.--Subsection (a) shall not apply to any item to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis-- (A) [as] the principal place of business fal any trade or business of the taxpayer, (B) as a place of business which is used by patients, clients, or customers in meeting or dealing with the taxpayer in the normal course of his trade or business, or (C) in the case of a separate structure which is not attached to the dwelling unit, in connection with the taxpayer's trade or business. In the case of an employee, the preceding sentence shall apply only if the exclusive use referred to in the preceding sentence is for the convenience of his employer. . . . SUBCHAPTER 0 -- GAIN OR LOSS ON DISPOSITION OF PROPERTY PART I -- DETERMINATION OF AMOUNT OF AND RECOGNITION OF GAIN OR LOSS SEC. 1001. Determination of amount of and recognition of gain or loss. (a) Computation of gain or loss.--The gain from the sale or other disposition of property shall be the excess of the amount realized therefrom over the adjusted basis provided in section 1011 for determining gain, and the loss shall be the excess of the adjusted basis provided in such section for determining loss over the amount realized. (b) Amount realized.--The amount realized from the sale or other disposition of property shall be the sum of any money received plus the fair market value of the property (other than money) received. In determining the amount realized-- . . . SEC. 1012. BASIS OF PROPERTY--COST. The basis of property shall be the cost of such property, . . . SEC.1014 BASIS OF PROPERTY ACQUIRED FROM A DECEDENT. (a) In general.--Except as otherwise provided in this section, the basis of property in the hands of a person acquiring the property from a decedent or to whom the property passed from a decedent, shall, if not sold, exchanged, or otherwise disposed of before the decedents's death by such person, be-- (1) the fair market value of the property at the decedent's death, or (2) in the case of an election under either section 2032 ..., its value at the applicable valuation date prescribed by those sections, or ... (c) Property representing income in respect of a decedent.--This section shall not apply to property which constitutes a right to receive an item of income in respect of a decedent under section 691. ... SEC. 1015 BASIS OF PROPERTY ACQUIRED BY GIFTS AND TRANSFERS IN TRUST. (a) Gifts after December 31, 1920.--If property was acquired by gift after December 31, 1920, the basis shall be the same as it would be in the hands of the donor or the last preceding owner ... except that if such basis ... is greater than the fair market value of the property at the time of the gift, then for the purpose of determining loss the basis shall be such fair market value... (d) Increase basis for gift tax paid.-- . . . (6) Special rule for gifts made after December 31, 1976.-- (A) In general.-- In the case of gifts made after December 31, 1976, the increase in basis provided by this subsection with respect to any gift tax paid under chapter 12 shall be an amount (not in excess of the amount of tax so paid) which bears the same ratio to the amount of tax so paid as -- (i) the net appreciation in value of the gift, bears to (ii) the amount of the gift. (B) Net appreciation.-- ... SEC. 1016. ADJUSTMENTS TO BASIS. (a) General rule.--Proper adjustment in respect of the property shall in all cases be made-- (1) for expenditures, receipts, losses, or other items, properly chargeable to capital account, ... (2) in respect of any period since February 28, 1913, for exhaustion, wear and tear, obsolescence, amortization, and depletion, to the extent of the amount-- (A) allowed as deduction is computing taxable income ... but not less than the amount allowable under this subtitle... SEC. 1031. EXCHANGE OF PROPERTY HELD FOR PRODUCTIVE USE OR INVESTMENT (a) Nonrecognition of gain or loss from exchanges solely in kind.-- (1) In general.--No gain or loss shall be recognized on the exchange of property held for productive use in a trade or business or for investment if such property is exchanged solely for property of like kind which is to be held either for productive use in a trade or business or for investment. (2) Exceptions.--This subsection shall not apply to any exchange of-- (A) stock in trade of other property held primarily for sale, (B) stocks, bonds or notes, (C) other securities or evidences of indebtedness or interest, (D) interest in a partnership, ... (3) Requirements that property be identified and that exchange be completed not more than 180 days after transfer of exchanged property.--For purposes of this subsection, any property received by the taxpayer shall be treated as property which is not like-kind property if-- (A) such property is not identified as property to be received in the exchange on or before the day which is 45 days after the date on which the taxpayer transfers the property relinquished in the exchange, or (B) such property is received after the earlier of-- (i) the day which is 180 days after the date on which the taxpayer transfers the property relinquished in the exchange, or (ii) the due date (determined with regard to extension) for the transferor's return of the tax imposed by this chapter for the taxable year in which the transfer of the relinquished property occurs. ... SEC. 1033. INVOLUNTARY CONVERSIONS SEC. 1034. ROLLOVER OF GAIN ON SALE OF PRINCIPAL RESIDENCE. (a) Nonrecognition of gain.-- If property (in this section called "old residence") used by the taxpayer as his principal residence is sold by him and, within a period beginning 2 years before the date of such sale and ending 2 years after such date, property (in this section called "new residence") is purchased and used by the taxpayer as his principal residence, gain (if any) from such sale shall be recognized only to the extent that the taxpayer's adjusted sales price (...) of the old residence exceeds the taxpayer's cost of purchasing the new residence. (b) Adjusted sales price defined.-- (1) In general.--For purposes of this section, the term "adjusted sales price" means the amount realized, reduced by the aggregate of the expenses for work performed on the old residence in order to assist in its sale. ... SEC 7701. DEFINITIONS . . . (38) Joint return.--The term joint return means a single return made jointly under section 6013 by a husband and wife. ... Sec. 7703. DETERMINATION OF MARITAL STATUS. (a) General rule.--For purposes of part V of subchapter B of chapter 1 and those provisions of this title which refer to this subsection-- (1) the determination of whether an individual is married shall be made as of the close of his taxable year; except that if his spouse dies during his taxable year such determination shall be made as of the time of such death; and (2) an individual legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married. (b) Certain married individuals living apart.--For purposes of those provisions of this title which refer to this subsection, if-- (1) an individual who is married (within the meaning of subsection (a)) and who files a separate return maintains as his home a household which constitutes for more than one-half of the taxable year the principal place of abode of a child (within the meaning of section 151(c)(3)) with respect to whom such individual is entitled to a deduction for the taxable year under section 151 (or would be so entitled but for paragraph (2) or (4) of section 152(e)), (2) such individual furnishes over one-half of the cost of maintaining such household during the taxable year, and (3) during the last 6 months of the taxable year, such individual's spouse is not a member of such household, such individual shall not be considered as married.
Created by Richard Malamud, 8/28/96 from an older document.

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