26 U.S.C. § 45G — Railroad track maintenance credit

submitted 22 years ago by Pub. L. 108-357 to r/title-26-INTERNAL-REVENUE-CODE · 511 words · no verdicts yet

in plain englishAI-generated · not legal advice

This law gives a tax credit to small railroads for maintaining their tracks. The credit is 40% of qualifying maintenance costs, capped by the miles of track owned. Companies that use or serve small railroads can also share in the credit.

(a) General rule: An eligible taxpayer gets a credit equal to 40% (50% for years before 2023) of its qualified railroad track maintenance expenses for the year. (b) Limit: The credit cannot be more than $3,500 times the number of miles of track the taxpayer owns or leases, plus any miles assigned to it by a Class II or Class III railroad. For these mile assignments: a Class II or III railroad can only assign a given mile once per year, as of the end of its tax year; that railroad cannot also claim credit for that same mile; and the person who receives the assignment claims it for their own tax year that includes the assignment's effective date. (c) Eligible taxpayer: This means a Class II or Class III railroad, or anyone who ships goods over a Class II or III railroad's tracks or supplies it with railroad-related property or services, but only for the miles that railroad assigned to them. (d) Qualified railroad track maintenance expenditures: This means money spent maintaining track, including roadbed, bridges, and related structures, that a Class II or III railroad owned or leased as of January 1, 2015, counted without regard to any payment the assigning railroad received for making the assignment. (e) Other rules: "Class II railroad" and "Class III railroad" mean whatever the Surface Transportation Board says they mean. Rules like those for combining related companies under section 41(f)(1) apply here too. If this credit is allowed for a piece of track, the track's basis is reduced by the credit amount.

the actual law source: uscode.house.gov ↗public domain

(a) General rule

For purposes of section 38, the railroad track maintenance credit determined under this section for the taxable year is an amount equal to 40 percent (50 percent in the case of any taxable year beginning before January 1, 2023) of the qualified railroad track maintenance expenditures paid or incurred by an eligible taxpayer during the taxable year.

(b) Limitation

(1) In general

The credit allowed under subsection (a) for any taxable year shall not exceed the product of—

(A)

$3,500, multiplied by

(B)

the sum of—

(i)

the number of miles of railroad track owned or leased by the eligible taxpayer as of the close of the taxable year, and

(ii)

the number of miles of railroad track assigned for purposes of this subsection to the eligible taxpayer by a Class II or Class III railroad which owns or leases such railroad track as of the close of the taxable year.

(2) Assignments

With respect to any assignment of a mile of railroad track under paragraph (1)(B)(ii)—

(A)

such assignment may be made only once per taxable year of the Class II or Class III railroad and shall be treated as made as of the close of such taxable year,

(B)

such mile may not be taken into account under this section by such railroad for such taxable year, and

(C)

such assignment shall be taken into account for the taxable year of the assignee which includes the date that such assignment is treated as effective.

For purposes of this section, the term “eligible taxpayer” means—

(1)

any Class II or Class III railroad, and

(2)

any person who transports property using the rail facilities of a Class II or Class III railroad or who furnishes railroad-related property or services to a Class II or Class III railroad, but only with respect to miles of railroad track assigned to such person by such Class II or Class III railroad for purposes of subsection (b).

(d) Qualified railroad track maintenance expenditures

For purposes of this section, the term “qualified railroad track maintenance expenditures” means gross expenditures (whether or not otherwise chargeable to capital account) for maintaining railroad track (including roadbed, bridges, and related track structures) owned or leased as of January 1, 2015, by a Class II or Class III railroad (determined without regard to any consideration for such expenditures given by the Class II or Class III railroad which made the assignment of such track).

(e) Other definitions and special rules

(1) Class II or Class III railroad

For purposes of this section, the terms “Class II railroad” and “Class III railroad” have the respective meanings given such terms by the Surface Transportation Board.

(2) Controlled groups

Rules similar to the rules of paragraph (1) of section 41(f) shall apply for purposes of this section.

(3) Basis adjustment

For purposes of this subtitle, if a credit is allowed under this section with respect to any railroad track, the basis of such track shall be reduced by the amount of the credit so allowed.

Source credit: (Added Pub. L. 108–357, title II, § 245(a), Oct. 22, 2004, 118 Stat. 1447; amended Pub. L. 109–135, title IV, § 403(f), Dec. 21, 2005, 119 Stat. 2623; Pub. L. 109–432, div. A, title IV, § 423(a), Dec. 20, 2006, 120 Stat. 2973; Pub. L. 110–343, div. C, title III, § 316(a), Oct. 3, 2008, 122 Stat. 3872; Pub. L. 111–312, title VII, § 734(a), Dec. 17, 2010, 124 Stat. 3318; Pub. L. 112–240, title III, § 306(a), Jan. 2, 2013, 126 Stat. 2329; Pub. L. 113–295, div. A, title I, § 116(a), Dec. 19, 2014, 128 Stat. 4014; Pub. L. 114–113, div. Q, title I, § 162(a), (b), Dec. 18, 2015, 129 Stat. 3066; Pub. L. 115–123, div. D, title I, § 40302(a), Feb. 9, 2018, 132 Stat. 145; Pub. L. 116–94, div. Q, title I, § 112(a), Dec. 20, 2019, 133 Stat. 3228; Pub. L. 116–260, div. EE, title I, § 105(a), (b), Dec. 27, 2020, 134 Stat. 3041.)

history & why it existsrecord from the source credit

2004Enacted · Pub. L. 108-357 · 118 Stat. 1447
2005Amended · Pub. L. 109-135 · 119 Stat. 2623
2006Amended · Pub. L. 109-432 · 120 Stat. 2973
2008Amended · Pub. L. 110-343 · 122 Stat. 3872
2010Amended · Pub. L. 111-312 · 124 Stat. 3318
2013Amended · Pub. L. 112-240 · 126 Stat. 2329
2014Amended · Pub. L. 113-295 · 128 Stat. 4014
2015Amended · Pub. L. 114-113 · 129 Stat. 3066
2018Amended · Pub. L. 115-123 · 132 Stat. 145
2019Amended · Pub. L. 116-94 · 133 Stat. 3228
2020Amended · Pub. L. 116-260 · 134 Stat. 3041

A history note hasn’t been published yet. The record shows enactment by Pub. L. 108-357 on 2004-10-22.

all 0 arguments · sorted by: best

no arguments yet — make the first case