26 U.S.C. § 281 — Terminal railroad corporations and their shareholders

(a) Computation of taxable income of terminal railroad corporations. (1) In general — When figuring a terminal railroad corporation's taxable income: (A) the corporation does not count as income (i) the part of any railroad's debt to it for terminal services that gets wiped out by crediting "related terminal income" toward it, or (ii) the part of a charge the corporation would have billed for terminal services but didn't, because it used related terminal income instead; and (B) no deduction normally allowed is denied just because of a debt wipe-out described in (A)(i) or a charge computed the way described in (A)(ii). (2) Limitation — For tax years ending after this section became law, paragraph (1) does not apply if it would create or increase a net operating loss for the terminal railroad corporation that year. (b) Computation of taxable income of shareholders. Subject to the limit in (a)(2), when figuring a shareholder's taxable income, none of these debt wipe-outs or special charge computations count as money the shareholder received, accrued, paid, or incurred. (c) Agreement required. These special tax rules only apply to a debt wipe-out or charge computation for a tax year if it was set out in a written agreement, signed by all the terminal railroad corporation's shareholders, made before that tax year started. (d) Definitions. (1) "Terminal railroad corporation" means a domestic railroad corporation that isn't part of a larger affiliated group (except as the parent company), and (A) all of its shareholders are rail carriers regulated under part A of subtitle IV of title 49; (B) its main business is providing terminal and switching services to those rail carriers and their shippers and passengers; (C) it does a substantial part of its work for one or more of its own shareholders; and (D) every shareholder uses the same tax year start and end dates as the terminal railroad corporation. (2) "Related terminal income" means income the terminal railroad corporation earns from (A) services or facilities terminal railroads normally provide to railroads or their workers, passengers, or shippers; (B) other people using part of a facility or service mainly used for railroad purposes; (C) any railroad corporation for services connected to railroad operations; and (D) the United States for mail-handling services or facilities. A big addition built onto a facility after this section became law counts as its own separate facility for part (B). (3) "Related terminal services" means only the services and facility use counted toward related terminal income. (e) Regulations. The Secretary must write the regulations needed to carry out this section.