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us/statute/26/59/k — Applicable corporation · Axiom

(1)Applicable corporation defined#

(A) In general The term “applicable corporation” means, with respect to any taxable year, any corporation (other than an S corporation, a regulated investment company, or a real estate investment trust) which meets the average annual adjusted financial statement income test of subparagraph (B) for one or more taxable years which— (i) are prior to such taxable year, and (ii) end after December 31, 2021 .

(B) Average annual adjusted financial statement income test For purposes of this subsection— (i) a corporation meets the average annual adjusted financial statement income test for a taxable year if the average annual adjusted financial statement income of such corporation (determined without regard to section 56A(d)) for the 3-taxable-year period ending with such taxable year exceeds $1,000,000,000, and (ii) in the case of a corporation described in paragraph (2), such corporation meets the average annual adjusted financial statement income test for a taxable year if— (I) the corporation meets the requirements of clause (i) for such taxable year (determined after the application of paragraph (2)), and (II) the average annual adjusted financial statement income of such corporation (determined without regard to the application of paragraph (2) and without regard to section 56A(d)) for the 3-taxable-year-period ending with such taxable year is $100,000,000 or more.

(C) Exception Notwithstanding subparagraph (A), the term “applicable corporation” shall not include any corporation which otherwise meets the requirements of subparagraph (A) if— (i) such corporation— (I) has a change in ownership, or (II) has a specified number (to be determined by the Secretary and which shall, as appropriate, take into account the facts and circumstances of the taxpayer) of consecutive taxable years, including the most recent taxable year, in which the corporation does not meet the average annual adjusted financial statement income test of subparagraph (B), and (ii) the Secretary determines that it would not be appropriate to continue to treat such corporation as an applicable corporation. The preceding sentence shall not apply to any corporation if, after the Secretary makes the determination described in clause (ii), such corporation meets the average annual adjusted financial statement income test of subparagraph (B) for any taxable year beginning after the first taxable year for which such determination applies.

(D) Special rules for determining applicable corporation status Solely for purposes of determining whether a corporation is an applicable corporation under this paragraph, all adjusted financial statement income of persons treated as a single employer with such corporation under subsection (a) or (b) of section 52 shall be treated as adjusted financial statement income of such corporation, and adjusted financial statement income of such corporation shall be determined without regard to paragraphs (2)(D)(i) and (11) of section 56A(c).

(E) Other special rules (i) Corporations in existence for less than 3 years If the corporation was in existence for less than 3-taxable years, subparagraph (B) shall be applied on the basis of the period during which such corporation was in existence. (ii) Short taxable years Adjusted financial statement income for any taxable year of less than 12 months shall be annualized by multiplying the adjusted financial statement income for the short period by 12 and dividing the result by the number of months in the short period. (iii) Treatment of predecessors Any reference in this subparagraph to a corporation shall include a reference to any predecessor of such corporation.

(1)(A)In general#

The term “applicable corporation” means, with respect to any taxable year, any corporation (other than an S corporation, a regulated investment company, or a real estate investment trust) which meets the average annual adjusted financial statement income test of subparagraph (B) for one or more taxable years which—

(i) are prior to such taxable year, and

(ii) end after December 31, 2021 .

(1)(A)(i)#

are prior to such taxable year, and

(1)(A)(ii)#

end after December 31, 2021 .

(1)(B)Average annual adjusted financial statement income test#

For purposes of this subsection—

(i) a corporation meets the average annual adjusted financial statement income test for a taxable year if the average annual adjusted financial statement income of such corporation (determined without regard to section 56A(d)) for the 3-taxable-year period ending with such taxable year exceeds $1,000,000,000, and

(ii) in the case of a corporation described in paragraph (2), such corporation meets the average annual adjusted financial statement income test for a taxable year if— (I) the corporation meets the requirements of clause (i) for such taxable year (determined after the application of paragraph (2)), and (II) the average annual adjusted financial statement income of such corporation (determined without regard to the application of paragraph (2) and without regard to section 56A(d)) for the 3-taxable-year-period ending with such taxable year is $100,000,000 or more.

(1)(B)(i)#

a corporation meets the average annual adjusted financial statement income test for a taxable year if the average annual adjusted financial statement income of such corporation (determined without regard to section 56A(d)) for the 3-taxable-year period ending with such taxable year exceeds $1,000,000,000, and

(1)(B)(ii)#

in the case of a corporation described in paragraph (2), such corporation meets the average annual adjusted financial statement income test for a taxable year if—

(I) the corporation meets the requirements of clause (i) for such taxable year (determined after the application of paragraph (2)), and

(II) the average annual adjusted financial statement income of such corporation (determined without regard to the application of paragraph (2) and without regard to section 56A(d)) for the 3-taxable-year-period ending with such taxable year is $100,000,000 or more.

(1)(B)(ii)(I)#

the corporation meets the requirements of clause (i) for such taxable year (determined after the application of paragraph (2)), and

(1)(B)(ii)(II)#

the average annual adjusted financial statement income of such corporation (determined without regard to the application of paragraph (2) and without regard to section 56A(d)) for the 3-taxable-year-period ending with such taxable year is $100,000,000 or more.

(1)(C)Exception#

Notwithstanding subparagraph (A), the term “applicable corporation” shall not include any corporation which otherwise meets the requirements of subparagraph (A) if—

(i) such corporation— (I) has a change in ownership, or (II) has a specified number (to be determined by the Secretary and which shall, as appropriate, take into account the facts and circumstances of the taxpayer) of consecutive taxable years, including the most recent taxable year, in which the corporation does not meet the average annual adjusted financial statement income test of subparagraph (B), and

(ii) the Secretary determines that it would not be appropriate to continue to treat such corporation as an applicable corporation.

The preceding sentence shall not apply to any corporation if, after the Secretary makes the determination described in clause (ii), such corporation meets the average annual adjusted financial statement income test of subparagraph (B) for any taxable year beginning after the first taxable year for which such determination applies.

(1)(C)(i)#

such corporation—

(I) has a change in ownership, or

(II) has a specified number (to be determined by the Secretary and which shall, as appropriate, take into account the facts and circumstances of the taxpayer) of consecutive taxable years, including the most recent taxable year, in which the corporation does not meet the average annual adjusted financial statement income test of subparagraph (B), and

(1)(C)(i)(I)#

has a change in ownership, or

(1)(C)(i)(II)#

has a specified number (to be determined by the Secretary and which shall, as appropriate, take into account the facts and circumstances of the taxpayer) of consecutive taxable years, including the most recent taxable year, in which the corporation does not meet the average annual adjusted financial statement income test of subparagraph (B), and

(1)(C)(ii)#

the Secretary determines that it would not be appropriate to continue to treat such corporation as an applicable corporation.

(1)(D)Special rules for determining applicable corporation status#

Solely for purposes of determining whether a corporation is an applicable corporation under this paragraph, all adjusted financial statement income of persons treated as a single employer with such corporation under subsection (a) or (b) of section 52 shall be treated as adjusted financial statement income of such corporation, and adjusted financial statement income of such corporation shall be determined without regard to paragraphs (2)(D)(i) and (11) of section 56A(c).

(1)(E)Other special rules#

(i) Corporations in existence for less than 3 years If the corporation was in existence for less than 3-taxable years, subparagraph (B) shall be applied on the basis of the period during which such corporation was in existence.

(ii) Short taxable years Adjusted financial statement income for any taxable year of less than 12 months shall be annualized by multiplying the adjusted financial statement income for the short period by 12 and dividing the result by the number of months in the short period.

(iii) Treatment of predecessors Any reference in this subparagraph to a corporation shall include a reference to any predecessor of such corporation.

(1)(E)(i)Corporations in existence for less than 3 years#

If the corporation was in existence for less than 3-taxable years, subparagraph (B) shall be applied on the basis of the period during which such corporation was in existence.

(1)(E)(ii)Short taxable years#

Adjusted financial statement income for any taxable year of less than 12 months shall be annualized by multiplying the adjusted financial statement income for the short period by 12 and dividing the result by the number of months in the short period.

(1)(E)(iii)Treatment of predecessors#

Any reference in this subparagraph to a corporation shall include a reference to any predecessor of such corporation.

(2)Special rule for foreign-parented multinational groups#

(A) In general If a corporation is a member of a foreign-parented multinational group for any taxable year, then, solely for purposes of determining whether such corporation meets the average annual adjusted financial statement income test under paragraph (1)(B)(ii)(I) for such taxable year, the adjusted financial statement income of such corporation for such taxable year shall include the adjusted financial statement income of all members of such group. Solely for purposes of this subparagraph, adjusted financial statement income shall be determined without regard to paragraphs (2)(D)(i), (3), (4), and (11) of section 56A(c).

(B) Foreign-parented multinational group For purposes of subparagraph (A), the term “foreign-parented multinational group” means, with respect to any taxable year, two or more entities if— (i) at least one entity is a domestic corporation and another entity is a foreign corporation, (ii) such entities are included in the same applicable financial statement with respect to such year, and (iii) either— (I) the common parent of such entities is a foreign corporation, or (II) if there is no common parent, the entities are treated as having a common parent which is a foreign corporation under subparagraph (D).

(C) Foreign corporations engaged in a trade or business within the United States For purposes of this paragraph, if a foreign corporation is engaged in a trade or business within the United States, such trade or business shall be treated as a separate domestic corporation that is wholly owned by the foreign corporation.

(D) Other rules The Secretary shall, applying the principles of this section, prescribe rules for the application of this paragraph, including rules for the determination of— (i) the entities (if any) which are to be to be treated under subparagraph (B)(iii)(II) as having a common parent which is a foreign corporation, (ii) the entities to be included in a foreign-parented multinational group, and (iii) the common parent of a foreign-parented multinational group.

(2)(A)In general#

If a corporation is a member of a foreign-parented multinational group for any taxable year, then, solely for purposes of determining whether such corporation meets the average annual adjusted financial statement income test under paragraph (1)(B)(ii)(I) for such taxable year, the adjusted financial statement income of such corporation for such taxable year shall include the adjusted financial statement income of all members of such group. Solely for purposes of this subparagraph, adjusted financial statement income shall be determined without regard to paragraphs (2)(D)(i), (3), (4), and (11) of section 56A(c).

(2)(B)Foreign-parented multinational group#

For purposes of subparagraph (A), the term “foreign-parented multinational group” means, with respect to any taxable year, two or more entities if—

(i) at least one entity is a domestic corporation and another entity is a foreign corporation,

(ii) such entities are included in the same applicable financial statement with respect to such year, and

(iii) either— (I) the common parent of such entities is a foreign corporation, or (II) if there is no common parent, the entities are treated as having a common parent which is a foreign corporation under subparagraph (D).

(2)(B)(i)#

at least one entity is a domestic corporation and another entity is a foreign corporation,

(2)(B)(ii)#

such entities are included in the same applicable financial statement with respect to such year, and

(2)(B)(iii)#

either—

(I) the common parent of such entities is a foreign corporation, or

(II) if there is no common parent, the entities are treated as having a common parent which is a foreign corporation under subparagraph (D).

(2)(B)(iii)(I)#

the common parent of such entities is a foreign corporation, or

(2)(B)(iii)(II)#

if there is no common parent, the entities are treated as having a common parent which is a foreign corporation under subparagraph (D).

(2)(C)Foreign corporations engaged in a trade or business within the United States#

For purposes of this paragraph, if a foreign corporation is engaged in a trade or business within the United States, such trade or business shall be treated as a separate domestic corporation that is wholly owned by the foreign corporation.

(2)(D)Other rules#

The Secretary shall, applying the principles of this section, prescribe rules for the application of this paragraph, including rules for the determination of—

(i) the entities (if any) which are to be to be treated under subparagraph (B)(iii)(II) as having a common parent which is a foreign corporation,

(ii) the entities to be included in a foreign-parented multinational group, and

(iii) the common parent of a foreign-parented multinational group.

(2)(D)(i)#

the entities (if any) which are to be to be treated under subparagraph (B)(iii)(II) as having a common parent which is a foreign corporation,

(2)(D)(ii)#

the entities to be included in a foreign-parented multinational group, and

(2)(D)(iii)#

the common parent of a foreign-parented multinational group.

in view

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Rules

section_59_completed_special_rule_domain_is_satisfied

Derived

source: 26 USC 59(a), (e), (g), and (h), bounded completed-return domain

- name: section_59_completed_special_rule_domain_is_satisfied
  kind: derived
  entity: TaxUnit
  dtype: Judgment
  period: Year
  source: 26 USC 59(a), (e), (g), and (h), bounded completed-return domain
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/59/a/1
            excerpt: >-
              The alternative minimum tax foreign tax credit for any taxable year shall be the
              credit which would be determined under section 27
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/59/e
            excerpt: >-
              any qualified expenditure to which an election under this paragraph applies shall be
              allowed as a deduction ratably over the 10-year period
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/59/g
            excerpt: differently treated items shall be properly adjusted
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/59/h
            excerpt: shall be applied for purposes of computing the alternative minimum taxable income
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/59
  versions:
    - effective_from: '2026-01-01'
      effective_to: '2026-12-31'
      formula: |-
        (
          completed_alternative_minimum_tax_foreign_tax_credit >= 0
          and section_59_a_completed_credit_domain_is_satisfied
          and section_59_e_completed_adjustment_domain_is_satisfied
          and section_59_g_completed_adjustment_domain_is_satisfied
          and section_59_h_completed_adjustment_domain_is_satisfied
          and no_other_section_59_special_rule_affects_completed_individual_amt
        )

alternative_minimum_tax_foreign_tax_credit

Derived

source: 26 USC 59(a), guarded completed AMT foreign tax credit

- name: alternative_minimum_tax_foreign_tax_credit
  kind: derived
  entity: TaxUnit
  dtype: Money
  period: Year
  unit: USD
  source: 26 USC 59(a), guarded completed AMT foreign tax credit
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: import
          import:
            target: us:statutes/26/59#section_59_completed_special_rule_domain_is_satisfied
            output: section_59_completed_special_rule_domain_is_satisfied
            hash: sha256:local
        - path: versions[0].formula
          kind: formula
          source:
            corpus_citation_path: us/statute/26/59/a/1
            excerpt: >-
              The alternative minimum tax foreign tax credit for any taxable year shall be the
              credit which would be determined under section 27
        - path: versions[0].formula
          kind: definition
          source:
            corpus_citation_path: us/statute/26/59/a/2
            excerpt: >-
              the term “pre-credit tentative minimum tax” means the amount determined under the
              first sentence of section 55(b)(1)(A)
  versions:
    - effective_from: '2026-01-01'
      effective_to: '2026-12-31'
      formula: |-
        if section_59_completed_special_rule_domain_is_satisfied:
          completed_alternative_minimum_tax_foreign_tax_credit
        else:
          0

section_59_e_qualified_expenditure_adjustment

Derived

source: 26 USC 59(e), guarded signed completed adjustment

- name: section_59_e_qualified_expenditure_adjustment
  kind: derived
  entity: TaxUnit
  dtype: Money
  period: Year
  unit: USD
  source: 26 USC 59(e), guarded signed completed adjustment
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: import
          import:
            target: us:statutes/26/59#section_59_completed_special_rule_domain_is_satisfied
            output: section_59_completed_special_rule_domain_is_satisfied
            hash: sha256:local
        - path: versions[0].formula
          kind: formula
          source:
            corpus_citation_path: us/statute/26/59/e
            excerpt: >-
              any qualified expenditure to which an election under this paragraph applies shall be
              allowed as a deduction ratably over the 10-year period
  versions:
    - effective_from: '2026-01-01'
      effective_to: '2026-12-31'
      formula: |-
        if section_59_completed_special_rule_domain_is_satisfied:
          completed_section_59_e_qualified_expenditure_adjustment
        else:
          0

section_59_g_tax_benefit_rule_adjustment

Derived

source: 26 USC 59(g), guarded signed completed adjustment

- name: section_59_g_tax_benefit_rule_adjustment
  kind: derived
  entity: TaxUnit
  dtype: Money
  period: Year
  unit: USD
  source: 26 USC 59(g), guarded signed completed adjustment
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: import
          import:
            target: us:statutes/26/59#section_59_completed_special_rule_domain_is_satisfied
            output: section_59_completed_special_rule_domain_is_satisfied
            hash: sha256:local
        - path: versions[0].formula
          kind: formula
          source:
            corpus_citation_path: us/statute/26/59/g
            excerpt: differently treated items shall be properly adjusted
  versions:
    - effective_from: '2026-01-01'
      effective_to: '2026-12-31'
      formula: |-
        if section_59_completed_special_rule_domain_is_satisfied:
          completed_section_59_g_tax_benefit_rule_adjustment
        else:
          0

section_59_h_limitation_coordination_adjustment

Derived

source: 26 USC 59(h), guarded signed completed adjustment

- name: section_59_h_limitation_coordination_adjustment
  kind: derived
  entity: TaxUnit
  dtype: Money
  period: Year
  unit: USD
  source: 26 USC 59(h), guarded signed completed adjustment
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: import
          import:
            target: us:statutes/26/59#section_59_completed_special_rule_domain_is_satisfied
            output: section_59_completed_special_rule_domain_is_satisfied
            hash: sha256:local
        - path: versions[0].formula
          kind: formula
          source:
            corpus_citation_path: us/statute/26/59/h
            excerpt: shall be applied for purposes of computing the alternative minimum taxable income
  versions:
    - effective_from: '2026-01-01'
      effective_to: '2026-12-31'
      formula: |-
        if section_59_completed_special_rule_domain_is_satisfied:
          completed_section_59_h_limitation_coordination_adjustment
        else:
          0

section_59_j_kiddie_exemption_limit_applies

Derived

source: 26 USC 59(j)

- name: section_59_j_kiddie_exemption_limit_applies
  kind: derived
  entity: TaxUnit
  dtype: Judgment
  period: Year
  source: 26 USC 59(j)
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: exception
          source:
            corpus_citation_path: us/statute/26/55/d/4
            excerpt: subsection (j) of section 59 shall not apply
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/59/j
            excerpt: In the case of a child to whom section 1(g) applies
  versions:
    - effective_from: '2018-01-01'
      formula: 'false'

▸citations (5)

References

This rule cites 5 other rules.

26 USC § 56A (d)inferredUS Federal › Statutes › Title 26 › § 56A › (d)
26 USC § 56A (d)inferredUS Federal › Statutes › Title 26 › § 56A › (d)
26 USC § 52inferredUS Federal › Statutes › Title 26 › § 52
26 USC § 56A (c)inferredUS Federal › Statutes › Title 26 › § 56A › (c)
26 USC § 56A (c)inferredUS Federal › Statutes › Title 26 › § 56A › (c)

(1)Applicable corporation defined#

(1)(A)In general#

(1)(A)(i)#

(1)(A)(ii)#

(1)(B)Average annual adjusted financial statement income test#

(1)(B)(i)#

(1)(B)(ii)#

(1)(B)(ii)(I)#

(1)(B)(ii)(II)#

(1)(C)Exception#

(1)(C)(i)#

(1)(C)(i)(I)#

(1)(C)(i)(II)#

(1)(C)(ii)#

(1)(D)Special rules for determining applicable corporation status#

(1)(E)Other special rules#

(1)(E)(i)Corporations in existence for less than 3 years#

(1)(E)(ii)Short taxable years#

(1)(E)(iii)Treatment of predecessors#

(2)Special rule for foreign-parented multinational groups#

(2)(A)In general#

(2)(B)Foreign-parented multinational group#

(2)(B)(i)#

(2)(B)(ii)#

(2)(B)(iii)#

(2)(B)(iii)(I)#

(2)(B)(iii)(II)#

(2)(C)Foreign corporations engaged in a trade or business within the United States#

(2)(D)Other rules#

(2)(D)(i)#

(2)(D)(ii)#

(2)(D)(iii)#

(3)Regulations or other guidance#

(3)(A)#