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United States Code (Last Updated: May 24, 2014) |
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Title 26. INTERNAL REVENUE CODE |
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SubTitle A. Income Taxes |
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Chapter 1. NORMAL TAXES AND SURTAXES |
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SubChapter A. Determination of Tax Liability |
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Part VI. ALTERNATIVE MINIMUM TAX |
§ 57. Items of tax preference
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(a) General rule For purposes of this part, the items of tax preference determined under this section are— (1) Depletion With respect to each property (as defined in section 614), the excess of the deduction for depletion allowable under section 611 for the taxable year over the adjusted basis of the property at the end of the taxable year (determined without regard to the depletion deduction for the taxable year). Effective with respect to taxable years beginning after
December 31, 1992 , this paragraph shall not apply to any deduction for depletion computed in accordance with section 613A(c).(2) Intangible drilling costs (A) In general With respect to all oil, gas, and geothermal properties of the taxpayer, the amount (if any) by which the amount of the excess intangible drilling costs arising in the taxable year is greater than 65 percent of the net income of the taxpayer from oil, gas, and geothermal properties for the taxable year.
(B) Excess intangible drilling costs For purposes of subparagraph (A), the amount of the excess intangible drilling costs arising in the taxable year is the excess of— (i) the intangible drilling and development costs paid or incurred in connection with oil, gas, and geothermal wells (other than costs incurred in drilling a nonproductive well) allowable under section 263(c) or 291(b) for the taxable year, over (ii) the amount which would have been allowable for the taxable year if such costs had been capitalized and straight line recovery of intangibles (as defined in subsection (b)) had been used with respect to such costs. (C) Net income from oil, gas, and geothermal properties For purposes of subparagraph (A), the amount of the net income of the taxpayer from oil, gas, and geothermal properties for the taxable year is the excess of— (i) the aggregate amount of gross income (within the meaning of section 613(a)) from all oil, gas, and geothermal properties of the taxpayer received or accrued by the taxpayer during the taxable year, over (ii) the amount of any deductions allocable to such properties reduced by the excess described in subparagraph (B) for such taxable year. (D) Paragraph applied separately with respect to geothermal properties and oil and gas properties This paragraph shall be applied separately with respect to— (i) all oil and gas properties which are not described in clause (ii), and (ii) all properties which are geothermal deposits (as defined in section 613(e)(2)). (E) Exception for independent producers In the case of any oil or gas well— (i) In general In the case of any taxable year beginning after
December 31, 1992 , this paragraph shall not apply to any taxpayer which is not an integrated oil company (as defined in section 291(b)(4)).(ii) Limitation on benefit The reduction in alternative minimum taxable income by reason of clause (i) for any taxable year shall not exceed 40 percent (30 percent in case of taxable years beginning in 1993) of the alternative minimum taxable income for such year determined without regard to clause (i) and the alternative tax net operating loss deduction under section 56(a)(4).
[(3) Repealed. Pub. L. 100–647, title I, § 1007(b)(14)(B), Nov. 10, 1988 , 102 Stat. 3430][(4) Repealed. Pub. L. 104–188, title I, § 1616(b)(3), Aug. 20, 1996 , 110 Stat. 1856](5) Tax-exempt interest (A) In general Interest on specified private activity bonds reduced by any deduction (not allowable in computing the regular tax) which would have been allowable if such interest were includible in gross income.
(B) Treatment of exempt-interest dividends Under regulations prescribed by the Secretary, any exempt-interest dividend (as defined in section 852(b)(5)(A)) shall be treated as interest on a specified private activity bond to the extent of its proportionate share of the interest on such bonds received by the company paying such dividend.
(C) Specified private activity bonds (i) In general For purposes of this part, the term “specified private activity bond” means any private activity bond (as defined in section 141) which is issued after
August 7, 1986 , and the interest on which is not includible in gross income under section 103.(ii) Exception for qualified 501(c)(3) bonds For purposes of clause (i), the term “private activity bond” shall not include any qualified 501(c)(3) bond (as defined in section 145).
(iii) Exception for certain housing bonds For purposes of clause (i), the term “private activity bond” shall not include any bond issued after the date of the enactment of this clause if such bond is— (I) an exempt facility bond issued as part of an issue 95 percent or more of the net proceeds of which are to be used to provide qualified residential rental projects (as defined in section 142(d)), (II) a qualified mortgage bond (as defined in section 143(a)), or (III) a qualified veterans’ mortgage bond (as defined in section 143(b)). The preceding sentence shall not apply to any refunding bond unless such preceding sentence applied to the refunded bond (or in the case of a series of refundings, the original bond). (iv) Exception for refundings For purposes of clause (i), the term “private activity bond” shall not include any refunding bond (whether a current or advance refunding) if the refunded bond (or in the case of a series of refundings, the original bond) was issued before
August 8, 1986 .(v) Certain bonds issued before September 1, 1986 For purposes of this subparagraph, a bond issued before September 1, 1986 , shall be treated as issued beforeAugust 8, 1986 , unless such bond would be a private activity bond if—(I) paragraphs (1) and (2) of section 141(b) were applied by substituting “25 percent” for “10 percent” each place it appears, (II) paragraphs (3), (4), and (5) of section 141(b) did not apply, and (III) subparagraph (B) of section 141(c)(1) did not apply. (vi) Exception for bonds issued in 2009 and 2010 (I) In general For purposes of clause (i), the term “private activity bond” shall not include any bond issued after
December 31, 2008 , and beforeJanuary 1, 2011 .(II) Treatment of refunding bonds For purposes of subclause (I), a refunding bond (whether a current or advance refunding) shall be treated as issued on the date of the issuance of the refunded bond (or in the case of a series of refundings, the original bond).
(III) Exception for certain refunding bonds Subclause (II) shall not apply to any refunding bond which is issued to refund any bond which was issued after
December 31, 2003 , and beforeJanuary 1, 2009 .(6) Accelerated depreciation or amortization on certain property placed in service before January 1, 1987 The amounts which would be treated as items of tax preference with respect to the taxpayer under paragraphs (2), (3), (4), and (12) of this subsection (as in effect on the day before the date of the enactment of the Tax Reform Act of 1986). The preceding sentence shall not apply to any property to which section 56(a)(1) or (5) applies.
(7) Exclusion for gains on sale of certain small business stock An amount equal to 7 percent of the amount excluded from gross income for the taxable year under section 1202.
(b) Straight line recovery of intangibles defined For purposes of paragraph (2) of subsection (a)— (1) In general The term “straight line recovery of intangibles”, when used with respect to intangible drilling and development costs for any well, means (except in the case of an election under paragraph (2)) ratable amortization of such costs over the 120-month period beginning with the month in which production from such well begins.
(2) Election If the taxpayer elects with respect to the intangible drilling and development costs for any well, the term “straight line recovery of intangibles” means any method which would be permitted for purposes of determining cost depletion with respect to such well and which is selected by the taxpayer for purposes of subsection (a)(2).
References In Text
The date of the enactment of this clause, referred to in subsec. (a)(5)(C)(iii), is the date of enactment of Pub. L. 110–289, which was approved
The date of the enactment of the Tax Reform Act of 1986, referred to in subsec. (a)(6), is the date of enactment of Pub. L. 99–514, which was approved
Prior Provisions
A prior section 57, added Pub. L. 91–172, title III, § 301(a),
Amendments
2009—Subsec. (a)(5)(C)(vi). Pub. L. 111–5 added cl. (vi).
2008—Subsec. (a)(5)(C)(iii) to (v). Pub. L. 110–289 added cl. (iii) and redesignated former cls. (iii) and (iv) as (iv) and (v), respectively.
2003—Subsec. (a)(7). Pub. L. 108–27 substituted “7 percent” for “42 percent” after “An amount equal to” and struck out last sentence which read as follows: “In the case of stock the holding period of which begins after
1998—Subsec. (a)(7). Pub. L. 105–206 inserted at end “In the case of stock the holding period of which begins after
1997—Subsec. (a)(7). Pub. L. 105–34 substituted “42 percent” for “one-half”.
1996—Subsec. (a)(4). Pub. L. 104–188 struck out par. (4) which read as follows: “Reserves for losses on bad debts of financial institutions.—In the case of a financial institution to which section 593 applies, the amount by which the deduction allowable for the taxable year for a reasonable addition to a reserve for bad debts exceeds the amount that would have been allowable had the institution maintained its bad debt reserve for all taxable years on the basis of actual experience.”
1993—Subsec. (a)(6), (7). Pub. L. 103–66, § 13171(a), redesignated pars. (7) and (8) as (6) and (7), respectively, and struck out heading and text of former par. (6). Text read as follows:
“(A) In general.—The amount by which the deduction allowable under section 170 or 642(c) would be reduced if all capital gain property were taken into account at its adjusted basis.
“(B) Capital gain property.—For purposes of subparagraph (A), the term ‘capital gain property’ has the meaning given to such term by section 170(b)(1)(C)(iv). Such term shall not include any property to which an election under section 170(b)(1)(C)(iii) applies. In the case of any taxable year beginning in 1991, such term shall not include any tangible personal property. In the case of a contribution made before
Subsec. (a)(8). Pub. L. 103–66, § 13171(a), redesignated par. (8) as (7).
Pub. L. 103–66, § 13113(b)(1), added par. (8).
1992—Subsec. (a)(1). Pub. L. 102–486, § 1915(a)(1), inserted at end “Effective with respect to taxable years beginning after
Subsec. (a)(2)(E). Pub. L. 102–486, § 1915(b)(1), added subpar. (E).
1991—Subsec. (a)(6)(B). Pub. L. 102–227 inserted at end “In the case of a contribution made before
1990—Subsec. (a)(2)(D)(ii). Pub. L. 101–508, § 11815(b)(3), substituted “section 613(e)(2)” for “section 613(e)(3)”.
Subsec. (a)(4). Pub. L. 101–508, § 11801(c)(12)(A), struck out “585 or” after “section”.
Subsec. (a)(6)(B). Pub. L. 101–508, § 11344, inserted at end “In the case of any taxable year beginning in 1991, such term shall not include any tangible personal property.”
1988—Subsec. (a)(3). Pub. L. 100–647, § 1007(b)(14)(B), struck out par. (3) which related to incentive stock options.
Subsec. (a)(5)(C)(i). Pub. L. 100–647, § 1007(c)(2), amended cl. (i) generally. Prior to amendment, cl. (i) read as follows: “For purposes of this part, the term ‘specified private activity bonds’ means any private activity bond (as defined in section 141) issued after
Subsec. (a)(5)(C)(iii). Pub. L. 100–647, § 1007(c)(1), inserted “(whether a current or advance refunding)” after “any refunding bond”.
Subsec. (a)(6)(A). Pub. L. 100–647, § 1007(c)(3), inserted “or 642(c)” after “section 170”.
Effective Date Of Amendment
Amendment by Pub. L. 111–5 applicable to obligations issued after
Amendment by Pub. L. 110–289 applicable to bonds issued after
Amendment by Pub. L. 108–27 applicable to dispositions on or after
Amendment by 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.
Amendment by Pub. L. 105–34 applicable to taxable years ending after
Amendment by Pub. L. 104–188 applicable to taxable years beginning after
Amendment by section 13113(b)(1) of Pub. L. 103–66 applicable to stock issued after
Amendment by section 13171(a) of Pub. L. 103–66 applicable to contributions made after
Amendment by Pub. L. 102–486 applicable to taxable years beginning after
Amendment by section 1007(b)(14)(B) of Pub. L. 100–647 applicable with respect to options exercised after
Amendment by section 1007(c) 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.
Effective Date
Section applicable to taxable years beginning after
Savings
For provisions that nothing in amendment by sections 11801 and 11815 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
Miscellaneous
Pub. L. 100–647, title I, § 1007(f)(4),
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