Internal Revenue Code · 26 U.S.C.
§ 265. Expenses and interest relating to tax-exempt income
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. § 265
At a glance
Read from the text, the source credit and the official notes. Not part of the law.
- Status
- In force
- Enacted
- February 26, 1964 by Pub. L. 88–272
- Last amended
- February 17, 2009 by Pub. L. 111–5
- Amendments
- 9 dated changes in the source credit
- Length
- 2 subsections · 2,428 words · about 11 min to read
- Defines
- 10 terms
- Cross-references
- cites 16; cited by 10 Code sections and 32 other regulations
- Regulations
- 3 issued under this section
Any amount otherwise allowable as a deduction which is allocable to one or more classes of income other than interest (whether or not any amount of income of that class or classes is received or accrued) wholly exempt from the taxes imposed by this subtitle, or any amount otherwise allowable under section 212 (relating to expenses for production of income) which is allocable to interest (whether or not any amount of such interest is received or accrued) wholly exempt from the taxes imposed by this subtitle.
Interest on indebtedness incurred or continued to purchase or carry obligations the interest on which is wholly exempt from the taxes imposed by this subtitle.
In the case of a regulated investment company which distributes during the taxable year an exempt-interest dividend (including exempt-interest dividends paid after the close of the taxable year as described in section 855), that portion of any amount otherwise allowable as a deduction which the amount of the income of such company wholly exempt from taxes under this subtitle bears to the total of such exempt income and its gross income (excluding from gross income, for this purpose, capital gain net income, as defined in section 1222(9)).
Interest on indebtedness incurred or continued to purchase or carry shares of stock of a regulated investment company which during the taxable year of the holder thereof distributes exempt-interest dividends.
In the case of a financial institution, no deduction shall be allowed for that portion of the taxpayer’s interest expense which is allocable to tax-exempt interest.
Any qualified tax-exempt obligation acquired after August 7, 1986, shall be treated for purposes of paragraph (2) and section 291(e)(1)(B) as if it were acquired on August 7, 1986.
For purposes of subparagraph (B), the term “qualified small issuer” means, with respect to obligations issued during any calendar year, any issuer if the reasonably anticipated amount of tax-exempt obligations (other than obligations described in clause (ii)) which will be issued by such issuer during such calendar year does not exceed $10,000,000.
Not more than $10,000,000 of obligations issued by an issuer during any calendar year may be designated by such issuer for purposes of this paragraph.
In the case of obligations issued during 2009 or 2010, subparagraphs (C)(i), (D)(i), and (D)(iii)(II) shall each be applied by substituting “$30,000,000” for “$10,000,000”.
In the case of a qualified 501(c)(3) bond (as defined in section 145) issued during 2009 or 2010, this paragraph shall be applied by treating the 501(c)(3) organization for whose benefit such bond was issued as the issuer.
For purposes of this subparagraph, the term “qualified financing issue” means any composite, pooled, or other conduit financing issue the proceeds of which are used directly or indirectly to make or finance loans to 1 or more ultimate borrowers each of whom is a qualified borrower.
For purposes of this subparagraph, the term “qualified portion” means that portion of the proceeds which are used with respect to each qualified borrower under the issue.
For purposes of this subparagraph, the term “qualified borrower” means a borrower which is a State or political subdivision thereof or an organization described in section 501(c)(3) and exempt from taxation under section 501(a).
The term “interest expense” means the aggregate amount allowable to the taxpayer as a deduction for interest for the taxable year (determined without regard to this subsection, section 264, and section 291). For purposes of the preceding sentence, the term “interest” includes amounts (whether or not designated as interest) paid in respect of deposits, investment certificates, or withdrawable or repurchasable shares.
The term “tax-exempt obligation” means any obligation the interest on which is wholly exempt from taxes imposed by this subtitle. Such term includes shares of stock of a regulated investment company which during the taxable year of the holder thereof distributes exempt-interest dividends.
This section shall be applied before the application of section 263A (relating to capitalization of certain expenses where taxpayer produces property).
In applying paragraph (2)(A), there shall not be taken into account tax-exempt obligations issued during 2009 or 2010.
The amount of tax-exempt obligations not taken into account by reason of subparagraph (A) shall not exceed 2 percent of the amount determined under paragraph (2)(B).
For purposes of this paragraph, a refunding bond (whether a current or advance refunding) shall be treated as issued on the date of the issuance of the refunded bond (or in the case of a series of refundings, the original bond).
(Aug. 16, 1954, ch. 736, 68A Stat. 78; Pub. L. 88–272, title II, § 216(a), Feb. 26, 1964, 78 Stat. 56; Pub. L. 94–455, title XIX, §§ 1901(a)(37), 1906(b)(13)(A), title XXI, § 2137(e), Oct. 4, 1976, 90 Stat. 1770, 1834, 1931; Pub. L. 96–223, title IV, § 404(b)(2), Apr. 2, 1980, 94 Stat. 306; Pub. L. 97–34, title III, §§ 301(b)(2), 302(c)(2), (d)(1), Aug. 13, 1981, 95 Stat. 270, 272, 274; Pub. L. 98–369, div. A, title I, §§ 16(a), 56(c), July 18, 1984, 98 Stat. 505, 574; Pub. L. 99–514, title I, § 144, title IX, § 902(a), (b), (d), Oct. 22, 1986, 100 Stat. 2121, 2380–2382; Pub. L. 100–647, title I, § 1009(b)(3)(A), Nov. 10, 1988, 102 Stat. 3446; Pub. L. 101–508, title XI, § 11801(c)(4), Nov. 5, 1990, 104 Stat. 1388–523; Pub. L. 105–34, title X, § 1084(c), Aug. 5, 1997, 111 Stat. 955; Pub. L. 111–5, div. B, title I, §§ 1501(a), 1502(a), Feb. 17, 2009, 123 Stat. 353.)
Terms defined here
Where the text says “the term … means”. Select a term to jump to its definition.
- financial institution § 265(b)(5)
- interest § 265(a)(5)(A)
- interest § 265(b)(4)(A)
- interest expense § 265(b)(4)(A)
- qualified borrower § 265(b)(3)(G)(vi)
- qualified financing issue § 265(b)(3)(G)(iv)
- qualified portion § 265(b)(3)(G)(v)
- qualified small issuer § 265(b)(3)(C)(i)
- qualified tax-exempt obligation § 265(b)(3)(B)(i)
- tax-exempt obligation § 265(b)(4)(B)
Regulations under this section
Treasury regulations (26 CFR) issued under § 265
Cross-references
Computed from the citations in the text of Title 26 and 26 CFR.
This section cites 16 other sections
- § 212 Expenses for production of income
- § 855 Dividends paid by regulated investment company after close of taxable year
- § 1222(9) Other terms relating to capital gains and losses
- § 107 Rental value of parsonages
- § 1016 Adjustments to basis
- § 291(e)(1)(B) Special rules relating to corporate preference items
- § 141 Private activity bond; qualified bond
- § 145 Qualified 501(c)(3) bond
- § 103(b)(2) Interest on State and local bonds
- § 1312 Circumstances of adjustment
- § 149(d) Bonds must be registered to be tax exempt; other requirements
- § 147(b)(2)(A) Other requirements applicable to certain private activity bonds
- § 501(c)(3) Exemption from tax on corporations, certain trusts, etc.
- § 264 Certain amounts paid in connection with insurance contracts
- § 585(a)(2) Reserves for losses on loans of banks
- § 263A Capitalization and inclusion in inventory costs of certain expenses
Cited by 10 Code sections
- § 139L(d) Interest on loans secured by rural or agricultural real property
- § 163(n)(2) Interest
- § 264(f)(6)(A) Certain amounts paid in connection with insurance contracts
- § 291(e)(1)(B)(i) Special rules relating to corporate preference items
- § 643(a)(5) Definitions applicable to subparts A, B, C, and D
- § 852(a)(1)(B) Taxation of regulated investment companies and their shareholders
- § 871(i)(3)(B) Tax on nonresident alien individuals
- § 1277(c)(2) Deferral of interest deduction allocable to accrued market discount
- § 4940(c)(5) Excise tax based on investment income
- § 4942(f)(3)(B) Taxes on failure to distribute income
Cited in 32 regulations not issued under it
- § 1.56(g)-1 Adjusted current earnings.
- § 1.163-8T Allocation of interest expense among expenditures (temporary).
- § 1.163-10T Qualified residence interest (temporary).
- § 1.163(j)-3 Relationship of the section 163(j) limitation to other provisions affecting interest.
- § 1.264-1 Premiums on life insurance taken out in a trade or business.
- § 1.468A-4 Treatment of nuclear decommissioning fund.
- § 1.585-6 Recapture method of changing from the reserve method of section 585.
- § 1.643(a)-5 Tax-exempt interest.
- § 1.643(a)-6 Income of foreign trust.
- § 1.652(b)-3 Allocation of deductions.
- § 1.804-4 Investment yield of a life insurance company.
- § 1.832-2 Deductions.
- § 1.832-5 Deductions.
- § 1.860-2 Requirements for deficiency dividends.
- § 1.860C-2 Determination of REMIC taxable income or net loss.
- § 1.861-2 Interest.
- § 1.861-9T Allocation and apportionment of interest expense (temporary).
- § 1.873-1 Deductions allowed nonresident alien individuals.
- § 1.882-5 Determination of interest deduction.
- § 1.883-1 Exclusion of income from the international operation of ships or aircraft.
- § 1.901-2 Income, war profits, or excess profits tax paid or accrued.
- § 1.1274A-1 Special rules for certain transactions where stated principal amount does not exceed $2,800,000.
- § 1.1361-4 Effect of QSub election.
- § 1.1367-1 Adjustments to basis of shareholder's stock in an S corporation.
Show 8 more
- § 1.1400Z2(c)-1 Investments held for at least 10 years.
- § 1.1502-13 Intercompany transactions.
- § 53.4940-1 Excise tax on net investment income.
- § 53.4942(a)-2 Computation of undistributed income.
- § 53.4968-2 Net investment income.
- § 301.6109-1 Identifying numbers.
- § 301.6362-4 Rules for adjustments relating to qualified resident taxes.
- § 301.7705-2 CPEO certification process.
Amendment history
From the source credit and the official notes, newest first.
- Amended by Pub. L. 111–5Parts changed in 2009: (b)(3)(G) (b)(7)
- Amended by Pub. L. 105–34Parts changed in 1997: (b)(4)(A)
- Amended by Pub. L. 101–508Parts changed in 1990: (a)(2)
- Amended by Pub. L. 100–647Parts changed in 1988: (b)(3)
- Amended by Pub. L. 99–514
- Amended by Pub. L. 98–369
- Amended by Pub. L. 97–34
- Amended by Pub. L. 96–223
- Amended by Pub. L. 94–455
- Enacted by Pub. L. 88–272
Where it sits in the Code
- Subtitle A Income Taxes
- Chapter 1 NORMAL TAXES AND SURTAXES
- Subchapter B Computation of Taxable Income
- Part IX ITEMS NOT DEDUCTIBLE
Nearby sections
- § 262 Personal, living, and family expenses
- § 263 Capital expenditures
- § 263A Capitalization and inclusion in inventory costs of certain expenses
- § 264 Certain amounts paid in connection with insurance contracts
- § 265 Expenses and interest relating to tax-exempt income
- § 266 Carrying charges
- § 267 Losses, expenses, and interest with respect to transactions between related taxpayers
- § 267A Certain related party amounts paid or accrued in hybrid transactions or with hybrid entities
- § 268 Sale of land with unharvested crop
Official notes
Show the Law Revision Counsel's notes (amendments, effective dates)
Editorial Notes
References in Text
The date of the enactment of the Tax Reform Act of 1986, referred to in subsec. (b)(3)(B)(ii)(II), (C)(ii)(II), is the date of enactment of Pub. L. 99–514, which was approved Oct. 22, 1986.
Sections 1312, 1313, 1316(g), and 1317 of the Tax Reform Act of 1986, referred to in subsec. (b)(3)(C)(ii)(II), are sections 1312, 1313, 1316(g), and 1317 of Pub. L. 99–514, which are set out as a note under section 141 of this title.
Section 149(d)(5), referred to in subsec. (b)(3)(C)(ii)(III), was redesignated section 149(d)(2) by Pub. L. 115–97, title I, § 13532(b)(1), Dec. 22, 2017, 131 Stat. 2154.
Codification
Another section 1084(c) of Pub. L. 105–34 amended section 264 of this title.
Amendments
2009—Subsec. (b)(3)(G). Pub. L. 111–5, § 1502(a), added subpar. (G).
Subsec. (b)(7). Pub. L. 111–5, § 1501(a), added par. (7).
1997—Subsec. (b)(4)(A). Pub. L. 105–34 inserted “, section 264,” before “and section 291”.
1990—Subsec. (a)(2). Pub. L. 101–508, § 11801(c)(4), struck out before period at end “, or to purchase or carry any certificate to the extent the interest on such certificate is excludable under section 128”.
1988—Subsec. (b)(3). Pub. L. 100–647 amended par. (3) generally, reenacting subpar. (A) without change, revising and restating provisions of subpars. (B) to (E), and adding subpar. (F).
1986—Pub. L. 99–514, § 902(a), (d), designated existing provisions as subsec. (a), inserted heading, and added subsec. (b).
Par. (2). Pub. L. 99–514, § 902(b), struck out last sentence which read as follows: “In applying the preceding sentence to a financial institution (other than a bank) which is a face-amount certificate company registered under the Investment Company Act of 1940 (15 U.S.C. 80a–1 and following) and which is subject to the banking laws of the State in which such institution is incorporated, interest on face-amount certificates (as defined in section 2(a)(15) of such Act) issued by such institution, and interest on amounts received for the purchase of such certificates to be issued by such institution, shall not be considered as interest on indebtedness incurred or continued to purchase or carry obligations the interest on which is wholly exempt from the taxes imposed by this subtitle, to the extent that the average amount of such obligations held by such institution during the taxable year (as determined under regulations prescribed by the Secretary) does not exceed 15 percent of the average of the total assets held by such institution during the taxable year (as so determined).”
Par. (6). Pub. L. 99–514, § 144, added par. (6).
1984—Par. (2). Pub. L. 98–369, § 16(a), repealed amendments made by Pub. L. 97–34, § 302(c). See 1981 Amendment note below.
Par. (5). Pub. L. 98–369, § 56(c), added par. (5).
1981—Par. (2). Pub. L. 97–34, § 302(c)(2), (d)(1), provided that, applicable to taxable years beginning after Dec. 31, 1984, par. (2) is amended by striking out “or to purchase or carry any certificate to the extent the interest on such certificate is excludable under section 128” and inserting in lieu thereof “or to purchase or carry obligations or shares, or to make other deposits or investments, the interest on which is described in section 128(c)(1) to the extent such interest is excludable from gross income under section 128”. Section 16(a) of Pub. L. 98–369, repealed section 302(c) of Pub. L. 97–34, and provided that this title shall be applied and administered as if section 302(c), and the amendments made by such section 302(c), had not been enacted.
Pub. L. 97–34, § 301(b)(2), inserted “, or to purchase or carry any certificate to the extent the interest on such certificate is excludable under section 128” after “116”.
1980—Par. (2). Pub. L. 96–223 inserted “, or to purchase or carry obligations or shares, or to make deposits or other investments, the interest on which is described in section 116(c) to the extent such interest is excludable from gross income under section 116” after “subtitle”.
1976—Par. (2). Pub. L. 94–455, §§ 1901(a)(37), 1906(b)(13)(A), struck out “(other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer)” after “to purchase or carry obligations” and “or his delegate” after “Secretary”.
Pars. (3), (4). Pub. L. 94–455, § 2137(e), added pars. (3) and (4).
1964—Par. (2). Pub. L. 88–272 provided that interest on face-amount certificates issued by a face-amount certificate company, and interest on amounts received for the purchase of such certificates to be issued by such institution, shall not be considered interest on indebtedness to purchase or carry obligations the interest on which is wholly exempt from the taxes under this subtitle, to the extent the average amount of such obligations held by such institution during the taxable year doesn’t exceed 15 percent of the average total assets held by such institution during the taxable year.
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Pub. L. 111–5, div. B, title I, § 1501(c), Feb. 17, 2009, 123 Stat. 353, provided that: “The amendments made by this section [amending this section and section 291 of this title] shall apply to obligations issued after December 31, 2008.”
Pub. L. 111–5, div. B, title I, § 1502(b), Feb. 17, 2009, 123 Stat. 354, provided that: “The amendment made by this section [amending this section] shall apply to obligations issued after December 31, 2008.”
Effective Date of 1997 Amendment
Amendment by Pub. L. 105–34 applicable to contracts issued after June 8, 1997, in taxable years ending after such date, with special provisions relating to changes in contracts to be treated as new contracts, see section 1084(d) of Pub. L. 105–34, set out as a note under section 101 of this title.
Effective Date of 1988 Amendment
Pub. L. 100–647, title I, § 1009(b)(3)(B)–(D), Nov. 10, 1988, 102 Stat. 3448, 3449, as amended by Pub. L. 101–239, title VII, § 7811(f)(2), Dec. 19, 1989, 103 Stat. 2409, provided that:
“(B) In the case of any obligation issued after August 7, 1986, and before January 1, 1987, the time for making a designation with respect to such obligation under section 265(b)(3)(B)(i)(III) of the 1986 Code shall not expire before January 1, 1989.“(C) If—“(i) an obligation is issued on or after January 1, 1986, and on or before August 7, 1986,“(ii) when such obligation was issued, the issuer made a designation that it intended to qualify under section 802(e)(3) of H.R. 3838 of the 99th Congress as passed by the House of Representatives [H.R. 3838 was enacted as Pub. L. 99–514], and“(iii) the issuer makes an election under this subparagraph with respect to such obligation,for purposes of section 265(b)(3) of the 1986 Code, such obligation shall be treated as issued on August 8, 1986.“(D)(i) Except as provided in clause (ii), the following provisions of section 265(b)(3) of the 1986 Code (as amended by this subparagraph (A)) shall apply to obligations issued after June 30, 1987:“(I) subparagraph (C)(ii)(III),“(II) clauses (ii) and (iii) of subparagraph (D), and“(III) subparagraphs (E) and (F).“(ii) At the election of an issuer (made at such time and in such manner as the Secretary of the Treasury or his delegate may prescribe), the provisions referred to in clause (i) shall apply to such issuer as if included in the amendments made by section 902(a) of the Tax Reform Act of 1986 [section 902(a) of Pub. L. 99–514, amending this section].”
Amendment by Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Effective Date of 1986 Amendment
Amendment by section 144 of Pub. L. 99–514 applicable to taxable years beginning before, on, or after Dec. 31, 1986, see section 151(e) of Pub. L. 99–514, set out as a note under section 1 of this title.
Pub. L. 99–514, title IX, § 902(f), Oct. 22, 1986, 100 Stat. 2382, as amended by Pub. L. 100–647, title I, § 1009(b)(1), (2), (7), Nov. 10, 1988, 102 Stat. 3445, 3446, 3449, provided that:
“(1) In general.— Except as provided in this subsection, the amendments made by this section [amending this section and sections 163, 291, and 1277 of this title] shall apply to taxable years ending after December 31, 1986.“(2) Obligations acquired pursuant to certain commitments.— For purposes of sections 265(b) and 291(e)(1)(B) of the Internal Revenue Code of 1986, any tax-exempt obligation which is acquired after August 7, 1986, pursuant to a direct or indirect written commitment—“(A) to purchase or repurchase such obligation, and“(B) entered into on or before September 25, 1985,shall be treated as an obligation acquired before August 8, 1986.“(3) Transitional rules.— For purposes of sections 265(b) and 291(e)(1)(B) of the Internal Revenue Code of 1986, obligations with respect to any of the following projects shall be treated as obligations acquired before August 8, 1986, in the hands of the first and any subsequent financial institution acquiring such obligations:“(A) Park Forest, Illinois, redevelopment project.“(B) Clinton, Tennessee, Carriage Trace project.“(C) Savannah, Georgia, Mall Terrace Warehouse project.“(D) Chattanooga, Tennessee, Warehouse Row project.“(E) Dalton, Georgia, Towne Square project.“(F) Milwaukee, Wisconsin, Standard Electric Supply Company—distribution facility.“(G) Wausau, Wisconsin, urban renewal project.“(H) Cassville, Missouri, UDAG project.“(I) Outlook Envelope Company—plant expansion.“(J) Woodstock, Connecticut, Crabtree Warehouse partnership.“(K) Louisville, Kentucky, Speed Mansion renovation project.“(L) Charleston, South Carolina, 2 Festival Market Place projects at Union Pier Terminal and 1 project at the Remount Road Container Yard, State Pier No. 15 at North Charleston Terminal.“(M) New Orleans, Louisiana, Upper Pontalba Building renovation.“(N) Woodward Wight Building.“(O) Minneapolis, Minnesota, Miller Milling Company—flour mill project.“(P) Homewood, Alabama, the Club Apartments.“(Q) Charlotte, North Carolina—qualified mortgage bonds acquired by NCNB bank ($5,250,000).“(R) Grand Rapids, Michigan, Central Bank project.“(S) Ruppman Marketing Services, Inc.— building project.“(T) Bellows Falls, Vermont—building project.“(U) East Broadway Project, Louisville, Kentucky.“(V) O.K. Industries, Oklahoma.“(4) Additional transitional rule.— Obligations issued pursuant to an allocation of a State’s volume limitation for private activity bonds, which allocation was made by Executive Order 25 signed by the Governor of the State on May 22, 1986 (as such order may be amended before January 1, 1987), and qualified 501(c)(3) bonds designated by such Governor for purposes of this paragraph, shall be treated as acquired on or before August 7, 1986, in the hands of the first and any subsequent financial institution acquiring such obligation. The aggregate face amount of obligations to which this paragraph applies shall not exceed $200,000,000.”
Effective Date of 1984 Amendment
Amendment by section 16(a) of Pub. L. 98–369 applicable to taxable years ending after Dec. 31, 1983, see section 18(a) of Pub. L. 98–369, set out as a note under section 48 of this title.
Amendment by section 56(c) of Pub. L. 98–369 applicable to short sales after July 18, 1984, in taxable years ending after that date, see section 56(d) of Pub. L. 98–369, set out as a note under section 163 of this title.
Effective Date of 1981 Amendment
Pub. L. 97–34, title III, § 301(d), Aug. 13, 1981, 95 Stat. 270, provided that:
“(1) In general.— Except as provided in paragraph (2), the amendments made by this section [enacting section 128 of this title and amending this section and sections 584, 643, and 702 of this title] shall apply to taxable years ending after September 30, 1981.“(2) Conforming amendments.— The amendments made by subsection (b)(6) [amending sections 584, 643, and 702 of this title] shall apply to taxable years beginning after December 31, 1981.”
Effective and Termination Dates of 1980 Amendment
Pub. L. 96–223, title IV, § 404(c), Apr. 2, 1980, 94 Stat. 308, as amended by Pub. L. 97–34, title III, § 302(b)(1), Aug. 13, 1981, 95 Stat. 272, provided that: “The amendments made by this section [amending this section and sections 116, 584, 643, 702, 854, and 857 of this title] shall apply with respect to taxable years beginning after December 31, 1980, and before January 1, 1982.”
Effective Date of 1976 Amendment
Amendment by section 1901(a)(37) of Pub. L. 94–455 effective for 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.
Amendment by section 2137(e) of Pub. L. 94–455 effective for taxable years beginning after Dec. 31, 1975, see section 2137(e) of Pub. L. 94–455, set out as a note under section 852 of this title.
Effective Date of 1964 Amendment
Pub. L. 88–272, title II, § 216(b), Feb. 26, 1964, 78 Stat. 56, provided that: “The amendment made by subsection (a) [amending this section] shall apply with respect to taxable years ending after the date of the enactment of this Act [Feb. 26, 1964].”
Savings Provision
For provisions that nothing in amendment by Pub. L. 101–508 be construed to affect treatment of certain transactions occurring, property acquired, or items of income, loss, deduction, or credit taken into account prior to Nov. 5, 1990, for purposes of determining liability for tax for periods ending after Nov. 5, 1990, see section 11821(b) of Pub. L. 101–508, set out as a note under section 45K of this title.
Clarification of Treatment of Amounts Excluded Under Section 597
Pub. L. 99–514, title IX, § 904(c)(2)(B), Oct. 22, 1986, 100 Stat. 2385, provided that this section shall not deny any deduction by reason of such deduction being allocable to amounts excluded from gross income under section 597 of this title as in effect on Oct. 21, 1986, prior to repeal by Pub. L. 101–73, title XIV, § 1401(a)(3)(B), Aug. 9, 1989, 103 Stat. 549.