[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: 26CFR1.281-1] [Page 737] TITLE 26--INTERNAL REVENUE CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY (CONTINUED) PART 1_INCOME TAXES--Table of Contents Sec. 1.281-1 In general. Section 281 provides special rules for the computation of the taxable incomes of a terminal railroad corporation and its shareholders when the terminal railroad corporation, as a result of taking related terminal income into account, reduces a charge which was made or which would be made for related terminal services furnished to a railroad corporation. Section 281 and paragraphs (a) and (b) of Sec. 1.281-2 provide that the ``reduced amount'' described in paragraph (c) of Sec. 1.281-2 is not includable in gross income of the terminal railroad corporation, is not treated as a dividend or other distribution to its railroad shareholders, and is not treated as an amount paid -or incurred by the railroad shareholders to the terminal railroad corporation. Section 281 and paragraph (a)(2) of Sec. 1.281-2 provide that no deduction otherwise allowable to a terminal railroad corporation shall be disallowed as a result of the ``reduced amount'' described in paragraph (c) of Sec. 1.281-2. Section 1.281-3 defines the terms terminal railroad corporation, related terminal income, related terminal services, agreement, and railroad corporation. Section 1.281-4 describes the effective dates and special rules for application of section 281 to taxable years ending before October 23, 1962. [T.D. 7356, 40 FR 23732, June 2, 1975]