View all text of Part VI [§ 55 - § 59]
§ 56A. Adjusted financial statement income
(a) In general
(b) Applicable financial statement
(c) General adjustments
(1) Statements covering different taxable years
(2) Special rules for related entities
(A) Consolidated financial statements
(B) Consolidated returns
(C) Treatment of dividends and other amounts
(D) Treatment of partnerships
(i) In general
(ii) Adjusted financial statement income of partnerships
(3) Adjustments to take into account certain items of foreign income
(A) In general
(B) Negative adjustmentsIn any case in which the adjustment determined under subparagraph (A) would result in a negative adjustment for such taxable year—
(i) no adjustment shall be made under this paragraph for such taxable year, and
(ii) the amount of the adjustment determined under this paragraph for the succeeding taxable year (determined without regard to this paragraph) shall be reduced by an amount equal to the negative adjustment for such taxable year.
(4) Effectively connected income
(5) Adjustments for certain taxes
(6) Adjustment with respect to disregarded entities
(7) Special rule for cooperatives
(8) Rules for Alaska native corporationsAdjusted financial statement income shall be appropriately adjusted to allow—
(A) cost recovery and depletion attributable to property the basis of which is determined under section 21(c) of the Alaska Native Claims Settlement Act (43 U.S.C. 1620(c)), and
(B) deductions for amounts payable made pursuant to section 7(i) or section 7(j) of such Act (43 U.S.C. 1606(i) and 1606(j)) only at such time as the deductions are allowed for tax purposes.
(9) Amounts attributable to elections for direct payment of certain credits
(10) Consistent treatment of mortgage servicing income of taxpayer other than a regulated investment company
(A) In general
(B) Rules for amounts not representing reasonable compensation
(11) Adjustment with respect to defined benefit pensions
(A) In generalExcept as otherwise provided in rules prescribed by the Secretary in regulations or other guidance, adjusted financial statement income shall be—
(i) adjusted to disregard any amount of income, cost, or expense that would otherwise be included on the applicable financial statement in connection with any covered benefit plan,
(ii) increased by any amount of income in connection with any such covered benefit plan that is included in the gross income of the corporation under any other provision of this chapter, and
(iii) reduced by deductions allowed under any other provision of this chapter with respect to any such covered benefit plan.
(B) Covered benefit planFor purposes of this paragraph, the term “covered benefit plan” means—
(i) a defined benefit plan (other than a multiemployer plan described in section 414(f)) if the trust which is part of such plan is an employees’ trust described in section 401(a) which is exempt from tax under section 501(a),
(ii) any qualified foreign plan (as defined in section 404A(e)), or
(iii) any other defined benefit plan which provides post-employment benefits other than pension benefits.
(12) Tax-exempt entitiesIn the case of an organization subject to tax under section 511, adjusted financial statement income shall be appropriately adjusted to only take into account any adjusted financial statement income—
(A) of an unrelated trade or business (as defined in section 513) of such organization, or
(B) derived from debt-financed property (as defined in section 514) to the extent that income from such property is treated as unrelated business taxable income.
(13) DepreciationAdjusted financial statement income shall be—
(A) reduced by depreciation deductions allowed under section 167 with respect to property to which section 168 applies to the extent of the amount allowed as deductions in computing taxable income for the taxable year, and
(B) appropriately adjusted—
(i) to disregard any amount of depreciation expense that is taken into account on the taxpayer’s applicable financial statement with respect to such property, and
(ii) to take into account any other item specified by the Secretary in order to provide that such property is accounted for in the same manner as it is accounted for under this chapter.
(14) Qualified wireless spectrum
(A) In generalAdjusted financial statement income shall be—
(i) reduced by amortization deductions allowed under section 197 with respect to qualified wireless spectrum to the extent of the amount allowed as deductions in computing taxable income for the taxable year, and
(ii) appropriately adjusted—(I) to disregard any amount of amortization expense that is taken into account on the taxpayer’s applicable financial statement with respect to such qualified wireless spectrum, and(II) to take into account any other item specified by the Secretary in order to provide that such qualified wireless spectrum is accounted for in the same manner as it is accounted for under this chapter.
(B) Qualified wireless spectrumFor purposes of this paragraph, the term “qualified wireless spectrum” means wireless spectrum which—
(i) is used in the trade or business of a wireless telecommunications carrier, and
(ii) was acquired after December 31, 2007, and before the date of enactment of this section.
(15) Secretarial authority to adjust itemsThe Secretary shall issue regulations or other guidance to provide for such adjustments to adjusted financial statement income as the Secretary determines necessary to carry out the purposes of this section, including adjustments—
(A) to prevent the omission or duplication of any item, and
(B) to carry out the principles of part II of subchapter C of this chapter (relating to corporate liquidations), part III of subchapter C of this chapter (relating to corporate organizations and reorganizations), and part II of subchapter K of this chapter (relating to partnership contributions and distributions).
(d) Deduction for financial statement net operating loss
(1) In generalAdjusted financial statement income (determined after application of subsection (c) and without regard to this subsection) shall be reduced by an amount equal to the lesser of—
(A) the aggregate amount of financial statement net operating loss carryovers to the taxable year, or
(B) 80 percent of adjusted financial statement income computed without regard to the deduction allowable under this subsection.
(2) Financial statement net operating loss carryover
(3) Financial statement net operating loss defined
(e) Regulations and other guidance
(Added Pub. L. 117–169, title I, § 10101(b)(1), Aug. 16, 2022, 136 Stat. 1822.)