text:
Page:United States Statutes at Large Volume 90 Part 2.djvu/74

 90 STAT. 1542

PUBLIC LAW 94-455—OCT. 4, 1976 " (g) PREPAID INTEREST.—

,.

'

26 USC 461

note.

"

''

' *

" (1) IN GENERAL.—If the taxable income of the tax p a y e r is computed under the cash receipts and disbursements method of accounting, interest paid by the tax p a y e r which, under regulations prescribed by the Secretary, is properly allocable to any period—• " (A) with respect to which the interest represents a charge for the use or forbearance of money, and " (B) which is after the close of the taxable year in which paid, shall be charged to capital account and shall be treated as paid in the period to which so allocable. " (2) EXCEPTION.—This subsection shall not a p p l y to points paid i n respect of any indebtedness incurred in connection with the purchase or improvement of, and secured by, the principal residence of the tax p a y e r to the extent that, under regulations prescribed by the Secretary, such payment of points is an established business practice in the area in which such indebtedness is incurred, and the amount of such payment does not exceed the amount generally charged i n such area." (b) EFEECTIVE D A T E. —

(1) jj^ GENERAL.—Except as provided in paragraph (2), the amendment made by subsection (a) shall apply to amounts paid after December 31, 1975, in taxable years ending after such date. (2) CERTAIN

26 USC 163.

AMOUNTS PAID BEFORE

1977.—The

amendment

made by subsection (a) shall not apply to amounts paid before January 1, 1977, pursuant to a binding contract or written loan commitment which existed on September 16, 1975 (and a t all times the r e after), and which required prepayment of such amounts by the taxpayer. SEC. 209. LIMITATION ON INTEREST DEDUCTION. (a) IN GENERAL.—Subsection (d) of section 163 (relating to limitation on interest on investment indebtedness) is amended— (1) by striking out paragraph s (1) and (2) and inserting i n lieu thereof the following: " (1) IN GENERAL.—In the case of a tax p a y e r othcr than a Corporation, the amount of investment interest (as defined in paragraph (3)(D)) otherwise allowable as a deduction under this chapter shall be limited, in the following order, to — " (A) $10,000 ($5,000, in the case of a separate r e t u r n by a married i n d i v i d u a l), plus " (B) the amount of the n e t investment income (as defined in paragraph (3)(A)), plus the amount (if any) by which the deductions allowable under this section (determined without regard to this subsection) and sections 162,164(a)(1) or (2), or 212 attributable to property of the tax p a y e r subject to a net lease exceeds the rental income produced by such property for the taxable year. I n the case of a trust, the $10,000 amount specified in subparagraph (A) shall be zero. "(2)

,.- -,.

CARRYOVER or DISALLOWED INVESTMENT INTEREST.—The

amount of disallowed investment interest for any taxable year shall be treated as investment interest p a i d or accrued in the succeeding taxable year."; (2) by adding at the end of paragraph (3)(A) the following new sentence: " I f the tax p a y e r has investment interest for the

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Page:United States Statutes at Large Volume 90 Part 2.djvu/75

 PUBLIC LAW 94-455—OCT. 4, 1976

9 0 STAT. 1543

taxable year to which this subsection (as in effect before the T a x Reform "Act of 1976) applies, the amount of the n e t investment Ante, p. 1520. income taken into account under this subsection shall be the amount of such income (determined without regard to this sentence) multiplied by a fraction the numerator of which is the excess of the investment interest for the taxable year over the investment interest to which such prior provision applies, and the denominator of which is the investment interest for the taxable year."; (3") by striking out "limitations in paragraph s (1) and (2) (A) ' ' in paragraph (3)(E) and inserting in lieu thereof "limitation in paragraph (1) "; (4) by striking out paragraph (5) and redesignating paragraph s (6) and (7) as paragraph s (5) and (6), respectively; (5) by a d d i n g at the end of paragraph (5) (as so redesignated) the following: " For taxable years beginning after December 31, 1975, this paragraph shall be applied on an allocation basis rather than a specific item basis."; and (6) by a d d i n g at the end thereof the following new paragraph: " (7) SPECIAL RULE WHERE TAXPAYER OWNS SO PERCENT OR MORE OF ENTERPRISE.

" (A) GENERAL RULE.—In the case of any 50 percent owned corporation or partnership, the $10,000 figure specified in paragraph (1) shall be increased by the lesser of— " (i) $15,000, or " ( i i) the interest paid or accrued during the taxable year on investment indebtedness incurred or continued in connection with the acquisition of the interest in such corporation or partnership. I n the case of a separate return by a married individual, $7,500 shall be substituted for the $15,000 figure in clause (1). "(B)

O W N E R S H I P REQUIREMENTS.—This paragraph

shall

apply with respect to indebtedness only if the taxpayer, his spouse, and his children own 50 percent or more of the total value of all classes of stock of the corporation or 50 percent or more of all capital interests in the partnership, as the case may be." (b) EFEECTIVE D A T E. —

26 USC 163

(1) IN GENERAL.—Except as provided in paragraph (2), the °°*®amendments made by subsection (a) shall a p p l y to taxable years beginning after December 31, 1975. (2) INDEBTEDNESS INCURRED BEFORE SEPTEMBER 11,19 7 5.—In the

case of indebtedness attributable to a specific item of property which— (A) is for a specified term, and (B) was incurred before September 11, 1975, or is incurred after September 10, 1975, pursuant to a written contract or commitment which on September 11, 1975, and a t all times thereafter before the incurring of such indebtedness, is binding on the taxpayer, the amendments made by this section shall not apply, but section 163(d) of the I n t e r n a l Revenue Code of 1954 (as in effect before the enactment of this Act) shall apply. For purposes of the preceding sentence, so much of the net investment income (as defined in section 163(d)(3)(A) of such Code) for any taxable year as

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Page:United States Statutes at Large Volume 90 Part 2.djvu/76

 90 STAT. 1544 Ante, p. 1542.

26 USC 280.

PUBLIC LAW 94-455—OCT. 4, 1976 is not taken into account under section 163(d) of such Code, as amended by this Act, by reason of the last sentence of section 1 6 3 (d)(3)(A) of such Code, shall be taken into account for purposes of applying such section as in effect before the date of enactment of this Act with respect to interest on indebtedness referred to in the precedino; sentence. SEC. 210. AMORTIZATION OF PRODUCTION COST OF MOTION PICTURES, BOOKS, RECORDS, AND OTHER SIMILAR PROPERTY. (a) IN GENERAL. — Part IX of subchapter B of chapter 1 (relating to items not deductible) is amended by adding at the end thereof the following new section: "SEC. 280. CERTAIN EXPENDITURES INCURRED IN PRODUCTION OF FILMS, BOOKS, RECORDS, OR SIMILAR PROPERTY. " (a) GENERAL RULE. — E x c e p t in the case of a corporation (other than an electing small business corporation (as defined in section 1371 (b)) or a personal holding company (as defined in section 542)) and except in the case of production costs which are charged to capital account, amounts attributable to the production of a film, sound recording, book, or similar property which are otherwise deductible under this chapter shall be allowed as deductions only in accordance with the provisions of subsection (b). "(b)

p: ^

'

26 USC 280 note.

26 USC 543.

PRORATION

OF PRODUCTION

COST

OVER

INCOME

PERIOD.—

Amounts referred to in subsection (a) are deductible only for those taxable years ending during the period during which the taxpayer reasonably may be expected to receive substantially all of the income he will receive from any such film, sound recording, book, or similar property. The amount deductible for any such taxable year is an amount which bears the same ratio to the sum of all such amounts (attributable to such film, sound recording, book, or similar property) as the income received from the property for that taxable year bears to the sum of the income the tax p a y e r may reasonably be expected to receive during such period. " (c) DEFINITIONS. — For purposes of this section— " (1) F I L M. — The term 'film' means any motion picture film or video tape. " (2) SOUND RECORDING.—The term 'sound recording' means works that result from the fixation of a series of musical, spoken, or other sounds, regardless of the nature of the material objects, such as discs, tapes, or other phonorecordings, in which such sounds are embodied." (b) CLERICAL AMENDMENT. — The table of sections for such part is amended by a d d i n g at the end thereof the following new item: "Sec. 280. Certain expenditures incurred in production of films, books, records, or similar property." (c) EFFECTIVE D A T E. — The amendment made by this section applies to amounts paid or incurred after December 31, 1975, with respect to property the principal production of which begins after December 31, 1975. SEC. 211. CLARIFICATION OF DEFINITION OF PRODUCED FILM RENTS. (a) IN GENERAL.—Subparagraph (B) of paragraph (5) of section 543(a) (defining produced film rents for purposes of personal holding company income) is amended by adding at the end thereof the following new sentence: " I n the case of a producer who actively participates in the production of the film, such term includes an interest in the

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Page:United States Statutes at Large Volume 90 Part 2.djvu/77

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1545

proceeds or profits from the film, but only to the extent such interest is attributable to such active participation." (b) ErrECTivE D A T E. — The amendment made by subsection (a) shall 26 USC 543 apply to taxable years ending on or after December 31, 1975. °ot«SEC. 212. BASIS LIMITATION FOR AND RECAPTURE OF DEPRECIATION ON PLAYER CONTRACTS. (a)

BASIS L I M I T A T I O N S. —

(1) IN GENERAL.—Part IV of subchapter O of chapter 1 (relat- 26 USC 1051. ing to special rules applicable to gain or loss on disposition of property) is amended by redesignating section 1056 as section 1057, and by inserting after section 1055 the following new section: "SEC. 1056. BASIS LIMITATION FOR PLAYER CONTRACTS TRANSFERRED 26 USC 1056. IN CONNECTION WITH THE SALE OF A FRANCHISE. " (a) GENERAL RULE. — I f a franchise to conduct any sports enterprise is sold or exchanged, and if, in connection with such sale or exchange, there is a transfer of a contract for the services of an athlete, the basis of such contract in the hands of the transferee shall not exceed the sum of— " (1) the adjusted basis of such contract in the hands of the transferor immediately before the transfer, plus " (2) the gain (if any) recognized by the transferor on the transfer of such contract. For purposes of this section, gain realized by the transferor on the transfer of such contract, but not recognized by reason of section 3 3 7 (a), shall be treated as recognized to the extent recognized by the Post, p. 1772. transferor's shareholders. " (b) EXCEPTIONS.—Subsection (a) shall not apply— " (1) to an exchange described in section 1031 (relating to exchange of property held for productive use or investment), and " (2) to property in the hands of a person acquiring the property from a decedent or to whom the property passed from a decedent (within the meaning of section 1 0 1 4 (a)). " "(c)

TRANSFEROR REQUIRED To F U R N I S H CERTAIN INFORMATION. —

Under regulations prescribed by the Secretary, the transfer shall, at the times and in the manner provided in such regulations, furnish to the Secretary and to the transferee the following information: " (1) the amount which the transferor believes to be the adjusted basis referred to in paragraph (1) of subsection (a), " (2) the amount which the transferor believes to be the gain referred to in paragraph (2) of subsection (a), and " (3) any subsequent modification of either such amount. To the extent provided in such regulations, the amounts furnished pursuant to the preceding sentence shall be binding on the transferor and on the transferee. "(d)

PRESUMPTION AS TO A M O U N T ALLOCABLE TO PLAYER C O N -

TRACTS.—In the case of any sale or exchange described in subsection (a), it shall be presumed that not more than 50 percent of the consideration is allocable to contracts for the services of athletes unless it is established to the satisfaction of the Secretary that a specified amount in excess of 50 percent is properly allocable to such contracts. Nothing in the preceding sentence shall give rise to a presumption that an allocation of less than 50 percent of the consideration to contracts for the services of athletes is a proper allocation."

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Page:United States Statutes at Large Volume 90 Part 2.djvu/78

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1546

(2) CLERICAL AMENDMENT.—The tables of sections for such part VI is amended by striking out the last item and inserting in lieu thereof the following: "Sec. 1056. Basis limitation for player contracts transferred in connection with the sale of a franchise. "Sec. 1057. Cross references." (3) EFFECTIVE DATE.—The amendments made by this subsection apply to sales or exchanges of franchises after December 31, 1975, in taxable years ending after such date.

26 USC 1056 note.

(b) RECAPTURE.—

(1) IN GENERAL.—Section 1245(a) (relating to gain from disposition of certain depreciable property) is amended by a d d i n g at the end thereof the following new paragraph:

26 USC 1245.

" (4) SPECIAL RULE FOR PLAYER CONTRACTS,—

r

"Previously unrecaptured depreciation."

" (A) IN GENERAL.—For purposes of this section, if a franchise to conduct any sports enterprise is sold or exchanged, and if, in connection with such sale or exchange, there is a transfer of any player contracts, the recomputed basis of such player contracts in the hands of the transferor shall be the adjusted basis of such contracts increased by the greater of— " (i) the previously unrecaptured depreciation with respect to player contracts acquired hj the transferor at the time of acquisition of such franchise, or " ( i i) the previously unrecaptured depreciation with respect to the player contracts involved in such transfer. "(B) PREVIOUSLY UNRECAPTURED DEPRECIATION W I T H RESPECT TO INITIAL CONTRACTS.—For purposes of subpara-

g r a p h (A)(i), the term 'previously unrecaptured depreciation' means the excess (if any) of— " (i) the sum of the deduction allowed or allowable to the taxpayer transferor for the depreciation of any player contracts acquired by him a t the time of acquisition of such franchise, plus the deduction allowed or allowable for losses with respect to such player contracts acquired at the time of such acquisition, over " (ii) the aggregate of the amounts treated as ordinary income by reason of this section with respect to prior dispositions of such player contracts acquired upon acquisition of the franchise. "(C)

"Previously unrecaptured depreciation."

"Player contract."

PREVIOUSLY

UNRECAPTURED

DEPRECIATION

WITH

RESPECT TO CONTRACTS TRANSFERRED.—For purposes of Subparagraph (A) ( i i), the term 'previously unrecaptured depreciation' means— " (i) the amount of any deduction allowed or allowable to the taxpayer transferor for the depreciation of any contracts involved in such transfer, over " (ii) the aggregate of the amounts treated as ordinary income by reason of this section with respect to prior dispositions of such player contracts acquired upon acquisition of the franchise. "(D)

PLAYER CONTRACT.—For purposes of this paragraph,

the term 'player contract' means any contract for the services of an athlete which, in the hands of the taxpayer, is of a character subject to the allowance for depreciation provided in section 167."

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Page:United States Statutes at Large Volume 90 Part 2.djvu/79

 PUBLIC LAW 94-455—OCT. 4, 1976

9 0 STAT. 1547

(2) EFFECTIVE DATE.—The amendment made by this subsection 26 USC 1245 applies to transfers of player contracts in connection with any note, sale or exchange of a franchise after December 31, 1975. SEC. 213. CERTAIN PARTNERSHIP PROVISIONS. (a) DOLLAR L I M I T A T I O N W I T H EESPECT TO ADDITIONAL F I R S T - Y E A R

DEPRECIATION ALLOWANCE.—Subsection (d) of section 179 (relating to 26 USC 179. additional first-year depreciation allowance for small business) is amended by redesignating paragraph (8) as paragraph (9) and by inserting after paragraph (7) the following new paragraph: " (8) DOLLAR LIMITATION I N CASE OF PARTNERSHIPS.—In the case

of a partnership, the dollar limitation contained i n the first sentence of subsection (b) shall apply with respect to the partnership and with respect to each partner." (b) CLARIFICATION OF TREATMENT OF PARTNERSHIP SYNDICATION FEES, ETC.—

(1) IN GENERAL.—Part I of subchapter K of chapter 1 (relating to determination of tax liability) is amended by a d d i n g a t the end thereof the following new section: "SEC. 709. TREATMENT OF ORGANIZATION AND SYNDICATION FEES. 26 USC 709. " (a) GENERAL RULE. — E x c e p t as provided i n subsection (b), n o deduction shall be allowed under this chapter to the partnership or to any part n e r for any amounts paid or incurred to organize a partnership or to promote the sale of (or to sell) a n interest in such partnership. " (b) AMORTIZATION OF ORGANIZATION F E E S. —

" (1) DEDUCTION.—Amounts paid or incurred to organize a partnership may, a t the election of the partnership (made in accordance with regulations prescribed by the Secretary), be treated as deferred expenses. Such deferred expenses shall be allowed as a deduction ratably over such period of not less than 60 months as may be selected by the partnership (beginning with the month in which the partnership begins business), or if the partnership is liquidated before the end of such 60-month period, such deferred expenses (to the extent not deducted under this section) may be deducted to the extent provided in section 165. " (2) ORGANIZATIONAL EXPENSES DEFINED.—The organizational

expenses to which paragraph (1) applies, are expenditures which— " (A) are incident to the creation of the partnership; " (B) are chargeable to capital account; and " (C) are of a character which, if expended incident to the creation of a partnership h a v i n g an ascertainable life, would be amortized over such life." (2) CLERICAL AMENDMENT.—The table of sections for such part is amended by a d d i n g at the end thereof the following: "Sec. 709. Treatment of organization and syndication fees." (3) DETERMINATION

OF AMOUNTS

CHARGEABLE

TO CAPITAL

ACCOUNT.—Section 707(c) (relating to guaranteed payments) is 26 USC 707. amended by striking out " and section 1 6 2 (a) " and inserting in lieu thereof "and, subject to section 263, for purposes of section 162(a)". (c) I T E M S M U S T B E ALLOCATED TO PORTION OF YEAR PARTNER H E L D INTEREST.—

(1) IN GENERAL.—Subparagraph (B) of section 7 0 6 (c)(2) (relating to disposition of less than entire interest) is amended

26 USC 706.

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Page:United States Statutes at Large Volume 90 Part 2.djvu/80

 90 STAT. 1548

PUBLIC LAW 9 4 ^ 5 5 — O C T. 4, 1976 by striking o u t " o r with respect to a part n e r whose interest is reduced" and inserting in lieu thereof " o r with respect to a part n e r whose interest is reduced (whether by entry of a new partner, partial liquidation of a part n e r ' s interest, gift, or otherwise)". (2) CERTAIN PROVISIONS O F SUBCHAPTER K M A Y N O T B E OVERR I D D E N BY PARTNERSHIP AGREEMENT.—Subsection (a) o f SectioU

26 USC 704.

704 (relating to effect of partnership agreement) is amended by striking out "except as otherwise provided in this section" and inserting in lieu thereof "except as otherwise provided in this chapter". (3) CROSS REFERENCES.—

(A) Section 704 is amended by a d d i n g a t the end thereof the following: "(f)

CROSS R E F E R E N C E. —

"For rules in the case of the sale, exchange, liquidation, or reduction of a partner's interest, see section 706(c)(2)." (B) Section 761 (relating to terms defined) is amended by a d d i n g at the end thereof the following:

26 USC 761. "(e)

CROSS R E F E R E N C E. —

"For rules in the case of the sale, exchange, liquidation, or reduction of a partner's interest, see sections 704(b) and 706(c)(2)." (d) DETERMINATION OF PARTNER'S DISTRIBUTIVE SHARE.—Subsec-

26 USC 704.

tion (b) of section 704 (relating to distributive share determined by income or loss ratio) is amended to read as follows: "(b)

DETERMINATION

OF DISTRIBUTIVE

S H A R E. — A part n e r ' s dis-

tributive share of income, gain, loss, deduction, o r credit (or item thereof) shall be determined in accordance with the partner's interest in the partnership (determined by taking into account all facts and circumstances), if—• " (1) the partnership agreement does not provide as to the part ' ner's distributive share of income, gain, loss, deduction, o r credit (or item thereof), or " (2) the allocation to a part n e r under the agreement of income, gain, loss, deduction, or credit (or item thereof) does not have substantial economic effect." (e) TREATMENT OF PARTNERSHIP LIABILITIES W I T H RESPECT TO W H I C H THE PARTNER I S N O T PERSONALLY LIABLE.—Section 7 0 4 (d)

(relating to limitation on allowance of losses) is amended by adding at the end thereof the following new sentences:

Ante, p. 1531.

26 USC 709

note.

" For purposes of this subsection, the adjusted basis of any part n e r ' s interest in the partnership shall not include any portion of any partnership liability with respect to which the part n e r has no personal liability. The preceding sentence shall not apply with respect to any activity to the extent that section 465 (relating to limiting deductions to amounts at risk in case of certain activities) applies, n o r shall it apply to any partnership the principal activity of which is investing in real property (other than mineral property). " (f)

EFFECTIVE

DATES.—

(1) ii^ GENERAL.—Exccpt as Otherwise provided i n this subsection, the amendments made by this section shall apply in the case of partnership taxable years beginning after December 31, 1975. (2) SUBSECTION (e).—The amendment made by subsection (e) shall apply to liabilities incurred after December 31, 1976.

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Page:United States Statutes at Large Volume 90 Part 2.djvu/81

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1549

(3) SEC5TI0N 709(b) OF THE CODE.—Section 709(b) of the I n t e r n a l Revenue Code of 1954 (as added by the amendment made by subsection (b)(1) of this section) shall apply in the case of amounts paid or incurred in taxable years b e g i n n m g after December 31, 1976. SEC. 214. SCOPE OF WAIVER OF STATUTE OF LIMITATIONS IN CASE OF ACTIVITIES NOT ENGAGED IN FOR PROFIT. (a) IN GENERAL.—Subsection (e) of section 183 (relating to spe- 26 USC 183. cial rule for activities not engaged in for profit) is amended by adding at the end thereof the following new paragraph: "(4)

T I M E FOR ASSESSING DEFICIENCY ATTRIBUTABLE TO ACTIV-

I T Y. — I f a tax p a y e r makes an election under paragraph (1) with respect to an activity, the statutory period for the assessment of any deficiency attributable to such activity shall not expire before the expiration of 2 years after the date prescribed by law (deter* mined without extensions) for filing the return of tax under chapter 1 for the last taxable year in the period of 5 taxable years (or 7 taxable years) to which the election relates. Such deficiency may be assessed notwithstanding the provisions of any law or rule of law which would otherwise prevent such an assessment.", (b) CROSS R E F E R E N C E. — Paragraph (2) of section 6212(c) (relat- Post, p. 1803. i n g to restriction of further deficiency letters) is amended by adding 26 USC 6212. at the end thereof the following new subparagraph: "(E) Deficiency attributable to activities not engaged in for profit, see section 183(e)(4).". Supra.

(c) EFFECTIVE D A T E. — The amendments made by this section shall 26 USC 183 a p p l y with respect to taxable years beginning after December 31, note. 1969; except that such amendments shall not apply to any taxable year ending before the date of the enactment of this Act with respect to which the period for assessing a deficiency has expired before such date of enactment.

TITLE III—MINIMUM TAX AND MAXIMUM TAX SEC. 301. MINIMUM TAX. (a) IN GENERAL.—Subsection (a) of section 56 (relating to mini- 26 USC 56. m u m tax for tax preferences) is amended to read as follows: " (a) GENERAL RULE. — I n addition to the other taxes imposed by this chapter, there is hereby imposed for each taxable year, with respect to the income of every person, a tax equal to 15 percent of the amount by which the sum of the items of tax preference exceeds the greater of— " (1) $10,000, o r " (2) the regular tax deduction for the taxable year (as determined under subsection (c)). " Poif, p. 1550. (b)

CONFORMING C H A N G E S. —

(1) Section 56(b) (relating to deferral of tax liability in case of certain net operating losses) is amended— (A) by striking out "$30,000" in paragraph (1)(B) and inserting in lieu thereof "$10,000", and (B) by striking out "10 percent" in paragraph s (1) and (2) and inserting in lieu thereof "15 percent".

89-194 0—78—pt. 2

6

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Page:United States Statutes at Large Volume 90 Part 2.djvu/82

 90 STAT. 1550 26 USC 56.

PUBLIC LAW 94-455—OCT. 4, 1976 (2) Section 56(c) (relating to tax carryovers) is amended to read as follows: " (c) REGULAR T A X DEDUCTION D E F I N E D. — For purposes of t h i s sec-

Post, p. 1643. Post, p. 1559.

Post, p. 1563.

tion, the term 'regular tax deduction' means an amount equal to onehalf of (or in the case of a corporation, an amount equal to) the taxes imposed by this chapter for the taxable year (computed without regard to this part and without regard to the taxes imposed by sections 7 2 (m)(5)(B), 402(e), 4 0 8 (f), 531, and 541), reduced by the sum of the credits allowable under— " (1) section 33 (relating to foreign tax c r e d i t), " (9S section 37 (relating to credit for the elderly), " (3) section 38 (relating to investment c r e d i t), " (4) section 40 (relating to expenses of work incentive program), " (5) section 41 (relating to contributions to candidates for public office), "^6) section 42 (relating to general tax credit), " (7) section 44 (relating to purchase of new principal residence), and " (8) section 44A (relating to expenses for household and dependent care services necessary for gainful employment)." (c) ADDITIONAL T A X PREFERENCE I T E M S. — (1) ADDITIONAL PREFERENCE I T E M S. —

26 USC 57.

(A) Section 57(a) (relating to items of tax preference) is amended by striking out paragraph (1) and inserting in lieu thereof the following: "(1)

EXCESS ITEMIZED DEDUCTIONS.—An a m o u n t equal to the

excess itemized deductions for the taxable year (as determined under subsection (b)). " (B) Section 57(a) (relating to items of tax preference) is amended by striking out the m a t t e r following paragraph (10) and inserting in lieu thereof the following: " ( 1 1) INTANGIBLE DRILLING COSTS.—The excess of the intangible

drilling and development costs described in section 263(c) paid or incurred in connection with oil and gas wells (other than costs incurred in drilling a nonproductive well) allowable under this chapter for the taxable year over the amount which would have been allowable for the taxable year if such costs h a d been capitalized and straight line recovery of intangibles (as defined in subsection (d)) h a d been used with respect to such costs. Paragraph s (1), (3), and (11) shall not apply to a corporation." (C) Section 5 7 (a)(3) (relating to accelerated depreciation on personal property subject to a net lease) is amended to read as follows: "(3)

•'•'''

ACCELERATED DEPRECIATION ON LEASED PERSONAL PROP-

ERTY.—With respect to each item of section 1245 property (as defined in section 1 2 4 5 (a)(3)) which is subject to a lease, the amount by which— " ( - ^) the deduction allowable for the taxable year for depreciation or amortization, exceeds " (B) the deduction which would have been allowable for the taxable year h a d the taxpayer depreciated the property under the straight-line method for each taxable year of its useful life for which the taxpayer has held the property. For purposes of subparagraph (B), useful life shall be determined as if section 1 6 7 (m)(l) (relating to asset depreciation range) did not include the last sentence thereof."

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Page:United States Statutes at Large Volume 90 Part 2.djvu/83

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1551

(2) EXCESS ITEMIZED DEDUCTIONS DEFINED.—Section 6 7 (b)

is

26 USC 57.

amended to read as follows: " (b) EXCESS ITEMIZED DEDUCTIONS.—

" (1) IN GENERAL.—For purposes of paragraph (1) of subsection (a), the amount of the excess itemized deductions for any taxable year is the amount by which the sum of the deductions for the taxable year other than— " (A) deductions allowable i n a r r i v i n g a t adjusted gross income, " (B) the standard deduction provided by section 141, " (C) the deduction for personal exemptions provided by section 151, " (D) the deduction for medical, dental, etc., expenses provided by section 213, and " (E) the deduction for casualty losses described i n section 165(c)(3), exceeds 60 percent ( b u t does not exceed 100 percent) of the taxpayer's adjusted gross income for the taxable year. " (2) SPECIAL RULE FOR TRUSTS AND ESTATES.—In the case of a

t r u s t or estate, any deduction allowed or allowable for the taxable year— " (A) under section 642(c) (but only to the extent that the amount of the deduction allowable under such section is included in the income of the beneficiary under section 662(a) (1) for the taxable year of the beneficiary with which or within which the taxable year of the t r u s t e n d s); " (B) under section 642'(d), 642(e), 6 4 2 (f), 651 (a), 661 (a), or 691; or " (C) for costs paid or incurred i n connection with the administration of the t r u s t or estate; shall, for purposes of paragraph (1), be treated as a deduction allowable in a r r i v i n g a t an adjusted gross income." (3) STRAIGHT LINE RECOVERY OF INTANGIBLES DEFINED.—Section

,

57 is amended by a d d i n g a t the end thereof the following new subsection: " (d) STRAIGHT L I N E RECOVERY OF INTANGIBLES D E F I N E D. — For p u r -

poses of paragraph (11) of subsection (a) — " (1) IN GENERAL.—The term 'straight line recovery of intangibles', when used with respect to intangible drilling and development costs for any well, means (except in the case of an election under paragraph (2)) ratable amortization of such costs over the 120-month period beginning with the month in which production from such well begins. " (2) ELECTION.—If the taxpayer elects, a t such time and in such manner as the Secretary may by regulations prescribe, with respect to the intangible drilling and development costs for any well, the term 'straight line recovery of intangibles' means any method which would be permitted for purposes of determining cost depletion with respect to such well and which is selected by the tax p a y e r for purposes of subsection (a) ( 1 1). " (4) S P E C I A L RULES FOR TIMBER.— (A) PREFERENCE REDUCTION FOR TIMBER.—Section

57(a)

(9) is amended by adding a t the end thereof the following new subparagraph: " (C) PREFERENCE REDUCTION FOR T I M B E R. — I n the case of a

corporation, the amount of the tax preference under sub-

^"^C' P- 1550.

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Page:United States Statutes at Large Volume 90 Part 2.djvu/84

 90 STAT. 1552

PUBLIC LAW 94-455—OCT. 4, 1976 paragraph (B) shall be reduced (but not below zero) by the sum of— "(i) one-third of the corporation's timber preference income (as defined in subsection (e)), plus "(ii) $20,000, but in no event shall this reduction exceed the amount of timber preference income." (B)

26 USC 56.

Section 56 is amended by adding at the end thereof the following new subsections: "(d)

Ante, p. 1550.

Ante, p. 1551.

REGULAR TAX DEDUCTION ADJUSTMENTS FOR TIMBER.—

REGULAR TAX DEDUCTION ADJUSTMENT FOR TIMBER.—In the

case of a corporation, the regular tax deduction (as determined under subsection (c)) shall be reduced by an amount equal to the lesser of— "(1) one-third of the amount determined under subsection (c) without regard to this subsection, or "(2) the preference reduction for timber determined under section 57(a)(9)(C). "(e) TAX CARRYOVER FOR TIMBER.—

Post, p. 1643.

•

' 26 USC 57.

"(1) IN GENERAL.—In the case of a corporation, if for any taxable year, including a taxable year beginning before January 1, 1976— "(A) the taxes imposed by this chapter (computed without regard to this part and without regard to the tax imposed by section 531) which, under regulations prescribed by the Secretary, are attributable to income from timber, reduced by the sum of the credits allowable under— " (i) section 33 (relating to foreign tax credit), "(ii) section 38 (relating to investment credit), and "(iii) section 40 (relating to expenses of work incentive programs), exceed "(B) the items of tax preference (as determined under section 57), then the excess of the taxes described in subparagraph (A) over the items of tax preference shall be a tax carryover to each of the 7 taxable years following such year. The entire amount of the excess shall be carried to the first of such 7 taxable years, and then to each of the other such taxable years to the extent that such excess is not used to reduce the amount subject to tax under subsection (a) for a prior taxable year to which such excess may be carried. "(2) LIMITATION.—The amount of any carryover under paragraph (1) which may be deducted in a taxable year shall be limited to— " (A) the excess of— "(i) the amount of timber preference income for the taxable year (as defined in section 57(e)), over "(ii) the amount determined under section 57 (a)(9)(C) for the taxable year, "(B) reduced by the excess of— "(i) the regular tax deduction for the taxable year (as determined under subsection (c) without regard to this subsection), over "(ii) the amount determined under subsection (d) for the taxable year." (C) TIMBER PREFERENCE INCOME DEFINED.—Section 57 is

amended by adding at the end thereof the following new subsection:

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Page:United States Statutes at Large Volume 90 Part 2.djvu/85

 PUBLIC LAW 94-455—OCT. 4, 1976

9 0 STAT. 1553

" (e) T I M B E R PREFERENCE I N C O M E DEnNED,—For purposes of t h i s

part, the term 'timber preference income' means the sum of— " (1) the gains referred to in section 631(a) and section 631(b), 26 USC 631. " (2) long-term capital gains on timber, and " (3) gains on the sale of timber included in paragraph 1231 (b)(1), multiplied by the fraction determined in paragraph 5 7 (a)(9)(B). " (d) AMENDMENTS OF SECTION 58.—Section 58 (relating to rules for 26 USC 58. application of part) is amended— (1) by striking out subsection (a) and inserting in lieu thereof the following: " (a) MARRIED INDIVIDUALS F I L J N G SEPARATE EETTJRNS.—In the case

of a married individual who files a separate return for the taxable year, section 56 shall be applied by substituting $5,000 for $10,000 each place it appears.", (2) by striking out "$30,000" each place it appears in subsections (b) and (c)(2) and inserting in lieu thereof "$10,000", and (3) by a d d i n g a t the end thereof the following new subsections: " (h) REGULATIONS To INCLUDE T A X B E N E F I T RULE. — The Secretary

shall prescribe regulations under which items of tax preference shall be properly adjusted where the tax treatment giving rise to such items will not result in the reduction of the taxpayer's tax under this subtitle for any taxable years. " (i) CORPORATION DEFINED.—Except as provided in subsection (d)(2), for purposes of this part, the term 'corporation' does not include an electing small business corporation (as defined in section 1371(b)) or a personal holding company (as defined i n section 542)." (e) CONFORMING AMENDMENT. — S u b s e c t i o n (d) of section 443 (re-

26 USC 443.

lating to adjustment in exclusion for computing minimum tax for tax preferences) is amended by striking out "$30,000" and inserting in lieu thereof "$10,00O". (f) SECTION 21 N O T To A P P L Y. — For purposes of section 21 of the 26 USC 56 note. I n t e r n a l Revenue Code of 1954, the amendments made by this section shall not be treated as a change in a r a t e of tax. (g) EFFEGTRTS D A T E. —

26 USC 56 note.

(1) IN GENERAL.—Except as provided by paragraph (4), the amendments made by this section shall apply to items of tax preference for taxable years beginning after December 31, 1975. (2) T A X CARRYOVER.—Except as provided in paragraph (4) and in section 56(e) of the I n t e r n a l Revenue Code of 1954, ^»'e, p. 1552. the amount of any tax carryover under section 56(c) of such Code ^"^e, p. 1550. from a taxable year beginning before January 1, 1976, shall not be allowed as a tax carryover for any taxable year beginning after December 31, 1975. (3) SPECIAL RULE FOR TAXABLE YEAR I 9 7 6 I N THE CASE OF A COR-

PORATION.—Notwithstanding any provision of the Internal Revenue Code of 1954 to the contrary, i n the case of a corporation 26 USC 1 et seq. which is not an electing small business corporation or a personal holding company the tax imposed by section 56 of such Code for taxable years beginning in 1976, is an amount equal to the sum of— (A) the amount of the tax which would have been imposed for such taxable year under such section as such section was in effect on the d a y before the date of the enactment of the Ante p 1520 T a x Reform Act of 1976, and (B) one-half of the amount by which the amount of the tax which would be imposed for such taxable year under such

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Page:United States Statutes at Large Volume 90 Part 2.djvu/86

 90 STAT. 1554

PUBLIC LAW 94-455—OCT. 4, 1976

Ante, p. 1520.

section as amended by the T a x Reform Act of 1976 (but for this paragraph) exceeds the amount determined under subparagraph (A). (4) CERTAIN FINANCIAL INSTITUTIONS. — I n the case of a tax p a y e r

.'"

which is a financial institution to which section 585 or 593 of the I n t e r n a l Revenue Code of 1954 applies, the amendments made by this section shall apply only to taxable years beginning after December 31, 1977, and paragraph (2) shall be applied by substituting " January 1, 1978" for " January 1, 1976" and by substituting "December 31, 1977" for "December 31, 1975". SEC. 302. MAXIMUM TAX. (a) IN GENERAL.—Section 1348 (relating to 50-percent maximum rate on earned income) is amended to read as follows: "SEC. 1348. 50-PERCENT MAXIMUM RATE ON PERSONAL SERVICE INCOME.

'

26 USC 1348.

"(a)

GENERAL RULE. — I f for any tax a b l e year an i n d i v i d u a l has

personal service taxable income which exceeds the amount of taxable income specified in paragraph (1), the tax imposed by section 1 for such year shall, unless the tax p a y e r chooses the benefits of part I (relating to income a v e r a g i n g), be the sum of— " (1) the tax imposed by section 1 on the highest amount of taxable income on which the rate of tax does not exceed 50 percent, " (2) 50 percent of the amount by which his personal service taxable income exceeds the amount of taxable income specified in paragraph (1) of this subsection, and " (3) the excess of the tax computed under section 1 without regard to this section over the tax so computed with reference solely to his personal service taxable income. " (b) DEFINITIONS. — For purposes of this section—

26 USC 1301.

" (1) PERSONAL SERVICE INCOME.—

.t. M < • •..

,, pj;

.

" (A) IN GENERAL.—The term 'personal service income' means any income which is earned income within the meaning of section 4 0 1 (c)(2)(C) or section 911(b) or which is an amount received as a pension or annuity. " (B) EXCEPTIONS.—The term 'personal service income* does not include any amount— " (i) to which section 7 2 (m)(5), 4 0 2 (a)(2), 402(e), 4 0 3 (a)(2), 4 0 8 (e)(2), 4 0 8 (e)(3), 4 0 8 (e)(4), 408(e) (5), 4 0 8 (f), o r 409(c) applies; or " ( i i) which is includible i n gross income under section 409(b) because of the redemption of a bond which was not tendered before the close of the taxable year in which the registered owner attained age 70^4. " (2) PERSONAL SERVICE TAXABLE I N C O M E. — The personal service

.,^

'^ '

taxable income of an individual is the excess of— " (A) the amount which bears the same ratio ( b u t not in excess of 100 percent) to his taxable income as his personal service net income bears to his adjusted gross income, over " (B) the sum of the items of tax preference (as defined in section 57) for the taxable year. For purposes of subparagraph (A), the term 'personal service net income' means personal service income reduced by any deductions allowable under section 62 which are properly allocable to or chargeable against such earned income. " (c) MARRIED INDIVIDUALS.—This section shall apply to a married individual only if such individual and his spouse make a single return jointly for the taxable year."

�


text:
Page:United States Statutes at Large Volume 90 Part 2.djvu/87

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1555

(b) CLERICAL AMENDMENT. — The table of sections for part VI of

subchapter Q of chapter 1 is amended by striking out the item relating to section 1348 and inserting in lieu thereof the following: "Sec. 1348. 50-percent maximum rate on personal service income." (c) CONFORMING AMENDMENTS. — S e c t i o n 1304(b)(5) is amended by

striking out "earned" and inserting i n lieu thereof "personal service". (d) EFFECTIVE D A T E. — The amendments made by this section apply to taxable years beginning after December 31, 1976.

26 USC 1304.

26 USC 1348 note.

TITLE IV—EXTENSIONS OF INDIVIDUAL INCOME TAX REDUCTIONS SEC. 401. EXTENSIONS OF INDIVIDUAL INCOME TAX REDUCTIONS. (a) GENERAL T A X CREDIT.—

(1) 1-YEAR EXTENSION OF CREDIT.—Section 3(b) of the Revenue Adjustment Act of 1975 is amended by striking out "December 31, 1976" and inserting in lieu thereof "December 31, 1977".

26 USC 42 note.

(2) T E C H N I C A L AMENDMENTS.—

(A) The heading and subsection (a) of section 42 (relating to allowance of taxable income credit) a r e amended to read as follows: "SEC. 42. GENERAL TAX CREDIT. 26 USC 42. " (a) ALLOWANCE OF C R E D I T. — I n the case of an individual, the r e

shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the greater of— " (1) 2 percent of so much of the taxpayer's taxable income for the taxable year as does not exceed $9,000; o r " (2) $35 multiplied by each exemption for which the taxpayer is entitled to a deduction for the taxable year under subsection (b) or (e) of section 151." (B) Paragraph (1) of section 42(c) (relating to special rule for married individuals filing separate returns) is amended to read as follows: " (1) IN GENERAL.—Notwithstanding subsection (a), in the case of a married individual who files a separate return for the taxable year, the amount of the credit allowable under subsection (a) for the taxable year shall be equal to either— " (A) the amount determined under paragraph (1) of subsection (a); or " (B) if this subparagraph applies to the individual for the taxable year, the amount determined under paragraph (2) of subsection (a). For purposes of the preceding sentence, paragraph (1) of subsection (a) shall be applied by substituting '$4,500' for '$9,000'." (C) Section 6096(b) (relating to designation of income 26 USC 6096. tax payments to Presidential Election Campaign F u n d), as in effect on the day before the date of the enactment of the Tax Keduction Act of 1975, is amended by striking out "and 4 1 " ^«'e, p. 1520. and inserting in lieu thereof "41, and 42". (D) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 42 and inserting in lieu thereof the following: "Sec. 42. General tax credit."

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text:
Page:United States Statutes at Large Volume 90 Part 2.djvu/88

 90 STAT. 1556 26 USC 141.

PUBLIC LAW 94-455—OCT. 4, 1976 (b) STANDARD DEDUCTION. — (1) L o w INCOME ALLOWANCE.—Subsection (c) of section 141

(relating to low income allowance) is amended to read as follows: " (c) L o w INCOME A L L O W A N C E. — The low income allowance is—

" (1) $2,100 in the case of— " (A) a joint return under section 6013, or " (B) a surviving spouse (as defined in section 2(a)), " (2) $1,700 in the case of an individual who is not married and who is not a surviving spouse (as so defined), or " (3) $1,050 in the case of a married individual filing a separate return.". (2) PERCENTAGE STANDARD DEDUCTION.—Subsection (b) of sec-

tion 141 (relating to percentage standard deduction) is amended to read as follows: "(b)

PERCENTAGE STANDARD DEDUCTION. — The percentage standard

deduction is an amount equal to 16 percent of adjusted gross income, but not more than — " (1) $2,800 in the case of— " (A) a joint return under section 6013, or " (B) a surviving spouse (as defined in section 2(a)), " (2) $2,400 in the case of an individual who is not married and who is not a surviving spouse (as so defined), or " (3) $1,400 in the case of a married individual filing a separate return." 26 USC 6012.

.

r

i

(3) F I L I N G REQUIREMENTS.—So m u c h of paragraph (1) of sec-

tion 6012(a) (relating to persons required to make returns of income) as precedes subparagraph (C) thereof is amended to read as follows: " (1)(A) E v e r y individual having for the taxable year a gross income of $750 or more, except that a return shall not be required of an individual (other than an individual referred to in section 142(b)) — " (i) who is not married (determined by applying section 143), is not a surviving spouse (as defined in section 2(a)), and for the taxable year has a gross income of less than $2,450, " (ii) who is a surviving spouse (as so Refined) and for the taxable year has a gross income of less than $2,850, or " ( i i i) who is entitled to make a joint r e t u r n under section 6013 and whose gross income, when combined with the gross income of his spouse, is, for the taxable year, less than $3,600 but only if such individual and his spouse, a t the close of the taxable year, h a d the same household as their home. Clause (iii) shall not apply if for the taxable year such spouse makes a separate return or any other taxpayer is entitled to an exemption for such spouse under section 151(e). " (B) The amount specified in clause (i) or (ii) of subparagraph (A) shall be increased by $750 i n the case of a n individual entitled to an additional personal exemption under section 151 (c)(1), and the amount specified in clause (iii) of subparagraph (A) shall be increased by $750 for each additional personal exemption to which the individual or his spouse is entitled under section 1 5 1 (c); ". (c) E A R N E D I N C O M E C R E D I T. — (1) E X T E N S I O N OF CREDIT.—

?»*;•=;

/

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Page:United States Statutes at Large Volume 90 Part 2.djvu/89

 PUBLIC LAW 94-455—OCT. 4, 1976

9 0 STAT. 1557

(A) Section 209(b) of the T a x Reduction Act of 1975 is 26 USC 43note. amended by striking out " January 1, 1977" and inserting i n lieu thereof " January 1, 1978". (B) Subsections (a) and (b) of section 43 (relating to 26 USC 43. earned income credit,) are amended to read as follows: "(a)

ALLOWANCE o r C R E D I T. — I n the case of a n eligible i n d i v i d u a l,

there is allowed as a credit against the tax imposed by this chapter for the taxable year a n amount equal to 10 percent of so much of the earned income for the taxable year as does not exceed $4,000. " (b) L I M I T A T I O N. — The amount of the credit allowable to a taxp a y e r under subsection (a) for any taxable year shall be reduced ( b u t not below zero) by a n amount equal to 10 percent of so much of the adjusted gross income (or, if greater, the earned income) of the tax p a y e r for the taxable year as exceeds $4,000." (2) DEFINITION OF ELIGIBLE INDIVIDUAL.—Subparagraph

(A^

of section 43(c)(1) (relating to definition of eligible individual) is amended to read as follows: " (A) maintains a household (within the meaning of section 4 4 A (f)(1)) i n the United States which is the principal place of abode of that individual and— " (i) a child of that individual if such child meets the requirements of section 151(e)(1)(B) (relating to additional exemptions for dependents), or " ( i i) a child of that individual who is disabled (within the meaning of section 7 2 (m)(7)) and with respect to whom that individual is entitled to claim a deduction under section 1 5 1; and",

Post, p. 1563.

(d) WITHHOLDING AMENDMENTS.—

(1) Subsection (a) of section 3402 (relating to income tax 26 USC 3402. collected a t source) is amended to read as follows: "(a)

REQUIREMENTo r W I T H H O L D I N G. — E x c e p t as otherwise p r o -

vided i n this section, every employer making payment of wages shall deduct and witlihold upon such wages a tax determined i n accordance with tables prescribed by the Secretary. W i t h respect to wages paid p r i o r to January 1, 1978, the tables so prescribed shall be the same as the tables prescribed under this section which were in eifect on January 1, 1976. W i t h respect to wages paid after December 31, 1977, the Secretary shall prescribe new tables which shall be the same as the tables prescribed under this subsection which were in effect on January 1, 1975, except that such tables shall be modified to the extent necessary to reflect the amendments made to subsections (b) and (c) of section 141 by the T a x Reform Act of 1976. For Ante, p. 1556. purposes of applying such taliles, the term 'the amount of wages' "The amount of means the amount by which the wages exceed the number of with- wages." holding exemptions claimed, multiplied by the amount of one such exemption as shown in the table in subsection (b)(1). " (2) Paragraph (6) of section 3402(c) (relating to wage bracket w i t h h o l d i n g), as such paragraph was in effect on the d a y before the date of the enactment of the T a x Reduction Act of 1975, is amended by striking out "table 7 contained in sub- 26 USC 1 note, section (a) " and inserting in lieu thereof " the table for a n annual payroll period prescribed pursuant to subsection (a) ". (3) Subparagraph (B) of section 3402(m)(1) (relating to withholding allowance based on itemized deductions) is amended to read as follows: " (B) an amount equal to the lesser of (i) 16 percent of his estimated wages, or ( i i) $2,800 ($2,400 i n the case of an individual

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Page:United States Statutes at Large Volume 90 Part 2.djvu/90

 90 STAT. 1558

26 USC 42 note.

26 USC 43 note. 26 USC 43 note.

1 „ ^

PUBLIC LAW 94-455—OCT. 4, 1976 who is not married (within the meaning of section 143) and who is not a surviving spouse (as defined in section 2(a))). " (e) EFFECTIVE DATES.—The amendments made by subsections (a) and (c) shall apply to taxable years ending after December 31, 1975, and shall cease to apply to taxable years ending after December 31, 1977. The amendments made by subsection (b) shall apply to taxable years ending after December 31, 1975. The amendments made by subsection (d) shall apply to wages paid after September 14, 1976. SEC. 402. REFUNDS OF EARNED INCOME CREDIT DISREGARDED IN THE ADMINISTRATION OF FEDERAL PROGRAMS AND FEDERALLY ASSISTED PROGRAMS. (a) Subsection (d) of section 2 of the Revenue Adjustment Act of 1975 jg amended by striking out "which begins prior to July 1, 1976,". (b) Subsection (g) of section 2 of such Act is amended to read as follows: " (g) EFFECTIVE DATES.—The amendments made by this section (other than by subsection (d)) apply to taxable years ending after December 31, 1975, and before January 1, 1978. Subsection (d) applies to taxable years ending after December 31, 1975."

TITLE V—TAX SIMPLIFICATION IN THE INDIVIDUAL INCOME TAX 26 USC 3.

SEC. 501. REVISION OF TAX TABLES FOR INDIVIDUALS. (a) IN GENERAL.—Section 3 (relating to optional tax tables for individuals) is amended to read as follows: "SEC. 3. TAX TABLES FOR INDIVIDUALS HAVING TAXABLE INCOME OF LESS THAN $20,000. "(a)

GENERAL RULE. — I n lieu of the tax imposed by section 1,

there is hereby imposed for each taxable year on the taxable income of every individual whose taxable income for such year does not exceed $20,000, a tax determined under tables, applicable to such taxable year, which shall be prescribed by the Secretary. I n the tables so prescribed, the amounts of tax shall be computed on the basis of the rates prescribed by section 1. " (b) T A X TREATED AS IMPOSED BY SECTION 1.—For purposes of

this title, the tax imposed by this section shall be treated as tax imposed by section 1." (b) CONFORMING AMENDMENTS. —

26 USC 4. 26 USC 36.

26 USC 144.

(1) Section 4 (relating to rules for optional tax) is hereby repealed. (2) Section 36 (relating to credits not allowed to individuals paying optional tax or taking standard deduction) is amended— (A) by striking out "PAYING OPTIONAL TAX OR" in the heading; and (B) by striking out "elects to pay the optional tax imposed by section 3, or if he'* in such section. (3) Subsection (a) of section 144 (relating to election of standard deduction) is amended to read as follows: " (a) METHOD

OF ELECTION. — The

standard

deduction

shall

be

allowed if the taxpayer so elects in his return, and the Secretary shall prescribe the manner of signifying such election in the return.. (4) Subsection (c) of section 144 is amended— (A) by striking out paragraph (2); (B) by inserting "or" at the end of paragraph (1); and

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Page:United States Statutes at Large Volume 90 Part 2.djvu/91

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1559

(C) by redesignating paragraph (3) as paragraph (2). (5) Subsection (d) of section 144 is hereby repealed. (6) Section 1211(b)(3) (relating to computation of taxable income for purposes of limitation on capital losses) is amended by striking out the last sentence thereof. (7) Section 1304(b) (relating to certain provisions inapplicable for income averaging) is amended by striking out paragraph (1) and by redesignating paragraph s (2), (3), (4), and (5) as paragraph s (1), (2), (3), and (4), respectively. (8) Section 6014(a) (relating to tax not computed by taxpayer) is amended— (A) by striking out in the first sentence "entitled to elect to p a y the tax imposed by section 3 " and inserting in lieu thereof "entitled to take the standard deduction provided by section 141 (other than an individual described in section 141(e))"; and (B) by striking out in the second sentence " p a y the tax imposed by section 3"' and inserting in lieu thereof "take the standard deduction*'. (9) Paragraph (5) of section 6014(b) is amended to read as follows: " (5) to cases where the taxpayer does not elect the standard deduction or where the taxpayer elects the standard deduction but is subject to the provisions of section 141(e) (relating to limitations in case of certain dependent tax p a y e r s). "

26 USC 144. 26 USC 1211. 26 USC 1304.

26 USC 6014. ^'»'«' P- 1558.

(c) CLERICAL AMENDMENTS. —

(1) The table of sections for part I of subchapter A of chapter 1 is amended by striking out the items relating to sections 3 and 4 and inserting in lieu thereof: "Sec. 3. Tax tables for individuals having taxable income of less than $20,000." (2) The table of sections for part IV of subchapter A of chapter 1 is amended by striking out "paying optional tax o r " in the item relating to section 36. SEC. 502. DEDUCTION FOR ALIMONY ALLOWED IN DETERMINING ADJUSTED GROSS INCOME. (a) IN GENERAL.—Section 62 (defining adjusted gross income) is 26 USC 62. amended by inserting after paragraph (12) the following new paragraph: "(13) ALI3IONY.—The deduction allowed by section 215." (b) CONFORMING AMENDMENT. — The first sentence of subparagraph

(A) of section 3402(m)(2) (relating to withholding allowances based 26 USC 3402. on itemized deductions) is amended by striking out "under section 62" and inserting in lieu thereof "under section 62 (other than paragraph (13) thereof)". (c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 62 note, apply to taxable years beginning after December 31, 1976. SEC. 503. REVISION OF RETIREMENT INCOME CREDIT. (a) IN GENERAL.—Section 37 (relating to retirement income) is 26 USC 37, amended to read as follows: "SEC. 37. CREDIT FOR THE ELDERLY. " (a) GENERAL RULE. — I n the case of an individual who has attained

age €5 before the close of the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 15 percent of such individual's section 37 amount for such taxable year.

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Page:Hockey, Canada's Royal Winter Game.djvu/71

THE QUEBEC HOCKEY TEAM.

☘

HE Quebec Hockey Club is one of the oldest in Canada, having been in existence for upwards of twenty years.

It was one of the clubs which formed the Amateur Hockey Association of Canada and played under the old challenge system before the present series was introduced.

The Quebec Club was the first to send a team across the border to teach the Americans' this fine Canadian game. This team played two exhibition matches in Baltimore, Md., in 1895, and the scientific play of the Canadians won unstinted praise from the spectators.

In 1896 its team was the only one to defeat the famous "Victorias," of Winnipeg, during that club's victorious tour, thus upholding the prestige of the east.


text:
Page:United States Statutes at Large Volume 90 Part 2.djvu/92

 PUBLIC LAW 94-455—OCT. 4, 1976

9 0 STAT. 1560

" (b) SECTION 37 A M O U N T. — For purposes of subsection (a) —

" (1) IN GENERAL.—An individual's section 37 amount for the taxable year is the applicable initial amount determined under paragraph (2), reduced as provided i n paragraph (3) and in subsection (c). " (2) I N I T I A L AMOUNT.—The i n i t i a l a m o u n t is—

42 USC 401. 45 USC 215— 228 notes, 228a. 26 USC 72. Post, p. 1926.

" ^ A) $2,500 in the case of a single individual, " (B) $2,500 in the case of a joint return where only one spouse is eligible for the credit under subsection (a), " (C) $3,750 in the case of a joint return where both spouses are eligible for the credit under subsection (a), or " (D) $1,875 in the case of a married individual filing a separate return. " (3) REDUCTION.—The reduction under this paragraph is an amount equal to the sum of the amounts received by the individual (or, in the case of a joint return, by either spouse) as a pension or annuity— " (A) under title II of the Social Security Act, " (B) under the Railroad Retirement Act of 1935 or 1937, or " (C) otherwise excluded from gross income. No reduction shall be made under this paragraph for any amount excluded from gross income under section 72 (relating to annuities), 101 (relating to life insurance proceeds), 104 (relating to compensation for injuries or sickness), 105 (relating to amounts received under accident and health p l a n s), 120 (relating to amounts received under qualified g r o u p legal services p l a n s), 402 (relating to taxability of beneficiary of employees' t r u s t), 403 (relating to taxation of employee annuities), or 405 (relating to qualified bond purchase p l a n s). "(c)

LIMITATIONS.— " (1) ADJUSTED GROSS INCOME L I M I T A T I O N. — I f

the

adjusted

gross income of the taxpayer exceeds— " (A) $7,500 in the case of a single individual, " (B) $10,000 in the case of a joint return, or " (C) $5,000 in the case of a married individual filing a separate return, the section 37 amount shall be reduced by one-half of the excess of the adjusted gross income over $7,500, $10,000, or $5,000, as the case may be. " (2) L I M I T A T I O N BASED ON AMOUNT o r TAX.—The a m o u n t of

26 USC 1.

the credit allowed by this section for the taxable year shall not exceed the amount of the tax imposed by this chapter for such taxable year. "(d)

DEFINITIONS

AND SPECIAL

RULES.—For

purposes

of

this

section— " (1) MARRIED COUPLE MUST FILE JOINT R E T U R N. — E x c e p t in the

"Joint return.

case of a husband and wife who live a part a t all times during the taxable year, if the taxpayer is married a t the close of the taxable year, the credit provided by this section shall be allowed only if the taxpayer and his spouse file a joint r e t u r n for the taxable year. " (2) MARITAL STATUS.—Marital status shall be determined under section 143. " (3) JOINT RETURN.—The term 'joint r e t u r n ' means the joint r e t u r n of a husband and wife made under section 6013.

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Page:United States Statutes at Large Volume 90 Part 2.djvu/93

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1561

" (e) ELECTION OF PRIOR L A W W I T H RESPECT TO P U B L I C RETIREMENT SYSTEM I N C O M E. —

" (1) IN GENERAL.—In the case of a taxpayer who has not attained age 65 before the close of the taxable year (other than a married individual whose spouse has attained age 65 before the close of the taxable year), his credit (if any) under this section shall be determined under this subsection. "(2)

'

O N E SPOUSE AGE 65 OR OVER.—In the case of a m a r r i e d

individual who has not attained age 65 before the close of the taxable year b u t whose spouse has attained such age, this paragraph shall apply for the taxable year only if both spouses elect, at such time and in such manner as the Secretary shall by regulations prescribe, to have this paragraph apply. I f this paragraph applies for the taxable year, the credit (if any) of each spouse under this section shall be determined under this subsection. "(3)

COMPUTATION OF CREDIT.—In the case of an i n d i v i d u a l

whose credit under this section for the taxable year is determined v under this subsection, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 15 percent of the amount received by such individual as retirement income (as defined in paragraph (4) and as limited by paragraph (5)). " (4) RETIREMENT INCOME.—For purposes of this subsection, the "Retirement term 'retirement income' means— income. " (A) in the case of an individual who has attained age 65 before the close of the taxable year, income from— " (i) pensions and annuities (including, in the case of an individual w h o is, o r has been, an employee within the meaning of section 401(c)(1), distributions by a trust 26 USC 401. described in section 401(a) which is exempt from tax under section 501(a)), " ( i i) interest, " ( i i i) rents, . •: • • " ( i v) dividends, " (v) bonds described in section 405(b)(1) which are received under a qualified bond purchase plan described in section 405(a) or i n a distribution from a t r u s t described i n section 401(a) which is exempt from tax under section 5 0 1 (a), or retirement bonds described in section 409, and " ( v i) a n individual retirement account described i n section 408(a) o r a n individual retirement annuity described in section 408(b), or " (B) in the case of an individual who has not attained age 65 before the close of the taxable year, income from pensions and annuities under a public retirement system (as defined in paragraph (8)(A)), to the extent included in gross income without reference to this subsection, b u t only to the extent such income does not represent compensation for personal services rendered during the taxable year. " (5) L I M I T A T I O N ON RETIREMENT I N C O M E. — For purposes of t h i s

subsection, the amount of retirement income shall not exceed $2,500 less— " (A) the reduction provided by subsection (b)(3), and " (B) i n the case of any individual who has not attained age 72 before the close of the taxable year—

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Page:United States Statutes at Large Volume 90 Part 2.djvu/94

 90 STAT. 1562

PUBLIC LAW 94-455—OCT. 4, 1976 ';i:;

" (i) if such individual has not attained age 62 before the close of the taxable year, any amount of earned income (as defined in paragraph (8)(B)) in excess of $900 received by such individual in the taxable year, or " ( i i) if such individual has attained age 62 before the close of the taxable year, the sum of one-half the amount of earned income received by such individual in the taxable year in excess of $1,200 b u t not in excess of $1,700, and the amount of earned income so received in excess of $1,700. " (6) LiMiTATLOx IX CASE OF MAKiuED INDIVIDUALS.—In the case of a joint return, paragraph (5) shall be applied by substituting '$3,750' for '$2,500'. The $3,750 provided by the preceding sentence shall be divided between the spouses in such amounts as may be agreed on by them, except that not more than $2,500 may be assigned to either spouse. " (7) L I M I T A T I O N IX THE CASE OF SEPARATE RETURNS.—In the case

of a married individual filing a separate return, paragraph (5) shall be applied by substituting '$1,875' for '$2,500'. " (8) DEFINITIONS. — For purposes of this subsection— " (A) P U B L I C RETIREMENT SYSTJ^I DEFINED.—The term ' p u b -

lic retirement system' means a pension, annuity, retirement, or similar fund o r system established by the United States, a State, a possession of the United States, any political subdivision of any of the foregoing, or the District of Columbia. " (B) EARNED INCOME.—The term 'earned income' has the meaning assigned to such term by section 9 1 1 (b), except that such term does not include any amount received a s a pension or annuity.

'

"(f)

NONRESIDENT A L I E N INELIGIBLE FOR CREDIT.—No credit shall

be allowed under this section to any nonresident alien." (b) T E C H N I C A L AMENDMENTS. —

26 USC 904.

(1) Section 904 (relating to limitation on foreign tax c r e d i t), as amended by this Act, is amended by redesignating subsection (g) as subsection (h), and by inserting after subsection (f) the following new subsection: " (g) COORDINATION "WITH CREDIT FOR THE E L D E R L Y. — I n the case of

Ante, p. 1559. 26 USC 6014.

' 26 USC 41, 42, '*^' ^0^-

an individual, for purposes of subsection (a) the tax against which the credit is taken is such tax reduced by the amount of the credit (if any) for the taxable year allowable under section 37 (relating to credit for the elderly)." (2) Section 6014(a) (relating to tax not computed by taxpayer) is amended by striking out the last sentence thereof. (3) Section 6014(b) is amended— (xV) by striking out paragraph (4), (B) by redesignating paragraph (5) (as amended by section 501(b)(9)) as paragraph (4), and (C) by inserting "or" at the end of paragraph (3). (4) Sections 41(b)(2), 42(b)(2), 46(a)(3)(C), and 5 0 A (a) (3)(C) are each amended by striking o u t "retirement income" and inserting in lieu thereof "credit for the elderly". (5) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 37 and inserting in lieu thereof the following: "Sec. 37. Credit for the elderly."

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Page:United States Statutes at Large Volume 90 Part 2.djvu/95

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1563

SEC. 504. CREDIT FOR CHILD CARE EXPENSES. (a) ALLOWANCES OF CREDIT FOR C H I L D CARE E X P E N S E S. —

(1) IN GENERAL.—Subpart A of part IV of subchapter A of chapter 1 (relating to credits allowable) is amended by inserting before section 45 the following new section: "SEC. 44A. EXPENSES FOR HOUSEHOLD AND DEPENDENT CARE SERV- 26 USC 44A. ICES NECESSARY FOR GAINFUL EMPLOYMENT. "(a)

ALLOWANCE OF C R E D I T. — I n the case of a n i n d i v i d u a l who

maintains a household which includes as a member one or more qualifying individuals (as defined in subsection (c)(1)), there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 20 percent of the employment-related expenses (as defined in subsection (c)(2)) paid by such individual during the taxable year. " (b) APPLICATION W I T H OTHER CREDITS.—The credit allowed by

subsection (a) shall not exceed the amount of the tax imposed by this chapter for the taxable year reduced by the sum of the credits allowable under— " (1) section 33 (relating to foreign tax c r e d i t), Post, P- 1643. " (2) section 37 (relating to credit for the elderly), ^"^^' P- l^^^" (3) section 38 (relating to investment in certain depreciable property), " (4) section 40 (relating to expenses of work incentive programs), " (5) section 41 (relating to contributions to candidates for public office), " (6) section 42 (relating to general tax c r e d i t), and " (7) section 44 (relating to purchase of new principal residence). " (c) DEFINITIONS OF QUALIFYING INDIVIDUAL AND EMPLOYMENT EELATED E X P E N S E S. — For purposes of t h i s section— " (1) QUALIFYING INDIVIDUAL.—The term 'qualifying individ-

ual' 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 w h o 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.—

" (A) IN GENERAL.—The term 'employment-related expenses' means amounts paid for the following expenses, b u t only if such expenses a r e incurred to enable the taxpayer to be gainfully employed for any period for which there are 1 or more qualifying individuals with respect to the tax p a y e r: " (i) expenses for household services, and " ( i i) expenses for the care of a qualifying individual. " (B) EXCEPTION.—Employment-related expenses described in subparagraph (A) 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 paragraph (1)(A). " (d) DOLLAR L I M I T ON A M O U N T CREDITABLE.—The a m o u n t of the

employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed—

^

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Page:United States Statutes at Large Volume 90 Part 2.djvu/96

 90 STAT. 1564

PUBLIC LAW 94-455—OCT. 4, 1976 " (1) $2,000 if there is 1 qualifying individual with respect to the taxpayer for such taxable year, or " (2) $4,000 if there are 2 or more qualifying individuals with respect to the taxpayer for such taxable year. "(e)

EARNED I N C O M E L I M I T A T I O N. —

" (1) IN GENERAL.—Except as otherwise provided in this subsection, the amount of the employment-related expenses incurred during any taxable year which may be taken into account under subsection (a) shall not exceed— " (A) in the case of an individual who is not married at the close of such year, such individual's earned income for such year, or " (B) in the case of an individual who is married at the close of such year, the lesser of such individual's earned income or the earned income of his spouse for such year. "(2)

SPECIAL RULE FOR SPOUSE WHO IS A STUDENT OR INCAPABLE

OF CARING FOR HIMSELF.—In the case of a spouse who is a student or a qualifying individual described in subsection (c)(1)(C), for purposes of paragraph (1), such spouse shall be deemed for each month during which such spouse is a full-time student at an educational institution, or is such a qualifying individual, to be gainfully employed and to have earned income of not less than— " (A) $166 if subsection (d)(1) applies for the taxable year, or " (B) $333 if subsection (d)(2) applies for the taxable year. I n the case of any husband and wife, this paragraph shall apply with respect to only one spouse for any one month. " (f) SPECIAL RULES. — For purposes of this section— " (1) MAINTAINING HOUSEHOLD.—An individual shall be treated as maintaining a household for any period only if over half the cost of maintaining the household for such period is furnished by such individual (or, if such individual is married during such period, is furnished by such individual and his spouse). "(2)

MARRIED COUPLES MUST FILE JOINT RETURN.—If the

tax-

payer is married at the close of the taxable year, the credit shall be allowed under subsection (a) only if the tax p a y e r and his spouse file a joint return for the taxable year. " (3) MARITAL STATUS.—An individual legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married. "(4)

CERTAIN MARRIED INDIVIDUALS LIVING APART.—If—

" (A) an individual who is married and who files a separate return— " (i) maintains as his home a household which constitutes for more than one-half of the taxable year the principal place of abode of a qualifying individual, and " ( i i) furnishes over half of the cost of maintaining such household during the taxable year, and " (B) during the last 6 months of such taxable year such individual's spouse is not a member of such household, such individual shall not be considered as married. "(5)

ETC. 26 USC 151.

SPECIAL DEPENDENCY TEST I N CASE OF DIVORCED PARENTS,

If " (A) a child (as defined in section 1 5 1 (e)(3)) who is under the age of 15 or who is physically or mentally incapable

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Page:United States Statutes at Large Volume 90 Part 2.djvu/97

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1565

of caring for himself receives over half of his support during the calendar year from his parents who a r e divorced or legally separated under a decree of divorce or separate maintenance or who a r e separated under a written separation agreement, and " (B) such child is i n the custody of one or both of his p a r e n t s for more than one-half of the calendar year, in the case of any taxable year beginning i n such calendar year such child shall be treated as being a qualifying individual described in subparagraph (A) or (B) of subsection (c)(1), as the case may be, with respect to that p a r e n t who has custody for a longer period during such calendar year than the other parent, and shall not be treated as being a qualifying individual with respect to such other parent. "(6)

P A Y M E X T S TO RELATED INDIVIDUALS.—

" (A) IN GENERAL.—Except as provided in subparagraph (B), no credit shall be allowed under subsection (a) for any amount paid by the tax p a y e r to an individual bearing a relationship to the taxpayer described in paragraph s (1) through (8) of section 152(a) (relating to definition of dependent) or to a dependent described in paragraph (9) of such section. " (B) EXCEPTION. — Subparagraph (A) shall not apply to any amount p a i d by the tax p a y e r to an individual with respect to whom, for the taxable year of the tax p a y e r in which the service is performed, neither the tax p a y e r n o r his spouse is entitled to a deduction under section 151(e) (relating to deduction for personal exemptions for dependents), but only if the service with respect to which such amount is paid constitutes employment within the meaning of section 3121(b). " (7) STUDENT.—The term 'student' means an individual who 'Student." during each of 5 calendar months during the taxable year is a full-time student a t an educational organization. " (8) EDUCATIONAL ORGANIZATION.—The term 'educational orga-

nization' means an educational organization described in section 170(b)(1)(A) (ii). ' (g) EEGULATIONS.—The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section."

"Educational organization."

(2) CLERICAL AMENDMENT. — The table of sections for subpart

A of part IV of subchapter A of chapter 1 is amended by inserting before the item relating to section 45 the following new item: "Sec. 44A. Expenses for household and dependent care services necessary for gainful employment." (b) E E P E A L OF DEDUCTION FOR C H I L D CARE E X P E N S E S. —

(1) IN GENERAL.—Section 214 (relating to expenses for house- 26 USC 214. hold and dependent care services necessary for gainful employment) is hereby repealed. (2) 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. (c) T E C H N I C A L AMENDMENTS. —

(1) Section 213(f) (relating to exclusion of amounts allowed 26 USC 213. for care of certain dependents) is amended by striking o u t " a deduction under section 214" and inserting in lieu thereof "a Ante, p. 1563. credit under section 44A". (2) Section 6096(b) (defining income tax liability) is amended 26 USC 6096. by striking out " and 44" and inserting i n lieu thereof ", 44, and 44A". ' '

89-194 O—78—pt. 2

jT

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Page:United States Statutes at Large Volume 90 Part 2.djvu/98

 90 STAT. 1566 26 USC 3402.

26 USC 105.

PUBLIC LAW 94-455—OCT. 4, 1976 (3) Paragraph (4) of section 3402(m) (relating to withholding allowances based on itemized deductions) is amended by striking out " and " a t the end of subparagraph (A), by striking out the period at the end of subparagraph (B) and inserting in lieu thereof ", and", and by adding at the end thereof the following new subparagraph: " (C) may take into account tax credits to which employees are entitled." SEC. 505. CHANGES IN EXCLUSIONS FOR SICK PAY AND CERTAIN MILITARY, ETC, DISABILITY PENSIONS; CERTAIN DISABILITY INCOME. (a) S I C K PAY.—Subsection (d) of section 105 (relating to amounts excluded from gross income under wage continuation plans) is amended to read as follows: "(d)

CERTAIN DISABILITY P A Y M E N T S. —

" (1) I N GENEKAL.—In the case of a taxpayer who— " (A) has not attained age 65 before the close of the taxable year, and "(13) retired on disability and, when he retired, was permanently and totally disabled, gross income does not include amounts referred to in subsection (a) if such amounts constitute wages or payuients in lieu of wages for a period during which the employee is absent from work on account of permanent and total disability. " (2) LIMITATION.—This subsection shall not a p p l y to the extent that the amounts referred to in paragraph (1) exceed a weekly rate of $100. " (3) PHASEOUT OVER $I5,000.—If the adjusted gross income of the tax p a y e r for the taxable year (determined without regard to this subsection) exceeds $15,000, the amount which b u t for this paragraph would be excluded under this subsection for the taxable year shall be reduced by an amount equal to the excess of the adjusted gross income (as so determined) over $15,000. " (4)

MARRIED COUPLE MUST FILE JOINT RETURN.—Except in

the

case of a husband and wife who live a part at all times during the taxable year, if the tax p a y e r is married a t the close of the taxable year, the exclusion provided by this subsection shall be allowed only if the tax p a y e r and his spouse file a joint return for the taxable year. For purposes of this subsection, marital status shall be determined under section 143. "(5)

'

P E R M A N E N T AND TOTAL DISAIULTTY DEFINED.—For

pur-

poses of this subsection, an individual is permanently and totally disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. A n individual shall not be considered to be permanently and totally disabled unless he furnishos proof of the existence thereof in such form and manner, and at such times, as the Secretary may require. " (6) JOINT RETURN.—For purposes of this subsection, the term 'joint retuiTi' means the joint return of a husband and wife made under section 6013. " (7) COORDINATION W^ITII SECTION 72.—In the case of an individ-

ual described in subparagraph s (A) and (B) of paragraph (1), for purposes of section 72 the annuity starting date shall not

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Page:United States Statutes at Large Volume 90 Part 2.djvu/99

 PUBLIC LAW 94-455—OCT. 4, 1976 be deemed to occur which the tax p a y e r earlier taxable year election not to seek and all subsequent

90 STAT. 1567

before the beginning of the taxable year in attains age 65, or before the beginning of a n for which the tax p a y e r makes an irrevocable the benefits of this' subsection for such year years."

(b) CERTAIN M I L I T A R T, E T C., DISABILITY P E N S I O N S. — S e c t i o n 104

26 USC 104.

(relating to compensation for injuries or sickness) is amended by redesignating subsection (b) as subsection (c) and by inserting after subsection (a) the following new subsection: " (b) TERMINATION o r APPLICATION OF SUBSECTION (a)(4) I N CERTAIN C A S E S. —

" (1) IN GENERAL.—Subsection (a)(4) shall not apply in the case of any individual who is not described i n paragraph (2). "(2)

INDIVIDUALS TO WHOM SUBSECTION (a)(4) CONTINUES TO

APPLY,—An individual is described in this paragraph if— " (A) on or before September 24, 1975, he was entitled to receive any amount described in subsection (a)(4), " (B) on September 24, 1975, he was a member of any organization (or reserve component thereof) referred to in subsection (a)(4) or under a binding written commitment to become such a member, " (C) he receives a n amount described in subsection (a) (4) by reason of a combat-related injury, or " (I)) on application therefor, he would be entitled to receive disability compensation from the Veterans' Administration. "(3)

SPECIAL RULES FOR COMBAT-RELATED I N J U R I E S. — For p u r -

•.<. " '

"Combat-related

poses of this subsection, the term 'combat-related injury' means '^^JTpersonal injury or sickness— " (A) which is incurred— " (^i) as a direct result of armed conflict, " ( i i) while engaged i n extrahazardous service, or " (iii) under conditions sinnilating w a r; or " (B) which is caused by an instrumentality of war. I n the case of a n individual who is not described i n subparagraph (A) o r (B) of paragraph (2), except as provided in paragraph (4), the only amounts taken into account under subsection (a)(4) shall be the amounts which he receives by reason of a combatrelated injury. "(4)

A M O U N T EXCLUDED TO BE NOT LESS THAN VETERANS' DIS-

ABILITY COMPENSATION.—In the case of any individual described in paragraph (2), the amounts excludable under subsection (a) (4) for any period with respect to any individual shall not be less than the maximum amount which such individual, on application therefor, would be entitled to receive as disability compensation from the Veterans' Administration." (c) SPECIAL RULE FOR E X I S T I N G P E R M A N E N T AND TOTAL DISABILITY

^ ^ ^ ^ ^ ^^^

CASES.—In the case of any individual who— °°*®" (1) retired before January 1, 1976, (2) either retired on disability or was entitled to retire on disability, and (3) on January 1, 1976, was permanently and totally disabled (within the meaning of section 105(d)(5) of the I n t e r n a l Revenue Code of 1954), ^'»^«' P- l^^^-

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Page:United States Statutes at Large Volume 90 Part 2.djvu/100

 90 STAT. 1568 Ante, p. 1566. 26 USC 105

note.

PUBLIC LAW 94-455—OCT. 4, 1976 such, individual shall be deemed to have met the requirements of section 105(d)(1)(B) of such Code (as amended by subsection (a) of this section). (d)

26 USC 104 note.

CERTAIN DISABILITY

INCOME.—

(1) I K GENERAL.—Section 104(a) (relating to compensation for injuries or sickness) is amended— (A) by striking out " and " at the end of paragraph (3); (B) by striking out the period at the end of paragraph (4) and inserting in lieu thereof a semicolon and the word " and "; and (C) by a d d i n g a t the end thereof the following new paragraph: " (5) amounts received by an individual as disability income attributable to injuries incurred as a direct result of a violent attack which the Secretary of State determines to be a terrorist attack and which occurred while such individual was an employee of the United States engaged in the performance of his official duties outside the United States." (2) EFFECTIVE DATE.—The amendments made by this subsection shall apply to taxable years beginning after December 31, 1976. SEC. 506. MOVING EXPENSES. (a)

26 USC 217.

the

case of an individual who— (1) retired on disability before January 1, 1976, and (2) on December 31, 1975, was entitled to exclude any amount with respect to such retirement disability from gross income under section 105(d) of the I n t e r n a l Revenue Code of 1954, for purposes of section 72 the annuity starting date shall not be deemed to occur before the beginning of the taxable year in which the tax p a y e r attains age 65, or before the beginning of an earlier taxable year for which the taxpayer makes an irrevocable election not to seek the benefits of this subsection for such year and all subsequent years, (e)

26 USC 104

SPECIAL RULE FOR COORDINATION W I T H SECTION 72.—In

DECREASE I N MILEAGE T E S T F R O M 50 M I L E S TO 35 M I L E S. — P a r a -

g r a p h (1) of section 217(c) (relating to conditions for allowance of deduction for moving expenses) is amended by striking out "50 miles'* each place it appears and inserting in lieu thereof "35 miles". (b) INCREASE I N DOLLAR A M O U N T S. —

(1) CERTAIN EXPENSES OF TRAVELING, MEALS, AND LODGING AFTER OBTAINING EMPLOYMENT.—The first senteucc of subparagraph (A) of section 2 1 7 (b)(3) (relating to dollar limits) is amended by striking out "$1,000" and inserting in lieu thereof "$1,500". (2) AGGREGATE DOLLAR L I M I T. — The second sentence of subpara-

g r a p h (A) of section 217(b)(3) is amended by striking out "$2,500" and inserting in lieu thereof "$3,000". (3) SEPARATE RETURNS.—The second sentence of subparagraph (B) of section 217(b)(3) (relating to dollar limits in the case of husband and wife) is amended to read as follows: " I n the case of a husband and wife filing separate returns, subparagraph (A) shall be applied by substituting '$750' for '$1,500', and by substituting '$1,500' for '$3,000'." (c)

RULES FOR MEMBERS OF THE ARMED FORCES OF THE UNITED

STATES.—Section 217 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection: "(g)

RULES FOR MEMBERS OF THE ARMED FORCES OF THE UNITED

STATES.—In the case of a member of the A r m e d Forces of the United

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Page:United States Statutes at Large Volume 90 Part 2.djvu/101

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1569

States on active duty who moves pursuant to a military order and incident to a permanent change of station— " (1) the limitations under subsection (c) shall not a p p l y; " (2) any moving and storage expenses which are furnished in kind (or for which reimbursement or an allowance is provided, but only to the extent of the expenses paid o r incurred) to such member, his spouse, or his dependents, shall not be includible in gross income, and n o reporting with respect to such expenses shall be required by the Secretary of Defense or the Secretary of Transportation, as the case may b e; and " (3) if moving and storage expenses are furnished in kind (or if reimbursement or an allowance for such expenses is provided) to such member's spouse and his dependents with regard to moving to a location other than the one to which such member moves (or from a location other than the one from which such member moves), this section shall apply with respect to the moving expenses of his spouse and dependents— " (A) as if his spouse commenced work as an employee at a new principal place of work at such location; " (B) for purposes of subsection (b)(3), as if such place of work was within the same general location as the member's new principal place of work, and " (C) without regard to the limitations under subsection (c)." (d) EFFECTIVE D A T E. — The amendments m a d e by subsections (a)

and (b) shall apply to taxable years beginning after December 31, 1976. SEC. 507. TAX REVISION STUDY.

26 USC 217 note. 26 USC 8022 note.

(a) STUDY.—The Joint Committee on Taxation shall make a full and complete study and investigation with respect to simplifying and indexing the tax laws of the United States. Such study and investigation shall include a consideration of whether the rates of tax can be reduced by repealing any or all tax deductions, exemptions, or credits. (b) REPORT.—Before July 1, 1977, the Joint Committee on Taxa- Report to tion shall submit to the Committee on Finance of the Senate and to congressional the Committee on W a y s and Means of the House of Representatives committees. a report of its study and investigation together with its recommendations, including recommendations for legislation. SEC. 508. EFFECTIVE DATE.

E x c e p t a s other-wise provided, the amendments made by this title shall a p p l y to taxable years beginning after December 31, 1975.

26 USC 3 note.

^

TITLE VI—BUSINESS RELATED INDIVIDUAL INCOME TAX PROVISIONS SEC. 601. DEDUCTIONS FOR EXPENSES ATTRIBUTABLE TO BUSINESS USE OF HOMES, RENTAL OF VACATION HOMES, ETC. (a) NoNDEDucABILITY OF CERTAIN E X P E N S E S. — Part IX of subchap-

ter B of chapter 1 (relating to items not deductible) is amended by a d d i n g a t the end thereof the following new section: "SEC. 280A. DISALLOWANCE OF CERTAIN EXPENSES IN CONNECTION 26 USC 280A. WITH BUSINESS USE OF HOME, RENTAL OF VACATION HOMES, ETC. " (a) GENERAL RULE. — E x c e p t as otherwise provided in this section, in the case of a taxpayer who is a n individual o r an electing small

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Page:United States Statutes at Large Volume 90 Part 2.djvu/102

 90 STAT. 1570

PUBLIC LAW 94-455—OCT. 4, 1976

business corporation, no deduction otherwise allowable under t h i s chapter shall be allowed with respect to the use of a dwelling unit which is used by the tax p a y e r during the taxable year as a residence. "(b)

EXCEPTION FOR INTEREST, TAXES, CASUALTY LOSSES, E T C. — S u b -

section (a) shall not apply to any deduction allowable to the taxpayer without regard to its connection with his trade or business (or with his income-producing activity). " (c) EXCEPTIONS FOR CERTAIN B U S I N E S S OR R E N T A L U S E; L I M I T A TION ON DEDUCTIONS FOR S U C H U S E. —

" (1) CERTAIN BUSINESS USE.—Subsection (a) shall not apply to

any item to the extent such item is allocable to a portion of the dwelling unit which is exclusively used on a regular basis— " (A) as the taxpayer's principal place of business, " (B) as a place of business which is used by patients, clients, or customers in meeting or dealing with the taxpayer in the normal course of his trade or business, or " (C) in the case of a separate structure which is not attached to the dwelling unit, in connection with the taxpayer's trade or business. I n the case of an employee, the preceding sentence shall apply only if the exclusive use referred to in the preceding sentence is for the convenience of his employer. " (2) CERTAIN STORAGE USE.—Subsection (a) shall not a p p l y to

any item to the extent such item is allocable to space within the dwelling unit which is used on a regular basis as a storage u n i t for the inventory of the taxpayer held for use in the taxpayer's trade or business of selling products at retail or wholesale, b u t only if the dwelling unit is the sole fixed location of such trade or business. " (3) RENTAL USE.—Subsection (a) shall not apply to any item which is attributable to the rental of the dwelling unit or portion thereof (determined after the application of subsection (e)). " (4) LIMITATION ON DEDUCTIONS.—In the case of a use described

in paragraph (1) or (2), and in the case of a use described in paragraph (3) where the dwelling unit is used by the taxpayer during the taxable year as a residence, the deductions allowed under this chapter for the taxable year by reason of being attributed to such use shall not exceed the excess of— " (A) the gross income derived from such use for the taxable year, over " (B) the deductions allocable to such use which are allowable under this chapter for the taxable year whether or not such unit (or portion thereof) was so used. "(d)

U S E AS RESIDENCE.—

" (1) IN GENERAL.—For purposes of this section, a tax p a y e r uses a dwelling imit during the taxable year as a residence if he uses such unit (or portion thereof) for personal purposes for a number of days which exceeds the greater of— " (A) 14 days, or " (B) 10 percent of the number of days during such year for which such Tinit is rented at a fair rental. For purposes of subparagraph (B), a unit shall not be treated as rented at a fair rental for any day for which it is used for personal purposes. " (2) PERSONAL USE OF UNIT.—For purposes of this section, the tax p a y e r shall be deemed to have used a dwelling u n i t for per-

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Page:United States Statutes at Large Volume 90 Part 2.djvu/103

 PUBLIC LAW 94-455—OCT. 4, 1976

90 STAT. 1571

sonal purposes for a day if, for any part of such day, the u n i t is used— " (A) for personal purposes by the tax p a y e r or any other person who has an interest in such unit, or by any member of the family (as defined in section 267(c)(4)) of the tax- 26 USC 267. payer or such other person; " (B) by any individual who uses the unit under a n a r r a n g e m e n t which enables the tax p a y e r to use some other dwelling u n i t (whether or not a rental is charged for the use of such other u n i t); or " (C) by any individual (other than an employee with respect to whose use section 119 applies), unless for such day the dwelling unit is rented for a rental which, under the facts and circumstances, is fair rental. The Secretary shall prescribe regulations with respect to the cir- Regulations, cumstances under which use of the unit for repairs and annual maintenance will not constitute personal use under this paragraph. "(e)

E X P E N S E S ATTRIBUTABLE TO R E N T A L. —

" (1) IN GENERAL.—In any case where a taxpayer who is an individual or an electing small business corporation uses a dw^elli n g unit for personal purposes on any d a y during the taxable year (whether or not he is treated under this section as using such u n i t as a residence), the amount deductible under this chapter with respect to expenses attributable to the rental of the unit (or portion thereof) for the taxable year shall not exceed an amount which bears the same relationship to such expenses as the number of days during each year that the unit (or portion thereof) is rented a t a fair rental bears to the total number of days during such year that the unit (or portion thereof) is used. "(2)

EXCEPTION FOR DEDUCTIONS OTHERWISE ALLOWABLE.—This

subsection shall not apply with respect to deductions which would be allowable under this chapter for the taxable year whether or not such unit (or portion thereof) was rented. "(f)

DEFINITIONS AND SPECIAL RULES. —

" (1) DWELLING UNIT DEFINED.—For purposes of this section— " (A) IN GENERAL.—The term 'dwelling unit' includes a house, apartment, condominium, mobile home, boat, or simil a r property, and all structures or other property appurtenant to such dwelling unit. " (B) EXCEPTION.—The term 'dwelling unit' does not include that portion of a unit which is used exclusively as a hotel, motel, inn, or similar establishment. " (2)

PERSONAL USE BY ELECTING SMALL BUSINESS CORPORATION.—

I n the case of an electing small business corporation, subparagraph s (A) and (B) of subsection (d)(2) shall be applied by substituting 'any shareholder of the electing small business corporation' for 'the tax p a y e r ' each place it appears. "(3)

COORDINATION

WITH

SECTION

IS3.—If

subsection

(a)

applies with respect to any dwelling unit (or portion thereof) for the taxable year— " (A) section 183 (relating to activities not engaged in for profit) shall not a p p l y to such unit (or portion thereof) for such year, but " (B) such year shall be taken into account as a taxable year for purposes of a p p l y i n g subsection (d) of section 183 (relating to 5-year p r e s u m p t i o n).

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