# § 1561. Limitation on accumulated earnings credit in the case of certain controlled corporations
**(a)** **In general** The component members of a controlled group of corporations on a December 31 shall, for their taxable years which include such December 31, be limited for purposes of this subtitle to one $250,000 ($150,000 if any component member is a corporation described in section 535(c)(2)(B)) amount for purposes of computing the accumulated earnings credit under section 535(c)(2) and (3). Such amount shall be divided equally among the component members of such group on such December 31 unless the Secretary prescribes regulations permitting an unequal allocation of such amount.
**(b)** **Certain short taxable years** If a corporation has a short taxable year which does not include a December 31 and is a component member of a controlled group of corporations with respect to such taxable year, then for purposes of this subtitle, the amount to be used in computing the accumulated earnings credit under section 535(c)(2) and (3) of such corporation for such taxable year shall be the amount specified in subsection (a) with respect to such group, divided by the number of corporations which are component members of such group on the last day of such taxable year. For purposes of the preceding sentence, section 1563(b) shall be applied as if such last day were substituted for December 31.
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**Source Credit**: (Added Pub. L. 88–272, title II, § 235(a), Feb. 26, 1964, 78 Stat. 116; amended Pub. L. 91–172, title IV, § 401(a)(1), Dec. 30, 1969, 83 Stat. 599; Pub. L. 94–12, title III, §§ 303(c)(1), 304(b), Mar. 29, 1975, 89 Stat. 44, 45; Pub. L. 94–164, § 4(d)(1), Dec. 23, 1975, 89 Stat. 974; Pub. L. 94–455, title IX, § 901(c)(1), title XIX, §§ 1901(b)(1)(J)(v), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1607, 1791, 1834; Pub. L. 95–600, title III, § 301(b)(19), title VII, § 703(j)(7), Nov. 6, 1978, 92 Stat. 2823, 2941; Pub. L. 97–34, title II, § 232(b)(3), Aug. 13, 1981, 95 Stat. 250; Pub. L. 97–248, title II, § 259(b), (c), Sept. 3, 1982, 96 Stat. 539; Pub. L. 98–369, div. A, title I, § 66(b), title II, § 211(b)(21), July 18, 1984, 98 Stat. 585, 756; Pub. L. 99–499, title V, § 516(b)(3), Oct. 17, 1986, 100 Stat. 1771; Pub. L. 99–514, title VII, § 701(e)(2), Oct. 22, 1986, 100 Stat. 2342; Pub. L. 100–647, title II, § 2004(*l*), Nov. 10, 1988, 102 Stat. 3606; Pub. L. 104–188, title I, § 1703(f), Aug. 20, 1996, 110 Stat. 1876; Pub. L. 113–295, div. A, title II, § 221(a)(12)(H), Dec. 19, 2014, 128 Stat. 4038; Pub. L. 115–97, title I, §§ 12001(b)(16), 13001(b)(6)(A), Dec. 22, 2017, 131 Stat. 2094, 2098.)
## Editorial Notes
### Amendments
2017—, amended section generally. Prior to amendment, section related to limitations on certain multiple tax benefits in the case of certain controlled corporations.
Subsec. (a). , struck out at end “In applying section 55(d)(3), the alternative minimum taxable income of all component members shall be taken into account and any decrease in the exemption amount shall be allocated to the component members in the same manner as under paragraph (3).”
Subsec. (a)(3). , struck out par. (3) which read as follows: “one $40,000 exemption amount for purposes of computing the amount of the minimum tax.”
2014—Subsec. (a). , substituted “and the amount specified in paragraph (3)” for “, the amount specified in paragraph (3), and the amount specified in paragraph (4)” in concluding provisions.
Subsec. (a)(2) to (4). , inserted “and” at end of par. (2), substituted a period for “, and” at end of par. (3), and struck out par. (4) which read as follows: “one $2,000,000 amount for purposes of computing the tax imposed by section 59A.”
1996—Subsec. (a). in closing provisions substituted “last 2 sentences” for “last sentence” in two places.
1988—Subsec. (a). substituted “section 11(b)(1)” for “section 11(b)” in par. (1) and in penultimate sentence.
1986—Subsec. (a). added par. (3), and in concluding provisions, substituted “amounts specified in paragraph (1) (and the amount specified in paragraph (3))” for “amounts specified in paragraph (1)” and inserted “In applying section 55(d)(3), the alternative minimum taxable income of all component members shall be taken into account and any decrease in the exemption amount shall be allocated to the component members in the same manner as under paragraph (3).”
, in subsec. (a) as amended by above, added par. (4), and in concluding provisions substituted “, the amount specified in paragraph (3), and the amount specified in paragraph (4)” for “(and the amount specified in paragraph (3))”.
1984—Subsec. (a). , inserted “and” at end of par. (1), substituted a period for the comma at end of par. (2), struck out par. (3) which read as follows: “one $25,000 amount for purposes of computing the limitation on the small business deduction of life insurance companies under sections 804(a)(3) and 809(d)(10), and”, struck out par. (4) which read as follows: “one $1,000,000 amount (adjusted as provided in section 809(f)(3) for purposes of computing the limitation under paragraph (1) or (2) of section 809(f).”, and substituted “paragraph (2)” for “paragraphs (2), (3), and (4)” in concluding provisions.
, inserted provision that notwithstanding paragraph (1), in applying last sentence of section 11(b) to such component members, the taxable income of all such component members shall be taken into account and any increase in tax under the last sentence shall be divided among such component members in the same manner as amounts under paragraph (1).
Subsec. (b). , inserted “and” at end of par. (1), struck out par. (3) which read as follows: “the amount to be used in computing the limitation on the small business deduction of life insurance companies under sections 804(a)(3) and 809(d)(10), and”, struck out par. (4) which read as follows: “the amount (adjusted as provided in section 809(f)(3)) to be used in computing the limitation under paragraph (1) or (2) of section 809(f),”, and substituted “or (2)” for “, (2), (3), or (4)” in concluding provisions.
1982—Subsec. (a). , added par. (4) and inserted reference to par. (4) in text following par. (4).
Subsec. (b). , added par. (4) and inserted reference to subsec. (a)(4) in text following par. (4).
1981—Subsec. (a)(2). substituted “$250,000 ($150,000 if any component member is a corporation described in section 535(c)(2)(B))” for “$150,000”.
1978—Subsec. (a). , in par. (1) substituted “amounts in each taxable income bracket in the tax table in section 11(b) which do not aggregate more than the maximum amount in such bracket to which a corporation is not a component member of a controlled group is entitled” for “the surtax exemption under section 11(d)” and in provisions following par. (3) substituted “amounts” for “amount” in two places and struck out provision that in applying section 11(b)(2), the first $25,000 of taxable income and the second $25,000 of taxable income each be allocated among the component members of a controlled group of corporations in the same manner as the surtax exemption is allocated.
Subsec. (b)(1). , substituted “the amount in each taxable income bracket in the tax table in section 11(b)” for “the surtax exemption under section 11(d)”.
Subsec. (b)(3). , substituted “804(a)(3)” for “804(a)(4)”.
1976—Subsec. (a). , §§ 901(c)(1), 1906(b)(13)(A), inserted “In applying section 11(b)(2), the first $25,000 of taxable income and the second $25,000 of taxable income shall each be allocated among the component members of a controlled group of corporations in the same manner as the surtax exemption is allocated” after “unequal allocation of such amounts” and struck out “or his delegate” after “Secretary” in two places.
Subsec. (a)(3). , substituted “804(a)(3)” for “804(a)(4)” after “under sections”.
1975—Subsec. (a)(1). struck out “$25,000” in par. (1) as par. (1) is in effect for taxable years ending after .
, substituted “$50,000” for “$25,000”.
Subsec. (a)(2). , substituted “$150,000” for “$100,000”.
1969— provided, with respect to taxable years beginning after , that a controlled group of corporations is limited to one $25,000 surtax exemption under section 11(d), one $100,000 amount for purposes of computing the accumulated earnings credit under section 535(c)(2) and (3), and one $25,000 amount for purposes of computing the limitation on the small business deduction of life insurance companies under sections 804(a)(4) and 809(d)(10).
## Statutory Notes and Related Subsidiaries
### Effective Date of 2017 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
Amendment by applicable to transfers made after , see , set out as a note under .
### Effective Date of 2014 Amendment
Amendment by effective , subject to a savings provision, see , set out as a note under .
### Effective Date of 1996 Amendment
Amendment by effective as if included in the provision of the Revenue Reconciliation Act of 1993, , §§ 13001–13444, to which such amendment relates, see section 1703() of , set out as a note under .
### Effective Date of 1988 Amendment
Amendment by effective, except as otherwise provided, as if included in the provisions of the Revenue Act of 1987, , to which such amendment relates, see , set out as a note under .
### Effective Date of 1986 Amendment
Amendment by applicable to taxable years beginning after , with certain exceptions and qualifications, see , set out as an Effective Date note under .
Amendment by applicable to taxable years beginning after , see , set out as a note under .
### Effective Date of 1984 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
Amendment by applicable to taxable years beginning after , see , set out as an Effective Date note under .
### Effective and Termination Date of 1982 Amendment
, , , provided that the amendment made by section 259(b), (c) of is applicable to taxable years beginning after , and before .
### Effective Date of 1981 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
### Effective Date of 1978 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
Amendment by effective on , see , set out as a note under .
### Effective Dates of 1976 Amendment
Amendment by applicable to taxable years ending after , see , set out as a note under .
Amendment by effective for taxable years beginning after , see , set out as a note under .
### Effective and Termination Dates of 1975 Amendment
Amendment by applicable to taxable years beginning after , see , set out as a note under .
Amendment by applicable to taxable years ending after , but to cease to apply for taxable years ending after , see , set out as a note under .
Amendment by applicable to taxable years beginning after , see , set out as an Effective Date of 1975 Amendment note under .
### Effective Date of 1969 Amendment
> **“(1)** The amendments made by subsection (a) [amending this section and repealing section 1562 of this title] shall apply with respect to taxable years beginning after December 31, 1974.
>
> **“(2)** The amendments made by subsection (b) [enacting section 1564 and amending sections 11, 535, 804, and 1562] shall apply with respect to taxable years beginning after December 31, 1969.
>
> **“(3)** The amendments made by subsections (c), (d), (e), and (f) [amending sections 46, 48, 179, and 1563] shall apply with respect to taxable years ending on or after December 31, 1970.”
, , , provided that:
### Effective Date
Section applicable with respect to taxable years ending after , see , set out as an Effective Date of 1964 Amendment note under .
### Applicability of Certain Amendments by Pub. L. 99–514 in Relation to Treaty Obligations of United States
For applicability of amendment by notwithstanding any treaty obligation of the United States in effect on , see , set out as a note under .