26 U.S.C. § 67 : US Code - Section 67: 2-percent floor on miscellaneous itemized deductions

Search 26 U.S.C. § 67 : US Code - Section 67: 2-percent floor on miscellaneous itemized deductions

(a) General rule
In the case of an individual, the miscellaneous itemized
deductions for any taxable year shall be allowed only to the extent
that the aggregate of such deductions exceeds 2 percent of adjusted
gross income.
(b) Miscellaneous itemized deductions
For purposes of this section, the term "miscellaneous itemized
deductions" means the itemized deductions other than -
(1) the deduction under section 163 (relating to interest),
(2) the deduction under section 164 (relating to taxes),
(3) the deduction under section 165(a) for casualty or theft
losses described in paragraph (2) or (3) of section 165(c) or for
losses described in section 165(d),
(4) the deductions under section 170 (relating to charitable,
etc., contributions and gifts) and section 642(c) (relating to
deduction for amounts paid or permanently set aside for a
charitable purpose),
(5) the deduction under section 213 (relating to medical,
dental, etc., expenses),
(6) any deduction allowable for impairment-related work
expenses,
(7) the deduction under section 691(c) (relating to deduction
for estate tax in case of income in respect of the decedent),
(8) any deduction allowable in connection with personal
property used in a short sale,
(9) the deduction under section 1341 (relating to computation
of tax where taxpayer restores substantial amount held under
claim of right),
(10) the deduction under section 72(b)(3) (relating to
deduction where annuity payments cease before investment
recovered),
(11) the deduction under section 171 (relating to deduction for
amortizable bond premium), and
(12) the deduction under section 216 (relating to deductions in
connection with cooperative housing corporations).
(c) Disallowance of indirect deduction through pass-thru entity
(1) In general
The Secretary shall prescribe regulations which prohibit the
indirect deduction through pass-thru entities of amounts which
are not allowable as a deduction if paid or incurred directly by
an individual and which contain such reporting requirements as
may be necessary to carry out the purposes of this subsection.
(2) Treatment of publicly offered regulated investment companies
(A) In general
Paragraph (1) shall not apply with respect to any publicly
offered regulated investment company.
(B) Publicly offered regulated investment companies
For purposes of this subsection -
(i) In general
The term "publicly offered regulated investment company"
means a regulated investment company the shares of which are -

(I) continuously offered pursuant to a public offering
(within the meaning of section 4 of the Securities Act of
1933, as amended (15 U.S.C. 77a to 77aa)),
(II) regularly traded on an established securities
market, or
(III) held by or for no fewer than 500 persons at all
times during the taxable year.
(ii) Secretary may reduce 500 person requirement
The Secretary may by regulation decrease the minimum
shareholder requirement of clause (i)(III) in the case of
regulated investment companies which experience a loss of
shareholders through net redemptions of their shares.
(3) Treatment of certain other entities
Paragraph (1) shall not apply -
(A) with respect to cooperatives and real estate investment
trusts, and
(B) except as provided in regulations, with respect to
estates and trusts.
(d) Impairment-related work expenses
For purposes of this section, the term "impairment-related work
expenses" means expenses -
(1) of a handicapped individual (as defined in section
190(b)(3)) for attendant care services at the individual's place
of employment and other expenses in connection with such place of
employment which are necessary for such individual to be able to
work, and
(2) with respect to which a deduction is allowable under
section 162 (determined without regard to this section).
(e) Determination of adjusted gross income in case of estates and
trusts
For purposes of this section, the adjusted gross income of an
estate or trust shall be computed in the same manner as in the case
of an individual, except that -
(1) the deductions for costs which are paid or incurred in
connection with the administration of the estate or trust and
which would not have been incurred if the property were not held
in such trust or estate, and
(2) the deductions allowable under sections 642(b), 651, and
661,
shall be treated as allowable in arriving at adjusted gross income.
Under regulations, appropriate adjustments shall be made in the
application of part I of subchapter J of this chapter to take into
account the provisions of this section.
(f) Coordination with other limitation
This section shall be applied before the application of the
dollar limitation of the second sentence of section 162(a)
(relating to trade or business expenses).