§ 46. Amount of credit

Pub. L. 97–424, title V, § 541(c), Jan. 6, 1983, 96 Stat. 2193, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “(1) General rule.—The amendments made by subsections (a) and (b) [amending this section and sections 167 and 168 of this title] shall apply to taxable years beginning after December 31, 1979. “(2) Special rule for periods beginning before march 1, 1980.—“(A) In general.—Subject to the provisions of paragraphs (3) and (4), notwithstanding the provisions of sections 167(l) and 46(f) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] and of any regulations prescribed by the Secretary of the Treasury (or his delegate) under such sections, the use for ratemaking purposes or for reflecting operating results in the taxpayer’s regulated books of account, for any period before March 1, 1980, of—“(i) any estimates or projections relating to the amounts of the taxpayer’s tax expense, depreciation expense, deferred tax reserve, credit allowable under section 38 of such code, or rate base, or “(ii) any adjustments to the taxpayer’s rate of return, shall not be treated as inconsistent with the requirements of subparagraph (G) of such section 167(l)(3) nor inconsistent with the requirements of paragraph (1) or (2) of such section 46(f), where such estimates or projections, or such rate of return adjustments, were included in a qualified order. “(B) Qualified order defined.—For purposes of this subsection, the term “qualified order” means an order—“(i) by a public utility commission which was entered before March 13, 1980, “(ii) which used the estimates, projections, or rate of return adjustments referred to in subparagraph (A) to determine the amount of the rates to be collected by the taxpayer or the amount of a refund with respect to rates previously collected, and “(iii) which ordered such rates to be collected or refunds to be made (whether or not such order actually was implemented or enforced). “(3) Limitations on application of paragraph (2).—“(A) Paragraph (2) not to apply to amounts actually flowed through.—Paragraph (2) shall not apply to the amount of any—“(i) rate reduction, or “(ii) refund, which was actually made pursuant to a qualified order. “(B) Taxpayer must enter into closing agreement before paragraph (2) applies.—Paragraph (2) shall not apply to any taxpayer unless, before the later of—“(i) July 1, 1983, or “(ii) 6 months after the refunds or rate reductions are actually made pursuant to a qualified order. the taxpayer enters into a closing agreement (within the meaning of section 7121 of the Internal Revenue Code of 1986) which provides for the payment by the taxpayer of the amount of which paragraph (2) does not apply by reason of subparagraph (A). “(4) Special rules relating to payment of refunds or interest by the united states or the taxpayer.—“(A) Refund defined.—For purposes of this subsection, the term “refund” shall include any credit allowed by the taxpayer under a qualified order but shall not include interest payable with respect to any refund (or credit) under such order. “(B) No interest payable by united states.—No interest shall be payable under section 6611 of the Internal Revenue Code of 1986 on any overpayment of tax which is attributable to the application of paragraph (2). “(C) Payments may be made in two equal installments.—“(i) In general.—The taxpayer may make any payment required by reason of paragraph (3) in 2 equal installments, the first installment being due on the last date on which a taxpayer may enter into a closing agreement under paragraph (3)(B), and the second payment being due 1 year after the last date for the first payment. “(ii) Interest payments.—For purposes of section 6601 of such Code, the last date prescribed for payment with respect to any payment required by reason of paragraph (3) shall be the last date on which such payment is due under clause (i). “(5) No inference.—The application of subparagraph (G) of section 167(l)(3) of the Internal Revenue Code of 1986, and the application of paragraphs (1) and (2) of section 46(f) of such Code, to taxable years beginning before January 1, 1980, shall be determined without any inference drawn from the amendments made by subsections (a) and (b) of this section [amending this section and sections 167 and 168 of this title] or from the rules contained in paragraphs (2), (3), and (4). Nothing in the preceding sentence shall be construed to limit the relief provided by paragraphs (2), (3), and (4).”

Effective Date of 1982 Amendment

Amendment by Pub. L. 97–354 applicable to taxable years beginning after Dec. 31, 1982, see section 6(a) of Pub. L. 97–354, set out as an Effective Date note under section 1361 of this title.

Amendment by section 201(d)(8)(A), formerly section 201(c)(8)(A), of Pub. L. 97–248, applicable to taxable years beginning after Dec. 31, 1982, see section 201(e)(1) of Pub. L. 97–248, set out as a note under section 5 of this title.

Pub. L. 97–248, title II, § 205(c)(2), Sept. 3, 1982, 96 Stat. 431, provided that: “The amendments made by subsection (b) [amending this section] shall apply to taxable years beginning after December 31, 1982.”

Amendment by section 265(b)(2)(A)(i) of Pub. L. 97–248 applicable to distributions after Dec. 31, 1982, see section 265(c)(2) of Pub. L. 97–248, set out as a note under section 72 of this title.

Effective Date of 1981 Amendment

Amendment by section 207(c)(1) of Pub. L. 97–34 applicable to unused credit years ending after Dec. 31, 1973, see section 209(c)(2)(A) of Pub. L. 97–34, set out as an Effective Date note under section 168 of this title.

Pub. L. 97–34, title II, § 211(i), Aug. 13, 1981, 95 Stat. 235, provided that: “(1) In general.—Except as provided in this subsection, the amendments made by this section [amending this section and sections 47 and 48 of this title] shall apply to property placed in service after December 31, 1980. “(2) Progress expenditures.—The amendments made by subsection (b) [amending this section] shall apply to progress expenditures made after December 31, 1980. “(3) Petroleum storage facilities.—The amendments made by subsection (c) [amending this section] shall apply to periods after December 31, 1980, under rules similar to the rules under section 48(m). “(4) Noncorporate lessors.—The amendments made by subsection (d) [amending this section] shall apply to leases entered into after June 25, 1981. “(5) At risk rules.—“(A) In general.—The amendment made by subsection (f) [amending this section and section 47 of this title] shall not apply to—“(i) property placed in service by the taxpayer on or before February 18, 1981, and “(ii) property placed in service by the taxpayer after February 18, 1981, where such property is acquired by the taxpayer pursuant to a binding contract entered into on or before that date. “(B) Binding contract.—For purposes of subparagraph (A)(ii), property acquired pursuant to a binding contract shall, under regulations prescribed by the Secretary, include property acquired in a manner so that it would have qualified as pretermination property under section 49(b) (as in effect before its repeal by the Revenue Act of 1978) [Pub. L. 95–600]. “(6) Leased rolling stock.—The amendment made by subsection (h) [amending section 48 of this title] shall apply to taxable years beginning after December 31, 1980.”

Pub. L. 97–34, title II, § 212(e), Aug. 13, 1981, 95 Stat. 239, as amended by Pub. L. 97–448, title I, § 102(f)(1), Jan. 12, 1983, 96 Stat. 2371; Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “(1) In general.—Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 48, 57, 167, 280B, 642, 1016, 1082, 1245, and 1250 of this title and repealing section 191 of this title] shall apply to expenditures incurred after December 31, 1981, in taxable years ending after such date. “(2) Transitional rule.—The amendments made by this section shall not apply with respect to any rehabilitation of a building if—“(A) the physical work on such rehabilitation began before January 1, 1982, and “(B) such building does not meet the requirements of paragraph (1) of section 48(g) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as amended by this Act [Pub. L. 97–34]).”

Pub. L. 97–34, title III, § 332(c)(1), Aug. 13, 1981, 95 Stat. 296, provided that: “The amendments made by subsection (a) [amending this section] shall be effective on the date of enactment of this Act [Aug. 13, 1981].”

Effective Date of 1980 Amendment

Amendment by section 222(e)(2) of Pub. L. 96–223 applicable to periods after Dec. 31, 1979, under rules similar to the rules of section 48(m) of this title, see section 222(j)(1) of Pub. L. 96–223, set out as a note under section 48 of this title.

Pub. L. 96–223, title II, § 223(b)(3), Apr. 2, 1980, 94 Stat. 266, provided that: “The amendments made by this subsection [amending this section and section 6401 of this title] shall apply to qualified investment for taxable years beginning after December 31, 1979.”

Effective Date of 1978 Amendment

Amendment by section 141(e), (f)(2) of Pub. L. 95–600 effective with respect to qualified investment for taxable years beginning after Dec. 31, 1978, see section 141(g)(1) of Pub. L. 95–600, set out as an Effective Date note under section 409 of this title.

Pub. L. 95–600, title III, § 312(d), Nov. 6, 1978, 92 Stat. 2826, provided that: “The amendments made by this section [amending this section and sections 48 and 167 of this title and repealing sections 49 and 50 of this title] shall apply to taxable years ending after December 31, 1978.”

Pub. L. 95–600, title III, § 313(b), Nov. 6, 1978, 92 Stat. 2827, provided that: “The amendment made by subsection (a) [amending this section] shall apply to— “(1) property acquired by the taxpayer after December 31, 1978, and “(2) property the construction, reconstruction, or erection of which was completed by the taxpayer after December 31, 1978 (but only to the extent of the basis thereof attributable to construction, reconstruction, or erection after such date).”

Pub. L. 95–600, title III, § 316(c), Nov. 6, 1978, 92 Stat. 2830, provided that: “The amendments made by this section [amending this section and section 1388 of this title] shall apply to taxable years ending after October 31, 1978.”

Pub. L. 95–600, title VII, § 703(r), Nov. 6, 1978, 92 Stat. 2944, provided that: “Except as otherwise provided, the amendments made by this section [amending this section and sections 48, 103, 447, 453, 501, 801, 911, 995, 996, 999, 1033, 1212, 1375, 1402, 1561, 4041, 4911, 6104, 6427, 6501, 6504, 6511, 7609 of this title and sections 402, 405, 410, and 411 of Title 42, The Public Health and Welfare, enacting provisions set out as notes under sections 103, 311, 443, 501, and 4973 of this title, and amending provisions set out as notes under section 120, 311, 907, 995, 2011, 2501, and 4940 of this title] shall take effect on October 4, 1976.”

Effective Date of 1976 Amendment

Amendment by section 503(b)(4) of Pub. L. 94–455 applicable to taxable years beginning after Dec. 31, 1975, see section 508 of Pub. L. 94–455, set out as a note under section 3 of this title.

Pub. L. 94–455, title VIII, § 802(c), Oct. 4, 1976, 90 Stat. 1583, provided that: “The amendments made by this section [amending this section and section 48 of this title and provisions set out below] shall apply to taxable years beginning after December 31, 1975.”

Pub. L. 94–455, title VIII, § 803(j), Oct. 4, 1976, 90 Stat. 1591, provided that: “(1) General rule.—Except as provided in paragraph (2), the amendments made by this section [see Tables for classification of section 803 of Pub. L. 94–455] shall apply for taxable years beginning after December 31, 1974. “(2) Exceptions.—“(A) Section 301(e) of the Tax Reduction Act of 1975 [set out below], as added by subsection (d), shall apply for taxable years beginning after December 31, 1976. “(B) The amendments made by subsections (a) and (b)(1) shall apply for taxable years beginning after December 31, 1975. “(C) The amendments made by subsections (b)(4) and (f) shall apply for years beginning after December 31, 1975.”

Pub. L. 94–455, title VIII, § 805(b), Oct. 4, 1976, 90 Stat. 1597, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “(1) In general.—Except as provided in subparagraph (B), the amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1975, in the case of property placed in service after such date. “(2) Section 46(g)(4).—Section 46(g)(4) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by subsection (a)) shall apply to taxable years beginning after December 31, 1975.”

Amendment by section 1607(b)(1)(B) of Pub. L. 94–455 applicable to taxable years ending after Oct. 4, 1976, with certain exceptions, see section 1608(c) of Pub. L. 94–455, set out as a note under section 857 of this title.

Amendment by section 1901(a)(4)(A), (B), (b)(1)(C) of Pub. L. 94–455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.

Pub. L. 94–455, title XXI, § 2112(d)(1), Oct. 4, 1976, 90 Stat. 1906, provided that: “The amendments made by subsection (a) [amending this section and section 48 of this title] shall apply to— “(A) property acquired by the taxpayer after December 31, 1976, and “(B) property the construction, reconstruction, or erection of which was completed by the taxpayer after December 31, 1976, (but only to the extent of the basis thereof attributable to construction, reconstruction, or erection after such date), in taxable years beginning after such date.”

Effective Date of 1975 Amendment

Pub. L. 94–12, title III, § 301(b)(4), Mar. 29, 1975, 89 Stat. 38, provided that: “The amendment made by paragraph (1) of this subsection [amending this section] shall apply to property placed in service after January 21, 1975, in taxable years ending after January 21, 1975. The amendments made by paragraphs (2) and (3) [amending this section] shall apply to taxable years ending after December 31, 1974.”

Pub. L. 94–12, title III, § 305(a), Mar. 29, 1975, 89 Stat. 45, provided that: “The amendments made by section 302 [amending this section and sections 47, 48, and 50B of this title] shall apply to taxable years ending after December 31, 1974.”

Effective Date of 1974 Amendment

Amendment by section 2001(g)(2)(B) of Pub. L. 93–406 applicable to distributions made in taxable years beginning after Dec. 31, 1975, see section 2001(i)(5) of Pub. L. 93–406, set out as a note under section 72 of this title.

Amendment by section 2002(g)(2) of Pub. L. 93–406 effective on Jan. 1, 1975, see section 2002(i)(2) of Pub. L. 93–406, set out as an Effective Date note under section 4973 of this title.

Amendment by section 2005(c)(4) of Pub. L. 93–406 applicable only with respect to distributions or payments made after Dec. 31, 1973, in taxable years beginning after Dec. 31, 1973, see section 2005(d) of Pub. L. 93–406, set out as a note under section 402 of this title.

Effective Date of 1971 Amendment

Pub. L. 92–178, title I, § 102(d)(1), (2), Dec. 10, 1971, 85 Stat. 500, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “(1) The amendments made by subsections (a) and (b) [amending this section and section 48 of this title] shall apply to property described in section 50 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]. “(2) In redetermining qualified investment for purposes of section 47(a) of the Internal Revenue Code of 1986 in the case of any property which ceases to be section 38 property with respect to the taxpayer after August 15, 1971, or which becomes public utility property after such date, section 46(c)(2) of such Code shall be applied as amended by subsection (a).”

Pub. L. 92–178, title I, § 105(d), Dec. 10, 1971, 85 Stat. 505, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “The amendments made by this section [amending this section and enacting provisions set out below] shall apply to property described in section 50 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954].”

Pub. L. 92–178, title I, § 106(d), Dec. 10, 1971, 85 Stat. 506, provided that: “The amendments made by subsections (a), (b), and (c)(2) [amending this section] shall apply to taxable years beginning after December 31, 1970. The amendments made by subsection (c)(1) [amending this section] shall apply to taxable years ending after August 15, 1971.”

Pub. L. 92–178, title I, § 107(a)(2), Dec. 10, 1971, 85 Stat. 507, provided that: “The repeals made by paragraph (1) [amending this section and section 47 of this title] shall apply to casualties and thefts occurring after August 15, 1971.”

Pub. L. 92–178, title I, § 108(d), Dec. 10, 1971, 85 Stat. 508, provided that: “The amendments made by subsections (a) and (b) [amending this section and section 48 of this title] shall apply to leases entered into after September 22, 1971. The amendment made by subsection (c) [amending section 48 of this title] shall apply to leases entered into after November 8, 1971.”

Effective Date of 1969 Amendment

Amendment by section 301(b)(4) of Pub. L. 91–172 applicable to taxable years ending after Dec. 31, 1969, see section 301(c) of Pub. L. 91–172, set out as a note under section 5 of this title.

Amendment by section 401(e)(1) of Pub. L. 91–172 applicable with respect to taxable years ending on or after Dec. 31, 1970, see section 401(h)(3) of Pub. L. 91–172, set out as a note under section 1561 of this title.

Effective Date of 1967 Amendment

Pub. L. 90–225, § 2(g), Dec. 27, 1967, 81 Stat. 732, provided that: “The amendments made by this section [amending this section and sections 6411, 6501, 6511, 6601, and 6611 of this title] shall apply with respect to investment credit carrybacks attributable to net operating loss carrybacks from taxable years ending after July 31, 1967.”

Effective Date of 1966 Amendment

Pub. L. 89–800, § 4, Nov. 8, 1966, 80 Stat. 1514, provided that: “The amendments made by this Act [amending this section and sections 48 and 167 of this title] shall apply to taxable years ending after October 9, 1966, except that the amendments made by section 3(b) [amending this section] shall apply only if the fifth taxable year following the unused credit year ends after December 31, 1966.”

Pub. L. 89–389, § 2(c), Apr. 14, 1966, 80 Stat. 114, provided that: “The amendments made by this section [enacting section 1378 of this title and amending this section and sections 1372, 1373, and 1375 of this title] shall apply with respect to taxable years of electing small business corporations beginning after the date of enactment of this Act [Apr. 14, 1966], but such amendments shall not apply with respect to sales or exchanges occurring before February 24, 1966.”

Amendment by Pub. L. 89–384 applicable with respect to amounts received after December 31, 1964, in respect of foreign expropriation losses (as defined in section 1351(b) of this title) sustained after December 31, 1958, see section 2 of Pub. L. 89–384, set out as an Effective Date note under section 1351 of this title.

Effective Date of 1964 Amendment

Amendment by Pub. L. 88–272 applicable with respect to dividends received after Dec. 31, 1964, in taxable years ending after such date, see section 201(e) of Pub. L. 88–272, set out as a note under section 22 of this title.

Effective Date

Pub. L. 87–834, § 2(h), Oct. 16, 1962, 76 Stat. 973, provided that: “The amendments made by this section [enacting this section and sections 38, 47, 48, and 181 of this title, amending sections 381, 1016, 6501, 6511, 6601, and 6611 of this title, and renumbering former section 38 as section 39 of this title] shall apply with respect to taxable years ending after December 31, 1961.”

Savings Provision

For provisions that nothing in amendment by section 11813(a) 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 45K of this title.

Plan Amendments Not Required Until January 1, 1989

For provisions directing that if any amendments made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 1800–1899A] of Pub. L. 99–514 require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of Pub. L. 99–514, as amended, set out as a note under section 401 of this title.

Clarification of Effect of 1984 Amendment on Investment Tax Credit

Pub. L. 98–369, title IV, § 475(c), July 18, 1984, 98 Stat. 847, provided that: “Nothing in the amendments made by section 474(o) [amending this section and sections 47 and 48 of this title] shall be construed as reducing the amount of any credit allowable for qualified investment in taxable years beginning before January 1, 1984.”

Regulated Public Utilities; Special Transitional Rule

Pub. L. 97–34, title II, § 209(d)(2), Aug. 13, 1981, 95 Stat. 227, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “If, by the terms of the applicable rate order last entered before the date of the enactment of this Act [Aug. 13, 1981] by a regulatory commission having appropriate jurisdiction, a regulated public utility would (but for this provision) fail to meet the requirements of paragraph (1) or (2) of section 46(f) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] with respect to property for an accounting period ending after December 31, 1980, such regulated public utility shall not fail to meet such requirements if, by the terms of its first rate order determining cost of service with respect to such property which becomes effective after the date of the enactment of this Act and on or before January 1, 1983, such regulated public utility meets such requirements. This provision shall not apply to any rate order which, under the rules in effect before the date of the enactment of this Act was inconsistent with the requirements of paragraph (1) or (2) of section 46(f) of such Code (whichever would have been applicable).”

Plan Requirements for Taxpayers Electing Additional Credits

Pub. L. 94–12, title III, § 301(d)–(f), Mar. 29, 1975, 89 Stat. 38, as amended by Pub. L. 94–455, title VIII, §§ 802(b)(7), 803(c)–(e), Oct. 4, 1976, 90 Stat. 1583–1588, relating to plan requirements for taxpayers electing additional credit, was repealed by Pub. L. 95–600, title I, § 141(f)(1), Nov. 6, 1978, 92 Stat. 2795.

Public Utility Property Subject to Subsec. (e); Provisions Respecting Treatment of Investment Credit by Federal Regulatory Agencies Inapplicable

Pub. L. 92–178, title I, § 105(e), Dec. 10, 1971, 85 Stat. 506, as amended by Pub. L. 99–514, § 2, Oct. 22, 1986, 100 Stat. 2095, provided that: “Section 203(e) of the Revenue Act of 1964 [set out as note under section 38 of this title] shall not apply to public utility property to which section 46(e) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by subsection (c)) [subsec. (e) of this section] applies.”