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Internal Revenue Code, § 115. Income Of States, Municipalities, Etc.

Gross income does not include—
I.R.C. § 115(1)
income derived from any public utility or the exercise of any essential governmental function and accruing to a State or any political subdivision thereof, or the District of Columbia; or
I.R.C. § 115(2)
income accruing to the government of any possession of the United States, or any political subdivision thereof.
(Aug. 16, 1954, ch. 736, 68A Stat. 35; Oct. 4, 1976, Pub. L. 94-455, title XIX, 1901(a)(19), 90 Stat. 1766.)
BACKGROUND NOTES
AMENDMENTS
1976--Pub. L. 94-455 struck out “(a) General rule” before “Gross income does not include”, struck out subsecs. (b) and (c) which related to contracts concerning public utilities made before Sept. 8, 1916, and contracts concerning bridge acquisition made before May 29, 1928, respectively, and in par. (1) of former subsec. (a), struck out “or territory” after “accruing to a State”.
EFFECTIVE DATE OF 1976 AMENDMENT
Amendment by 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.
TAX TREATMENT OF STATE OWNERSHIP OF RAILROAD REAL ESTATE INVESTMENT TRUST
Sec. 11146(a) of Pub. L. 109-59 provided that:
”(a) In General- If a State owns all of the outstanding stock of a corporation--
”(1) which is a real estate investment trust on the date of the enactment of this Act,
”(2) which is a non-operating class III railroad, and
”(3) substantially all of the activities of which consist of the ownership, leasing, and operation by such corporation of facilities, equipment, and other property used by the corporation or other persons for railroad transportation and for economic development purposes for the benefit of the State and its citizens, then, to the extent such activities are of a type which are an essential governmental function within the meaning of section 115 of the Internal Revenue Code of 1986, income derived from such activities by the corporation shall be treated as accruing to the State for purposes of section 115 of such Code.”
[116. Repealed. Pub. L. 99-514, title VI, 612(a), Oct. 22, 1986, 100 Stat. 2250]
Section, acts Aug. 16, 1954, ch. 736, 68A Stat. 37; June 25, 1959, Pub. L. 86-69, 3(a)(2), 73 Stat. 139; Sept. 14, 1960, Pub. L. 86-779, 10(f), 74 Stat. 1009; Feb. 26, 1964, Pub. L. 88-272, title II, 201(c), (d)(6)(C), 78 Stat. 32; Nov. 13, 1966, Pub. L. 89-809, title I, 103(g), 80 Stat. 1552; Oct. 4, 1976, Pub. L. 94-455, title X, 1051(h)(2), 1053(d)(1), title XIX, 1901(a)(20), 90 Stat. 1647, 1649, 1766; Apr. 2, 1980, Pub. L. 96-223, title IV, 404(a), 94 Stat. 305; Aug. 13, 1981, Pub. L. 97-34, title III, 302(b)(2), 95 Stat. 272; July 18, 1984, Pub. L. 98-369, div. A, title V, 542(b), 98 Stat. 891, authorized partial exclusion of dividends received by individuals.
Effective Date of Repeal
Repeal applicable to taxable years beginning after Dec. 31, 1986, see section 612(c) of Pub. L. 99-514, set out as an Effective Date of 1986 Amendment note under section 301 of this title.