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Sec. 196. Deduction For Certain Unused Business Credits

I.R.C. § 196(a) Allowance Of Deduction
If any portion of the qualified business credits determined for any taxable year has not, after the application of section 38(c), been allowed to the taxpayer as a credit under section 38 for any taxable year, an amount equal to the credit not so allowed shall be allowed to the taxpayer as a deduction for the first taxable year following the last taxable year for which such credit could, under section 39, have been allowed as a credit.
I.R.C. § 196(b) Taxpayer's Dying Or Ceasing To Exist
If a taxpayer dies or ceases to exist before the first taxable year following the last taxable year for which the qualified business credits could, under section 39, have been allowed as a credit, the amount described in subsection (a) (or the proper portion thereof) shall, under regulations prescribed by the Secretary, be allowed to the taxpayer as a deduction for the taxable year in which such death or cessation occurs.
I.R.C. § 196(c) Qualified Business Credits
For purposes of this section, the term “qualified business credits” means—
I.R.C. § 196(c)(1)
the investment credit determined under section 46 (but only to the extent attributable to property the basis of which is reduced by section 50(c)),
I.R.C. § 196(c)(2)
the work opportunity credit determined under section 51(a),
I.R.C. § 196(c)(3)
the alcohol fuels credit determined under section 40(a),
I.R.C. § 196(c)(4)
the research credit determined under section 41(a) (other than such credit determined under section 280C(c)(3)) for taxable years beginning after December 31, 1988,
I.R.C. § 196(c)(5)
the enhanced oil recovery credit determined under section 43(a),
I.R.C. § 196(c)(6)
the empowerment zone employment credit determined under section 1396(a),
I.R.C. § 196(c)(7)
the Indian employment credit determined under section 45A(a),
I.R.C. § 196(c)(8)
the employer social security credit determined under section 45B(a),
I.R.C. § 196(c)(9)
the new markets tax credit determined under section 45D(a),
I.R.C. § 196(c)(10)
the small employer pension plan startup cost credit determined under section 45E(a),
I.R.C. § 196(c)(11)
the biodiesel fuels credit determined under section 40A(a),
I.R.C. § 196(c)(12)
the low sulfur diesel fuel production credit determined under section 45H(a),
I.R.C. § 196(c)(13)
the new energy efficient home credit determined under section 45L(a), and
I.R.C. § 196(c)(14)
the small employer health insurance credit determined under section 45R(a).
I.R.C. § 196(d) Special Rule For Investment Tax Credit
Subsection (a) shall be applied by substituting “an amount equal to 50 percent of” for “an amount equal to” in the case of the investment credit determined under section 46 (other than the rehabilitation credit).
(Added Pub. L. 97-248, title II, Sec. 205(a)(2), Sept. 3, 1982, 96 Stat. 428, and amended Pub. L. 98-369, div. A, title IV, Sec. 474(r)(8)(A), July 18, 1984, 98 Stat. 840; Pub. L. 100-647, title IV, Sec. 4008(b)(2), Nov. 10, 1988, 102 Stat. 3653; Pub. L. 101-239, title VII, Sec. 7110(c)(2), 7814(e)(1), (2)(D), Dec. 19, 1989, 103 Stat. 2325, 2413, 2414; Pub. L. 101-508, title XI, Sec. 11511(b)(3), 11813(b)(12), Nov. 5, 1990, 104 Stat. 1388-485, 1388-554; Pub. L. 103-66, title XIII, Sec. 13302(b)(2), 13322(c)(2), Aug. 10, 1993; Pub. L. 104-188, title I, Sec. 1201(e)(1), Aug. 20, 1996, 110 Stat. 1755; Pub. L. 105-206, title VI, Sec. 6020(a), July 22, 1998, 112 Stat 685; Pub. L. 106-554, Sec. 121, Dec. 21, 2000, 114 Stat. 2763; Pub. L. 107-16, title VI, Sec. 618(c)(2), June 7, 2001, 115 Stat. 38; Pub. L. 108-357, title III, Sec. 302(c)(2), 339(e), Oct. 22, 2004, 118 Stat. 1418; Pub. L. 109-58, title XIII, Sec. 1332(d), Aug. 8, 2005, 119 Stat. 594; Pub. L. 111-148, Sec. 1421(d)(2), 10105(e), Mar. 23, 2010, 124 Stat. 119; Pub. L. 115-141, Div. U, title IV, Sec. 401(b)(16), Mar. 23, 2018, 132 Stat. 348.)
BACKGROUND NOTES
AMENDMENTS
2018 - Subsec. (d). Pub. L. 115-141, Div. U, Sec. 401(b)(16)(A), amended subsec. (d) by substituting “in the case of the investment credit determined under section 46 (other than the rehabilitation credit).’’ for
“in the case of—
“(1) the investment credit determined under section 46 (other than the rehabilitation credit), and
“(2) the research credit determined under section 41(a) for a taxable year beginning before January 1, 1990.”
Sec. 401(b)(16)(B), amended subsec. (d) by striking “And Research Credit” in the heading thereof.
2010 - Subsec. (c)(12)-(14). Pub. L. 111-148, Sec. 1421(d)(2), amended subsec. (c) by striking “and” at the end of par. (12), by substituting “, and” for the period at the end of par. (13), and by adding par. (14).
2005 - Subsec. (c)(11)-(13). Pub. L. 109-58, Sec. 1332(d), amended subsec. (c) by striking “and” at the end of par. (11), by substituting “, and” for the period at the end of par. (12), and by adding par. (13).
2004 - Subsec. (c)(9)-(11). Pub. L. 108-357, Sec. 302(c)(2), amended subsec. (c) by striking “and” at the end of par. (9), by substituting “, and” for the period at the end of par. (10), and by adding par. (11).
Subsec. (c)(10)-(12). Pub. L. 108-357, Sec. 339(e), amended subsec. (c) by striking “and” at the end of par. (10), by substituting “, and” for the period at the end of par. (12), and by adding par. (12).
2001 - Subsec. (c). Pub. L. 107-16, Sec. 619(c)(2), amended subsec. (c) by striking “and” at the end of par. (8), by substituting “, and” for the period at the end of par. (9), and by adding par. (10).
2000 - Subsec. (c). Pub. L. 106-554, Sec. 121(c), amended subsec. (c) by striking “and” at the end of par. (7), by substituting “, and” for the period at the end of par. (8), and by adding par. (9).
1998 - Subsec. (c). Pub. L. 105-206, Sec. 6020(a), amended subsec. (c) by striking “and” at the end of par. (6); by substituting “, and” for “.” at the end of par. (7); and by adding par. (8).
1996 - Subsec. (c). Pub. L. 104-188, Sec. 1201(e)(1) substituted ‘work opportunity credit’ for ‘targeted jobs credit’.
1993 - Subsec. (c)(4)-(6). Pub. L. 103-66, Sec. 13302(b)(2), amended subsec. (c) by striking “and” at the end of par. (4); by substituting “, and” for the period at the end of par. (5); and by adding a new par. (6).
Subsec. (c)(5)-(7). Pub. L. 103-66, Sec. 13322(c)(2), amended subsec. (c) by striking “and” at the end of par. (5); by substituting “, and” for the period at the end of par. (6); and by adding new par. (7).
1990 - Subsec. (c)(1). Pub. L. 101-508, Sec. 11813(b)(12)(A), substituted ‘section 46’ for ‘section 46(a)’ and ‘section 50(c)’ for ‘section 48(q)’.
Subsec. (c)(5). Pub. L. 101-508, Sec. 11511(b)(3), added par. (5).
Subsec. (d)(1). Pub. L. 101-508, Sec. 11813(b)(12)(B), substituted ‘section 46’ for ‘section 46(a)’ and ‘other than the rehabilitation credit’ for ‘other than a credit to which section 48(q)(3) applies’.
1989 - Subsec. (c)(4). Pub. L. 101-239, Sec. 7814(e)(2)(D), inserted ‘(other than such credit determined under section 280C(c)(3))’ after ‘section 41(a)’.
Subsec. (d). Pub. L. 101-239, Sec. 7814(e)(1), substituted ‘substituting ‘an amount equal to 50 percent of’ for ‘an amount equal to’ in the case of' for ‘substituting an amount equal to 50 percent of for an amount equal to in the case of’ in introductory provisions.
Subsec. (d)(2). Pub. L. 101-239, Sec. 7110(c)(2), inserted ‘for a taxable year beginning before January 1, 1990’ after ‘under section 41(a)’.
1988 - Subsec. (c)(4). Pub. L. 100-647, Sec. 4008(b)(2)(A), added par. (4).
Subsec. (d). Pub. L. 100-647, Sec. 4008(b)(2)(B), inserted ‘and research credit’ after ‘tax credit’ in heading and amended text generally. Prior to amendment, text read as follows: ‘In the case of the investment credit determined under section 46(a) (other than a credit to which section 48(q)(3) applies), subsection (a) shall be applied by substituting ‘an amount equal to 50 percent of’ for ‘an amount equal to’.'
1984 - Pub. L. 98-369 amended section generally, substituting provisions relating to deduction for certain unused business credits for provisions relating to deduction for certain unused investment credits.
EFFECTIVE DATE OF 2018 AMENDMENTS
Amendments by Pub. L. 115-141, Div. U, Sec. 401(b)(16), effective March 23, 2018.
Sec. 401(e) of Pub. L. 115-141, Div. U, provided the following savings provision:
“(e) General Savings Provision With Respect To Deadwood Provisions.—If—
“(1) any provision amended or repealed by the amendments made by subsection (b) or (d) applied to—
“(A) any transaction occurring before the date of the enactment of this Act,
“(B) any property acquired before such date of enactment, or
“(C) any item of income, loss, deduction, or credit taken into account before such date of enactment, and
“(2) the treatment of such transaction, property, or item under such provision would (without regard to the amendments or repeals made by such subsection) affect the liability for tax for periods ending after such date of enactment,
“nothing in the amendments or repeals made by this section shall be construed to affect the treatment of such transaction, property, or item for purposes of determining liability for tax for periods ending after such date of enactment.”
EFFECTIVE DATE OF 2010 AMENDMENTS
Amendments by section 1421(d) of Pub. L. 111-148, as amended by Sec. 10105(e), effective for amounts paid or incurred in taxable years beginning after December 31, 2009.
EFFECTIVE DATE OF 2005 AMENDMENTS
Amendments by section 1332(d) of Pub. L. 109-58 effective for qualified new energy efficient homes acquired after December 31, 2005, in taxable years ending after such date.
EFFECTIVE DATE OF 2004 AMENDMENTS
Amendments by section 302(c)(2) of Pub. L. 108-357 effective for fuel produced, and sold or used, after December 31, 2004, in taxable years ending after such date.
Amendments by section 339(e) of Pub. L. 108-357 effective for expenses paid or incurred after December 31, 2002, in taxable years ending after such date.
EFFECTIVE DATE OF 2001 AMENDMENTS
Section 619(d) of Pub. L. 107-16, as amended by Pub. L. 107-147, Sec. 411(n)(2), provided that: “The amendments made by this section shall apply to costs paid or incurred in taxable years beginning after December 31, 2001, with respect to qualified employer plans first effective after such date.”
Section 901 (Sunset of Provisions of Act) of Pub. L. 107-16, as amended by Pub. L. 107-358, provided that:
“(a) IN GENERAL.--All provisions of, and amendments made by, this Act shall not apply--
“(1) to taxable, plan, or limitation years beginning after December 31, 2010, or
“(2) in the case of title V, to estates of decedents dying, gifts made, or generation skipping transfers, after December 31, 2010.
“(b) APPLICATION OF CERTAIN LAWS.--The Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 shall be applied and administered to years, estates, gifts, and transfers described in subsection (a) as if the provisions and amendments described in subsection (a) had never been enacted.
“(c) EXCEPTION.-Subsection (a) shall not apply to section 803 (relating to no federal income tax on restitution received by victims of the Nazi regime or their heirs or estates).”
PENSIONS AND INDIVIDUAL RETIREMENT ARRANGEMENT PROVISIONS OF ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT OF 2001 MADE PERMANENT
Section 811 of Pub. L. 109-280 provided that:
“Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16] shall not apply to the provisions of, and amendments made by, subtitles A through F [Sections 601-666] of title VI of such Act (relating to pension and individual retirement arrangement provisions).”
EFFECTIVE DATE OF 2000 AMENDMENTS
Amendments by section 121(c) of Pub. L. 106-554 effective for investments made after December 31, 2000.
EFFECTIVE DATE OF 1998 AMENDMENTS
Amendment by section 6020(a) of Pub. L. 105-206 effective as if included in the amendments made by section 13443 of the Revenue Reconciliation Act of 1993 [Effective Date of Pub. L. 103-66, Sec. 13443: Taxes paid after December 31, 1993].
EFFECTIVE DATE OF 1996 AMENDMENTS
Amendment by section 1201(1) of Pub. L. 104-188 applicable to individuals who begin work for the employer after September 30, 1996.
EFFECTIVE DATE OF 1993 AMENDMENTS
Amendment by section 13302(b)(2) of Pub. L. 103-66 applicable on the date of the enactment of this Act [Enacted: Aug. 10, 1993].
Amendment by section 13322(c)(2) of Pub. L. 103-66 applicable for wages paid or incurred after December 31, 1993.
EFFECTIVE DATE OF 1990 AMENDMENTS
Amendment by section 11511(b)(3) of Pub. L. 101-508 applicable to costs paid or incurred in taxable years beginning after Dec. 31, 1990, see section 11511(d)(1) of Pub. L. 101-508, set out as an Effective Date note under section 43 of this title.
Amendment by section 11813(b)(12) of Pub. L. 101-508 applicable to property placed in service after Dec. 31, 1990, but not applicable to any transition property (as defined in section 49(e) of this title), any property with respect to which qualified progress expenditures were previously taken into account under section 46(d) of this title, and any property described in section 46(b)(2)(C) of this title, as such sections were in effect on Nov. 4, 1990, see section 11813(c) of Pub. L. 101-508, set out as a note under section 29 of this title.
EFFECTIVE DATE OF 1989 AMENDMENTS
Amendment by section 7110(c)(2) of Pub. L. 101-239 applicable to taxable years beginning after Dec. 31, 1989, see section 7110(e) of Pub. L. 101-239, set out as a note under section 41 of this title.
Amendment by section 7814(e)(1), (2)(D) of Pub. L. 101-239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, to which such amendment relates, see section 7817 of Pub. L. 101-239, set out as a note under section 1 of this title.
EFFECTIVE DATE OF 1988 AMENDMENTS
Amendment by Pub. L. 100-647 applicable to taxable years beginning after Dec. 31, 1988, see section 4008(d) of Pub. L. 100-647, set out as a note under section 41 of this title.
EFFECTIVE DATE OF 1984 AMENDMENTS
Amendment by Pub. L. 98-369 applicable to taxable years beginning after Dec. 31, 1983, and to carrybacks from such years, see section 475(a) of Pub. L. 98-369, set out as a note under section 21 of this title.
EFFECTIVE DATE
Section 205(c)(1) of Pub. L. 97-248, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
‘(A) General rule. - Except as otherwise provided in this paragraph, the amendments made by subsection (a) (enacting this section and amending sections 48, 312, and 1016 of this title) shall apply to periods after December 31, 1982, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954).
‘(B) Exception. - The amendments made by subsection (a) shall not apply to any property which -
‘(i) is constructed, reconstructed, erected, or acquired pursuant to a contract which was entered into after August 13, 1981, and was, on July 1, 1982, and at all times thereafter, binding on the taxpayer,
‘(ii) is placed in service after December 31, 1982, and before January 1, 1986,
‘(iii) with respect to which an election under section 168(f)(8)(A) of such Code is not in effect at any time, and
‘(iv) is not described in section 167(l)(3)(A) of such Code.
‘(C) Special rule for intergrated manufacturing facilities. -
‘(i) In general. - In the case of any integrated manufacturing facility, the requirements of clause (i) of subparagraph (B) shall be treated as met if -
‘(I) the on-site construction of the facility began before July 1, 1982, and
‘(II) during the period beginning after August 13, 1981, and ending on July 1, 1982, the taxpayer constructed (or entered into binding contracts for the construction of) more than 20 percent of the cost of such facility.
‘(ii) Intergrated manufacturing facility. - For purposes of clause (i), the term ‘intergrated manufacturing facility’ means 1 or more facilities -
‘(I) located on a single site,
‘(II) for the manufacture of 1 or more manufactured products from raw materials by the application of 2 or more integrated manufacturing processes.
‘(D) Special rule for historic structures. - In the case of any certified historic structure (as defined in section 48(g)(3) of the Internal Revenue Code of 1986), clause (i) of subparagraph (B) shall be applied by substituting ‘December 31, 1980’ for ‘August 13, 1981.’
‘(E) Certain projects with respect to historic structures. - In the case of any certified historic structure (as so defined), the requirements of clause (i) of subparagraph (B) shall be treated as met with respect to such property -
‘(i) if the rehabilitation begins after December 31, 1980, and before July 1, 1982, or
‘(ii) if -
‘(I) before July 1, 1982, a public offering with respect to interests in such property was registered with the Securities and Exchange Commission,
‘(II) before such date an application with respect to such property was filed under section 8 of the United States Housing Act of 1937 (section 1437f of Title 42, The Public Health and Welfare), and
‘(III) such property is placed in service before July 1, 1984.’
SAVINGS PROVISION
For provisions that nothing in amendment by section 11813(b)(12) 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 29 of this title.