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Definitions and special rules

For purposes of this subsection—

(A) Economic substance doctrine The term “economic substance doctrine” means the common law doctrine under which tax benefits under subtitle A with respect to a transaction are not allowable if the transaction does not have economic substance or lacks a business purpose.

(B) Exception for personal transactions of individuals In the case of an individual, paragraph (1) shall apply only to transactions entered into in connection with a trade or business or an activity engaged in for the production of income.

(C) Determination of application of doctrine not affected The determination of whether the economic substance doctrine is relevant to a transaction shall be made in the same manner as if this subsection had never been enacted.

(D) Transaction The term “transaction” includes a series of transactions.

in view

Whole section

▸rulespec code

Shown source

statutes/26/7701.yaml

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Rules

motor_vehicle_business_use_minimum_fraction

Parameter

source: 26 USC 7701(h)

- name: motor_vehicle_business_use_minimum_fraction
  kind: parameter
  dtype: Rate
  source: 26 USC 7701(h)
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: parameter
          source:
            corpus_citation_path: us/statute/26/7701
            excerpt: >-
              more than 50 percent of the use of the property subject to such agreement is to be in
              a trade or business of the lessee
  versions:
    - effective_from: '2024-01-01'
      formula: '0.50'

qualified_motor_vehicle_operating_agreement

Derived

source: 26 USC 7701(h)

- name: qualified_motor_vehicle_operating_agreement
  kind: derived
  entity: MotorVehicleOperatingAgreement
  dtype: Judgment
  period: Year
  source: 26 USC 7701(h)
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/7701
        - path: versions[0].formula
          kind: import
          import:
            target: us:statutes/26/7701#motor_vehicle_business_use_minimum_fraction
            output: motor_vehicle_business_use_minimum_fraction
            hash: sha256:local
  versions:
    - effective_from: '2024-01-01'
      formula: >-
        agreement_is_with_respect_to_motor_vehicle_including_trailer

        and
        lessor_personal_liability_plus_eligible_pledged_property_value_equals_or_exceeds_acquisition_financing

        and lessee_separately_signed_perjury_certification_of_trade_or_business_use_fraction >
        motor_vehicle_business_use_minimum_fraction

        and
        lessee_separately_signed_notice_that_lessee_will_not_be_treated_as_owner_for_federal_income_tax

        and not lessor_knows_certification_is_false

motor_vehicle_agreement_treated_as_lease

Derived

source: 26 USC 7701(h)

- name: motor_vehicle_agreement_treated_as_lease
  kind: derived
  entity: MotorVehicleOperatingAgreement
  dtype: Judgment
  period: Year
  source: 26 USC 7701(h)
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/7701
        - path: versions[0].formula
          kind: import
          import:
            target: us:statutes/26/7701#qualified_motor_vehicle_operating_agreement
            output: qualified_motor_vehicle_operating_agreement
            hash: sha256:local
  versions:
    - effective_from: '2024-01-01'
      formula: |-
        qualified_motor_vehicle_operating_agreement
        and agreement_contains_terminal_rental_adjustment_clause
        and agreement_would_be_treated_as_lease_but_for_terminal_rental_adjustment_clause

lessee_not_owner_during_motor_vehicle_operating_agreement

Derived

source: 26 USC 7701(h)

- name: lessee_not_owner_during_motor_vehicle_operating_agreement
  kind: derived
  entity: MotorVehicleOperatingAgreement
  dtype: Judgment
  period: Year
  source: 26 USC 7701(h)
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/7701
        - path: versions[0].formula
          kind: import
          import:
            target: us:statutes/26/7701#qualified_motor_vehicle_operating_agreement
            output: qualified_motor_vehicle_operating_agreement
            hash: sha256:local
  versions:
    - effective_from: '2024-01-01'
      formula: |-
        qualified_motor_vehicle_operating_agreement
        and agreement_contains_terminal_rental_adjustment_clause

transaction_has_economic_substance

Derived

source: 26 USC 7701(o)

- name: transaction_has_economic_substance
  kind: derived
  entity: Transaction
  dtype: Judgment
  period: Year
  source: 26 USC 7701(o)
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/7701
            excerpt: >-
              changes in a meaningful way (apart from Federal income tax effects) the taxpayer's
              economic position
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/7701
            excerpt: the taxpayer has a substantial purpose (apart from Federal income tax effects)
  versions:
    - effective_from: '2024-01-01'
      formula: >-
        economic_substance_doctrine_is_relevant_to_transaction

        and
        transaction_changes_taxpayer_economic_position_meaningfully_apart_from_federal_income_tax_effects

        and taxpayer_has_substantial_non_federal_income_tax_purpose_for_transaction

profit_potential_taken_into_account_for_economic_substance

Derived

source: 26 USC 7701(o)

- name: profit_potential_taken_into_account_for_economic_substance
  kind: derived
  entity: Transaction
  dtype: Judgment
  period: Year
  source: 26 USC 7701(o)
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/7701
            excerpt: >-
              only if the present value of the reasonably expected pre-tax profit from the
              transaction is substantial in relation to the present value of the expected net tax
              benefits
  versions:
    - effective_from: '2024-01-01'
      formula: >-
        transaction_relies_on_profit_potential_for_economic_substance

        and
        present_value_of_reasonably_expected_pretax_profit_is_substantial_in_relation_to_expected_net_tax_benefits

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us/statute/26/7701/o/5 — Definitions and special rules · Axiom

Definitions and special rules

Official source

For purposes of this subsection—

(D) Transaction The term “transaction” includes a series of transactions.

in view

Whole section

▸rulespec code

Shown source

statutes/26/7701.yaml

Displaying the canonical repository encoding.

This encoding covers the parent provision us/statute/26/7701; no dedicated encoding exists for this exact provision yet.

View on GitHub

Rules

motor_vehicle_business_use_minimum_fraction

Parameter

source: 26 USC 7701(h)

- name: motor_vehicle_business_use_minimum_fraction
  kind: parameter
  dtype: Rate
  source: 26 USC 7701(h)
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: parameter
          source:
            corpus_citation_path: us/statute/26/7701
            excerpt: >-
              more than 50 percent of the use of the property subject to such agreement is to be in
              a trade or business of the lessee
  versions:
    - effective_from: '2024-01-01'
      formula: '0.50'

qualified_motor_vehicle_operating_agreement

Derived

source: 26 USC 7701(h)

- name: qualified_motor_vehicle_operating_agreement
  kind: derived
  entity: MotorVehicleOperatingAgreement
  dtype: Judgment
  period: Year
  source: 26 USC 7701(h)
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/7701
        - path: versions[0].formula
          kind: import
          import:
            target: us:statutes/26/7701#motor_vehicle_business_use_minimum_fraction
            output: motor_vehicle_business_use_minimum_fraction
            hash: sha256:local
  versions:
    - effective_from: '2024-01-01'
      formula: >-
        agreement_is_with_respect_to_motor_vehicle_including_trailer

        and
        lessor_personal_liability_plus_eligible_pledged_property_value_equals_or_exceeds_acquisition_financing

        and lessee_separately_signed_perjury_certification_of_trade_or_business_use_fraction >
        motor_vehicle_business_use_minimum_fraction

        and
        lessee_separately_signed_notice_that_lessee_will_not_be_treated_as_owner_for_federal_income_tax

        and not lessor_knows_certification_is_false

motor_vehicle_agreement_treated_as_lease

Derived

source: 26 USC 7701(h)

- name: motor_vehicle_agreement_treated_as_lease
  kind: derived
  entity: MotorVehicleOperatingAgreement
  dtype: Judgment
  period: Year
  source: 26 USC 7701(h)
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/7701
        - path: versions[0].formula
          kind: import
          import:
            target: us:statutes/26/7701#qualified_motor_vehicle_operating_agreement
            output: qualified_motor_vehicle_operating_agreement
            hash: sha256:local
  versions:
    - effective_from: '2024-01-01'
      formula: |-
        qualified_motor_vehicle_operating_agreement
        and agreement_contains_terminal_rental_adjustment_clause
        and agreement_would_be_treated_as_lease_but_for_terminal_rental_adjustment_clause

lessee_not_owner_during_motor_vehicle_operating_agreement

Derived

source: 26 USC 7701(h)

- name: lessee_not_owner_during_motor_vehicle_operating_agreement
  kind: derived
  entity: MotorVehicleOperatingAgreement
  dtype: Judgment
  period: Year
  source: 26 USC 7701(h)
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/7701
        - path: versions[0].formula
          kind: import
          import:
            target: us:statutes/26/7701#qualified_motor_vehicle_operating_agreement
            output: qualified_motor_vehicle_operating_agreement
            hash: sha256:local
  versions:
    - effective_from: '2024-01-01'
      formula: |-
        qualified_motor_vehicle_operating_agreement
        and agreement_contains_terminal_rental_adjustment_clause

transaction_has_economic_substance

Derived

source: 26 USC 7701(o)

- name: transaction_has_economic_substance
  kind: derived
  entity: Transaction
  dtype: Judgment
  period: Year
  source: 26 USC 7701(o)
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/7701
            excerpt: >-
              changes in a meaningful way (apart from Federal income tax effects) the taxpayer's
              economic position
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/7701
            excerpt: the taxpayer has a substantial purpose (apart from Federal income tax effects)
  versions:
    - effective_from: '2024-01-01'
      formula: >-
        economic_substance_doctrine_is_relevant_to_transaction

        and
        transaction_changes_taxpayer_economic_position_meaningfully_apart_from_federal_income_tax_effects

        and taxpayer_has_substantial_non_federal_income_tax_purpose_for_transaction

profit_potential_taken_into_account_for_economic_substance

Derived

source: 26 USC 7701(o)

- name: profit_potential_taken_into_account_for_economic_substance
  kind: derived
  entity: Transaction
  dtype: Judgment
  period: Year
  source: 26 USC 7701(o)
  metadata:
    proof:
      atoms:
        - path: versions[0].formula
          kind: condition
          source:
            corpus_citation_path: us/statute/26/7701
            excerpt: >-
              only if the present value of the reasonably expected pre-tax profit from the
              transaction is substantial in relation to the present value of the expected net tax
              benefits
  versions:
    - effective_from: '2024-01-01'
      formula: >-
        transaction_relies_on_profit_potential_for_economic_substance

        and
        present_value_of_reasonably_expected_pretax_profit_is_substantial_in_relation_to_expected_net_tax_benefits