[Code of Federal Regulations]
[Title 26, Volume 1]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.280C-1]

[Page 658-659]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.280C-1  Disallowance of certain deductions for wage or salary 
expenses.

    If an employer elects to claim the targeted jobs credit under 
section 44B (as amended by the Revenue Act of

[[Page 659]]

1978), or elects to claim the new jobs credit under section 44B (as in 
effect prior to enactment of the Revenue Act of 1978), the employer must 
reduce its deduction for wage or salary expenses paid or incurred in the 
year the credit is earned by the amount allowable as credit (determined 
without regard to the provisions of section 53). In the case in which 
wages and salaries are capitalized the amount subject to depreciation 
must be reduced by an amount equal to the amount of the credit 
(determined without regard to the provisions of section 53) in 
determining the depreciation deduction. In the case of an employer who 
uses the full absorption method of inventory costing under Sec. 1.471-
11, the portion of the basis of the inventory attributable to the wage 
or salary expenses giving rise to the credit and paid or incurred in the 
year the credit is earned must be reduced by the amount of the credit 
allowable (determined without regard to the provisions of section 53). 
If the employer is an organization that is under common control (as 
described in Sec. 1.52-1), it must reduce its deduction for wage or 
salary expenses by the amount of the credit apportioned to it under 
Sec. 1.52-1 (a) or (b). The deduction for wage and salary expenses must 
be reduced in the year the credit is earned, even if the employer is 
unable to use the credit in that year because of the limitations imposed 
by section 53.

(Secs. 44B, 381, and 7805 of the Internal Revenue Code of 1954, 92 Stat. 
2834 (28 U.S.C. 44B); 91 Stat. 148 (26 U.S.C. 381(c)(26)); 68A Stat. 917 
(28 U.S.C. 7805))

[T.D. 7921, 48 FR 52908, Nov. 23, 1983]