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USC Title 26 enacted through 2008

§ 467. Certain payments for the use of property or services

Accrual method on present value basis
In the case of the lessor or lessee under any section 467 rental agreement, there shall be taken into account for purposes of this title for any taxable year the sum of -
the amount of the rent which accrues during such taxable year as determined under subsection (b), and
interest for the year on the amounts which were taken into account under this subsection for prior taxable years and which are unpaid.
Accrual of rental payments
Allocation follows agreement
Except as provided in paragraph (2), the determination of the amount of the rent under any section 467 rental agreement which accrues during any taxable year shall be made -
by allocating rents in accordance with the agreement, and
by taking into account any rent to be paid after the close of the period in an amount determined under regulations which shall be based on present value concepts.
Constant rental accrual in case of certain tax avoidance transactions, etc.
In the case of any section 467 rental agreement to which this paragraph applies, the portion of the rent which accrues during any taxable year shall be that portion of the constant rental amount with respect to such agreement which is allocable to such taxable year.
Agreements to which paragraph (2) applies
Paragraph (2) applies to any rental payment agreement if -
such agreement is a disqualified leaseback or long-term agreement, or
such agreement does not provide for the allocation referred to in paragraph (1)(A).
Disqualified leaseback or long-term agreement
For purposes of this subsection, the term "disqualified leaseback or long-term agreement" means any section 467 rental agreement if -
such agreement is part of a leaseback transaction or such agreement is for a term in excess of 75 percent of the statutory recovery period for the property, and
a principal purpose for providing increasing rents under the agreement is the avoidance of tax imposed by this subtitle.
Exceptions to disqualification in certain cases
The Secretary shall prescribe regulations setting forth circumstances under which agreements will not be treated as disqualified leaseback or long-term agreements, including circumstances relating to -
changes in amounts paid determined by reference to price indices,
rents based on a fixed percentage of lessee receipts or similar amounts,
reasonable rent holidays, or
changes in amounts paid to unrelated 3rd parties.
Recapture of prior understated inclusions under leaseback or long-term agreements
In general
If -
the lessor under any section 467 rental agreement disposes of any property subject to such agreement during the term of such agreement, and
such agreement is a leaseback or long-term agreement to which paragraph (2) of subsection (b) did not apply,
the recapture amount shall be treated as ordinary income. Such gain shall be recognized notwithstanding any other provision of this subtitle.
Recapture amount
For purposes of paragraph (1), the term "recapture amount" means the lesser of -
the prior understated inclusions, or
the excess of the amount realized (or in the case of a disposition other than a sale, exchange, or involuntary conversion, the fair market value of the property) over the adjusted basis of such property.
The amount determined under subparagraph (B) shall be reduced by the amount of any gain treated as ordinary income on the disposition under any other provision of this subtitle.
Prior understated inclusions
For purposes of this subsection, the term "prior understated inclusion" means the excess (if any) of -
the amount which would have been taken into account by the lessor under subsection (a) for periods before the disposition if subsection (b)(2) had applied to the agreement, over
the amount taken into account under subsection (a) by the lessor for periods before the disposition.
Leaseback or long-term agreement
For purposes of this subsection, the term "leaseback or long-term agreement" means any agreement described in subsection (b)(4)(A).
Special rules
Under regulations prescribed by the Secretary -
exceptions similar to the exceptions applicable under section 1245 or 1250 (whichever is appropriate) shall apply for purposes of this subsection,
any transferee in a disposition excepted by reason of subparagraph (A) who has a transferred basis in the property shall be treated in the same manner as the transferor, and
for purposes of sections 170(e) and 751(c), amounts treated as ordinary income under this section shall be treated in the same manner as amounts treated as ordinary income under section 1245 or 1250.
Section 467 rental agreements
In general
Except as otherwise provided in this subsection, the term "section 467 rental agreements" means any rental agreement for the use of tangible property under which -
there is at least one amount allocable to the use of property during a calendar year which is to be paid after the close of the calendar year following the calendar year in which such use occurs, or
there are increases in the amount to be paid as rent under the agreement.
Section not to apply to agreements involving payments of $250,000 or less
This section shall not apply to any amount to be paid for the use of property if the sum of the following amounts does not exceed $250,000 -
the aggregate amount of payments received as consideration for such use of property, and
the aggregate value of any other consideration to be received for such use of property.
For purposes of the preceding sentence, rules similar to the rules of clauses (ii) and (iii) of section 1274(c)(4)(C) shall apply.
For purposes of this section -
Constant rental amount
The term "constant rental amount" means, with respect to any section 467 rental agreement, the amount which, if paid as of the close of each lease period under the agreement, would result in an aggregate present value equal to the present value of the aggregate payments required under the agreement.
Leaseback transaction
A transaction is a leaseback transaction if it involves a leaseback to any person who had an interest in such property at any time within 2 years before such leaseback (or to a related person).
Statutory recovery period
In general
The statutory
In the case of:
recovery period is:
3-year property 3 years
5-year property 5 years
7-year property 7 years
10-year property 10 years
15-year and 20-year property 15 years
Residential rental property and nonresi- dential real property 19 years
Any railroad grading or tunnel bore 50 years.
Special rule for property not depreciable under section 168
In the case of property to which section 168 does not apply, subparagraph (A) shall be applied as if section 168 applies to such property.
Discount and interest rate
For purposes of computing present value and interest under subsection (a)(2), the rate used shall be equal to 110 percent of the applicable Federal rate determined under section 1274(d) (compounded semiannually) which is in effect at the time the agreement is entered into with respect to debt instruments having a maturity equal to the term of the agreement.
Related person
The term "related person" has the meaning given to such term by section 465(b)(3)(C).
Certain options of lessee to renew not taken into account
Except as provided in regulations prescribed by the Secretary, there shall not be taken into account in computing the term of any agreement for purposes of this section any extension which is solely at the option of the lessee.
Comparable rules where agreement for decreasing payments
Under regulations prescribed by the Secretary, rules comparable to the rules of this section shall also apply in the case of any agreement where the amount paid under the agreement for the use of property decreases during the term of the agreement.
Comparable rules for services
Under regulations prescribed by the Secretary, rules comparable to the rules of subsection (a)(2) shall also apply in the case of payments for services which meet requirements comparable to the requirements of subsection (d). The preceding sentence shall not apply to any amount to which section 404 or 404A (or any other provision specified in regulations) applies.
The Secretary shall prescribe such regulations as may be appropriate to carry out the purposes of this section, including regulations providing for the application of this section in the case of contingent payments.

Tax Code (Internal Revenue Code) Section Index

U.S. GAAP by Codification Topic
105 GAAP Hierarchy
105 GAAP History

205 Presentation of Financial Statements
205-20 Discontinued Operations
210 Balance Sheet
210-20 Offsetting
220 Comprehensive Income
225 Income Statement
225-20 Extraordinary and Unusual Items
230 Statement of Cash Flows
250 Accounting Changes and Error Corrections
260 Earnings per Share
270 Interim Reporting

310 Impairment of a Loan
320 Investment Securities
320 Other-Than-Temporary Impairments, FSP FAS 115-2
320-10-05 Overview of Investments in Other Entities
320-10-35 Reclassification of Investments in Securities
323-10 Equity Method Investments
323-30 Investments in Partnerships and Joint Ventures
325-20 Cost Method Investments
330 Inventory

340-20 Capitalized Advertising Costs
350-20 Goodwill
350-30 Intangibles Other than Goodwill
350-40 Internal-Use Software
350-50 Website Development Costs
360 Property, Plant and Equipment
360-20 Real Estate Sales

410 Asset Retirement and Environmental Obligations
420 Exit or Disposal Cost Obligations
450 Contingencies
450-20 Loss Contingencies
450-30 Gain Contingencies
480 Redeemable Financial Instruments

505-20 Stock Dividends, Stock Splits
505-30 Treasury Stock

605 SEC Staff Accounting Bulletin, Topic 13
605-25 Revenue Recognition - Multiple Element Arrangements

715-30 Defined Benefit Plans - Pension
718 Share-Based Payment
730 Research and Development
730-20 Research and Development Arrangements

805 Business Combinations
810 Consolidation
810 Noncontrolling Interests
810 Consolidation of Variable Interest Entities, SFAS 167

815 Derivatives and Hedging Overview

820 Fair Value Measurements
820 Fair value when the markets are not active, FSP FAS 157-4
825 Fair Value Option

830 Foreign Currency Matters
830-20 Foreign Currency Transactions
830-30 Translation of Financial Statements
835 Interest
835-20 Capitalization of Interest
835-30 Imputation of Interest

840 Leases
840-20 Operating Leases
840-30 Capital Leases
840-40 Sale-Leaseback Transactions
845 Nonmonetary Transactions

855 Subsequent Events
860-20 Sale of Financial Assets, SFAS 166
860-50 Servicing Assets and Liabilities, SFAS 156

985-20 Costs of software to be sold

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Tax Code (Internal Revenue Code) Section Index

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