Treasury Regulations · 26 CFR
§ 1.1366-4. Special rules limiting the passthrough of certain items of an S corporation to its shareholders.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 1366
Cite as 26 CFR § 1.1366-4
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Issued
- December 22, 1999 by T.D. 8852
- Last amended
- March 9, 2000
- Issued under
- 26 U.S.C. § 1366
- Length
- 219 words · about 1 min to read
- Cross-references
- cites 3 Code sections and 1 regulation; cited by 1
¶(b) Reduction in passthrough for tax imposed on built-in gains. For purposes of § 1.1366-1(a), if for any taxable year of the S corporation a tax is imposed on the corporation under section 1374, the amount of the tax imposed is treated as a loss sustained by the S corporation during the taxable year. The character of the deemed loss is determined by allocating the loss proportionately among the net recognized built-in gains giving rise to the tax and attributing the character of each net recognized built-in gain to the allocable portion of the loss.
¶(c) Reduction in passthrough for tax imposed on excess net passive income. For purposes of § 1.1366-1(a), if for any taxable year of the S corporation a tax is imposed on the corporation under section 1375, each item of passive investment income shall be reduced by an amount that bears the same ratio to the amount of the tax as the net amount of the item bears to the total net passive investment income for that taxable year.
[T.D. 8852, 64 FR 71648, Dec. 22, 1999; 65 FR 12471, Mar. 9, 2000]
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
- § 34 Certain uses of gasoline and special fuels
- § 1374 Tax imposed on certain built-in gains
- § 1375 Tax imposed when passive investment income of corporation having accumulated earnings and profits exceeds 25 percent of gross receipts
Regulations it cites
Cited by 1 other regulation
Amendment history
From the source citation at the end of the section, newest first. T.D. is a Treasury decision; FR is the Federal Register.
- Amended (65 FR 12471)
- Issued by T.D. 8852 (64 FR 71648)
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 1 Income taxes
- Small Business Corporations and Their Shareholders
Nearby sections
- § 1.1366-0 Table of contents.
- § 1.1366-1 Shareholder's share of items of an S corporation.
- § 1.1366-2 Limitations on deduction of passthrough items of an S corporation to its shareholders.
- § 1.1366-3 Treatment of family groups.
- § 1.1366-4 Special rules limiting the passthrough of certain items of an S corporation to its shareholders.
- § 1.1366-5 Effective/applicability date.
- § 1.1367-0 Table of contents.
- § 1.1367-1 Adjustments to basis of shareholder's stock in an S corporation.
- § 1.1367-2 Adjustments to basis of indebtedness to shareholder.