Internal Revenue Code · 26 U.S.C.
§ 115. Income of States, municipalities, etc.
Official text, no changes From the Office of the Law Revision Counsel, release point 119-121 (current through Public Law 119-121 (October 9, 2026)). Compare it with the official text at uscode.house.gov (external site).
Cite as 26 U.S.C. § 115
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Enacted
- October 4, 1976 by Pub. L. 94–455
- Length
- 2 subsections · 75 words · about 1 min to read
- Cross-references
- cites 0; cited by 4 Code sections and 9 other regulations
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.)
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
Cited by 4 Code sections
- § 105(j)(2)(B) Amounts received under accident and health plans
- § 415(m)(1) Limitations on benefits and contribution under qualified plans
- § 501(f)(3)(B) Exemption from tax on corporations, certain trusts, etc.
- § 4960(c)(1)(C) Tax on excess tax-exempt organization executive compensation
Cited in 9 regulations not issued under it
- § 1.337(d)-4 Taxable to tax-exempt.
- § 1.1245-6 Relation of section 1245 to other sections.
- § 1.1250-1 Gain from dispositions of certain depreciable realty.
- § 1.1441-2 Amounts subject to withholding.
- § 1.6033-2 Returns by exempt organizations and returns by certain nonexempt organizations.
- § 1.6033-6 Notification requirement for entities not required to file an annual information return under section 6033(a)(1) (taxable years beginning after December 31, 2006).
- § 53.4960-0 Table of contents.
- § 53.4960-1 Scope and definitions.
- § 305.7871-1 Indian tribal governments treated as States for certain purposes.
Amendment history
From the source credit and the official notes, newest first.
- Enacted by Pub. L. 94–455
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter B Computation of Taxable Income
- Part III ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME
Nearby sections
- § 111 Recovery of tax benefit items
- § 112 Certain combat zone compensation of members of the Armed Forces
- § 113 Repealed
- § 114 Repealed
- § 115 Income of States, municipalities, etc.
- § 116 Repealed
- § 117 Qualified scholarships
- § 118 Contributions to the capital of a corporation
- § 119 Meals or lodging furnished for the convenience of the employer
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
Amendments
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 Subsidiaries
Effective 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.”