Us Code § 115 - Income of States, municipalities, etc.
Full text of Us Code United States Code § 115 — Income of States, municipalities, etc., with citation guidance and answers to common questions.
§ 115. Income of States, municipalities, etc.
Gross income does not include—
(1) income derived from any public utility or the exercise of any essential governmental function and accruing to a State or any political subdivision thereof, or the District of Columbia; or
(2) income accruing to the government of any possession of the United States, or any political subdivision thereof.
(Aug. 16, 1954, ch. 736, 68A Stat. 35; Pub. L. 94–455, title XIX, §1901(a)(19), Oct. 4, 1976, 90 Stat. 1766.)
Editorial Notes
Amendments
1976—Pub. L. 94–455 struck out "(a) General rule" before "Gross income does not include", struck out subsecs. (b) and (c) which related to contracts concerning public utilities made before Sept. 8, 1916, and contracts concerning bridge acquisition made before May 29, 1928, respectively, and in par. (1) of former subsec. (a), struck out "or territory" after "accruing to a State".
Statutory Notes and Related Subsidiaries
Effective Date of 1976 Amendment
Amendment by Pub. L. 94–455 applicable with respect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94–455, set out as a note under section 2 of this title.
Tax Treatment of State Ownership of Railroad Real Estate Investment Trust
Pub. L. 109–59, title XI, §11146, Aug. 10, 2005, 119 Stat. 1966, provided that:
"(a)
"(1) which is a real estate investment trust on the date of the enactment of this Act [Aug. 10, 2005],
"(2) which is a non-operating class III railroad, and
"(3) substantially all of the activities of which consist of the ownership, leasing, and operation by such corporation of facilities, equipment, and other property used by the corporation or other persons for railroad transportation and for economic development purposes for the benefit of the State and its citizens, then, to the extent such activities are of a type which are an essential governmental function within the meaning of section 115 of the Internal Revenue Code of 1986, income derived from such activities by the corporation shall be treated as accruing to the State for purposes of section 115 of such Code.
"(b)
"(1) no gain or loss shall be recognized under section 336 or 337 of such Code, and
"(2) no change in basis of the property of such corporation shall occur, because of any change of status of a corporation to a tax-exempt entity by reason of the application of subsection (a).
"(c)
"(1)
"(A) shall be treated as a State or local bond (within the meaning of section 103(c) of such Code), and
"(B) shall not be treated as a private activity bond (within the meaning of section 103(b)(1) of such Code) solely by reason of the ownership or use of such railroad transportation infrastructure by the corporation.
"(2)
"(d)
"(1)
"(2)
"(3)
"(A) the District of Columbia and any possession of the United States, and
"(B) any authority, agency, or public corporation of a State.
"(e)
"(1)
"(2)
"(A) becomes the owner of all of the voting stock of a corporation described in subsection (a) after December 31, 2003, or
"(B) becomes the owner of all of the outstanding stock of a corporation described in subsection (a) after December 31, 2006."
About This Section
26 U.S.C. § 115 is part of Title 26 of the United States Code. The United States Code is the official codification of federal statutes maintained by the Office of the Law Revision Counsel of the U.S. House of Representatives. Congress amends the Code through new public laws, which are eventually incorporated into the relevant title.
This section may be cited in legal writing as 26 U.S.C. § 115. For the most current official text, including any recent amendments, use the official source links below. Do not rely on this page as the sole authority for legal citation or litigation.
How to Read This Statute
Statutes are organized by title, chapter, section, and subsection. Pay attention to words like "shall," "may," "and," and "or," because they determine whether a requirement is mandatory or permissive and whether multiple conditions must all be met. Historical notes and amendments often appear at the end of a section.
Using This Page
This page is intended for research and educational use. Lawyers, students, journalists, and compliance professionals can use it as a starting point, but should always verify the current text through an official government source before relying on it for legal advice, filings, or compliance decisions.