26 U.S. Code § 1367 - Adjustments to basis of stock of shareholders, etc.
An amount which is required to be included in the gross income of a shareholder and shown on his return shall be taken into account under subparagraph (A) or (B) of subsection (a)(1) only to the extent such amount is included in the shareholder’s gross income on his return, increased or decreased by any adjustment of such amount in a redetermination of the shareholder’s tax liability.
If for any taxable year the amounts specified in subparagraphs (B), (C), (D), and (E) of subsection (a)(2) exceed the amount which reduces the shareholder’s basis to zero, such excess shall be applied to reduce (but not below zero) the shareholder’s basis in any indebtedness of the S corporation to the shareholder.
If for any taxable year beginning after December 31, 1982, there is a reduction under subparagraph (A) in the shareholder’s basis in the indebtedness of an S corporation to a shareholder, any net increase (after the application of paragraphs (1) and (2) of subsection (a)) for any subsequent taxable year shall be applied to restore such reduction in basis before any of it may be used to increase the shareholder’s basis in the stock of the S corporation.
This section and section 1366 shall be applied before the application of sections 165(g) and 166(d) to any taxable year of the shareholder or the corporation in which the security or debt becomes worthless.
If any person acquires stock in an S corporation by reason of the death of a decedent or by bequest, devise, or inheritance, section 691 shall be applied with respect to any item of income of the S corporation in the same manner as if the decedent had held directly his pro rata share of such item.
2014—Subsec. (a)(2). Pub. L. 113–295 substituted “December 31, 2014” for “December 31, 2013” in concluding provisions.
2013—Subsec. (a)(2). Pub. L. 112–240 substituted “December 31, 2013” for “December 31, 2011” in concluding provisions.
2010—Subsec. (a)(2). Pub. L. 111–312 substituted “December 31, 2011” for “December 31, 2009” in concluding provisions.
2008—Subsec. (a)(2). Pub. L. 110–343 substituted “December 31, 2009” for “December 31, 2007” in concluding provisions.
2006—Subsec. (a)(2). Pub. L. 109–280, which directed the addition of concluding provisions to section 1367(a)(2), without specifying the act to be amended, was executed to subsec. (a)(2) of this section, which is section 1367 of the Internal Revenue Code of 1986, to reflect the probable intent of Congress.
1996—Subsec. (a)(2)(E). Pub. L. 104–188, § 1702(h)(14), substituted “section 613A(c)(11)(B)” for “section 613A(c)(13)(B)”.
Subsec. (b)(4). Pub. L. 104–188, § 1313(a), added par. (4).
1984—Subsec. (a)(2)(E). Pub. L. 98–369, § 722(e)(2), substituted “for any oil and gas property held by the S corporation to the extent such deduction does not exceed the proportionate share of the adjusted basis of such property allocated to such shareholder under section 613A(c)(13)(B)” for “under section 611 with respect to oil and gas wells”.
Subsec. (b)(2)(B). Pub. L. 98–369, § 721(w), substituted “for any taxable year beginning after December 31, 1982, there is” for “for any taxable year there is”.
Subsec. (b)(3). Pub. L. 98–369, § 721(d), inserted “and 166(d)” in heading and text.
Amendment by section 1702(h)(14) of Pub. L. 104–188 effective, except as otherwise expressly provided, as if included in the provision of the Revenue Reconciliation Act of 1990, Pub. L. 101–508, title XI, to which such amendment relates, see section 1702(i) of Pub. L. 104–188, set out as a note under section 38 of this title.
Amendment by section 721(d), (w) of Pub. L. 98–369 effective as if included in the Subchapter S Revision Act of 1982, Pub. L. 97–354, see section 721(y)(1) of Pub. L. 98–369, set out as a note under section 1361 of this title.
Written determinations for this section
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- Accumulated Adjustments Account : 2014-10-03
- Taxability of Corporation on Distribution : 2014-05-23
- Accumulated Adjustments Account : 2014-05-23
- Pass-Thru of Items to Shareholders : 2006-05-12
- Pass-Thru of Items to Shareholders : 2002-06-07
- Post-termination Transition Period : 2002-06-07
- Definitions and Special Rules : 2001-04-27
- Liquidation v. Reorganization : 2001-04-27
- Distributions : 2001-04-27
- Liquidation in a Reorganization : 2001-04-27