I.R.C. § 4985(a) Imposition Of Tax —
In the case of an individual who is a disqualified individual with respect to any
expatriated corporation, there is hereby imposed on such person a tax equal to—-
I.R.C. § 4985(a)(1) —
the rate of tax specified in section 1(h)(1)(D), multiplied
by
I.R.C. § 4985(a)(2) —
the value (determined under subsection
(b)) of the specified stock compensation held (directly or indirectly)
by or for the benefit of such individual or a member of such individual's family (as
defined in section 267)
at any time during the 12-month period beginning on the date which is 6 months before
the expatriation date.
I.R.C. § 4985(b) Value —
For purposes of subsection (a)—
I.R.C. § 4985(b)(1) In General —
The value of specified stock compensation shall be—
I.R.C. § 4985(b)(1)(A) —
in the case of a stock option (or other similar right) or a stock appreciation right,
the fair value of such option or right, and
I.R.C. § 4985(b)(1)(B) —
in any other case, the fair market value of such compensation.
I.R.C. § 4985(b)(2) Date For Determining Value —
The determination of value shall be made—
I.R.C. § 4985(b)(2)(A) —
in the case of specified stock compensation held on the expatriation date, on such
date,
I.R.C. § 4985(b)(2)(B) —
in the case of such compensation which is canceled during the 6 months before the
expatriation date, on the day before such cancellation, and
I.R.C. § 4985(b)(2)(C) —
in the case of such compensation which is granted after the expatriation date, on
the date such compensation is granted.
I.R.C. § 4985(c) Tax To Apply Only If Shareholder Gain Recognized —
Subsection (a) shall apply to any disqualified individual with respect to an expatriated
corporation only if gain (if any)
on any stock in such corporation is recognized in whole or part by any shareholder
by reason of the acquisition referred to in section 7874(a)(2)(B)(i) with
respect to such corporation.
I.R.C. § 4985(d) Exception Where Gain Recognized On Compensation —
Subsection (a) shall not apply to—-
I.R.C. § 4985(d)(1) —
any stock option which is exercised on the expatriation date or during the 6-month
period before such date and to the stock acquired in such exercise, if income is recognized
under section 83 on or before the expatriation date with respect to the stock acquired pursuant to
such exercise, and
I.R.C. § 4985(d)(2) —
any other specified stock compensation which is exercised, sold, exchanged, distributed,
cashed-out, or otherwise paid during such period in a transaction in which income,
gain, or loss is recognized in full.
I.R.C. § 4985(e) Definitions —
For purposes of this section—-
I.R.C. § 4985(e)(1) Disqualified Individual —
The term “disqualified individual” means, with respect to a corporation, any individual
who, at any time during the 12-month period beginning on the date which is 6 months
before the expatriation date—
I.R.C. § 4985(e)(1)(A) —
is subject to the requirements of section 16(a) of the Securities Exchange Act of 1934 with respect to such corporation or any member
of the expanded affiliated group which includes such corporation, or
I.R.C. § 4985(e)(1)(B) —
would be subject to such requirements if such corporation or member were an issuer
of equity securities referred to in such section.
I.R.C. § 4985(e)(2) Expatriated Corporation; Expatriation Date
I.R.C. § 4985(e)(2)(A) Expatriated Corporation —
The term “expatriated corporation” means any corporation which is an expatriated
entity (as defined in section 7874(a)(2)). Such term
includes any predecessor or successor of such a corporation.
I.R.C. § 4985(e)(2)(B) Expatriation Date —
The term “expatriation date” means, with respect to a corporation, the date on which
the corporation first becomes an expatriated corporation.
I.R.C. § 4985(e)(3) Specified Stock Compensation
I.R.C. § 4985(e)(3)(A) In General —
The term “specified stock compensation”
means payment (or right to payment) granted by the expatriated corporation
(or by any member of the expanded affiliated group which includes such corporation)
to any person in connection with the performance of services by a disqualified individual
for such corporation or member if the value of such payment or right is based on (or
determined by reference to) the value (or change in value) of stock in such corporation
(or any such member).
I.R.C. § 4985(e)(3)(B) Exceptions —
Such term shall not include—-
I.R.C. § 4985(e)(3)(B)(i) —
any option to which part II of subchapter D of chapter 1 applies, or
I.R.C. § 4985(e)(3)(B)(ii) —
any payment or right to payment from a plan referred to in section 280G(b)(6).
I.R.C. § 4985(e)(4) Expanded Affiliated Group —
The term “expanded affiliated group” means an affiliated group (as defined in section
1504(a) without regard to section 1504(b)(3)); except that section 1504(a) shall be applied by substituting “more than 50 percent” for “at least 80 percent”
each place it appears.
I.R.C. § 4985(f) Special Rules —
For purposes of this section—-
I.R.C. § 4985(f)(1) Cancellation Of Restriction —
The cancellation of a restriction which by its terms will never lapse shall be treated
as a grant.
I.R.C. § 4985(f)(2) Payment Or Reimbursement Of Tax By Corporation Treated As Specified
Stock Compensation —
Any payment of the tax imposed by this section directly or indirectly by the expatriated
corporation or by any member of the expanded affiliated group which includes such
corporation—-
I.R.C. § 4985(f)(2)(A) —
shall be treated as specified stock compensation, and
I.R.C. § 4985(f)(2)(B) —
shall not be allowed as a deduction under any provision of chapter 1.
I.R.C. § 4985(f)(3) Certain Restrictions Ignored —
Whether there is specified stock compensation, and the value thereof, shall be determined
without regard to any restriction other than a restriction which by its terms will
never lapse.
I.R.C. § 4985(f)(4) Property Transfers —
Any transfer of property shall be treated as a payment and any right to a transfer
of property shall be treated as a right to a payment.
I.R.C. § 4985(f)(5) Other Administrative Provisions —
For purposes of subtitle F, any tax imposed by this section shall be treated as a
tax imposed by subtitle A.
I.R.C. § 4985(g) Regulations —
The Secretary shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of this section.
(Added by Pub. L. 108-357, title VIII, Sec. 802(a), Oct. 22, 2004, 118 Stat. 1418; amended by Pub. L. 115-97, title I, Sec. 13604(a), Dec. 22, 2017, 131 Stat. 2054.)
BACKGROUND NOTES
AMENDMENTS
2017 —
Subsec. (a)(1). Pub. L. 115-97, Sec. 13604(a), amended par. (1) by substituting “section 1(h)(1)(D)” for “section 1(h)(1)(C)”.
EFFECTIVE DATE OF 2017 AMENDMENT
Amendment by Pub. L. 115-97, Sec. 13604(a), effective for corporations first becoming expatriated corporations before the date
of enactment of this Act [Enacted: Dec. 22, 2017].
EFFECTIVE DATE
Effective March 4, 2003; except that periods before such date shall not be taken into
account in applying the periods in subsections (a) and (e)(1) of section 4985 of the Internal Revenue Code of 1986, as added by this section.
[4986 to 4990. Repealed. Pub. L. 100-418, title I, 1941(a), Aug. 23, 1988, 102 Stat. 1322]
Section 4986, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2, 1980, 94 Stat. 230, related to imposition of windfall
profit tax on domestic crude oil.
Section 4987, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2, 1980, 94 Stat. 230, and amended Pub. L. 97-34, title VI, 602(a), Aug. 13, 1981, 95 Stat. 337; Pub. L. 98-369, div. A, title I, 25(a), July 18, 1984, 98 Stat. 506, related to amount of windfall
profit tax on domestic crude oil.
Section 4988, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2, 1980, 94 Stat. 231, and amended Pub. L. 97-448, title II, 201(a), (h)(1)(D), Jan. 12, 1983, 96 Stat. 2391, 2394; Pub. L. 99-514, title XIII, 1301(j)(4), Oct. 22, 1986, 100 Stat. 2657, related to windfall profit
and removal price.
Section 4989, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2, 1980, 94 Stat. 233, and amended Pub. L. 97-448, title II, 201(b), Jan. 12, 1983, 96 Stat. 2392, related to adjusted base price for
purposes of windfall profit tax on domestic crude oil.
Section 4990, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2, 1980, 94 Stat. 234, related to phaseout of windfall
profit tax on domestic crude oil.
Effective Date of Repeal
Repeal applicable to crude oil removed from the premises on or after Aug. 23, 1988,
see section 1941(c) of Pub. L. 100-418, set out as an Effective Date of 1988 Amendment note under section 164 of this title.
Allocation of Net Revenues From Windfall Profit Tax to Certain Uses
Pub. L. 96-223, title I, 102, Apr. 2, 1980, 94 Stat. 255, provided for Windfall Profit Tax Account
in Treasury, specified uses for amounts in that Account, defined “net revenues”, required
President to propose allocation of net revenues, and required Secretary of the Treasury
to make reports to Congress.
[4991 to 4994. Repealed. Pub. L. 100-418, title I, 1941(a), Aug. 23, 1988, 102 Stat. 1322]
Section 4991, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2, 1980, 94 Stat. 235, and amended Pub. L. 97-34, title VI, 601(b)(1), 603(a), Aug. 13, 1981, 95 Stat. 336, 338; Pub. L. 97-448, title II, 201(c), Jan. 12, 1983, 96 Stat. 2392; Pub. L. 99-514, title XVIII, 1879(h)(1), Oct. 22, 1986, 100 Stat. 2907, related to taxable crude
oil and categories of oil.
Section 4992, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2, 1980, 94 Stat. 236, and amended Pub. L. 97-34, title VI, 603(c), Aug. 13, 1981, 95 Stat. 338; Pub. L. 97-354, 3(b)(2), Oct. 19, 1982, 96 Stat. 1688; Pub. L. 97-448, title II, 201(d), Jan. 12, 1983, 96 Stat. 2392, related to independent producer
oil.
Section 4993, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2, 1980, 94 Stat. 239, and amended Pub. L. 97-448, title II, 201(e), Jan. 12, 1983, 96 Stat. 2392, related to incremental tertiary
oil.
Section 4994, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2, 1980, 94 Stat. 241, and amended Pub. L. 97-34, title VI, 601(b)(2), 603(b), 604(a)-(c), Aug. 13, 1981, 95 Stat. 337-339; Pub. L. 97-248, title II, 291, Sept. 3, 1982, 96 Stat. 572; Pub. L. 97-448, title I, 106(a)(2), (4)(B),
(b), title II, 201(f), Jan. 12, 1983, 96 Stat. 2388, 2390, 2392, related to definitions
and special rules with respect to exempt oil.
Effective Date of Repeal
Repeal applicable to crude oil removed from the premises on or after Aug. 23, 1988,
see section 1941(c) of Pub. L. 100-418, set out as an Effective Date of 1988 Amendment note under section 164 of this title.
[4995 to 4998. Repealed. Pub. L. 100-418, title I, 1941(a), Aug. 23, 1988, 102 Stat. 1322]
Section 4995, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2, 1980, 94 Stat. 244, and amended Pub. L. 97-34, title VI, 601(b)(3), Aug. 13, 1981, 95 Stat. 337; Pub. L. 97-448, title II, 201(g), Jan. 12, 1983, 96 Stat. 2393, related to withholding and depository
requirements bearing on the windfall profit tax.
Section 4996, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2, 1980, 94 Stat. 247, and amended Pub. L. 97-248, title II, 284(a), Sept. 3, 1982, 96 Stat. 569; Pub. L. 97-354, 3(b)(1), Oct. 19, 1982, 96 Stat. 1688; Pub. L. 97-448, title II, 201(h)(1)(A)-(C), (2), Jan. 12, 1983, 96 Stat. 2393-2395, provided for
other definitions and special rules bearing on the windfall profit tax.
Section 4997, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2, 1980, 94 Stat. 249, and amended Pub. L. 97-448, title II, 201(i)(1), Jan. 12, 1983, 96 Stat. 2395, related to records and information,
and regulations, bearing on the windfall profit.
Section 4998, added Pub. L. 96-223, title I, 101(a)(1), Apr. 2, 1980, 94 Stat. 250, related to cross references.
Effective Date of Repeal
Repeal applicable to crude oil removed from the premises on or after Aug. 23, 1988,
see section 1941(c) of Pub. L. 100-418, set out as an Effective Date of 1988 Amendment note under section 164 of this title.
Amendments Related to Crude Oil Windfall Profit Tax Act of 1980
Pub. L. 100-647, title VI, 6254, Nov. 10, 1988, 102 Stat. 3753, repealed the reporting requirements
of section 4997 of former chapter 45 of this title and the related regulations thereunder,
effective only for crude oil removed after December 31, 1987, for which no tax is
due or withheld under former chapter 45.
