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On August 20, 1996, the President signed the Small Business
Job Protection Act of 1996, Pub. L. 104-188, 110 Stat. 1755 (the
Act). Section 1704(p) of the Act provides that the expense
disallowance rule of section 162(k) does not apply to any
"deduction for amounts which are properly allocable to
indebtedness and amortized over the term of such indebtedness".
110 Stat. 1887. This provision takes effect as if included in
the amendment made by section 613 of the Tax Reform Act of 1986,
Pub. L. 99-514, 100 Stat. 2251, which applies to amounts paid or
incurred after February 28, 1986.2 The Act's amendment of
2Including the amendment made by sec. 1704(p) of the Small
Business Job Protection Act of 1996, Pub. L. 104-188, 110 Stat.
1755, sec. 162(k) as it applies to this case provides:
(k) Stock redemption expenses.--
(1) In general.--Except as provided in paragraph
(2), no deduction otherwise allowable shall be allowed
under this chapter for any amount paid or incurred by a
corporation in connection with the redemption of its
stock.
(2) Exceptions.--Paragraph (1) shall not apply
to--
(A) Certain specific deductions--Any--
(i) deduction allowable under
section 163 (relating to interest),
(ii) deduction for amounts
which are properly allocable to
indebtedness and amortized over the
term of such indebtedness, or
(iii) deduction for dividends
(continued...)
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Last modified: May 25, 2011