excess net passive income

(A)Except as provided in subparagraph (B), the term “excess net passive income” means an amount which bears the same ratio to the net passive income for the taxable year as— (i)the amount by which the passive investment income for the taxable year exceeds 25 percent of the gross receipts for the taxable year, bears to (ii)the passive investment income for the taxable year. (B)The amount of the excess net passive income for any taxable year shall not exceed the amount of the corporation’s taxable income for such taxable year as determined under— (i)without regard to the deductions allowed by part VIII of subchapter B (other than the deduction allowed by section 248, relating to organization expenditures), and (ii)without regard to the deduction under section 172.

Source

26 USC § 1375(b)(1)(A)


Scoping language

For purposes of this section
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