Title 26 — Internal Revenue CodeRelease 119-73
§280E Expenditures in Connection with the Illegal Sale of Drugs
Title 26 › Subtitle Subtitle A— Income Taxes › Chapter 1— NORMAL TAXES AND SURTAXES › Subchapter B— Computation of Taxable Income › Part IX— ITEMS NOT DEDUCTIBLE › § 280E
Summary
A business that consists of trafficking in Schedule I or II controlled substances — where that is illegal under federal law or the law of the state where it operates — gets no tax deductions or credits for its expenses. The ban applies as long as the trafficking is prohibited by federal law or by the law of any state where the business operates.
Full Legal Text
Title 26, §280E
Internal Revenue Code — Source: USLM XML via OLRC
No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
The Controlled Substances Act, referred to in text, is title II of Pub. L. 91–513, Oct. 27, 1970, 84 Stat. 1242, which is classified principally to subchapter I (§ 801 et seq.) of chapter 13 of Title 21, Food and Drugs. Schedules I and II are set out in section 812 of Title 21. For complete classification of this Act to the Code, see
Short Title
note set out under section 801 of Title 21 and Tables.
Statutory Notes and Related Subsidiaries
Effective Date
Pub. L. 97–248, title III, § 351(c), Sept. 3, 1982, 96 Stat. 640, provided that: “The
Amendments
made by this section [enacting this section] shall apply to amounts paid or incurred after the date of the enactment of this Act [Sept. 3, 1982] in taxable years ending after such date.”
Reference
Citations & Metadata
Citation
26 U.S.C. § 280E
Title 26 — Internal Revenue Code
Last Updated
Apr 6, 2026
Release point: 119-73