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Internal Revenue Service, Treasury

§ 301.9100–7T

installments, then the election is presumed to be for the maximum amount
so payable and for payment thereof in
10 equal annual installments, beginning on the date prescribed in section
6151(a). The elections described under
this paragraph (k) are available for estates of decedents dying after July 18,
1984.
(l) Subchapter S election by commodities
dealers and options dealers. This paragraph applies to a commodities dealer
or options dealer referred to in section
102(d)(3) of the Act (relating to the
election by such a dealer to be an S
corporation) whose taxable year is the
calendar year and that was a small
business corporation (as defined in section 1361(b) of the Code) as of January
1, 1984. The election by such a dealer
under section 102(d)(3) of the Act shall
be made in the manner prescribed by
section 1362 and the regulations thereunder, except that the election under
section 102(d)(3) must be made before
October 2, 1984. In addition to making
the election in the manner prescribed
under such section 1362 and the regulations thereunder, the commodities
dealer or options dealer must indicate
on Form 2553 that the election is made
under section 102(d)(3) of the Act. Although section 102(d)(3) of the Act applies to dealers not covered by this
paragraph, and such dealers may make
an election under such section 102(d)(3),
guidelines for making such an election
are not provided in this paragraph and
are forthcoming.
(m) Election with respect to treatment
of S termination year. For the election
provided under section 1362(e)(3), as
amended by section 721(h) of the Act,
see § 18.1362–4 of this chapter.
(n) Election to be an S corporation; certain short taxable years. For the election
provided under section 1362(b), as
amended by section 721(l) of the Act,
see § 18.1362–1(b) of this chapter.
(o) Election with respect to subchapter
S passive investment income rules. For
the election provided under section
721(i) of the Act which amends section
6(b) of the Subchapter S Revision Act
of 1982, see § 18.1362–5 of this chapter.
(p) Election with respect to subchapter
S distributions during certain post-termination transition periods. For the election provided under section 1371(e), as

amended by section 721(o) of the Act,
see § 18.1371–1 of this chapter.
(q) No elections for closed year. Any
election under this section which is allowed to be made by filing an amended
return may only be made if the period
for making a claim for refund or credit
with respect to the taxable year for
which such election is to be effective
has not expired. This paragraph shall
not apply to the election under paragraph (a)(2)(iv) of this section with respect to the election under section 1078
of the Act.
(r) Additional information required.
Later regulations or revenue procedures issued under provisions of the
Code or Act covered by this section
may require the furnishing of information in addition to that which was furnished with the statement of election
described herein. In such event the
later regulations or revenue procedures
will provide guidance with respect to
the furnishing of such additional information.
[T.D. 7976, 49 FR 35487, Sept. 10, 1984; T.D.
7976, 49 FR 43640, Oct. 31, 1984; 49 FR 43951,
Nov. 1, 1984, as amended by T.D. 8062, 50 FR
46004, Nov. 6, 1985. Redesignated by T.D. 8435,
57 FR 43895, Sept. 23, 1992; T.D. 9172, 70 FR
296, Jan. 4, 2005]

§ 301.9100–7T Time and manner of
making certain elections under the
Tax Reform Act of 1986.
(a) Miscellaneous elections—(1) Elections to which this paragraph applies.
This paragraph applies to the elections
set forth below provided under the Tax
Reform Act of 1986 (the Act). General
rules regarding the time for making
the elections are provided in paragraph
(a)(2) of this section. General rules regarding the manner for making the
elections are provided in paragraph
(a)(3) of this section. Special rules regarding the time and manner for making certain elections are contained in
paragraphs (a) through (i) of this section. If a special rule applies to one of
the elections listed below, a cross-reference to the special rule is shown in
brackets at the end of the description
of the ‘‘Availability of Election.’’ Paragraph (j) of this section provides that
additional information with respect to
elections may be required by future
regulations or revenue procedures.

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§ 301.9100–7T
Section of Act

Section of Code

Description of Election

Availability of Election

201(a) ..............

168(b)(5) ............

Election to depreciate property using the
straight line method of recovery with respect to one or more classes of property
for any taxable year

201(a) ..............

168(f)(1) .............

Election to exclude certain property from
the accelerated cost recovery system

201(a) ..............

168(g)(7) ............

Election to use alternative depreciation system with respect to one or more classes
of property for any taxable year (except
for residential rental or non-residential
real property where the election may be
made separately with respect to each
property)

201(a), 1802(a)

168(h)(6)(F)(ii),
Election by a tax-exempt controlled entity to
168(j) (as in eftreat any gain recognized by the tax-exfect before Ocempt parent on any disposition of an intober 22, 1986).
terest in the tax-exempt controlled entity
(and to treat any dividends or interest received or accrued from the tax-exempt
controlled entity) as unrelated business
taxable income under Code section 511
in order for the tax-exempt controlled entity to not be treated as a tax-exempt entity (or as a successor to a tax-exempt
entity)
............................ Election to apply Act section 201 (including
all elections within section 201)
............................ Election to have Act section 201 either (i)
not apply to any property placed in service during 1987 or 1988 which is replacement property for property lost, damaged
or destroyed in a flood which occurred
11–3–85 through 11–7–85 and which
was declared a natural disaster area by
the President of the United States, or (ii)
apply to all such replacement property
placed in service during 1985 or 1986
............................ Election to begin the 60 month amortization
period with the first month of the taxpayer’s first taxable year beginning after
11–19–82 in lieu of the 11–19–82 date or
the bus operating authority acquisition
date
............................ Election to begin the 60 month amortization
period on the first month of the taxpayer’s first taxable year beginning after
the deregulation month in lieu of the deregulation month

Property placed in service after 12–31–86.
Election must be made for taxable year
in which property is placed in service.
Election shall apply to all property in the
class placed in service during the taxable
year for which the election is made.
Property placed in service after 12–31–86.
Election must be made for taxable year
in which property is placed in service.
Property placed in service after 12–31–86.
Election must be made for taxable year
in which property is placed in service. Except for residential rental or non-residential real property, election shall apply to
all property in the class placed in service
during the taxable year for which the
election is made.
Property placed in service after 9–27–85,
but can apply to property placed in service before such date if the tax-exempt
controlled entity so elects. [See paragraph (a)(3)(ii) of this section.]

203(a)(1)(B) .....
204(e) ..............

243(a) ..............

243(b) ..............

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243 (a), (b) .......

............................

Election by a qualified corporate taxpayer
to allocate a portion of the cost basis of a
qualified acquiring corporation in the
stock of an acquired corporation to the
basis of the authority

252(a) ..............

42(f)(1) ...............

Election concerning beginning of credit period for low-income housing credit

252(a) ..............

42(g)(1) ..............

Election concerning qualified low-income
housing project to either satisfy the 20–
50 or the 40–60 occupancy test

Property placed in service after 7–31–86
and before 1–1–87.
(i) Property placed in service during 1987
or 1988; or (ii) property placed in service
during 1985 or 1986.

Bus operating authorities held on 11/19/82,
or acquired after that date under a written
contract that was binding on that date.

Freight forwarder operating authorities held
at the beginning of the 60 month period
applicable to the taxpayer (i.e., the deregulation date or the first month of the
first taxable year beginning after the deregulation date).
For bus operating authorities: authorities
held on 11/19/82, or acquired after that
date under a written contract that was
binding on that date. For freight forwarders: authorities held at the beginning
of the 60-month period applicable to the
taxpayer.
Buildings placed in service after 12–31–86
and before 1–1–90 (before 1–1–91 for
buildings described in Code section
42(n)(2)(B)). [See paragraph (b) of this
section.]
Buildings placed in service after 12–31–86
and before 1–1–90 (before 1–1–91 for
buildings described in Code section
42(n)(2)(B)). [See paragraph (b) of this
section.]

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Section of Act

Section of Code

Description of Election

Availability of Election

252(a) ..............

42(i)(2) ...............

Election to reduce eligible basis by outstanding balance of Federal loan subsidy

252(a) ..............

42(j)(5) ...............

Election to have certain partnerships treated as the taxpayer eligible for low-income
housing credit

311(d)(2) ..........

............................

Revocation of prior election under Code
section 631(a).

411(b)(1) ..........

263(i) ..................

411(b)(2) ..........

616(d) ................

411(b)(2) ..........

617(h) ................

501(a) ..............

469(j)(9) .............

614(b) ..............

1059(c)(4) ..........

644(d) ..............

216(b)(3) ............

646 ...................

............................

For intangible drilling and development
costs paid or incurred with respect to an
oil, gas, or geothermal well located outside the United States, election to include
such costs in adjusted basis for purposes
of computing the amount of any deduction under Code section 611 (without regard to section 613).
For expenditures paid or incurred with respect to the development of a mine or
other natural deposit (other than an oil,
gas, or geothermal well) located outside
the United States, election to include
such expenditures paid or incurred during
the taxable year for which made in adjusted basis for purposes of computing
the amount of any deduction under Code
section 611 (without regard to section
613)
For expenditures paid or incurred before
the development stage for the purpose of
ascertaining the existence, location, extent or quality of any deposit of ore or
other mineral deposit (other than an oil,
gas or geothermal well) located outside
the United States, election to include all
such expenditures, paid or incurred during the taxable year with respect to any
such deposit, in adjusted basis for purposes of computing the amount of any
deduction under Code section 611 (without regard to section 613)
Election to increase basis of property by
amount of disallowed credit for purposes
of determining gain or loss from a disposition of property used in a passive activity
Election to determine whether a dividend is
extraordinary by reference to the fair
market value of the share of stock with
respect to which the dividend was received
Election by a cooperative housing corporation to allocate real estate taxes or interest or both to each tenant-stockholder’s
dwelling unit in a manner which reasonably reflects the cost to the corporation of
the tenant-stockholder’s dwelling unit
Election by an entity to be treated as a trust
under the Internal Revenue Code if such
entity was created in 1906 as a common
law trust and governed by the trust laws
of the State of Minnesota, receives royalties from iron ore leases, and income interests in the entity are publicly traded on
a national stock exchange

Buildings placed in service after 12–31–86
and before 1–1–90 (before 1–1–91 for
buildings described in Code section
42(n)(2)(B)). [See paragraph (b) of this
section.]
Buildings placed in service after 12–31–86
and before 1–1–90 (before 1–1–91 for
buildings described in Code section
42(n)(2)(B) [See paragraph (b) of this
section.]
Election for taxable years beginning before
1–1–87 may be revoked for taxable years
ending after 12–31–86.
Costs paid or incurred after 12–31–86 in
taxable years ending after such date.
[See paragraph (a)(2)(iii) of this section.]

Costs paid or incurred after 12–31–86 in
taxable years ending after such date.
[See paragraph (a)(2)(iv) of this section.]

Costs paid or incurred after 12–31–86 in
taxable years ending after such date.
[See paragraph (a)(2)(v) of this section.]

Taxable years beginning after 12–31–86.
[See paragraph (a)(3)(iii) of this section.]

Dividends declared after July 18, 1986 in
taxable years ending after such date.

Taxable years beginning after 12–31–86.
[See paragraph (a)(3)(iv) of this section.]

The election is effective beginning on the
first day of the first taxable year beginning after October 22, 1986 and following
the year in which the election is made.
Such election must be made by the
board of trustees of such entity and must
be accompanied by a written agreement
signed by the board of trustees of the entity.

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26 CFR Ch. I (4–1–13 Edition)

Section of Act

Section of Code

Description of Election

Availability of Election

651 ...................

4982(e)(4) ..........

Calendar years beginning after 12–31–86.
[See paragraph (a)(2)(vi) of this section.]

701(a) ..............

56(f)(3)(B) ..........

801(a) ..............

448(d)(4) ............

801(d)(2) ..........

............................

802 ...................

474 .....................

803(a) ..............

263A(d)(3) ..........

806(e)(2)(C) .....

............................

Election by a regulated investment company to use taxable years ending on 11–
30 or 12–31 for purposes of computing
capital gain net income under Code section 4982
Election to have amount of net book income be equal to amount of earnings
and profits
Election of common parent of an affiliated
group that all members of such group be
treated as one taxpayer if substantially all
the activities of all members of the affiliated group involve performance of services in the same field
Election to continue using the cash method
of accounting for loans, leases and related party transactions
Election by certain small businesses to use
the simplified dollar-value LIFO method
Election to have rules of Code section
263A (relating to capitalization and inclusion in inventory costs of certain expenses) not apply to any plant or animal
produced in any farming business conducted by the electing taxpayer
Election to have net income for the short
taxable year of a partnership or S corporation which results from the required
change in accounting period included entirely in income for such short taxable
year
Election to reduce partnership or S corporation income for the short taxable year resulting from a required change in accounting period under section 806 of the
Act by an unamortized adjustment
amount existing as of October 22, 1986,
where such adjustment was required to
effectuate a previous accounting period
change under Rev. Proc. 72–51, 1972–2
C.B. 832 or Rev. Proc. 83–25, 1983–1
C.B. 689
Election to compute adjusted bases using
depreciation deduction used under Code
section 312(k)
Election to have Code section 453C not
apply to obligations arising from sales of
timeshares and unimproved residential
lots to invidividuals
Election to treat amount of reasonably estimated loss on a deposit in insolvent or
bankrupt qualified financial institution as
a loss described in Code section
165(c)(3) and incurred in the taxable year
Election to apply Code section 451(f) (relating to treatment of interest on frozen deposits in certain financial institutions)
Election by issuer of tax-exempt bonds to
treat a portion of an issue as a qualified
501(c)(3) bond if such portion would have
qualified as a 501(c)(3) bond had it been
issued separately
Election by issuer of tax-exempt bonds for
residential rental property to satisfy either
the 20–50 or the 40–60 occupancy test
Election by issuer of tax-exempt bonds for
residential rental property to treat the
project as a deep rent skewed project
Election to treat limited equity cooperative
housing as residential rental property and
not as owner-occupied housing

811(a) ..............

453C(b)(2)(B) .....

811(a) ..............

453C(e)(4) .........

905(a) ..............

165(l)(1) .............

905(c) ...............

............................

1301(b) ............

141(b)(9) ............

1301(b) ............

142(d)(1) ............

1301(b) ............

142(d)(4)(B) .......

1301(b) ............

143(k)(9)(D)(iii) ...

Taxable years beginning after 12–31–86.

Taxable years beginning after 12–31–86.

Loans, leases and related party transactions entered into before 9–26–85.
Taxable years beginning after 12–31–86.
[See paragraph (a)(3)(v) of this section.]
Unless consent is obtained from the Commissioner, the first taxable year beginning
after 12–31–86 during which the taxpayer
engages in a farming business. [See
paragraph (c) of this section.]
Partner and shareholder taxable years beginning after 12–31–86 with or within
which the short taxable year created
under section 806 of the Act ends. [See
paragraph (d) of this section.]
Short taxable years of partnerships or S
corporations beginning after 12–31–86.
[See paragraph (e) of this section.]

Taxable years ending after 12–31–86 with
respect to dispositions made after 2–28–
86.
Taxable years ending after 12–31–86 with
respect to dispositions made after 2–28–
86. [See paragraph (a)(3)(vi) of this section.]
Taxable years beginning after 12–31–81.
[See the cross-–reference in paragraph
(f) of this section.]

Taxable years beginning after 12–31–82
and before 1–1–87.
Bonds issued after 8–15–86. [See paragraph (g) of this section.]

Bonds issued after 8–15–86. [See paragraph (g) of this section.]
Bonds issued after 8–15–86. [See paragraph (g) of this section.]
Bonds issued after 8–15–86 and before 1–
1–89. [See paragraph (g) of this section.]

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Internal Revenue Service, Treasury
Section of Act

Section of Code

1301(b) ............

145(d) ................

1301(b) ............

1704(b) ............

1801(a) ............

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§ 301.9100–7T

Description of Election

Availability of Election

Election by issuer of tax-exempt bonds to
have Code section 145 not apply to the
issue if the issue is an issue of exempt
facility bonds or qualified redevelopment
bonds, to which the volume cap applies
147(b)(4)(A) ....... Election by issuer of qualified 501(c)(3)
bonds to have such bonds treated as
meeting the limitation on maturity requirements of Code section 147(b)(1) if the requirements of section 147(b)(4)(B) are
met
............................ Election to revoke prior election under
Code section 1402(e) (relating to exemption from social security taxes for certain
clergy)
168(i) (as in efElection to make finance leasing rules inapfect before Ocplicable to property which would othertober 22, 1986).
wise be subject to them under the transitional rules of section 12(c)(1) of the Tax
Reform Act of 1984
............................ Election by a common parent of an affiliated group to apply amendments made
by the Tax Reform Act of 1984 for taxable years beginning after 12–31–83

1807(a)(7) ........

468B ..................

Election to treat a qualified payment made
to a court-ordered fund as a payment
made to a designated settlement fund

1809(e)(2) ........

48(b)(2) ..............

Election by lessee and lessor not to apply
the rule of Code section 48(b)(2) concerning the date leased property is treated as originally placed in service

1810(1)(4) ........

7701(b) ..............

Election to be treated as a resident alien

1879(p)(1) ........

83(c)(3) ..............

1882(c) .............

3121(w)(2) .........

Election to treat certain stock acquired
upon the exercise of nonqualified stock
options as subject to a substantial risk of
forfeiture by reason of Code section
83(c)(3) even though the transfer of stock
pursuant to such exercise occurred before 1–1–82, the effective date of section
83(c)(3)
Election to revoke prior election under
Code section 3121(w) (relating to exemption from social security taxes for certain
churches and qualified church-controlled
organizations)

(2) Time for making elections—(i) In
general. Except as otherwise provided
in this section, the elections specified
in paragraph (a)(1) of this section shall
be made by the later of—
(A) The due date (taking extensions
into account) of the tax return for the
first taxable year for which the election is to be effective, or

Bonds issued after 8–15–86. [See paragraph (g) of this section.]

Bonds issued after 8–15–86. [See paragraph (g) of this section.]

Remuneration received in taxable years
ending on or after October 22, 1986.
[See paragraph (h) of this section.]
Personal property leased under certain
lease agreements effective on or after 1–
1–84. [See paragraph (a)(3)(vii) of this
section.]
Groups which include a corporation which
on 6–22–84 is a member of the group
which files a consolidated return for such
corporation’s taxable year which includes
6–22–84.
Generally, liabilities arising out of personal
injury, death or property damage that are
incurred after 7–18–84 under law in effect before the enactment of Code section 461(h). Election is made for the taxable year in which qualified payments are
made to a designated settlement fund.
Property originally placed in service after 4–
11–84 (as determined under Code section 48(b) prior to its amendment by section 114(a)of the Tax Reform Act of
1984). [See paragraph (a)(3)(viii) of this
section.]
Taxable years beginning after December
31, 1984. [See paragraph (a)(3)(ix) of this
section.]
Transfers of stock described in section
1879(p)(1) of the Act. [See paragraph
(a)(2)(vii) and(a)(3)(x) of this section.]

Remuneration paid after 12–31–86 unless
such electing church or church-controlled
organization had withheld and paid over
all employment taxes due, as if such
election had never been in effect during
the period from the stated effective date
of the election being revoked through 12–
31–86. [See paragraph (i) of this section.]

(B) April 15, 1987 (in which case the
election generally must be made by
amended return).
(ii) No extension of time for payment.
Payments of tax due shall be made in
accordance with chapter 62 of the Code.
(iii) Time for making the election with
respect to foreign intangible drilling costs.
With respect to the election under Act
section
411(b)(1)
(Code
section

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263(i)(2)(A)), the election shall be made
on a property-by-property basis for
each oil, gas, or geothermal property
(as defined in Code section 614). The
election shall be made by the due date
(taking extensions into account) of the
income tax return for the first taxable
year in which the taxpayer pays or incurs any cost with respect to the development of such property for which the
election is available.
(iv) Time for making the election with
respect to foreign development expenditures. With respect to the election
under Act section 411(b)(2) (Code section 616(d)(2)(A)), the election shall be
made for each mine or other natural
deposit not later than the time prescribed by law for filing the income tax
return (taking extensions into account)
for the taxable year to which such election is applicable.
(v) Time for making the election with
respect to foreign exploration expenditures. With respect to the election
under Act section 411(b)(2) (Code section 617(h)(2)(A)), the election may be
made at any time before the expiration
of the period prescribed for filing a
claim for credit or refund of the tax
imposed by chapter 1 of the Code for
the first taxable year for which the
taxpayer desires the election to be applicable.
(vi) Time for making certain elections
by regulated investment companies. The
election under Act section 651 (Code
section 4982(e)(4)) shall be made on a
statement attached to the form prescribed by the Internal Revenue Service which is used to report and pay the
excise tax liability under section 4982.
The election shall be filed on or before
the later of—
(A) March 15 of the first calendar
year beginning after the end of the
first excise tax period for which the
election is to be effective, or
(B) If the regulated investment company has been granted an extension of
time to file a return for the excise tax
under Code section 4982 for such excise
tax period, the due date (including extensions thereof) for such return.
The statement of election under section 4982(e)(4) shall be attached to the
prescribed form regardless of whether
the regulated investment company is
liable for the excise tax imposed by

section 4982 for the excise tax period in
question.
(vii) Time for making the election with
respect to certain nonqualified stock options. The election under section
1879(p)(1) of the Act (Code section
83(c)(3)) shall be made—
(A) By April 21, 1987, in any case in
which the operation of any law or rule
of law on or before such date would
prevent the credit or refund of any
overpayment of tax resulting from
such election, and
(B) By no later than any date after
April 21, 1987 on which the operation of
any law or rule of law would prevent
the credit or refund of any overpayment of tax resulting from such election.
(3) Manner of making elections—(i) In
general. Except as otherwise provided
in this section, the elections specified
in paragraph (a)(1) of this section shall
be made by attaching a statement to
the tax return for the taxable year for
which the election is to be effective. If
because of paragraph (a)(2)(i)(B) of this
section the election may be filed after
the due date of the tax return for the
first taxable year for which the election is to be effective, such statement
must be attached to a tax return or
amended return for the taxable year to
which the election relates. Except as
otherwise provided in the return or in
the instructions accompanying the return for the taxable year, the statement shall—
(A) Contain the name, address and
taxpayer identification number of the
electing taxpayer,
(B) Identify the election,
(C) Indicate the section of the Code
(or, if the provision is not codified, the
section of the Act) under which the
election is made,
(D) Specify, as applicable, the period
for which the election is being made
and/or the property or other items to
which the election is to apply, and
(E) Provide any information required
by the relevant statutory provisions
and any information necessary to show
that the taxpayer is entitled to make
the election.
(ii) Special rules for making the transitional rule elections with respect to certain tax-exempt controlled entities. The
irrevocable election under Act sections

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§ 301.9100–7T

201(a) and 1802(a) (Code sections
168(h)(6)(F)(ii) and 168(j), as in effect
before October 22, 1986), shall be made
by the tax-exempt controlled entity at
the time and in the manner described
in paragraphs (a)(2) and (a)(3)(i) of this
section. A copy of the election statement filed by the tax-exempt controlled entity shall also be attached to
the Federal tax returns (e.g., Form 990
or 5500) of each of the tax-exempt
shareholders or beneficiaries of the
controlled entity.
(iii) Special rule for making the election
with respect to gain or loss from a disposition of property used in a passive activity.
The election under Act section 501(a)
(Code section 469(j)(9)) shall be made on
the form prescribed by the Internal
Revenue Service for computing the
taxpayer’s passive activity loss and
credit for the taxable year in which the
property is disposed.
(iv) Special rules for making the election with respect to cooperative housing
corporations. The election under Act
section
644(d)
(Code
section
216(b)(3)(B)(ii)) may be made by a cooperative housing corporation with respect to its real estate taxes or interest
or both. The election is available for
any taxable year beginning after December 31, 1986, if the cooperative housing corporation has, by January 31 of
the year following the first calendar
year that includes any period to which
the election applies, furnished to each
tenant-stockholder during that period
a written statement showing the
amount of the allocation (or allocations) under section 216(b)(3)(B)(i) attributable to such tenant-stockholder’s
dwelling unit (or units) for that period.
Any cooperative housing corporation
making the election shall do so in accordance with paragraphs (a) (2) and (3)
of this section and shall identify in the
statement described in paragraph (a)(3)
of this section whether the election is
for real estate taxes or interest or
both.
(v) Special rules for making the election
with respect to the simplified dollar-value
LIFO method. The election under Act
section 802 (Code section 474) may be
made only if the taxpayer files with
the taxpayer’s income tax return for
the taxable year as of the close of
which the method is first to be used a

statement of the taxpayer’s election to
use the simplified dollar-value LIFO
inventory method. The statement shall
be on Form 970 pursuant to the instructions to the form and to the requirements of the regulations under section
474, or in such other manner as may be
acceptable to the Commissioner.
(vi) Special rules for making the election to have section 453C not apply to obligations arising from sales of timeshares
and unimproved residential lots to individuals. The election under Act section
811(a) (Code section 453C(e)(4)) to have
section 453C not apply to obligations
arising from sales of timeshares and
unimproved residential lots to individuals may be made with respect to any
obligation, or with respect to a class of
such obligations. In the case of an election made with respect to a class of obligations, such election shall describe
the class of obligations with such specificity as to make the class readily
identifiable.
(vii) Special rules for making certain finance leasing transitional rule elections.
The election relating to finance leases
under Act section 1801(a)(1) (Code section 168(i) as in effect before October
22, 1986) shall be made by the lessor
under a lease agreement subject to the
finance lease rules of section 168(i) of
the Code, as in effect before October 22,
1986, by noting this election in the
books and records relating to the lease
agreement within 12 months after February 5, 1987.
(viii) Special rules for making the election relating to the date leased property is
treated as originally placed in service.
The
election
under
Act
section
1809(e)(2) (Code section 48(b)(2)) must be
made jointly by the lessee and the lessor. The election is made jointly when
both the lessee and the lessor make the
election in accordance with paragraphs
(a)(2) and (a)(3)(i) of this section. In addition to the other information required to be provided under paragraph
(a)(3)(i) of this section, the statement
described therein shall include a copy
of the lease agreement and shall be
signed by both the lessee and the lessor.
(ix) Special rules for making the election to be treated as a resident alien. The
election under Act section 1810(l)(4)
(Code section 7701(b)) to be treated as a

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resident under Code section 7701(b)
shall be made by an alien individual by
attaching a statement to the individual’s income tax return (Form 1040), for
the taxable year for which the election
is to be in effect (the election year).
The alien individual may not make
this election until such time as he has
satisfied the substantial presence test
of Code section 7701(b)(1)(A)(ii) for the
year following the election year. If an
alien individual has not satisfied the
substantial presence test for the year
following the election year as of the
due date (without regard to extensions)
of the tax return for the election year,
the alien individual may request an extension of time for filing the return
until after he has satisfied such test,
provided that he pays with his extension application the amount of tax he
expects to owe for the election year,
computed as if he were a non-resident
alien throughout the election year. The
statement shall include the name and
address of the alien individual and contain a signed declaration that the election is being made. It must specify—
(A) That the alien individual was not
a resident in the year immediately preceding the election year;
(B) That the alien individual is a
resident in the year immediately following the election year under the substantial presence test and the individual’s number of days of presence in the
United States during such year;
(C) The date or dates of the alien individual’s 31 consecutive day period of
presence and continuous presence in
the United States during the election
year; and
(D) The date or dates of absence from
the United States during the election
year that are deemed to be days of
presence.
(x) Special rules for making the election
with respect to the treatment of the exercise of certain nonqualified stock options.
The
election
under
Act
section
1879(p)(1) (Code section 83(c)(3)) is made
by filing on Form 1040X a claim for
credit or refund of the overpayment of
tax resulting from the election. In
order to satisfy the requirements of
§ 301.6402–2(b)(1) (relating to grounds set
forth in claim), the claim for credit or
refund must set forth)—

(A) The date on which the option was
granted,
(B) The name of the corporation
which granted the option,
(C) The date on which the stock was
transferred pursuant to the exercise of
the option,
(D) The fair market value of such
stock on December 4, 1973,
(E) The fair market value on July 1,
1974 of the stock received upon the reorganization of the corporation which
granted the option, and
(F) The date on which the taxpayer
sold substantially all of the stock received in such reorganization. The taxpayer shall file a single claim for credit
or refund of the entire overpayment of
tax resulting from the election under
Act section 1879(p)(1).
(4) Revocation—(i) Irrevocable elections.
The elections described in this section
under:
Act Sections
201(a)
203(a)(1)(B), 252(a)
411(b)(1)
411(b)(2)(A)
501(a)
801(d)(2), 905(c),
1301(b)
1704(b), 1802(a)
1804(e)(4), 1879(p)(1)
1882(c)

Code Sections
168(b)(5),
168(f)(1),
168(g)(7),
168(h)(6)(F)(ii)
42(f)(1), 42(g)(1), 42(i)(2), 42(j)(5)
263(i)
616(d)(2)(A)
469(j)(9)
141(b)(9), 142(d)(1), 142(d)(4)(B)
143(k)(9)(D)(iii),
145(d),
147(b)(4)(A)
168(j) as in effect before October 22,
1986
83(c)(3)
3121(w)(2)

are irrevocable.
(ii) Elections revocable with the consent
of the Commissioner. The elections described in this section under:
Act Sections
204(e), 243(a), 243(b),
243(a)(b), 411(b)(2)(B)
614(b)
644(d)
646, 651
701(a)
801(a)
802
803(a)
806(e)(2)(C) and the election
described in H.R. Rep. No.
99–841 at II–320, 811(a)
905(a)
1801(a)
1807(a)(7)
1809(e)(2)
1810(l)(4)

Code Sections
617(h)(2)(A)
1059(c)(4)
216(b)(3)
4982(e)(4)(B)
56(f)(3)(B)
448(d)(4)
474
263A(d)(3)
453C(b)(2)(B)(i), 453C(e)(4)

165(l)(1)
168(i) as in effect before October 22, 1986
468B)
48(b)(2)
7701(b)

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§ 301.9100–7T

are revocable only with the consent of
the Commissioner.
(iii) Freely revocable election. The election described in this section under Act
section 311(d)(2) is freely revocable.
(b) Elections with respect to the low-income housing credit. The elections under
Act section 252(a) (Code sections
42(f)(1), 42(g)(1), 42(i)(2), and 42(j)(5))
must be made for the taxable year in
which the project is placed in service
and shall be made in the certification
required to be filed pursuant to section
42(l)(1).
(c) Election to have the rules of section
263A (relating to capitalization and inclusion in inventory costs of certain expenses) not apply to any plant or animal
produced in any farming business conducted by the electing taxpayer—(1) In
general. This paragraph applies to the
election under Act section 803(a) (Code
section 263A(d)(3)) to have the rules of
section 263A (relating to capitalization
and inclusion in inventory costs of certain expenses) not apply to any plant
or animal produced in any farming
business conducted by the electing taxpayer. The election is available to taxpayers engaged in the business of farming, including producers of agricultural
crops, livestock, nursery stock, sod,
trees bearing fruit, nuts or other crops,
and ornamental trees (for purposes of
section 263A, an evergreen tree that is
more than 6 years old at the time it is
severed from the roots shall not be
treated as an ornamental tree). The
election is not available to a corporation, partnership, or tax shelter that is
required to use the accrual method of
accounting under section 447 or section
448(a)(3), or farming syndicates (as defined in section 464(c)), or with respect
to the planting, cultivation, maintenance or development of pistachio
trees. In addition, the election does not
apply with respect to costs incurred for
the planting, cultivation, maintenance
or development of any citrus or almond
grove incurred during the 4-taxableyear period beginning with the taxable
year in which such grove was planted.
If a citrus or almond grove is planted
in more than one taxable year, the portion of the grove planted in one taxable
year is treated as a separate grove for
this purpose.

(2) Time and manner of making the election. Unless consent is obtained from
the Commissioner, the election may
only be made for the taxpayer’s first
taxable year that begins after December 31, 1986, and during which the taxpayer engages in a farming business.
The election shall be made on the
Schedule E, F or other schedule required to be attached to the income tax
return for the first taxable year for
which the election is effective. In the
case of a partnership or S corporation,
the election must be made at the partner or shareholder level.
(3) Election treated as if made if certain
requirements satisfied. A taxpayer eligible to make the election under section
263A(d)(3) shall be treated as having
made the election if such taxpayer reports income and expense, in accordance with the rules under the election
on a timely filed income tax return.
(4) Revocation. Once the election is
made, it is revocable only with the consent of the Commissioner.
(5) Special rules for treatment of expenses. If the election is made, the
plant or animal produced is treated as
section 1245 property and gain is recaptured (treated as ordinary income) in
the amount of deductions which, but
for the election, would have been required to be capitalized with respect to
the plant or animal. If the taxpayer or
a related person makes the election, a
non-accelerated method of depreciation
(as defined in section 168(g)(2)) shall be
applied to all property used predominantly in any farming business of the
taxpayer or related person and placed
in service in any taxable year during
which the election is in effect. For purposes of this election, related party
means: (i) The members of the taxpayer’s family (defined for this purpose
to include the spouse of the taxpayer
and any of his or her children who have
not reached the age of 18 as of the last
day of the taxable year); (ii) any corporation (including an S corporation)
50 percent or more of the value of
which is owned directly or indirectly
(through the application of section 318)
by the taxpayer or members of the taxpayer’s family; (iii) any corporation
that is a member of the same controlled group (within the meaning of
section 1563) as the taxpayer; and (iv)

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any partnership if 50 percent or more of
the value of the interests in such partnership is owned directly or indirectly
(through the application of section 318)
by the taxpayer or members of the taxpayer’s family.
(d) Election with respect to the treatment of net income for the short taxable
year resulting from a required change in
accounting period. This paragraph applies to the election under section
806(e)(2)(C) of the Act. Net income for
the short taxable year resulting from a
required change in accounting period
under the provisions of section 806 of
the Act which is to be included ratably
in the partners’ and S corporation
shareholders’ income for the first four
taxable years (including the short taxable year) beginning after December 31,
1986, or included entirely in income for
the short taxable year at the election
of the partner or shareholder, shall be
taken into account in accordance with
section 702 (with respect to partners)
and section 1366 (with respect to S corporation shareholders).
(e) Election with respect to reducing
partnership or S corporation income for
the short taxable year resulting from a required change in accounting period under
section 806 of the Act by an unamortized
adjustment amount existing as of October
22, 1986—(1) In general. This paragraph
applies to the election described in
H.R. Rep. No. 99–841 at II–320.
(2) Partnerships or S corporations that
make the election to reduce income for the
short taxable year by an unamortized adjustment amount existing as of October 22,
1986. Where a partnership or S corporation elects to reduce its income for the
short taxable year required under the
provisions of section 806 of the Act by
the unamortized adjustment amount
existing as of October 22, 1986, in accordance with paragraph (a) of this section, the income for the short taxable
year (reduced by the unamortized adjustment amount) may then be subject
to
the
election,
under
section
806(e)(2)(C) of the Act, by partners and
S corporation shareholders to include
all the net income for the short taxable
year entirely in income for the partners’ or shareholders’ taxable year
with or within which the short taxable
year ends.

(3) Partnerships or S corporations that
do not make the election to reduce income
for the short taxable year by an
unamortized adjustment amount existing
as of October 22, 1986. Where a partnership or S corporation does not elect to
reduce its income for the short taxable
year created by the provisions of section 806 of the Act by the unamortized
adjustment amount existing as of October 22, 1986, as provided in paragraph
(a) of this section, the short taxable
year required under the provisions of
section 806 of the Act shall be considered one taxable year for purposes of
amortizing the adjustment amount
under the requirements of Rev. Proc.
72–51, 1972–2 C.B. 832, or Rev. Proc. 83–
25, 1983–1 C.B. 689. The net income of
the partnership or S corporation after
reduction by the adjustment amount
for the short taxable year may then be
subject to the election under section
806(e)(2)(C) of the Act by partners or S
corporation shareholders to include all
the net income for the short taxable
year entirely in income for the partners’ or shareholders’ taxable year
with or within which the short taxable
year of the partnership or S corporation ends.
(f) Cross-reference. See § 301.9100–8(d)
for rules on both the election under
section 905(a) of the Act, relating to
section 165(l)(1), and the related election under section 165(l)(5), added by
section 1009(d) of the Technical and
Miscellaneous Revenue Act of 1988, 102
Stat. 3342. An election under section
165(l) is available only to qualified individuals and, in general, applies to reasonably estimated losses on deposits in
an insolvent or bankrupt financial institution.
(g) Elections with respect to certain
bonds. The elections under Act section
1301(b)
(Code
sections
141(b)(9),
142(d)(1), 142(d)(4)(B), 143(k)(9)(D)(iii),
145(d), and 147(b)(4)(A)) must be made
in the bond indenture or a related document (as defined in § 1.103–13(b)(8)) on
or before the date of issue. With respect to obligations issued on or before
March 9, 1987 these elections must be
made on or before March 9, 1987 and
need not be made in the bond indenture
or a related document, but must be
made in writing and retained as part of
the issuer’s books and records.

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(h) Revocation of the election for exemption from social security taxes by certain clergy—(1) In general. This paragraph applies to the election under Act
section 1704(b) to revoke an election
under section 1402(e)(1) of the Code by a
duly ordained, commissioned, or licensed minister of a church, a member
of a religious order (other than a member of a religious order who has taken
a vow of poverty as a member of such
order), or a Christian Science practitioner. Only elections which are effective for the taxable year containing October 22, 1986 may be revoked under
this paragraph.
(2) Time for revoking the election. The
election shall be revoked by filing
Form 2031 before the date on which the
individual becomes entitled to benefits
under sections 202(a) or 223 of the Social Security Act (without regard to
sections 202(j)(1) or 223(b) of such Act),
and not later than the due date of the
Federal income tax return (including
any extension thereof) for the individual’s first taxable year beginning after
October 22, 1986.
(3) Manner of revoking the election. To
revoke an election under section
1402(e)(1), the individual shall file Form
2031 in accordance with the instructions accompanying that form. The
revocation shall be made effective, as
designated by the individual on the
form, either with respect to the individual’s first taxable year ending on or
after October 22, 1986, or with respect
to the individual’s first taxable year
beginning after October 22, 1986.
(4) Special rules for payment of self-employment taxes with respect to certain
taxable years ending on or after October
22, 1986—(i) Elections filed after the due
date of the Federal income tax return. If
Form 2031 is filed on or after the due
date of the Federal income tax return
(including any extension thereof) for
the individual’s first taxable year ending on or after October 22, 1986, and the
election made therein is effective with
respect to that taxable year, Form 2031
shall be accompanied by an amended
Federal income tax return for such taxable year together with payment in full
of an amount equal to the total of the
taxes that would have been imposed by
section 1401 of the Code with respect to
all of the individual’s income derived

in that taxable year which would have
constituted net earnings from self-employment for purposes of chapter 2 of
subtitle A of the Code (notwithstanding paragraph (4) or (5) of section
1402(c)) but for the exemption under
section 1402(e)(1).
(ii) Elections filed before the due date of
the Federal income tax return. If Form
2031 is filed before the due date of the
Federal income tax return (including
any extension thereof) for the individual’s first taxable year ending on or
after October 22, 1986, and the election
is effective with respect to that taxable
year, payment in full of an amount
equal to the total of the taxes that
would have been imposed by section
1401 of the Code with respect to all of
the individual’s income derived in that
taxable year which would have constituted net earnings from self-employment for purposes of chapter 2 of subtitle A of the Code (notwithstanding
paragraph (4) or (5) of section 1402(c))
but for the exemption under section
1402(e)(1) shall be made:
(A) In the case of Forms 2031 that are
filed on or before the date on which the
individual’s Federal income tax return
for such first taxable year is filed, with
the individual’s Federal income tax return for such taxable year; and
(B) In the case of Forms 2031 that are
filed after the date on which the individual’s Federal income tax return for
such first taxable year is filed, with an
amended Federal income tax return for
that taxable year filed on or before the
due date for the individual’s Federal
income tax return (including any extension thereof) for such taxable year.
(iii) Interest on amounts paid after the
due date of the Federal income tax return.
If any amount of tax imposed by section 1401 for an individual’s taxable
year with respect to which an election
under this paragraph (h) is effective is
paid after the due date of the individual’s Federal income tax return (without regard to extensions) for such taxable year, interest will be assessed on
such tax from the due date of such return (without regard to extensions) to
the date on which such tax is paid.
(5) Revocability of the revocation of the
election. Once having filed Form 2031,
the individual may not thereafter file

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an application for an exemption under
section 1402(e)(1).
(6) Effective date of this provision. This
provision shall apply with respect to
remuneration received in the taxable
years for which the individual designates the revocation to be effective,
as described in paragraph (h)(3) of this
section, and with respect to monthly
insurance benefits payable under title
II of the Social Security Act on the
basis of the wages and self-employment
income of any individual for months in
or after the calendar year in which
such individual’s application for revocation is effective (and lump-sum
death payments payable under such
title on the basis of such wages and
self-employment income in the case of
deaths occurring in or after such calendar year).
(i) Revocation of the election for exemption from social security taxes by certain
churches on qualified church-controlled
organizations—(1) In general. This paragraph applies to the election under Act
section 1882 (Code section 3121 (w)(2)) to
revoke an election under section
3121(w) by a church or qualified churchcontrolled organization (as defined in
section 3121(w)(3)).
(2) Time and manner of revoking the
election. The revocation described in
this paragraph (i) shall be made by filing a Form 941 on or before the due
date for filing Form 941 (without regard to extensions) for the first quarter
for which the revocation is to be effective, accompanied by payment in full
of the taxes that would be due for that
quarter had there been no election
under section 3121(w). See paragraph
(i)(4) of this section for the effective
date of revocations made under this
paragraph (i).
(3) Revocability of the revocation of the
election. Once an election under section
3121(w) is revoked under this paragraph
(i), a new election under section 3121(w)
may not be made.
(4) Effective date of this paragraph. A
revocation made under this paragraph
(i) shall be effective for the quarter of
the calendar year covered by the Form
941 on which the revocation is made in
accordance with paragraph (i)(2) of this
section and all subsequent quarters.
However, no revocation shall be effective prior to January 1, 1987 unless

such electing church or church-controlled organization had withheld and
paid over all employment taxes due, as
if such election had never been in effect, during the period from the effective date of the election being revoked
through December 31, 1986.
(j) Additional information required.
Later regulations or revenue procedures issued under provisions of the
Code or Act covered by this section
may require the furnishing of information in addition to that which was furnished with the statement of election
described in this section. In such event,
the later regulations or revenue procedures will provide guidance with respect to the furnishing of such additional information.
[T.D. 8124, 52 FR 3624, Feb. 5, 1987; 52 FR 8405,
Mar. 17, 1987; 52 FR 10085, Mar. 30, 1987, as
amended by T.D. 8180, 53 FR 6147, Mar. 1,
1988; T.D. 8267, 54 FR 38980, Sept. 22, 1989. Redesignated and amended by T.D. 8435, 57 FR
43895, 43896, Sept. 23, 1992; T.D. 8513, 58 FR
68764, 68765, Dec. 29, 1993; T.D. 8530, 59 FR
12844, Mar. 18, 1994; T.D. 8644, 60 FR 66926,
Dec. 27, 1995]

§ 301.9100–8 Time and manner of making certain elections under the
Technical and Miscellaneous Revenue Act of 1988.
(a) Miscellaneous elections—(1) Elections to which this paragraph applies.
This paragraph applies to the elections
set forth below provided under the
Technical and Miscellaneous Revenue
Act of 1988, 102 Stat. 3342 (the Act).
General rules regarding the time for
making the elections are provided in
paragraph (a)(2) of this section. General rules regarding the manner for
making the elections are provided in
paragraph (a)(3) of this section. Special
rules regarding the time and manner
for making certain elections are contained in paragraphs (a) through (i) of
this section. In this paragraph (a)(1), a
cross-reference to a special rule applicable to an election is shown in brackets at the end of the description of the
‘‘Availability of Election.’’ Paragraph
(j) of this section lists certain elections
provided under the Act that are not addressed in this section. Paragraph (k)
of this section provides that additional
information with respect to elections
may be required by future regulations
or revenue procedures.

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