HISTORICAL & REVISION NOTES (26 U.S.C. § 25A)
Inflation Adjusted Items for Taxable Years Beginning in 2003
For inflation adjustment of amounts in subsection (b)(1) of this section used in determining Hope Scholarship Credit and amounts in subsection (d)(2)(A)(ii) of this section
used in determining reduction in amount of credits otherwise allowable for taxable years beginning in 2003, see section 3.05 of Revenue Procedure 2002–70, set out as a note under section 1 of this title.
Amendment of Section
For termination of amendment by section 901 of
Pub. L. 107–16, see Effective and Termination Dates of 2001 Amendment note below.
References in Text
The date of the enactment of this section, referred to in subsecs. (b)(3)(A) and (f)(2)(A), is the date of enactment of
Pub. L. 105–34 which was approved Aug. 5, 1997. The
Higher Education Act of 1965, referred to in subsec. (f)(2)(B), is Pub. L. 89–329, Nov. 8, 1965, 79 Stat. 1219, as amended. Title IV of the Act is classified generally to subchapter IV (§ 1070 et seq.) of chapter 28 of Title 20, Education,
and part C (§ 2751 et seq.) of subchapter I of chapter 34 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of Title 20 and Tables.
Amendments
2001 — Subsec. (e).
Pub. L. 107–16, §§ 401(g)(2)(A), 901, temporarily amended heading and text of subsec. (e) generally. Prior to amendment, text read as follows:
“(1) In general.—No credit shall be allowed under subsection (a) for a taxable year with respect to the qualified tuition and related expenses of an individual unless the taxpayer elects to have this section apply with respect to
such individual for such year. “(2) Coordination with exclusions.—An election under this subsection shall not take effect with respect to an individual for any taxable year if any portion of any distribution during such taxable year
from an education individual retirement account is excluded from gross income under section 530 (d)(2).” See Effective and Termination Dates of 2001 Amendment note below.
Effective and Termination Dates of 2001 Amendment
Pub. L. 107–16, title IV, § 401(h), June 7, 2001, 115 Stat. 60, provided that: “The amendments made by this section [amending this section and sections 135, 530, and 4973
of this title] shall apply to taxable years beginning after December 31, 2001.” Amendment by
Pub. L. 107–16 inapplicable to taxable, plan, or limitation years beginning after Dec. 31, 2010, and the Internal Revenue Code of 1986 to
be applied and administered to such years as if such amendment had never been enacted, see section 901 of
Pub. L. 107–16, set out as a note under section 1 of this title.
Effective Date
Section 201(f) of
Pub. L. 105–34 provided that: “(1) In general.—The amendments made by this section [enacting this section and section 6050S of this title and amending
sections 135, 6213, and 6724 of this title] shall apply to expenses paid after December 31, 1997 (in taxable years ending after such date), for education furnished in academic periods beginning after such date. “(2) Lifetime learning
credit.—Section 25A(a)(2) of the Internal Revenue Code of 1986 shall apply to expenses paid after June 30, 1998 (in taxable years ending after such date), for education furnished in academic periods beginning after such dates.”
Section Referred to in Other Sections
This section is referred to in sections 72, 135, 221, 222, 529, 530, 6050S, 6213 of this title; title 20 sections 1087oo, 1087pp, 1087qq, 1087ss, 1087vv.
HISTORICAL & REVISION NOTES (26 U.S.C. § 108)
AMENDMENTS
2004
Subsec. (e). Pub. L. 108-357, Sec. 896(a) (applicable to cancellations of indebtedness occurring on or after 10/22/2004, as provided by Sec. 896(b) of Pub. L. 108-357), rewrote subsec. (e)(8) which previously read: "(8) Indebtedness satisfied by corporation's stock. For purposes of determining income of a debtor from discharge of indebtedness, if a debtor corporation transfers stock to a creditor in satisfaction of its indebtedness, such corporation shall be treated as having satisfied the indebtedness with an amount of money equal to the fair market value of the stock.".
Subsec. (f)(4). Pub. L. 108-357, Sec. 320(a) (applicable to amounts received by an individual in taxable years beginning after 12/31/2003, as provided by Sec. 320(c) of Pub. L. 108-357), added para. (4).
2002 - Subsec. (d)(7)(A). Pub. L. 107-147 inserted ", including by not taking into account under section 1366(a) any amount excluded under subsection (a) of this section" before period at end.
1998
Subsec. (f)(2).
Pub. L. 105-206, Sec. 6004(f)(1), amended concluding provisions generally.
Prior to amendment, concluding provisions read as follows: "The term 'student loan' includes any loan made by an educational organization so described or by an organization exempt from tax under section 501(a) to refinance a loan
meeting the requirements of the preceding sentence."
Subsec. (f)(3).
Pub. L. 105-206, Sec. 6004(f)(2), struck out "(or by an organization described in paragraph (2)(E)
from funds provided by an organization described in paragraph (2)(D))" after "paragraph (2)(D)".
1997
Subsec. (f)(2).
Pub. L. 105-34, Sec. 225(a)(1), added subpar.
(D) and concluding provisions and struck out former subpar. (D) which read as follows: "any educational organization so described pursuant to an agreement with any entity
described in subparagraph (A), (B), or (C) under which the funds from which the loan was made were provided to such educational organization."
Subsec. (f)(2)(B).
Pub. L. 105-34, Sec. 225(a)(1), struck out "or" at end.
Subsec. (f)(3).
Pub. L. 105-34, Sec. 225(a)(2), added par. (3).
1996 — Subsec. (d)(9)(A).
Pub. L. 104-188 substituted "paragraph (3)(C)" for "paragraph (3)(B)".
1993
Subsec. (a)(1)(D).
Pub. L. 103-66, Sec. 13150(a), added subpar. (D).
Subsec. (a)(2)(A).
Pub. L. 103-66, Sec. 13150(c)(1), substituted ", (C), and (D)"
for "and (C)".
Subsec. (a)(2)(B).
Pub. L. 103-66, Sec. 13150(c)(2), amended heading and text of subpar.
(B) generally. Prior to amendment, text read as follows: "Subparagraph (C) of paragraph (1) shall not apply to a discharge to the extent the taxpayer is insolvent." Subsec. (b)(2)(C) to (E).
Pub. L. 103-66, Sec. 13226(b)(1), added
subpar. (C) and redesignated former subpars. (C) and (D) as (D) and (E), respectively. Former subpar. (E) redesignated (F).
Subsec. (b)(2)(F).
Pub. L. 103-66, Sec. 13226(b)(2), added subpar. (F). Former subpar.
(F) redesignated (G).
Pub. L. 103-66, Sec. 13226(b)(1), redesignated subpar. (E) as (F).
Subsec. (b)(2)(G).
Pub. L. 103-66, Sec. 13226(b)(2), redesignated subpar. (F) as (G).
Subsec. (b)(3)(B).
Pub. L. 103-66, Sec. 13226(b)(3)(A), amended heading and text of
subpar. (B) generally. Prior to amendment, text read as follows: "The reductions described in subparagraphs (B) and (E) of paragraph (2) shall be 33 1/3 cents for each dollar excluded by subsection (a)."
Subsec. (b)(4)(B).
Pub. L. 103-66, Sec. 13226(b)(3)(B), substituted "(D)" for "(C)"
in heading and text.
Subsec. (b)(4)(C).
Pub. L. 103-66, Sec. 13226(b)(3)(C), substituted "(G)" for "(E)"
in heading and text.
Subsec. (c).
Pub. L. 103-66, Sec. 13150(b), added subsec. (c).
Subsec. (d).
Pub. L. 103-66, Sec. 13150(c)(3)(B), substituted "certain provisions" for
"subsections (a), (b) and (g)" in heading.
Subsec. (d)(6), (7)(A).
Pub. L. 103-66, Sec. 13150(c)(3)(A),
(C), substituted "Certain provisions" for "Subsections (a), (b) and (g)" in heading and "subsections (a), (b), (c), and (g)" for "subsections (a), (b), and (g)" in text.
Subsec. (d)(7)(B).
Pub. L. 103-66, Sec. 13150(c)(4), inserted at end "The preceding
sentence shall not apply to any discharge to the extent that subsection (a)(1)(D) applies to such discharge." Subsec. (d)(9)(A).
Pub. L. 103-66, Sec. 13150(c)(5), inserted "or under paragraph (3)(B) of subsection (c)" after "subsection
(b)".
Subsec. (e)(6).
Pub. L. 103-66, Sec. 13226(a)(2)(B), substituted "Except as provided
in regulations, for" for "For".
Subsec. (e)(8).
Pub. L. 103-66, Sec. 13226(a)(1)(B), amended heading and text of par.
(8) generally. Prior to amendment, text read as follows:
"For purposes of determining income of the debtor from discharge of indebtedness, the stock for debt exception shall not apply—
"(A) to the issuance of nominal or token shares, or
"(B) with respect to an unsecured creditor, where the ratio of the value of the stock received by such unsecured creditor to the amount of
his indebtedness cancelled or exchanged for stock in the workout is less than 50 percent of a similar ratio computed for all unsecured creditors participating in the workout.
Any stock which is disqualified stock (as defined in paragraph (10)(B)(ii)) shall not be treated as stock for purposes
of this paragraph."
Subsec. (e)(10), (11).
Pub. L. 103-66, Sec. 13226(a)(1)(A), redesignated par. (11)
as (10) and struck out former par. (10) which related to satisfaction of indebtedness by transfer of corporation's stock.
Subsec. (g)(3)(B).
Pub. L. 103-66, Sec. 13226(b)(3)(D), substituted "subparagraphs
(A), (B), (C), (D), (F), and (G)" for "subparagraphs (A), (B), (C), and (E)" and "subparagraphs (B), (C), and (G)" for "subparagraphs (B) and (E)" and inserted before period at end "and the attribute described in subparagraph (F)
of subsection (b)(2) to the extent attributable to any passive activity credit carryover".
1990
Subsec. (e)(6).
Pub. L. 101-508, Sec. 11325(b)(2), inserted provision at end that any
stock which is a disqualified stock, as so defined, not be treated as stock for purposes of this paragraph.
Subsec. (e)(10)(B).
Pub. L. 101-508, Sec. 11325(b)(1), substituted heading for one
which read: "Exception for title 11 cases and insolvent debtors" and amended text generally. Prior to amendment, text read as follows: "Subparagraph (A) shall not apply in the case of a debtor in a title
11 case or to the extent the debtor is insolvent."
Subsec. (e)(11).
Pub. L. 101-508, Sec. 11325(a)(1), added par. (11).
Subsec. (g)(1)(B).
Pub. L. 101-508, Sec. 11813(b)(6), substituted "section 49(a)(1)(D)(iv)"
for "section 46(c)(8)(D)(iv)".
1988
Subsec. (a)(1)(C).
Pub. L. 100-647, Sec. 1004(a)(1), added subpar. (C).
Subsec. (a)(2).
Pub. L. 100-647, Sec. 1004(a)(2), amended par. (2) generally. Prior
to amendment, par. (2) read as follows: "Subparagraph (B) of paragraph (1) shall not apply to a discharge which occurs in a title 11 case."
Subsec. (b).
Pub. L. 100-647, Sec. 1004(a)(3), struck out "in title
11 case or insolvency" after "Reduction of tax attributes" in heading and substituted "subparagraph (A), (B), or (C)" for "subparagraph (A) or (B)" in text of par. (1).
Subsec. (d).
Pub. L. 100-647, Sec. 1004(a)(6)(B), which directed amendment of subsec.
(d) heading by substituting "subsections (a), (b), and (g)" for "subsections (a), and (b)", was executed by making the substitution for "subsections (a) and (b)" as the probable intent of Congress.
Subsec. (d)(6).
Pub. L. 100-647, Sec. 1004(a)(6)(A), (C), substituted "Subsections
(a), (b), and (g)" for "Subsections (a) and (b)" in heading and "subsections (a), (b), and (g)" for "subsections (a) and (b)" in text.
Subsec. (d)(7)(A).
Pub. L. 100-647, Sec. 1004(a)(6)(A), (C), substituted "Subsections
(a), (b), and (g)" for "Subsections (a) and (b)" in heading and "subsections (a), (b), and (g)" for "subsections (a) and (b)" in text.
Subsec. (g).
Pub. L. 100-647, Sec. 1004(a)(4), substituted "indebtedness" for "indebtedness
of solvent farmers" in heading and amended text generally. Prior to amendment, text read as follows:
"(1) In general.—For purposes of this section and section 1017, the discharge
by a qualified person of qualified farm indebtedness of a taxpayer who is not insolvent at the time of the discharge shall be treated in the same manner as if the discharge had occurred when the taxpayer was insolvent.
"(2) Qualified farm indebtedness.—For purposes of this subsection, indebtedness
of a taxpayer shall be treated as qualified farm indebtedness if—
'"(A) such indebtedness was incurred directly in connection with the operation by the taxpayer of the trade or business
of farming, and
"(B) 50 percent or more of the average annual gross receipts of the taxpayer for the 3 taxable years preceding the
taxable year in which the discharge of such indebtedness occurs is attributable to the trade or business of farming.
"(3) Qualified person.—For purposes of this subsection, the term 'qualified
person' means a person described in section 46(c)(8)(D)(iv)."
1986
Subsec. (a)(1)(C).
Pub. L. 99-514, Sec. 822(a), struck out subpar. (C) relating to
exclusion from gross income if the indebtedness discharged is qualified business indebtedness.
Subsec. (a)(2).
Pub. L. 99-514, Sec. 822(b)(1), substituted "Subparagraph (B) of paragraph
(1)" for "Subparagraphs (B) and (C) of paragraph (1)" in subpar. (A), struck out subpar. (A) designation and heading, and struck out subpar. (B) providing that insolvency exclusion takes precedence over qualified business exclusion.
Subsec. (b)(2)(B).
Pub. L. 99-514, Sec. 231(d)(3)(D), substituted "General business
credit" for "Research credit and general business credit" in heading and amended text, as amended by this Act (Pub.
L. 99-514, Sec. 1171(b)(4) (see below)), generally.
Prior to amendment, text read as follows:
“Any carryover to or from the taxable year of a discharge of an amount for purposes of determining the amount allowable as a credit under—
"(i) section 30 (relating to credit for increasing research activities), or
"(ii) section 38 (relating to general business credit).
For purposes of this subparagraph, there shall not be taken into account any portion of a carryover which is attributable to the employee stock ownership
credit determined under section 41." Pub. L. 99-514, Sec. 1171(b)(4), struck out last sentence which had been eliminated by the general amendment of subpar. (B) by
Pub. L. 99-514, Sec. 231(d)(3)(D). See above.
Subsec. (b)(2)(E).
Pub. L. 99-514, Sec. 1847(b)(7), substituted "section 27" for "section
33".
Subsec. (b)(3).
Pub. L. 99-514, Sec. 104(b)(2), substituted "33 1/3 cents" for "50
cents".
Subsec. (c).
Pub. L. 99-514, Sec. 822(b)(2), struck out subsec. (c) relating to tax
treatment of discharge of qualified business indebtedness.
Subsec. (d).
Pub. L. 99-514, Sec. 822(b)(3)(B), struck out reference to subsec. (c)
in heading.
Subsec. (d)(4).
Pub. L. 99-514, Sec. 822(b)(3)(A), struck out par. (4) relating to
treatment of indebtedness as qualified business indebtedness.
Subsec. (d)(6), (7)(A).
Pub. L. 99-514, Sec. 822(b)(3)(B),
struck out reference to subsec. (c) in heading and text.
Subsec. (d)(7)(B).
Pub. L. 99-514, Sec. 822(b)(3)(C), struck out "The preceding sentence
shall not apply to any discharge to the extent that subsection (a)(1)(C) applies to such discharge." Subsec. (d)(9)(A).
Pub. L. 99-514, Sec. 822(b)(3)(D), struck out "under paragraph (4) of this subsection or" after "An election".
Subsec. (e)(7)(A)(ii)(I).
Pub. L. 99-514, Sec. 805(c)(2), substituted "subsection
(a) or (b) of section 166" for "subsection (a), (b), or (c) of section 166".
Subsec. (e)(7)(B) to (D).
Pub. L. 99-514, Sec. 805(c)(3),
redesignated subpars. (C) to (E) as (B) to (D), respectively, and struck out former subpar. (B) which related to taxpayers on reserve method.
Subsec. (e)(7)(E), (F).
Pub. L. 99-514, Sec. 805(c)(3), (4), redesignated subpar.
(F) as (E) and substituted "the foregoing subparagraphs" for "subparagraphs (A), (B), (C), (D), and (E)".
Former subpar. (E) redesignated (D).
Subsec. (e)(10)(C).
Pub. L. 99-514, Sec. 621(e), repealed the amendment by Pub. L.
98-369, Sec. 59(b)(1), which had added subpar. (C) creating an exception for transfers in certain workouts of the satisfaction of indebtedness by corporation's stock. See 1984 Amendment note below.
Subsec. (g).
Pub. L. 99-514, Sec. 405(a), added subsec. (g).
1984
Subsec. (b)(2)(B).
Pub. L. 98-369, Sec. 474(r)(5), substituted provisions relating
to research credits and general business credits covering carryovers to or from the taxable year of a discharge of an amount for purposes of determining the amount allowable as a credit under section 30 (relating to credit for increasing
research activities), or section 38 (relating to general business credit), and directing that there shall not be taken into account any portion of a carryover which is attributable to the employee stock ownership credit determined
under section 41 for former provisions covering carryovers to or from the taxable year of the discharge of an amount for purposes of determining the amount of a credit allowable under section 38 (relating to investment in certain
depreciable property), section 40 (relating to expenses of work incentive programs), section 44B (relating to credit for employment of certain new employees), section 44E (relating to alcohol used as a fuel), or section 44F (relating
to credit for increasing research activities), and directing that, for purposes of clause (i), there could not be taken into account any portion of a carryover which was attributable to the employee plan credit (within the meaning
of section 48(o)(3)).
Subsec. (d)(6).
Pub. L. 98-369, Sec. 721(b)(2), struck out "or S corporation shareholder
level" in heading and second sentence which provided that "In the case of an S corporation, subsections (a), (b), and (c) shall apply at the shareholder level.". See par. (7)(A).
Subsec. (d)(7) to (10).
Pub. L. 98-369, Sec. 721(b)(2),
added par. (7) and redesignated former pars. (7) to (9) as (8) to (10), respectively.
Subsec. (e)(10).
Pub. L. 98-369, Sec. 59(a), added par. (10).
Subsec. (e)(10)(C).
Pub. L. 98-369, Sec. 59(b)(1), which added subpar. (C), effective as if included in the amendments
made by section 806(e) and (f) of Pub. L. 94-455, was repealed by Pub. L. 99-514, Sec. 621(e), (f)(2), eff. Jan. 1, 1986, with certain exceptions, see Effective Date of 1986 Amendment note below.
Subsec. (f).
Pub. L. 98-369, Sec. 1076(a), added subsec. (f).
1983
Subsec. (b)(2)(B)(v).
Pub. L. 97-448, Sec. 102(h)(1), added cl. (v).
Subsec. (e)(7)(A)(iii).
Pub. L. 97-448, Sec. 304(d), added cl. (iii).
1982 — Subsec. (d)(6).
Pub. L. 97-354 inserted "or S corporation shareholder level" in heading and inserted
"In the case of an S corporation, subsections (a), (b), and (c) shall be applied at the shareholder level."
1980 —
Pub. L. 96-589 completely revised and expanded provisions by specifying the types of indebtedness and by setting out priorities
among the exclusions, to reflect the revision of Title 11, Bankruptcy, in 1978.
1976
Pub. L. 94-455, Sec. 1951(b)(2)(A), struck out "(a) Special rule of exclusion. — " after "Income from discharge of indebtedness" and struck out subsec.
(b) which related to discharge, cancellation, or modification of indebtedness of certain railroad corporations.
Pub. L. 94-455, Sec. 1906(b)(13)(A), struck out "or his delegate" after "Secretary".
1960 — Subsec. (b).
Pub. L. 86-496 provided that if the discharge, cancellation, or modification
of any indebtedness is effected pursuant to a court order in a receivership proceeding or in a proceeding under section 77 of the Bankruptcy Act, commenced before Jan. 1, 1960, then no amount is to be included in gross income with
respect to it, and struck out provisions which made subsection inapplicable to discharges occurring in a taxable year beginning after Dec. 31, 1957.
1956 — Subsec. (b). Act June 29, 1956, substituted "December 31, 1957" for "December 31, 1955".
EFFECTIVE DATES
1998 Acts. Amendment by
Pub. L. 105-206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997,
Pub. L. 105-34,
to which such amendment relates, see section 6024 of Pub. L. 105-206, set out as a note under section 1 of this title.
1997 Acts. Section 225(b) of
Pub. L. 105-34 provided that: "The amendments made by this section (amending this section) shall apply to discharges of indebtedness
after the date of the enactment of this Act (Aug. 5, 1997)."
1996 Acts. Amendment by
Pub. L. 104-188 effective as if included in the provision of the Revenue Reconciliation Act of 1993,
Pub. L. 103-66, Sec. 13001-13444, to
which such amendment relates, see section 1703(o) of Pub. L. 104-188, set out as a note under section 39 of this title.
1993 Acts. Section 13150(d) of
Pub. L. 103-66 provided that:
"The amendments made by this section (amending this section and sections 703 and 1017 of this title) shall apply to discharges after December 31, 1992, in taxable years
ending after such date." Section 13226(a)(3) of Pub. L. 103-66 provided that:
"(A) In general.—Except as otherwise provided in this paragraph, the amendments
made by this subsection (amending this section and section 382 of this title) shall apply to stock transferred after December 31, 1994, in satisfaction of any indebtedness.
"(B) Exception for title 11 cases.—The amendments made by this subsection shall
not apply to stock transferred in satisfaction of any indebtedness if such transfer is in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1986) which was
filed on or before December 31, 1993." Section 13226(b)(4) of Pub. L. 103-66 provided that: "The amendments made by this subsection (amending this section) shall apply to discharges of indebtedness in taxable years beginning after
December 31, 1993."
1990 Acts. Section 11325(c) of
Pub. L. 101-508 provided that:
"(1) In general.—Except as provided in paragraph (2), the amendments made by
this section (amending this section and section 1275 of this title) shall apply to debt instruments issued, and stock transferred, after October 9, 1990, in satisfaction of any indebtedness.
"(2) Exceptions.—The amendments made by this section shall not apply to any
debt instrument issued, or stock transferred, in satisfaction of any indebtedness if such issuance or transfer (as the case may be)—
"(A) is in a title 11 or similar case (as defined in section 368(a)(3)(A) of the Internal Revenue Code of 1986)
which was filed on or before October 9, 1990,
"(B) is pursuant to a written binding contract in effect on October 9, 1990, and at all times thereafter before such issuance or transfer,
"(C) is pursuant to a transaction which was described in documents filed with the Securities and Exchange Commission on or before October 9,
1990, or
"(D) is pursuant to a transaction—
"(i) the material terms of which were described in a written public announcement on or before October 9, 1990,
"(ii) which was the subject of a prior filing with the Securities and Exchange Commission, and
"(iii) which is the subject of a subsequent filing with the Securities and Exchange Commission before January 1, 1991." Amendment by section
11813(b)(6) 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.
1988 — Amendment by
Pub. L. 100-647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of
1986, Pub. L. 99-514, to which such amendment relates, see section 1019(a) of
Pub. L. 100-647, set out as a note under section 1 of this title.
1986 — Amendment by section 104(b)(2) of Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1986, see section 151(a) of Pub. L. 99-514, set out as a note under section 1 of this title.
Amendment by section 231(d)(3)(D) of
Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1985, see section 231(g) of
Pub. L. 99-514, set out as a note
under section 41 of this title.
Section 405(c) of
Pub. L. 99-514 provided that: "The amendments made by this section (amending this section and section 1017 of this title) shall apply to discharges
of indebtedness occurring after April 9, 1986, in taxable years ending after such date." Repeal by section 621(e)(1) of
Pub. L. 99-514 of amendment by section 59(b)(1) of Pub. L. 99-369, which was effective as if included in the amendments
made by section 806(e) and (f) of Pub. L. 94-455, effective Jan. 1, 1986, with certain exceptions, see section 621(f)(2) of
Pub. L. 99-514, set out as a note under section 382 of this title.
Amendment by section 805(c)(2), (4) of Pub. L. 99-514 applicable to taxable years beginning after Dec. 31, 1986, with certain changes required in method of accounting, see section 805(d) of Pub. L. 99-514, set out as a note under section 166 of this title.
Section 822(c) of
Pub. L. 99-514 provided that: "The amendments made by this section (amending this section and section 1017 of this title) shall apply to discharges
after December 31, 1986." Amendment by section 1171(b)(4) of Pub. L. 99-514 applicable to compensation paid or accrued after Dec. 31, 1986, in taxable years ending after such date, except as otherwise provided, see section 1171(c)
of Pub. L. 99-514, set out as a note under section 38 of this title.
Amendment by section 1847(b)(7) of Pub. L. 99-514 effective, except as otherwise provided, as if included in the provisions of the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such amendment relates, see section 1881 of Pub. L. 99-514, set out as a note under section 48 of this title.
1984 — Section 59(b)(2) of
Pub. L. 98-369 provided that: "The amendment made by paragraph (1) (amending this section) shall take effect
as if it had been included in the amendments made by subsections (e) and (f) of section 806 of the Tax Reform Act of 1976 (Pub.
L. 94-455)." See Effective Date of 1976 Amendment note set out under section 382 of this title.
Section 59(b)((c)) of Pub. L. 98-369 provided that:
"(1) In general.—Except as otherwise provided in this subsection, the amendment
made by subsection (a) (amending this section) shall apply to transfers after the date of the enactment of this Act (July 18, 1984) in taxable years ending after such date.
"(2) Transitional rule.—The amendment made by subsection (a) shall not apply to the transfer by a corporation of its stock in exchange for debt of the corporation after the date of the enactment of this Act if such transfer is—
"(A) pursuant to a written contract requiring such transfer which was binding on the corporation at all times on June 7, 1984, and at all times
after such date but only if the transfer takes place before January 1, 1985, and only if the transferee held the debt at all times on June 7, 1984, or
"(B) pursuant to the exercise of an option to exchange debt for stock but only if such option was in effect at all times on June 7, 1984, and at all times after such date and only if at all times on June 7, 1984, the option and the debt were held by the same person.
"(3) Certain transfers to controlling shareholder.—The amendment made by subsection
(a) shall not apply to any transfer before January 1, 1985, by a corporation of its stock in exchange for debt of such corporation if—
"(A) such transfer is to another corporation which at all times on June 7, 1984, owned 75 percent or more of the total value of the stock of the corporation making such transfer, and
"(B) immediately after such transfer, the transferee corporation owns 80 percent or more of the total value of the stock of the transferor
corporation.
"(4) Certain transfers pursuant to debt restructure agreement.—The amendment made by subsection (a) shall not apply to the transfer by a corporation of its stock in exchange for debt of the corporation after the date of the enactment of this Act and before January 1, 1985, if—
"(A) such transfer is covered by a debt restructure agreement entered into by the corporation during November 1983,
and
"(B) such agreement was specified in a registration statement filed with the Securities and Exchange Commission by the corporation on March 7, 1984."
Amendment by section 474(r)(5) of
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.
Amendment by section 721(b) of Pub. L. 98-369 applicable to contributions to capital after Dec. 31, 1980, in taxable years ending after such date, see section 721(y)(2) of Pub. L. 98-369, set out as a note under section 1361 of this title.
Section 1076(b) of
Pub. L. 98-369 provided that: "The amendments made by this section (amending this section) shall apply to discharges of indebtedness made on or after
January 1, 1983."
1983 — Amendment by title I of Pub. L. 97-448 effective, except as otherwise provided, as if it had been included in the provision of the Economic Recovery Tax Act of 1981, Pub. L. 97-34, to which such amendment relates, see section 109 of Pub. L. 97-448, set out as a note under section 1 of this title.
1982 — 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.
1980 — Section 7 of Pub. L. 96-589, as amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:
"(a) For Section 2 (Relating to Tax Treatment of Discharge of Indebtedness). -
"(1) In general.—Except as provided in paragraph (2), the amendments made by
section 2 (amending this section and sections 111, 118, 382, 703 and 1017 of this title) shall apply to any transaction which occurs after December 31, 1980, other than a transaction which occurs in a proceeding in a bankruptcy case
or similar judicial proceeding (or in a proceeding under the Bankruptcy Act) (Title 11, Bankruptcy) commencing on or before December 31, 1980.
"(2) Transitional rule.—In the case of any discharge of indebtedness to which
subparagraph (A) or (B) of section 108(a)(1) of the Internal Revenue Code of 1986 (formerly I.R.C. 1954) (relating to exclusion from gross income), as amended by section 2, applies and which occurs before January
1, 1982, or which occurs in a proceeding in a bankruptcy case or similar judicial proceedings commencing before January 1, 1982, then—
"(A) section 108(b)(2) of the such Code (relating to reduction of tax attributes), as so amended, shall be applied without regard to subparagraphs (A), (B), (C), and (E) thereof, and
"(B) the basis of any property shall not be reduced under section 1017 of such Code (relating to reduction in basis
in connection with discharges of indebtedness), as so amended, below the fair market value of such property on the date the debt is discharged.
"(b) For Section 3 (Relating to Rules Relating to Title 11 Cases for Individuals).—The amendments made by section
3 (enacting sections 1398 and 1399 of this title and amending sections 443, 6012 and 6103 of this title) shall apply to any bankruptcy case commencing more than 90 days after the date of the enactment of this Act (Dec. 24, 1980).
"(c) For Section 4 (Relating to Corporate Reorganization Provisions). -
"(1) In general.—The amendments made by section 4 (enacting section 370 of this title and amending sections 354,
355, 357, 368 and 381 of this title) shall apply to any bankruptcy case or similar judicial proceeding commencing after December 31, 1980.
"(2) Exchanges of property for accrued interest.—The amendments made by subsection (e) of section 4 (amending sections
354 and 355 of this title) (relating to treatment of property attributable to accrued interest) shall also apply to any exchange—
"(A) which occurs after December 31, 1980, and
"(B) which does not occur in a bankruptcy case or similar judicial proceeding (or in a proceeding under the Bankruptcy
Act) commenced on or before December 31, 1980.
"(d) For Section 5 (Relating to Miscellaneous Corporate Amendments). -
"(1) For subsection (a) (relating to exemption from personal holding company tax).—The amendments made by subsection
(a) of section 5 (amending section 542 of this title) shall apply to any bankruptcy case or similar judicial proceeding commenced after December 31, 1980.
"(2) For subsection (b) (relating to repeal of special treatment for certain railroad redemptions).—The amendments made by subsection (b) of section 5 (amending section 302 of this title) shall apply to stock which is issued after December 31, 1980 (other than stock issued pursuant to a plan of reorganization approved on or before that date).
"(3) For subsection (c) (relating to application of 12-month liquidation rule).—The amendment made by subsection
(c) of section 5 (amending section 337 of this title) shall apply to any bankruptcy case or similar judicial proceeding commenced after December 31, 1980.
"(4) For subsection (d) (relating to permitting bankruptcy estate to be subchapter s shareholder).—The amendment made by subsection (d) of section 5 (amending section 1371 of this title) shall apply to any bankruptcy case commenced on or after October 1, 1979.
"(5) For subsection (e) (relating to certain transfers to controlled corporations).—The amendments made by subsection
(e) of section 5 (amending section 351 of this title) shall apply as provided in subsection (a) of this section.
"(6) For subsection (f) (relating to effect of debt discharge on earnings and profits).—The amendment made by subsection (f) of section 5 (amending section 312 of this title) shall apply as provided in subsection (a) of this section.
"(e) For Section 6 (Relating to Changes in Tax Procedures).—The amendments made by section 6 (enacting sections 6658
and 7464 of this title, amending sections 128, 354, 422, 1023, 3302, 6012, 6036, 6155, 6161, 6212, 6213, 6216, 6326 (now 6327), 6404, 6503, 6512, 6532, 6871, 6872, 6873, 7430, and 7508 of this title, repealing section 1018 of this
title, and redesignating former section 7464 of this title as 7465) shall take effect on October 1, 1979, but shall not apply to any proceeding under the Bankruptcy Act (Title 11) commenced before October
1, 1979. "(f) Election To Substitute September 30, 1979, for December 31, 1980.—
"(1) In general.—The debtor (or debtors) in a bankruptcy case or similar judicial proceeding may (with the approval of the court) elect to apply subsections (a), (c), and (d) by substituting 'September 30, 1979' for 'December 31, 1980' each place it appears in such subsections.
"(2) Effect of election.—Any election made under paragraph (1) with respect to any proceeding shall apply to all
parties to the proceeding.
'"(3) Revocation only with consent.—Any election under this subsection may be revoked only with the consent of the Secretary of the Treasury or his delegate.
"(4) Time and manner of election.—Any election under this subsection shall be made at such time, and in such manner,
as the Secretary of the Treasury or his delegate may by regulations prescribe.
"(g) Definitions.—For purposes of this section—
"(1) Bankruptcy case.—The term 'bankruptcy case' means any case under title 11 of the
United States Code (as recodified by Public Law 95-598).
"(2) Similar judicial proceeding.—The term 'similar judicial proceeding' means a receivership, foreclosure, or similar proceeding in a Federal or State court (as modified by section 368(a)(3)(D) of the Internal Revenue Code of 1986)."
1976 — Amendment by section 1951(b)(2)(A) of
Pub. L. 94-455 applicable with respect to taxable years beginning after Dec. 31, 1976, see
section 1951(d) of Pub. L. 94-455, set out as a note under section 72 of this title.
1960 — Section 1(b) of Pub. L. 86-496 provided that: "The amendment made by subsection (a) (amending this section) shall apply to taxable years ending after December 31, 1959, but only with respect to discharges occurring after such date."
SAVINGS PROVISION
For provisions that nothing in amendment by section 11813 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.
Section 1951(b)(2)(B) of
Pub. L. 94-455 provided that: "If any discharge, cancellation, or modification of indebtedness of a railroad corporation occurs in a taxable
year beginning after December 31, 1976, pursuant to an order of a court in a proceeding referred to in section 108(b)(A) or (B) which commenced before January 1, 1960, then, notwithstanding the amendments
made by subparagraph (A) (amending this section) the provisions of subsection (b) of section 108 shall be considered as not repealed with respect to such discharge, cancellation, or modification of indebtedness."
EXCLUSION OF CERTAIN CANCELLATIONS OF INDEBTEDNESS
Pub. L. 107-134, title I, Sec. 105, Jan. 23, 2002, 115 Stat. 2432, provided that:
"(a) In General.—For purposes of the Internal Revenue Code of 1986—
"(1) gross income shall not include any amount which (but for this section) would be includible in gross income by
reason of the discharge (in whole or in part) of indebtedness of any taxpayer if the discharge is by reason of the death of an individual incurred as the result of the terrorist attacks against the United States on September 11, 2001,
or as the result of illness incurred as a result of an attack involving anthrax occurring on or after September 11, 2001, and before January 1, 2002; and
"(2) return requirements under section 6050P of such Code shall not apply to any discharge described in paragraph (1).
"(b) Effective Date.—This section shall apply to discharges made on or after September 11, 2001, and before January
1, 2002." PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989 For provisions directing that if any amendments made by subtitle A or subtitle C of title XI (Sec. 1101-1147 and 1171-1177) or title XVIII (Sec. 1800-1899A) of
Pub. L. 99-514
require an amendment to any plan, such plan amendment shall not be required to be made before the first plan year beginning on or after Jan. 1, 1989, see section 1140 of
Pub. L. 99-514, as amended, set out as a note under section 401
of this title.
SECTION REFERRED TO IN OTHER SECTIONS
This section is referred to in sections 118, 147, 382, 703, 773, 774, 1017, 1503 of this title.
HISTORICAL & REVISION NOTES (26 U.S.C. § 221)
Adjustment of Amounts to Determine Availability of Interest Deduction for Taxable Years Beginning in 2003
For adjustment of maximum deduction in subsection (b)(2)(B) of this section for interest paid on qualified education loans for taxable years beginning in 2003, see section
3.18 of Revenue Procedure 2002–70, set out as a note under section 1 of this title.
Amendment of Section
For termination of amendment by section 901 of
Pub. L. 107–16, see Effective and Termination Dates of 2001 note below.
References in Text
The date of the enactment of this Act, referred to in subsec. (d)(2), probably means the date of enactment of
Pub. L. 105–34, which enacted this section and was approved
Aug. 5, 1997.
Prior Provisions
A prior section 221 was renumbered section 223 of this title. Another prior section 221, added
Pub. L. 97–34, title I, § 103(a), Aug. 13, 1981, 95 Stat. 187; amended
Pub. L.
97–448, title III, § 305(d)(4), Jan. 12, 1983, 96 Stat. 2400, related to deduction for two-earner married couples, prior to repeal by
Pub. L. 99–514, title I, § 131(a), Oct. 22, 1986, 100 Stat. 2113, applicable to taxable years beginning
after Dec. 31, 1986.
Amendments
2004
Subsec. (b)(2)(C)(i).
Pub. L. 108-357, Sec. 102(d)(2), amended subsec. (b)(2)(C)(i) by inserting "199," before "221".
Subsec. (d)(4).
Pub. L. 108-311, Sec. 207(20), amended subsec. (d)(4) by inserting
"(determined without regard to subsections (b)(1), (b)(2), and (d)(1)(B) thereof)" after "section 152".
Subsec. (f)(1).
Pub. L. 108-311, Sec. 408(b)(5), amended the directory language of Pub. L. 107-16, Sec. 412(b)(2), which amended this section, to
provide that this amendment applied to subsec. (f)(1), not subsec. (g)(1), as purported in the original language.
2001
Subsec. (b)(2)(B)(i), (ii).
Pub. L. 107–16, §§ 412(b)(1), 901, temporarily amended cls. (i) and (ii) generally. Prior to amendment, cls. (i) and
(ii) read as follows: “(i) the excess of— “(I) the taxpayer’s modified adjusted gross income for such taxable year, over “(II) $40,000 ($60,000 in the case of a joint return), bears to “(ii) $15,000.” See Effective and Termination
Dates of 2001 Amendment note below.
Subsec. (b)(2)(C)(i).
Pub. L. 107–16, §§ 431(c)(2), 901, temporarily inserted “222,” before “911”. See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (d).
Pub. L. 107–16, §§ 412(a)(1), 901, temporarily redesignated subsec. (e) as (d), and struck out heading
and text of former subsec. (d). Text read as follows: “A deduction shall be allowed under this section only with respect to interest paid on any qualified education loan during the first 60 months (whether
or not consecutive) in which interest payments are required. For purposes of this paragraph, any loan and all refinancings of such loan shall be treated as 1 loan. Such 60 months shall be determined in the manner prescribed by the
Secretary in the case of multiple loans which are refinanced by, or serviced as, a single loan and in the case of loans incurred before the date of the enactment of this section.” See Effective and Termination Dates of 2001 Amendment
note below.
Subsec. (e).
Pub. L. 107–16, §§ 412(a)(1), 901, temporarily redesignated subsec. (f) as (e). Former subsec. (e) redesignated (d). See Effective
and Termination Dates of 2001 Amendment note below.
Subsec. (e)(2)(A).
Pub. L. 107–16, §§ 402(b)(2)(B), 901, temporarily inserted “529,” after “135,”. See Effective and Termination Dates of 2001
Amendment note below.
Subsec. (f).
Pub. L. 107–16, §§ 412(a)(1), 901, temporarily redesignated former subsec. (g) as (f). Former subsec. (f) redesignated (e). See Effective
and Termination Dates of 2001 Amendment note below.
Subsec. (f)(1).
Pub. L. 107–16, §§ 412(b)(2), 901, which directed the temporary amendment of subsec. (g)(1) by substituting “$50,000 and $100,000
amounts” for “$40,000 and $60,000 amounts”, was executed to subsec. (f)(1) to reflect the probable intent of Congress and the temporary redesignation of subsec. (g) as (f) by
Pub. L. 107–16, §§ 412(a)(1), 901. See above and Effective
and Termination Dates of 2001 Amendment note below.
Subsec. (g).
Pub. L. 107–16, §§ 412(a)(1), 901, temporarily redesignated former subsec. (g) as (f). See Effective and Termination Dates of 2001
Amendment note below.
1998
Subsec. (b)(2)(C).
Pub. L. 105–277, § 4003(a)(2)(A)(iii), struck out concluding provisions which read as follows: “For purposes of sections 86,
135, 137, 219, and 469, adjusted gross income shall be determined without regard to the deduction allowed under this section.”
Subsec. (b)(2)(C)(i). Pub. L. 105–277, § 4003(a)(2)(A)(i), struck out “135, 137,” after “sections”.
Subsec. (b)(2)(C)(ii).
Pub. L. 105–277, § 4003(a)(2)(A)(ii), inserted “135, 137,” after “sections 86,”.
Subsec. (d).
Pub. L. 105–206, § 6004(b)(2), inserted at end “Such 60 months shall be determined in the manner prescribed
by the Secretary in the case of multiple loans which are refinanced by, or serviced as, a single loan and in the case of loans incurred before the date of the enactment of this section.”
Subsec. (e)(1).
Pub. L. 105–277, § 4003(a)(3), inserted before period at end “or to any person by reason of a loan under any qualified employer
plan (as defined in section 72 (p)(4)) or under any contract referred to in section 72 (p)(5)”.
Pub. L. 105–206, § 6004(b)(1), inserted “by the taxpayer solely” after “incurred” in introductory provisions.
Effective and Termination Dates
2001 Acts. Amendment by section 402(b)(2)(B) of
Pub. L. 107–16 applicable to taxable years beginning after Dec. 31, 2001, see section 402(h) of
Pub. L. 107–16, set
out as a note under section 72 of this title. Pub. L. 107–16, title IV, § 412(a)(3), June 7, 2001, 115 Stat. 64, provided that: “The amendments made by this subsection [amending this section and section 6050S of this title] shall apply
with respect to any loan interest paid after December 31, 2001, in taxable years ending after such date.”
Pub. L. 107–16, title IV, § 412(b)(3), June 7, 2001, 115 Stat. 64, provided that: “The amendments made by this subsection [amending
this section] shall apply to taxable years ending after December 31, 2001.” Amendment by section 431(c)(2) of
Pub. L. 107–16 applicable to payments made in taxable years beginning after Dec. 31, 2001, see section 431(d) of
Pub. L. 107–16,
set out as a note under section 62 of this title. Amendment by Pub. L. 107–16 inapplicable to taxable, plan, or limitation years beginning after Dec. 31, 2010, and the Internal Revenue Code of 1986 to be applied and administered to
such years as if such amendment had never been enacted, see section 901 of Pub.
L. 107–16, set out as a note under section 1 of this title.
1998 Acts. Amendment by
Pub. L. 105–277 effective as if included in the provision of the Taxpayer Relief Act of 1997,
Pub. L. 105–34, to which such amendment relates,
see section 4003(l) of Pub. L. 105–277, set out as a note under section 86 of this title. Amendment by
Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997,
Pub. L.
105–34, to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.
1997 Acts. Section applicable to any qualified education loan (as defined in subsec. (e)(1) of this section) incurred on, before, or after Aug. 5, 1997, but only
with respect to any loan interest payment due and paid after Dec. 31, 1997, and to the portion of the 60-month period referred to in subsec. (d) of this section after Dec. 31, 1997, see section 202(e) of
Pub. L. 105–34, set out as
an Effective Date of 1997 Amendment note under section 62 of this title.
Section Referred to in Other Sections
This section is referred to in sections 62, 86, 135, 137, 163, 219, 222, 469, 6050S of this title.
HISTORICAL & REVISION NOTES (26 U.S.C. § 529)
Amendment of Section
For termination of amendment by section 901 of
Pub. L. 107–16, see Effective and Termination Dates of 2001 Amendment note below.
References in Text
The date of the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001, referred to in subsec. (e)(3)(B)(ii)(I), is the date of enactment of
Pub. L.
107–16, which was approved June 7, 2001.
The date of the enactment of this paragraph, referred to in subsec. (e)(5)(A), probably means the date of enactment of Pub. L. 105–34, which enacted subsec. (e)(5) and which was approved Aug. 5, 1997.
The Higher Education Act of 1965, referred to in subsec. (e)(5), is
Pub. L. 89–329, Nov. 8, 1965, 79 Stat. 1219, as amended. Title IV of the Act is classified generally
to subchapter IV (§ 1070 et seq.) of chapter 28 of Title 20, Education, and part C (§ 2751 et seq.) of subchapter I of chapter 34 of Title 42, The Public Health and Welfare.
For complete classification of this Act to the Code, see Short Title note set out under section 1001 of Title 20 and Tables.
Amendments
2004
Subsec. (c)(5)(B).
Pub. L. 108-311, § 406(a), rewrote subpar. (B), which previously read:
"(B) Treatment of designation of new beneficiary.--The taxes imposed by chapters 12 and 13 shall apply to a transfer by reason of a change in
the designated beneficiary under the program (or a rollover to the account of a new beneficiary) only if the new beneficiary is a generation below the generation of the old beneficiary (determined in accordance with section 2651)."
Subsec. (e)(2)(B).
Pub. L. 108-311, § 207(21), amended subsec. (e)(2)(B) by stricking out "paragraphs (1) through (8) of section 152(a)" and inserting
"subparagraphs (A) through (G) of section 152(d)(2)".
2002
Subsec. (e)(3)(B)(i).
Pub. L. 107–147 substituted “subsection (b)(6)” for “subsection (b)(7)”. 2001—Pub.
L. 107–16, §§ 402(a)(4)(D), 901, temporarily
struck out “State” before “tuition” in section catchline. See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (a).
Pub. L. 107–16, §§ 402(a)(4)(A), 901, temporarily substituted “qualified tuition” for “qualified State
tuition”. See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (b).
Pub. L. 107–16, §§ 402(a)(4)(C), 901, temporarily substituted “Qualified tuition” for “Qualified State
tuition” in heading. See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (b)(1).
Pub. L. 107–16, §§ 402(a)(1), (4)(A), 901, in introductory provisions, temporarily substituted “qualified
tuition” for “qualified State tuition” and inserted “or by 1 or more eligible educational institutions” after “thereof”, and temporarily added concluding provisions. See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (b)(1)(A)(ii).
Pub. L. 107–16, §§ 402(a)(2), 901, temporarily inserted “in the case of a program established
and maintained by a State or agency or instrumentality thereof,” before “may make”. See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (b)(2).
Pub. L. 107–16, §§ 402(a)(4)(A), 901, temporarily substituted “qualified tuition” for “qualified
State tuition”. See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (b)(3) to (7).
Pub. L. 107–16, §§ 402(a)(3)(A), (4)(A), 901, temporarily redesignated pars. (4) to (7) as
(3) to (6), respectively, substituted “qualified tuition” for “qualified State tuition” wherever appearing, and struck out heading and text of former par. (3). Text read as follows: "A program shall not be treated as a qualified
State tuition program unless it imposes a more than de minimis penalty on any refund of earnings from the account which are not—
"(A) used for qualified higher education expenses of the designated beneficiary,
"(B) made on account of the death or disability of the designated beneficiary, or
"(C) made on account of a scholarship (or allowance or payment described in section 135 (d)(1)(B) or (C)) received by the designated beneficiary
to the extent the amount of the refund does not exceed the amount of the scholarship, allowance, or payment.” See Effective and Termination Dates of 2001 note below.
Subsec. (c)(1)(A), (3)(A).
Pub. L. 107–16, §§ 402(a)(4)(A), 901, temporarily substituted “qualified tuition” for “qualified State tuition”. See
Effective and Termination Dates of 2001 Amendment note below.
Subsec. (c)(3)(B).
Pub. L. 107–16, §§ 402(b)(1), 901, temporarily amended heading and text of subpar. (B) generally. Prior to amendment, text read
as follows: “Any benefit furnished to a designated beneficiary under a qualified tuition program shall be treated as a distribution to the beneficiary.” See Effective and Termination Dates of 2001 Amendment note below.
Pub. L. 107–16,
§§ 402(a)(4)(A), 901, temporarily substituted “qualified tuition” for “qualified State tuition”. See Effective and Termination Dates note below.
Subsec. (c)(3)(B)(vi).
Pub. L. 107–22 substituted “Coverdell education savings” for “education individual retirement” in heading.
Subsec. (c)(3)(C).
Pub. L. 107–16, §§ 402(c)(3), 901, temporarily inserted “or programs” after “beneficiaries” in heading. See Effective and Termination
Dates of 2001 Amendment note below.
Subsec. (c)(3)(C)(i).
Pub. L. 107–16, §§ 402(c)(1), 901, temporarily substituted “transferred—” for “transferred”, added subcl. (I), and designated
existing provisions “to the credit” as subcl. (II). See Effective and Termination Dates of 2001 Amendment note below.
Pub. L. 107–16, §§ 402(a)(4)(A), 901, temporarily substituted “qualified tuition” for “qualified State tuition”.
See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (c)(3)(C)(ii).
Pub. L. 107–16, §§ 402(a)(4)(A), 901, temporarily substituted “qualified tuition” for “qualified State tuition”. See Effective
and Termination Dates of 2001 Amendment note below.
Subsec. (c)(3)(C)(iii).
Pub. L. 107–16, §§ 402(c)(2), 901, temporarily added cl. (iii). See Effective and Termination Dates of 2001 Amendment note
below.
Subsec. (c)(3)(D)(i).
Pub. L. 107–16, §§ 402(a)(4)(A), 901, temporarily substituted “qualified tuition” for “qualified State tuition”. See Effective
and Termination Dates of 2001 Amendment note below.
Subsec. (c)(3)(D)(ii).
Pub. L. 107–16, §§ 402(g)(1), 901, temporarily inserted “except to the extent provided by the Secretary,” before “all distributions”.
See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (c)(3)(D)(iii).
Pub. L. 107–16, §§ 402(g)(2), 901, temporarily inserted “except to the extent provided by the Secretary,” before “the value”.
See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (c)(6).
Pub. L. 107–16, §§ 402(a)(3)(B), 901, temporarily added par. (6). See Effective and Termination Dates of 2001 Amendment note below.
Subsecs. (d), (e)(1)(A), (C).
Pub. L. 107–16, §§ 402(a)(4)(A), 901, temporarily substituted “qualified tuition” for “qualified State tuition”.
See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (e)(2)(D).
Pub. L. 107–16, §§ 402(d), 901, temporarily added subpar. (D). See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (e)(3)(A).
Pub. L. 107–16, §§ 402(f), 901, temporarily reenacted heading without change and amended text of subpar. (A) generally. Prior
to amendment, text read as follows: “The term ‘qualified higher education expenses’ means tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a designated beneficiary at an eligible educational
institution.” See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (e)(3)(B)(i).
Pub. L. 107–16, §§ 402(a)(4)(A), 901, temporarily substituted “qualified tuition” for “qualified State tuition”. See Effective
and Termination Dates of 2001 Amendment note below.
Subsec. (e)(3)(B)(ii).
Pub. L. 107–16, §§ 402(e), 901, temporarily reenacted heading without change and amended text of cl. (ii) generally. Prior
to amendment, text read as follows: “The amount treated as qualified higher education expenses by reason of the preceding sentence shall not exceed the minimum amount (applicable to the student) included for room and board for such
period in the cost of attendance (as defined in section 472 of the Higher Education Act of 1965, 20 U.S.C. 1087ll, as in effect on the date of the enactment of this paragraph) for the eligible educational institution for such period.”
See Effective and Termination Dates of 2001 Amendment note below.
Subsec. (e)(4).
Pub. L. 107–16, §§ 402(a)(4)(A), 901, temporarily substituted “qualified tuition” for “qualified State tuition”. See Effective
and Termination Dates of 2001 Amendment note below.
2000—Subsec. (e)(3)(B).
Pub. L. 106–554 struck out “under guaranteed plans” after “students” in heading.
1998
Subsec. (c)(3)(A).
Pub. L. 105–206, § 6004(c)(2), substituted “section 72” for “section 72 (b)”.
Subsec. (e)(2).
Pub. L. 105–206, § 6004(c)(3), reenacted heading without change and amended text of par. (2) generally. Prior to amendment, text
read as follows: “The term ‘member of the family’ means— “(A) an individual who bears a relationship to another individual which is a relationship described in paragraphs (1) through (8) of section 152 (a), and “(B) the spouse of
any individual described in subparagraph (A).”
1997
Subsec. (b)(5).
Pub. L. 105–34, § 211(b)(4), inserted “directly or indirectly” after “may not”.
Subsec. (c)(2).
Pub. L. 105–34, § 211(b)(3)(A)(i), amended heading and text of par. (2) generally. Prior to amendment, text read as follows: “In
no event shall a contribution to a qualified State tuition program on behalf of a designated beneficiary be treated as a taxable gift for purposes of chapter 12.”
Subsec. (c)(3)(A).
Pub. L. 105–34, § 211(d), substituted “section 72 (b)” for “section 72”.
Subsec. (c)(4).
Pub. L. 105–34, § 211(b)(3)(B), amended heading and text of par. (4) generally. Prior to amendment, text read as follows: “The value of any interest
in any qualified State tuition program which is attributable to contributions made by an individual to such program on behalf of any designated beneficiary shall be includible in the gross estate of the contributor for purposes of
chapter 11.”
Subsec. (c)(5).
Pub. L. 105–34, § 211(b)(3)(A)(ii), amended heading and text of par. (5) generally. Prior to amendment, text read as follows: “For purposes of section
2503 (e), the waiver (or payment to an educational institution) of qualified higher education expenses of a designated beneficiary under a qualified State tuition program shall be treated as a qualified transfer.”
Subsec. (d).
Pub. L. 105–34, § 211(e)(2)(A), amended subsec. (d) generally. Prior to amendment, subsec. (d) read as follows:
“(d) Reporting Requirements.—
“(1) In general.—If there is a distribution to any individual with respect to an interest in a qualified State tuition program during any calendar
year, each officer or employee having control of the qualified State tuition program or their designee shall make such reports as the Secretary may require regarding such distribution to the Secretary and to the designated beneficiary
or the individual to whom the distribution was made. Any such report shall include such information as the Secretary may prescribe.
“(2) Timing of reports.—Any report required by this subsection—
“(A) shall be filed at such time and in such matter as the Secretary prescribes, and
“(B) shall be furnished to individuals not later than January 31 of the calendar year following the calendar year to which such report relates.”
Subsec. (e)(1)(B).
Pub. L. 105–34, § 1601(h)(1)(A), substituted “subsection (c)(3)(C)” for “subsection (c)(2)(C)”.
Subsec. (e)(1)(C).
Pub. L. 105–34, § 1601(h)(1)(B), inserted “(or agency or instrumentality thereof)” after “local government”.
Subsec. (e)(2).
Pub. L. 105–34, § 211(b)(1), amended heading and text of par. (2) generally. Prior to amendment, text read as follows: “The term ‘member of the family’
has the same meaning given such term as section 2032A (e)(2).”
Subsec. (e)(3).
Pub. L. 105–34, § 211(a), amended heading and text of par. (3) generally. Prior to amendment, text read as follows: “The term ‘qualified higher education
expenses’ means tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a designated beneficiary at an eligible educational institution (as defined in section 135 (c)(3)).”
Subsec. (e)(5). Pub. L. 105–34, § 211(b)(2), added par. (5).
Effective and Termination Dates
2001 Acts. Amendment by
Pub. L. 107–22 effective July 26, 2001, see section 1(c) of Pub. L. 107–22, set out as a note under section 26 of this title.
Amendment by Pub. L. 107–16 applicable to taxable years beginning after Dec. 31, 2001, see section 402(h) of Pub. L. 107–16, set out as a note under section 72 of this title.
Amendment by Pub.
L. 107–16 inapplicable to taxable, plan, or limitation years beginning after Dec. 31, 2010, and the Internal Revenue Code of 1986 to be applied and administered
to such years as if such amendment had never been enacted, see section 901 of
Pub. L. 107–16, set out as a note under section 1 of this title.
1998 Acts. Amendment by
Pub. L. 105–206 effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997,
Pub. L. 105–34,
to which such amendment relates, see section 6024 of Pub. L. 105–206, set out as a note under section 1 of this title.
1997 Acts. Section 211(f) of Pub. L. 105–34 provided that:
"(1) In general.—Except as otherwise provided in this subsection, the amendments made by this section [amending this section and sections 135
and 6693 of this title] shall take effect on January 1, 1998.
"(2) Expenses to include room and board.—The amendment made by subsection (a) shall take effect as if included in the amendments made by section
1806 of the Small Business Job Protection Act of 1996 [Pub. L. 104–188].
"(3) Eligible educational institution.—The amendment made by subsection (b)(2) [amending this section] shall apply to distributions after December 31, 1997, with respect to expenses paid after such date (in taxable years ending after such date), for education furnished in academic periods beginning after such date.
"(4) Coordination with education savings bonds.—The amendment made by subsection (c) [amending section 135 of this title] shall apply to
taxable years beginning after December 31, 1997.
"(5) Estate and gift tax changes.—
“(A) Gift tax changes.—Paragraphs (2) and (5) of section 529(c) of the Internal Revenue Code of 1986, as amended by this section, shall apply
to transfers (including designations of new beneficiaries) made after the date of the enactment of this Act [Aug. 5, 1997].
"(B) Estate tax changes.—Paragraph (4) of such section 529 (c) shall apply to estates of decedents dying after June 8, 1997.
"(6) Transition rule for pre-august 20, 1996 contracts.—In the case of any contract issued prior to August 20, 1996, section 529(c)(3)(C) of the
Internal Revenue Code of 1986 shall be applied for taxable years ending after August 20, 1996, without regard to the requirement that a distribution be transferred to a member of the family or the requirement that a change in beneficiaries
may be made only to a member of the family.”
Amendment by section 1601(h)(1)(A), (B) of
Pub. L. 105–34 effective as if included in the provisions of the Small Business Job Protection Act of 1996,
Pub. L. 104–188, to which it relates, see section 1601(j) of Pub. L. 105–34, set out as a note under section 23 of this title.
1997 Acts. Section 1806(c) of Pub. L. 104–188, as amended by Pub. L. 105–34, title XVI, § 1601(h)(1)(C), Aug. 5, 1997, 111 Stat. 1092, provided that:
"(1) In general.—The amendments made by this section [enacting this section and amending section 135 of this title] shall apply to taxable years
ending after the date of the enactment of this Act [Aug. 20, 1996].
"(2) Transition rule.— If—
"(A) a State or agency or instrumentality thereof maintains, on the date of the enactment of this Act, a program under which persons may purchase
tuition credits or certificates on behalf of, or make contributions for education expenses of, a designated beneficiary, and
"(B) such program meets the requirements of a qualified State tuition program before the later of—
“(i) the date which is 1 year after such date of enactment, or
"(ii) the first day of the first calendar quarter after the close of the first regular session of the State legislature that begins after such
date of enactment, then such program (as in effect on August 20, 1996)
shall be treated as a qualified State tuition program with respect to contributions (and earnings allocable thereto) pursuant to contracts entered into
under such program before the first date on which such program meets such requirements (determined without regard to this paragraph) and the provisions of such program (as so in effect) shall apply in lieu of section 529(b) of the
Internal Revenue Code of 1986 with respect to such contributions and earnings.
For purposes of subparagraph (B)(ii), if a State has a 2-year legislative session, each year of such session shall be deemed to be a separate regular
session of the State legislature.”
Section Referred to in Other Sections
This section is referred to in sections 62, 72, 135, 221, 222, 530, 6693 of this title.
HISTORICAL & REVISION NOTES (26 U.S.C. § 530)
Amendment of Section
For termination of amendment by section 901 of
Pub. L. 107–16, see Effective and Termination Dates of 2001 Amendment note below.
Amendments
2004
Subsec. (d)(2)(C)(i).
Pub. L. 108-311, Sec. 404(a) amended subsec. (d)(2)(C)(i) by deleting "higher" after "qualified" in the introductory matter.
Subsec. (d)(4)(B)(iii).
Pub. L. 108-311, Sec. 406(b), amended subsec. (d)(4)(B)(iii) by substituting "designated beneficiary" for "account holder".
2003 — Subsec. (d)(14)(B)(iii) to (v). Pub. L. 108-121, Sec. 107(a) amended subsec. (d)(4)(B) by stricking "or" following the concluding com