IRC 11 ( a ) – Tax imposed
( a ) Corporations in general
A revenue enhancement is herewith imposed for each nonexempt twelvemonth on the nonexempt income of every corporation.
IRC 7701 ( a ) ( 3 ) – Definitions
( 3 ) Corporation
The term “corporation” includes associations. joint-stock companies. and insurance companies.
IRC 7701 ( a ) ( 4 )
( 4 ) Domestic
The term “domestic” when applied to a corporation or partnership agencies created or organized in the United States or under the jurisprudence of the United States or of any State unless. in the instance of a partnership. the Secretary provides otherwise by ordinances.
IRC 7701 ( a ) ( 5 )
( 5 ) Foreign
The term “foreign” when applied to a corporation or partnership means a corporation or partnership which is non domestic.
Reg 301-7701-3 ( a ) ; 301-7701-3 ( B ) ( 1 ) ; 301-7701-3 ( degree Celsius )
Section 301. 7701-3 ( a ) provides that a concern entity that is non classified as a corporation under § 301. 7701-2 ( B ) ( 1 ) . ( 3 ) . ( 4 ) . ( 5 ) . ( 6 ) . ( 7 ) . or ( 8 ) ( an eligible entity ) can elect its categorization for federal revenue enhancement intents. Elections are necessary merely when an eligible entity does non desire to be classified under the default categorization or when an eligible entity chooses to alter its categorization.
Section 301-7701-3 ( B ) ( 2 ) ( one ) provides that. except for certain bing entities described in § 301-7701-3 ( B ) ( 3 ) . unless a domestic eligible entity chosens otherwise. the entity is ( A ) a partnership if it has two or more members ; or ( B ) disregarded as an entity separate from its proprietor if it has a individual proprietor.
Section 301. 7701-3 ( degree Celsius ) ( 1 ) ( one ) provides that an eligible entity may elect to be classified other than as provided under § 301-7701-3 ( B ) ( 2 ) by registering Form 8832 with the appropriate service centre. Under § 301-7701-3 ( degree Celsius ) ( 1 ) ( three ) . this election will be effectual on the day of the month specified by the entity on Form 8832 or on the day of the month filed if no such day of the month is specified. The day of the month specified on Form 8832 can non be more than 75 yearss prior to the day of the month on which the election is filed and no more than 12 months after the day of the month the election is filed.
IRC 243 – Dividends received by corporations
( a ) General regulation
In the instance of a corporation. there shall be allowed as a tax write-off an sum equal to the undermentioned per centums of the sum received as dividends from a domestic corporation which is capable to revenue enhancement under this chapter: ( 1 ) 70 per centum. in the instance of dividends other than dividends described in paragraph ( 2 ) or ( 3 ) ; ( 2 ) 100 per centum. in the instance of dividends received by a little concern investing company runing under the Small Business Investment Act of 1958 ( 15 U. S. C. 661 and following ) ; and ( 3 ) 100 per centum. in the instance of measure uping dividends ( as defined in subdivision ( B ) ( 1 ) ) . ( B ) Qualifying dividends
( 1 ) In general
For intents of this subdivision. the term “qualifying dividend” means any dividend received by a corporation— ( A ) if at the stopping point of the twenty-four hours on which such dividend is received. such corporation is a member of the same attached group as the corporation administering such dividend. and ( B ) if—
( I ) such dividend is distributed out of the net incomes and net incomes of a nonexempt twelvemonth of the distributing corporation which ends after December 31. 1963. for which an election under subdivision 1562 was non in consequence. and on each twenty-four hours of which the distributing corporation and the corporation having the dividend were members of such attached group. or ( two ) such dividend is paid by a corporation with regard to which an election under subdivision 936 is in consequence for the nonexempt twelvemonth in which such dividend is paid. ( 2 ) Affiliated group
For intents of this subdivision:
( A ) In general
The term “affiliated group” has the intending given such term by subdivision 1504 ( a ) . except that for such intents subdivisions 1504 ( B ) ( 2 ) . 1504 ( B ) ( 4 ) . and 1504 ( degree Celsius ) shall non use. ( B ) Group must be consistent in foreign revenue enhancement intervention
The demands of paragraph ( 1 ) ( A ) shall non be treated as being met with regard to any dividend received by a corporation if. for any nonexempt twelvemonth which includes the twenty-four hours on which such dividend is received— ( I ) 1 or more members of the attached group referred to in paragraph ( 1 ) ( A ) choose to any extent to take the benefits of subdivision 901. and ( two ) 1 or more other members of such group claim to any extent a tax write-off for revenue enhancements otherwise creditable under subdivision 901. ( 3 ) Particular regulation for groups which include life insurance companies ( A ) In general
In the instance of an attached group which includes 1 or more insurance companies under subdivision 801. no dividend by any member of such group shall be treated as a measure uping dividend unless an election under this paragraph is in consequence for the nonexempt twelvemonth in which the dividend is received. The predating sentence shall non use in the instance of a dividend described in paragraph ( 1 ) ( B ) ( two ) . ( B ) Effect of election
If an election under this paragraph is in consequence with regard to any attached group— ( I ) portion II of subchapter B of chapter 6 ( associating to certain controlled corporations ) shall be applied with regard to the members of such group without respect to subdivisions 1563 ( a ) ( 4 ) and 1563 ( B ) ( 2 ) ( D ) . and ( two ) for intents of this subdivision. a distribution by any member of such group which is capable to revenue enhancement under subdivision 801 shall non be treated as a measure uping dividend if such distribution is out of net incomes and net incomes for a nonexempt twelvemonth for which an election under this paragraph is non effectual and for which such distributing corporation was non a component member of a controlled group of corporations within the significance of subdivision 1563 entirely by ground of subdivision 1563 ( B ) ( 2 ) ( D ) . ( C ) Election
An election under this paragraph shall be made by the common parent of the attached group and at such clip and in such mode as the Secretary shall by ordinances prescribe. Any such election shall be adhering on all members of such group and may be revoked merely with the consent of the Secretary. ( degree Celsius ) Retention of 80-percent dividends received tax write-off for dividends from 20-percent owned corporations ( 1 ) In general
In the instance of any dividend received from a 20-percent owned corporation— ( A ) subdivision ( a ) ( 1 ) of this subdivision. and
( B ) subdivisions ( a ) ( 3 ) and ( B ) ( 2 ) ofsection 244.
shall be applied by replacing “80 percent” for “70 percent” . ( 2 ) 20-percent owned corporation
For intents of this subdivision. the term “20-percent owned corporation” means any corporation if 20 per centum or more of the stock of such corporation ( by ballot and value ) is owned by the taxpayer. For intents of the predating sentence. stock described in subdivision 1504 ( a ) ( 4 ) shall non be taken into history. ( vitamin D ) Particular regulations for certain distributions
For intents of subdivision ( a ) —
( 1 ) Any sum allowed as a tax write-off under subdivision 591 ( associating to tax write-off for dividends paid by common nest eggs Bankss. etc. ) shall non be treated as a dividend. ( 2 ) A dividend received from a regulated investing company shall be capable to the restrictions prescribed in subdivision 854. ( 3 ) Any dividend received from a existent estate investing trust which. for the nonexempt twelvemonth of the trust in which the dividend is paid. qualifies under portion II of subchapter M ( subdivision 856 and following ) shall non be treated as a dividend. ( 4 ) Any dividend received which is described in subdivision 244 ( associating to dividends received on preferable stock of a public public-service corporation ) shall non be treated as a dividend. ( vitamin E ) Certain dividends from foreign corporations
For intents of subdivision ( a ) and for intents of subdivision 245. any dividend from a foreign corporation from net incomes and net incomes accumulated by a domestic corporation during a period with regard to which such domestic corporation was capable to revenue enhancement under this chapter ( or matching commissariats of anterior jurisprudence ) shall be treated as a dividend from a domestic corporation which is capable to revenue enhancement under this chapter.
IRC 246 ( B ) . 246 ( degree Celsius ) – Rules using to tax write-offs for dividends received ( B ) Restriction on aggregative sum of tax write-offs
( 1 ) General regulation
Except every bit provided in paragraph ( 2 ) . the aggregative sum of the tax write-offs allowed by subdivisions 243 ( a ) ( 1 ) . 244 ( a ) . andsubsection ( a ) or ( B ) ofsection 245 shall non transcend the per centum determined under paragraph ( 3 ) of the nonexempt income computed without respect to the tax write-offs allowed by subdivisions 172. 199. 243 ( a ) ( 1 ) . 244 ( a ) . subdivision ( a ) or ( B ) ofsection 245. and 247. without respect to any accommodation under subdivision 1059. and without respect to any capital loss carryback to the nonexempt twelvemonth under subdivision 1212 ( a ) ( 1 ) . ( 2 ) Consequence of net operating loss
Paragraph ( 1 ) shall non use for any nonexempt twelvemonth for which there is a net operating loss ( as determined under subdivision 172 ) . ( 3 ) Particular regulations
The commissariats of paragraph ( 1 ) shall be applied—
( A ) foremost individually with regard to dividends from 20-percent owned corporations ( as defined in subdivision 243 ( degree Celsius ) ( 2 ) ) and the per centum determined under this paragraph shall be 80 per centum. and ( B ) so individually with regard to dividends non from 20-percent owned corporations and the per centum determined under this paragraph shall be 70 per centum and the nonexempt income shall be reduced by the aggregative sum of dividends from 20-percent owned corporations ( as so defined ) . ( degree Celsius ) Exclusion of certain dividends
( 1 ) In general
No tax write-off shall be allowed under subdivision 243. 244. or 245. in regard of any dividend on any portion of stock— ( A ) which is held by the taxpayer for 45 yearss or less during the 91-day period get downing on the day of the month which is 45 yearss before the day of the month on which such portion becomes ex-dividend with regard to such dividend. or ( B ) to the extent that the taxpayer is under an duty ( whether pursuant to a short sale or otherwise ) to do related payments with regard to places in well similar or related belongings. ( 2 ) 90-day regulation in the instance of certain penchant dividends
In the instance of stock holding penchant in dividends. if the taxpayer receives dividends with regard to such stock which are attributable to a period or periods aggregating in surplus of 366 yearss. paragraph ( 1 ) ( A ) shall be applied— ( A ) by replacing “90 days” for “45 days” each topographic point it appears. and ( B ) by replacing “181-day period” for “91-day period” . ( 3 ) Determination of keeping periods
For intents of this subdivision. in finding the period for which the taxpayer has held any portion of stock— ( A ) the twenty-four hours of temperament. but non the twenty-four hours of acquisition. shall be taken into history. and ( B ) paragraph ( 3 ) of subdivision 1223 shall non use.
( 4 ) Keeping period reduced for periods where hazard of loss diminished The keeping periods determined for intents of this subdivision shall be suitably reduced ( in the mode provided in ordinances prescribed by the Secretary ) for any period ( during such periods ) in which— ( A ) the taxpayer has an option to sell. is under a contractual duty to sell. or has made ( and non closed ) a short sale of. well indistinguishable stock or securities. ( B ) the taxpayer is the grantor of an option to purchase well indistinguishable stock or securities. or ( C ) under ordinances prescribed by the Secretary. a taxpayer has diminished his hazard of loss by keeping 1 or more other places with regard to well similar or related belongings. The predating sentence shall non use in the instance of any qualified covered call ( as defined in subdivision 1092 ( degree Celsius ) ( 4 ) but without respect to the demand that addition or loss with regard to the option non be ordinary income or loss ) . other than a qualified covered call option to which subdivision 1092 ( degree Fahrenheit ) applies.
IRC 248 – Organizational outgos
( a ) Election to subtract
If a corporation elects the application of this subdivision ( in conformity with ordinances prescribed by the Secretary ) with regard to any organisational expenditures— ( 1 ) the corporation shall be allowed a tax write-off for the nonexempt twelvemonth in which the corporation begins concern in an sum equal to the lesser of— ( A ) the sum of organisational outgos with regard to the taxpayer. or ( B ) $ 5. 000. decreased ( but non below nothing ) by the sum by which such organisational outgos exceed $ 50. 000. and ( 2 ) the balance of such organisational outgos shall be allowed as a tax write-off ratably over the 180-month period get downing with the month in which the corporation begins concern. ( B ) Organizational outgos defined
The term “organizational expenditures” means any outgo which— ( 1 ) is incident to the creative activity of the corporation ;
( 2 ) is indictable to capital history ; and
( 3 ) is of a character which. if expended incident to the creative activity of a corporation holding a limited life. would be amortizable over such life. ( degree Celsius ) Time for and range of election
The election provided by subdivision ( a ) may be made for any nonexempt twelvemonth beginning after December 31. 1953. but merely if made non later than the clip prescribed by jurisprudence for registering the return for such nonexempt twelvemonth ( including extensions thereof ) . The period so elective shall be adhered to in calculating the nonexempt income of the corporation for the nonexempt twelvemonth for which the election is made and all subsequent nonexempt old ages. The election shall use merely with regard to outgos paid or incurred on or after August 16. 1954.
IRC 170 ( a ) ( 2 ) . 170 ( B ) ( 2 ) . 170 ( vitamin D ) ( 2 ) – Charitable. etc. . parts and gifts ( a ) Allowance of tax write-off
( 2 ) Corporations on accrual footing
In the instance of a corporation describing its nonexempt income on the accrual footing. if— ( A ) the board of managers authorizes a charitable part during any nonexempt twelvemonth. and ( B ) payment of such part is made after the stopping point of such nonexempt twelvemonth and on or before the fifteenth twenty-four hours of the 3rd month following the stopping point of such nonexempt twelvemonth. so the taxpayer may elect to handle such part as paid during such nonexempt twelvemonth. The election may be made merely at the clip of the filing of the return for such nonexempt twelvemonth. and shall be signified in such mode as the Secretary shall by ordinances prescribe.
( B ) Percentage restrictions
( 2 ) Corporations
In the instance of a corporation—
( A ) In general
The entire tax write-offs under subdivision ( a ) for any nonexempt twelvemonth ( other than for parts to which subparagraph ( B ) applies ) shall non transcend 10 per centum of the taxpayer’s nonexempt income. ( B ) Qualified preservation parts by certain corporate husbandmans and ranchers ( I ) In general Any qualified preservation part ( as defined in subdivision ( H ) ( 1 ) ) — ( I ) which is made by a corporation which. for the nonexempt twelvemonth during which the part is made. is a qualified husbandman or rancher ( as defined in paragraph ( 1 ) ( E ) ( V ) ) and the stock of which is non readily tradable on an established securities market at any clip during such twelvemonth. and ( II ) which. in the instance of parts made after the day of the month of the passage of this subparagraph. is a part of belongings which is used in agribusiness or farm animal production ( or available for such production ) and which is capable to a limitation that such belongings remain available for such production. shall be allowed to the extent the sum of such parts does non transcend the surplus of the taxpayer’s nonexempt income over the sum of charitable parts allowable under subparagraph ( A ) .
( two ) Carryover If the aggregative sum of parts described in clause ( I ) exceeds the restriction of clause ( I ) . such extra shall be treated ( in a mode consistent with the regulations of subdivision ( vitamin D ) ( 2 ) ) as a charitable part to which clause ( I ) applies in each of the 15 wining old ages in order of clip. ( three ) Termination This subparagraph shall non use to any part made in nonexempt old ages get downing after December 31. 2011. ( C ) Taxable income
For intents of this paragraph. nonexempt income shall be computed without respect to— ( I ) this subdivision.
( two ) portion VIII ( except subdivision 248 ) .
( three ) any net operating loss carryback to the nonexempt twelvemonth under subdivision 172. ( four ) subdivision 199. and
( V ) any capital loss carryback to the nonexempt twelvemonth under subdivision 1212 ( a ) ( 1 ) .
( vitamin D ) Carryovers of extra parts
( 2 ) Corporations
( A ) In general
Any part made by a corporation in a nonexempt twelvemonth ( hereinafter in this paragraph referred to as the “contribution year” ) in surplus of the sum deductible for such twelvemonth under subdivision ( B ) ( 2 ) ( A ) shall be deductible for each of the 5 wining nonexempt old ages in order of clip. but merely to the extent of the lesser of the two following sums: ( I ) the surplus of the maximal sum deductible for such wining nonexempt twelvemonth under subdivision ( B ) ( 2 ) ( A ) over the amount of the parts made in such twelvemonth plus the sum of the extra parts which were made in nonexempt old ages before the part twelvemonth and which are deductible under this subparagraph for such wining nonexempt twelvemonth ; or ( two ) in the instance of the first succeeding nonexempt twelvemonth. the sum of such extra part. and in the instance of the 2nd. 3rd. 4th. or 5th wining nonexempt twelvemonth. the part of such extra part non deductible under this subparagraph for any nonexempt twelvemonth step ining between the part twelvemonth and such succeeding nonexempt twelvemonth. ( B ) Special regulation for net operating loss carryovers
For intents of subparagraph ( A ) . the extra of—
( I ) the parts made by a corporation in a nonexempt twelvemonth to which this subdivision applies. over ( two ) the sum deductible in such twelvemonth under the restriction in subdivision ( B ) ( 2 ) ( A ) . shall be reduced to the extent that such extra reduces nonexempt income ( as computed for intents of the 2nd sentence of subdivision 172 ( B ) ( 2 ) ) and increases a net operating loss carryover under subdivision 172 to a wining nonexempt twelvemonth.
IRC 291 ( a ) ( 1 ) – Particular regulations associating to corporate penchant points ( a ) Decrease in certain penchant points. etc.
( 1 ) Section 1250 capital addition intervention
In the instance of subdivision 1250 belongings which is disposed of during the nonexempt twelvemonth. 20 per centum of the surplus ( if any ) of— ( A ) the sum which would be treated as ordinary income if such belongings was subdivision 1245 belongings. over ( B ) the sum treated as ordinary income under subdivision 1250 ( determined without respect to this paragraph ) . shall be treated as addition which is ordinary income under subdivision 1250 and shall be recognized notwithstanding any other proviso of this rubric. Under ordinances prescribed by the Secretary. the commissariats of this paragraph shall non use to the temperament of any belongings to the extent subdivision 1250 ( a ) does non use to such temperament by ground of subdivision 1250 ( vitamin D ) .