I.R.C. § 45G(a) General Rule —
For purposes of section 38, the railroad track maintenance credit determined under this section for the taxable
year is an amount equal to 40 percent (50 percent in the case of any taxable year
beginning before January 1, 2023)
of the qualified railroad track maintenance expenditures paid or incurred by an eligible
taxpayer during the taxable year.
I.R.C. § 45G(b) Limitation
I.R.C. § 45G(b)(1) In General —
The credit allowed under subsection (a) for any taxable year shall not exceed the product of—
I.R.C. § 45G(b)(1)(A) —
$3,500, multiplied by
I.R.C. § 45G(b)(1)(B) —
the sum of—
I.R.C. § 45G(b)(1)(B)(i) —
the number of miles of railroad track owned or leased by the eligible taxpayer as
of the close of the taxable year, and
I.R.C. § 45G(b)(1)(B)(ii) —
the number of miles of railroad track assigned for purposes of this subsection to
the eligible taxpayer by a Class II or Class III railroad which owns or leases such
railroad track as of the close of the taxable year.
I.R.C. § 45G(b)(2) Assignments —
With respect to any assignment of a mile of railroad track under paragraph (1)(B)(ii)—
I.R.C. § 45G(b)(2)(A) —
such assignment may be made only once per taxable year of the Class II or Class
III railroad and shall be treated as made as of the close of such taxable year,
I.R.C. § 45G(b)(2)(B) —
such mile may not be taken into account under this section by such railroad for such
taxable year, and
I.R.C. § 45G(b)(2)(C) —
such assignment shall be taken into account for the taxable year of the assignee
which includes the date that such assignment is treated as effective.
I.R.C. § 45G(c) Eligible Taxpayer —
For purposes of this section, the term “eligible taxpayer” means—
I.R.C. § 45G(c)(1) —
any Class II or Class III railroad, and
I.R.C. § 45G(c)(2) —
any person who transports property using the rail facilities of a Class II or Class
III railroad or who furnishes railroad-related property or services to a Class II
or Class III railroad, but only with respect to miles of railroad track assigned
to such person by such Class II or Class III railroad for purposes of subsection
(b).
I.R.C. § 45G(d) Qualified Railroad Track Maintenance Expenditures —
For purposes of this section, the term “qualified railroad track maintenance expenditures”
means gross expenditures
(whether or not otherwise chargeable to capital account) for maintaining railroad
track (including roadbed, bridges, and related track structures)
owned or leased as of January 1, 2015, by a Class II or Class III railroad (determined
without regard to any consideration for such
expenditures given by the Class II or Class III railroad which made the assignment
of such track).
I.R.C. § 45G(e) Other Definitions And Special Rules
I.R.C. § 45G(e)(1) Class II Or Class III Railroad —
For purposes of this section, the terms “Class II railroad” and “Class III railroad”
have the respective meanings given such terms by the Surface Transportation Board.
I.R.C. § 45G(e)(2) Controlled Groups —
Rules similar to the rules of paragraph (1) of section 41(f) shall apply for purposes of this section.
I.R.C. § 45G(e)(3) Basis Adjustment —
For purposes of this subtitle, if a credit is allowed under this section with respect
to any railroad track, the basis of such track shall be reduced by the amount of
the credit so allowed.
(Added by Pub. L. 108-357, title II, Sec. 245(a), Oct. 22, 2004, 118 Stat. 1418; and amended by Pub. L. 109-135, title IV, Sec. 403(f), Dec. 21, 2005, 119 Stat. 2577; Pub. L. 109-432, div. A, title IV,
Sec. 423(a), Dec. 20, 2006, 120 Stat. 2922; Pub. L. 110-343, Div. C, Sec. 316(a), Oct. 3, 2008, 122 Stat. 3765; Pub. L. 111-312, Sec. 734, Dec. 17, 2010, 124 Stat. 3296; Pub. L. 112-240, title III, Sec. 306, Jan. 2, 2013, 126 Stat. 2313; Pub. L. 113-295, Div. A, title I, Sec. 116(a), Dec. 19, 2014, 128 Stat. 4010; Pub. L. 114-113, Div. Q, title I, Sec. 162, Dec. 18, 2015, Pub. L. 115-123, Div. D, title I, Sec. 40302(a), Feb. 9, 2018, 132 Stat. 64; Pub. L. 116-94, Div. Q, title I, Sec. 112(a), Dec. 20, 2019; Pub. L. 116-260, Div. EE, title I, Sec. 105, Dec. 27, 2020, 134 Stat. 1182.)
BACKGROUND NOTES
AMENDMENTS
2020 - Subsec. (a). Pub. L. 116-260, Div. EE, Sec. 105(b), amended subsec. (a) by substituting “40 percent (50 percent
in the case of any taxable year 16 beginning before January 1, 2023)”
for “50 percent”.
Subsec. (f). Pub. L. 116-260, Div. EE, Sec. 105(a), amended by striking subsection
(f). Prior to amendment it read as follows:
“(f) Application Of Section.—This
section shall apply to qualified railroad track maintenance expenditures
paid or incurred during taxable years beginning after December 31, 2004, and before
January 1, 2023.”
2019 -- Subsec. (f). Pub. L. 116-94, Div. Q, Sec. 112(a), amended subsec. (f) by substituting “January 1, 2023” for “January
1, 2018”.
2018 -
Subsec. (f). Pub. L. 115-123, Sec, 40302(a), amended subsec. (f) by substituting ‘‘January 1, 2018’’ for ‘‘January
1, 2017’’.
2015 - Subsec. (d). Pub. L. 114-113, Div. Q, Sec. 162(b), amended subsec. (f) by substituting “January 1, 2015,” for
“January 1, 2005,”.
Subsec. (f). Pub. L. 114-113, Div. Q, Sec. 162(a), amended subsec. (f) by substituting “January 1, 2017” for “January
1, 2015”.
2014 - Subsec. (f). Pub. L. 113-295, Div. A, Sec. 116(a), amended subsec.
(f) by substituting “January 1, 2015” for “January 1, 2014”.
2013 - Subsec. (f). Pub. L. 112-240, Sec. 306(a), amended subsec. (f) by substituting “January 1, 2014”
for “January 1, 2012”.
2010
- Subsec. (f). Pub. L. 111-312, Sec. 734(a), amended subsec. (f) by substituting “December 31, 2012” for “December 31, 2010”.
2008
- Subsec. (f). Pub. L. 110-343, Div. C, Sec. 316(a), amended subsec. (f) by substituting “December 31, 2010” for
“December 31, 2008”.
2006 - Subsec. (d). Pub. L. 109-432, Sec. 423(a), amended subsec. (d) by inserting “gross” after “means”
and by inserting “(determined without regard to any consideration for such expenditures
given by the Class II or Class III railroad which made the assignment of such
track)” after Class II or Class III railroad”.
2005 - Subsec. (b). Pub. L. 109-135, Sec. 403(f)(1), amended subsec. (b). Before amendment, it read as follows:
“(b) LIMITATION-
“The credit allowed under subsection (a) for any taxable year shall not exceed the
product of--
“(1) $3,500, and
“(2) the number of miles of railroad track owned or leased by the eligible taxpayer
as of the close of the taxable year. A mile of railroad track may be taken into account
by a person other than the owner only if such mile is assigned to such person by the
owner for purposes of this subsection. Any mile which is so assigned may not be taken
into account by the owner for purposes of this subsection.”
Subsec. (c)(2). Pub. L. 109-135, Sec. 403(f)(2), amended par. (2). Before amendment, it read as follows:
“(2) any person who transports property using the rail facilities of a person described
in paragraph (1) or who furnishes railroad-related property or services to such a
person.”
EFFECTIVE DATE OF 2020 AMENDMENTS
Amendments by Pub. L. 116-260, Div. EE, Sec. 105, effective for taxable years ending after the date of the enactment
of this Act [Enacted: Dec. 27, 2020].
EFFECTIVE DATE OF 2019 AMENDMENT
Amendment by Pub. L. 116-94, Div. Q, Sec. 112(a), effective for expenditures paid or incurred during taxable
years beginning after December 31, 2017.
EFFECTIVE DATE OF 2018 AMENDMENT
Amendment by Pub. L. 115-123, Sec. 40302(a), effective for expenditures paid or incurred in taxable years beginning after December
31, 2016. Sec. 40302(b)(2) of Pub. L. 115-123 provided the following rule:
“(2) SAFE HARBOR ASSIGNMENTS.—Assignments, including related expenditures paid or
incurred, under paragraph (2)
of section 45G(b) of the Internal Revenue Code of 1986 for taxable years ending after January 1, 2017, and before January 1, 2018,
shall be treated as effective as of the close of such taxable year if made pursuant
to a written agreement entered into no later than 90 days following the date of the
enactment of this Act [Feb. 9, 2018].”
EFFECTIVE DATE OF 2015 AMENDMENTS
Amendment by Pub. L. 114-113, Div. Q, Sec. 162(a), effective for expenditures paid or incurred during taxable
years beginning after December 31, 2014.
Amendment by Pub. L. 114-113, Div. Q, Sec. 162(b), effective for expenditures paid or incurred during taxable
years beginning after December 31, 2015.
EFFECTIVE DATE OF 2014 AMENDMENT
Amendment by Pub. L. 113-295, Div. A, Sec. 116(a), effective for expenditures paid or incurred during taxable
years beginning after December 31, 2013.
EFFECTIVE DATE OF 2013 AMENDMENT
Amendment by Sec. 306(a), of Pub. L. 112-240 effective for expenditures paid or incurred during taxable years beginning after
December 31, 2011.
EFFECTIVE DATE OF 2010 AMENDMENT
Amendment by Sec. 734(a), of Pub. L. 111-312 effective for expenditures paid or incurred during taxable years beginning after
December 31, 2009.
EFFECTIVE DATE OF 2008 AMENDMENT
Amendment by Div. C, Sec. 316(a), of Pub. L. 110-343 effective for expenditures paid or incurred during taxable years beginning after
December 31, 2007.
EFFECTIVE DATE OF 2006 AMENDMENTS
Amendments by Sec. 423(a) of Pub. L. 109-432 effective as if included in the amendment made by section 245(a) of the American
Jobs Creation Act of 2004 [Pub. L. 108-357] [effective for taxable years beginning after December 31, 2004].
EFFECTIVE DATE OF 2005 AMENDMENTS
Amendments by Sec. 403(f) of Pub. L. 109-135 effective as if included in the provisions of the American Jobs Creation Act of 2004
[Pub. L. 108-357, Sec. 245]
to which they relate.
EFFECTIVE DATE
Effective for taxable years beginning after December 31, 2004.
SAFE HARBOR ASSIGNMENTS.—
Section 112(b) of Pub. L. 116-94, Div. Q, provided:
“(b) SAFE HARBOR ASSIGNMENTS.—Any assignment, including related expenditures paid
or incurred, under section 45G(b)(2) of the Internal Revenue Code of 1986 for a taxable year beginning on or after January 1, 2018, and ending before
January 1, 2020, shall be treated as effective as of the close of such taxable year
if made pursuant to a written agreement entered into no later than 90 days following
the date of the enactment of this Act [Enacted: Dec. 20, 2019].”
