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Internal Revenue Code, § 52. Special Rules

I.R.C. § 52(a) Controlled Group Of Corporations
For purposes of this subpart, all employees of all corporations which are members of the same controlled group of corporations shall be treated as employed by a single employer. In any such case, the credit (if any) determined under section 51(a) with respect to each such member shall be its proportionate share of the wages giving rise to such credit. For purposes of this subsection, the term “controlled group of corporations” has the meaning given to such term by section 1563(a), except that—
I.R.C. § 52(a)(1)
“more than 50 percent” shall be substituted for “at least 80 percent” each place it appears in section 1563(a)(1), and
I.R.C. § 52(a)(2)
the determination shall be made without regard to subsections (a)(4) and (e)(3)(C) of section 1563.
I.R.C. § 52(b) Employees Of Partnerships, Proprietorships, Etc., Which Are Under Common Control
For purposes of this subpart, under regulations prescribed by the Secretary—
I.R.C. § 52(b)(1)
all employees of trades or business (whether or not incorporated) which are under common control shall be treated as employed by a single employer, and
I.R.C. § 52(b)(2)
the credit (if any) determined under section 51(a) with respect to each trade or business shall be its proportionate share of the wages giving rise to such credit.
The regulations prescribed under this subsection shall be based on principles similar to the principles which apply in the case of subsection (a).
I.R.C. § 52(c) Tax-Exempt Organizations
I.R.C. § 52(c)(1) In General
No credit shall be allowed under section 38 for any work opportunity credit determined under this subpart to any organization (other than a cooperative described in section 521) which is exempt from income tax under this chapter.
I.R.C. § 52(c)(2) Credit Made Available to Qualified Tax-Exempt Organizations Employing Qualified Veterans
For credit against payroll taxes for employment of qualified veterans by qualified tax-exempt organizations, see section 3111(e).
I.R.C. § 52(d) Estates And Trusts
In the case of an estate or trust—
I.R.C. § 52(d)(1)
the amount of the credit determined under this subpart for any taxable year shall be apportioned between the estate or trust and the beneficiaries on the basis of the income of the estate or trust allocable to each, and
I.R.C. § 52(d)(2)
any beneficiary to whom any amount has been apportioned under paragraph (1) shall be allowed, subject to section 38(c), a credit under section 38(a) for such amount.
I.R.C. § 52(e) Limitations With Respect To Certain Persons
Under regulations prescribed by the Secretary, in the case of—
I.R.C. § 52(e)(1)
a regulated investment company or a real estate investment trust subject to taxation under subchapter M (section 851 and following), and
I.R.C. § 52(e)(2)
a cooperative organization described in section 1381(a),
rules similar to the rules provided in subsections (e) and (h) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply in determining the amount of the credit under this subpart.
(Added by Pub. L. 95-30, title II, Sec. 202(b), May 23, 1977, 91 Stat. 143, and amended Pub. L. 95-600, title III, Sec. 321(c)(1), Nov. 6, 1978, 92 Stat. 2835; Pub. L. 96-222, title I, Sec. 103(a)(5), Apr. 1, 1980, 94 Stat. 209; Pub. L. 97-354, Sec. 5(a)(11), Oct. 19, 1982, 96 Stat. 1693; Pub. L. 98-369, div. A, title IV, Sec. 474(p)(4)-(7), July 18, 1984, 98 Stat. 838; Pub. L. 101-508, title XI, Sec. 11813(b)(4), Nov. 5, 1990, 104 Stat. 1388-551; Pub. L. 104-188, title I, 1616, Aug. 20, 1996, 110 Stat. 1755; Pub. L. 105-34, title XVI, Sec. 1601(b), Aug. 5, 1997, 111 Stat 788; Pub. L. 112-56, title II, sec. 261(e)(1), Nov. 21, 2011, 125 Stat. 711.)
BACKGROUND NOTES
AMENDMENTS
2011 - Subsec. (c). Pub. L. 112-56, Sec. 261(e)(1), amended subsec. (c) by inserting “(1) In General” before “No credit” and by adding par. (2).
1997 - Subsec. (c). Pub. L. 105-34, Sec. 1601(b), substituted “work opportunity credit” for “targeted jobs credit”.
1996 - Subsec. (e). Pub. L. 104-188, Sec. 1616(b)(2), struck par. (1); redesignated pars. (2) and (3) as pars. (1) and (2), respectively.
1990 - Subsec. (e). Pub. L. 101-508, Sec. 11813(b)(4), substituted ‘section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990)’ for ‘section 46’ in concluding provisions.
1984 - Subsec. (a). Pub. L. 98-369, Sec. 474(p)(4), substituted ‘the credit (if any) determined under section 51(a) with respect to each such member’ for ‘the credit (if any) allowable by section 44B to each such member’.
Subsec. (b)(2). Pub. L. 98-369, Sec. 474(p)(5), substituted ‘the credit (if any) determined under section 51(a)’ for ‘the credit (if any) allowable by section 44B’.
Subsec. (c). Pub. L. 98-369, Sec. 474(p)(6), substituted ‘credit shall be allowed under section 38 for any targeted jobs credit determined under this subpart’ for ‘credit shall be allowed under section 44B’.
Subsec. (d)(2). Pub. L. 98-369, Sec. 474(p)(7), substituted ‘, subject to section 38(c), a credit under section 38(a)’ for ‘, subject to section 53 a credit under section 44B’.
1982 - Subsecs. (d) to (f). Pub. L. 97-354, Sec. 5(a)(11), struck out subsec. (d) relating to apportionment of credit among shareholders, and redesignated subsecs. (e) and (f) as (d) and (e), respectively.
1980 - Subsec. (f). Pub. L. 96-222, Sec. 103(a)(5), substituted ‘subsections (e) and (h) of section 46’ for ‘section 46(e)’.
1978 - Subsecs. (a), (b). Pub. L. 95-600, Sec. 321(c)(1)(B), substituted ‘proportionate share of the wages’ for ‘proportionate contribution to the increase in unemployment insurance wages’.
Subsecs. (c), (d). Pub. L. 95-600, Sec. 321(c)(1)(A), struck out subsec. (c) which related to dispositions by an employer, and redesignated subsecs. (d) and (f) as (c) and (d), respectively.
Subsec. (e). Pub. L. 95-600, Sec. 321(c)(1)(A), (C), redesignated subsec. (g) as (e) and struck out par. (3) which provided that the $100,000 amount specified in section 51(d) applicable to such estate or trust be reduced to an amount which bears the same ratio to $100,000 as the portion of the credit allocable to the estate or trust under paragraph (1) bears to the entire amount of such credit. Former subsec. (e), which related to a change in status from self-employed to employee, was struck out.
Subsecs. (f) to (h). Pub. L. 95-600, Sec. 321(c)(1)(A), redesignated subsecs. (f) to (h) as (d) to (f), respectively.
Subsec. (i). Pub. L. 95-600, Sec. 321(c)(1)(A)(i), struck out subsec. (i) which related to a $50,000 limitation in the case of married individuals filing separate returns.
Subsec. (j). Pub. L. 95-600, Sec. 321(c)(1)(A)(i), struck out subsec. (j) which related to certain short taxable years.
EFFECTIVE DATE OF 2011 AMENDMENTS
Amendments by Sec. 261(e)(1) of Pub. L. 112-56 effective for individuals who begin work for the employer after the date of the enactment of this Act [Enacted: Nov. 21, 2011].
EFFECTIVE DATE OF 1997 AMENDMENTS
Amendments by Sec. 1601(b) of Pub. L. 105-34 effective as if included in the provisions of the Small Business Job Protection Act of 1996 to which it relates.
EFFECTIVE DATE OF 1996 AMENDMENT
Amendment by Sec. 1616(c) of Pub. L. 104-188, provided that:
“In general.—Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning after December 31, 1995.”
(2) Subsection (b)(7)(B).—The amendments made by subsection (b)(7)(B) shall not apply to any distribution with respect to preferred stock if—
(A) such stock is outstanding at all times after October 31, 1995, and before the distribution, and
(B) such distribution is made before the date which is 1 year after the date of the enactment of this Act [Aug. 20, 1996](or, in the case of stock which may be redeemed, if later, the date which is 30 days after the earliest date that such stock may be redeemed).
(3) Subsection (b)(8).—The amendment made by subsection (b) (8) shall apply to property acquired in taxable years beginning after December 31, 1995.
(4) Subsection (b)(10).—The amendments made by subsection (b)(10) shall not apply to any residual interest held by a taxpayer if such interest has been held by such taxpayer at all times after October 31, 1995.”
EFFECTIVE DATE OF 1990 AMENDMENT
Amendment by 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 1984 AMENDMENT
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 OF 1982 AMENDMENT
Amendment by Pub. L. 97-354 applicable to taxable years beginning after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as an Effective Date note under section 1361 of this title.
EFFECTIVE DATE OF 1980 AMENDMENT
Amendment by Pub. L. 96-222 effective, except as otherwise provided, as if it had been included in the provisions of the Revenue Act of 1978, Pub. L. 95-600, to which such amendment relates, see section 201 of Pub. L. 96-222, set out as a note under section 32 of this title.
EFFECTIVE DATE OF 1978 AMENDMENT
Amendment by Pub. L. 95-600 applicable to amounts paid or incurred after Dec. 31, 1978, in taxable years ending after such date, see section 321(d)(1) of Pub. L. 95-600, set out as a note under section 51 of this title.
EFFECTIVE DATE
Section applicable to taxable years beginning after Dec. 31, 1976, and to credit carrybacks from such years, see section 202(e) of Pub. L. 95-30, set out as a note under section 51 of this title.
DISASTER-RELATED EMPLOYMENT RELIEF
Section 503 of Pub. L. 115-63, provided:
“SEC. 4503. DISASTER-RELATED EMPLOYMENT RELIEF
“(a) Employee retention credit for employers affected by Hurricane Harvey.—
“(1) IN GENERAL.—For purposes of section 38 of the Internal Revenue Code of 1986, in the case of an eligible employer, the Hurricane Harvey employee retention credit shall be treated as a credit listed in subsection (b) of such section. For purposes of this subsection, the Hurricane Harvey employee retention credit for any taxable year is an amount equal to 40 percent of the qualified wages with respect to each eligible employee of such employer for such taxable year. For purposes of the preceding sentence, the amount of qualified wages which may be taken into account with respect to any individual shall not exceed $6,000.
“(2) DEFINITIONS.—For purposes of this subsection—
“(A) ELIGIBLE EMPLOYER.—The term “eligible employer” means any employer—
“(i) which conducted an active trade or business on August 23, 2017, in the Hurricane Harvey disaster zone, and
“(ii) with respect to whom the trade or business described in clause (i) is inoperable on any day after August 23, 2017, and before January 1, 2018, as a result of damage sustained by reason of Hurricane Harvey.
“(B) ELIGIBLE EMPLOYEE.—The term “eligible employee” means with respect to an eligible employer an employee whose principal place of employment on August 23, 2017, with such eligible employer was in the Hurricane Harvey disaster zone.
“(C) QUALIFIED WAGES.—The term “qualified wages” means wages (as defined in section 51(c)(1) of the Internal Revenue Code of 1986, but without regard to section 3306(b)(2)(B) of such Code) paid or incurred by an eligible employer with respect to an eligible employee on any day after August 23, 2017, and before January 1, 2018, which occurs during the period—
“(i) beginning on the date on which the trade or business described in subparagraph (A) first became inoperable at the principal place of employment of the employee immediately before Hurricane Harvey, and
“(ii) ending on the date on which such trade or business has resumed significant operations at such principal place of employment. Such term shall include wages paid without regard to whether the employee performs no services, performs services at a different place of employment than such principal place of employment, or performs services at such principal place of employment before significant operations have resumed.
“(3) CERTAIN RULES TO APPLY.—For purposes of this subsection, rules similar to the rules of sections 51(i)(1) and 52, of the Internal Revenue Code of 1986, shall apply.
“(4) EMPLOYEE NOT TAKEN INTO ACCOUNT MORE THAN ONCE.—An employee shall not be treated as an eligible employee for purposes of this subsection for any period with respect to any employer if such employer is allowed a credit under section 51 of the Internal Revenue Code of 1986 with respect to such employee for such period.
“(b) Employee Retention Credit for Employers Affected by Hurricane Irma.—
“(1) IN GENERAL.—For purposes of section 38 of the Internal Revenue Code of 1986, in the case of an eligible employer, the Hurricane Irma employee retention credit shall be treated as a credit listed in subsection (b) of such section. For purposes of this subsection, the Hurricane Irma employee retention credit for any taxable year is an amount equal to 40 percent of the qualified wages with respect to each eligible employee of such employer for such taxable year. For purposes of the preceding sentence, the amount of qualified wages which may be taken into account with respect to any individual shall not exceed $6,000.
“(2) DEFINITIONS.—For purposes of this subsection—
“(A) ELIGIBLE EMPLOYER.—The term “eligible employer” means any employer— (i) which conducted an active trade or business on September 4, 2017, in the Hurricane Irma disaster zone, and (ii) with respect to whom the trade or business described in clause (i) is inoperable on any day after September 4, 2017, and before January 1, 2018, as a result of damage sustained by reason of Hurricane Irma.
“(B) ELIGIBLE EMPLOYEE.—The term “eligible employee” means with respect to an eligible employer an employee whose principal place of employment on September 4, 2017, with such eligible employer was in the Hurricane Irma disaster zone.
”(C) QUALIFIED WAGES.—The term “qualified wages” means wages (as defined in section 51(c)(1) of the Internal Revenue Code of 1986, but without regard to section 3306(b)(2)(B) of such Code) paid or incurred by an eligible employer with respect to an eligible employee on any day after September 4, 2017, and before January 1, 2018, which occurs during the period—
“(i) beginning on the date on which the trade or business described in subparagraph (A) first became inoperable at the principal place of employment of the employee immediately before Hurricane Irma, and
“(ii) ending on the date on which such trade or business has resumed significant operations at such principal place of employment. Such term shall include wages paid without regard to whether the employee performs no services, performs services at a different place of employment than such principal place of employment, or performs services at such principal place of employment before significant operations have resumed.
“(3) CERTAIN RULES TO APPLY.—For purposes of this subsection, rules similar to the rules of sections 51(i)(1) and 52, of the Internal Revenue Code of 1986, shall apply.
“(4) EMPLOYEE NOT TAKEN INTO ACCOUNT MORE THAN ONCE.—An employee shall not be treated as an eligible employee for purposes of this subsection for any period with respect to any employer if such employer is allowed a credit under subsection (a), or section 51 of the Internal Revenue Code of 1986, with respect to such employee for such period.
“(c) Employee retention credit for employers affected by Hurricane Maria.—
“(1) IN GENERAL.—For purposes of section 38 of the Internal Revenue Code of 1986, in the case of an eligible employer, the Hurricane Maria employee retention credit shall be treated as a credit listed in subsection (b) of such section. For purposes of this subsection, the Hurricane Maria employee retention credit for any taxable year is an amount equal to 40 percent of the qualified wages with respect to each eligible employee of such employer for such taxable year. For purposes of the preceding sentence, the amount of qualified wages which may be taken into account with respect to any individual shall not exceed $6,000.
“(2) DEFINITIONS.—For purposes of this subsection—
“(A) ELIGIBLE EMPLOYER.—The term “eligible employer” means any employer—
“(i) which conducted an active trade or business on September 16, 2017, in the Hurricane Maria disaster zone, and
“(ii) with respect to whom the trade or business described in clause (i) is inoperable on any day after September 16, 2017, and before January 1, 2018, as a result of damage sustained by reason of Hurricane Maria.
“(B) ELIGIBLE EMPLOYEE.—The term “eligible employee” means with respect to an eligible employer an employee whose principal place of employment on September 16, 2017, with such eligible employer was in the Hurricane Maria disaster zone.
“(C) QUALIFIED WAGES.—The term “qualified wages” means wages (as defined in section 51(c)(1) of the Internal Revenue Code of 1986, but without regard to section 3306(b)(2)(B) of such Code) paid or incurred by an eligible employer with respect to an eligible employee on any day after September 16, 2017, and before January 1, 2018, which occurs during the period—
“(i) beginning on the date on which the trade or business described in subparagraph (A) first became inoperable at the principal place of employment of the employee immediately before Hurricane Maria, and
“(ii) ending on the date on which such trade or business has resumed significant operations at such principal place of employment.
Such term shall include wages paid without regard to whether the employee performs no services, performs services at a different place of employment than such principal place of employment, or performs services at such principal place of employment before significant operations have resumed.
“(3) CERTAIN RULES TO APPLY.—For purposes of this subsection, rules similar to the rules of sections 51(i)(1) and 52, of the Internal Revenue Code of 1986, shall apply.
“(4) EMPLOYEE NOT TAKEN INTO ACCOUNT MORE THAN ONCE.—An employee shall not be treated as an eligible employee for purposes of this subsection for any period with respect to any employer if such employer is allowed a credit under subsection (a) or (b), or section 51 of the Internal Revenue Code of 1986, with respect to such employee for such period.”
EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED BY HURRICANE KATRINA
Section 202 of Pub. L. 109-73, before repeal by Pub. L. 109-135, Sec. 201(b)(4) (effective Dec. 21, 2005), provided that:
“(a) IN GENERAL.—In the case of an eligible employer, there shall be allowed as a credit against the tax imposed by chapter 1 of the Internal Revenue Code of 1986 for the taxable year an amount equal to 40 percent of the qualified wages with respect to each eligible employee of such employer for such taxable year. For purposes of the preceding sentence, the amount of qualified wages which may be taken into account with respect to any individual shall not exceed $6,000.
“(b) DEFINITIONS.—For purposes of this section—
“(1) ELIGIBLE EMPLOYER.—The term “eligible employer” means any employer—
“(A) which conducted an active trade or business on August 28, 2005, in a core disaster area, and
“(B) with respect to whom the trade or business described in subparagraph (A) is inoperable on any day after August 28, 2005, and before January 1, 2006, as a result of damage sustained by reason of Hurricane Katrina.
“(2) ELIGIBLE EMPLOYEE.—The term “eligible employee” means with respect to an eligible employer an employee whose principal place of employment on August 28, 2005, with such eligible employer was in a core disaster area.
“(3) QUALIFIED WAGES.—The term “qualified wages” means wages (as defined in section 51(c)(1) of such Code, but without regard to section 3306(b)(2)(B) of such Code) paid or incurred by an eligible employer with respect to an eligible employee on any day after August 28, 2005, and before January 1, 2006, which occurs during the period—
“(A) beginning on the date on which the trade or business described in paragraph (1) first became inoperable at the principal place of employment of the employee immediately before Hurricane Katrina, and
“(B) ending on the date on which such trade or business has resumed significant operations at such principal place of employment.
“Such term shall include wages paid without regard to whether the employee performs no services, performs services at a different place of employment than such principal place of employment, or performs services at such principal place of employment before significant operations have resumed.
“(c) CREDIT NOT ALLOWED FOR LARGE BUSINESSES.--The term “eligible employer” shall not include any trade or business for any taxable year if such trade or business employed an average of more than 200 employees on business days during the taxable year.
“(d) CERTAIN RULES TO APPLY.—For purposes of this section, rules similar to the rules of sections 51(i)(1), 52, and 280C(a) of such Code shall apply.
“(e) EMPLOYEE NOT TAKEN INTO ACCOUNT MORE THAN ONCE.—An employee shall not be treated as an eligible employee for purposes of this section for any period with respect to any employer if such employer is allowed a credit under section 51 of such Code with respect to such employee for such period.
“(f) CREDIT TO BE PART OF GENERAL BUSINESS CREDIT.—The credit allowed under this section shall be added to the current year business credit under section 38(b) of such Code and shall be treated as a credit allowed under subpart D of part IV of subchapter A of chapter 1 of such Code.”
SAVINGS PROVISION
For provisions that nothing in amendment by 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.