26 U.S.C. § 115

Income of States, municipalities, etc.

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Gross income does not include—(1) income derived from any public utility or the exercise of any essential governmental function and accruing to a State or any political subdivision thereof, or the District of Columbia; or(2) income accruing to the government of any possession of the United States, or any political subdivision thereof.(Aug. 16, 1954, ch. 736, 68A Stat. 35; Pub. L. 94–455, title XIX, § 1901(a)(19), Oct. 4, 1976, 90 Stat. 1766.)Editorial NotesAmendments

1976—Pub. L. 94–455 struck out “(a) General rule” before “Gross income does not include”, struck out subsecs. (b) and (c) which related to contracts concerning public utilities made before Sept. 8, 1916, and contracts concerning bridge acquisition made before May 29, 1928, respectively, and in par. (1) of former subsec. (a), struck out “or territory” after “accruing to a State”.

Statutory Notes and Related SubsidiariesEffective Date of 1976 Amendment

Amendment by Pub. L. 94–455 applicable with respect to 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.

Tax Treatment of State Ownership of Railroad Real Estate Investment Trust

Pub. L. 109–59, title XI, § 11146, Aug. 10, 2005, 119 Stat. 1966, provided that:“(a)In General.—If a State owns all of the outstanding stock of a corporation—“(1) which is a real estate investment trust on the date of the enactment of this Act [Aug. 10, 2005],“(2) which is a non-operating class III railroad, and“(3) substantially all of the activities of which consist of the ownership, leasing, and operation by such corporation of facilities, equipment, and other property used by the corporation or other persons for railroad transportation and for economic development purposes for the benefit of the State and its citizens, then, to the extent such activities are of a type which are an essential governmental function within the meaning of section 115 of the Internal Revenue Code of 1986, income derived from such activities by the corporation shall be treated as accruing to the State for purposes of section 115 of such Code.“(b)Gain or Loss not Recognized on Conversion.—Notwithstanding section 337(d) of the Internal Revenue Code of 1986—“(1) no gain or loss shall be recognized under section 336 or 337 of such Code, and“(2) no change in basis of the property of such corporation shall occur, because of any change of status of a corporation to a tax-exempt entity by reason of the application of subsection (a).“(c)Tax-Exempt Financing.—“(1)In general.—Any obligation issued by a corporation described in subsection (a) at least 95 percent of the net proceeds (as defined in section 150(a) of the Internal Revenue Code of 1986) of which are to be used to provide for the acquisition, construction, or improvement of railroad transportation infrastructure (including railroad terminal facilities)—“(A) shall be treated as a State or local bond (within the meaning of section 103(c) of such Code), and“(B) shall not be treated as a private activity bond (within the meaning of section 103(b)(1) of such Code) solely by reason of the ownership or use of such railroad transportation infrastructure by the corporation.“(2)No inference.—Except as provided in paragraph (1), nothing in this subsection shall be construed to affect the treatment of the private use of proceeds or property financed with obligations issued by the corporation for purposes of section 103 of the Internal Revenue Code of 1986 and part IV of subchapter B [probably means part IV of subchapter B of chapter 1] of such Code.“(d)Definitions.—For purposes of this section:“(1)Real estate investment trust.—The term ‘real estate investment trust’ has the meaning given such term by section 856(a) of the Internal Revenue Code of 1986.“(2)Non-operating class iii railroad.—The term ‘non-operating class III railroad’ has the meaning given such term by part A of subtitle IV of title 49, United States Code (49 U.S.C. 10101 et seq.), and the regulations thereunder.“(3)State.—The term ‘State’ includes—“(A) the District of Columbia and any possession of the United States, and“(B) any authority, agency, or public corporation of a State.“(e)Applicability.—“(1)In general.—Except as provided in paragraph (2), this section shall apply on and after the date on which a State becomes the owner of all of the outstanding stock of a corporation described in subsection (a) through action of such corporation’s board of directors.“(2)Exception.—This section shall not apply to any State which—“(A) becomes the owner of all of the voting stock of a corporation described in subsection (a) after December 31, 2003, or“(B) becomes the owner of all of the outstanding stock of a corporation described in subsection (a) after December 31, 2006.”

Notes of Decisions
Cited in 204 cases (3 in the last 5 years), 1928–2026 · leading case: Patty v. Helvering, 98 F.2d 717 (2d Cir. 1938).
Patty v. Helvering, 98 F.2d 717 (2d Cir. 1938). · cites it 10× “He claims that this reduction fell within § 115(c) of the Revenue Act of 1928, 26 U.S.C.A. § 115 note, because the payments were “amounts distributed in partial liquidation of a corporation”, a partial liquidation being defined by § 115(h), 26 U.”
State of Michigan & Michigan Educ. Trust v. United States, 40 F.3d 817 (6th Cir. 1995). · cites it 5× “The letter also asked for a ruling that “[t]he accrued investment income of the Trust is exempt from federal income taxation pursuant to either the Doctrine of Intergovernmental Tax Immunity or the provisions of Section 115(1) of the Code [ 26 U.S.C. § 115 (1)].” 3 In Private…”
Zenz v. Quinlivan, 213 F.2d 914 (6th Cir. 1954). · cites it 4× “* * *” 26 U.S.C.A. § 115 (a). “(e) Distributions in liquidation.”
Comm'r v. South Texas Lumber Co., 333 U.S. 496 (1948). “974 , 1004, 26 U. S. C. § 115 (l), had provided a definition of “earnings and profits” which includes these unpaid installment obligations and that the regulation here conflicts with § 115 (7), 15 which is applicable alike to both the income and the excess profits taxes.”
Phillips v. Comm'r, 283 U.S. 589 (1931). “Compare 26 U.S.C. §§ 115 , 136; Heyward v. United States, 2 F.”
Kelly v. Comm'r of Internal Revenue, 97 F.2d 915 (2d Cir. 1938). · cites it 6× “169 , 204, 26 U.S.C.A. § 115 (i) and whether the petitioner sustained a deductible capital loss in the amount of the excess of cost of one-half of his Trust Company stock which he surrendered over the amount of cash and fair markét value of the Improvement Company stock received.”
Comm'r of Internal Revenue v. Godley's Est., 213 F.2d 529 (3rd Cir. 1954). · cites it 3× “* * * ” 26 U.S.C. § 115 (d) (1952). 3 . 26 id. § 22(a).”
Metro. Life Ins. Co. v. United States, 107 F.2d 311 (6th Cir. 1939). · cites it 2× “By 26 U.S.C.A. § 115 (see 26 U.S.C.A. § 1560 ) taxes are a lien "upon all property and rights to property whether real or personal" belonging to the taxpayer.”
Kennemer v. Comm'r of Internal Revenue, 96 F.2d 177 (5th Cir. 1938). · cites it 2× “By joint petition of all parties, the consolidated proceedings were brought to this court from a decision of the Board of Tax Appeals holding that each of the individual petitioners, in the calendar year 1929, received a taxable distribution under the Revenue Act of 1928, §…”
Apt v. Birmingham, 89 F. Supp. 361 (N.D. Iowa 1950). · cites it 2× “§ 22 (a), provides in general that dividends shall be included in the gross income of a taxpayer, the ordinary dividend is defined in Section 115(a) of the Internal Revenue Code, 26 U.S.C.A. § 115 (a), whereas'distributions in complete or partial liquidation of a corporation are…”
Union Pac. R.R. v. United States, 208 Ct. Cl. 1 (Ct. Cl. 1975). · cites it 2× “This section, quoted in the note, 9 was section 115(1), 1939 Code, 26 U.S.C. § 115 (a) (1) (1940 ed.), added by § 501, Second Revenue Act of 1940, ch.”
United States v. Maryland Sav.-Share Ins. Corp., 400 U.S. 4 (1970). “We also find unpersuasive MSSIC’s remaining argument that it is an instrumentality of the State and hence entitled to exemption from federal taxation under the doctrine of intergovernmental immunity and under § 115 (a)(1) of the Code, 26 U. S. C. § 115 (a)(1). The District Court…”
— 26 U.S.C. § 115(a) — 2 cases
Bounds v. United States, 157 F. Supp. 228 (D. Maryland 1957).
— 26 U.S.C. § 115(b) — 2 cases
Patty v. Helvering, 98 F.2d 717 (2d Cir. 1938). “He claims that this reduction fell within § 115(c) of the Revenue Act of 1928, 26 U.S.C.A. § 115 note, because the payments were “amounts distributed in partial liquidation of a corporation”, a partial liquidation being defined by § 115(h), 26 U.”
— 26 U.S.C. § 115(c) — 3 cases
Herbert v. Riddell, 103 F. Supp. 369 (S.D. Cal. 1952).
— 26 U.S.C. § 115(c)(i) — 1 case
Beattie Inv. Co. v. United States, 101 F.2d 850 (8th Cir. 1939).
— 26 U.S.C. § 115(d) — 1 case
— 26 U.S.C. § 115(g) — 2 cases
Eva D. Bradbury v. Comm'r of Internal Revenue, 298 F.2d 111 (1st Cir. 1962).
Keefe, Collector v. Cote, 213 F.2d 651 (1st Cir. 1954).
Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.