[Code of Federal Regulations]
[Title 26, Volume 11]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1347-1]

[Page 669]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.1347-1  Tax on certain amounts received from the United States.

    (a) In the case of an amount (other than interest) received from the 
United States by an individual under a claim involving acquisition of 
property and remaining unpaid for more than 15 years, the tax (or, in 
the case of taxable years beginning before January 1, 1971, the surtax) 
imposed by section 1 attributable to such amount shall not exceed 33 
percent of the amount (other than interest) so received (30 percent for 
taxable years beginning before January 1, 1971). For the purpose of 
section 1347 and this section, such amount shall not include any amount 
received from the United States which constitutes interest, whether such 
interest was included in the claim or in any judgment thereon or has 
accrued on such judgment. Section 1347 and this section shall only apply 
with respect to amounts received under a claim filed with the United 
States before January 1, 1958.
    (b) To determine the application of section 1347 and this section to 
a particular amount, the taxpayer shall first compute the tax (or, in 
the case of taxable years beginning before January 1, 1971, the surtax) 
imposed by section 1 upon his entire taxable income, including the 
amount specified in paragraph (a) of this section, without regard to the 
limitation on tax provided in section 1347. The proportion of the tax 
(or surtax), so computed, indicated by the ratio which the taxpayer's 
taxable income attributable to the amount specified in paragraph (a) of 
this section, computed as prescribed in paragraph (c) of this section, 
bears to his total taxable income, is the portion of the tax (or surtax) 
attributable to such amount. If this portion of the tax (or surtax) 
exceeds 33 percent (30 percent for taxable years beginning before 
January 1, 1971) of the amount specified in paragraph (a) of this 
section, that portion of the tax (or surtax) shall be reduced to 33 
percent (or 30 percent) of such amount.
    (c) In determining the portion of the taxable income attributable to 
any amount specified in paragraph (a) of this section, the taxpayer 
shall allocate to such amount received and to the gross income derived 
from all other sources, the expenses, losses, and other deductions 
properly attributable thereto, and shall apply any general expenses, 
losses, and other deductions (which cannot be properly apportioned 
otherwise) ratably to the gross income from all sources. The amount 
specified in paragraph (a) of this section, less the deductions properly 
attributable thereto and less its proportion of any general deductions, 
shall be the taxable income attributable to such amount. The taxpayer 
shall submit with his return a statement fully explaining the manner in 
which such expenses, losses, and deductions are allocated or 
apportioned.

[T.D. 6500, 25 FR 12052, Nov. 26, 1960, as amended by T.D. 7117, 36 FR 
9422, May 25, 1971; 36 FR 11434, June 12, 1971]