PUBLIC LAW 87-870--OCT. 23, 1962
1158
Public Law 87-870 October 23, 1962 [H. R. 12599]
Terminal railroad corporations. Income tax. 68A Stat. 17. 26 USC 61 et seq.
[76 STAT.
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AN ACT Relating to the income tax treatment of terminal railroad corporations and their shareholders, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United /States of Amsrica in Congress assembled, That (a) subchapter B of chapter 1 of the Internal Revenue Code of 1954 (relating to computation of taxable income) is amended by adding at the end thereof the following new part: "PART X—TERMINAL RAILROAD CORPORATIONS A N D THEIR SHAREHOLDERS "Sec. 281. Terminal railroad corporations and their shareholders. "SEC. 281. TERMINAL RAILROAD CORPORATIONS AND THEIR SHAREHOLDERS. " (a) COMPUTATION or TAXABLE INCOME OF TERMINAL RAILROAD CORPORATIONS.—
"(1) IN GENERAL.—In computing the taxable income of a terminal railroad corporation— " (A) such corporation shall not be considered to have received or accruedr— "(i) the portion of any liability of any railroad corporation, with respect to related terminal services provided by such corporation, which is discharged by crediting such liability with an amount of related terminal income, or "(ii) the portion of any charge which would be made by such corporation for related terminal services provided by it, out which is not made as a result of taking related terminal income into account in computing such charge; and " (B) no deduction otherwise allowable under this chapter shall be disallowed as a result of any discharge of liability described in subparagraph (A)(i) or as a result of any computation of charges in the manner described in subparagraph " (2) LIMITATION.—In the case of any taxable year ending after the date of the enactment of this section, paragraph (1) shall not apply to the extent that it would (but for this paragraph) operate to create (or increase) a net operating loss for the terminal railroad corporation for the taxable year. "(b)
COMPUTATION OF TAXABLE INCOME OF SHAREHOLDERS.—Sub-
ject to the limitation in subsection (a)(2), in computing the taxable income of any shareholder of a terminal railroad corporation, no amount shall be considered to have been received or accrued or paid or incurred by such shareholder as a result of any discharge of liability described in subsection (a)(l)(A)(i) or as a result of any computation of charges in the manner described in subsection (a)(l)(A) ( i i). "(c) AGREEMENT REQUIRED.—In the case of any taxable year, subsections (a) and (b) shall apply with respect td any discharge of liability described in subsection (a)(l)(A)(i), and to any computation of charges in the manner described in subsection (a)(l)(A) ( i i), only if such discharge or computation (as the case may be) was provided for in a written agreement, to which all of the shareholders of the terminal railroad corporation were parties, entered into before the beginning of such taxable year.
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