§312 Effect on earnings and profits

section 263A(f)(4)(B), referred to in subsec. (n)(1)(C), was redesignated section 263A(f)(5)(B) by Pub. L. 115–97, title I, § 13801(a)(1), Dec. 22, 2017, 131 Stat. 2169.

2022—Subsec. (k)(3)(B). Pub. L. 117–169 designated existing provisions as cl. (i), inserted heading, substituted “For purposes of computing the earnings and profits of a corporation, except as provided in clause (ii)” for “For purposes of computing the earnings and profits of a corporation”, and added cl. (ii). 2014—Subsec. (d)(2), (3). Pub. L. 113–295, § 221(a)(49), redesignated par. (3) as (2) and struck out former par. (2) which read as follows: “In the case of a distribution of stock or securities, or property, to which section 115(h) of the Internal Revenue Code of 1939 (or the corresponding provision of prior law) applied, the effect on earnings and profits of such distribution shall be determined under such section 115(h), or the corresponding provision of prior law, as the case may be.” Subsec. (k)(3)(B). Pub. L. 113–295, § 221(a)(34)(F), struck out “179A,” after “section 179,” in heading and in two places in text. 2006—Subsec. (k)(3)(B). Pub. L. 109–432 substituted “179D, or 179E” for “or 179D” in heading and two places in text. 2005—Subsec. (k)(3)(B). Pub. L. 109–58, § 1331(b)(5), substituted “179, 179A, 179B, 179C, or 179D” for “179, 179A, 179B, or 179C” in heading and two places in text. Pub. L. 109–58, § 1323(b)(3), substituted “179, 179A, 179B, or 179C” for “179 179A, or 179B” in heading and two places in text. 2004—Subsec. (j). Pub. L. 108–357, § 413(c)(4), struck out subsec. (j) which related to earnings and profits of foreign investment companies. Subsec. (k)(3)(B). Pub. L. 108–357, § 338(b)(3), substituted “179A, or 179B” for “or 179A” in heading and two places in text. Subsec. (m). Pub. L. 108–357, § 413(c)(5), struck out “, a foreign investment company (within the meaning of section 1246(b)), or a foreign personal holding company (within the meaning of section 552)” before “and the issuance”. 1997—Subsec. (k)(3)(B). Pub. L. 105–34, in heading substituted “179 or 179A” for “179” and in text substituted “section 179 or 179A shall” for “section 179 shall” and “section 179 or 179A, as the case may be)” for “section 179)”. 1990—Subsec. (k)(2). Pub. L. 101–508, § 11812(b)(5), substituted heading for one which read: “Exceptions” and amended text generally. Prior to amendment, text read as follows: “If for any taxable year beginning after June 30, 1972, a method of depreciation was used by the taxpayer which the Secretary has determined results in a reasonable allowance under section 167(a), and which is not— “(A) a declining balance method, “(B) the sum of the years-digit method, or “(C) any other method allowable solely by reason of the application of subsection (b)(4) or (j)(1)(C) of section 167, then the adjustment to earnings and profits for depreciation for such year shall be determined under the method so used (in lieu of under the straight line method).” Subsec. (k)(5). Pub. L. 101–508, § 11813(b)(14), substituted “section 50(c)” for “section 48(q)”. 1989—Subsec. (b). Pub. L. 101–239, § 7811(m)(2), made clarifying amendment to directory language of Pub. L. 100–647, § 1018(d)(4), see 1988 Amendment note below. Subsec. (n)(2)(A)(ii). Pub. L. 101–239, § 7611(f)(5)(A), substituted “in which such amount was paid or incurred” for “in which the production from the well begins”. 1988—Subsec. (b). Pub. L. 100–647, § 1018(d)(4), as amended by Pub. L. 101–239, § 7811(m)(2), substituted “of any property (other than an obligation of such corporation)” for “of any property” in introductory provisions. Subsec. (k)(4). Pub. L. 100–647, § 1002(a)(3), substituted “paragraph (1)” for “paragraphs (1) and (3)”. Subsec. (n)(1)(B). Pub. L. 100–647, § 1018(u)(4), made technical amendment to directory language of Pub. L. 99–514, § 803(b)(3)(A). See 1986 Amendment note below. 1986—Subsec. (b). Pub. L. 99–514, § 1804(f)(1)(A), amended subsec. (b) generally, substituting provisions relating to distributions of appreciated property for provisions relating to distribution of certain inventory assets. Subsec. (c). Pub. L. 99–514, § 1804(f)(1)(B), (C), struck out “, etc.” after “liabilities” in heading and struck out par. (3) which read as follows: “any gain recognized to the corporation on the distribution.” Subsec. (k)(3). Pub. L. 99–514, § 201(b), amended par. (3) generally, substituting provisions relating to tangible property to which section 168 applies and amounts deductible under section 179 for provisions relating to recovery property within the meaning of section 168, amounts deductible under section 179, and flexibility if a different recovery percentage is elected under section 168 based on a longer recovery period. Subsec. (k)(3)(A). Pub. L. 99–514, § 1809(a)(2)(C)(ii), in subpar. (A), struck out “and rules similar to the rules under the next to the last sentence of section 168(b)(2)(A) and section 168(b)(2)(B) shall apply” after “low-income housing)”. Subsec. (k)(4). Pub. L. 99–514, § 201(d)(6), struck out last sentence “In determining the earnings and profits of such corporation in the case of recovery property (within the meaning of section 168), the rules of section 168(f)(2) shall apply.” Subsec. (n)(1)(B). Pub. L. 99–514, § 803(b)(3)(A), as amended by Pub. L. 100–647, § 1018(u)(4), struck out “(determined without regard to section 189)” after “incurred”. Subsec. (n)(1)(C). Pub. L. 99–514, § 803(b)(3)(B), added subpar. (C) and struck out former subpar. (C) which read as follows: “The term ‘

period’ has the meaning given such term by section 189(e)(2) (determined without regard to any real property limitation).” Subsec. (n)(3). Pub. L. 99–514, § 241(b)(1), struck out “, 177,” after “section 173”. Subsec. (n)(4). Pub. L. 99–514, § 631(e)(1), amended par. (4) generally. Prior to amendment, par. (4) read as follows: “Earnings and profits shall be increased or decreased by the amount of any increase or decrease in the LIFO recapture amount (determined under section 336(b)(3)) as of the close of each taxable year; except that any decrease below the LIFO recapture amount as of the close of the taxable year preceding the first taxable year to which this paragraph applies to the taxpayer shall be taken into account only to the extent provided in

of this subsec. Former subsec. (i) redesignated (h). Subsec. (j). Pub. L. 94–455, §§ 1901(a)(43)(D), (b)(32)(B)(i), 1906(b)(13)(A), redesignated subsec. (l) as (j), struck out “or his delegate” after “Secretary” in par. (1) and in par. (3) provision relating to the

of such paragraph. Former subsec. (j) redesignated (i). Subsec. (k). Pub. L. 94–455, §§ 1901(b)(32)(B)(i), 1906(b)(13)(A), redesignated subsec. (m) as (k) and struck out “or his delegate” after “Secretary” in par. (2). Former subsec. (k), relating to special adjustment on disposition of antitrust stock received as a dividend, was struck out. Subsec. (l). Pub. L. 94–455, § 1901(b)(32)(B)(i), redesignated subsec. (l) as (j). Subsec. (m). Pub. L. 94–455, § 1901(b)(32)(B)(i), redesignated subsec. (m) as (k). 1969—Subsec. (c)(3). Pub. L. 91–172, §§ 211(b)(3), 905(b)(2), substituted “1250(a), 1251(c), or 1252(a)”, for “or 1250(a)” and inserted reference to section 311(d). Subsec. (m). Pub. L. 91–172, § 442(a), added subsec. (m). 1966—Subsec. (c)(3). Pub. L. 89–570 inserted reference to section 617(d)(1). 1964—Subsec. (c)(3). Pub. L. 88–484 authorized adjustment for amount of gain recognized under section 341(f). Pub. L. 88–272 inserted reference to section 1250(a). 1962—Subsec. (c)(3). Pub. L. 87–834, § 13(f)(3), included any gain recognized under section 1245(a). Subsec. (k). Pub. L. 87–403 added subsec. (k). Subsec. (l). Pub. L. 87–834, § 14(b)(1), added subsec. (l).

of 2022 AmendmentAmendment by Pub. L. 117–169 applicable to taxable years beginning after Dec. 31, 2022, see section 13303(d)(1) of Pub. L. 117–169, set out as a note under section 179D of this title.

of 2014 AmendmentAmendment by Pub. L. 113–295 effective Dec. 19, 2014, subject to a

, see section 221(b) of Pub. L. 113–295, set out as a note under section 1 of this title.

of 2006 AmendmentAmendment by Pub. L. 109–432 applicable to costs paid or incurred after Dec. 20, 2006, see section 404(c) of Pub. L. 109–432, set out as an

note under section 179E of this title.

of 2005 AmendmentAmendment by section 1323(b)(3) of Pub. L. 109–58 applicable to properties placed in service after Aug. 8, 2005, see section 1323(c) of Pub. L. 109–58, set out as an

note under section 179C of this title. Amendment by section 1331(b)(5) of Pub. L. 109–58 applicable to property placed in service after Dec. 31, 2005, see section 1331(d) of Pub. L. 109–58, set out as an

note under section 179D of this title.

of 2004 AmendmentAmendment by section 338(b)(3) of Pub. L. 108–357 applicable to expenses paid or incurred after Dec. 31, 2002, in taxable years ending after such date, see section 338(c) of Pub. L. 108–357, set out as an

note under section 179B of this title. Amendment by section 413(c)(4), (5) of Pub. L. 108–357 applicable to taxable years of foreign corporations beginning after Dec. 31, 2004, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end, see section 413(d)(1) of Pub. L. 108–357, set out as an Effective and Termination Dates of 2004

note under section 1 of this title.

of 1997 AmendmentAmendment by Pub. L. 105–34 effective as if included in the

made by section 1913 of the Energy Policy Act of 1992, Pub. L. 102–486, see section 1604(a)(4) of Pub. L. 105–34, set out as a note under section 263 of this title.

of 1990 AmendmentAmendment by section 11812(b)(5) of Pub. L. 101–508 applicable to property placed in service after Nov. 5, 1990, but not applicable to any property to which section 168 of this title does not apply by reason of subsec. (f)(5) of section 168, and not applicable to rehabilitation expenditures described in section 252(f)(5) of Pub. L. 99–514, see section 11812(c) of Pub. L. 101–508, set out as a note under section 42 of this title. Amendment by section 11813(b)(14) 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 45K of this title.

of 1989 AmendmentAmendment by section 7611(f)(5)(A) of Pub. L. 101–239 applicable to costs paid or incurred in taxable years beginning after Dec. 31, 1989, see section 7611(g)(2) of Pub. L. 101–239, set out as a note under section 56 of this title. Amendment by section 7811(m)(2) of Pub. L. 101–239 effective, except as otherwise provided, as if included in the provision of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100–647, to which such amendment relates, see section 7817 of Pub. L. 101–239, set out as a note under section 1 of this title.

of 1988 AmendmentAmendment 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.

of 1986 AmendmentIf any interest costs incurred after Dec. 31, 1986, are attributable to costs incurred before Jan. 1, 1987, the amendment by section 803(b)(3) of Pub. L. 99–514 is applicable to such interest costs only to the extent such interest costs are attributable to costs which were required to be capitalized under section 263 of the Internal Revenue Code of 1954 and which would have been taken into account in applying section 189 of the Internal Revenue Code of 1954 (as in effect before its repeal by section 803 of Pub. L. 99–514) or, if applicable, section 266 of such Code, see section 7831(d)(2) of Pub. L. 101–239, set out as an

note under section 263A of this title. Amendment by section 201(b), (d)(6) of Pub. L. 99–514 applicable to property placed in service after Dec. 31, 1986, in taxable years ending after such date, with exceptions, see section 203 and 204 of Pub. L. 99–514, set out as a note under section 168 of this title. Amendment by section 201(b), (d)(6) of Pub. L. 99–514 not applicable to any property placed in service before Jan. 1, 1994, if such property placed in service as part of specified rehabilitations, and not applicable to certain additional rehabilitations, see section 251(d)(2), (3) of Pub. L. 99–514, set out as a note under section 46 of this title. Amendment by section 241(b)(1) of Pub. L. 99–514 applicable to expenditures paid or incurred after Dec. 31, 1986, except as otherwise provided, see section 241(c) of Pub. L. 99–514, set out as an

of Repeal note under former section 177 of this title. Amendment by section 631(e)(1) of Pub. L. 99–514 applicable to any distribution in complete liquidation, and any sale or exchange, made by a corporation after July 31, 1986, unless such corporation is completely liquidated before Jan. 1, 1987, any transaction described in section 338 of this title for which the acquisition date occurs after Dec. 31, 1986, and any distribution, not in complete liquidation, made after Dec. 31, 1986, with exceptions and special and transitional rules, see section 633 of Pub. L. 99–514, set out as an

note under section 336 of this title. Amendment by section 803(b)(3) of Pub. L. 99–514 applicable to costs incurred after Dec. 31, 1986, in taxable years ending after such date, except as otherwise provided, see section 803(d) of Pub. L. 99–514, set out as an

note under section 263A of this title. Amendment by section 1804(f)(1)(A)–(E) and 1809(a)(2)(C)(ii) 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. Pub. L. 99–514, title XVIII, § 1804(f)(3), Oct. 22, 1986, 100 Stat. 2805, provided that: “Paragraph (7) of section 312(n) of the Internal Revenue Code of 1954 [now 1986] (as redesignated by paragraph (1)(D) of this subsection), and the

made by section 61(a)(2) of the Tax Reform Act of 1984 [amending this section], shall apply to distributions in taxable years beginning after September 30, 1984.”

of 1985 AmendmentAmendment by Pub. L. 99–121 applicable with respect to property placed in service by the taxpayer after May 8, 1985, with specified exceptions, see section 105(b) of Pub. L. 99–121, set out as a note under section 168 of this title.

made by subsection (b) [amending this section] shall apply to property placed in service in taxable years beginning after September 30, 1984. “(3) Subsection (c).—The

made by subsection (c) [amending this section and section 1275 of this title] shall apply with respect to distributions declared after March 15, 1984, in taxable years ending after such date.” Amendment by section 61(a)(2) of Pub. L. 98–369 applicable to distributions in taxable years beginning after Sept. 30, 1984, see section 1804(f)(3) of Pub. L. 99–514, set out as an

of 1983 AmendmentAmendment by Pub. L. 97–448 effective as if included in the provisions of the Tax Equity and Fiscal Responsibility Act of 1982, Pub. L. 97–248, to which such amendment relates, see section 311(d) of Pub. L. 97–448, set out as a note under section 31 of this title.

of 1982 AmendmentAmendment by section 205(a)(3) of Pub. L. 97–248 applicable to periods after Dec. 31, 1982, under rules similar to the rules of section 48(m) of this title, with certain qualifications, see section 205(c)(1) of Pub. L. 97–248, set out as an

note under section 196 of this title. Amendment by section 222(e)(3) of Pub. L. 97–248 applicable to distributions after Aug. 31, 1982, with exceptions for certain partial liquidations, see section 222(f) of Pub. L. 97–248, set out as a note under section 302 of this title. Amendment by section 310(b)(3) of Pub. L. 97–248 applicable to obligations issued after Dec. 31, 1982, with exceptions for certain warrants, see section 310(d) of Pub. L. 97–248, set out as a note under section 103 of this title.

of 1981 AmendmentAmendment by Pub. L. 97–34 applicable to property placed in service after Dec. 31, 1980, in taxable years ending after that date, see section 209(a) of Pub. L. 97–34, set out as an

note under section 168 of this title.

of 1980 AmendmentAmendment by Pub. L. 96–589 applicable to transactions which occur after Dec. 31, 1980, other than transactions which occur in proceedings in bankruptcy cases or similar judicial proceedings or in proceedings under Title 11, Bankruptcy, commencing on or before Dec. 31, 1980, except as otherwise provided, see section 7 of Pub. L. 96–589, set out as a note under section 108 of this title.

of 1978 AmendmentAmendment by Pub. L. 95–628 applicable to distributions made after Nov. 10, 1978, see section 3(d) of Pub. L. 95–628, set out as a note under section 301 of this title.

of 1976 AmendmentAmendment by section 205(c)(1)(D) of Pub. L. 94–455 effective for taxable years ending after Dec. 31, 1975, see section 205(e) of Pub. L. 94–455, set out as a note under section 1254 of this title. Amendment by section 1901(a)(43) of Pub. L. 94–455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title. Amendment by section 1901(b)(32) of Pub. L. 94–455 effective for taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.

of 1969 AmendmentAmendment by section 211(b)(3) of Pub. L. 91–172 applicable to taxable years beginning after December 31, 1969, see section 211(c) of Pub. L. 91–172, set out as a note under section 301 of this title. Amendment by section 905(b)(2) Pub. L. 91–172 effective with respect to distributions made after Nov. 30, 1969, see section 905(c) of Pub. L. 91–172, set out as a note under section 311 of this title.

of 1966 AmendmentAmendment by Pub. L. 89–570 applicable to taxable years ending after Sept. 12, 1966, but only in respect of expenditures paid or incurred after such date, see section 3 of Pub. L. 89–570, set out as an

note under section 617 of this title.

of 1964 AmendmentAmendment by Pub. L. 88–484 applicable with respect to transactions after Aug. 22, 1964 in taxable years ending after such date, see section 2 of Pub. L. 88–484, set out as a note under section 301 of this title. Amendment by Pub. L. 88–272 applicable to dispositions after Dec. 31, 1963, in taxable years ending after such date, see section 231(c) of Pub. L. 88–272, set out as an

note under section 1250 of this title.

of 1962 AmendmentAmendment by section 13(f)(3) of Pub. L. 87–834 applicable to taxable years beginning after Dec. 31, 1962, see section 13(g) of Pub. L. 87–834, set out as an

note under section 1245 of this title. Pub. L. 87–834, § 14(c), Oct. 16, 1962, 76 Stat. 1041, provided that: “The

made by this section [enacting section 1246 and 1247 of this title and amending this section and section 751 and 1223 of this title] shall apply with respect to taxable years beginning after December 31, 1962.” Pub. L. 87–403, § 3(g), Feb. 2, 1962, 76 Stat. 8, provided that: “The

made by this section [amending this section and section 535, 543, 545, 556 and 561 of this title] shall apply only with respect to distributions made after the date of the enactment of this Act [Feb. 2, 1962].”

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 45K of this title. Plan

Not Required Until January 1, 1989For provisions directing that if any

made by subtitle A or subtitle C of title XI [§§ 1101–1147 and 1171–1177] or title XVIII [§§ 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.