[Code of Federal Regulations]
[Title 26, Volume 3]
[Revised as of April 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.280C-1]

[Page 625-626]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
COMPUTATION OF TAXABLE INCOME (Continued)--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 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

[[Page 626]]

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]