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PUBLIC LAW 92-174-NOV. 27, 1971

[85 STAT.

oated as set forth in subsections (a), (b), and (c) of this section, and for research and development activities under section 812(c) (as it relates to safety in air navigation) of the Federal Aviation Act of 72 Stat. 7 5 2. 49 USC 1353.

19>8 " '

84 Stat. 224.

SEC. 3. Section 14 of the Airport and AirAvay Development Act of 1970 (j^g X^.S.(\ 1714) is amended by addino- at the end thereof the followinjr new subsection: •'(e) PRESERVATION OF FUNDS AND PRIORITY FOR AIRPORT AND AIRWAY PROGRAMS.—

note ^^^ ^^^^

49 u'sc 1^^4*2'

84 225. 224, Stat. 220,

"(1) Xotwithstandino- any other provision of law to the contrary, no amounts may be appropriated from the trust fund to carry out any program or activity under the Federal Aviation "^^^ ^^ 1958, except programs or activities referred to in subsections (c) and (d) of this section, as amended, "'(2) Amounts equal to the minimum amounts authorized for each fiscal year by subsections (a) and (c) of this section shall remain available in the trust fund until appropriated for the purposes described in such subsections. "(3) No amounts transferred to the trust fund by subsection (b) of section 208 of the Airport and Airway Revenue Act of (relating to aviation user taxes) may be appropriated for any fiscal year to carry out administrative expenses of the Department of Transportation or of any unit thereof except to the extent authorized by subsection )," SEC. 4. (a) Paragraphs (8) and( d (11) of section 11 (49 U.S.C. 1711), subsection (b)(3) of section 13 (49 U.S.C. 1713), and subr lection (b)(2) of section 15 (49 U.S.C. 1715) of the Airport and section (b)(2) of section 15 (49 U.S.C. 1715) of the Airport and ^ i r•way Development Act of 1970 are each amended by inserting nediately aiier "\ irgni isianas,' wherever appeal innneuuueiy after "Virgin Islands,*' wherever appearing therein the following: "American Samoa, the Trust Territory of the Pacific Fslands,". (b) Paragraphs (1) and (2) of section 14(a) of such Act (49 U.S.C. 1714) are each amended by inserting after "Guam," the following: •'American Samoa, the Trust Territory of the Pacific Islands,". (c) Subsection (c) of section 17 of such Act (49 U.S.C. 1717) is amended (1) by inserting immediately after "VIRGIN ISLANDS" in the heading of such subsection a comma and the following: "AMERICAN SAMOA, AND THE TRUST TERRITORY OF THE PACIFIC ISLANDS",

Airport operating certificate. 84 Stat. 234.

49 USC 1430 "°*^'

Anfe, p. 481.

and

(2) by inserting immediately after "Virgin Islands" in the text of such subsection a conmia and the following: "American Samoa, or the Tnist Territory of the Pacific Islands". SEC. 5. (a) Section 51(b)(4) of the Airport and Airway I)e\elopment Act of 1970 is amended by striking out "two-year period" and inserting in lieu thereof "three-year period". (b) Subsection (b) of section 612 of the Federal Aviation Act of 1958 (49 U.S.C. 1432(b)), as added by section 51 of the Airport and Airway Development Act of 1970, is amended by striking out all after "transportation" in the third sentence thereof and inserting in lieu thereof a period and the following: "Unless the Administrator determines that it would be contrary to the public interest, such terms, conditions, and limitations shall include but not be limited to terms, conditions, and limitations relating to the operation and maintenance of adequate safety equipment, including firefighting and rescue equipment capable of rapid access to any portion of the airport used for the landing, takeoff, or surface maneuvering of aircraft." SEC. 6. Section 609 of the Federal Aviation Act of 1958 (49 U.S.C. 1429) is amended by inserting "(including airport operating certificate)" immediately after "air navigation facility certificate". Approved November 27, 1971.

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STAT.]

PUBLIC LAW 92-175-DEC. 2, 1971

493

Public Law 92-175 AN ACT To iuiieud the W a t e r Resources Research Act of 1!)<>4, to increase the authorization for w a t e r resources researcli institutes, and for other imrposes.

Be it enacted by the Senate and IIouHe of RepienehtativeH of the United /States of Aniet'ica hi Congress assembled, That section 100(a) of the Water Resources Eesearch Act of 19B4 (78 Stat. 329; 42 U.S.C. 1961a), is amended (A) by striking out $100,000 and inserting in lieu thereof "$250,0-', and (B) by strikino- the period at the end of the subsection and adding '': Pro ruled further. That for fiscal year 1973 not more than $125,000 shall be appropriated for each of the District of Columbia, the Virgin Islands, and Guam, and for fiscal year 1974 not more than $200,{)0 shall be appropriated for each of such areas." SEC. 2. The second sentence of section 100(b) of the "Water Resources Research Act of 1964 (78 Stat. 829; 42 U.S.C. 1961a) is amended by inserting after the word "problems," the following: "and scientific information dissemination activities, including identifying, assembling, and interpreting the ivsults of scientific and engineering research deemed potentially significant for solution of water resource problems, providing means for impro\ed communication regarding such research results, including prototype operations, ascertaining the existing and potential effectiveness of such for aiding in the solution of practical problems, and for training qualified persons in the performance of such scientific information dissemination;'". SEC. 8. Subsection 100(b) of the "Water Resources Research Act of 1964 is further amended by adding at the end thereof the following sentence: "The annual programs submitted by the State institutes to the Secretary for approval shall include assurance satisfactory to the Secretary that such programs were dexeloped in close consultation and collaboration with leading water resources officials within the State to promote research, ti-aining, and other work meeting the needs of the State.". SEC. 4. Section 102 of the Water Resources Research Act of 1964 is amended by adding after the first sentence a new sentence reading as follows: "Funds received by an institute pursuant to such payment may be used for any allowable costs within the meaning of the Federal procurement regulations that establish principles for determining costs applicable to research and development under grants and contracts with educational institutions (41 C F R 1-15,8), including future amendments thereto: Pro ruled. That the direct costs of the programs of each State institute, as distinguished from indirect costs, are not less than the amcnnit of the Federal funds made available to such State institute pursuant to section 100 of this Act.*". SEC. 5. Section 200 of the Water Resources Research Act of 1964 is amended by adding a new subsection (c) as follows: "(c) I n addition to other requirements of this Act, the Secretary's annual report to the President and Congress as required by section 307 of this Act shall specifically identify each contract and grant award approved under subsection (a) of this section in the preceding fiscal year, including the title of each research project, name of performing organization, and the amount of each grant or contract.".

December 2, 1971 [H. R, 1 0 2 0 3;

Water R e s o u r c e s R e s e a r c h Act of 1964, amendments. Appropriation increase.

Scientific information d i s s e m i nation.

Funds, usage, 78 Stat, 330, 42 USC 1961a-2,

Report, contents, 80 Stat, 129, 42 USC 1961b, 42 USC 1961C-7,

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 494 78 Stat, 333. 42 USC 1961C-6. 80 Stat. 130. 42 USC 1961C-7.

Land conveyance. 78 Stat, 329. 42 USC 1961 note, 63 Stat. 377, 40 USC 471 note.

PUBLIC LAW 92-176-DEC. 2, 1971

[85

STAT.

SEC. 0. Section 306 of the W a t e r Resources Keseaich Act of 1964 is amended by c h a n g i n g the period to a comma and a d d i n g " the District of C o l u m b i a, and the t e r r i to r i e s of the V i r g i n Islands and G u a m. ". SEC. 7. Section 307 of the W a t e r Resources Research Act of 1964 is amended by striking out " March 1" and inserting in lieu thereof "October 1" and by striking out "calendar'* and inserting in lieu thereof "fiscal". SEC. 8. The W a t e r Resources Research Act of 1964 is amended by inserting the following new section: " SEC. 308. Excess p e r s o n a l property acquired by the Secretary under the Federal Property and Administrative Services Act of 1949, as amended, for use i n f u r the r a n c e of the purposes of t h i s Act may be conveyed by the Secretary to a c o operating institute, educational institution, or nonprofit organization, w i t h or w i t h o u t consideratioji, under such term s and conditions as the Secretary may prescribe.". Approved December 2, 1971.

P u b l i c Law 92-176 December 2, 1971 [H. R. 8356]

Uniformed services. 37 USC 405a note.

AN ACT To make pennaiient the authority to pay si)-t^cial allowances to (lejjendHiits of inenibers of tlin imifornied services to offset expenses incident to their evacuation. Be It enacted by the Senate and Home of Liepre.scntatict'^ of the United States of America hi Congress asiienihlcd. That section 2 of the Act of May 22, 1965, P u b l i c Law 89-26 ( 79 Stat. 117), as amended (80 Stat. 851), is amended by striking o u t ", and terminates on June 30, 197r\ Approved December 2, 1971.

P u b l i c Law 92-177 December 6, 1971 [H, R, 11489]

D,c, eharitable trusts, 79 Stat, 736, D. e. eode 21101.

AN ACT To facilitate the amendment of the governing instruments of certain trusts and corporations subject to the jurisdiction of the District of in order to conform to the requirements of section 508 and section Internal Revenue Code of 1954, as added by the Tax Reform Act of

charitable Columbia, 664 of the 1969.

Be It enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That title 21 of the District of C o l u m b i a Code is amended by a d d i n g the following new chapter: "Chapter 1 8. — C H A R I T A B L E A N D TRUSTS

SPLIT-INTEREST

"Sec.

"21-1801. Charitable and split-interest trusts. " § 21-1801. C h a r i t a b l e and s p l i t - i n t e r e s t t r u s t s

83 Stat. 496. 26 USC 509,

" (a) Notwithstanding any provision to the c o n t r a r y in the governing i n s t r u m e n t or under any law applicable to the District of Columbia, except as provided in subsection (e) of t h i s s e c t i o n), the g o v e r n i n g i n s t r u m e n t of any t r u s t which is t r e a t e d during a part i c u l a r year as a p r i v a t e f o u n d a t i o n described in section 509 of the I n t e r n a l Revenue Code of 1954: ( i n c l u d i n g any n o n e x e m p t c h a r i t a b l e t r u s t described in section 4947(a)(1) of the Code which is t r e a t e d as a p r i v a t e founda-

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 85 STAT. ]

PUBLIC LAW 92-177-DEC. 6, 1971

tion) and the governing- instrument of any nonexempt split-interest trust described in section 4947(a)(2) of the Code (but only to the extent that section 508(e) of the Code is applicable to such nonexempt split-interest trust) shall be deemed during such particular year to contain all of the following provisions: "(1) The trust shall not engage in any act of self-dealing which is taxable under section 4941 of the Code. "(2) The trust shall make distributions at such time and in such manner as not to subject it to tax under section 4942 of the Code. "(8) The trust shall not retain any excess business holdings which would subject it to tax under section 4948 of the Code. "(4) The trust shall not make any investments which would subject it to tax under section 4944 of the Code. "(5) The trust shall not make any taxable expenditures wdiich would subject it to tax under section 4945 of the Code. With respect to any such trust created prior to January 1, 1970, subsection (a) shall apply to taxable years beginning on or after January 1, 1972. " (b) Notwithstanding any provision to the contrary in the governing instrument, the trustee or trustees of any trust described in subsection (a), other than a trust described in section 4947(a)(2) of the Code, may, without application to any court, amend the governing instrument expressly to include the provisions required by section 508(e) of the Code by executing a written amendment to the trust and delivering a copy thereof, by certified mail, to each named beneficiary, if any. "(c) Xotwithstanding any [jiovision to the contrarv in the governing instrument, the ti'ustee or ti'ustees of any trust described in section 4947(a)(2) of the Code to which subsection (a) is applicable may, after obtaining the written consent of the creator of such trust if then living and competent to give such consent, and without application to any court, amend the governing instrument expressly to include the provisions required by section 508(e) of the Code by executing a written amendment to the trust and delivering a copy thereof by certified mail, to each named beneficiary, if any. " (d) Xotwithstanding any provision to the contrary in the governing instrument, the trustee or trustees of any trust described in section 4947(a)(2) of the Code to which subsection (a) is applicable, with the consent of each beneticiary named in such governing insti'ument, may, without application to any court, amend the gover-ning instrument to conform to the provisions of section 664 of the Code by executing a written amendment to the trust foi- such purpose. Consent shall not be required as to individual named beneficiaries not living at the time of the amendment. In the case of any individual beneficiary not competent to give consent, the consent of a guardian, appointed by a court of competent jurisdiction, shall be treated as consent of the beneficiary. In the case of any amendment to a trust created by will, such amendment may, if provided in the amendment, be deemed to apply as of the date of death of the testator. "(e) The provisions of subsection (a) shall not apply to any trust to the extent that a court of competent jurisdiction shall determine that such application would be contrary to the terms of the governing instrument and that such instrument may not properly be amended to confor-m with subsection (a).

495 83 Stat. 517. 26 USC 4947.

Effective date,

^^ Stat. 562.

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PUBLIC LAW 92-177-DEC. 6, 1971

"Trust."

[85 STAT.

" (f) For purposes of this section, the term 'trust' includes (1) any trust created by will of a resident of the District of Columbia admitted to probate in the District of Columbia, (2) any trust created by a resident of the District of Columbia and executed in the District of Columbia, (l^) any trust of which the trustee or a co-trustee is a bank or trust company doing- business in the District of Columbia, (4) any trust of which a niajority of the trustees are resident in the District of Columbia, (5) any trust of real property located in the District of Columbia, and ((>) any trust the governino" instrument of which provides that it is ooverned by the laws of the District of Columbia. "Code." "(g") For the purposes of this section, the term 'Code' means the 68A Stat. 3. Internal Revenue (\)de of 15)54." 26 USC 1 etseq. ^^^^^.^ ^^^^ ]S'otwithstaudiuo- any provision to the contrary in the governing instrument or under any law applicable to the District of Columbia (except as provided in subsection (c) of this section), the governing in«trument of any corporation organized vuider the laws of the District of Columbia, or under any Act of Congress applicable to the District of Columbia, which is treated during a particular year as a private foundation described in section 509 of the Internal Revenue 83 Stat. 496. Code of 1954 shall be deemed during such particular year to contain the following provisions: (1) The corporation shall not engage in any act of self-dealing which is taxable under secticm 4941 of the Code. (•2) The corporation shall make distributions at such time and in such manner as not to subject it to tax under section 4942 of the Code. (o) The corporation shall Jiot retain any excess bu^siness holdings which would subject it to tax under section 4943 of the Code. (4) The corporation shall not make any investments which would subject it to tax under section 4944 of the Code. (5) The corporation shall not niake any taxable expenditures which would subject it to tax under section 4945 of the Code. Effective date. \Yith respect to any such corporation organized prior to January 1, 1970, subsection (a) shall apply to taxable years beginning on or after January 1, 1972. ' (b) The governing instrument of any corporation described in subsection (a) may be amended, in the manner provided by law for amendment of such governing instrument, expressly to include the provisions required by section 508(e) of the Code. (c) The provisions of subsection (a) shall not apply to any corporati<m to the extent that its go\erning instruinent is amended in the manner provided by law for amendment of such governing instrument, expressly to exclude the application of subsection (a). "Corporation." ((^^ YQ^ purposes of this section, the term "corporation" includes an association (other than an association treated as a trust described in Ante, p.^494. section 1801 of title 21 of the District of Columbia Code). "Code." ^g^ Yov the purposes of this section, the term "Code" means the [nternal Revenue Code of 1954. Effective date. j^j^^. 3. Exccpt as othcrwise provided in this Act, or in the amendments made by this Act, the provisions of this Act shall first apply with respect to taxable years of trusts and corporations beginning on or after January 1, 1970. SEC. 4. The table of chapters for title 21 of the District of Columbia Code is amended by inserting after the item relating to chapter 17 the following: is. C'haritablo ami split-interest trusts."

Approved December 6, 1971.

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 85 STAT. ]

PUBLIC LAW 92-178-DEC. 10, 1971

497

Public Law 92-178 AN ACT

December 10, 1971

To provide a job development investment credit, to reduce individual income taxes, to reduce certain excise taxes, and for other purposes.

Be it emxicted by the Senate and House of Representatives United States of America in Congress assembled,

of the

SECTION 1. SHORT TITLE, ETC.

(a) SHORT TITLE.—This Act may be cited as the "Revenue Act of

1971". (b)

TABLE OF CONTENTS.—

TITLE I—JOB DEVELOPMENT INVESTMENT C R E D I T; DEPRECIATION REVISION Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec.

101. Restoration of investment credit. 102. Determination of qualified investment. 103. Limitation of credit to domestic products. 104. Definition of section 38 property. 105. Regulated companies. 1(J6. Investment credit carryovers and carrybacks. 107. T r e a t m e n t of casualties and certain replacements. 108. Availability of credit to certain lessors. 109. Reasonable allowance for depreciation; repair allowance. TITLE II — C H A N G E S I N P E R S O N A L E X E M P T I O N S, MINIMUM STANDARD DEDUCTION, W I T H H O L D I N G, ETC.

Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec.

201. Increase in personal exemption. 202. Increase in percentage standard deduction. 203. Low income allowance. 204. Filing requirements. 205. Certain fiscal year taxpayers. 206. Election of standard deduction. 207. Waiver of penalty for underpayment of 1971 estimated income tax. 208. Adjustment of withholding. 209. Changes in requirements of declaration of estimated income tax by individuals. Sec. 210. Expenses to enable individuals to be gainfully employed. Sec. 211. Levies on salaries and wages.

TITLE III—STRUCTURAL IMPROVEMENTS Sec. 301. Unearned income of tax p a y e r s who a r e dependents of other taxpayers. Sec. 302. Limitation on carryovers of unused credits and capital losses. Sec. 303. Amortization of certain expenditures for on-the-job training and for child care centers. Sec. 304. Excess investment interest. Sec. 305. F a r m losses of electing small business corporations. Sec. 306. Capital gain distributions of certain trusts. Sec. 307. Application of Western Hemisphere Trade Corporation provision under the Virgin Islands tax laws. Sec. 308. Capital gains and stock options. Sec. 309. Certain t r e a t y cases. Sec. 310. Bribes, kickbacks, medical referral payments, etc. Sec. 311. Activities not engaged in for profit. Sec. 312. Certain distributions to foreign corporations. Sec. 313. Original issue discount. Sec. 314. Income from certain aircraft and vessels. Sec. 315. I n d u s t r i a l development bonds. Sec. 316. Disclosure or use of information by preparers of income tax returns. TITLE IV—EXCISE TAX Sec. 401. Repeal or suspension of manufacturers excise tax on passenger automobiles, light-duty trucks, etc. Sec. 402. Credit against tax on coin-operated gaming devices.

[H, R, 10947]

Revenue Act of 1971.

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 498

PUBLIC LAW 9 2 - 1 7 8 - D E C. 10, 1971

[85 STAT.

TITLE V—DOMESTIC INTERNATIONAL SALES CORPORATIONS Sec. Sec. Sec. Sec. Sec. Sec. Sec.

501. Domestic international sales corporations. 502. Deductions, credits, etc. 503. Source of Income. 504. Procedure and administration. 505. Export trade corporations. 506. Submission of annual reports to Congress. 507. General effective date of title.

TITLE VI—JOB DEVELOPMENT RELATED TO WORK INCENTIVE PROGRAM Sec. 601. Tax credit for certain expenses incurred in work incentive program. TITLE VII—TAX INCENTIVES FOR CONTRIBUTIONS TO CANDIDATES FOR PUBLIC OFFICE Sec. 701. Allowance of credit. Sec. 702. Deduction in lieu of credit. Sec. 703. Effective date. TITLE VIII—FINANCING OF PRESIDENTIAL ELECTION CAMPAIGNS Sec. 801. Presidential Election Campaign Fund Act. Sec. 802. Miscellaneous amendments. (c) AMENDMENT

68A Stat. 3. 26 USC 1 etseq.

O F 1954 C O D E. — E x c e p t

as other w i s e

expressly

provided, whenever i n t h i s Act a n amendment is expressed i n term s of a n amendment to a section o r other provision, the reference is to a section o r other provision of the I n t e r n a l Revenue C o d e of 1954.

TITLE I—JOB DEVELOPMENT INVESTMENT CREDIT; DEPRECIATION REVISION 76 Stat, 963. 26 USC 46.

83 Stat. 660.

SEC. 101. RESTORATION OF INVESTMENT CREDIT. (a) Subpart B of part IV of subchapter A of chapter 1 ( r e l a t i n g to rules for c o m p u t i n g c r e d i t for investment i n certain depreciable property) is amended by a d d i n g a t the e n d thereof the following n e w section: "SEC. 50. RESTORATION OF CREDIT. "(a)

GENERAL RULE.—Section 49(a)

(relating to termination

of

c r e d i t) shall not a p p l y to property — " (1) the construction, reconstruction, or erection of which — " (A) is completed by the tax p a y e r after August 15, 1971, or " (B) is b e g u n by the tax p a y e r after March 31, 1971, o r " (2) which is acquired by the tax p a y e r — " (A) after August 15, 1971, o r " (B) after March 31, 1971, and before August 16, 1971, pursuant to a n o r d e r which the tax p a y e r establishes w a s placed after March 31, 1971. "(b)

T R A N S I T I O N A L RULE. — I n a p p l y i n g section 4 6 (c)(1)(A)

in

the case of property described i n subsection (a)(1)(A) the construction, r e construction, o r erection of which is b e g u n before April 1, 1971, the r e shall be t a k e n i n to account only that p o r t i o n of the basis which is p r o p e r l y a t t r i b u t a b l e to construction, reconstruction, o r erection after August 15, 1971. T h i s subsection shall not a p p l y to p r e - termination property ( w i t h i n the m e a n i n g of section 4 9 (b)). " (b)

CONFORMING AMENDMENTS. —

(1) Section 4 9 (a) ( r e l a t i n g to termination of c r e d i t) is amended b ^ a d d i n g a t the e n d thereof the following n e w sentence: " T h i s subsection shall not a p p l y to property described i n section 5 0. "

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 85 STAT. ]

PUBLIC LAW 92-178-DEC. 10, 1971

499

(2) Section 49(b) (defining pre-termination property) is 26 USC 49.°' amended by striking out "For purposes of this section" and inserting in lieu thereof'^'For purposes of this subpart". (3) Section 49(d) (relating to property placed in service after Repeal. 1975) is hereby repealed. (4) The heading for section 49 is amended to read as follows: "SEC. 49. TERMINATION FOR PERIOD BEGINNING APRIL 19, 1969, AND ENDING DURING 1971." (5) The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 49 and inserting in lieu thereof the following: "Sec. 49, Termination for period beginning April 19, 1969, and ending during 1971. ''Sec 50. Restoration of credit." (c) ACCOUNTING FOR INVESTMENT CREDIT I N CERTAIN FINANCIAL REPORTS AND REPORTS TO FEDERAL AGENCIES.—

(1) IN GENERAL.—It was the intent of the Congress in enacting, in the Revenue Act of 1962, the investment credit allowed by section 38 of the Internal Revenue Code of 1954, and it is the intent of the Congress in restoring that credit in this Act, to provide an incentive for modernization and growth of private industry. Accordingly, notwithstanding any other provision of law, on and after the date of the enactment of this Act— (A) no taxpayer shall be required to use, for purposes of financial reports subject to the jurisdiction of any Federal agency or reports made to any Federal agency, any particular method of accounting for the credit allowed by such section 38, (B) a taxpayer shall disclose, in any such report, the method of accounting for such credit used by him for purposes of such report, and (C) a taxpayer shall use the same method of accounting for such credit in all such reports made by him, unless the Secretary of the Treasury or his delegate consents to a change to another method. (2) EXCEPTIONS.—Paragraph (1) shall not apply to taxpayers who are subject to the provisions of section 46(e) of the Internal Revenue Code of 1954 (as added by section 105(c) of this Act) or to section 203(e) of the Revenue Act of 1964 (as modified by section 105(e) of this Act).

76 Stat. 962.

^o«'» p* 503. ^°st, p. soe.

SEC. 102. DETERMINATION OF QUALIFIED INVESTMENT. (a) CHANGE I N USEP^UL L I F E BRACKETS.—

(1) Section 46(c)(2) (relating to applicable percentage for purposes of determining qualified investment) is amended— (A) by striking out "4 years" and inserting in lieu thereof "3 years", (B) by striking out "6 years" each place it appears and inserting in lieu thereof "5 years", and (C) by striking out "8 years" each place it appears and inserting in lieu thereof "7 years". (2) The second sentence of section 48(a)(1) (defining section 38 property) is amended by striking out "4 years" and inserting in lieu thereof "3 years".

76 Stat. 96 3.

(b) USEFUL L I F E FOR INVESTMENT CREDIT PURPOSES.—The second

sentence of section 46(c)(2) is amended to read as follows: "For purposes of this subpart, the useful life of any property shall be the useful life used in computing the allowance for depreciation under section 167 for the taxable year in which the property is placed in service." 75-432 O - 72 - 34

^°«'' P* SOS,

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 SOO 84 Stat. 2060. 26 USC 47.

P U B L I C LAW 9 2 - 1 7 8 - D E C. 10, 1971 (c) TECHNICAL AMENDMENT.—Section 47(a)(6)(A)

[85 STAT. (relating to

aircraft used outside the United States after April 18, 1969) is amended by striking out "4 years" and inserting in lieu thereof "31/^ years". (d) EFFECTIVE DATES.—

Ante, p. 498. 76 p. 507. Post, Stat.^966;

Ante, p. 499.

Post^^V'soiJ'

(1) The amendments made by subsections (a) and (b) shall apply to property described in section 50 of the Internal Revenue Code of 1954. (2) I n redetermining qualified investment for purposes of section 47(a) of the Internal Revenue Code of 1954 in the case of any property which ceases to be section 38 property with respect to the taxpayer after August 16, 1971, or which becomes public utility property after such date, section 46(c)(2) of such Code shall be applied as amended by subsection (a). (3) The amendment made by subsection (c) shall apply to leases executed after April 18, 1969. SEC. 103. LIMITATION OF CREDIT TO DOMESTIC PRODUCTS. Section 48(a) (relating to definition of section 38 property) is amended by adding after paragraph (6) the following new paragraph: " (7) PROPERTY COMPLETED ABROAD OR PREDOMINANTLY o r FOREIGN ORIGIN.—

"United

" (A) IN GENERAL.—Property (other than pre-termination property) shall not be treated as section 38 property if— "(i) such property was completed outside the United States, or "(ii) less than 50 percent of the basis of such property is attributable to value added within the United States. Por purposes of this subparagraph, the term 'United States' includes the Commonwealth of Puerto Rico and the possessions of the United States. "(B)

Post, p. 925.

PERIOD OF APPLICATION OF PARAGRAPH.—Except as

provided in subparagraph (D), subparagraph (A) shall apply only with respect to property described in section 50— " (i) the construction, reconstruction, or erection of which by the taxpayer is begun after August 15, 1971, and on or before the date of termination of Proclamation 4074, or "(ii) which is acquired pursuant to an order placed on or before the date of termination of Proclamation 4074, unless acquired pursuant to an order which the taxpayer establishes was placed before August 16, 1971. " (C) PRESIDENT MAY EXEMPT ARTICLES.—If the President

of the United States shall at any time determine that the application of subparagraph (A) to any article or class of articles is not in the public interest, he may by Executive order specify that subparagraph (A) shall not apply to such article or class of articles. Subparagraph (A) shall not apply to an article or class of articles for the period specified in such Executive order. Any period specified under the preceding sentence shall not apply to property ordered before (or to property the construction, reconstruction, or erection of which began before) the date of the Executive order specifying such period, except that, if the President determines it to be in the public interest, such period shall apply to property ordered (or property the construction, reconstruction, or erection of which began) after a date (before the date of the Executive order) specified in the Executive order.

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 85 STAT. ]

PUBLIC LAW 92-178-DEC. 10, 1971 "(D)

COUNTRIES

MAINTAINING

TRADE

501 RESTRICTIONS OR

ENGAGING IN DISCRIMINATORY ACTS.—If, Oil OF after the date of the termination of Proclamation 4074, the President determines that a foreign country— " (i) maintains nontariff trade restrictions, including variable import fees, which substantially burden United States commerce in a manner inconsistent with provisions of trade agreements, or "(ii) engages in discriminatory or other acts (including tolerance of international cartels) or policies unjustifiably restricting United States commerce, he may provide by Executive order for the application of subparagraph (A) to any article or class of articles manufactured or produced in such foreign country for such period as may be provided by Executive order." SEC. 104. DEFINITION OF SECTION 38 PROPERTY.

Post, p. 92s,,

(a) STORAGE FACILITIES.—

(1) IN GENERAL.—Section 4 8 (a)(1)(B) (relating to other tangible property constituting section 38 property) is amended by striking out clause (ii) and inserting in lieu thereof the follow" (ii) constitutes a research facility used in connection with any of the activities referred to in clause (i), or "(iii) constitutes a facility used in connection with any of the activities referred to in clause (i) for the bulk storage of fungible commodities (including commodities in a liquid or gaseous state), or". (2) CONFORMING AMENDMENT.—Section 1245(a)(3)(B) (relating to other property constituting section 1245 property) is amended by striking out "or" at the end of clause (i), and by striking out clause (ii) and inserting in lieu thereof the follow-

76 Stat. 967. ^^ "^^ " *

76 Stat. 1032.

"(ii) constituted a research facility used in connection with any of the activities referred to in clause (i), or " (iii) constituted a facility used in connection with any of the activities referred to in clause (i) for the bulk storage of fungible commodities (including commodities in a liquid or gaseous state),". (b) COIN-OPERATED MACHINES I N APARTMENT BUILDINGS.—Section

48(a)(3) (relating to property used for lodging) is amended— (1) by striking out "and" at the end of subparagraph (A), (2) by striking out the period at the end of subparagraph (B) and inserting in lieu thereof ", and", and (3) by adding after subparagraph (B) the following new subparagraph: " (C) coin-operated vending machines and coin-operated washing machines and dryers." (c) CERTAIN SERVICES.—

PROPERTY USED I N FURNISHING

76 stat, 968.

COMMUNICATION

(1) Section 48(a)(5) (relating to property used by governmental units) is amended by inserting after "international organization" the following: "(other than the International Telecommunications Satellite Consortium or any successor organization)". (2) Section 4 8 (a)(2)(B) (relating to exceptions from rule for property used outside the United States) is amended by striking out "and" at the end of clause (vi), by striking out the period at the end of clause (vii) and inserting in lieu thereof a semicolon, and by adding at the end thereof the following new clause:

so Stat. 1575.

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Page:United States Statutes at Large Volume 85.djvu/532

 502

76 Stat. 419. Ante, p. 501,

Post, p. 503.

PUBLIC LAW 92-178-DEC. 10, 1971

[85 STAT.

"(viii) any communications satellite (as defined in section 103(3) of the Communications Satellite Act of 1962, 47 U.S.C. sec. 702(3)), or any interest therein, of a United States person;". (3) Section 48(a)(2)(B) (relating to exceptions from rule for property used outside the United States) is amended by inserting after clause (viii) (as added by paragraph (2)) the following new clause: "(ix) any cable, or any interest therein, of a domestic corporation engaged in furnishing telephone service to which section 46(c)(3)(B) (iii) applies (or of a wholly owned domestic subsidiary of such a corporation), if such cable is part of a submarine cable system which constitutes part of a communication link exclusively between the United States and one or more foreign countries; and", (d) CERTAIN PROPERTY USED To EXPLORE FOR, DEVELOP, KEMOVE, AND TRANSPORT RESOURCES FROM OCEAN WATERS AND SUBMARINE

26 USC 4^8.^'

84 Stat. 2060.

68A Stat. 303.

DEPOSITS.—Section 4 8 (a)(2)(B) (relating to exceptions from rule for property used outside the United States) is amended by inserting after clause (ix) (as added by subsection (c)(3)) the following new clause: " (x) any property (other than a vessel or an aircraft) of a United States person which is used in international or territorial waters for the purpose of exploring for, developing, removing, or transporting resources from ocean waters or deposits under such waters." (^) I^ivESTOCK.—Section 48(a)(6) (relating to livestock) is amended to read as follows: "(6) LIVESTOCK.—Livestock (other than horses) acquired by the taxpayer shall be treated as section 38 property, except that if substantially identical livestock is sold or otherwise disposed of by the taxpayer during the one-year period beginning 6 months bcforc the date of such acquisition and if section 47(a) (relating to certain dispositions, etc., of section 38 property) does not apply to such sale or other disposition, then, unless such sale or other disposition constitutes an involuntary conversion (within the meaning of section 1033), the cost of the livestock acquired shall, for purposes of this subpart, be reduced by an amount equal to the amount realized on such sale or other disposition. Horses shall not be treated as section 38 property." (f)

>.f,V!^T\VI.' Post,p, 521.

AMORTIZED PROPERTY.—

(1) IN GENERAL.—Section 48(a) (relating to definition of section 38 property) is amended by adding after paragraph (7) (as added by section 103 of this Act) the following new paragraph: "'(8) AMORTIZED PROPERTY.—Any property with respect to which an election under section 167(k), 169, 184, 187, or 188 applies shall not be treated as section 38 property. In the case of any property to which section 169 applies, the preceding sentence shall apply only to so much of the adjusted basis of the property as (after the application of section 169(f)) constitutes the amortizable basis for purposes of section 169." (2) CONFORMING AMENDMENT.—Section 169 (relating to amortization of pollution control facilities) is amended by striking out subsection (h). (g) EAILROAD TRACK.—Section 48(a) (relating to definition of section 38 property) is amended by inserting after paragraph (8) (as added by subsection (f)) the following new paragraph: "(9) RAILROAD TRACK.—In the case of a railroad (including a railroad switching or terminal company) which uses the retirement-replacement method of accounting for depreciation of its

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 85 STAT. ]

PUBLIC LAW 92-178-DEC. 10, 1971

503

railroad track, the term 'section 38 property' includes replace- "section 38 ment track material, if— proper y. " (A) the replacement is made pursuant to a scheduled program for replacement, " (B) the replacement is made pursuant to observations by maintenance-of-way personnel of specific track material needing replacement, " (C) the replacement is made pursuant to the detection by a rail-test car of specific track material needing replacement, or " (D) the replacement is made as a result of a casualty. Replacements made as a result of a casualty shall be section 38 property only to the extent that, in the case of each casualty, the qualified investment with respect to the replacement track material "Track mateexceeds $5,0. For purposes of this paragraph, the term 'track rial." material' includes ties, rail, other track material, and ballast." (h) EFFECTIVE DATES.—The amendments made by this section (other than by subsections (c)(1), (c)(2), and (g)) shall apply to property described in section 50 of the Internal Revenue Code of 1954. The amendments made by subsections (c)(1), (c)(2), and (g) ^"'®' P* ^SS. shall apply to taxable years ending after December 31, 1961. SEC. 105. REGULATED COMPANIES. (a) INCREASE I N QUALIFIED INVESTMENT FOR PUBLIC UTILITY PROP-

ERTY.—Section 46(c)(3)(A) (relating to qualified investment in case of public utility property) is amended by striking out " 3 / 7 " and inserting in lieu thereof "4/7". (b)

DEFINITION

OF PUBLIC

UTILITY

PROPERTY,

^^ ^^^^ 963.

ETC.—Section

46(c)(3) (relating to public utility property) is amended— (1) by inserting "or" at the end of clause (ii) of subparagraph (B), and by striking out clauses (iii) and (iv) of such subparagraph and inserting in lieu thereof the following: "(iii) telephone service, telegraph service by means of domestic telegraph operations (as defined in section 222(a) (5) of the Communications Act of 1934, as amended; 47 U.S.C., sec. 2 2 2 (a)(5)), or other communication services s? Stat. s. (other than international telegraph service),"; (2) by adding at the end of subparagraph (B) the following new sentence: "Such term also means communication property of the type used by persons engaged in providing telephone or microwave communication services to which clause (iii) applies, if such supra. property is used predominantly for communication purposes."; and (3) by adding after subparagraph (B) the following new subparagraph: " (C) I n the case of any interest in a submarine cable circuit used to furnish telegraph service between the United States and a point outside the United States of a taxpayer engaged in furnishing international telegraph service (if the rates for such furnishing have been established or approved by a governmental unit, agency, instrumentality, commission, or similar body described in subparagraph (B)), the qualified investment shall not exceed the qualified investment attributable to so much of the interest of the taxpayer in the circuit as does not exceed 50 percent of all interests in the circuit." (c) CREDIT NOT AVAILABLE I N CERTAIN CASES.—Section 46 (relat- ^^ ^*^** ^^^* ing to amount of credit) is amended by adding at the end thereof the following new subsection:

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Page:United States Statutes at Large Volume 85.djvu/534

 504

PUBLIC LAW 92-178-DEC. 10, 1971 "(e)

26 us^c 3^8.^' Ante, p. 498.

LIMITATION I N CASE OF CERTAIN EEGULATED COMPANIES.— "(1) GENERAL RUI^E.—Except as otherwise provided in this

subsection, no credit shall be allowed by section 38 with respect to any property described in section 50 which is public utility property (as defined in paragraph (5)) of the taxpayer— " (A) COST OF SERVICE REDUCTION.—If the taxpayer's cost of service for ratemaking purposes is reduced by reason of any portion of the credit allowable by section 38 (determined without regard to this subsection); or " (B) RATE BASE REDUCTION.—If the base to which the taxpayer's rate of return for ratemaking purposes is applied is reduced by reason of any portion of the credit allowable by section 38 (determined without regard to this subsection). Subparagraph (B) shall not apply if the reduction in the rate base is restored not less rapidly than ratably. If the taxpayer makes an election under this sentence within 90 days after the date of the enactment of this paragraph in the manner prescribed by the Secretary or his delegate, the immediately preceding sentence shall not apply to property described in paragraph (5)(B) if any agency or instrumentality of the United States having jurisdiction for ratemaking purppses with respect to such taxpayer's trade or business referred to in paragraph (5)(B) determines that the natural domestic supply of the product furnished by the taxpayer in the course of such trade or business is insufficient to meet the present and future requirements of the domestic economy. "(2) SPECIAL RULE FOR RATABLE FLOW-THROUGH.—If the taxpayer makes an election under this paragraph within 90 days after the date of the enactment of this paragraph in the manner prescribed by the Secretary or his delegate, paragraph (1) shall not apply, but no credit shall be allowed by section 38 with respect to any property described in section 50 which is public utility property (as defined in paragraph (5)) of the taxpayer— " (A) COST OF SERVICE REDUCTION.—If the taxpayer's cost of service for ratemaking purposes or in its regulated books of account is reduced hj more than a ratable portion of the credit allowable by section 38 (determined without regard to this subsection), or " (B) RATE BASE REDUCTION.—If the base to which the taxpayer's rate of return for ratemaking purposes is applied is reduced by reason of any portion of the credit allowable by section 38 (determined without regard to this subsection). "(3)

83 Stat. 625.

[85 STAT.

SPECIAL RULE FOR IMMEDIATE FLOW-THROUGH I N CERTAIN

CASES.—lu the casc of property to which section 167(1)(2)(C) applies, if the taxpayer makes an election under this paragraph within 90 days after the date of the enactment of this paragraph in the manner prescribed by the Secretary or his delegate, paragraphs (1) and (2) shall not apply to such property. "(4)

LIMITATION.—

" (A) IN GENERAL.—The requirements of paragraphs (1) and (2) regarding cost of service and rate base adjustments shall not be applied to public utility property of the taxpayer to disallow the credit with respect to such property before the first final determination which is inconsistent with paragraph (1) or (2) (as the case may be) is put into effect with respect to public utility property (to which this subsection applies) of the taxpayer. Thereupon, paragraph (1) or (2) shall apply to disallow the credit with respect to public utility property (to which this subsection applies) placed in service by the taxpayer—

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Page:United States Statutes at Large Volume 85.djvu/535

 85 STAT. ]

PUBLIC LAW 92-178-DEC. 10, 1971

505

" (i) before the date that the jfirst final determination, or a subsequent determination, which is inconsistent with paragraph (1) or (2) (as the case may be) is put into effect, and "(ii) on or after the date that a determination referred to in clause (i) is put into effect and before the date that a subsequent determination thereafter which is consistent with paragraph (1) or (2) (as the case may be) is put into effect. " (B) DETERMINXVTIONS.—For purposes of this paragraph, a determination is a determination made with respect to public utility property (to which this subsection applies) by a governmental unit, agency, instrumentality, or commission or similar body described in subsection (c)(3)(B) which Ante, P, 503. determines the effect of the credit allowed by section 38 26u'sc3^8^' (determined without regard to this subsection)— " (i) on the taxpayer's cost of service or rate base for ratemaking purposes, or "(ii) in the case of a taxpayer which made an election under paragraph (2), on the taxpayer's cost of service for ratemaking purposes or in its regulated books of account or rate base for ratemaking purposes. " (C) SPECIAL RULES.—For purposes of this paragraph— "(i) a determination is final if all rights to appeal or to request a review, a rehearing, or a redetermination, have been exhausted or have lapsed, "(ii) the first final determination is the first final determination made after the date of the enactment of this subsection, and "(iii) a subsequent determination is a determination subsequent to a final determination. "(5) PUBLIC UTILITY PROPERTY.—For purposes of this subsection, the term 'public utility property' means— " (A) property which is public utility property within the meaning of subsection (c)(3)(B), and " (B) property used predominantly in the trade or business of the furnishing or sale of (i) steam through a local distribution system or (ii) the transportation of gas or steam by pipeline, if the rates for such furnishing or sale are established or approved by a governmental unit, agency, instrumentality, or commission described in subsection (c)(3)(B). "(6) RATABLE PORTION.—For purposes of determining ratable restorations to base under paragraph (1) and for purposes of determining ratable portions under paragraph (2)(A), the Ante, P. 504. period of time used in computing depreciation expense for purposes of reflecting operating results in the taxpayer's regulated books of account shall be used. "(7) REORGANIZATIONS, ASSETS ACQUISITIONS, ETC.—If by reason of a corporate reorganization, by reason of any other acquisition of the assets of one taxpayer by another taxpayer, by reason of the fact that any trade or business of the taxpayer is subject to ratemaking by more than one body, or by reason of other circumstances, the application of any provisions of this subsection to any public utility property does not carry out the purposes of this subsection, the Secretary or his delegate shall provide by regulations for the application of such provisions in a manner consistent with the purposes of this subsection." (d) EFFECTIVE DATE.—The amendments made by this section shall apply to property described in section 50 of the Internal Revenue Code of 1954.

Ante,

P. 498.

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Page:United States Statutes at Large Volume 85.djvu/536

 506 II f/cA',\^1„..

26 USC 38 note.

Ante, p. 503.

PUBLIC LAW 92-178-DEC. 10, 1971

[85 STAT.

(e) APPLICATION OF SECTION 203(e) OF REVENUE ACT OF 1964.— Section 203(e) of the Revenue Act of 1964 shall not apply to public utility property to which section 46(e) of the Internal Revenue Code of 1954 (as added by subsection (c)) applies.

SEC. 1 6 INVESTMENT CREDIT CARRYOVERS AND CARRYBACKS. 0. i^starVa^i"' 3 Stat! 666^

^^) PRIORITY OF APPLICATION.—Section 46(b) (relating to carrybaclv and carryover of unused credits) is amended by inserting after paragraph (2) the following new paragraph: "(3)

80 Stat. 1514.

SPECIAL RULES FOR CARRYOVERS FROM PRE-I9 7 I

UNUSED

CREDIT YEARS.—The extent to which an investment credit carryover from an unused credit year ending before January 1, 1971, may be added under paragraph (1) for a taxable year beginning after December 31, 1970, shall be determined without regard to paragraph (2)(A). In determining the excess under paragraph (1) for any taxable year beginning after December 31, 1970, the limitation provided by subsection (a)(2) for such taxable year shall be reduced by the investment credit carryovers from such unused credit years (to the extent such unused credit may not be added for a prior taxable year)." (|3^ EXTENSION OF CARRYOVER PERIOD.—Section 46(b)(1) (relating to allowance of carryback and carryover of unused credits) is amended by adding at the end thereof the following new sentence: " I n the case of an unused credit for an unused credit year ending before January 1, 1971, which is an investment credit carryover to a taxable year beginning after December 31, 1970 (determined without regard to this sentence), this paragraph shall be applied by substituting '10 taxable years' for '7 taxable years' in subparagraph (B) and by substituting '13 taxable years' for '10 taxable years' and '12 taxable years' for '9 taxable years' in the preceding sentence." (c) REMOVAL OF 20-PERCENT LIMITATION AND C A R R Y B A C K S. —

ON L^SE OF CARRYOVERS

(1) REMOVAL OF LIMITATION.—Section 4 6 (b)(5) (relating to

carryback and carryover of unused credits to taxable years beginning after December 31, 1968, and ending after April 18, 1969) is amended— (A) by striking out the heading and inserting: "(5)

CERTAIN TAXABLE YEARS E N D I N G I N I 9 6 9, IOTO, OR I Q T I. — ",

and (B) by striking out "ending after April 18, 1969," and inserting in lieu thereof "ending after April 18, 1969, and before January 1, 1972,", and (C) by adding at the end thereof the following new sentence: " I n the case of a taxable year ending after August 15, 1971, and before January 1, 1972, the percentage contained in the preceding sentence shall be increased by 6 percentage points for each month (or portion thereof) in the taxable year after August 15, 1971." (2)

CONFORMING AMENDMENT TO ADDITIONAL 3-YEAR CARRYOVER

PROVISION.—Section 46(b)(6) (relating to additional 3-year carryover period in certain cases) is amended— (A) by striking out "ending after April 18, 1969," and inserting in lieu thereof "ending after April 18, 1969, and before January 1, 1971,", and (B) by striking out "following the last taxable year for which such portion may be added under paragraph (1) " and inserting in lieu thereof "following the 7th taxable year after the unused credit year". (d) EFFECTIVE DATES.—The amendments made by subsections (a), (b), and (c)(2) shall apply to taxable years beginning after Decern-

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Page:United States Statutes at Large Volume 85.djvu/537

 85 STAT. ]

PUBLIC LAW 92-178-DEC. 10, 1971

507

ber 31, 1970. The amendments made by subsection (c)(1) shall apply to taxable years ending after August 15, 1971. SEC. 107. TREATMENT OF CASUALTIES AND CERTAIN REPLACEMENTS. (a)

CASUALTIES TREATED AS DISPOSITIONS.—

(1) Sections 46(c)(4) (relating to certain replacements of section 38 property) and 47 (a)(4) (relating to property destroyed by casualty, etc.) are hereby repealed. (2) The repeals made by paragraph (1) shall apply to casualties and thefts occurring after August 15, 1971. (b)

Repeals. 76 stau 9^63.^^ ' Effective date,

CERTAIN REPLACEMENTS DURING TERMINATION PERIOD.—

(1) Section 4 7 (a)(5) (relating to certain property replaced Repeal. after April 18, 1969) is hereby repealed. (2) The repeal made by paragraph (1) shall not apply if replacement property described in subparagraph (B) of such section 47(a)(5) is not property described in section 50 of the Internal Revenue Code of 1954. ^nte. p. 498. SEC. 108. AVAILABILITY OF CREDIT TO CERTAIN LESSORS. (a) IN GENERAL.—Section 46(d) (relating to limitations with ^^ ^'^** ^^^' respect to certain persons) is amended by adding at the end thereof the following new paragraph: "(3) NONCORPORATE LESSORS.—^A credit shall be allowed by section 38 to a person which is not a corporation with respect to property of which such person is the lessor only if— " (A) the property subject to the lease has been manufactured or produced by the lessor, or " (B) the term of the lease (taking into account options to renew) is less than 50 percent of the useful life of the property, and for the period consisting of the first 12 months after the date on which the property is transferred to the lessee the sum of the deductions with respect to such property which are allowable to the lessor solely by reason of section 162 (other than rents and reimbursed amounts with ^^^ ^*7ro^^' respect to such property) exceeds 15 percent of the rental income produced by such property. I n the case of property of which a partnership is the lessor, the credit otherwise allowable under section 38 with respect to such property to any partner which is a corporation shall be allowed notwithstanding the first sentence of this paragraph. For purposes of this paragraph, an electing small business corj^oration (as defined in section 1371) shall be treated as a person which is ^2 Stat. leso; j_

,'

7 8 S t a t * 112«

not a corporation. (b) CREDIT MAY B E USED BY LESSEE.—Section 48(d) (relating to

certain leased property) is amended by striking out "section 4 6 (d) " and inserting in lieu thereof "section 46(d)(1)". (c) CERTAIN PROPERTY LEASED FOR SHORT TERM.—Section 48(d) (relating to investment credit for certain leased property) is amended to read as follows: " (d) CERTAIN LEASED PROPERTY.— "(1) GENERAL RULE.—A person (other than a person referred

to in section 46(d)(1)) who is a lessor of property may (at such time, in such manner, and subject to such conditions as are provided by regulations prescribed by the Secretary or his delegate) elect with respect to any new section 38 property (other than property described in paragraph (4)) to treat the lessee as having acquired such property for an amount equal to— " (A) except as provided in subparagraph (B), the fair market value of such property, or " (B) if the property is leased by a corporation which is a component member of a controlled group (within the meaning

i^fra.

7 6 Stat. 967;

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Page:United States Statutes at Large Volume 85.djvu/538

 508

26 u*sc'4^6°/'

PUBLIC LAW 92-178-DEC. 10, 1971

[85 STAT.

^f section 46(a)(5)) to another corporation which is a component member of the same controlled group, the basis of such property to the lessor. " (2) SPECIAL RULE FOR CERTAUST SHORT TERM LEASES.—

76 Stat. 965.

" (A) IN GENERAL.—A person (other than a person referred ^^ jj^ section 46(d)(1)) who is a lessor of property described in paragraph (4) may (at such time, in such manner, and subject to such conditions as are provided by regulations prescribed by the Secretary or his delegate) elect with respect to such property to treat the lessee as having acquired a portion of such property for the amount determined under subparagraph (B). " (B) DETERMINATION

^"^'•a-

or

LESSEE'S

INVESTMENT.—The

amount for which a lessee of property described in paragraph (4) shall be treated as having acquired a portion of such property is an amount equal to a fraction, the numerator of which is the term of the lease and the denominator of which is the class life of the property leased (determined under section 167(m)), of the amount for which the lessee would be treated as having acquired the property under paragraph (1).

" (C) DETERMINATION OF LESSOR'S QUALIFIED INVESTMENT.—

Ante, p. 499, ' '

post, p. 522.

^I^st^t* 51;

The qualified investment of a lessor of property described in paragraph (4) in any such property with respect to which he has made an election under this paragraph is an amount equal to his qualified investment in such property (as determined under section 46(c)) multiplied by a fraction equal to the excess of one over the fraction used under subparagraph (B) to determine the lessee's investment in such property. "(3) LIMITATIONS.—The elections provided by paragraphs (1) and (2) may be made with respect to property which would be new section 38 property if acquired by the lessee. For purposes of the preceding sentence and section 46(c), the useful life of property in the hands of the lessee is the useful life of such property m the hands of the lessor. If a lessor makes the election provided by paragraph (1) with respect to any property, the lessee shall be treated for all purposes of this subpart as having acquired such property. If a lessor makes the election provided by paragraph (2) with respect to any property, the lessee shall be treated for all purposes of this subpart as having acquired a fractional portion of such property equal to the fraction determined under paragraph (2)(B) with respect to such property. "(4) PROPERTY TO WHICH PARAGRAPH (2) APPLIES.—Paragraph (2) shall apply only to property which— " (A) is new section 38 property, " (B) has a class life (determined under section 167(m)) in excess of 14 years, " (C) is leased for a period which is less than 80 percent of its class life, and " (D) is not leased subject to a net lease (within the meaning of section 57(c)(2)). " (d) EFFECTIVE DATES.—The amendments made by subsections (a) and (b) shall apply to leases entered into after September 22, 1971. The amendment made by subsection (c) shall apply to leases entered into after November 8, 1971. SEC. 109. REASONABLE ALLOWANCE FOR DEPRECIATION; REPAIR ALLOWANCE. (a) Section 167 (relating to depreciation) is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (1) the following new subsection:

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Page:United States Statutes at Large Volume 85.djvu/539

 85 STAT.]

PUBLIC LAW 92-178-DEC. 10, 1971

509

" (m) CLASS LIVES.—

"(1) IN GENERAL.—In the case of a taxpayer who has made an election under this subsection for the taxable year, the term "Reasonable 'reasonable allowance' as used in subsection (a) means (with ^"°^^"'=^'" respect to property which is placed in service during the taxable year and which is included in any class for which a class life has Deen prescribed) only an allowance based on the class life prescribed by the Secretary or his delegate which reasonably renects the anticipated useful life of that class of property to the industry or other group. The allowance so prescribed may (under regulations prescribed by the Secretary or his delegate) permit a variance from any class life by not more than 20 percent (rounded to the nearest half year) of such life. "(2)

CERTAIN FIRST-YEAR CONVENTIONS NOT PERMITTED.—No

convention with respect to the time at which assets are deemed placed in service shall be permitted under this section which generally would provide greater depreciation allowances during the taxable year in which the assets are placed in service than would be permitted if all assets were placed m service ratably throughout the year and if depreciation allowances were computed without regard to any convention. "(3) MAKING OF ELECTION.—An election under this subsection for any taxable year shall be made at such time, in such manner, and subject to such conditions as may be prescribed by the Secretary or his delegate by regulations." (b)

REASONABLE REPAIR A L I

^ANCE.—Section 263 (relating to ssstatTr^'''^'

capital expenditures) is amendea by adding at the end thereof the following new subsection: " (f) REASONABLE REPAIR ALLOWANCE.—The Secretary or his delegate may by regulations provide that che taxpayer may make an election under which amounts representing either repair expenses or specified repair, rehabilitation, or improvement expenditures for any class of depreciable property— "(1) are allowable as a deduction under section 162(a) or 212 (whichever is appropriate) to the extent of the repair allowance for that class, and "(2) to the extent such amounts exceed for the taxable year such repair allowance, are chargeable to capital account. Any allowance prescribed under this subsection shall reasonably reflect the anticipated repair experience of the class of property in the industry or other group." (c) RAILROAD ROLLING STOCK.—Section 263(e) (relating to expendi-

tures in connection with certain railroad rolling stock) is amended— (1) by striking out "shall be treated" and inserting in lieu thereof "shall, at the election of the taxpayer, be treated", and (2) by adding at the end thereof the following new sentences: "An election under this subsection shall be made for any taxable year at such time and in such manner as the Secretary or his delegate prescribes by regulations. A n election may not be made under this subsection for any taxable year to which an election under subsection (f) applies to railroad rolling stock (other than locomotives)." (d) EFFECTIVE DATES.—

(1) The amendments made by subsection (a) shall apply to property placed in service after December 31, 1970. (2) The amendment made by subsection (b) shall apply to taxable years ending after December 31, 1970. (3) The amendments made by subsection (c) shall apply to taxable years beginning after December 31, 1969.

26 USC 26*3.

^SA Stat. 4s,69.

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Page:United States Statutes at Large Volume 85.djvu/540

 510

PUBLIC LAW 92-178-DEC. 10, 1971 (e)

Ante, p. 508.

[85 STAT.

TKANSITIONAL, RULES,— (1) REAL PROPERTY.—In the case of buildings and other items

of section 1250 property for which a separate guideline life is prescribed in Revenue Procedure 62-21 (as amended and supplemented), the class lives first prescribed by the Secretary of the Treasury or his delegate under section 167(m) of the Internal RevBuue Code of 1954 shall be the same as the guideline lives for such property in effect on December 31, 1970. Any such property which is placed in service by the taxpayer during the period beginning on January 1, 1971, and ending on December 31, 1973 (or such earlier date on which a class life subsequently prescribed by the Secretary of the Treasury or his delegate under such section becomes effective for such property) may, in accordance with regulations prescribed by the Secretary of the Treasury or his delegate, be excluded by the taxpayer from an election under such section if a life for such property shorter than the class life prescribed in accordance with the preceding sentence is justified under Revenue Procedure 62-21 (as amended and supplemented). (2) SUBSIDIARY ASSETS.—If a significant portion of a class of property first prescribed by the Secretary of the Treasury or his delegate under section 167(m) of the Internal Revenue Code of 1954 consists of subsidiary assets, all such subsidiary assets in such class placed in service by the taxpayer during the period beginning on January 1, 1971, and ending on December 31, 1973 (or such earlier date on which a class which includes such subsidiary ass^ets subsequently prescribed by the Secretary of the Treasury or his delegate under such section becomes effective), may, in accordance with regulations prescribed by the Secretary of the Treasury or his delegate, be excluded by the taxpayer from an election under such section.

TITLE II—CHANGES IN PERSONAL EXEMPTIONS, MINIMUM STANDARD DEDUCTION, WITHHOLDING, ETC.

ssstatTvel^' 26 USC 15*1.

SEC. 201. INCREASE IN PERSONAL EXEMPTION. (a) INCREASE I N PERSONAL EXEMPTION TO $675 FOR 1971.—Effective with respect to taxable years beginning after December 31, 1970, and before January 1, 1972— ^^^ section 151 (relating to allowance of deductions for personal exemptions) is amended by striking out "$650" each place it appears and inserting in lieu thereof "$675"; and (2) section 6013(b)(3)(A) (relating to assessment and collection in case of certain returns of husband and wife) is amended by striking out "$650" each place it appears and inserting in lieu thereof "$675"; and by striking out "$1,300" each place it appears and inserting in lieu thereof "$1,350". (b) INCREASE I N PERSONAL EXEMPTION TO $750 FOR 1972 AND S U B SEQUENT YEARS.—Effective with respect to taxable years beginning after December 31, 1971— (1) section 151 (relating to allowance of deductions for personal exemptions) is amended by striking out "$675" each place it appears and inserting in lieu thereof $750"; and (2) section 6013(b)(3)(A) (relating to assessment and collection in the case of certain returns of husband and wife) is amended by striking out "$675" each place it appears and inserting in lieu thereof "$750"; and by striking out "$1,350" each place it appears and inserting in lieu thereof "$1,500".

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Page:United States Statutes at Large Volume 85.djvu/541

 85 STAT. ]

PUBLIC LAW 92-178-DEC. 10, 1971

511

(c) TECHNICAL AMENDMENT.—Subsections (c) and (d) of section Repeal. 801 of the Tax Reform Act of 1969 are hereby repealed. 83 st^«^- f^s. SEC. 202. INCREASE IN PERCENTAGE STANDARD DEDUCTION. 6013. Effective with respect to taxable years beginning after December 31, 1971, the last two lines in the table in section 141(b) (relating to per- ^^ Stat. 67«5. centage standard deduction) are amended to read as follows: "1972 and thereafter SEC. 203. LOW INCOME ALLOWANCE.

15

2, 000".

(a) ELIMINATION OF PHASEOUT FOR 1971.—Effective with respect to taxable years beginning after December 31, 1970, and before January 1, 1972, section 141(c) (relating to low income allowance) is amended to read as follows: "(c)

Low INCOME ALLOWANCE.—The low income allowance is

$1,050 ($525 in the case of a married individual filing a separate return)." (b)

INCREASE OF Low

INCOME ALLOWANCE FOR 1972 AND THERE-

AFTER.—Effective with respect to taxable years beginning after December 31, 1971, section 141(c) (relating to low income allowance) is amended to read as follows: "(c) Low INCOME ALLOWANCE.—The low income allowance is

$1,300 ($650 in the case of a married individual filing a separate return)." (c) TECHNICAL AMENDMENT.—Section 802(e) of the Tax Reform Act of 1969 is hereby repealed. SEC. 204. FILING REQUIREMENTS. (a) IN GENERAL.—Effective with respect to taxable years beginning after December 31, 1971, section 6012(a)(1) (relating to persons required to make returns of income) is amended— (1) by striking out "$600" each place it appears and inserting in lieu thereof "$750"; (2) by striking out "$1,700" each place it appears and inserting in lieu thereof "$2,050"; (3) by striking out "$2,300" each place it appears and inserting in lieu thereof "$2,800"; and (4) by inserting after subparagraph (B) the following new subparagraph: " (C) Every individual having for the taxable year a gross income of $750 or more and to whom section 141(e) (relating to limitations in case of certain dependent taxpayers) applies;". (b) TECHNICAL AMENDMENT.—Section 941(d) of the Tax Reform Act of 1969 is hereby repealed. SEC. 205. CERTAIN FISCAL YEAR TAXPAYERS. Section 21 (relating to effect of changes) is amended by adding at the end thereof the following new subsection: "(e) CHANGES MADE BY REVENUE ACT OF 1971. — I n applying subsection (a) to a taxable year of an individual which is not a calendar year, each change made by the Revenue Act of 1971 in section 141 (relating to the standard deduction) and section 151 (relating to personal exemptions) shall be treated as a change in a rate of tax." SEC. 206. ELECTION OF STANDARD DEDUCTION. Effective with respect to taxable years beginning after December 31, 1970, section 144 (relating to election of standard deduction) is amended by striking out "$5,000" each place it appears and inserting in lieu thereof "$10,000".

^^^fsp'

26 USC 141.

s3 Stat. 726.

P°^^' P* ^20. ga^^^a^* 72,26 usV 60]'2 "°'*g,^!'^ ^*^*' ^^'

Supra; Poat, ^'^nte p. sio.

^^A Stat. AU

78 Stat. 24, 110.

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Page:United States Statutes at Large Volume 85.djvu/542

 512

68A Stat. 8 2 3. 26 USC 6654.

83 Stat. 6 8 2.

68A Stat. 7 3 3; 84 Stat. 2063.

69 Stat. 616; 79 Stat. 3 8 3.

83 Stat. 686.

PUBLIC LAW 92-178-DEC. 10, 1971

[85 STAT.

SEC. 207. WAIVER OF PENALTY FOR UNDERPAYMENT OF 1&71 ESTIMATED INCOME TAX. (a) WAIVER OF PENALTY.—Notwithstanding any other provision of law, section 6654(a) of the Internal Revenue Code of 1954 (relating to addition to tax for failure by individual to pay estimated income tax) shall not apply to any taxable year beginning after December 31, 1970, and ending before January 1, 1972— (1) if gross income for the taxable year does not exceed $10,000 in the case of— (A) a single individual other than a head of a household (as defined in section 2(b) of such Code) or a surviving spouse (as defined in section 2(a) of such Code); or (B) a married individual not entitled under section 6013 of such Code to file a joint return for the taxable year; or (2) if gross income for the taxable year does not exceed $20,000 in the case of— (A) a head of a household (as defined in section 2(b) of such Code); or (B) a surviving spouse (as defined in section 2(a) of such Code); or (3) in the case of a married individual entitled under section 6013 of such Code to file a joint return for the taxable year, if the aggregate gross income of such individual and his spouse lor the taxable year does not exceed $20,000. (b) LIMITATION.—Subsection (a) shall not apply if the taxpayer has income from sources other than wages (as defined in section 3401 (a) of such Code) in excess of $200 for the taxable year ($400 in the case of a husband and wife entitled to file a joint return under section 6013 of such Code for the taxable year). SEC. 208. ADJUSTMENT OF WITHHOLDING. (a) REQUIREMENT OF WITHHOLDING.—Section 3402(a)

(relating

to requirement of withholding) is amended by striking out paragraphs (1) through (5) and inserting in lieu thereof the following: 'Table 1.—If the payroll period with respect to an employee is WEEKLY " (a) Single Person—Including Head of Household: "If the amount of wages is: Not over $11 Over $11 but not over $35 Over $35 but not over $73 Over $73 but not over $202 Over.$202 but not over $231 Over $231 but not over $269 Over $269 but not over $333 Over $333

The amount of income tax to be withheld shall be: 0. 14% of excess over $11. $3.36 plus 18% of excess over $35. $10.20 plus 21% of excess over $73. $37.29 plus 23% of excess over $202. $43.96 plus 27% of excess over $231. $54.22 plus 31% of excess over $269. $74.06 plus 35% of excess over.$333.

" (b) Married Person: "If the amount of wages is: Not over $11 Over $11 but not over $39 Over $39 but not over $167 Over $167 but not over $207 Over $207 but not over $324 Over $324 but not over $409 Over $409 but not over $486 Over $486

The amount of income tax to be withheld shall be: 0. 14% of excess over $11. $3.92 plus 16% of excess over $39. $24.40 plus 20% of excess over $167. $32.40 plus 24% of excess over $207. $60.48 plus 28% of excess over $324. $84.28 plus 32% of excess over $409. $108.92 plus 36% of excess over $486.

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Page:United States Statutes at Large Volume 85.djvu/543

 85 S T A T. ]

PUBLIC LAW 92-178-DEC. 10, 1971

"Table 2.—If the payroll period with respect to an employee is BIWEEKLY " (a) S i n g l e P e r s o n — I n c l u d i n g H e a d of H o u s e h o l d: "If the amount of wages is: Not over $21 Over $21 but not over $69 Over $69 but not over $146 Over $146 but not over $404 Over $404 but not over $462 Over $462 but not over $538 Over $538 but not over $665 Over $665

The amount of income tax to be withheld shall be: 0. 14% of excess over $21. $6.72 plus 18% of excess over $69. $20.58 plus 21% of excess over $146. $74.76 plus 23% of excess over $404. $88.10 plus 27% of excess over $462. $108.62 plus 31% of excess over $538. $147.99 plus 35% of excess over $665.

"(b) Married Person: "If the amount of wages is: Not over $21 Over $21 but not over $79 Over $79 but not over $335 Over $335 but not over $413 Over $413 but not over $648 Over $648 but not over $817 Over $817 but not over $971 Over $971

The amount of income tax to be withheld shall be: 0. 14% of excess over $21. $8.12 plus 16% of excess over $79. $49.08 plus 20% of excess over $335. $64.68 plus 24% of excess over $413. $121.08 plus 28% of excess over $648. $168.40 plus 32% of excess over $817. $217.68 plus 36% of excess over $971.

"Table 3.—If the payroll period with respect to an employee is SEMIMONTHLY

"(a) Single Person—Including Head of Household: "If the amount of wages i s: Not over $23 Over $23 but not over $75 Over $75 but not over $158 Over $158 but not over $438 Over $438 but not over $500 Over $500 but not over $583 Over $583 but not over $721 Over $721

The amount of income tax to be withheld shall be: 0. 14% of excess over $23. $7.28 plus 18% of excess over $75. $22.22 plus 21% of excess over $158. $81.02 plus 23%, of excess over $438. $95.28 plus 27% of excess over $500. $117.69 plus 31% of excess over $583. $160.47 plus 35% of excess over $721.

"(b) Married Person: "If the amount of wages is: Not over $23 Over $23 but not over $85 Over $85 but not over $363 Over $363 but not over $448 Over $448 but not over $702 Over $702 but not over $885 Over $885 but not over $1,052 Over $1,052

The amount of income tax to be withheld shall be: 0. 14% of excess over $23. $8.68 plus 16% of excess over $85. $53.16 plus 20% of excess over $363. $70.16 plus 24% of excess over $448. $131.12 plus 28% of excess over $702. $182.36 plus 32% of excess over $885. $235.80 plus 36% of excess over $1,052.

"Table 4.—If the payroll period with respect to an employee is MONTHLY

"(a) Single Person—Including Head of Household: "If the amount of wages is: Not over $46 Over $46 but not over $150 Over $150 but not over $317 Over $317 but not over $875 Over $875 but not over $1,000 Over $1,000 but not over $1,167 Over $1,167 but not over $1,442 Over $1,442

The amount of income tax to be withheld shall be: 0. 14% of excess over $46. $14.56 plus 18% of excess over $150. $44.62 plus 21% of excess over $317. $161.80 plus 23% of excess over $875. $190.55 plus 27% of excess over $1,000. $235.64 plus 31% of excess over $1,167. $320.89 plus 35% of excess over $1,442.

513

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Page:United States Statutes at Large Volume 85.djvu/544

 514

PUBLIC LAW 92-178-DEC. 10, 1971

[85 STAT.

"Table 4.—If the payroll period with respect to an employee is MONTHLY— Continued "(b) Married Person: "If the amount of wages is: Nat over $46 Over $46 but not over $171 Over $171 but not over $725 Over $725 but not over $896 Over $896 but not over $1,404 Over $1,404 but not over $1,771 Over $1,771 but not over $2,104 Over $2,104

The amount of income tax to be withheld shall be: 0. 14% of excess over $46. $17.50 plus 16% of excess over $171. $106.14 plus 20% of excess over $725. $140.34 plus 24% of excess over $896. $262.26 plus 28% of excess over $1,404. $365.02 plus 32% of excess over $1,771. $471.58 plus 36% of excess over $2,104.

"Table 5.—If the payroll period with respect to an employee is QUARTERLY " (a) S i n g l e P e r s o n — I n c l u d i n g H e a d of H o u s e h o l d: "If the amount of wages is: Not over $138 Over $138 but not over $450 Over $450 but not over $950 Over $950 but not over $2,625 Over $2,625 but not over $3,000 Over $3,000 but not over $3,500 Over $3,500 but not over $4,325 Over $4,325

The amount of income tax to be withheld shall be: 0. 14% of excess over $138. $43.68 plus 18% of excess over $450. $133.68 plus 21% of excess over $950. $485.43 plus 23% of excess over $2,625. $571.68 plus 27% of excess over $3,000. $706.68 plus 31% of excess over $3,500. $962.43 plus 35% of excess over $4,325.

"(b) Married Person: "If the amount of wages is: Not over $138 Over $138 but not over $513 Over $513 but not over $2,175 Over $2,175 but not over $2,688 Over $2,688 but not over $4,213 Over $4,213 but not over $5,313 Over $5,313 but not over $6,313 Over $6,313

The amount of income tax to be withheld shall be: 0. 14% of excess over $138. $52.50 plus 16% of excess over $513. $318.42 plus 20% of excess over $2,175. $421.02 plus 24% of excess over $2,688. $787.02 plus 28% of excess over $4,213. $1,095.02 plus 32% of excess over $5,313. $1,415.02 plus 36% of excess over $6,313.

"Table 6.—If the payroll period with respect to an employee is SEMIANNUAL

" (a) Single Person—Including Head of Household: "If the amount of wages is: Not over $275 Over $275 but not over $900 Over $900 but not over $1,900 Over $1,900 but not over $5,250 Over $5,250 but not over $6,000 Over $6,000 but not over $7,000 Over $7,000 but not over $8,650 Over $8,650

The amount of income tax to be withheld shall be: 0. 14% of excess over $275. $87.50 plus 18% of excess over $900. $267.50 plus 21% of excess over $1,900. $971.00 plus 23% of excess over $5,250. $1,143.50 plus 27% of excess over $6,000. $1,413.50 plus 31% of excess over $7,000. $1,925.00 plus 35% of excess over $8,650.

" (b) Married Person: "If the amount of wages is:

The amount of income tax to be withheld shall be: Not over $275 0. Over $275 but not over $1,025 14% of excess over $275. Over $1,025 but not over $4,350 $105.00 plus 16% of excess over $1,025. Over $4,350 but not over $5,375 $637.00 plus 20% of excess over $4,350. Over $5,375 but not over $8,425 $842.00 plus 24% of excess over $5,375. Over $8,425 but not over $10,625— $1,574.00 plus 28% of excess over $8,425. Over $10,625 but not over $12,625__ $2,190.00 plus 32% of excess over $10,625. Over $12,625 $2,830.00 plus 36% of excess over $12,625.

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Page:United States Statutes at Large Volume 85.djvu/545

 85 STAT. ]

PUBLIC LAW 92-178-DEC. 10, 1971

"Table 7.—If the payroll period with respect to an employee is ANNUAL

" (a) Single Person—Including Head of Household: "If the amount of wages is:

The amount of income tax to be withheld shall be: Not over $550 0. Over $550 but not over $1,800 14% of excess over $550. Over $1,800 but not over $3,800 $175.00 plus 18% of excess over $1,800. Over $3,800 but not over $10,500 $535.00 plus 21% of excess over $3,800. Over $10,500 but not over $12,000— $1,942.00 plus 23% of excess over $10,500. Over $12,000 but not over $14,000— $2,287.00 plus 27% of excess over $12,000. Over $14,000 but not over $17,300— $2,827.00 plus 31% of excess over $14,000. Over $17,300 $3,850.00 plus 35% of excess over $17,300.

"(b) Married Person: "If the amount of wages is: Not over $550 Over $550 but not over $2,050 Over $2,050 but not over $8,700 Over $8,700 but not over $10,750 Over $10,750 but not over $16,850 Over $16,850 but not over $21,250 Over $21,250 but not over $25,250 Over $25,250

The amount of income tax to be withheld shall be: 0. 14% of excess over $550. $210.00 plus 16% of excess over $2,050. $1,274.00 plus 20% of excess over $8,700. $1,684.00 plus 24% of excess over $10,750. $3,148.00 plus 28% of excess over $16,850. $4,380.00 plus 32% of excess over $21,250. $5,660.00 plus 36% of excess over $25,250.

"Table 8.—If the payroll period with respect to an employee is a DAILY payroll period or a miscellaneous payroll period " (a) S i n g l e P e r s o n — I n c l u d i n g H e a d of H o u s e h o l d: "If the amount of wages divided by the number of days in the payroll period is: Not over $1.50 Over $1.50 but not over $4.90 Over $4.90 but not over $10.40 Over $10.40 but not over $28.80 Over $28.80 but not over $32.90 Over $32.90 but not over $38.40 Over $38.40 but not over $47.40 Over $47.40

The amount of income tax to be withheld shall be: 0. 14% of excess over $1.50. $0.48 plus 18% of excess over $4.90. $1.47 plus 21% of excess over $10.40. $5.33 plus 23% of excess over $28.80. $6.27 plus 277o of excess over $32.90. $7.76 plus 31% of excess over $38.40. $10.55 plus 35% of excess over $47.40.

"(b) Married Person: "If the amount of wages divided by the number of days in the payroll period is: Not over $1.50 Over $1.50 but not over $5.60 Over $5.60 but not over $23.80 Over $23.80 but not over $29.50 Over $29.50 but not over $46.20 Over $46.20 but not over $58.20 Over $58.20 but not over $69.20 Over $69.20

75-432 O - 72 - 35

The amount of income tax to be withheld shall be: 0. 14% of excess over $1.50. $0.57 plus 16% of excess over $5.60. $3.48 plus 20% of excess over $23.80. $4.62 plus 24% of excess over $29.50. $8.63 plus 28% of excess over $46.20. $11.99 plus 32% of excess over $58.20. $15.51 plus 36%, of excess over $69.20."

515

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Page:United States Statutes at Large Volume 85.djvu/546

 516

PUBLIC LAW 92-178-DEC. 10, 1971

[85 STAT.

(b) PERCENTAGE METHOD OF WITHHOLDING.—

26?sc3'4o^2and note.

S^^ Section 3402(b)(1) (relating to percentage method of withholding) is amended to read as follows: "(1) The table referred to in subsection (a) is as follows: "Percentage Method Withholding Table .

Payroll period: Weekly Biweekly Semimonthly Monthly Quarterly Semiannual Annual Daily or miscellaneous (per day of such period)

^^p^^^73 Stat. 118.

sa^sut^'e?'?^^'

exemption $14. 40 28.80 31. 30 62.50 187. 50 375. 00 750. 00 2.10."

(2) Paragraphs (3) and (4) of section 805(b) of the Tax Reform Act of 1969 are hereby repealed. (c)

8o^st^at!*59*.^^^'

Amount of one withholding

WITHHOLDING ALLOWANCE FOR STANDARD DEDUCTION.—

(1) Section 3402(f)(1) (relating to withholding exemptions) is amended— (A) by striking out "and" at the end of subparagraph (E), (B) by striking out the period at the end of subparagraph (F) and inserting in lieu thereof "; and", and (C) by adding at the end thereof the following: " (G) a standard deduction allowance which shall be an amount equal to one exemption unless (i) he is married (as determined under section 143) and his spouse is an employee receiving wages subject to withholding or (ii) he has withholding exemption certificates in effect with respect to more than one employer. For purposes of this title, any standard deduction allowance under subparagraph (G) shall be treated as if it were denominated a withholding exemption." (d) WITHHOLDING EXEMPTIONS W H E R E EMPLOYEE H A S MORE T H A N

75 Stat. 537.

ONE EMPLOYER.—Section 3402(f) (relating to withholding exemptions) is amended by adding at the end thereof the following new paragraph: "(7)

EXEMPTION WHERE CERTIFICATE WITH ANOTHER EMPLOYER

IS I N EFFECT.—If a withholding exemption certificate is in effect with respect to one employer, an employee shall not be entitled under a certificate in effect with any other employer to any withholding exemption which he has claimed under such first certificate." (e)

83 Stat. 707.

DETERMINATION OF AMOUNT OF WITHHOLDING ALLOWANCE.—

Section 3402(m)(1)(B) (relating to withholding allowances based on itemized deductions) is amended to read as follows: " (B) an amount equal to the lesser of (i) $2,000 or (ii) 15 percent of his estimated wages." (f) WITHHOLDING ALLOWANCE BASED ON PRECEDING YEAR I N CERTAIN CASES.—Section 3402(m) is amended—

83*statr 70?.'

(1) by striking out in the second sentence of paragraph (2)(A) "for the taxable year preceding the estimation year" and inserting in lieu thereof "for the taxable year preceding the estimation year or (if such a return has not been filed for such preceding taxable year at the time the withholding exemption certificate is furnished the employer) the second taxable year preceding the estimation year", (2) ^y amending the first sentence of paragraph (2)(D) to read as follows: " I n the case of an employee who nles his return on the basis of a calendar year, the term 'estimation year' means the calendar year in which the wages are paid.", and

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Page:United States Statutes at Large Volume 85.djvu/547

 85 STAT. ]

PUBLIC LAW 92-178-DEC. 10, 1971

517

S (3) by striking out subparagraphs (B) and (C) of paragraph 80 u tsaet. 5 9, 26 3402, (3), and redesignating subparagraphs (D) and (E) as subparagraphs (B) and (C),respectively, (g) CONFORMING AMENDMENT.—Section 3402(c)(6) (relating to 83 Stat. 705. wage bracket withholding) is amended hj striking out "paragraph (1), (2), (3), (4), or (5) (whichever is applicable) of".

(h) F I F T E E N - D A Y EXTENSION OF EXISTING WITHHOLDING PROVISIONS.—

(1) Paragraph (3) of section 3402(a) (relating to requirement of withholding) is amended by striking out "January 1, 1972" and inserting in lieu thereof "January 16, 1972". (2) Paragraph (2) of section 805(b) of the Tax Reform Act of 1969 (relating to percentage method of withholding) is amended by striking out "January 1, 1972" and inserting in lieu thereof "January 16, 1972".

83 Stat. 693; Ante, p. 512.

83 Stat. 70 4.

(i) EFFECTIVE D A T E. —

(1) The amendments made by this section (other than subsection (h)) shall apply with respect to wages paid after January 15, 1972. (2) The amendments made by subsection (h) shall apply with respect to wages paid after December 31, 1971, and before January 16, 1972. SEC. 209. CHANGES IN REQUIREMENTS OF DECLARATION OF ESTIMATED INCOME TAX BY INDIVIDUALS. (a) GENERAL RULE.—Section 6015(a) (relating to the requirement of declaration of estimated income tax by individuals) is amended to read as follows:

74 Stat. 1000,

" (a) REQUIREMENT OF DECLARATION.—Except as otherwise provided

in this section, every individual shall make a declaration of his estimated tax for the taxable year if— "(1) the gross income for the taxable year can reasonably be expected to exceed— " (A) $20,000, in the.case of— " (i) a single individual, including a head of a household (as defined in section 2(b)) or a surviving spouse 83 Stat, 6 8 2. (as defined in section 2(a)); or "(ii) a married individual entitled under subsection (b) to file a joint declaration with his spouse, but only 68A Stat. 7 3 7. if his spouse has not received wages (as defined in section 3401(a)) for the taxable year; or 7/stalr sssl^' " (B) $10,000, in the case of a married individual entitled under subsection (b) to file a joint declaration with his spouse, but only if both he and his spouse have received wages (as defined in section 3401(a)) for the taxable year; or " (C) $5,000, in the case of a married individual not entitled under subsection (b) to file a joint declaration with his spouse; or "(2) the gross income can reasonably be expected to include more than $500 from sources other than wages (as defined in section 3401(a)). Notwithstanding the provisions of this subsection, no declaration is required if the estimated tax (as defined in subsection (c)) can rea- ^° ^*^** ^^' sonably be expected to be less than $100." (b) EFFECTIVE DATE.—The amendment made by this section shall apply with respect to estimated tax for taxable years beginning after December 31, 1971.

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Page:United States Statutes at Large Volume 85.djvu/548

 518

78 Stat. 49.

PUBLIC LAW 92-178-DEC. 10, 1971

[85 STAT.

SEC. 210. CERTAIN EXPENSES TO ENABLE INDIVIDUALS TO BE GAINFULLY EMPLOYED. (a) IN GENERAL.—Section 214 (relating to expenses for care of certain dependents) is amended to read as follows:

"SEC. 214. EXPENSES FOR HOUSEHOLD AND DEPENDENT CARE SERVICES NECESSARY FOR GAINFUL EMPLOYMENT.

Ante, p. 510.

" (a) ALLOWANCE or DEDUCTION.—In the case of an individual who maintains a household which includes as a member one or more qualifying individuals (as defined in subsection (b)(1)), there shall be allowed as a deduction the employment-related expenses (as defined in subsection (b)(2)) paid by him during the taxable year. "(b) DEFINITIONS, ETC.—For purposes of this section— "(1) QuALiFYixcx INDIVIDUAL.—The term 'qualifying individual' means— " (A) a dependent of the taxpayer who is under the age of 15 and with respect to whom the taxpayer is entitled to a deduction under section 151(e), " (B) a dependent of the taxpayer who is physically or mentally incapable of caring for himself, or " (C) the spouse of the taxpayer, if he is physically or mentally incapable of caring for himself. "(2) EMPLOYMENT-RELATED EXPENSES.—The term 'employmentrelated expenses' means amounts paid for the following expenses, but only if such expenses are incurred to enable the taxpayer to be gainfully employed: " (A) expenses for household services, and " (B) expenses for the care of a qualifying individual. "(3) MAINTAINING A HOUSEHOLD.—An individual shall be treated as maintaining a household for any period only if over half of the cost of maintaining the household during such period is furnished by such individual (or if such individual is married during such period, is furnished by such individual and his spouse). "(c)

LIMITATIONS ON AMOUNTS DEDUCTIBLE.—

"(1) IN GENERAL.—A deduction shall be allowed under subsection (a) for employment-related expenses incurred during any month only to the extent such expenses do not exceed $400. "(2)

EXPENSES MUST BE FOR SERVICES IN THE HOUSEHOLD.—

" (A) IN GENERAL.—Except as provided in subparagraph (B), a deduction shall be allowed under subsection (a) for employment-related expenses only if they are incurred for services in the taxpayer's household. " (B) EXCEPTION.—Employment-related expenses described in subsection (b)(2)(B) which are incurred for services outside the taxpayer's household shall be taken into account only if incurred for the care of a qualifying individual described in subsection (b)(1)(A) and onh^ to the extent such expenses incurred during any month do not exceed— " (i) $200, in the case of one such individual, " (ii) $300, in the case of two such individuals, and "(iii) $400, in the case of three or more such individuals. " (d) INCOME LIMITATION.—If the adjusted gross income of the taxpayer exceeds $18,000 for the taxable year during which the expenses are incurred, the amount of the employment-related expenses incurred during any month of such year which may be taken into account under this section shall (after the application of subsections (e)(5) and (c)) be further reduced by that portion of one-half of the excess of the adjusted gross income over $18,000 which is properly allocable to such

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Page:United States Statutes at Large Volume 85.djvu/549

 85 STAT.]

PUBLIC LAW 92-178--DEC. 10, 1971

519

month. For purposes of the preceding sentence, if the taxpayer is married during any period of the taxable year, there shall be taken into account the combined adjusted gross income of the taxpayer and his spouse for such period. "(e) SPECIAL RULES.—For purposes of this section— "(1) MARRIED COUPLES MUST FILE JOINT RETURN.—If the taxpayer is married at the close of the taxable year, the deduction provided by subsection (a) shall be allowed only if the taxpayer and his spouse file a single return jointly for the taxable year. "(2)

GAINFUL EMPLOYMENT REQUIREMENT.—If the taxpayer is

married for any period during the taxable year, there shall be taken into account employment-related expenses incurred during any month of such period only if— " (A) both spouses are gainfully employed on a substan^ tially lull-time basis, or " (B) the spouse is a qualifying individual described in subsection (b)(1)(C). "(3) CERTAIN MARRIED INDIVIDUALS LIVING APART.—An individual who for the taxable year would be treated as not married under section 143(b) if paragraph (1) of such section referred to ^^ ^*|^* ^^• any dependent, shall be treated as not married for such taxable year. "(4) PAYMENTS TO RELATED INDIVIDUALS.—No deduction shall be allowed under subsection (a) for any amount paid by the taxpayer to an individual bearing a relationship to the taxpayer described in paragraphs (1) through (8) of section 152(a) (relat- ^SA Stat. 43. ing to definition of dependent) or to a dependent described in paragraph (9) of such section. '^^ ^*^*' ^6°''« " (5) KEDUCTION FOR CERTAIN PAYMENTS.—In the case of employment-related expenses incurred during any taxable year solely with respect to a qualifying individual (other than an individual who is also described in subsection (b)(1)(A)), the amount of such expenses which may be taken into account for purposes of this section shall (before the application of subr^^ction (c)) be reduced— " (A) if such individual is described in subsection (b)(1) (B), by the amount by which the sum of— " (i) such individual's adjusted gross income for such taxable year, and "(ii) the disability payments received by such individual during such year, exceeds $750, or " (B) in the case of a qualifying individual described in subsection (b)(1)(C), by the amount of disability payments received by such individual during the taxable year. For purposes of this paragraph, the term 'disability payment' pa'ymlm!'"'*^ means a payment (other than a gift) which is made on account of the physical or mental condition of an individual and which is not included in gross income. " (f) REGULATIONS.—The Secretary or his delegate shall prescribe such regulations as may pe necessary to carry out the purposes of this section."

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text:
Page:United States Statutes at Large Volume 85.djvu/550

 520

PUBLIC LAW 92-178-DEC. 10, 1971

[85 STAT.

(b) CLERICAL AMENDMENT.—The table of sections for part VII of subchapter B of chapter 1 is amended by striking out the item relating to section 214 and inserting in lieu thereof the following: "Sec. 214. Expenses for household and dependent care services necessary for gainful employment." (c) EFFECTIVE DATE.—The amendments made by this section shall

ae'usc^ea?!!*

apply to taxable years beginning after December 31, 1971. SEC. 211. LEVIES ON SALARIES AND WAGES. (^).WRITTEN NOTICE REQUIRED.—Section 6331 (relating to levy and distraint) is amended by redesignating subsection (d) as (e) and by inserting after subsection (c) the following new subsection: " (d) SALARY AND W A G E S. —

"(1) IN GENERAL.—Levy may be made under subsection (a) upon the salary or wages of an individual with respect to any unpaid tax only after the Secretary or his delegate has notified such individual in writing of his intention to make such levy. Such notice shall be given in person, left at the dwelling or usual place of business of such individual, or shall be sent by mail to such individual's last known address, no less than 10 days before the day of levy. No additional notice shall be required in the case of successive levies with respect to such tax. " (2) JEOPARDY.—Paragraph (1) shall not apply to a levy if the Secretary or his delegate has made a finding under the last sentence of subsection (a) that the collection of tax is in jeopardy." (b) EFFECTIVI: DATE.—The amendments made by this section shall apply with respect to levies made after March 31, 1972.

TITLE III—STRUCTURAL IMPROVEMENTS 83^stat^676^'

SEC. 301. UNEARNED INCOME OF TAXPAYERS WHO ARE DEPENDENTS OF OTHER TAXPAYERS. (^) LIMITATION OF STANDAED DEDUCTION.—Section 141 (relating to the standard deduction) is amended by adding at the end thereof the following new subsection: " (e) LIMITATIONS I N CASE OF CERTXVIN DEPENDENT TAXPAYERS.—In

Ante, p. 510. 76 Stat. 1003.

68A Stat. 10.

Supra.

the case of a taxpayer with respect to whom a deduction under section 151(e) is allowaole to another taxpayer for the taxable year— "(1) the percentage standard deduction shall be computed only with reference to so much of his adjusted gross income as is attributable to his earned income (as defined in section 911(b)), and "(2) the low income allowance shall not exceed his earned income for the taxable year." (|3^ OPTIONAL TAX.—Section 4(d) (relating to taxpayers ineligible for optional tax) is amended— (1) by striking out "or" at the end of paragraph (3); (2) by striking out the period at the end of paragraph (4) and inserting in lieu thereof "; or "; and (3) by adding at the end thereof the following new paragraph: "(5) an individual if the amount of the standard deduction otherwise allowable to such individual is reduced under section 141(e)." (c) ELECTION OF STANDARD DEDUCTION.—Section 144(a)

(relating to election of standard deduction) is amended by adding at the end thereof the following new paragraph: "(4) If the adjusted gross income shown on the return is less than $10,000, and if the taxpayer cannot elect to pay the tax imposed by section 3 by reason of section 4(d)(5), the standard

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