US (United States) Code. Title 26. Chapter 1: Normal taxes and surtaxes

Codificación normativa de EEUU (Estados Unidos). Legislación federal estadounidense # Internal revenue code

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-CITE-

26 USC CHAPTER 1 - NORMAL TAXES AND SURTAXES 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

-HEAD-

CHAPTER 1 - NORMAL TAXES AND SURTAXES

-MISC1-

Subchapter Sec.(!1)

A. Determination of tax liability 1

B. Computation of taxable income 61

C. Corporate distributions and adjustments 301

D. Deferred compensation, etc. 401

E. Accounting periods and methods of accounting 441

F. Exempt organizations 501

G. Corporations used to avoid income tax on

shareholders 531

H. Banking institutions 581

I. Natural resources 611

J. Estates, trusts, beneficiaries, and decedents 641

K. Partners and partnerships 701

L. Insurance companies 801

M. Regulated investment companies and real estate

investment trusts 851

N. Tax based on income from sources within or without

the United States 861

O. Gain or loss on disposition of property 1001

P. Capital gains and losses 1201

Q. Readjustment of tax between years and special

limitations 1301

[R. Repealed.]

S. Tax treatment of S corporations and their

shareholders 1361

T. Cooperatives and their patrons 1381

U. Designation and treatment of empowerment zones,

enterprise communities, and rural development

investment areas 1391

V. Title 11 cases 1398

W. District of Columbia Enterprise Zone 1400

X. Renewal Communities 1400E

Y New York Liberty Zone Benefits 1400L

AMENDMENTS

2002 - Pub. L. 107-147, title III, Sec. 301(c), Mar. 9, 2002, 116

Stat. 40, added subchapter Y.

2000 - Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 101(d)], Dec.

21, 2000, 114 Stat. 2763, 2763A-600, added subchapter X.

1997 - Pub. L. 105-34, title VII, Sec. 701(c), Aug. 5, 1997, 111

Stat. 869, added subchapter W.

1993 - Pub. L. 103-66, title XIII, Sec. 13301(b), Aug. 10, 1993,

107 Stat. 555, added subchapter U.

1986 - Pub. L. 99-514, title XIII, Sec. 1303(c)(1), Oct. 22,

1986, 100 Stat. 2658, struck out subchapter U "General stock

ownership plans".

1982 - Pub. L. 97-354, Sec. 5(b), Oct. 19, 1982, 96 Stat. 1697,

substituted in subchapter S "Tax treatment of S corporations and

their shareholders" for "Election of certain small business

corporations as to taxable status".

1980 - Pub. L. 96-589, Sec. 3(a)(2), Dec. 24, 1980, 94 Stat.

3400, added subchapter V.

1978 - Pub. L. 95-600, title VI, Sec. 601(c)(1), Nov. 6, 1978, 92

Stat. 2897, added subchapter U.

1966 - Pub. L. 89-389, Sec. 4(b)(2), Apr. 14, 1966, 80 Stat. 116,

struck out subchapter R effective January 1, 1969.

1962 - Pub. L. 87-834, Sec. 17(b)(4), Oct. 16, 1962, 76 Stat.

1051, added subchapter T.

1960 - Pub. L. 86-779, Sec. 10(c), Sept. 14, 1960, 74 Stat. 1009,

added to subchapter M heading "and real estate investment trusts".

1958 - Pub. L. 85-866, title I, Sec. 64(d)(1), Sept. 2, 1958, 72

Stat. 1656, added subchapter S.

-SECREF-

CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in sections 408, 1022, 1501, 2031,

3402, 3406, 3510, 4977, 4980, 4990, 4994, 6012, 6013, 6033, 6039C,

6039E, 6039F, 6048, 6050E, 6075, 6096, 6103, 6161, 6166, 6166A,

6167, 6201, 6211, 6242, 6246, 6404, 6428, 6651, 6654, 6655, 6662,

6664, 6683, 6713, 7216, 7518, 7611, 7654, 7701, 7704, 9510 of this

title; title 2 sections 632, 633, 642; title 7 sections 1926,

1929a; title 12 section 3018; title 22 section 277d-23; title 25

sections 941n, 1486; title 30 section 1141; title 42 sections

291j-7, 300e-7, 300q-2, 409, 411, 1382, 1440, 1490p-2, 5308, 5919,

8833, 14752; title 46 App. sections 1177, 1279c; title 48 section

1574b.

-FOOTNOTE-

(!1) Section numbers editorially supplied.

-End-

-CITE-

26 USC Subchapter A - Determination of Tax Liability 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

-HEAD-

SUBCHAPTER A - DETERMINATION OF TAX LIABILITY

-MISC1-

Part

I. Tax on individuals.

II. Tax on corporations.

III. Changes in rates during a taxable year.

IV. Credits against tax.

[V. Repealed.]

VI. Minimum tax for tax preferences.(!1)

VII. Environmental tax.

[VIII. Repealed.]

AMENDMENTS

1989 - Pub. L. 101-234, title I, Sec. 102(a), Dec. 13, 1989, 103

Stat. 1980, repealed Pub. L. 100-360, Sec. 111, and provided that

the provisions of law amended by such section are restored or

revived as if such section had not been enacted, see 1988 Amendment

note below.

1988 - Pub. L. 100-360, title I, Sec. 111(c), July 1, 1988, 102

Stat. 697, added part VIII "Supplemental medicare premium".

1986 - Pub. L. 99-499, title V, Sec. 516(b)(5), Oct. 17, 1986,

100 Stat. 1771, added part VII.

1976 - Pub. L. 94-455, title XIX, Sec. 1901(b)(2), Oct. 4, 1976,

90 Stat. 1792, struck out part V "Tax surcharge".

1969 - Pub. L. 91-172, title III, Sec. 301(b)(1), Dec. 30, 1969,

83 Stat. 585, added part VI.

1968 - Pub. L. 90-364, title I, Sec. 102(d), June 28, 1968, 82

Stat. 259, added part V.

-FOOTNOTE-

(!1) Part heading amended by Pub. L. 99-514 without corresponding

amendment of analysis.

-End-

-CITE-

26 USC PART I - TAX ON INDIVIDUALS 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART I - TAX ON INDIVIDUALS

-HEAD-

PART I - TAX ON INDIVIDUALS

-MISC1-

Sec.

1. Tax imposed.

2. Definitions and special rules.

3. Tax tables for individuals having taxable income of

less than $20,000.(!1)

[4. Repealed.]

5. Cross references relating to tax on individuals.

AMENDMENTS

1976 - Pub. L. 94-455, title V, Sec. 501(c)(1), Oct. 4, 1976, 90

Stat. 1559, substituted "Tax tables for individuals having taxable

income of less than $20,000" for "Optional tax tables for

individuals" in item 3 and struck out item 4 relating to rules for

optional tax.

1969 - Pub. L. 91-172, title VIII, Sec. 803(d)(9), Dec. 30, 1969,

83 Stat. 685, substituted "Definitions and special rules" and

"Optional tax tables for individuals" for "Tax in case of joint

return or return of surviving spouse" and "Optional tax if adjusted

gross income is less than $5,000" in items 2 and 3, respectively.

-FOOTNOTE-

(!1) Section catchline amended by Pub. L. 95-30 without

corresponding amendment of analysis.

-End-

-CITE-

26 USC Sec. 1 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART I - TAX ON INDIVIDUALS

-HEAD-

Sec. 1. Tax imposed

-STATUTE-

(a) Married individuals filing joint returns and surviving spouses

There is hereby imposed on the taxable income of -

(1) every married individual (as defined in section 7703) who

makes a single return jointly with his spouse under section 6013,

and

(2) every surviving spouse (as defined in section 2(a)),

a tax determined in accordance with the following table:

If taxable income is: The tax is:

--------------------------------------------------------------------

Not over $36,900 15% of taxable income.

Over $36,900 but not over $5,535, plus 28% of the excess over

$89,150 $36,900.

Over $89,150 but not over $20,165, plus 31% of the excess

$140,000 over $89,150.

Over $140,000 but not $35,928.50, plus 36% of the excess

over $250,000 over $140,000.

Over $250,000 $75,528.50, plus 39.6% of the

excess over $250,000.

--------------------------------------------------------------------

(b) Heads of households

There is hereby imposed on the taxable income of every head of a

household (as defined in section 2(b)) a tax determined in

accordance with the following table:

If taxable income is: The tax is:

--------------------------------------------------------------------

Not over $29,600 15% of taxable income.

Over $29,600 but not over $4,440, plus 28% of the excess over

$76,400 $29,600.

Over $76,400 but not over $17,544, plus 31% of the excess

$127,500 over $76,400.

Over $127,500 but not $33,385, plus 36% of the excess

over $250,000 over $127,500.

Over $250,000 $77,485, plus 39.6% of the excess

over $250,000.

--------------------------------------------------------------------

(c) Unmarried individuals (other than surviving spouses and heads

of households)

There is hereby imposed on the taxable income of every individual

(other than a surviving spouse as defined in section 2(a) or the

head of a household as defined in section 2(b)) who is not a

married individual (as defined in section 7703) a tax determined in

accordance with the following table:

If taxable income is: The tax is:

--------------------------------------------------------------------

Not over $22,100 15% of taxable income.

Over $22,100 but not over $3,315, plus 28% of the excess over

$53,500 $22,100.

Over $53,500 but not over $12,107, plus 31% of the excess

$115,000 over $53,500.

Over $115,000 but not $31,172, plus 36% of the excess

over $250,000 over $115,000.

Over $250,000 $79,772, plus 39.6% of the excess

over $250,000.

--------------------------------------------------------------------

(d) Married individuals filing separate returns

There is hereby imposed on the taxable income of every married

individual (as defined in section 7703) who does not make a single

return jointly with his spouse under section 6013, a tax determined

in accordance with the following table:

If taxable income is: The tax is:

--------------------------------------------------------------------

Not over $18,450 15% of taxable income.

Over $18,450 but not over $2,767.50, plus 28% of the excess

$44,575 over $18,450.

Over $44,575 but not over $10,082.50, plus 31% of the excess

$70,000 over $44,575.

Over $70,000 but not over $17,964.25, plus 36% of the excess

$125,000 over $70,000.

Over $125,000 $37,764.25, plus 39.6% of the

excess over $125,000.

--------------------------------------------------------------------

(e) Estates and trusts

There is hereby imposed on the taxable income of -

(1) every estate, and

(2) every trust,

taxable under this subsection a tax determined in accordance with

the following table:

If taxable income is: The tax is:

--------------------------------------------------------------------

Not over $1,500 15% of taxable income.

Over $1,500 but not over $225, plus 28% of the excess over

$3,500 $1,500.

Over $3,500 but not over $785, plus 31% of the excess over

$5,500 $3,500.

Over $5,500 but not over $1,405, plus 36% of the excess over

$7,500 $5,500.

Over $7,500 $2,125, plus 39.6% of the excess

over $7,500.

--------------------------------------------------------------------

(f) Adjustments in tax tables so that inflation will not result in

tax increases

(1) In general

Not later than December 15 of 1993, and each subsequent

calendar year, the Secretary shall prescribe tables which shall

apply in lieu of the tables contained in subsections (a), (b),

(c), (d), and (e) with respect to taxable years beginning in the

succeeding calendar year.

(2) Method of prescribing tables

The table which under paragraph (1) is to apply in lieu of the

table contained in subsection (a), (b), (c), (d), or (e), as the

case may be, with respect to taxable years beginning in any

calendar year shall be prescribed -

(A) by increasing the minimum and maximum dollar amounts for

each rate bracket for which a tax is imposed under such table

by the cost-of-living adjustment for such calendar year,

(B) by not changing the rate applicable to any rate bracket

as adjusted under subparagraph (A), and

(C) by adjusting the amounts setting forth the tax to the

extent necessary to reflect the adjustments in the rate

brackets.

(3) Cost-of-living adjustment

For purposes of paragraph (2), the cost-of-living adjustment

for any calendar year is the percentage (if any) by which -

(A) the CPI for the preceding calendar year, exceeds

(B) the CPI for the calendar year 1992.

(4) CPI for any calendar year

For purposes of paragraph (3), the CPI for any calendar year is

the average of the Consumer Price Index as of the close of the

12-month period ending on August 31 of such calendar year.

(5) Consumer Price Index

For purposes of paragraph (4), the term "Consumer Price Index"

means the last Consumer Price Index for all-urban consumers

published by the Department of Labor. For purposes of the

preceding sentence, the revision of the Consumer Price Index

which is most consistent with the Consumer Price Index for

calendar year 1986 shall be used.

(6) Rounding

(A) In general

If any increase determined under paragraph (2)(A), section

63(c)(4), section 68(b)(2) or section 151(d)(4) is not a

multiple of $50, such increase shall be rounded to the next

lowest multiple of $50.

(B) Table for married individuals filing separately

In the case of a married individual filing a separate return,

subparagraph (A) (other than with respect to subsection (c)(4)

of section 63 (as it applies to subsections (c)(5)(A) and (f)

of such section) and section 151(d)(4)(A)) shall be applied by

substituting "$25" for "$50" each place it appears.

(7) Special rule for certain brackets

(A) Calendar year 1994

In prescribing the tables under paragraph (1) which apply

with respect to taxable years beginning in calendar year 1994,

the Secretary shall make no adjustment to the dollar amounts at

which the 36 percent rate bracket begins or at which the 39.6

percent rate begins under any table contained in subsection

(a), (b), (c), (d), or (e).

(B) Later calendar years

In prescribing tables under paragraph (1) which apply with

respect to taxable years beginning in a calendar year after

1994, the cost-of-living adjustment used in making adjustments

to the dollar amounts referred to in subparagraph (A) shall be

determined under paragraph (3) by substituting "1993" for

"1992".

(g) Certain unearned income of minor children taxed as if parent's

income

(1) In general

In the case of any child to whom this subsection applies, the

tax imposed by this section shall be equal to the greater of -

(A) the tax imposed by this section without regard to this

subsection, or

(B) the sum of -

(i) the tax which would be imposed by this section if the

taxable income of such child for the taxable year were

reduced by the net unearned income of such child, plus

(ii) such child's share of the allocable parental tax.

(2) Child to whom subsection applies

This subsection shall apply to any child for any taxable year

if -

(A) such child has not attained age 14 before the close of

the taxable year, and

(B) either parent of such child is alive at the close of the

taxable year.

(3) Allocable parental tax

For purposes of this subsection -

(A) In general

The term "allocable parental tax" means the excess of -

(i) the tax which would be imposed by this section on the

parent's taxable income if such income included the net

unearned income of all children of the parent to whom this

subsection applies, over

(ii) the tax imposed by this section on the parent without

regard to this subsection.

For purposes of clause (i), net unearned income of all children

of the parent shall not be taken into account in computing any

exclusion, deduction, or credit of the parent.

(B) Child's share

A child's share of any allocable parental tax of a parent

shall be equal to an amount which bears the same ratio to the

total allocable parental tax as the child's net unearned income

bears to the aggregate net unearned income of all children of

such parent to whom this subsection applies.

(C) Special rule where parent has different taxable year

Except as provided in regulations, if the parent does not

have the same taxable year as the child, the allocable parental

tax shall be determined on the basis of the taxable year of the

parent ending in the child's taxable year.

(4) Net unearned income

For purposes of this subsection -

(A) In general

The term "net unearned income" means the excess of -

(i) the portion of the adjusted gross income for the

taxable year which is not attributable to earned income (as

defined in section 911(d)(2)), over

(ii) the sum of -

(I) the amount in effect for the taxable year under

section 63(c)(5)(A) (relating to limitation on standard

deduction in the case of certain dependents), plus

(II) the greater of the amount described in subclause (I)

or, if the child itemizes his deductions for the taxable

year, the amount of the itemized deductions allowed by this

chapter for the taxable year which are directly connected

with the production of the portion of adjusted gross income

referred to in clause (i).

(B) Limitation based on taxable income

The amount of the net unearned income for any taxable year

shall not exceed the individual's taxable income for such

taxable year.

(5) Special rules for determining parent to whom subsection

applies

For purposes of this subsection, the parent whose taxable

income shall be taken into account shall be -

(A) in the case of parents who are not married (within the

meaning of section 7703), the custodial parent (within the

meaning of section 152(e)) of the child, and

(B) in the case of married individuals filing separately, the

individual with the greater taxable income.

(6) Providing of parent's TIN

The parent of any child to whom this subsection applies for any

taxable year shall provide the TIN of such parent to such child

and such child shall include such TIN on the child's return of

tax imposed by this section for such taxable year.

(7) Election to claim certain unearned income of child on

parent's return

(A) In general

If -

(i) any child to whom this subsection applies has gross

income for the taxable year only from interest and dividends

(including Alaska Permanent Fund dividends),

(ii) such gross income is more than the amount described in

paragraph (4)(A)(ii)(I) and less than 10 times the amount so

described,

(iii) no estimated tax payments for such year are made in

the name and TIN of such child, and no amount has been

deducted and withheld under section 3406, and

(iv) the parent of such child (as determined under

paragraph (5)) elects the application of subparagraph (B),

such child shall be treated (other than for purposes of this

paragraph) as having no gross income for such year and shall

not be required to file a return under section 6012.

(B) Income included on parent's return

In the case of a parent making the election under this

paragraph -

(i) the gross income of each child to whom such election

applies (to the extent the gross income of such child exceeds

twice the amount described in paragraph (4)(A)(ii)(I)) shall

be included in such parent's gross income for the taxable

year,

(ii) the tax imposed by this section for such year with

respect to such parent shall be the amount equal to the sum

of -

(I) the amount determined under this section after the

application of clause (i), plus

(II) for each such child, 10 percent of the lesser of the

amount described in paragraph (4)(A)(ii)(I) or the excess

of the gross income of such child over the amount so

described, and

(iii) any interest which is an item of tax preference under

section 57(a)(5) of the child shall be treated as an item of

tax preference of such parent (and not of such child).

(C) Regulations

The Secretary shall prescribe such regulations as may be

necessary or appropriate to carry out the purposes of this

paragraph.

(h) Maximum capital gains rate

(1) In general

If a taxpayer has a net capital gain for any taxable year, the

tax imposed by this section for such taxable year shall not

exceed the sum of -

(A) a tax computed at the rates and in the same manner as if

this subsection had not been enacted on the greater of -

(i) taxable income reduced by the net capital gain; or

(ii) the lesser of -

(I) the amount of taxable income taxed at a rate below 25

percent; or

(II) taxable income reduced by the adjusted net capital

gain;

(B) 10 percent of so much of the adjusted net capital gain

(or, if less, taxable income) as does not exceed the excess (if

any) of -

(i) the amount of taxable income which would (without

regard to this paragraph) be taxed at a rate below 25

percent, over

(ii) the taxable income reduced by the adjusted net capital

gain;

(C) 20 percent of the adjusted net capital gain (or, if less,

taxable income) in excess of the amount on which a tax is

determined under subparagraph (B);

(D) 25 percent of the excess (if any) of -

(i) the unrecaptured section 1250 gain (or, if less, the

net capital gain), over

(ii) the excess (if any) of -

(I) the sum of the amount on which tax is determined

under subparagraph (A) plus the net capital gain, over

(II) taxable income; and

(E) 28 percent of the amount of taxable income in excess of

the sum of the amounts on which tax is determined under the

preceding subparagraphs of this paragraph.

(2) Reduced capital gain rates for qualified 5-year gain

(A) Reduction in 10-percent rate

In the case of any taxable year beginning after December 31,

2000, the rate under paragraph (1)(B) shall be 8 percent with

respect to so much of the amount to which the 10-percent rate

would otherwise apply as does not exceed qualified 5-year gain,

and 10 percent with respect to the remainder of such amount.

(B) Reduction in 20-percent rate

The rate under paragraph (1)(C) shall be 18 percent with

respect to so much of the amount to which the 20-percent rate

would otherwise apply as does not exceed the lesser of -

(i) the excess of qualified 5-year gain over the amount of

such gain taken into account under subparagraph (A) of this

paragraph; or

(ii) the amount of qualified 5-year gain (determined by

taking into account only property the holding period for

which begins after December 31, 2000),

and 20 percent with respect to the remainder of such amount.

For purposes of determining under the preceding sentence

whether the holding period of property begins after December

31, 2000, the holding period of property acquired pursuant to

the exercise of an option (or other right or obligation to

acquire property) shall include the period such option (or

other right or obligation) was held.

(3) Net capital gain taken into account as investment income

For purposes of this subsection, the net capital gain for any

taxable year shall be reduced (but not below zero) by the amount

which the taxpayer takes into account as investment income under

section 163(d)(4)(B)(iii).

(4) Adjusted net capital gain

For purposes of this subsection, the term "adjusted net capital

gain" means net capital gain reduced (but not below zero) by the

sum of -

(A) unrecaptured section 1250 gain; and

(B) 28-percent rate gain.

(5) 28-percent rate gain

For purposes of this subsection, the term "28-percent rate

gain" means the excess (if any) of -

(A) the sum of -

(i) collectibles gain; and

(ii) section 1202 gain, over

(B) the sum of -

(i) collectibles loss;

(ii) the net short-term capital loss; and

(iii) the amount of long-term capital loss carried under

section 1212(b)(1)(B) to the taxable year.

(6) Collectibles gain and loss

For purposes of this subsection -

(A) In general

The terms "collectibles gain" and "collectibles loss" mean

gain or loss (respectively) from the sale or exchange of a

collectible (as defined in section 408(m) without regard to

paragraph (3) thereof) which is a capital asset held for more

than 1 year but only to the extent such gain is taken into

account in computing gross income and such loss is taken into

account in computing taxable income.

(B) Partnerships, etc.

For purposes of subparagraph (A), any gain from the sale of

an interest in a partnership, S corporation, or trust which is

attributable to unrealized appreciation in the value of

collectibles shall be treated as gain from the sale or exchange

of a collectible. Rules similar to the rules of section 751

shall apply for purposes of the preceding sentence.

(7) Unrecaptured section 1250 gain

For purposes of this subsection -

(A) In general

The term "unrecaptured section 1250 gain" means the excess

(if any) of -

(i) the amount of long-term capital gain (not otherwise

treated as ordinary income) which would be treated as

ordinary income if section 1250(b)(1) included all

depreciation and the applicable percentage under section

1250(a) were 100 percent, over

(ii) the excess (if any) of -

(I) the amount described in paragraph (5)(B); over

(II) the amount described in paragraph (5)(A).

(B) Limitation with respect to section 1231 property

The amount described in subparagraph (A)(i) from sales,

exchanges, and conversions described in section 1231(a)(3)(A)

for any taxable year shall not exceed the net section 1231 gain

(as defined in section 1231(c)(3)) for such year.

(8) Section 1202 gain

For purposes of this subsection, the term "section 1202 gain"

means the excess of -

(A) the gain which would be excluded from gross income under

section 1202 but for the percentage limitation in section

1202(a), over

(B) the gain excluded from gross income under section 1202.

(9) Qualified 5-year gain

For purposes of this subsection, the term "qualified 5-year

gain" means the aggregate long-term capital gain from property

held for more than 5 years. The determination under the preceding

sentence shall be made without regard to collectibles gain, gain

described in paragraph (7)(A)(i), and section 1202 gain.

(10) Coordination with recapture of net ordinary losses under

section 1231

If any amount is treated as ordinary income under section

1231(c), such amount shall be allocated among the separate

categories of net section 1231 gain (as defined in section

1231(c)(3)) in such manner as the Secretary may by forms or

regulations prescribe.

(11) Regulations

The Secretary may prescribe such regulations as are appropriate

(including regulations requiring reporting) to apply this

subsection in the case of sales and exchanges by pass-thru

entities and of interests in such entities.

(12) Pass-thru entity defined

For purposes of this subsection, the term "pass-thru entity"

means -

(A) a regulated investment company;

(B) a real estate investment trust;

(C) an S corporation;

(D) a partnership;

(E) an estate or trust;

(F) a common trust fund;

(G) a foreign investment company which is described in

section 1246(b)(1) and for which an election is in effect under

section 1247; and

(H) a qualified electing fund (as defined in section 1295).

(i) Rate reductions after 2000

(1) 10-percent rate bracket

(A) In general

In the case of taxable years beginning after December 31,

2000 -

(i) the rate of tax under subsections (a), (b), (c), and

(d) on taxable income not over the initial bracket amount

shall be 10 percent, and

(ii) the 15 percent rate of tax shall apply only to taxable

income over the initial bracket amount but not over the

maximum dollar amount for the 15-percent rate bracket.

(B) Initial bracket amount

For purposes of this paragraph, the initial bracket amount is

-

(i) $14,000 ($12,000 in the case of taxable years beginning

before January 1, 2008) in the case of subsection (a),

(ii) $10,000 in the case of subsection (b), and

(iii) 1/2 the amount applicable under clause (i) (after

adjustment, if any, under subparagraph (C)) in the case of

subsections (c) and (d).

(C) Inflation adjustment

In prescribing the tables under subsection (f) which apply

with respect to taxable years beginning in calendar years after

2000 -

(i) the Secretary shall make no adjustment to the initial

bracket amount for any taxable year beginning before January

1, 2009,

(ii) the cost-of-living adjustment used in making

adjustments to the initial bracket amount for any taxable

year beginning after December 31, 2008, shall be determined

under subsection (f)(3) by substituting "2007" for "1992" in

subparagraph (B) thereof, and

(iii) such adjustment shall not apply to the amount

referred to in subparagraph (B)(iii).

If any amount after adjustment under the preceding sentence is

not a multiple of $50, such amount shall be rounded to the next

lowest multiple of $50.

(D) Coordination with acceleration of 10 percent rate bracket

benefit for 2001

This paragraph shall not apply to any taxable year to which

section 6428 applies.

(2) Reductions in rates after June 30, 2001

In the case of taxable years beginning in a calendar year after

2000, the corresponding percentage specified for such calendar

year in the following table shall be substituted for the

otherwise applicable tax rate in the tables under subsections

(a), (b), (c), (d), and (e).

The corresponding percentages shall be substituted

for

the following percentages:

28% 31% 36% 39.6%

--------------------------------------------------------------------

2001 27.5% 30.5% 35.5% 39.1%

2002 and 2003 27.0% 30.0% 35.0% 38.6%

2004 and 2005 26.0% 29.0% 34.0% 37.6%

2006 and thereafter 25.0% 28.0% 33.0% 35.0%

--------------------------------------------------------------------

(3) Adjustment of tables

The Secretary shall adjust the tables prescribed under

subsection (f) to carry out this subsection.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 5; Pub. L. 88-272, title I, Sec.

111, Feb. 26, 1964, 78 Stat. 19; Pub. L. 89-809, title I, Sec.

103(a)(2), Nov. 13, 1966, 80 Stat. 1550; Pub. L. 91-172, title

VIII, Sec. 803(a), Dec. 30, 1969, 83 Stat. 678; Pub. L. 95-30,

title I, Sec. 101(a), May 23, 1977, 91 Stat. 127; Pub. L. 95-600,

title I, Sec. 101(a), Nov. 6, 1978, 92 Stat. 2767; Pub. L. 97-34,

title I, Secs. 101(a), 104(a), Aug. 13, 1981, 95 Stat. 176, 188;

Pub. L. 97-448, title I, Sec. 101(a)(3), Jan. 12, 1983, 96 Stat.

2366; Pub. L. 99-514, title I, Sec. 101(a), title III, Sec. 302(a),

title XIV, Sec. 1411(a), Oct. 22, 1986, 100 Stat. 2096, 2218, 2714;

Pub. L. 100-647, title I, Secs. 1001(a)(3), 1014(e)(1)-(3), (6),

(7), title VI, Sec. 6006(a), Nov. 10, 1988, 102 Stat. 3349, 3561,

3562, 3686; Pub. L. 101-239, title VII, Secs. 7811(j)(1), 7816(b),

7831(a), Dec. 19, 1989, 103 Stat. 2411, 2420, 2425; Pub. L.

101-508, title XI, Secs. 11101(a)-(c), (d)(1)(A), (2), 11103(c),

11104(b), Nov. 5, 1990, 104 Stat. 1388-403 to 1388-406, 1388-408;

Pub. L. 103-66, title XIII, Secs. 13201(a), (b)(3)(A), (B),

13202(a), 13206(d)(2), Aug. 10, 1993, 107 Stat. 457, 459, 461, 467;

Pub. L. 104-188, title I, Sec. 1704(m)(1), (2), Aug. 20, 1996, 110

Stat. 1882, 1883; Pub. L. 105-34, title III, Sec. 311(a), Aug. 5,

1997, 111 Stat. 831; Pub. L. 105-206, title V, Sec. 5001(a)(1)-(4),

title VI, Secs. 6005(d)(1), 6007(f)(1), July 22, 1998, 112 Stat.

787, 788, 800, 810; Pub. L. 105-277, div. J, title IV, Sec.

4002(i)(1), (3), Oct. 21, 1998, 112 Stat. 2681-907, 2681-908; Pub.

L. 106-554, Sec. 1(a)(7) [title I, Sec. 117(b)(1)], Dec. 21, 2000,

114 Stat. 2763, 2763A-604; Pub. L. 107-16, title I, Sec. 101(a),

(c)(1), (2), title III, Secs. 301(c)(1), 302(a), (b), June 7, 2001,

115 Stat. 41, 43, 54.)

-STATAMEND-

AMENDMENT OF SECTION

For termination of amendment by section 901 of Pub. L. 107-16,

see Effective and Termination Dates of 2001 Amendment note below.

Pub. L. 107-16, title III, Sec. 302, title IX, Sec. 901, June 7,

2001, 115 Stat. 54, 150, provided that, applicable to taxable years

beginning after Dec. 31, 2004, subsection (f) of this section is

temporarily amended as follows:

(1) in heading, by inserting "Phaseout of Marriage Penalty in

15-Percent Bracket;" before "Adjustments";

(2) in paragraph (2)(A), by inserting "except as provided in

paragraph (8)," before "by increasing"; and

(3) by adding at the end the following new paragraph:

(8) Phaseout of marriage penalty in 15-percent bracket

(A) In general

With respect to taxable years beginning after December 31,

2004, in prescribing the tables under paragraph (1) -

(i) the maximum taxable income in the 15-percent rate

bracket in the table contained in subsection (a) (and the

minimum taxable income in the next higher taxable income

bracket in such table) shall be the applicable percentage of

the maximum taxable income in the 15-percent rate bracket in

the table contained in subsection (c) (after any other

adjustment under this subsection), and

(ii) the comparable taxable income amounts in the table

contained in subsection (d) shall be 1/2 of the amounts

determined under clause (i).

(B) Applicable percentage

For purposes of subparagraph (A), the applicable percentage

shall be determined in accordance with the following table:

For taxable years beginning The applicable

in calendar year - percentage is -

2005 180

2006 187

2007 193

2008 and thereafter 200.

(C) Rounding

If any amount determined under subparagraph (A)(i) is not a

multiple of $50, such amount shall be rounded to the next

lowest multiple of $50.

Pub. L. 107-16, title III, Sec. 301(c)(1), (d), title IX, Sec.

901, June 7, 2001, 115 Stat. 54, 150, provided that, applicable to

taxable years beginning Dec. 31, 2004, subsection (f)(6)(B) of this

section is temporarily amended by substituting "(other than with

respect to sections 63(c)(4) and 151(d)(4)(A)) shall be applied"

for "(other than with" and all that follows through "shall be

applied".

TAX TABLES FOR TAXABLE YEARS BEGINNING IN 2003

Revenue Procedure 2002-70 provided:

Section 1. Purpose

This revenue procedure sets forth inflation adjusted items for

2003.

Section 2. Changes

.01 The amount in Sec. 23(a)(3) used to determine the maximum

credit allowed in the case of an adoption of a child with special

needs, the amount in Sec. 23(b)(1) used to determine the amount of

qualified adoption expenses which may be taken into account in

determining the maximum credit allowed for other adoptions, and the

income phase-out amounts in Sec. 23(b)(2)(A), are adjusted for

inflation. (Section 3.03).

.02 The amounts in Sec. 42(h)(3)(C)(ii) used to calculate the

State housing credit ceiling for the low-income housing credit are

adjusted for inflation. (Section 3.07).

.03 The amount in Sec. 137(a)(2) used to determine the maximum

amount that an employer can exclude from an employee's gross income

in connection with the employee's adoption of a child with special

needs, the amount in Sec. 137(b)(1) used to determine the maximum

amount that can be excluded from an employee's gross income for

amounts paid or expenses incurred by the employer for qualified

adoption expenses furnished pursuant to an adoption assistance

program in connection with other adoptions, and the income

phase-out amounts in Sec. 137(b)(2)(A), are adjusted for inflation.

(Section 3.13).

.04 The amounts in Sec. 146(d)(1) used to calculate the State

ceiling for the volume cap for private activity bonds are adjusted

for inflation. (Section 3.14).

.05 The amounts in Sec. 221(b)(2)(B) used to determine the

availability of a deduction for interest paid on qualified

education loans are adjusted for inflation. (Section 3.18).

.06 The tax on domestic segments of taxable air transportation in

Sec. 4261(b) is adjusted for inflation. (Section 3.26).

.07 The excise tax on luxury automobiles imposed by Secs. 4001

and 4003 terminates effective December 31, 2002, in accordance with

Sec. 4001(g) and is no longer included in this revenue procedure.

Section 3. 2003 Adjusted Items

.01 Tax Rate Tables. For taxable years beginning in 2003, the tax

rate tables under Sec. 1 are as follows:

TABLE 1 - SECTION 1(A). - MARRIED INDIVIDUALS FILING JOINT RETURNS

AND SURVIVING SPOUSES

--------------------------------------------------------------------

If Taxable Income Is: The Tax Is:

--------------------------------------------------------------------

Not Over $12,000 10% of the taxable income

Over $12,000 but not over $1,200 plus 15% of excess over

$47,450 $12,000

Over $47,450 but not over $6,517.50 plus 27% of excess over

$114,650 $47,450

Over $114,650 but not over $24,661.50 plus 30% of excess over

$174,700 $114,650

Over $174,700 but not over $42,676.50 plus 35% of excess over

$311,950 $174,700

Over $311,950 $90,714 plus 38.6% of excess over

$311,950

--------------------------------------------------------------------

TABLE 2 - SECTION 1(B). - HEADS OF HOUSEHOLDS

--------------------------------------------------------------------

If Taxable Income Is: The Tax Is:

--------------------------------------------------------------------

Not Over $10,000 10% of the taxable income

Over $10,000 but not over $1,000 plus 15% of excess over

$38,050 $10,000

Over $38,050 but not over $5,207.50 plus 27% of the excess

$98,250 over $38,050

Over $98,250 but not over $21,461.50 plus 30% of the excess

$159,100 over $98,250

Over $159,100 but not over $39,716.50 plus 35% of the excess

$311,950 over $159,100

Over $311,950 $93,214 plus 38.6% of the excess

over $311,950

--------------------------------------------------------------------

TABLE 3 - SECTION 1(C). - UNMARRIED INDIVIDUALS (OTHER THAN

SURVIVING SPOUSES AND HEADS OF HOUSEHOLDS)

--------------------------------------------------------------------

If Taxable Income Is: The Tax Is:

--------------------------------------------------------------------

Not Over $6,000 10% of the taxable income

Over $6,000 but not over $600 plus 15% of the excess over

$28,400 $6,000

Over $28,400 but not over $3,960 plus 27% of the excess over

$68,800 $28,400

Over $68,800 but not over $14,868 plus 30% of the excess

$143,500 over $68,800

Over $143,500 but not over $37,278 plus 35% of the excess

$311,950 over $143,500

Over $311,950 $96,235.50 plus 38.6% of the

excess over $311,950

--------------------------------------------------------------------

TABLE 4 - SECTION 1(D). - MARRIED INDIVIDUALS FILING SEPARATE

RETURNS

--------------------------------------------------------------------

If Taxable Income Is: The Tax Is:

--------------------------------------------------------------------

Not Over $6,000 10% of the taxable income

Over $6,000 but not over $600 plus 15% of the excess over

$23,725 $6,000

Over $23,725 but not over $3,258.75 plus 27% of the excess

$57,325 over $23,725

Over $57,325 but not over $12,330.75 plus 30% of the excess

$87,350 over $57,325

Over $87,350 but not over $21,338.25 plus 35% of the excess

$155,975 over $87,350

Over $155,975 $45,357 plus 38.6% of the excess

over $155,975

--------------------------------------------------------------------

TABLE 5 - SECTION 1(E). - ESTATES AND TRUSTS

--------------------------------------------------------------------

If Taxable Income Is: The Tax Is:

--------------------------------------------------------------------

Not Over $1,900 15% of the taxable income

Over $1,900 but not over $285 plus 27% of the excess over

$4,500 $1,900

Over $4,500 but not over $987 plus 30% of the excess over

$6,850 $4,500

Over $6,850 but not over $1,692 plus 35% of the excess over

$9,350 $6,850

Over $9,350 $2,567 plus 38.6% of the excess

over $9,350

--------------------------------------------------------------------

.02 Unearned Income of Minor Children Taxed as if Parent's Income

(the "Kiddie Tax"). For taxable years beginning in 2003, the amount

in Sec. 1(g)(4)(A)(ii)(I), which is used to reduce the net unearned

income reported on the child's return that is subject to the

"kiddie tax," is $750. (This amount is the same as the $750

standard deduction amount provided in section 3.09(2) of this

revenue procedure.) The same $750 amount is used for purposes of

Sec. 1(g)(7) (that is, in determining whether a parent may elect to

include a child's gross income in the parent's gross income and for

calculating the "kiddie tax"). For example, one of the requirements

for the parental election is that a child's gross income is more

than the amount referenced in Sec. 1(g)(4)(A)(ii)(I) but less than

10 times such amount; thus, a child's gross income for 2003 must be

more than $750 but less than $7,500 to satisfy that requirement.

.03 Adoption Credit. For taxable years beginning in 2003, under

Sec. 23(a)(3) the maximum credit allowed in the case of an adoption

of a child with special needs is $10,160. For taxable years

beginning in 2003, under Sec. 23(b)(1) the maximum credit allowed

with regard to other adoptions is the amount of qualified adoption

expenses up to $10,160. The available adoption credit begins to

phase out under Sec. 23(b)(2)(A) for taxpayers with modified

adjusted gross income in excess of $152,390 and is completely

phased out for taxpayers with modified adjusted gross income of

$192,390.

.04 Child Tax Credit. For taxable years beginning in 2003, the

value used in Sec. 24(d)(1)(B)(i) in determining the amount of

credit under Sec. 24 that may be refundable is $10,500.

.05 Hope and Lifetime Learning Credits.

(1) For taxable years beginning in 2003, 100 percent of qualified

tuition and related expenses not in excess of $1,000 and 50 percent

of such expenses in excess of $1,000 are taken into account in

determining the amount of the Hope Scholarship Credit under Sec.

25A(b)(1).

(2) For taxable years beginning in 2003, a taxpayer's modified

adjusted gross income in excess of $41,000 ($83,000 in the case of

a joint return) is taken into account in determining the reduction

under Sec. 25A(d)(2)(A)(ii) in the amount of the Hope Scholarship

and Lifetime Learning Credits otherwise allowable under Sec.

25A(a).

.06 Earned Income Credit.

(1) In general. For taxable years beginning in 2003, the

following amounts are used to determine the earned income credit

under Sec. 32(b). The "earned income amount" is the amount of

earned income at or above which the maximum amount of the earned

income credit is allowed. The "threshold phaseout amount" is the

amount of adjusted gross income (or, if greater, earned income)

above which the maximum amount of the credit begins to phase out.

The "completed phaseout amount" is the amount of adjusted gross

income (or if greater, earned income) at or above which no credit

is allowed.

Item Number of Qualifying Children

One Two or None

More

--------------------------------------------------------------------

Earned Income Amount $ 7,490 $10,510 $ 4,990

Maximum Amount of Credit $ 2,547 $ 4,204 $ 382

Threshold Phaseout Amount $13,730 $13,730 $ 6,240

Completed Phaseout Amount $29,666 $33,692 $11,230

Threshold Phaseout Amount $14,730 $14,730 $ 7,240

(Married Filing Jointly)

Completed Phaseout Amount $30,666 $34,692 $12,230

(Married Filing Jointly)

--------------------------------------------------------------------

The instructions for the Form 1040 series provide tables showing

the amount of the earned income credit for each type of taxpayer.

(2) Excessive investment income. For taxable years beginning in

2003, the earned income tax credit is denied under Sec. 32(i) if

the aggregate amount of certain investment income exceeds $2,600.

.07 Low-Income Housing Credit. For calendar years beginning in

2003, the amounts used under Sec. 42(h)(3)(C)(ii) to calculate the

State housing credit ceiling for the low-income housing credit is

the greater of $1.75 multiplied by the State population or

$2,030,000.

.08 Alternative Minimum Tax Exemption for a Child Subject to the

"Kiddie Tax." For taxable years beginning in 2003, in the case of a

child to whom the Sec. 1(g) "kiddie tax" applies, the exemption

amount under Secs. 55 and 59(j) for purposes of the alternative

minimum tax under Sec. 55 may not exceed the sum of (A) such

child's earned income for the taxable year, plus (B) $5,600.

.09 Standard Deduction.

(1) In general. For taxable years beginning in 2003, the standard

deduction amounts under Sec. 63(c)(2) are as follows:

Filing Status Standard

Deduction

--------------------------------------------------------------------

Married Individuals Filing Joint Returns and $7,950

Surviving Spouses (Sec. 1(a))

Heads of Households (Sec. 1(b)) $7,000

Unmarried Individuals (Other Than Surviving Spouses $4,750

and Heads of Households) (Sec. 1(c))

Married Individuals Filing Separate Returns (Sec. $3,975

1(d))

--------------------------------------------------------------------

(2) Dependent. For taxable years beginning in 2003, the standard

deduction amount under Sec. 63(c)(5) for an individual who may be

claimed as a dependent by another taxpayer may not exceed the

greater of $750, or the sum of $250 and the individual's earned

income.

(3) Aged and blind. For taxable years beginning in 2003, the

additional standard deduction amounts under Sec. 63(f) for the aged

and for the blind are $950 for each. These amounts are increased to

$1,150 if the individual is also unmarried and not a surviving

spouse.

.10 Overall Limitation on Itemized Deductions. For taxable years

beginning in 2003, the "applicable amount" of adjusted gross income

under Sec. 68(b), above which the amount of otherwise allowable

itemized deductions is reduced under Sec. 68, is $139,500 (or

$69,750 for a separate return filed by a married individual).

.11 Qualified Transportation Fringe. For taxable years beginning

in 2003, the monthly limitation under Sec. 132(f)(2)(A), regarding

the aggregate fringe benefit exclusion amount for transportation in

a commuter highway vehicle and any transit pass, is $100. The

monthly limitation under Sec. 132(f)(2)(B) regarding the fringe

benefit exclusion amount for qualified parking is $190.

.12 Income from United States Savings Bonds for Taxpayers Who Pay

Qualified Higher Education Expenses. For taxable years beginning in

2003, the exclusion under Sec. 135, regarding income from United

States savings bonds for taxpayers who pay qualified higher

education expenses, begins to phase out for modified adjusted gross

income above $87,750 for joint returns and $58,500 for other

returns. This exclusion completely phases out for modified adjusted

gross income of $117,750 or more for joint returns and $73,500 or

more for other returns.

.13 Adoption Assistance Programs. For taxable years beginning in

2003, under Sec. 137(a)(2) the maximum amount that an employer can

exclude from an employee's gross income in connection with the

adoption by the employee of a child with special needs is $10,160.

For taxable years beginning in 2003, under Sec. 137(b)(1) the

maximum amount that can be excluded from an employee's gross income

for the amounts paid or expenses incurred by the employer for

qualified adoption expenses furnished pursuant to an adoption

assistance program in connection with other adoptions by the

employee is $10,160. The amount excludable from an employee's gross

income begins to phase out under Sec. 137(b)(2)(A) for taxpayers

with modified adjusted gross income in excess of $152,390 and is

completely phased out for taxpayers with modified adjusted gross

income of $192,390.

.14 Private Activity Bonds Volume Cap. For calendar years

beginning in 2003, the amounts used under Sec. 146(d)(1) to

calculate the State ceiling for the volume cap for private activity

bonds is the greater of $75 multiplied by the State population or

$228,580,000.

.15 Personal Exemption.

(1) Exemption amount. For taxable years beginning in 2003, the

personal exemption amount under Sec. 151(d) is $3,050.

(2) Phase out. For taxable years beginning in 2003, the personal

exemption amount begins to phase out at, and is completely phased

out after, the following adjusted gross income amounts:

Filing Status AGI - AGI Above

Beginning Which

of Phaseout Exemption

Fully Phased

Out

--------------------------------------------------------------------

Code Sec. 1(a) $209,250 $331,750

Code Sec. 1(b) $174,400 $296,900

Code Sec. 1(c) $139,500 $262,000

Code Sec. 1(d) $104,625 $165,875

--------------------------------------------------------------------

.16 Eligible Long-Term Care Premiums. For taxable years beginning

in 2003, the limitations under Sec. 213(d)(10), regarding eligible

long-term care premiums includible in the term "medical care," are

as follows:

Attained age before the close of the taxable year Limi

tation

on

prem

iums

--------------------------------------------------------------------

40 or less $ 250

More than 40 but not more than 50 $ 470

More than 50 but not more than 60 $ 940

More than 60 but not more than 70 $2,510

More than 70 $3,130

--------------------------------------------------------------------

.17 Medical Savings Accounts.

(1) Self-only coverage. For taxable years beginning in 2003, the

term "high deductible health plan" as defined in Sec. 220(c)(2)(A)

means, in the case of self-only coverage, a health plan that has an

annual deductible that is not less than $1,700 and not more than

$2,500, and under which the annual out-of-pocket expenses required

to be paid (other than for premiums) for covered benefits does not

exceed $3,350.

(2) Family coverage. For taxable years beginning in 2003, the

term "high deductible health plan" means, in the case of family

coverage, a health plan that has an annual deductible that is not

less than $3,350 and not more than $5,050, and under which the

annual out-of-pocket expenses required to be paid (other than for

premiums) for covered benefits does not exceed $6,150.

.18 Interest on Education Loans. For taxable years beginning in

2003, the $2,500 maximum deduction for interest paid on qualified

education loans under Sec. 221 is reduced under Sec. 221(b)(2)(B)

when modified adjusted gross income exceeds $50,000 ($100,000 for

joint returns), and is completely eliminated when modified adjusted

gross income is $65,000 ($130,000 for joint returns).

.19 Treatment of Dues Paid to Agricultural or Horticultural

Organizations. For taxable years beginning in 2003, the limitation

under Sec. 512(d)(1), regarding the exemption of annual dues

required to be paid by a member to an agricultural or horticultural

organization, is $122.

.20 Insubstantial Benefit Limitations for Contributions

Associated with Charitable Fund-Raising Campaigns.

(1) Low cost article. For taxable years beginning in 2003, the

unrelated business income of certain exempt organizations under

Sec. 513(h)(2) does not include a "low cost article" of $8 or less.

(2) Other insubstantial benefits. For taxable years beginning in

2003, the $5, $25, and $50 guidelines in section 3 of Rev. Proc.

90-12, 1990-1 C.B. 471 (as amplified and modified), for

disregarding the value of insubstantial benefits received by a

donor in return for a fully deductible charitable contribution

under Sec. 170, are $8, $40 and $80, respectively.

.21 Funeral Trusts. For a contract entered into during calendar

year 2003 for a "qualified funeral trust," as defined in Sec. 685,

the trust may not accept aggregate contributions by or for the

benefit of an individual in excess of $7,800.

.22 Expatriation to Avoid Tax. For calendar year 2003, the

amounts used under Sec. 877(a)(2), regarding whether an

individual's loss of United States citizenship had the avoidance of

United States taxes as one of its principal purposes, are more than

$122,000 for "average annual net income tax" and $608,000 or more

for "net worth."

.23 Valuation of Qualified Real Property in Decedent's Gross

Estate. For an estate of a decedent dying in calendar year 2003, if

the executor elects to use the special use valuation method under

Sec. 2032A for qualified real property, the aggregate decrease in

the value of qualified real property resulting from electing to use

Sec. 2032A that is taken into account for purposes of the estate

tax may not exceed $840,000.

.24 Annual Exclusion for Gifts.

(1) For calendar year 2003, the first $11,000 of gifts to any

person (other than gifts of future interests in property) are not

included in the total amount of taxable gifts under Sec. 2503 made

during that year.

(2) For calendar year 2003, the first $112,000 of gifts to a

spouse who is not a citizen of the United States (other than gifts

of future interests in property) are not included in the total

amount of taxable gifts under Secs. 2503 and 2523(i)(2) made during

that year.

.25 Generation-Skipping Transfer Tax Exemption. For calendar year

2003, the generation-skipping transfer tax exemption under Sec.

2631, which is allowed in determining the "inclusion ratio" defined

in Sec. 2642, is $1,120,000.

.26 Passenger Air Transportation Excise Tax. For calendar year

2003, the tax under Sec. 4261(b) on the amount paid for each

domestic segment of taxable transportation by air is $3. For

calendar year 2003, the tax under Sec. 4261(c) on any amount paid

(whether within or without the United States) for any

transportation of any person by air, if such transportation begins

or ends in the United States, generally is $13.40. However, in the

case of a domestic segment beginning or ending in Alaska or Hawaii

as described in Sec. 4261(c)(3), the tax only applies to departures

and is at the rate of $6.70.

.27 Reporting Exception for Certain Exempt Organizations with

Nondeductible Lobbying Expenditures. For taxable years beginning in

2003, the annual per person, family, or entity dues limitation to

qualify for the reporting exception under Sec. 6033(e)(3) (and

section 5.05 of Rev. Proc. 98-19, 1998-1 C.B. 547), regarding

certain exempt organizations with nondeductible lobbying

expenditures, is $85 or less.

.28 Notice of Large Gifts Received from Foreign Persons. For

taxable years beginning in 2003, recipients of gifts from certain

foreign persons may be required to report these gifts under Sec.

6039F if the aggregate value of gifts received in a taxable year

exceeds $11,827.

.29 Persons Against Which a Federal Tax Lien Is Not Valid. For

calendar year 2003, a federal tax lien is not valid against (1)

certain purchasers under Sec. 6323(b)(4) that purchased personal

property in a casual sale for less than $1,150 or (2) a mechanic's

lienor under Sec. 6323(b)(7) that repaired or improved certain

residential property if the contract price with the owner is not

more than $5,750.

.30 Property Exempt from Levy. For calendar year 2003, the value

of property exempt from levy under Sec. 6334(a)(2) (fuel,

provisions, furniture, and other household personal effects, as

well as arms for personal use, livestock, and poultry) may not

exceed $6,890. The value of property exempt from levy under Sec.

6334(a)(3) (books and tools necessary for the trade, business, or

profession of the taxpayer) may not exceed $3,440.

.31 Interest on a Certain Portion of the Estate Tax Payable in

Installments. For an estate of a decedent dying in calendar year

2003, the dollar amount used to determine the "2-percent portion"

(for purposes of calculating interest under Sec. 6601(j)) of the

estate tax extended as provided in Sec. 6166 is $1,120,000.

.32 Attorney Fee Awards. For fees incurred in calendar year 2003,

the attorney fee award limitation under Sec. 7430(c)(1)(B)(iii) is

$150 per hour.

.33 Periodic Payments Received under Qualified Long-Term Care

Insurance Contracts or under Certain Life Insurance Contracts. For

calendar year 2003, the stated dollar amount of the per diem

limitation under Sec. 7702B(d)(4), regarding periodic payments

received under a qualified long-term care insurance contract or

periodic payments received under a life insurance contract that are

treated as paid by reason of the death of a chronically ill

individual, is $220.

Section 4. Effective Date

.01 General Rule. Except as provided in section 4.02, this

revenue procedure applies to taxable years beginning in 2003.

.02 Calendar Year Rule. This revenue procedure applies to

transactions or events occurring in calendar year 2003 for purposes

of sections 3.07 (low-income housing credit), 3.14 (private

activity bond volume cap), 3.21 (funeral trusts), 3.22

(expatriation to avoid tax), 3.23 (valuation of qualified real

property in decedent's gross estate), 3.24 (annual exclusion for

gifts), 3.25 (generation-skipping transfer tax exemption), 3.26

(passenger air transportation excise tax), 3.29 (persons against

which a federal tax lien is not valid), 3.30 (property exempt from

levy), 3.31 (interest on a certain portion of the estate tax

payable in installments), 3.32 (attorney fee awards), and 3.33

(periodic payments received under qualified long-term care

insurance contracts or under certain life insurance contracts).

Section 5. Drafting Information

[Omitted-related to author of this revenue procedure.]

TAX TABLES FOR PRIOR TAX YEARS

Inflation adjusted items for certain prior tax years were

contained in the following:

Revenue Procedure 2001-59 provided inflation adjusted items for

tax years beginning in 2002.

Revenue Procedure 2001-13 provided inflation adjusted items for

tax years beginning in 2001.

Revenue Procedure 99-42 provided inflation adjusted items for tax

years beginning in 2000.

Revenue Procedure 98-61 provided inflation adjusted items for tax

years beginning in 1999.

Revenue Procedure 97-57 provided inflation adjusted items for tax

years beginning in 1998.

Revenue Procedure 96-59 provided inflation adjusted items for tax

years beginning in 1997.

Revenue Procedure 95-53 provided inflation adjusted items for tax

years beginning in 1996.

Revenue Procedure 94-72 provided inflation adjusted items for tax

years beginning in 1995.

Revenue Procedure 93-49 provided inflation adjusted items for tax

years beginning in 1994.

Revenue Procedure 92-102 provided inflation adjusted items for

tax years beginning in 1993.

Revenue Procedure 91-65 provided inflation adjusted items for tax

years beginning in 1992.

Revenue Procedure 90-64 provided inflation adjusted items for tax

years beginning in 1991.

Revenue Procedure 90-7 provided inflation adjusted items for tax

years beginning in 1990.

Revenue Procedure 88-56 provided inflation adjusted items for tax

years beginning in 1989.

Revenue Procedure 85-55 provided income tax cost-of-living

adjustment (indexing) factor with respect to taxable years

beginning in 1986.

Revenue Procedure 84-79 provided income tax cost-of-living

adjustment (indexing) factor with respect to taxable years

beginning in 1985.

-REFTEXT-

REFERENCES IN TEXT

The enactment of this clause, referred to in subsec.

(h)(13)(A)(iii), means the date of enactment of Pub. L. 105-206,

which was approved July 22, 1998.

-MISC1-

AMENDMENTS

2001 - Subsec. (g)(7)(B)(ii)(II). Pub. L. 107-16, Secs.

101(c)(1), 901, which directed amendment of subcl. (II) by

temporarily substituting "10 percent." for "15 percent", was

executed by temporarily substituting "10 percent" for "15 percent",

to reflect the probable intent of Congress. See Effective and

Termination Dates of 2001 Amendment note below.

Subsec. (h)(1)(A)(ii)(I), (B)(i). Pub. L. 107-16, Secs.

101(c)(2)(A), 901, temporarily substituted "25 percent" for "28

percent". See Effective and Termination Dates of 2001 Amendment

note below.

Subsec. (h)(13). Pub. L. 107-16, Secs. 101(c)(2)(B), 901,

temporarily struck out par. (13), which set out special rules for

determination of 28-percent rate gain, unrecaptured section 1250

gain, pass-thru entities, and charitable remainder trusts. See

Effective and Termination Dates of 2001 Amendment note below.

Subsec. (i). Pub. L. 107-16, Secs. 101(a), 901, temporarily added

subsec. (i). See Effective and Termination Dates of 2001 Amendment

note below.

2000 - Subsec.(h)(8). Pub. L. 106-554 substituted "means the

excess of - " and subpars. (A) and (B) for "means an amount equal

to the gain excluded from gross income under section 1202(a)."

1998 - Subsec. (g)(3)(C), (D). Pub. L. 105-206, Sec. 6007(f)(1),

redesignated subpar. (D) as (C) and struck out heading and text of

former subpar. (C). Text read as follows: "If tax is imposed under

section 644(a)(1) with respect to the sale or exchange of any

property of which the parent was the transferor, for purposes of

applying subparagraph (A) to the taxable year of the parent in

which such sale or exchange occurs -

"(i) taxable income of the parent shall be increased by the

amount treated as included in gross income under section

644(a)(2)(A)(i), and

"(ii) the amount described in subparagraph (A)(ii) shall be

increased by the amount of the excess referred to in section

644(a)(2)(A)."

Subsec. (h). Pub. L. 105-206, Sec. 6005(d)(1), reenacted subsec.

heading without change and amended text of subsec. (h) generally,

substituting present provisions comprising pars. (1) to (13) for

former similar provisions comprising pars. (1) to (11).

Subsec. (h)(5). Pub. L. 105-206, Sec. 5001(a)(1), amended par.

(5) generally. Prior to amendment, par. (5) read as follows:

"(5) 28-percent rate gain. - For purposes of this subsection -

"(A) In general. - The term '28-percent rate gain' means the

excess (if any) of -

"(i) the sum of -

"(I) the aggregate long-term capital gain from property

held for more than 1 year but not more than 18 months;

"(II) collectibles gain; and

"(III) section 1202 gain, over

"(ii) the sum of -

"(I) the aggregate long-term capital loss (not described in

subclause (IV)) from property referred to in clause (i)(I);

"(II) collectibles loss;

"(III) the net short-term capital loss; and

"(IV) the amount of long-term capital loss carried under

section 1212(b)(1)(B) to the taxable year.

"(B) Special rules. -

"(i) Short sale gains and holding periods. - Rules similar to

the rules of section 1233(b) shall apply where the

substantially identical property has been held more than 1 year

but not more than 18 months; except that, for purposes of such

rules -

"(I) section 1233(b)(1) shall be applied by substituting

'18 months' for '1 year' each place it appears; and

"(II) the holding period of such property shall be treated

as being 1 year on the day before the earlier of the date of

the closing of the short sale or the date such property is

disposed of.

"(ii) Long-term losses. - Section 1233(d) shall be applied

separately by substituting '18 months' for '1 year' each place

it appears.

"(iii) Options. - A rule similar to the rule of section

1092(f) shall apply where the stock was held for more than 18

months.

"(iv) Section 1256 contracts. - Amounts treated as long-term

capital gain or loss under section 1256(a)(3) shall be treated

as attributable to property held for more than 18 months."

Subsec. (h)(6)(A). Pub. L. 105-206, Sec. 5001(a)(2), substituted

"1 year" for "18 months".

Subsec. (h)(7)(A)(i), (ii). Pub. L. 105-206, Sec. 5001(a)(3),

amended cls. (i) and (ii) generally. Prior to amendment, cls. (i)

and (ii) read as follows:

"(i) the amount of long-term capital gain (not otherwise treated

as ordinary income) which would be treated as ordinary income if -

"(I) section 1250(b)(1) included all depreciation and the

applicable percentage under section 1250(a) were 100 percent, and

"(II) only gain from property held for more than 18 months were

taken into account, over

"(ii) the excess (if any) of -

"(I) the amount described in paragraph (5)(A)(ii), over

"(II) the amount described in paragraph (5)(A)(i)."

Subsec. (h)(13). Pub. L. 105-206, Sec. 5001(a)(4), struck out

"for periods during 1997" after "Special rules" in par. heading and

amended headings and text of subpars. (A) and (B) generally. Prior

to amendment, subpars. (A) and (B) read as follows:

"(A) Determination of 28-percent rate gain. - In applying

paragraph (5) -

"(i) the amount determined under subclause (I) of paragraph

(5)(A)(i) shall include long-term capital gain (not otherwise

described in paragraph (5)(A)(i)) which is properly taken into

account for the portion of the taxable year before May 7, 1997;

"(ii) the amounts determined under subclause (I) of paragraph

(5)(A)(ii) shall include long-term capital loss (not otherwise

described in paragraph (5)(A)(ii)) which is properly taken into

account for the portion of the taxable year before May 7, 1997;

and

"(iii) clauses (i)(I) and (ii)(I) of paragraph (5)(A) shall be

applied by not taking into account any gain and loss on property

held for more than 1 year but not more than 18 months which is

properly taken into account for the portion of the taxable year

after May 6, 1997, and before July 29, 1997.

"(B) Other special rules. -

"(i) Determination of unrecaptured section 1250 gain not to

include pre-may 7, 1997 gain. - The amount determined under

paragraph (7)(A)(i) shall not include gain properly taken into

account for the portion of the taxable year before May 7, 1997.

"(ii) Other transitional rules for 18-month holding period. -

Paragraphs (6)(A) and (7)(A)(i)(II) shall be applied by

substituting '1 year' for '18 months' with respect to gain

properly taken into account for the portion of the taxable year

after May 6, 1997, and before July 29, 1997."

Subsec. (h)(13)(B). Pub. L. 105-277, Sec. 4002(i)(1), substituted

"paragraph (7)(A)(i)" for "paragraph (7)(A)" in introductory

provisions.

Subsec. (h)(13)(D). Pub. L. 105-277, Sec. 4002(i)(3), added

subpar. (D).

1997 - Subsec. (h). Pub. L. 105-34 amended heading and text of

subsec. (h) generally. Prior to amendment, text read as follows:

"If a taxpayer has a net capital gain for any taxable year, then

the tax imposed by this section shall not exceed the sum of -

"(1) a tax computed at the rates and in the same manner as if

this subsection had not been enacted on the greater of -

"(A) taxable income reduced by the amount of the net capital

gain, or

"(B) the amount of taxable income taxed at a rate below 28

percent, plus

"(2) a tax of 28 percent of the amount of taxable income in

excess of the amount determined under paragraph (1).

For purposes of the preceding sentence, the net capital gain for

any taxable year shall be reduced (but not below zero) by the

amount which the taxpayer elects to take into account as investment

income for the taxable year under section 163(d)(4)(B)(iii)."

1996 - Subsec. (g)(7)(A)(ii). Pub. L. 104-188, Sec. 1704(m)(1),

amended cl. (ii) generally. Prior to amendment, cl. (ii) read as

follows: "such gross income is more than $500 and less than

$5,000,".

Subsec. (g)(7)(B)(i). Pub. L. 104-188, Sec. 1704(m)(2)(A),

substituted "twice the amount described in paragraph (4)(A)(ii)(I)"

for "$1,000".

Subsec. (g)(7)(B)(ii)(II). Pub. L. 104-188, Sec. 1704(m)(2)(B),

amended subcl. (II) generally. Prior to amendment, subcl. (II) read

as follows: "for each such child, the lesser of $75 or 15 percent

of the excess of the gross income of such child over $500, and".

1993 - Subsecs. (a) to (e). Pub. L. 103-66, Secs. 13201(a),

13202(a), amended subsecs. (a) to (e) generally, substituting

five-tiered tax tables for all categories applicable to tax years

after December 31, 1992, for prior three-tiered tax tables.

Subsec. (f)(1). Pub. L. 103-66, Sec. 13201(b)(3)(A)(i),

substituted "1993" for "1990".

Subsec. (f)(3)(B). Pub. L. 103-66, Sec. 13201(b)(3)(A)(ii),

substituted "1992" for "1989".

Subsec. (f)(7). Pub. L. 103-66, Sec. 13201(b)(3)(B), added par.

(7).

Subsec. (h). Pub. L. 103-66, Sec. 13206(d)(2), inserted as

concluding provision at end "For purposes of the preceding

sentence, the net capital gain for any taxable year shall be

reduced (but not below zero) by the amount which the taxpayer

elects to take into account as investment income for the taxable

year under section 163(d)(4)(B)(iii)."

1990 - Subsecs. (a) to (e). Pub. L. 101-508, Sec. 11101(a),

amended subsecs. (a) to (e) generally, substituting three-tiered

tax tables for all categories applicable to tax years after Dec.

31, 1990, for prior two-tiered tax tables.

Subsec. (f)(1). Pub. L. 101-508, Sec. 11101(d)(1)(A)(i),

substituted "1990" for "1988".

Subsec. (f)(3)(B). Pub. L. 101-508, Sec. 11101(d)(1)(A)(ii),

substituted "1989" for "1987".

Subsec. (f)(6)(A). Pub. L. 101-508, Sec. 11104(b)(1), substituted

"section 151(d)(4)" for "section 151(d)(3)".

Pub. L. 101-508, Sec. 11103(c), inserted reference to section

68(b)(2).

Pub. L. 101-508, Sec. 11101(b)(2), struck out "subsection

(g)(4)," after "paragraph (2)(A),".

Subsec. (f)(6)(B). Pub. L. 101-508, Sec. 11104(b)(2), substituted

"section 151(d)(4)(A)" for "section 151(d)(3)".

Subsec. (g). Pub. L. 101-508, Sec. 11101(d)(2), redesignated

subsec. (i) as (g).

Pub. L. 101-508, Sec. 11101(b)(1), struck out subsec. (g) which

provided for phaseout of 15-percent rate and personal exemptions.

Subsec. (h). Pub. L. 101-508, Sec. 11101(d)(2), redesignated

subsec. (j) as (h) and struck out former subsec. (h) which provided

tax schedules for taxable years beginning in 1987.

Subsec. (i). Pub. L. 101-508, Sec. 11101(d)(2), redesignated

subsec. (i) as (g).

Subsec. (j). Pub. L. 101-508, Sec. 11101(d)(2), redesignated

subsec. (j) as (h).

Pub. L. 101-508, Sec. 11101(c), amended subsec. (j) generally.

Prior to amendment, subsec. (j) read as follows:

"(1) In general. - If a taxpayer has a net capital gain for any

taxable year to which this subsection applies, then the tax imposed

by this section shall not exceed the sum of -

"(A) a tax computed at the rates and in the same manner as if

this subsection had not been enacted on the greater of -

"(i) the taxable income reduced by the amount of net capital

gain, or

"(ii) the amount of taxable income taxed at a rate below 28

percent, plus

"(B) a tax of 28 percent of the amount of taxable income in

excess of the amount determined under subparagraph (A), plus

"(C) the amount of increase determined under subsection (g).

"(2) Years to which subsection applies. - This subsection shall

apply to -

"(A) any taxable year beginning in 1987, and

"(B) any taxable year beginning after 1987 if the highest rate

of tax set forth in subsection (a), (b), (c), (d), or (e)

(whichever applies) for such taxable year exceeds 28 percent."

1989 - Subsec. (f)(6)(B). Pub. L. 101-239, Sec. 7831(a),

substituted "subsection (c)(4) of section 63 (as it applies to

subsections (c)(5)(A) and (f) of such section) and section

151(d)(3)" for "section 63(c)(4)".

Subsec. (i)(3)(C), (D). Pub. L. 101-239, Sec. 7811(j)(1),

redesignated subpar. (C), relating to special rule where parent has

different taxable year, as (D).

Subsec. (i)(7)(A). Pub. L. 101-239, Sec. 7816(b), inserted

"(other than for purposes of this paragraph)" after "shall be

treated" in concluding provisions.

1988 - Subsec. (g)(2). Pub. L. 100-647, Sec. 1001(a)(3), inserted

provision relating to application of subpar. (B) at end of last

sentence.

Subsec. (i)(3)(A). Pub. L. 100-647, Sec. 1014(e)(2), substituted

"any exclusion, deduction, or credit" for "any deduction or

credit".

Subsec. (i)(3)(C). Pub. L. 100-647, Sec. 1014(e)(7), added

subpar. (C) relating to special rule where parent has different

taxable year.

Pub. L. 100-647, Sec. 1014(e)(1), added subpar. (C) relating to

coordination with section 644.

Subsec. (i)(4)(A)(i). Pub. L. 100-647, Sec. 1014(e)(3)(A),

substituted "adjusted gross income" for "gross income" and inserted

"attributable to" after "which is not".

Subsec. (i)(4)(A)(ii)(II). Pub. L. 100-647, Sec.

1014(e)(3)(B)-(D), substituted "his deductions" for "his

deduction", "the itemized deductions allowed" for "the deductions

allowed", and "adjusted gross income" for "gross income".

Subsec. (i)(5)(A). Pub. L. 100-647, Sec. 1014(e)(6), substituted

"custodial parent (within the meaning of section 152(e))" for

"custodial parent".

Subsec. (i)(7). Pub. L. 100-647, Sec. 6006(a), added par. (7).

1986 - Subsecs. (a) to (e). Pub. L. 99-514, Sec. 101(a), in

amending subsecs. (a) to (e) generally, substituted a general tax

table for tax tables (1), (2), and (3) in each subsec. applicable

to taxable years beginning in 1982, 1983, and after 1983,

respectively.

Subsec. (f). Pub. L. 99-514, Sec. 101(a), in amending subsec. (f)

generally, in par. (1) substituted "1988," for "1984" and struck

out "paragraph (3) of" before "subsections", in par. (2) struck out

"paragraph (3) of" before "subsection" in introductory provisions,

substituted subpars. (A) to (C) for former subpars. (A) to (C)

which read as follows:

"(A) by increasing -

"(i) the maximum dollar amount on which no tax is imposed

under such table, and

"(ii) the minimum and maximum dollar amounts for each rate

bracket for which a tax is imposed under such table,

by the cost-of-living adjustment for such calendar year,

"(B) by not changing the rate applicable to any rate bracket as

adjusted under subparagraph (A)(ii), and

"(C) by adjusting the amounts setting forth the tax to the

extent necessary to reflect the adjustments in the rate

brackets.",

and struck out concluding provisions which read as follows: "If any

increase determined under subparagraph (A) is not a multiple of

$10, such increase shall be rounded to the nearest multiple of $10

(or if such increase is a multiple of $5, such increase shall be

increased to the next highest multiple of $10).", in par. (3)(B)

substituted "1987" for "1983", in par. (4) substituted "August 31"

for "September 30", in par. (5) inserted requirement that the

Consumer Price Index most consistent with such Index for calendar

year 1986 be used, and added par. (6).

Subsecs. (g), (h). Pub. L. 99-514, Sec. 101(a), in amending

section generally, added subsecs. (g) and (h).

Subsec. (i). Pub. L. 99-514, Sec. 1411(a), added subsec. (i).

Subsec. (j). Pub. L. 99-514, Sec. 302(a), added subsec. (j).

1982 - Subsecs. (d), (e). Pub. L. 97-448, Sec. 101(a)(3), set out

as a note below, provided for amendment of the tables applying to

married individuals filing separately or to estates and trusts so

as to correct any figure differing by not more than 50 cents from

the correct amount under the formula used in constructing such

table. Corrections to the tables in subsecs. (d) and (e) appeared

in Announcement 83-50 contained in Internal Revenue Bulletin No.

1983-12 of Mar. 21, 1983.

1981 - Subsecs. (a) to (e). Pub. L. 97-34, Sec. 101(a), generally

revised tax tables downward providing for cumulative

across-the-board reductions of 23 percent on a three phase schedule

under which different new rates were set for taxable years

beginning in 1982, for taxable years beginning in 1983, and for

taxable years beginning after 1983.

Subsec. (f). Pub. L. 97-34, Sec. 104(a), added subsec. (f).

1978 - Subsec. (a). Pub. L. 95-600 generally made a downward

revision of tax table for married individuals filing joint returns

and surviving spouses resulting in a table under which, among other

changes, a bottom bracket imposing no tax on taxable income of

$3,400 or less was substituted for a bottom bracket imposing no tax

on taxable income of $3,200 or less.

Subsec. (b). Pub. L. 95-600 generally made a downward revision of

tax table for heads of household resulting in a table under which,

among other changes, a bottom bracket imposing no tax on taxable

income of $2,300 or less was substituted for a bottom bracket

imposing no tax on taxable income of $2,200 or less.

Subsec. (c). Pub. L. 95-600 generally made a downward revision of

tax table for unmarried individuals other than surviving spouses

and heads of households resulting in a table under which, among

other changes, a bottom bracket imposing no tax on taxable income

of $2,300 or less was substituted for a bottom bracket imposing no

tax on taxable income of $2,200 or less.

Subsec. (d). Pub. L. 95-600 generally made a downward revision of

tax tables for married individuals filing separate returns

resulting in a table under which, among other changes, a bottom

bracket imposing no tax on taxable income of $1,700 or less was

substituted for a bottom bracket imposing no tax on taxable income

of $1,600 or less.

Subsec. (e). Pub. L. 95-600 generally made a downward revision of

tax tables for estates and trusts resulting in a table under which,

among other changes, a bottom bracket under which a tax of 14% is

imposed on taxable income of $1,050 for a bottom bracket under

which a tax of 14% was imposed on taxable income of $500 or less.

1977 - Subsec. (a). Pub. L. 95-30 generally made a downward

revision of tax table for married individuals filing joint returns

and surviving spouses resulting in a table under which, among other

changes, a bottom bracket imposing no tax on taxable income of

$3,200 or less was substituted for a bottom bracket under which a

tax of 14% had been imposed on a taxable income of $1,000 or less.

Subsec. (b). Pub. L. 95-30 generally made a downward revision of

tax table for heads of households resulting in a table under which,

among other changes, a bottom bracket imposing no tax on taxable

income of $2,200 or less was substituted for a bottom bracket under

which a tax of 14% had been imposed on a taxable income of $1,000

or less.

Subsec. (c). Pub. L. 95-30 generally made a downward revision of

tax table for unmarried individuals other than surviving spouses

and heads of households resulting in a table under which, among

other changes, a bottom bracket imposing no tax on taxable income

of $2,200 or less was substituted for a bottom bracket under which

a tax of 14% had been imposed on a taxable income of $500 or less.

Subsec. (d). Pub. L. 95-30 generally made a downward revision of

tax table for married individuals filing separate returns resulting

in a table under which, among other changes, a bottom bracket

imposing no tax on taxable income of $1,600 or less was substituted

for a bottom bracket under which a tax of 14% had been imposed on a

taxable income of $500 or less. Provisions making table applicable

to estates and trusts were struck out. See subsec. (e).

Subsec. (e). Pub. L. 95-30 added subsec. (e) consisting of table

formerly contained in subsec. (d) but without any downward revision

and limited so as to apply only to estates and trusts.

1969 - Subsec. (a). Pub. L. 91-172 substituted a table of rates

of tax for married individuals filing joint returns and surviving

spouses for the tables of rates of tax on individuals. For rates of

taxes on unmarried individuals and married persons filing separate

returns, see subsecs. (c) and (d) of this section.

Subsec. (b). Pub. L. 91-172 generally revised rates of tax of

heads of household downwards and struck out provisions defining

head of household, determination of status, and limitations. For

definition of head of household, determination of status, and

limitations, see section 2(b) of this title.

Subsec. (c). Pub. L. 91-172 substituted rates of tax on unmarried

individuals (other than surviving spouses and heads of household)

for special rules explaining the rates of tax imposed under former

subsecs. (a) and (b)(1) and prescribing a maximum limit of 87

percent of the taxable year.

Subsec. (d). Pub. L. 91-172 substituted a table of rates of tax

for married individuals filing separate returns for provision

prescribing the applicability of the rates to non-resident aliens.

For applicability of rates of tax to non-resident aliens, see

section 2(d) of this title.

Subsec. (e). Pub. L. 91-172 struck out cross reference to section

63. See section 2(e) of this title.

1966 - Subsecs. (d), (e). Pub. L. 89-809 added subsec. (d) and

redesignated former subsec. (d) as (e).

1964 - Pub. L. 88-272 amended section generally by splitting the

former first bracket which started at $2,000 into four new

brackets, the 14 percent bracket representing a 30 percent

reduction, the 15 percent bracket a 25 percent cut, and the 16

percent bracket a 20 percent cut, and reducing all other brackets

by cuts averaging about 20 percent and effectuated these cuts in

two steps, one in 1964, and one in 1965.

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Pub. L. 107-16, title I, Sec. 101(d), June 7, 2001, 115 Stat. 44,

provided that:

"(1) In general. - Except as provided in paragraph (2), the

amendments made by this section [enacting section 6428 of this

title and amending this section and sections 15, 531, 541, 3402,

and 3406 of this title] shall apply to taxable years beginning

after December 31, 2000.

"(2) Amendments to withholding provisions. - The amendments made

by paragraphs (6), (7), (8), (9), (10), and (11) of subsection (c)

[amending sections 3402 and 3406 of this title] shall apply to

amounts paid after the 60th day after the date of the enactment of

this Act [June 7, 2001]. References to income brackets and rates of

tax in such paragraphs shall be applied without regard to section

1(i)(1)(D) of the Internal Revenue Code of 1986."

Pub. L. 107-16, title III, Sec. 301(d), June 7, 2001, 115 Stat.

54, provided that: "The amendments made by this section [amending

this section and section 63 of this title] shall apply to taxable

years beginning after December 31, 2004."

Pub. L. 107-16, title III, Sec. 302(c), June 7, 2001, 115 Stat.

54, provided that: "The amendments made by this section [amending

this section] shall apply to taxable years beginning after December

31, 2004."

Pub. L. 107-16, title IX, Sec. 901, June 7, 2001, 115 Stat. 150,

as amended by Pub. L. 107-358, Sec. 2, Dec. 17, 2002, 116 Stat.

3015, provided that:

"(a) In General. - All provisions of, and amendments made by,

this Act [see Tables for classification] shall not apply -

"(1) to taxable, plan, or limitation years beginning after

December 31, 2010, or

"(2) in the case of title V [see Tables for classification], to

estates of decedents dying, gifts made, or generation skipping

transfers, after December 31, 2010.

"(b) Application of Certain Laws. - The Internal Revenue Code of

1986 and the Employee Retirement Income Security Act of 1974 [29

U.S.C. 1001 et seq.] shall be applied and administered to years,

estates, gifts, and transfers described in subsection (a) as if the

provisions and amendments described in subsection (a) had never

been enacted."

"(c) Exception. - Subsection (a) shall not apply to section 803

[set out as a note preceding section 101 of this title] (relating

to no federal income tax on restitution received by victims of the

Nazi regime or their heirs or estates)."

EFFECTIVE DATE OF 2000 AMENDMENT

Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 117(c)], Dec. 21,

2000, 114 Stat. 2763, 2763A-605, provided that: "The amendments

made by this section [amending this section and section 1202 of

this title] shall apply to stock acquired after the date of the

enactment of this Act [Dec. 21, 2000]."

EFFECTIVE DATE OF 1998 AMENDMENTS

Pub. L. 105-277, div. J, title IV, Sec. 4002(k), Oct. 21, 1998,

112 Stat. 2681-908, provided that: "The amendments made by this

section [amending this section and sections 408A, 6015, 6103, 6159,

7421, 7443A, and 7491 of this title and amending provisions set out

as a note under section 6601 of this title] shall take effect as if

included in the provisions of the 1998 Act [Pub. L. 105-206] to

which they relate."

Pub. L. 105-206, title V, Sec. 5001(b), July 22, 1998, 112 Stat.

788, provided that:

"(1) In general. - Except as provided in paragraph (2), the

amendments made by this section [amending this section and sections

1223 and 1235 of this title] shall apply to taxable years ending

after December 31, 1997.

"(2) Subsection (a)(5). - The amendments made by subsection

(a)(5) [amending sections 1223 and 1235 of this title] shall take

effect on January 1, 1998."

Pub. L. 105-206, title VI, Sec. 6024, July 22, 1998, 112 Stat.

826, provided that: "Except as otherwise provided in this title

[see Tables for classification], the amendments made by this title

shall take effect as if included in the provisions of the Taxpayer

Relief Act of 1997 [Pub. L. 105-34] to which they relate."

EFFECTIVE DATE OF 1997 AMENDMENT

Section 311(d) of Pub. L. 105-34 provided that:

"(1) In general. - Except as provided in paragraph (2), the

amendments made by this section [amending this section, sections

55, 57, 904, 1445, and 7518 of this title, and section 1177 of

Title 46, Appendix, Shipping] shall apply to taxable years ending

after May 6, 1997.

"(2) Withholding. - The amendment made by subsection (c)(1)

[amending section 1445 of this title] shall apply only to amounts

paid after the date of the enactment of this Act [Aug. 5, 1997]."

EFFECTIVE DATE OF 1996 AMENDMENT

Section 1704(m)(4) of Pub. L. 104-188 provided that: "The

amendments made by this subsection [amending this section and

section 59 of this title] shall apply to taxable years beginning

after December 31, 1995."

EFFECTIVE DATE OF 1993 AMENDMENT

Section 13201(c) of Pub. L. 103-66 provided that: "The amendments

made by this section [amending this section and sections 41, 63,

68, 132, 151, 453A, 513, 531, and 541 of this title] shall apply to

taxable years beginning after December 31, 1992."

Section 13202(c) of Pub. L. 103-66 provided that: "The amendments

made by this section [amending this section and sections 531 and

541 of this title] shall apply to taxable years beginning after

December 31, 1992."

Section 13206(d)(3) of Pub. L. 103-66 provided that: "The

amendments made by this subsection [amending this section and

section 163 of this title] shall apply to taxable years beginning

after December 31, 1992."

EFFECTIVE DATE OF 1990 AMENDMENT

Section 11101(e) of Pub. L. 101-508 provided that: "The

amendments made by this section [amending this section, sections

32, 41, 59, 63, 135, 151, 513, 691, 904, 6103, and 7518 of this

title, and section 1177 of Title 46, Appendix, Shipping] shall

apply to taxable years beginning after December 31, 1990."

Section 11103(e) of Pub. L. 101-508 provided that: "The

amendments made by this section [enacting section 68 of this title

and amending this section and section 56 of this title] shall apply

to taxable years beginning after December 31, 1990."

Section 11104(c) of Pub. L. 101-508 provided that: "The

amendments made by this section [amending this section and section

151 of this title] shall apply to taxable years beginning after

December 31, 1990."

EFFECTIVE DATE OF 1989 AMENDMENT

Section 7817 of Pub. L. 101-239 provided that: "Except as

otherwise provided in this part [part I (Secs. 7811-7817) of

subtitle H of title VII of Pub. L. 101-239, see Tables for

classification], any amendment made by this part shall take effect

as if included in the provision of the 1988 Act [Pub. L. 100-647]

to which such amendment relates."

Section 7831(g) of Pub. L. 101-239 provided that: "Any amendment

made by this section [amending this section and sections 42, 406,

407, and 1250 of this title and provisions set out as notes under

sections 141 and 263A of this title] shall take effect as if

included in the provision of the Tax Reform Act of 1986 [Pub. L.

99-514] to which such amendment relates."

EFFECTIVE DATE OF 1988 AMENDMENT

Section 1019 of title I of Pub. L. 100-647 provided that:

"(a) General Rule. - Except as otherwise provided in this title,

any amendment made by this title [see Tables for classification],

shall take effect as if included in the provision of the Reform Act

[Pub. L. 99-514] to which such amendment relates.

"(b) Waiver of Estimated Tax Penalties. - No addition to tax

shall be made under section 6654 or 6655 of the 1986 Code for any

period before April 16, 1989 (March 16, 1989 in the case of a

taxpayer subject to section 6655 of the 1986 Code) with respect to

any underpayment to the extent such underpayment was created or

increased by any provision of this title or title II [see Tables

for classification]."

Section 6006(b) of Pub. L. 100-647 provided that: "The amendment

made by this section [amending this section] shall apply to taxable

years beginning after December 31, 1988."

EFFECTIVE DATE OF 1986 AMENDMENT

Section 151 of title I of Pub. L. 99-514 provided that:

"(a) General Rule. - Except as otherwise provided in this

section, the amendments made by this title [enacting section 67 of

this title, amending this section, sections 3, 5, 15, 21, 32, 62,

63, 74, 85, 86, 102, 108, 117, 129, 151, 152, 164, 170, 172, 183,

213, 265, 274, 280A, 402, 441, 443, 527, 541, 613A, 642, 667, 861,

862, 901, 904, 1398, 1441, 2032A, 3121, 3231, 3306, 3401, 3402,

3507, 4941, 4945, 6012 to 6014, 6212, 6504, 6511, and 7871 of this

title, and section 409 of Title 42, The Public Health and Welfare,

renumbering section 223 of this title as section 220 of this title,

repealing sections 24, 221, 222, and 1301 to 1305 of this title,

and enacting provisions set out as a note under section 32 of this

title] shall apply to taxable years beginning after December 31,

1986.

"(b) Unemployment Compensation. - The amendment made by section

121 [amending section 85 of this title] shall apply to amounts

received after December 31, 1986, in taxable years ending after

such date.

"(c) Prizes and Awards. - The amendments made by section 122

[amending sections 74, 102, 274, 3121, 3231, 3306, 3401, 4941, and

4945 of this title and section 409 of Title 42, The Public Health

and Welfare] shall apply to prizes and awards granted after

December 31, 1986.

"(d) Scholarships. - The amendments made by section 123 [amending

sections 74, 117, 1441, and 7871 of this title] shall apply to

taxable years beginning after December 31, 1986, but only in the

case of scholarships and fellowships granted after August 16, 1986.

"(e) Parsonage and Military Housing Allowances. - The amendment

made by section 144 [amending section 265 of this title] shall

apply to taxable years beginning before, on, or after, December 31,

1986."

Section 302(b) of Pub. L. 99-514 provided that: "The amendment

made by this section [amending this section] shall apply to taxable

years beginning after December 31, 1986."

Section 1411(c) of Pub. L. 99-514 provided that: "The amendments

made by this section [amending this section and section 6103 of

this title] shall apply to taxable years beginning after December

31, 1986."

EFFECTIVE DATE OF 1983 AMENDMENT

Section 109 of title I of Pub. L. 97-448 provided that: "Except

as otherwise provided in this title, any amendment made by this

title [see Tables for classification] shall take effect as if it

had been included in the provision of the Economic Recovery Tax Act

of 1981 [Pub. L. 97-34, Aug. 13, 1981, 95 Stat. 172] to which such

amendment relates."

EFFECTIVE DATE OF 1981 AMENDMENT

Section 101(f)(1) of Pub. L. 97-34, as amended by Pub. L. 97-448,

title I, Sec. 101(a)(1), Jan. 12, 1983, 96 Stat. 2365, provided

that: "The amendments made by subsections (a), (c), and (d)

[amending this section and sections 3, 21, 55, 541, and 1304 of

this title and repealing section 1348 of this title] shall apply to

taxable years beginning after December 31, 1981; except that the

amendment made by paragraph (3) of subsection (d) [amending section

21 of this title] shall apply to taxable years ending after

December 31, 1981."

Section 104(e) of Pub. L. 97-34 provided that: "The amendments

made by this section [amending this section and sections 63, 151,

6012, and 6013 of this title] shall apply to taxable years

beginning after December 31, 1984."

EFFECTIVE DATE OF 1978 AMENDMENT

Section 101(f)(1) of Pub. L. 95-600 provided that: "The

amendments made by subsections (a), (b), (c), and (d) [amending

sections 63, 402, 1302, and 6012 of this title] shall apply to

taxable years beginning after December 31, 1978."

EFFECTIVE DATE OF 1977 AMENDMENT

Section 106(a) of Pub. L. 95-30 provided that: "The amendments

made by sections 101, 102, and 104 [amending this section and

sections 3, 21, 42, 57, 63, 143, 161, 172, 211, 402, 441, 443, 511,

584, 613A, 641, 642, 667, 703, 861, 862, 873, 904, 911, 931, 1034,

1211, 1302, 6012, 6014, 6212, 6504, and 6654 of this title and

repealing sections 36, 141, 142, 144, and 145 of this title] shall

apply to taxable years beginning after December 31, 1976."

EFFECTIVE DATE OF 1969 AMENDMENT

Section 803(f) of Pub. L. 91-172, as amended by Pub. L. 99-514,

Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The

amendments made by subsections (a) [amending this section], (b)

[amending section 2 of this title], and (d) (other than paragraphs

(1) and (8)) [amending sections 5, 511, 632, 641, 1347, and 6015 of

this title] shall apply to taxable years beginning after December

31, 1970, except that section 2(c) of the Internal Revenue Code of

1986 [formerly I.R.C. 1954] [section 2(c) of this title], as

amended by subsection (b), shall also apply to taxable years

beginning after December 31, 1969. The amendments made by

subsections (c) [amending section 3 of this title], (d)(1)

[amending section 6014 of this title], and (d)(8) [amending section

1304 of this title] shall apply to taxable years beginning after

December 31, 1969".

EFFECTIVE DATE OF 1966 AMENDMENT

Section 103(n) of Pub. L. 89-809 provided that:

"(1) The amendments made by this section (other than the

amendments made by subsections (h), (i), and (k)) [enacting

section 877 of this title, amending this section and sections

116, 154, 871, 872, 873, 874, 875, 932, 6015, and 7701 of this

title, renumbering section 877 as 878, and repealing section 1493

of this title] shall apply with respect to taxable years

beginning after December 31, 1966.

"(2) The amendments made by subsection (h) [amending section

1441 of this title] shall apply with respect to payments made in

taxable years of recipients beginning after December 31, 1966.

"(3) The amendments made by subsection (i) [amending section

1461 of this title] shall apply with respect to payments

occurring after December 31, 1966.

"(4) The amendments made by subsection (k) [amending section

3401 of this title] shall apply with respect to remuneration paid

after December 31, 1966."

EFFECTIVE DATE OF 1964 AMENDMENT

Section 131 of Pub. L. 88-272, as amended by Pub. L. 99-514, Sec.

2, Oct. 22, 1986, 100 Stat. 2095, provided that: "Except for

purposes of section 21 of the Internal Revenue Code of 1986

[formerly I.R.C. 1954] (relating to effect of changes in rates

during a taxable year), the amendments made by parts I and II of

this title [amending this section and sections 2, 11, 37, 141, 144,

242, 821, 871, 963, 6016, 6074, 6154, 6212, 6504, and 6655 of this

title] shall apply with respect to taxable years beginning after

December 31, 1963."

SHORT TITLE OF 2002 AMENDMENTS

Pub. L. 107-358, Sec. 1, Dec. 17, 2002, 116 Stat. 3015, provided

that: "This Act [amending provisions set out as a note under this

section] may be cited as the 'Holocaust Restitution Tax Fairness

Act of 2002'."

Pub. L. 107-181, Sec. 1, May 20, 2002, 116 Stat. 583, provided

that: "This Act [amending section 107 of this title and enacting

provisions set out as a note under section 107 of this title] may

be cited as the 'Clergy Housing Allowance Clarification Act of

2002'."

Pub. L. 107-147, Sec. 1(a), Mar. 9, 2002, 116 Stat. 21, provided

that: "This Act [see Tables for classification] may be cited as the

'Job Creation and Worker Assistance Act of 2002'."

Pub. L. 107-134, Sec. 1(a), Jan. 23, 2002, 115 Stat. 2427,

provided that: This Act [enacting sections 139 and 5891 of this

title and section 1148 of Title 29, Labor, amending sections 5,

101, 104, 140, 642, 692, 2011, 2053, 2201, 6013, 6081, 6103, 6105,

6161, 6404, 7213, 7508, and 7508A of this title and section 1302 of

Title 29, enacting provisions set out as notes under sections 101,

108, 139, 501, 642, 692, 2011, 5891, 6081, and 6103 of this title,

section 401 of Title 42, The Public Health and Welfare, and section

40101 of Title 49, Transportation, and amending provisions set out

as a note under section 40101 of Title 49] may be cited as the

'Victims of Terrorism Tax Relief Act of 2001'."

SHORT TITLE OF 2001 AMENDMENTS

Pub. L. 107-16, Sec. 1(a), June 7, 2001, 115 Stat. 38, provided

that: "This Act [see Tables for classification] may be cited as the

'Economic Growth and Tax Relief Reconciliation Act of 2001'."

Pub. L. 107-15, Sec. 1, June 5, 2001, 115 Stat. 37, provided

that: "This Act [amending provisions set out as a note under

section 101 of this title] may be cited as the 'Fallen Hero

Survivor Benefit Fairness Act of 2001'."

SHORT TITLE OF 2000 AMENDMENTS

Pub. L. 106-573, Sec. 1, Dec. 28, 2000, 114 Stat. 3061, provided

that: "This Act [amending section 453 of this title and enacting

provisions set out as a note under section 453 of this title] may

be cited as the 'Installment Tax Correction Act of 2000'."

Pub. L. 106-554, Sec. 1(a)(7) [Sec. 1(a)], Dec. 21, 2000, 114

Stat. 2763, 2763A-587, provided that: "This Act [H.R. 5662, as

enacted by section 1(a)(7) of Pub. L. 106-554, see Tables for

classification] may be cited as the 'Community Renewal Tax Relief

Act of 2000'."

Pub. L. 106-519, Sec. 1(a), Nov. 15, 2000, 114 Stat. 2423,

provided that: "This Act [enacting sections 114 and 941 to 943 of

this title, amending sections 56, 275, 864, 903 and 999 of this

title, and repealing sections 921 to 927 of this title] may be

cited as the 'FSC Repeal and Extraterritorial Income Exclusion Act

of 2000'."

Pub. L. 106-476, title IV, Sec. 4001, Nov. 9, 2000, 114 Stat.

2176, provided that: "This title [enacting sections 1681 to 1681b

of Title 19, Customs Duties, amending sections 5704, 5754, and 5761

of this title, and enacting provisions set out as notes under

sections 5704 and 5761 of this title and section 1681 of Title 19]

may be cited as the 'Imported Cigarette Compliance Act of 2000'."

SHORT TITLE OF 1999 AMENDMENT

Pub. L. 106-170, title V, Sec. 500, Dec. 17, 1999, 113 Stat.

1918, provided that: "This title [see Tables for classification]

may be cited as the 'Tax Relief Extension Act of 1999'."

SHORT TITLE OF 1998 AMENDMENTS

Pub. L. 105-277, div. J, Sec. 1000(a), Oct. 21, 1998, 112 Stat.

2681-886, provided that: "This division [Secs. 1000-5301, see

Tables for classification] may be cited as the 'Tax and Trade

Relief Extension Act of 1998'."

Pub. L. 105-277, div. C, title XV, Sec. 1501, Oct. 21, 1998, 112

Stat. 2681-741, provided that: "This title [amending sections 4132

and 9510 of this title and section 300aa-11 of Title 42, The Public

Health and Welfare, and enacting provisions set out as notes under

sections 4132 and 9510 of this title] may be cited as the 'Vaccine

Injury Compensation Program Modification Act'."

Pub. L. 105-206, Sec. 1(a), July 22, 1998, 112 Stat. 685,

provided that: "This Act [see Tables for classification] may be

cited as the 'Internal Revenue Service Restructuring and Reform Act

of 1998'."

Pub. L. 105-206, title III, Sec. 3000, July 22, 1998, 112 Stat.

726, provided that: "This title [see Tables for classification] may

be cited as the 'Taxpayer Bill of Rights 3'."

Pub. L. 105-206, title VI, Sec. 6001(a), July 22, 1998, 112 Stat.

790, provided that: "This title [see Tables for classification] may

be cited as the 'Tax Technical Corrections Act of 1998'."

Pub. L. 105-178, title IX, Sec. 9001(a), June 9, 1998, 112 Stat.

499, provided that: "This title [amending sections 40, 132, 4041,

4051, 4071, 4081, 4091, 4221, 4481 to 4483, 6156, 6412, 6421, 6427,

9503, and 9504 of this title and section 460l-11 of Title 16,

Conservation, repealing section 9511 of this title, enacting

provisions set out as notes under sections 40, 132, 172, 4041,

6421, and 9503 of this title, and amending provisions set out as a

note under section 172 of this title] may be cited as the 'Surface

Transportation Revenue Act of 1998'."

SHORT TITLE OF 1997 AMENDMENTS

Pub. L. 105-35, Sec. 1, Aug. 5, 1997, 111 Stat. 1104, provided

that: "This Act [enacting section 7213A of this title, amending

sections 7213 and 7431 of this title, and enacting provisions set

out as notes under sections 7213 and 7431 of this title] may be

cited as the 'Taxpayer Browsing Protection Act'."

Section 1(a) of Pub. L. 105-34 provided that: "This Act [see

Tables for classification] may be cited as the 'Taxpayer Relief Act

of 1997'."

Pub. L. 105-2, Sec. 1(a), Feb. 28, 1997, 111 Stat. 4, provided

that: "This Act [amending sections 4041, 4081, 4091, 4261, 4271,

and 9502 of this title and enacting provisions set out as notes

under sections 4041, 4081, and 4261 of this title] may be cited as

the 'Airport and Airway Trust Fund Tax Reinstatement Act of 1997'."

SHORT TITLE OF 1996 AMENDMENTS

Section 1(a) of Pub. L. 104-188 provided that: "This Act [see

Tables for classification] may be cited as the 'Small Business Job

Protection Act of 1996'."

Pub. L. 104-168, Sec. 1(a), July 30, 1996, 110 Stat. 1452,

provided that: "This Act [enacting sections 4958, 7434, 7435, and

7524 of this title, amending sections 501, 4955, 4963, 6013, 6033,

6041 to 6042, 6044, 6045, 6049, 6050B, 6050H to 6050K, 6050N, 6103,

6104, 6159, 6201, 6213, 6323, 6334, 6343, 6404, 6503, 6601, 6651,

6652, 6656, 6672, 6685, 7122, 7213, 7422, 7430, 7433, 7454, 7502,

7608, 7609, 7623, 7802, 7805, and 7811 of this title, renumbering

sections 7434 and 7435 as sections 7435 and 7436 of this title,

enacting provisions set out as notes under sections 501, 4955,

6013, 6033, 6041, 6103, 6104, 6159, 6201, 6311, 6323, 6334, 6404,

6503, 6601, 6651, 6652, 6656, 6672, 7122, 7430, 7433 to 7435, 7524,

7608, 7609, 7623, 7802, 7803, 7805, and 7811 of this title, and

amending provisions set out as a note under section 7608 of this

title] may be cited as the 'Taxpayer Bill of Rights 2'."

SHORT TITLE OF 1994 AMENDMENTS

Pub. L. 103-465, title VII, Sec. 750, Dec. 8, 1994, 108 Stat.

5012, provided that: "This subtitle [subtitle F (Secs. 750-781) of

title VII of Pub. L. 103-465, enacting sections 1310, 1311, and

1350 of Title 29, Labor, amending sections 401, 404, 411, 412, 415,

417, 4971, and 4972 of this title and sections 1053 to 1056, 1082,

1132, 1301, 1303, 1305, 1306, 1322, 1341, 1342, and 1343 of Title

29, and enacting provisions set out as notes under sections 401,

411, 412, and 4972 of this title and sections 1056, 1082, 1303,

1306, 1310, 1311, 1322, 1341, and 1342 of Title 29] may be cited as

the 'Retirement Protection Act of 1994'."

Pub. L. 103-387, Sec. 1, Oct. 22, 1994, 108 Stat. 4071, provided

that: "This Act [enacting section 3510 of this title, amending

sections 3102 and 3121 of this title, section 3701 of Title 31,

Money and Finance, and sections 401, 402, 404, 409, 410, and 1383

of Title 42, The Public Health and Welfare, and enacting provisions

set out as notes under sections 3102 and 3510 of this title,

section 3701 of Title 31, and sections 401, 402, and 1383 of Title

42] may be cited as the 'Social Security Domestic Employment Reform

Act of 1994'."

SHORT TITLE OF 1993 AMENDMENTS

Pub. L. 103-152, Sec. 1, Nov. 24, 1993, 107 Stat. 1516, provided

that: "This Act [amending sections 503, 504, 1105, 1108, and 1382j

of Title 42, The Public Health and Welfare, enacting provisions set

out as notes under section 3304 of this title and sections 503 and

1382j of Title 42, amending provisions set out as notes under

section 3304 of this title and section 352 of Title 45, Railroads,

and repealing provisions set out as a note under section 3304 of

this title] may be cited as the 'Unemployment Compensation

Amendments of 1993'."

Section 13001(a) of title XIII of Pub. L. 103-66 provided that:

"This chapter [chapter 1 (Secs. 13001-13444) of title XIII of Pub.

L. 103-66, see Tables for classification] may be cited as the

'Revenue Reconciliation Act of 1993'."

Pub. L. 103-6, Sec. 1, Mar. 4, 1993, 107 Stat. 33, provided that:

"This Act [enacting provisions set out as notes under section 3304

of this title, section 31 of Title 2, The Congress, and section 352

of Title 45, Railroads, and amending provisions set out as notes

under section 3304 of this title and section 352 of Title 45] may

be cited as the 'Emergency Unemployment Compensation Amendments of

1993'."

SHORT TITLE OF 1992 AMENDMENTS

Pub. L. 102-486, title XIX, Sec. 19141, Oct. 24, 1992, 106 Stat.

3036, provided that: "This subtitle [subtitle C (Secs. 19141-19143)

of title XIX of Pub. L. 102-486, enacting sections 9701 to 9722 of

this title, amending sections 1231 and 1232 of Title 30, Mineral

Lands and Mining, and enacting provisions set out as a note under

section 9701 of this title] may be cited as the 'Coal Industry

Retiree Health Benefit Act of 1992'."

Pub. L. 102-318, Sec. 1, July 3, 1992, 106 Stat. 290, provided

that: "This Act [enacting section 1110 of Title 42, The Public

Health and Welfare, amending sections 55, 62, 72, 151, 219, 401 to

404, 406 to 408, 411, 414, 415, 457, 691, 871, 877, 1441, 3121,

3304, 3306, 3402, 3405, 4973, 4980A, 6047, 6652, 6655, and 7701 of

this title, section 8509 of Title 5, Government Organization and

Employees, section 2291 of Title 19, Customs Duties, and sections

502, 503, 1101, 1102, 1104, and 1105 of Title 42, enacting

provisions set out as notes under sections 401, 402, 3302, 3304,

and 6655 of this title, section 8509 of Title 5, section 2291 of

Title 19, and sections 502, 666, 1102, and 1108 of Title 42, and

amending provisions set out as notes under section 3304 of this

title, sections 502 and 666 of Title 42, and section 352 of Title

45, Railroads] may be cited as the 'Unemployment Compensation

Amendments of 1992'."

SHORT TITLE OF 1991 AMENDMENTS

Pub. L. 102-240, title VIII, Sec. 8001(a), Dec. 18, 1991, 105

Stat. 2203, provided that: "This title [enacting section 9511 of

this title, amending sections 4041, 4051, 4071, 4081, 4091, 4221,

4481, 4482, 4483, 6156, 6412, 6420, 6421, 6427, 9503, and 9504 of

this title and section 460l-11 of Title 16, Conservation, and

enacting provisions set out as notes under section 9503 of this

title, section 101 of Title 23, Highways, and section 1601 of

former Title 49, Transportation] may be cited as the 'Surface

Transportation Revenue Act of 1991'."

Pub. L. 102-227, Sec. 1(a), Dec. 11, 1991, 105 Stat. 1686,

provided that: "This Act [amending sections 25, 28, 41, 42, 48, 51,

57, 120, 127, 143, 144, 162, 864, and 6655 of this title and

enacting provisions set out as notes under sections 25, 28, 42, 51,

120, 127, 143, 144, 162, 864, and 6655 of this title] may be cited

as the 'Tax Extension Act of 1991'."

SHORT TITLE OF 1990 AMENDMENT

Section 11001(a) of title XI of Pub. L. 101-508 provided that:

"This title [see Tables for classification] may be cited as the

'Revenue Reconciliation Act of 1990'."

SHORT TITLE OF 1989 AMENDMENT

Section 7001(a) of title VII of Pub. L. 101-239 provided that:

"This title [see Tables for classification] may be cited as the

'Revenue Reconciliation Act of 1989'."

Section 7701 of title VII of Pub. L. 101-239 provided that: "This

subtitle [subtitle G (Secs. 7701-7743) of title VII of Pub. L.

101-239, see Tables for classification] may be cited as the

'Improved Penalty Administration and Compliance Tax Act'."

SHORT TITLE OF 1988 AMENDMENT

Section 1(a) of Pub. L. 100-647 provided that: "This Act [see

Tables for classification] may be cited as the 'Technical and

Miscellaneous Revenue Act of 1988'."

Section 6226 of Pub. L. 100-647 provided that: "This subtitle

[subtitle J (Secs. 6226-6247) of title VI of Pub. L. 100-647,

enacting sections 6159, 6326, 6712, 7430, 7432, 7433, 7520, 7521,

and 7811 of this title, amending sections 6213, 6214, 6331, 6332,

6334, 6335, 6343, 6404, 6512, 6601, 6673, 6863, 7216, 7429, 7481,

7482, 7802, and 7805 of this title and section 504 of Title 5,

Government Organization and Employees, renumbering section 6326 as

6327, 7432 as 7433, and 7433 as 7434 of this title, and enacting

provisions set out as notes under this section and sections 6159,

6213, 6214, 6326, 6331, 6404, 6512, 6673, 6712, 6863, 7429, 7430,

7432, 7520, 7521, 7605, 7801 to 7803, 7805, and 7811 of this title]

may be cited as the 'Omnibus Taxpayer Bill of Rights'."

SHORT TITLE OF 1987 AMENDMENTS

Pub. L. 100-223, title IV, Sec. 401, Dec. 30, 1987, 101 Stat.

1532, provided that: "This title [enacting section 4283 of this

title, amending sections 4041, 4261, 4271, 6427, and 9502 of this

title, and enacting provisions set out as notes under sections 4041

and 4261 of this title] may be cited as the 'Airport and Airway

Revenue Act of 1987'."

Pub. L. 100-203, title IX, Sec. 9302(a), Dec. 22, 1987, 101 Stat.

1330-333, provided that: "This part [part II (Secs. 9302-9346) of

subtitle D of part II of Pub. L. 100-203, enacting sections 1085b

and 1371 of Title 29, Labor, amending sections 401, 404, 411, 412,

414, and 4971 of this title and sections 1021, 1023, 1024, 1054,

1082 to 1084, 1085a, 1086, 1103, 1107, 1113, 1132, 1201, 1301, 1305

to 1307, 1322, 1341, 1342, 1344, 1349, 1362, 1364, 1367, and 1368

of Title 29, repealing section 1349 of Title 29, and enacting

provisions set out as notes under sections 401, 404, 412, and 4971

of this title and sections 1054, 1107, 1132, 1301, 1305, 1322, and

1344 of Title 29] may be cited as the 'Pension Protection Act'."

Pub. L. 100-203, title X, Sec. 10000(a), Dec. 22, 1987, 101 Stat.

1330-382, provided that: "This title [see Tables for

classification] may be cited as the 'Revenue Act of 1987'."

Pub. L. 100-17, title V, Sec. 501, Apr. 2, 1987, 101 Stat. 256,

provided that: "This title [amending sections 4041, 4051, 4052,

4071, 4081, 4221, 4481, 4482, 4483, 6156, 6412, 6420, 6421, 6427,

and 9503 of this title and section 460l-11 of Title 16,

Conservation, and enacting provisions set out as notes under

sections 4052 and 4481 of this title] may be cited as the 'Highway

Revenue Act of 1987'."

SHORT TITLE OF 1986 AMENDMENTS

Pub. L. 99-662, title XIV, Sec. 1401, Nov. 17, 1986, 100 Stat.

4266, provided that: "This title [enacting sections 4461, 4462,

9505, and 9506 of this title and section 988a of Title 33,

Navigation and Navigable Waters, amending section 4042 of this

title and sections 984 and 1804 of Title 33, repealing sections

1801 and 1802 of Title 33, and enacting provisions set out as notes

under sections 4042, 4461, 9505, and 9506 of this title and

sections 984 and 988 of Title 33] may be cited as the 'Harbor

Maintenance Revenue Act of 1986'."

Section 1(a) of Pub. L. 99-514 provided that: "This Act [see

Tables for classification] may be cited as the 'Tax Reform Act of

1986'."

Pub. L. 99-499, title V, Sec. 501, Oct. 17, 1986, 100 Stat. 1760,

provided that: "This title [enacting sections 59A, 4671, 4672,

9507, and 9508 of this title, amending sections 26, 164, 275, 936,

1561, 4041, 4042, 4081, 4221, 4611, 4612, 4661, 4662, 6154, 6416,

6420, 6421, 6425, 6427, 6655, 9502, 9503, and 9506 of this title

and section 9601 of Title 42, The Public Health and Welfare,

repealing sections 4681 and 4682 of this title and sections 9631 to

9633, 9641, and 9653 of Title 42, and enacting provisions set out

as notes under this section and sections 26, 4041, 4611, 4661,

4671, 4681, 9507, and 9508 of this title] may be cited as the

'Superfund Revenue Act of 1986'."

SHORT TITLE OF 1984 AMENDMENT

Pub. L. 98-369, Sec. 1(a), July 18, 1984, 98 Stat. 494, provided

that: "This Act [see Tables for classification] may be cited as the

'Deficit Reduction Act of 1984'."

Pub. L. 98-369, div. A (Secs. 5-1082), Sec. 5(a), July 18, 1984,

98 Stat. 494, provided that: "This division [see Tables for

classification] may be cited as the 'Tax Reform Act of 1984'."

SHORT TITLE OF 1983 AMENDMENTS

Pub. L. 98-76, title II, Sec. 201, Aug. 12, 1983, 97 Stat. 419,

provided that: "This title [enacting sections 3321 to 3323 and

6050G of this title, amending sections 72, 86, 105, 3201, 3202,

3211, 3221, 3231, 6157, 6201, 6317, 6513, and 6601 of this title

and section 430 of Title 42, The Public Health and Welfare, and

enacting provisions set out as notes under sections 72, 105, 3201,

3321, and 6302 of this title and section 231n of Title 45,

Railroads] may be cited as the 'Railroad Retirement Revenue Act of

1983'."

Pub. L. 98-67, title I, Sec. 101(a), Aug. 5, 1983, 97 Stat. 369,

provided that: "This title [enacting sections 3406 and 6705 of this

title, amending sections 31, 274, 275, 643, 661, 3402, 3403, 3502,

3507, 6011, 6013, 6015, 6042, 6044, 6049, 6051, 6365, 6401, 6413,

6652, 6653, 6654, 6676, 6678, 6682, 7205, 7215, 7431, 7654, and

7701 of this title, repealing sections 3451 to 3456 of this title,

enacting provisions set out as notes under sections 31, 3451, and

6011 of this title, and repealing provisions set out as a note

under section 3451 of this title] may be cited as the 'Interest and

Dividend Tax Compliance Act of 1983'."

Pub. L. 97-473, title II, Sec. 201, Jan. 14, 1983, 96 Stat. 2607,

provided that: "This title [enacting section 7871 of this title,

amending sections 41, 103, 164, 170, 2055, 2106, 2522, 4227, 4484,

6420, 6421, 6424, 6427, and 7701 of this title, and enacting

provisions set out as a note under section 7871 of this title] may

be cited as the 'Indian Tribal Governmental Tax Status Act of

1982'."

Section 1(a) of Pub. L. 97-448 provided that: "This Act [see

Tables for classification] may be cited as the 'Technical

Corrections Act of 1982'."

Pub. L. 97-424, title V, Sec. 501(a), Jan. 6, 1983, 96 Stat.

2168, provided that: "This title [see Tables for classification]

may be cited as the 'Highway Revenue Act of 1982'."

SHORT TITLE OF 1982 AMENDMENTS

Pub. L. 97-362, Sec. 1(a), Oct. 25, 1982, 96 Stat. 1726, provided

that: "This Act [amending sections 8509 and 8521 of Title 5,

Government Organization and Employees, sections 48, 172, 4401,

4411, 6051, 7447, 7448, 7456, 7459, and 7463 of this title, and

section 601 of former Title 46, Shipping, enacting provisions set

out as notes under sections 8509 and 8521 of Title 5 and sections

48, 172, 336, 4401, 4411, 6051, 7448, and 7463 of this title, and

amending provisions set out as notes under section 2291 of Title

19, Customs Duties, and section 3306 of this title] may be cited as

the 'Miscellaneous Revenue Act of 1982'."

Pub. L. 97-354, Sec. 1(a), Oct. 19, 1982, 96 Stat. 1669, provided

that: "This Act [enacting sections 1361 to 1363, 1366 to 1368, 1371

to 1375, 1377 to 1379, and 6241 to 6245 of this title, amending

sections 29, 31, 40, 41, 46, 48, 50A, 50B, 52, 53, 55, 57, 58, 62,

108, 163, 168, 170, 172, 179, 183, 189, 194, 267, 280, 280A, 291,

447, 464, 465, 613A, 992, 1016, 1101, 1212, 1251, 1254, 1256, 3453,

3454, 4992, 4996, 6037, 6042, 6362, and 6661 of this title and

section 1108 of Title 29, Labor, omitting section 1376 of this

title, and enacting provisions set out as a note under section 1361

of this title] may be cited as the 'Subchapter S Revision Act of

1982'."

Pub. L. 97-248, Sec. 1(a), Sept. 3, 1982, 96 Stat. 324, provided

that: "This Act [see Tables for classification] may be cited as the

'Tax Equity and Fiscal Responsibility Act of 1982'."

Section 401 of title IV of Pub. L. 97-248 provided that: "This

title [enacting sections 6046A and 6221 to 6232 of this title and

section 1508 of Title 28, Judiciary and Judicial Procedure,

amending sections 702, 6031, 6213, 6216, 6422, 6501, 6504, 6511,

6512, 6515, 6679, 7422, 7451, 7456, 7459, 7482, and 7485 of this

title and section 1346 of Title 28, and enacting provisions set out

as notes under sections 6031, 6046A, 6221, and 6231 of this title]

may be cited as the 'Tax Treatment of Partnership Items Act of

1982'."

SHORT TITLE OF 1981 AMENDMENTS

Pub. L. 97-119, title I, Sec. 101(a), Dec. 29, 1981, 95 Stat.

1635, provided that: "This subtitle [subtitle A (Secs. 101-104) of

title I of Pub. L. 97-119, enacting sections 9500, 9501, 9601, and

9602 of this title, amending sections 501 and 4121 of this title

and sections 902, 925, 932, and 934 of Title 30, Mineral Lands and

Mining, repealing section 934a of Title 30, and enacting provisions

set out as notes under sections 4121 and 9501 of this title and

section 934 of Title 30] may be cited as the 'Black Lung Benefits

Revenue Act of 1981'."

Section 1(a) of Pub. L. 97-34 provided that: "This Act [see

Tables for classification] may be cited as the 'Economic Recovery

Tax Act of 1981'."

SHORT TITLE OF 1980 AMENDMENTS

Pub. L. 96-605, Sec. 1(a), Dec. 28, 1980, 94 Stat. 3521, provided

that: "This Act [enacting sections 66 and 195 of this title,

amending sections 48, 105, 125, 274, 401, 408, 409A, 410, 414, 415,

501, 513, 514, 528, 861, 871, and 2055 of this title, and enacting

provisions set out as notes under sections 48, 66, 119, 125, 195,

274, 401, 409A, 414, 415, 501, 513, 514, 528, 861, 871, 2055, 3121,

and 7701 of this title] may be cited as the 'Miscellaneous Revenue

Act of 1980'."

Pub. L. 96-589, Sec. 1(a), Dec. 24, 1980, 94 Stat. 3389, provided

that: "This Act [enacting sections 370, 1398, 1399, 6658, and 7464

of this title, redesignating former section 7464 of this title as

7465, amending sections 108, 111, 118, 128, 302, 312, 337, 351,

354, 355, 357, 368, 381, 382, 422, 443, 542, 703, 1017, 1023, 1371,

3302, 6012, 6036, 6103, 6155, 6161, 6212, 6213, 6216, 6326, 6404,

6503, 6512, 6532, 6871, 6872, 6873, 7430, and 7508 of this title,

repealing section 1018 of this title, and enacting provisions set

out as a note under section 108 of this title] may be cited as the

'Bankruptcy Tax Act of 1980'."

Pub. L. 96-510, title II, Sec. 201(a), Dec. 11, 1980, 94 Stat.

2796, provided that: "This title [enacting chapter 38 of this

title, sections 9631 to 9641 of Title 42, The Public Health and

Welfare, and provisions set out as a note under section 4611 of

this title] may be cited as the 'Hazardous Substance Response

Revenue Act of 1980'."

Pub. L. 96-499, title XI, Sec. 1100, Dec. 5, 1980, 94 Stat. 2660,

provided: "This title [enacting sections 103A, 280D, 897, 6039C,

and 6429 of this title, amending sections 103, 861, 871, 882, 3121,

3306, 4251, 6652, and 6655 of this title and section 409 of Title

42, The Public Health and Welfare, and enacting provisions set out

as notes under sections 1, 103A, 280D, 897, 3121, and 6655 of this

title] may be cited as the 'Revenue Adjustments Act of 1980'."

Pub. L. 96-499, title XI, subtitle A (Secs. 1101-1104), Sec.

1101, Dec. 5, 1980, 94 Stat. 2660, provided: "This subtitle

[enacting section 103A of this title, amending section 103 of this

title, and enacting provisions set out as a note under section 103A

of this title] may be cited as the 'Mortgage Subsidy Bond Tax Act

of 1980'."

Pub. L. 96-499, title XI, Sec. 1121, Dec. 5, 1980, 94 Stat. 2682,

provided: "This subtitle [subtitle C (Secs. 1121-1125) of title XI

of Pub. L. 96-499, enacting sections 897 and 6039C of this title,

amending sections 861, 871, 882, and 6652 of this title, and

enacting provisions set out as notes under section 897 of this

title] may be cited as the 'Foreign Investment in Real Property Tax

Act of 1980'."

Pub. L. 96-471, Sec. 1(a), Oct. 19, 1980, 94 Stat. 2247,

provided: "This Act [enacting sections 453 to 453B of this title,

amending sections 311, 336, 337, 381, former section 453, sections

453B, 481, 644, 691, 1038, 1239, and 1255 of this title, and

enacting provisions set out as notes under sections 453, 691, and

1038 of this title] may be cited as the 'Installment Sales Revision

Act of 1980'."

Pub. L. 96-283, title IV, Sec. 401, June 28, 1980, 94 Stat. 582,

provided that: "This title [enacting sections 4495 to 4498 of this

title and sections 1472, 1473 of Title 30, Mineral Lands and

Mining, and enacting provision set out as a note under section 4495

of this title] may be cited as the 'Deep Seabed Hard Mineral

Removal Tax Act of 1979'."

Pub. L. 96-223, Sec. 1(a) Apr. 2, 1980, 94 Stat. 229, provided

that: "This Act [see Tables for classification] may be cited as the

'Crude Oil Windfall Profit Tax Act of 1980'."

Pub. L. 96-222, Sec. 1(a), Apr. 1, 1980, 94 Stat. 194, provided

that: "This Act [see Tables for classification] may be cited as the

'Technical Corrections Act of 1979'."

SHORT TITLE OF 1979 AMENDMENT

Pub. L. 96-39, title VIII, Sec. 801(a), July 26, 1979, 93 Stat.

273, provided that: "This subtitle [subtitle A (Secs. 801-810) of

title VIII of Pub. L. 96-39, amending sections 5001, 5002 to 5008,

5043, 5061, 5064, 5066, 5116, 5171 to 5173, 5175 to 5178, 5180,

5181, 5201 to 5205, 5207, 5211 to 5215, 5221 to 5223, 5231, 5232,

5235, 5241, 5273, 5291, 5301, 5352, 5361 to 5363, 5365, 5381, 5391,

5551, 5601, 5604, 5610, 5612, 5615, 5663, 5681, 5682, and 5691 of

this title, repealing sections 5009, 5021 to 5026, 5081 to 5084,

5174, 5233, 5234, 5251, 5252, 5364, and 5521 to 5523 of this title,

and enacting provisions set out as notes under sections 5001, 5061,

5171, and 5173 of this title] may be cited as the 'Distilled

Spirits Tax Revision Act of 1979'."

SHORT TITLE OF 1978 AMENDMENTS

Section 1(a) of Pub. L. 95-618, Nov. 9, 1978, 92 Stat. 3174,

provided that: "This Act [enacting sections 44C, 124, and 4064 of

this title, amending sections 39, 46 to 48, 56, 57, 167, 263, 465,

613, 613A, 614, 751, 1016, 1254, 4041, 4063, 4081, 4092, 4093,

4217, 4221, 4222, 4293, 4483, 6096, 6401, 6412, 6416, 6421, 6424,

6427, 6504, and 6675 of this title, redesignating section 124 of

this title as section 125, enacting provisions set out as notes

under sections 39, 44C, 48, 124, 167, 263, 613, 613A, 4041, 4063,

4064, 4081, 4093, and 4221 of this title, and amending provisions

set out as notes under section 57 of this title and section 120 of

Title 23, Highways] may be cited as the 'Energy Tax Act of 1978'."

Pub. L. 95-615, Sec. 1, Nov. 8, 1978, 92 Stat. 3097, provided

that: "This Act [probably meaning sections 1 to 8 of Pub. L.

95-615, amending section 167 of this title, enacting provisions set

out as notes under sections 61, 62, and 911 of this title, and

amending provisions set out as notes under sections 117, 167, 382,

401, and 911 of this title] may be cited as the 'Tax Treatment

Extension Act of 1977'."

Pub. L. 95-615, Sec. 201(a), Nov. 8, 1978, 92 Stat. 3098,

provided that: "This Act [probably meaning sections 201 to 210 of

Pub. L. 95-615, enacting section 913 of this title, amending

sections 43, 62, 119, 217, 911, 1034, 1302, 1304, 1402, 3401, 6011,

6012, and 6091 of this title, and enacting provisions set out as

notes under sections 61, 401, and 911 of this title] may be cited

as the 'Foreign Earned Income Act of 1978'."

Section 1(a) of Pub. L. 95-600 provided that: "This Act [see

Tables for classification] may be cited as the 'Revenue Act of

1978'."

Pub. L. 95-502, title II, Sec. 201, Oct. 21, 1978, 92 Stat. 1696,

provided that: "This title [enacting section 4042 of this title and

sections 1801 to 1804 of Title 33, Navigation and Navigable Waters,

amending section 4293 of this title, and enacting provisions set

out as notes under section 4042 of this title] may be cited as the

'Inland Waterways Revenue Act of 1978'."

Pub. L. 95-227, Sec. 1, Feb. 10, 1978, 92 Stat. 11, provided

that: "This Act [enacting sections 192, 4121, and 4951 to 4953 of

this title and section 934a of Title 30, Mineral Lands and Mining,

amended sections 501, 4218, 4221, 4293, 4946, 6104, 6213, 6405,

6416, 6501, 6503, and 7454 of this title and section 934 of Title

30 and enacted provisions set out as notes under sections 192 and

4121 of this title and section 934 of Title 30] may be cited as the

'Black Lung Benefits Revenue Act of 1977'."

SHORT TITLE OF 1977 AMENDMENTS

Section 1(a) of Pub. L. 95-30 provided that: "This Act [see

Tables for classification] may be cited as the 'Tax Reduction and

Simplification Act of 1977'."

Pub. L. 95-19, Sec. 1, Apr. 12, 1977, 91 Stat. 39, provided that:

"This Act [amending section 3304 of this title, enacting provisions

set out as notes under sections 3302, 3304, and 3309 of this title,

and amending provisions set out as notes under sections 3302, 3304,

and 3309 of this title and sections 359 and 360 of Title 2, The

Congress] may be cited as the 'Emergency Unemployment Compensation

Extension Act of 1977'."

SHORT TITLE OF 1976 AMENDMENTS

Pub. L. 94-455, title I, Sec. 101, Oct. 4, 1976, 90 Stat. 1525,

provided that: "This Act [see Tables for classification] may be

cited as the 'Tax Reform Act of 1976'."

Section 1 of Pub. L. 94-452 provided that: "This Act [enacting

section 6158 of this title, amending sections 311, 1101, 1102,

1103, 6151, 6503, and 6601 of this title, and enacting provisions

set out as notes under sections 311, 1101, and 6158 of this title]

may be cited as the 'Bank Holding Company Tax Act of 1976'."

SHORT TITLE OF 1975 AMENDMENTS

Pub. L. 94-164, Sec. 1, Dec. 23, 1975, 89 Stat. 970, provided

that: "This Act [amending sections 11, 21, 42, 43, 103, 141, 883,

962, 1561, 3402, 6012, 6153, and 6154 of this title and provisions

set out as notes under sections 42, 43, and 3402 of this title, and

enacting provisions set out as notes under this section and

sections 3, 11, 43, 103, and 883 of this title] may be cited as the

'Revenue Adjustment Act of 1975'."

Pub. L. 94-12, Sec. 1(a), Mar. 29, 1975, 89 Stat. 26, provided

that: "This Act [enacting sections, 42, 43, 44, 613A, 907, 955, and

6428 of this title, amending sections 3, 11, 12, 21, 46, 47, 48,

50A, 50B, 56, 141, 214, 535, 613, 703, 851, 901, 902, 951, 954,

962, 993, 1034, 1561, 3304 note, 3402, 6012, 6096, 6201, and 6401

of this title, repealing sections 955 and 963 of this title, and

enacting provisions set out as notes under sections 3, 11, 43, 44,

46, 48, 50A, 214, 410, 535, 613A, 907, 955, 993, 3304, 3402, 6428,

and 6611 of this title and section 402 of Title 42, The Public

Health and Welfare] may be cited as the 'Tax Reduction Act of

1975'."

SHORT TITLE OF 1973 AMENDMENTS

Pub. L. 93-69, title I, Sec. 110, July 10, 1973, 87 Stat. 166,

provided that: "This title [amending sections 3201, 3202, 3211, and

3221 of this title and sections 228b, 228c, and 228e of Title 45,

Railroads, enacting provisions set out as notes under section 3201

of this title and sections 228b, 228c, 228f, and 228o of Title 45,

and amending provisions set out as notes under section 228c of

Title 45] may be cited as the 'Railroad Retirement Amendments of

1973'."

For short title of Pub. L. 93-17 as the "Interest Equalization

Tax Extension Act of 1973", see section 1(a) of Pub. L. 93-17, set

out as a note under section 2104 of this title.

SHORT TITLE OF 1972 AMENDMENT

Pub. L. 92-512, title II, Sec. 201, Oct. 20, 1972, 86 Stat. 936,

provided that: "This title [enacting sections 6361 to 6363 of this

title, amending sections 6405 and 7463 of this title, and enacting

provisions set out as a note under section 7463 of this title] may

be cited as the 'Federal-State Tax Collection Act of 1972'."

SHORT TITLE OF 1971 AMENDMENTS

Pub. L. 92-178, Sec. 1(a), Dec. 10, 1971, 85 Stat. 497, provided

that: "This Act [see Tables for classification] may be cited as the

'Revenue Act of 1971'."

For short title of Pub. L. 92-9 as the "Interest Equalization Tax

Extension Act of 1971", see section 1(a) of Pub. L. 92-9, set out

as a note under section 861 of this title.

SHORT TITLE OF 1970 AMENDMENT

For short title of Pub. L. 91-614 as the "Excise, Estate, and

Gift Tax Adjustment Act of 1970", see section 1 of Pub. L. 91-614,

set out as a Short Title note under section 2001 of this title.

SHORT TITLE OF 1969 AMENDMENTS

Pub. L. 91-172, Sec. 1(a), Dec. 30, 1969, 83 Stat. 487, provided

that: "This Act [see Tables for classification] may be cited as the

'Tax Reform Act of 1969'."

For short title of Pub. L. 91-128 as the "Interest Equalization

Tax Extension Act of 1969", see section 1(a) of Pub. L. 91-128, set

out as a note under section 4182 of this title.

SHORT TITLE OF 1968 AMENDMENT

Pub. L. 90-364, Sec. 1(a), June 28, 1968, 82 Stat. 251, provided

that: "This Act [enacting sections 51 and 6425 of this title,

amending sections 103, 243, 276, 501, 963, 3402, 4061, 4251, 6020,

6154, 6412, 6651, 6655, 7203, 7502, and 7701 of this title and

sections 603, 607, and 1396b of Title 42, The Public Health and

Welfare, repealing sections 6016, 6074, and 4251 to 4254 of this

title, enacting provisions set out as notes under sections 51, 103,

276, 501, 4061, 6154, and 7502 of this title, section 3101 of Title

5, Government Organization and Employees, sections 11 and 757b of

former Title 31, Money and Finance, and section 1396b of Title 42,

and amending notes under section 1396b of Title 42,] may be cited

as the 'Revenue and Expenditure Control Act of 1968'."

SHORT TITLE OF 1967 AMENDMENT

For short title of Pub. L. 90-59 as the "Interest Equalization

Tax Extension Act of 1967", see section 1(a) of Pub. L. 90-59, set

out as a note under section 6011 of this title.

SHORT TITLE OF 1966 AMENDMENTS

For short title of title I of Pub. L. 89-809 as the "Foreign

Investors Tax Act of 1966", see section 101 of Pub. L. 89-809, set

out as a note under section 861 of this title.

For short title of title III of Pub. L. 89-809 as the

"Presidential Election Campaign Fund Act of 1966", see section 301

of Pub. L. 89-809, set out as a Short Title note under section 6096

of this title.

For short title of Pub. L. 89-719 as the "Federal Tax Lien Act of

1966", see section 1(a) of Pub. L. 89-719, set out as a Short Title

note under section 6321 of this title.

SHORT TITLE OF 1965 AMENDMENT

Pub. L. 89-44, Sec. 1(a), June 21, 1965, 79 Stat. 136, provided

that: "This Act [see Tables for classification] may be cited as the

'Excise Tax Reduction Act of 1965'."

SHORT TITLE OF 1964 AMENDMENTS

Section 1 of Pub. L. 88-348 provided: "That this Act [amending

sections 165, 4061, 4251, 4261, 5001, 5022, 5041, 5051, 5063, 5701,

5707, and 6412 of this title, and provisions set out as notes under

sections 165, 4261, and 5701 of this title] may be cited as the

'Excise-Tax Rate Extension Act of 1964'."

Pub. L. 88-272, Sec. 2(a), Feb. 26, 1964, 78 Stat 19, provided

that: "This Act [see Tables for classification] may be cited as the

'Revenue Act of 1964'."

SHORT TITLE OF 1963 AMENDMENT

Pub. L. 88-52, Sec. 1, June 29, 1963, 77 Stat. 72, provided:

"That this Act [amending sections 11, 821, 4061, 4251, 4261, 5001,

5022, 5041, 5051, 5063, 5701, 5707, 6412 of this title and

provisions set out as notes under sections 4261 and 5701 of this

title] may be cited as the 'Tax Rate Extension Act of 1963'."

SHORT TITLE OF 1962 AMENDMENTS

Pub. L. 87-834, Sec. 1(a), Oct. 16, 1962, 76 Stat. 960, provided

that: "This Act [see Tables for classification] may be cited as the

'Revenue Act of 1962'."

For short title of Pub. L. 87-792 as the "Self-Employed

Individuals Tax Retirement Act of 1962", see section 1 of Pub. L.

87-792, set out as a note under section 401 of this title.

Pub. L. 87-508, Sec. 1, June 28, 1962, 76 Stat. 114, provided:

"That this Act [amending sections 11, 821, 4061, 4251 to 4253, 4261

to 4264, 5001, 5002, 5041, 5051, 5063, 5701, 6707, 6412, 6416, and

6421 of this title, enacting provisions set out as notes under

section 4261, 6416, and 6421 of this title, and amending provisions

set out as a note under section 5701 of this title] may be cited as

the 'Tax Rate Extension Act of 1962'."

SHORT TITLE OF 1961 AMENDMENT

Pub. L. 87-72, Sec. 1, June 30, 1961, 75 Stat. 193, provided:

"That this Act [amending sections 11, 821, 4061, 4251, 4261, 5001,

5022, 5041, 5051, 5063, 5701, 5707, and 6412 of this title and

provisions set out as a note under section 5701 of this title] may

be cited as the 'Tax Rate Extension Act of 1961'."

SHORT TITLE OF 1959 AMENDMENTS

Pub. L. 86-75, Sec. 1, June 30, 1959, 73 Stat. 157, provided:

"That this Act [amending sections 11, 821, 4061, 4251, 4261, 5001,

5022, 5041, 5051, 5063, 5701, 5707 and 6412 of this title and

provisions set out as a note under section 5701 of this title] may

be cited as the 'Tax Rate Extension Act of 1959'."

Section 1 of Pub. L. 86-69 provided that: "This Act [amending

former part I of subchapter L of this chapter and sections 116,

381, 841, 842, 891, 1016, 1201, 1232, 1504, 4371, and 6501 of this

title and enacting provisions set out as notes under sections 801,

6072, and 6655 of this title] may be cited as the 'Life Insurance

Company Income Tax Act of 1959'."

SHORT TITLE OF 1958 AMENDMENTS

Pub. L. 85-866, title I, Sec. 1(a), Sept. 2, 1958, 72 Stat. 1606,

provided that: "This title [see Tables for classification] may be

cited as the 'Technical Amendments Act of 1958'."

Pub. L. 85-866, title II, Sec. 201, Sept. 2, 1958, 72 Stat. 1676,

provided that: "This title [amending sections 165, 172, 179, 535,

1244, 1551, 6161, 6166, 6503, and 6601 of this title and enacting

provisions set out as notes under sections 172, 179, 535, 6161 of

this title] may be cited as the 'Small Business Tax Revision Act of

1958'."

For short title of Pub. L. 85-859 as the "Excise Tax Technical

Changes Act of 1958", see section 1(a) of Pub. L. 85-859, set out

as a Short Title note under section 5001 of this title.

Pub. L. 85-475, Sec. 1, June 30, 1958, 72 Stat. 259, provided:

"That this Act [amending sections 11, 821, 4061, 4292, 5001, 5022,

5041, 5051, 5063, 5134, 5701, 5707, 6412, 6415, 6416, 7012, and

7272 of this title and repealing sections 4271 to 4273 and 4281 to

4283 of this title] may be cited as the 'Tax Rate Extension Act of

1958'."

SHORT TITLE OF 1957 AMENDMENT

Section 1 of Pub. L. 85-12 provided: "That this Act [amending

sections 11, 821, 4061, 5001, 5022, 5041, 5051, 5063, 5134, 5701,

5707, and 6412 of this title] may be cited as the 'Tax Rate

Extension Act of 1957'."

SHORT TITLE OF 1956 AMENDMENTS

For short title of title II of act June 29, 1956 as the "Highway

Revenue Act of 1956", see section 201(a) of act June 29, 1956, set

out as a note under section 4041 of this title.

For short title of act Mar. 29, 1956 as the "Tax Rate Extension

Act of 1956", see section 1 of act Mar. 29, 1956, set out as a note

under section 4041 of this title.

Section 1 of act Mar. 13, 1956, provided: "That this Act

[enacting section 843 of this title and amending sections 316, 501,

594, 801 to 805, 811 to 813, 816 to 818, 821, 822, 832, 841, 842,

891, 1201, 1504, and 4371 of this title] be cited as the 'Life

Insurance Company Tax Act for 1955'."

SHORT TITLE OF 1955 AMENDMENT

For short title of act Mar. 30, 1955 as the "Tax Rate Extension

Act of 1955", see section 1 of act Mar. 30, 1955, set out as a note

under section 4041 of this title.

COORDINATION OF PROVISIONS IN AMENDATORY ACTS

Pub. L. 105-277, div. J, title IV, Sec. 4001(b), Oct. 21, 1998,

112 Stat. 2681-906, provided that: "For purposes of applying the

amendments made by any title of this division [Secs. 1000-5301, see

Tables for classification] other than this title [see Definitions

note set out below for classification], the provisions of this

title shall be treated as having been enacted immediately before

the provisions of such other titles."

Pub. L. 105-206, title VI, Sec. 6001(b), July 22, 1998, 112 Stat.

790, provided that: "For purposes of applying the amendments made

by any title of this Act other than this title, the provisions of

this title [see Tables for classification] shall be treated as

having been enacted immediately before the provisions of such other

titles."

Section 1600 of title XVI of Pub. L. 105-34 provided that: "For

purposes of applying the amendments made by any title of this Act

other than this title, the provisions of this title [see Tables for

classification] shall be treated as having been enacted immediately

before the provisions of such other titles."

Section 1701 of Pub. L. 104-188 provided that: "For purposes of

applying the amendments made by any subtitle [subtitle A to F

(Secs. 1111-1621) and H to J (Secs. 1801-1954) of title I of Pub.

L. 104-188, see Tables for classification] of this title other than

this subtitle [subtitle G (Secs. 1701-1704) of title I of Pub. L.

104-188, see Tables for classification], the provisions of this

subtitle shall be treated as having been enacted immediately before

the provisions of such other subtitles."

Section 11700 of Pub. L. 101-508 provided that: "For purposes of

applying the amendments made by any subtitle [subtitles A to F

(Secs. 11101-11622) and H and I (Secs. 11801-11901) of title XI of

Pub. L. 101-508, see Tables for classification] of this title other

than this subtitle [subtitle G (Secs. 11700-11704) of title XI of

Pub. L. 101-508, see Tables for classification], the provisions of

this subtitle shall be treated as having been enacted immediately

before the provisions of such other subtitles."

Section 7801(b) of Pub. L. 101-239 provided that: "For purposes

of applying the amendments made by any subtitle [subtitles A to G

(Secs. 7101-7743) of title VII of Pub. L. 101-239, see Tables for

classification] of this title other than this subtitle [subtitle H

(Secs. 7801-7894) of title VII of Pub. L. 101-239, see Tables for

classification], the provisions of this subtitle shall be treated

as having been enacted immediately before the provisions of such

other subtitles."

Section 1800 of title XVIII of Pub. L. 99-514 provided that: "For

purposes of applying the amendments made by any title of this Act

other than this title, the provisions of this title [see Tables for

classification] shall be treated as having been enacted immediately

before the provisions of such other titles."

ADJUSTMENTS FOR CONSUMER PRICE INDEX ERROR

Pub. L. 106-554, Sec. 1(a)(7) [title III, Sec. 308], Dec. 21,

2000, 114 Stat. 2763, 2763A-636, provided that:

"(a) Determinations by OMB. - As soon as practicable after the

date of the enactment of this Act [Dec. 21, 2000], the Director of

the Office of Management and Budget shall determine with respect to

each applicable Federal benefit program whether the CPI computation

error for 1999 has or will result in a shortfall in payments to

beneficiaries under such program (as compared to payments that

would have been made if the error had not occurred). As soon as

practicable after the date of the enactment of this Act, but not

later than 60 days after such date, the Director shall direct the

head of the Federal agency which administers such program to make a

payment or payments that, insofar as the Director finds practicable

and feasible -

"(1) are targeted to the amount of the shortfall experienced by

individual beneficiaries, and

"(2) compensate for the shortfall.

"(b) Coordination with Federal Agencies. - As soon as practicable

after the date of the enactment of this Act [Dec. 21, 2000], each

Federal agency that administers an applicable Federal benefit

program shall, in accordance with such guidelines as are issued by

the Director pursuant to this section, make an initial

determination of whether, and the extent to which, the CPI

computation error for 1999 has or will result in a shortfall in

payments to beneficiaries of an applicable Federal benefit program

administered by such agency. Not later than 30 days after such

date, the head of such agency shall submit a report to the Director

and to each House of the Congress of such determination, together

with a complete description of the nature of the shortfall.

"(c) Implementation Pursuant to Agency Reports. - Upon receipt of

the report submitted by a Federal agency pursuant to subsection

(b), the Director shall review the initial determination of the

agency, the agency's description of the nature of the shortfall,

and the compensation payments proposed by the agency. Prior to

directing payment of such payments pursuant to subsection (a), the

Director shall make appropriate adjustments (if any) in the

compensation payments proposed by the agency that the Director

determines are necessary to comply with the requirements of

subsection (a) and transmit to the agency a summary report of the

review, indicating any adjustments made by the Director. The agency

shall make the compensation payments as directed by the Director

pursuant to subsection (a) in accordance with the Director's

summary report.

"(d) Income Disregard Under Federal Means-Tested Benefit

Programs. - A payment made under this section to compensate for a

shortfall in benefits shall, in accordance with guidelines issued

by the Director pursuant to this section, be disregarded in

determining income under title VIII of the Social Security Act [42

U.S.C. 1001 et seq.] or any applicable Federal benefit program that

is means-tested.

"(e) Funding. - Funds otherwise available under each applicable

Federal benefit program for making benefit payments under such

program are hereby made available for making compensation payments

under this section in connection with such program.

"(f) No Judicial Review. - No action taken pursuant to this

section shall be subject to judicial review.

"(g) Director's Report. - Not later than April 1, 2001, the

Director shall submit to each House of the Congress a report on the

activities performed by the Director pursuant to this section.

"(h) Definitions. - For purposes of this section:

"(1) Applicable federal benefit program. - The term 'applicable

Federal benefit program' means any program of the Government of

the United States providing for regular or periodic payments or

cash assistance paid directly to individual beneficiaries, as

determined by the Director of the Office of Management and

Budget.

"(2) Federal agency. - The term 'Federal agency' means a

department, agency, or instrumentality of the Government of the

United States.

"(3) CPI computation error for 1999. - The term 'CPI

computation error for 1999' means the error in the computation of

the Consumer Price Index announced by the Bureau of Labor

Statistics on September 28, 2000.

"(i) Tax Provisions. - In the case of taxable years (and other

periods) beginning after December 31, 2000, if any Consumer Price

Index (as defined in section 1(f)(5) of the Internal Revenue Code

of 1986) reflects the CPI computation error for 1999 -

"(1) the correct amount of such Index shall (in such manner and

to such extent as the Secretary of the Treasury determines to be

appropriate) be taken into account for purposes of such Code, and

"(2) tables prescribed under section 1(f) of such Code to

reflect such correct amount shall apply in lieu of any tables

that were prescribed based on the erroneous amount."

APPLICATION OF SPECIAL RULES FOR MAXIMUM CAPITAL GAINS RATE

Pub. L. 105-277, div. J, title IV, Sec. 4002(i)(2), Oct. 21,

1998, 112 Stat. 2681-907, provided that:

"(2)(A) Subparagraphs (A)(i)(II), (A)(ii)(II), and (B)(ii) of

section 1(h)(13) of the 1986 Code shall not apply to any

distribution after December 31, 1997, by a regulated investment

company or a real estate investment trust with respect to -

"(i) gains and losses recognized directly by such company or

trust, and

"(ii) amounts properly taken into account by such company or

trust by reason of holding (directly or indirectly) an interest

in another such company or trust to the extent that such

subparagraphs did not apply to such other company or trust with

respect to such amounts.

"(B) Subparagraph (A) shall not apply to any distribution which

is treated under section 852(b)(7) or 857(b)(8) of the 1986 Code as

received on December 31, 1997.

"(C) For purposes of subparagraph (A), any amount which is

includible in gross income of its shareholders under section

852(b)(3)(D) or 857(b)(3)(D) of the 1986 Code after December 31,

1997, shall be treated as distributed after such date.

"(D)(i) For purposes of subparagraph (A), in the case of a

qualified partnership with respect to which a regulated investment

company meets the holding requirement of clause (iii) -

"(I) the subparagraphs referred to in subparagraph (A) shall

not apply to gains and losses recognized directly by such

partnership for purposes of determining such company's

distributive share of such gains and losses, and

"(II) such company's distributive share of such gains and

losses (as so determined) shall be treated as recognized directly

by such company.

The preceding sentence shall apply only if the qualified

partnership provides the company with written documentation of such

distributive share as so determined.

"(ii) For purposes of clause (i), the term 'qualified

partnership' means, with respect to a regulated investment company,

any partnership if -

"(I) the partnership is an investment company registered under

the Investment Company Act of 1940 [15 U.S.C. 80a-1 et seq.],

"(II) the regulated investment company is permitted to invest

in such partnership by reason of section 12(d)(1)(E) of such Act

[15 U.S.C. 80a-12(d)(1)(E)] or an exemptive order of the

Securities and Exchange Commission under such section, and

"(III) the regulated investment company and the partnership

have the same taxable year.

"(iii) A regulated investment company meets the holding

requirement of this clause with respect to a qualified partnership

if (as of January 1, 1998) -

"(I) the value of the interests of the regulated investment

company in such partnership is 35 percent or more of the value of

such company's total assets, or

"(II) the value of the interests of the regulated investment

company in such partnership and all other qualified partnerships

is 90 percent or more of the value of such company's total

assets."

CAPITAL GAIN DISTRIBUTION BY TRUST

Pub. L. 105-277, div. J, title IV, Sec. 4003(b), Oct. 21, 1998,

112 Stat. 2681-909, as amended by Pub. L. 106-554, Sec. 1(a)(7)

[title III, Sec. 312(b)], Dec. 21, 2000, 114 Stat. 2763, 2763A-640,

provided that: "In the case of any capital gain distribution made

after 1997 by a trust to which section 664 of the 1986 Code applies

with respect to amounts properly taken into account by such trust

during 1997, paragraphs (5)(A)(i)(I), (5)(A)(ii)(I), (7)(A)(i)(II),

and (13)(A) of section 1(h) of the 1986 Code (as in effect for

taxable years ending on December 31, 1997) shall not apply."

ELECTION TO RECOGNIZE GAIN ON ASSETS HELD ON JANUARY 1, 2001

Pub. L. 105-34, title III, Sec. 311(e), Aug. 5, 1997, 111 Stat.

835, as amended by Pub. L. 106-554, Sec. 1(a)(7) [title III, Sec.

314(c)], Dec. 21, 2000, 114 Stat. 2763, 2763A-643; Pub. L. 107-147,

title IV, Sec. 414(a), Mar. 9, 2002, 116 Stat. 54, provided that:

"For purposes of the Internal Revenue Code of 1986 -

"(1) In general. - A taxpayer other than a corporation may

elect to treat -

"(A) any readily tradable stock (which is a capital asset)

held by such taxpayer on January 1, 2001, and not sold before

the next business day after such date, as having been sold on

such next business day for an amount equal to its closing

market price on such next business day (and as having been

reacquired on such next business day for an amount equal to

such closing market price), and

"(B) any other capital asset or property used in the trade or

business (as defined in section 1231(b) of the Internal Revenue

Code of 1986) held by the taxpayer on January 1, 2001, as

having been sold on such date for an amount equal to its fair

market value on such date (and as having been reacquired on

such date for an amount equal to such fair market value).

"(2) Treatment of gain or loss. -

"(A) Any gain resulting from an election under paragraph (1)

shall be treated as received or accrued on the date the asset

is treated as sold under paragraph (1) and shall be included in

gross income notwithstanding any provision of the Internal

Revenue Code of 1986.

"(B) Any loss resulting from an election under paragraph (1)

shall not be allowed for any taxable year.

"(3) Election. - An election under paragraph (1) shall be made

in such manner as the Secretary of the Treasury or his delegate

may prescribe and shall specify the assets for which such

election is made. Such an election, once made with respect to any

asset, shall be irrevocable. Such an election shall not apply to

any asset which is disposed of (in a transaction in which gain or

loss is recognized in whole or in part) before the close of the

1-year period beginning on the date that the asset would have

been treated as sold under such election.

"(4) Readily tradable stock. - For purposes of this subsection,

the term 'readily tradable stock' means any stock which, as of

January 1, 2001, is readily tradable on an established securities

market or otherwise.

"(5) Disposition of interest in passive activity. - Section

469(g)(1)(A) of the Internal Revenue Code of 1986 shall not apply

by reason of an election made under paragraph (1)."

[Pub. L. 107-147, title IV, Sec. 414(b), Mar. 9, 2002, 116 Stat.

54, provided that: "The amendments made by this section [amending

section 311(e) of Pub. L. 105-34, set out above] shall take effect

as if included in section 311 of the Taxpayer Relief Act of 1997

[Pub. L. 105-34]."]

ELECTION TO PAY ADDITIONAL 1993 TAXES IN INSTALLMENTS

Section 13201(d) of Pub. L. 103-66 provided that:

"(1) In general. - At the election of the taxpayer, the

additional 1993 taxes may be paid in 3 equal installments.

"(2) Dates for paying installments. - In the case of any tax

payable in installments by reason of paragraph (1) -

"(A) the first installment shall be paid on or before the due

date for the taxpayer's taxable year beginning in calendar year

1993,

"(B) the second installment shall be paid on or before the date

1 year after the date determined under subparagraph (A), and

"(C) the third installment shall be paid on or before the date

2 years after the date determined under subparagraph (A).

For purposes of the preceding sentence, the term 'due date' means

the date prescribed for filing the taxpayer's return determined

without regard to extensions.

"(3) Extension without interest. - For purposes of section 6601

of the Internal Revenue Code of 1986, the date prescribed for the

payment of any tax payable in installments under paragraph (1)

shall be determined with regard to the extension under paragraph

(1).

"(4) Additional 1993 taxes. -

"(A) In general. - For purposes of this subsection, the term

'additional 1993 taxes' means the excess of -

"(i) the taxpayer's net chapter 1 liability as shown on the

taxpayer's return for the taxpayer's taxable year beginning in

calendar year 1993, over

"(ii) the amount which would have been the taxpayer's net

chapter 1 liability for such taxable year if such liability had

been determined using the rates which would have been in effect

under section 1 of the Internal Revenue Code of 1986 for

taxable years beginning in calendar year 1993 but for the

amendments made by this section [amending this section and

sections 41, 63, 68, 132, 151, 453A, 513, 531, and 541 of this

title] and section 13202 [amending this section and sections

531 and 541 of this title] and such liability had otherwise

been determined on the basis of the amounts shown on the

taxpayer's return.

"(B) Net chapter 1 liability. - For purposes of subparagraph

(A), the term 'net chapter 1 liability' means the liability for

tax under chapter 1 of the Internal Revenue Code of 1986

determined -

"(i) after the application of any credit against such tax

other than the credits under sections 31 and 34, and

"(ii) before crediting any payment of estimated tax for the

taxable year.

"(5) Acceleration of payments. - If the taxpayer does not pay any

installment under this section on or before the date prescribed for

its payment or if the Secretary of the Treasury or his delegate

believes that the collection of any amount payable in installments

under this section is in jeopardy, the Secretary shall immediately

terminate the extension under paragraph (1) and the whole of the

unpaid tax shall be paid on notice and demand from the Secretary.

"(6) Election on return. - An election under paragraph (1) shall

be made on the taxpayer's return for the taxpayer's taxable year

beginning in calendar year 1993.

"(7) Exception for estates and trusts. - This subsection shall

not apply in the case of an estate or trust."

TRANSITIONAL RULE FOR MAXIMUM CAPITAL GAINS RATE

Section 302(c) of Pub. L. 99-514, which related to long-term

capital gain on rights to royalties paid under particular leases

and assignments, was repealed by Pub. L. 100-647, title I, Sec.

1003(b)(1), Nov. 10, 1988, 102 Stat. 3382.

COORDINATION WITH OTHER PROVISIONS

Pub. L. 99-509, title VIII, Sec. 8081, Oct. 21, 1986, 100 Stat.

1965, provided that: "Nothing in any provision of this Act [see

Tables for classifications] (other than this title) shall be

construed as -

"(1) imposing any tax (or exempting any person or property from

any tax),

"(2) establishing any trust fund, or

"(3) authorizing amounts to be expended from any trust fund."

[S.Con.Res. 174, agreed to Oct. 18, 1986, provided: "That, in the

enrollment of the bill (H.R. 5300) to provide for reconciliation

pursuant to section 2 of the concurrent resolution on the budget

for fiscal year 1987, the Clerk of the House of Representatives

shall insert at the end of section 8081 of the bill the following:

Paragraph (3) shall not apply to any authorization made by title IX

of this Act." As a result of clerical error, the sentence was

inserted at the end of section 8101 of the bill, and appears at the

end of section 8101 of Pub. L. 99-509, 100 Stat. 1967.]

Pub. L. 99-499, title V, Sec. 531, Oct. 17, 1986, 100 Stat. 1782,

provided that: "Notwithstanding any provision of this Act [see

Tables for classifications] not contained in this title [see Short

Title of 1986 Amendment note above], any provision of this Act (not

contained in this title) which -

"(1) imposes any tax, premium, or fee,

"(2) establishes any trust fund, or

"(3) authorizes amounts to be expended from any trust fund,

shall have no force or effect."

ELIMINATION OF 50-CENT ROUNDING ERRORS

Section 101(a)(3) of Pub. L. 97-448, as amended by Pub. L.

99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "If

any figure in any table -

"(A) which is set forth in section 1 of the Internal Revenue

Code of 1986 [formerly I.R.C. 1954] (as amended by section 101 of

the Economic Recovery Tax Act of 1981 [Pub. L. 97-34, title I,

Sec. 101, Aug. 13, 1981, 95 Stat. 176], and

"(B) which applies to married individuals filing separately or

to estates and trusts,

differs by not more than 50 cents from the correct amount under the

formula used in constructing such table, such figure is hereby

corrected to the correct amount." [See 1982 Amendment note above.]

POLICY WITH RESPECT TO ADDITIONAL TAX REDUCTIONS

Section 3 of Pub. L. 95-600 provided that: "As a matter of

national policy the rate of growth in Federal outlays, adjusted for

inflation, should not exceed 1 percent per year between fiscal year

1979 and fiscal year 1983; Federal outlays as a percentage of gross

national product should decline to below 21 percent in fiscal year

1980, 20.5 percent in fiscal year 1981, 20 percent in fiscal year

1982 and 19.5 percent in fiscal year 1983; and the Federal budget

should be balanced in fiscal years 1982 and 1983. If these

conditions are met, it is the intention that the tax-writing

committees of Congress will report legislation providing

significant tax reductions for individuals to the extent that these

tax reductions are justified in the light of prevailing and

expected economic conditions."

EFFECTIVE DATE OF CERTAIN DEFINITIONS AND DESIGNATIONS

Pub. L. 94-455, title XIX, Sec. 1908, Oct. 4, 1976, 90 Stat.

1836, provided that: "For purposes of any amendment made by any

provision of this Act [see Tables for classification] (other than

this title) -

"(1) which contains a term the meaning of which is defined in

or modified by any provision of this title, and

"(2) which has an effective date earlier than the effective

date of the provision of this title defining or modifying such

term,

that definition or modification shall be considered to take effect

as of such earlier effective date."

CONGRESSIONAL DECLARATION RELATING TO 1975 AMENDMENT

Pub. L. 94-164, Sec. 1A, Dec. 23, 1975, 89 Stat. 970, provided

that:

"(a) Congress is determined to continue the tax reduction for the

first 6 months of 1976 in order to assure continued economic

recovery.

"(b) Congress is also determined to continue to control spending

levels in order to reduce the national deficit.

"(c) Congress reaffirms its commitments to the procedures

established by the Congressional Budget and Impoundment Control Act

of 1974 [see Tables for classification of Pub. L. 93-344, July 12,

1974, 88 Stat. 297] under which it has already established a

binding spending ceiling for the fiscal year 1976.

"(d) If the Congress adopts a continuation of the tax reduction

provided by this Act [see Short Title of 1975 Amendment note above]

beyond June 30, 1976, and if economic conditions warrant doing so,

Congress shall provide, through the procedures in the Budget Act

[Pub. L. 93-344], for reductions in the level of spending in the

fiscal year 1977 below what would otherwise occur, equal to any

additional reduction in taxes (from the 1974 tax rate levels)

provided for the fiscal year 1977: Provided, however, That nothing

shall preclude the right of the Congress to pass a budget

resolution containing a higher or lower expenditure figure if the

Congress concludes that this is warranted by economic conditions or

unforeseen circumstances."

CONGRESSIONAL DECLARATION RELATING TO 1964 AMENDMENT

Pub. L. 88-272, Sec. 1, Feb. 26, 1964, 78 Stat. 19, provided

that: "It is the sense of Congress that the tax reduction provided

by this Act [see Short Title of 1964 Amendment note above] through

stimulation of the economy, will, after a brief transitional

period, raise (rather than lower) revenues and that such revenue

increases should first be used to eliminate the deficits in the

administrative budgets and then to reduce the public debt. To

further the objective of obtaining balanced budgets in the near

future, Congress by this action, recognizes the importance of

taking all reasonable means to restrain Government spending and

urges the President to declare his accord with this objective."

-CROSS-

DEFINITIONS

Pub. L. 105-277, div. J, title IV, Sec. 4001(a), Oct. 21, 1998,

112 Stat. 2681-906, provided that: "For purposes of this title

[amending this section, sections 51, 56, 67, 68, 86, 135, 137, 163,

172, 219, 221, 264, 351, 368, 408A, 469, 873, 954, 2001, 2031,

6015, 6103, 6159, 6311, 6404, 6693, 7421, 7443A, 7491, 9503, and

9510 of this title, and sections 401 and 407 of Title 42, The

Public Health and Welfare, enacting provisions set out as notes

under this section, sections 51, 67, 68, 86, 172, 833, 6103, and

9503 of this title, and section 401 of Title 42, and amending

provisions set out as notes under sections 6601 and 7508A of this

title] -

"(1) 1986 code. - The term '1986 Code' means the Internal

Revenue Code of 1986.

"(2) 1998 act. - The term '1998 Act' means the Internal Revenue

Service Restructuring and Reform Act of 1998 (Public Law 105-206)

[see Tables for classification].

"(3) 1997 act. - The term '1997 Act' means the Taxpayer Relief

Act of 1997 (Public Law 105-34) [see Tables for classification]."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 2, 3, 15, 23, 24, 25A,

32, 41, 42, 55, 59, 63, 68, 132, 135, 137, 146, 162, 213, 219, 220,

221, 453A, 460, 468B, 511, 512, 513, 531, 541, 641, 646, 685, 691,

774, 871, 876, 877, 891, 904, 911, 936, 962, 1022, 1260, 1291,

1301, 1398, 1446, 2032A, 2503, 2631, 3402, 3406, 4001, 4261, 6014,

6015, 6039F, 6103, 6242, 6323, 6334, 6428, 6601, 6652, 6655, 6867,

7430, 7518, 7519 of this title; title 7 section 940d; title 46 App.

section 1177.

-End-

-CITE-

26 USC Sec. 2 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART I - TAX ON INDIVIDUALS

-HEAD-

Sec. 2. Definitions and special rules

-STATUTE-

(a) Definition of surviving spouse

(1) In general

For purposes of section 1, the term "surviving spouse" means a

taxpayer -

(A) whose spouse died during either of his two taxable years

immediately preceding the taxable year, and

(B) who maintains as his home a household which constitutes

for the taxable year the principal place of abode (as a member

of such household) of a dependent (i) who (within the meaning

of section 152) is a son, stepson, daughter, or stepdaughter of

the taxpayer, and (ii) with respect to whom the taxpayer is

entitled to a deduction for the taxable year under section 151.

For purposes of this paragraph, an individual shall be considered

as maintaining a household only if over half of the cost of

maintaining the household during the taxable year is furnished by

such individual.

(2) Limitations

Notwithstanding paragraph (1), for purposes of section 1 a

taxpayer shall not be considered to be a surviving spouse -

(A) if the taxpayer has remarried at any time before the

close of the taxable year, or

(B) unless, for the taxpayer's taxable year during which his

spouse died, a joint return could have been made under the

provisions of section 6013 (without regard to subsection (a)(3)

thereof).

(3) Special rule where deceased spouse was in missing status

If an individual was in a missing status (within the meaning of

section 6013(f)(3)) as a result of service in a combat zone (as

determined for purposes of section 112) and if such individual

remains in such status until the date referred to in subparagraph

(A) or (B), then, for purposes of paragraph (1)(A), the date on

which such individual died shall be treated as the earlier of the

date determined under subparagraph (A) or the date determined

under subparagraph (B):

(A) the date on which the determination is made under section

556 of title 37 of the United States Code or under section 5566

of title 5 of such Code (whichever is applicable) that such

individual died while in such missing status, or

(B) except in the case of the combat zone designated for

purposes of the Vietnam conflict, the date which is 2 years

after the date designated under section 112 as the date of

termination of combatant activities in that zone.

(b) Definition of head of household

(1) In general

For purposes of this subtitle, an individual shall be

considered a head of a household if, and only if, such individual

is not married at the close of his taxable year, is not a

surviving spouse (as defined in subsection (a)), and either -

(A) maintains as his home a household which constitutes for

more than one-half of such taxable year the principal place of

abode, as a member of such household, of -

(i) a son, stepson, daughter, or stepdaughter of the

taxpayer, or a descendant of a son or daughter of the

taxpayer, but if such son, stepson, daughter, stepdaughter,

or descendant is married at the close of the taxpayer's

taxable year, only if the taxpayer is entitled to a deduction

for the taxable year for such person under section 151 (or

would be so entitled but for paragraph (2) or (4) of section

152(e)), or

(ii) any other person who is a dependent of the taxpayer,

if the taxpayer is entitled to a deduction for the taxable

year for such person under section 151, or

(B) maintains a household which constitutes for such taxable

year the principal place of abode of the father or mother of

the taxpayer, if the taxpayer is entitled to a deduction for

the taxable year for such father or mother under section 151.

For purposes of this paragraph, an individual shall be considered

as maintaining a household only if over half of the cost of

maintaining the household during the taxable year is furnished by

such individual.

(2) Determination of status

For purposes of this subsection -

(A) a legally adopted child of a person shall be considered a

child of such person by blood;

(B) an individual who is legally separated from his spouse

under a decree of divorce or of separate maintenance shall not

be considered as married;

(C) a taxpayer shall be considered as not married at the

close of his taxable year if at any time during the taxable

year his spouse is a nonresident alien; and

(D) a taxpayer shall be considered as married at the close of

his taxable year if his spouse (other than a spouse described

in subparagraph (C)) died during the taxable year.

(3) Limitations

Notwithstanding paragraph (1), for purposes of this subtitle a

taxpayer shall not be considered to be a head of a household -

(A) if at any time during the taxable year he is a

nonresident alien; or

(B) by reason of an individual who would not be a dependent

for the taxable year but for -

(i) paragraph (9) of section 152(a), or

(ii) subsection (c) of section 152.

(c) Certain married individuals living apart

For purposes of this part, an individual shall be treated as not

married at the close of the taxable year if such individual is so

treated under the provisions of section 7703(b).

(d) Nonresident aliens

In the case of a nonresident alien individual, the taxes imposed

by sections 1 and 55 shall apply only as provided by section 871 or

877.

(e) Cross reference

For definition of taxable income, see section 63.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 8; Pub. L. 88-272, title I, Sec.

112(b), Feb. 26, 1964, 78 Stat. 24; Pub. L. 91-172, title VIII,

Sec. 803(b), Dec. 30, 1969, 83 Stat. 682; Pub. L. 93-597, Sec.

3(b), Jan. 2, 1975, 88 Stat. 1951; Pub. L. 94-455, title XIX, Sec.

1901(a)(1), (b)(9), Oct. 4, 1976, 90 Stat. 1764, 1795; Pub. L.

94-569, Sec. 3(a), Oct. 20, 1976, 90 Stat. 2699; Pub. L. 97-448,

title III, Sec. 307(a), Jan. 12, 1983, 96 Stat. 2407; Pub. L.

98-369, div. A, title IV, Sec. 423(c)(2), July 18, 1984, 98 Stat.

801; Pub. L. 99-514, title XIII, Sec. 1301(j)(10), title XVII, Sec.

1708(a)(1), Oct. 22, 1986, 100 Stat. 2658, 2782; Pub. L. 100-647,

title I, Sec. 1007(g)(13)(A), Nov. 10, 1988, 102 Stat. 3436.)

-MISC1-

AMENDMENTS

1988 - Subsec. (d). Pub. L. 100-647 substituted "the taxes

imposed by sections 1 and 55" for "the tax imposed by section 1".

1986 - Subsec. (a)(3)(B). Pub. L. 99-514, Sec. 1708(a)(1),

amended subpar. (B) generally. Prior to amendment, subpar. (B) read

as follows: "the date which is -

"(i) December 31, 1982, in the case of service in the combat

zone designated for purposes of the Vietnam conflict, or

"(ii) 2 years after the date designated under section 112 as

the date of termination of combatant activities in that zone, in

the case of any combat zone other than that referred to in clause

(i)."

Subsec. (c). Pub. L. 99-514, Sec. 1301(j)(10), substituted

"section 7703(b)" for "section 143(b)".

1984 - Subsec. (b)(1)(A). Pub. L. 98-369, Sec. 423(c)(2)(A),

substituted "which constitutes for more than one-half of such

taxable year" for "which constitutes for such taxable year".

Subsec. (b)(1)(A)(i). Pub. L. 98-369, Sec. 423(c)(2)(B), inserted

"(or would be so entitled but for paragraph (2) or (4) of section

152(e))".

1983 - Subsec. (a)(3)(B)(i). Pub. L. 97-448 substituted "December

31, 1982" for "January 2, 1978".

1976 - Subsec. (a)(3)(B). Pub. L. 94-569 substituted "the date

which is" for "the date which is 2 years after" in provisions

preceding cl. (i), substituted "January 2, 1978" for "the date of

the enactment of this paragraph" in cl. (i), and substituted "2

years after the date" for "the date" in cl. (ii).

Subsec. (b)(3)(B)(ii). Pub. L. 94-455, Sec. 1901(b)(9),

redesignated cl. (iii) as (ii) and struck out former cl. (ii) which

provided that an individual who was a dependent solely by reason of

par. (10) of section 152(a) would not be considered as a head of a

household.

Subsec. (c). Pub. L. 94-455, Sec. 1901(a)(1), substituted "shall

be treated as not married at the close of the taxable year" for

"shall not be considered as married".

1975 - Subsec. (a)(3). Pub. L. 93-597 added par. (3).

1969 - Subsec. (a). Pub. L. 91-172 redesignated subsec. (b) as

(a). See sec. 1(a) of this title.

Subsec. (b). Pub. L. 91-172 redesignated provisions of former

section 1(b)(2) to (4) of this title as subsec. (b). Former subsec.

(b) redesignated (a), with minor changes.

Subsec. (c). Pub. L. 91-172 added subsec. (c).

Subsec. (d). Pub. L. 91-172 redesignated as subsec. (d)

provisions of former section 1(d) with minor changes.

Subsec. (e). Pub. L. 91-172 redesignated as subsec. (e)

provisions of former section 1(e).

1964 - Subsec. (a). Pub. L. 88-272 inserted reference to section

141.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-647 effective, except as otherwise

provided, as if included in the provision of the Tax Reform Act of

1986, Pub. L. 99-514, to which such amendment relates, see section

1019(a) of Pub. L. 100-647, set out as a note under section 1 of

this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by section 1301(j)(10) of Pub. L. 99-514 applicable to

bonds issued after Aug. 15, 1986, except as otherwise provided, see

sections 1311 to 1318 of Pub. L. 99-514, set out as an Effective

Date; Transitional Rules note under section 141 of this title.

Section 1708(b) of Pub. L. 99-514 provided that: "The amendments

made by this section [amending this section and sections 692, 6013,

and 7508 of this title] shall apply to taxable years beginning

after December 31, 1982."

EFFECTIVE DATE OF 1984 AMENDMENT

Section 423(d) of Pub. L. 98-369 provided that: "The amendments

made by this section [amending this section and sections 43, 44A,

105, 143, 152, and 213 of this title] shall apply to taxable years

beginning after December 31, 1984."

EFFECTIVE DATE OF 1976 AMENDMENT

Section 1901(d) of Pub. L. 94-455 provided that: "Except as

otherwise expressly provided in this section, the amendments made

by this section [see Tables for classification] shall apply with

respect to taxable years beginning after December 31, 1976. The

amendments made by subsections (a)(29) and (b)(10) shall apply with

respect to taxable years ending after the date of the enactment of

this Act [Oct. 4, 1976]."

EFFECTIVE DATE OF 1975 AMENDMENT

Amendment by Pub. L. 93-597 applicable to taxable years ending on

or after Feb. 28, 1961, see section 3(c) of Pub. L. 93-597, set out

as a note under section 6013 of this title.

EFFECTIVE DATE OF 1969 AMENDMENT

Amendment by Pub. L. 91-172 applicable to taxable years beginning

after Dec. 31, 1970, except that subsec. (c) is applicable to

taxable years beginning after Dec. 31, 1969, see section 803(f) of

Pub. L. 91-172, set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1964 AMENDMENT

Amendment by Pub. L. 88-272, except for purposes of section 21 of

this title, effective with respect to taxable years beginning after

Dec. 31, 1963, see section 131 of Pub. L. 88-272, set out as a note

under section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1, 32, 63, 151, 3402,

6012, 6013 of this title; title 20 sections 1087nn, 1087oo, 1087qq;

title 38 section 1503.

-End-

-CITE-

26 USC Sec. 3 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART I - TAX ON INDIVIDUALS

-HEAD-

Sec. 3. Tax tables for individuals

-STATUTE-

(a) Imposition of tax table tax

(1) In general

In lieu of the tax imposed by section 1, there is hereby

imposed for each taxable year on the taxable income of every

individual -

(A) who does not itemize his deductions for the taxable year,

and

(B) whose taxable income for such taxable year does not

exceed the ceiling amount,

a tax determined under tables, applicable to such taxable year,

which shall be prescribed by the Secretary and which shall be in

such form as he determines appropriate. In the table so

prescribed, the amounts of the tax shall be computed on the basis

of the rates prescribed by section 1.

(2) Ceiling amount defined

For purposes of paragraph (1), the term "ceiling amount" means,

with respect to any taxpayer, the amount (not less than $20,000)

determined by the Secretary for the tax rate category in which

such taxpayer falls.

(3) Authority to prescribe tables for taxpayers who itemize

deductions

The Secretary may provide that this section shall apply also

for any taxable year to individuals who itemize their deductions.

Any tables prescribed under the preceding sentence shall be on

the basis of taxable income.

(b) Section inapplicable to certain individuals

This section shall not apply to -

(1) an individual making a return under section 443(a)(1) for a

period of less than 12 months on account of a change in annual

accounting period, and

(2) an estate or trust.

(c) Tax 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.

(d) Taxable income

Whenever it is necessary to determine the taxable income of an

individual to whom this section applies, the taxable income shall

be determined under section 63.

(e) Cross reference

For computation of tax by Secretary, see section 6014.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 8; Pub. L. 88-272, title III,

Sec. 301(a), Feb. 26, 1964, 78 Stat. 129; Pub. L. 91-172, title

VIII, Sec. 803(c), Dec. 30, 1969, 83 Stat. 684; Pub. L. 94-12,

title II, Sec. 201(c), Mar. 29, 1975, 89 Stat. 29; Pub. L. 94-455,

title V, Sec. 501(a), Oct. 4, 1976, 90 Stat. 1558; Pub. L. 95-30,

title I, Sec. 101(b), May 23, 1977, 91 Stat. 131; Pub. L. 95-600,

title IV, Sec. 401(b)(1), Nov. 6, 1978, 92 Stat. 2867; Pub. L.

95-600, title II, Sec. 202(g), as added Pub. L. 96-222, title I,

Sec. 108(a)(1)(A), Apr. 1, 1980, 94 Stat. 223; Pub. L. 96-222,

title I, Sec. 108(a)(1)(E), Apr. 1, 1980, 94 Stat. 225; Pub. L.

97-34, title I, Secs. 101(b)(2)(B), (C), (c)(2)(A), 121(c)(3), Aug.

13, 1981, 95 Stat. 183, 197; Pub. L. 99-514, title I, Secs. 102(b),

141(b)(1), Oct. 22, 1986, 100 Stat. 2102, 2117.)

-MISC1-

AMENDMENTS

1986 - Subsec. (a). Pub. L. 99-514, Sec. 102(b), substituted

subsec. (a) for former subsec. (a) which read as follows:

"(1) In general. - In lieu of the tax imposed by section 1,

there is hereby imposed for each taxable year on the tax table

income of every individual whose tax table income for such year

does not exceed the ceiling amount, a tax determined under

tables, applicable to such taxable year, which shall be

prescribed by the Secretary and which shall be in such form as he

determines appropriate. In the tables so prescribed, the amounts

of tax shall be computed on the basis of the rates prescribed by

section 1.

"(2) Ceiling amount defined. - For purposes of paragraph (1),

the term "ceiling amount" means, with respect to any taxpayer,

the amount (not less than $20,000) determined by the Secretary

for the tax rate category in which such taxpayer falls.

"(3) Certain taxpayers with large number of exemptions. - The

Secretary may exclude from the application of this section

taxpayers in any tax rate category having more than the number of

exemptions for that category determined by the Secretary.

"(4) Tax table income defined. - For purposes of this section,

the term 'tax table income' means adjusted gross income -

"(A) reduced by the sum of -

"(i) the excess itemized deductions, and

"(ii) the direct charitable deduction, and

"(B) increased (in the case of an individual to whom section

63(e) applies) by the unused zero bracket amount.

"(5) Section may be applied on the basis of taxable income. -

The Secretary may provide that this section shall be applied for

any taxable year on the basis of taxable income in lieu of tax

table income."

Subsec. (b). Pub. L. 99-514, Sec. 141(b)(1), struck out par. (1)

which read: "an individual to whom section 1301 (relating to income

averaging) applies for the taxable year," and redesignated pars.

(2) and (3) as (1) and (2), respectively.

1981 - Subsec. (a)(1). Pub. L. 97-34, Sec. 101(b)(2)(B), inserted

"and which shall be in such form as he determines appropriate"

after "Secretary".

Subsec. (a)(4)(A). Pub. L. 97-34, Sec. 121(c)(3), substituted

"reduced by the sum of (i) the excess itemized deductions, and (ii)

the direct charitable deduction" for "reduced by the excess

itemized deductions".

Subsec. (a)(5). Pub. L. 97-34, Sec. 101(b)(2)(C), added par. (5).

Subsec. (b)(1). Pub. L. 97-34, Sec. 101(c)(2)(A), substituted "an

individual to whom section 1301 (relating to income averaging)

applies for the taxable year" for "an individual to whom (A)

section 1301 (relating to income averaging), or (B) section 1348

(relating to maximum rate on personal service income), applies for

the taxable year".

1980 - Subsec. (b)(1). Pub. L. 96-222 redesignated subpars. (B)

and (C) as (A) and (B), respectively, and struck out former subpar.

(A) which made reference to section 911 (relating to earned income

from sources without the United States).

1978 - Subsec. (b)(1). Pub. L. 95-600 struck out subpar. (B)

which related to the alternative capital gains tax under section

1201 of this title, and redesignated subpars. (C) and (D) as (B)

and (C), respectively.

1977 - Pub. L. 95-30 struck out "having taxable income of less

than $20,000" after "individuals" in section catchline.

Subsec. (a). Pub. L. 95-30 designated existing provisions as par.

(1), substituted "tax table income" for "taxable income" and "does

not exceed the ceiling amount" for "does not exceed $20,000", and

added pars. (2) to (4).

Subsecs. (b) to (e). Pub. L. 95-30 added subsec. (b),

redesignated former subsec. (b) as (c), and added subsecs. (d) and

(e).

1976 - Pub. L. 94-455 designated existing provisions as subsec.

(a), substituted provision relating to taxable income for such year

does not exceed $20,000 for provision relating to adjusted gross

income for such year is less than $15,000 and who has elected for

such year to pay the tax imposed by this section, struck out "or

his delegate" after "Secretary", "beginning after Dec. 31, 1969"

after "each taxable year", struck out provision requiring

computation of taxable income by using standard deduction, and

added subsec. (b).

1975 - Pub. L. 94-12 substituted "$15,000" for "$10,000".

1969 - Pub. L. 91-172 raised the individual gross income limit of

$5,000 to $10,000 for exercising the option and substituted

provision that the tax has to be determined under tables to be

prescribed by the Secretary or his delegate for tables of tax rates

for single persons, heads of household, married persons filing

joint returns, married persons filing separate returns with 10 per

cent standard deduction and married persons filing separate returns

with minimum standard deduction.

1964 - Pub. L. 88-272 substituted optional tax tables covering

five categories for taxable years beginning on or after Jan. 1,

1964, and before Jan. 1, 1965, and for years beginning after Dec.

31, 1964, for a single general table.

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by Pub. L. 99-514 applicable to taxable years beginning

after Dec. 31, 1986, see section 151(a) of Pub. L. 99-514, set out

as a note under section 1 of this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Amendment by section 101(c)(2)(A) of Pub. L. 97-34 applicable to

taxable years beginning after Dec. 31, 1981, see section 101(f)(1)

of Pub. L. 97-34, set out as a note under section 1 of this title.

Amendment by section 121(c)(3) of Pub. L. 97-34 applicable to

contributions made after Dec. 31, 1981, in taxable years beginning

after such date, see section 121(d) of Pub. L. 97-34, set out as a

note under section 170 of this title.

EFFECTIVE DATE OF 1980 AMENDMENT

Section 108(a)(2) of Pub. L. 96-222 provided that:

"(A) In general. - Except as provided in subparagraph (B), the

amendments made by paragraph (1) [amending this section and

sections 119, 911, and 913 of this title] shall take effect as if

included in the Foreign Earned Income Act of 1978 [Pub. L. 95-615].

"(B) Paragraph (1)(E). - The amendment made by paragraph (1)(E)

[amending this section] shall apply to taxable years beginning

after December 31, 1978."

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by section 401(b)(1) of Pub. L. 95-600 applicable to

taxable years beginning after Dec. 31, 1978, see section 401(c) of

Pub. L. 95-600, set out as a note under section 1201 of this title.

EFFECTIVE DATE OF 1977 AMENDMENT

Amendment by Pub. L. 95-30 applicable to taxable years beginning

after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out

as a note under section 1 of this title.

EFFECTIVE DATE OF 1976 AMENDMENT

Section 508 of Pub. L. 94-455 provided that: "Except as otherwise

provided, the amendments made by this title [enacting section 44A,

amending this section and sections 36, 37, 41, 42, 46, 50A, 104,

144, 213, 217, 904, 1211, 1304, 3402, 6014, and 6096, enacting

provisions set out as notes under sections 105, 8022, and repealing

sections 4 and 214 of this title] shall apply to taxable years

beginning after December 31, 1975."

EFFECTIVE AND TERMINATION DATES OF 1975 AMENDMENT

Section 209(a) of Pub. L. 94-12, as amended by Pub. L. 94-164,

Sec. 2(e), Dec. 23, 1975, 89 Stat. 972, provided that: "The

amendments made by sections 201, 202(a), and 203 [enacting section

42 of this title and amending this section and sections 56, 141,

6012, and 6096 of this title] shall apply to taxable years ending

after December 31, 1974. The amendments made by sections 201(a) and

202(a) [amending section 141 of this title] shall cease to apply to

taxable years ending after December 31, 1975; those made by

sections 201(b), 201(c), and 203 [enacting section 42 of this title

and amending this section and sections 56, 6012, and 6096 of this

title] shall cease to apply to taxable years ending after December

31, 1976."

EFFECTIVE DATE OF 1969 AMENDMENT

Amendment by Pub. L. 91-172 applicable to taxable years beginning

after Dec. 31, 1969, see section 803(f) of Pub. L. 91-172, set out

as a note under section 1 of this title.

EFFECTIVE DATE OF 1964 AMENDMENT

Section 301(c) of Pub. L. 88-272, as amended by Pub. L. 99-514,

Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "Except for

purposes of section 21 of the Internal Revenue Code of 1986

[formerly I.R.C. 1954] (relating to effect of changes in rates

during a taxable year), the amendments made by this section

[amending this section and sections 4 and 6014 of this title] shall

apply to taxable years beginning after December 31, 1963."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 891 of this title.

-End-

-CITE-

26 USC [Sec. 4 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART I - TAX ON INDIVIDUALS

-HEAD-

[Sec. 4. Repealed. Pub. L. 94-455, title V, Sec. 501(b)(1), Oct. 4,

1976, 90 Stat. 1558]

-MISC1-

Section, acts Aug. 16, 1954, ch. 736, 68A Stat. 10; Feb. 26,

1964, Pub. L. 88-272, title II, Sec. 232(f)(1), title III, Sec.

301(b)(1), (3), 78 Stat. 111, 140; Dec. 30, 1969, Pub. L. 91-172,

title VIII, Sec. 802(c)(1)-(3), 83 Stat. 677, 678; Dec. 10, 1971,

Pub. L. 92-178, title III, Sec. 301(b), 85 Stat. 520, related to

rules for optional tax.

EFFECTIVE DATE OF REPEAL

Repeal applicable to taxable years beginning after Dec. 31, 1975,

see section 508 of Pub. L. 94-455, set out as an Effective Date of

1976 Amendment note under section 3 of this title.

-End-

-CITE-

26 USC Sec. 5 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART I - TAX ON INDIVIDUALS

-HEAD-

Sec. 5. Cross references relating to tax on individuals

-STATUTE-

(a) Other rates of tax on individuals, etc.

(1) For rates of tax on nonresident aliens, see section 871.

(2) For doubling of tax on citizens of certain foreign

countries, see section 891.

(3) For rate of withholding in the case of nonresident

aliens, see section 1441.

(4) For alternative minimum tax, see section 55.

(b) Special limitations on tax

(1) For limitation on tax in case of income of members of

Armed Forces and victims of certain terrorist attacks on death,

see section 692.

(2) For computation of tax where taxpayer restores

substantial amount held under claim of right, see section 1341.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 10; Pub. L. 88-272, title II,

Sec. 232(f)(2), Feb. 26, 1964, 78 Stat. 111; Pub. L. 91-172, title

III, Sec. 301(b)(2), title VIII, Sec. 803(d)(6), Dec. 30, 1969, 83

Stat. 585, 684; Pub. L. 94-455, title XIX, Secs. 1901(b)(22)(B),

1951(c)(3)(A), Oct. 4, 1976, 90 Stat. 1798, 1841; Pub. L. 95-600,

title IV, Secs. 401(b)(2), 421(e)(1), Nov. 6, 1978, 92 Stat. 2867,

2875; Pub. L. 96-222, title I, Sec. 104(a)(4)(H)(vii), Apr. 1,

1980, 94 Stat. 218; Pub. L. 97-248, title II, Sec. 201(d)(4),

formerly Sec. 201(c)(4), Sept. 3, 1982, 96 Stat. 419, renumbered

Sec. 201(d)(4), Pub. L. 97-448, title III, Sec. 306(a)(1)(A)(i),

Jan. 12, 1983, 96 Stat. 2400; Pub. L. 99-514, title I, Sec.

141(b)(2), title VII, Sec. 701(e)(4)(A), Oct. 22, 1986, 100 Stat.

2117, 2343; Pub. L. 107-134, title I, Sec. 101(b)(1), Jan. 23,

2002, 115 Stat. 2428.)

-MISC1-

AMENDMENTS

2002 - Subsec. (b)(1). Pub. L. 107-134 inserted "and victims of

certain terrorist attacks" before "on death".

1986 - Subsec. (a)(4). Pub. L. 99-514, Sec. 701(e)(4)(A), amended

par. (4) generally, substituting "alternative minimum tax" for

"minimum tax for taxpayers other than corporations".

Subsec. (b)(2), (3). Pub. L. 99-514, Sec. 141(b)(2), struck out

par. (2) which read: "For limitation on tax where an individual

chooses the benefits of income averaging, see section 1301." and

redesignated former par. (3) as (2).

1982 - Subsec. (a)(4). Pub. L. 97-248, Sec. 201(d)(4), formerly

Sec. 201(c)(4), substituted "section 55" for "sections 55 and 56".

1980 - Subsec. (a)(4). Pub. L. 96-222 substituted "sections 55

and 56" for "section 55".

1978 - Subsec. (a)(3). Pub. L. 95-600, Sec. 401(b)(2),

redesignated par. (4) as (3). Former par. (3), relating to the

alternative tax in the case of capital gains, was struck out.

Subsec. (a)(4), (5). Pub. L. 95-600, Secs. 401(b)(2), 421(e)(1),

redesignated par. (5) as (4) and substituted "taxpayers other than

corporations, see section 55" for "preferences, see section 56".

Former par. (4) redesignated (3).

1976 - Subsec. (b). Pub. L. 94-455 redesignated pars. (2), (3),

and (4), as (1), (2), (3), respectively, and struck out former par.

(1) which referred to section 632 for limitation on tax

attributable to sales of oil or gas properties and par. (5) which

referred to section 1347 for limitation on tax attributable to

claims against the U.S. involving acquisition of property.

1969 - Subsec. (a)(5). Pub. L. 91-172, Sec. 301(b)(2), added par.

(5).

Subsec. (b). Pub. L. 91-172, Sec. 803(d)(6), substituted "tax"

for "surtax" in pars. (1) and (5).

1964 - Subsec. (b). Pub. L. 88-272 redesignated pars. (2), (3),

(4), (7) and (8) as pars. (1) to (5), respectively, substituted

"where an individual chooses the benefits of income averaging" for

"with respect to compensation for longterm services" in par. (3),

and struck out former pars. (1), (5) and (6) which referred to tax

attributable to receipt of lump sum under annuity, endowment, or

life insurance contract, to income from artistic work or

inventions, and to back pay, respectively.

EFFECTIVE DATE OF 2002 AMENDMENT

Amendment by Pub. L. 107-134 applicable to taxable years ending

before, on, or after Sept. 11, 2001, with provisions relating to

waiver of limitations, see section 101(d) of Pub. L. 107-134, set

out as a note under section 692 of this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by section 141(b)(2) of Pub. L. 99-514 applicable to

taxable years beginning after Dec. 31, 1986, see section 151(a) of

Pub. L. 99-514, set out as a note under section 1 of this title.

Amendment by section 701(e)(4)(A) of Pub. L. 99-514 applicable to

taxable years beginning after Dec. 31, 1986, with certain

exceptions and qualifications, see section 701(f) of Pub. L.

99-514, set out as an Effective Date note under section 55 of this

title.

EFFECTIVE DATE OF 1982 AMENDMENT

Section 201(e)(1) of Pub. L. 97-248 provided that: "The

amendments made by this section [amending this section and sections

46, 53, 55, 56, 57, 58, 173, 174, 511, 616, 617, 897, 901, 936,

1016, 6015, 6362, 6654, and 7701 of this title] shall apply to

taxable years beginning after December 31, 1982."

EFFECTIVE DATE OF 1980 AMENDMENT

Amendment by Pub. L. 96-222 effective, except as otherwise

provided, as if it had been included in the provisions of the

Revenue Act of 1978, Pub. L. 95-600, to which such amendment

relates, see section 201 of Pub. L. 96-222, set out as a note under

section 32 of this title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by section 401(b)(2) of Pub. L. 95-600 applicable to

taxable years beginning after Dec. 31, 1978, see section 401(c) of

Pub. L. 95-600, set out as a note under section 1201 of this title.

Section 421(g) of Pub. L. 95-600 provided that: "The amendments

made by this section [enacting section 55 of this title and

amending this section and sections 57, 58, 443, 511, 666, 871, 877,

904, 6015, 6362, and 6654 of this title] shall apply to taxable

years beginning after December 31, 1978, except that the amendment

made by paragraph (1) of subsection (b) [amending section 57 of

this title] shall apply to sales and exchanges made after July 26,

1978, in taxable years ending after such date."

EFFECTIVE DATE OF 1969 AMENDMENT

Section 301(c) of Pub. L. 91-172, as amended by Pub. L. 99-514,

Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "The

amendments made by this section [enacting sections 56 to 58 of this

title and amending this section and sections 12, 46, 51, 443, 453,

511, 901, 1373, 1375, 6015, and 6654 of this title] shall apply to

taxable years ending after December 31, 1969. In the case of a

taxable year beginning in 1969 and ending in 1970, the tax imposed

by section 56 of the Internal Revenue Code of 1986 [formerly I.R.C.

1954] (as added by subsection (a)) shall be an amount equal to the

tax imposed by such section (determined without regard to this

sentence) multiplied by a fraction -

"(1) the numerator of which is the number of days in the

taxable year occurring after December 31, 1969, and

"(2) the denominator of which is the number of days in the

entire taxable year."

Amendment by section 803(d)(6) of Pub. L. 91-172 applicable to

taxable years beginning after Dec. 31, 1970, see section 803(f) of

Pub. L. 91-172, set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1964 AMENDMENT

Section 232(g) of Pub. L. 88-272, as amended by Pub. L. 99-514,

Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

"(1) General rule. - Except as provided in paragraph (2), the

amendments made by this section [enacting sections 1301 to 1305,

amending this section and sections 4, 72, 144, 402, 403, 6511, and

omitting former sections 1301 to 1307 of this title] shall apply

with respect to taxable years beginning after December 31, 1963.

"(2) Income from an employment. - If, in a taxable year beginning

after December 31, 1963, an individual or partnership receives or

accrues compensation from an employment (as defined by section

1301(b) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]

as in effect immediately before the enactment of this Act [Feb. 26,

1964] and the employment began before February 6, 1963, the tax

attributable to such compensation may, at the election of the

taxpayer, be computed under the provisions of sections 1301 and

1307 of such Code as in effect immediately before the enactment of

this Act. If a taxpayer so elects (at such time and in such manner

as the Secretary of the Treasury or his delegate by regulations

prescribes), he may not choose for such taxable year the benefits

provided by part I of subchapter Q of chapter 1 of such Code

(relating to income averaging) as amended by this Act and (if he

elects to have subsection (e) of such section 1307 apply) section

170(b)(5) of such Code as amended by this Act shall not apply to

charitable contributions paid in such taxable year."

APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION

TO TREATY OBLIGATIONS OF UNITED STATES

For applicability of amendment by section 701(e)(4)(A) of Pub. L.

99-514 notwithstanding any treaty obligation of the United States

in effect on Oct. 22, 1986, see section 1012(aa)(2) of Pub. L.

100-647, set out as a note under section 861 of this title.

-End-

-CITE-

26 USC PART II - TAX ON CORPORATIONS 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART II - TAX ON CORPORATIONS

-HEAD-

PART II - TAX ON CORPORATIONS

-MISC1-

Sec.

11. Tax imposed.

12. Cross references relating to tax on corporations.

-End-

-CITE-

26 USC Sec. 11 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART II - TAX ON CORPORATIONS

-HEAD-

Sec. 11. Tax imposed

-STATUTE-

(a) Corporations in general

A tax is hereby imposed for each taxable year on the taxable

income of every corporation.

(b) Amount of tax

(1) In general

The amount of the tax imposed by subsection (a) shall be the

sum of -

(A) 15 percent of so much of the taxable income as does not

exceed $50,000,

(B) 25 percent of so much of the taxable income as exceeds

$50,000 but does not exceed $75,000,

(C) 34 percent of so much of the taxable income as exceeds

$75,000 but does not exceed $10,000,000, and

(D) 35 percent of so much of the taxable income as exceeds

$10,000,000.

In the case of a corporation which has taxable income in excess

of $100,000 for any taxable year, the amount of tax determined

under the preceding sentence for such taxable year shall be

increased by the lesser of (i) 5 percent of such excess, or (ii)

$11,750. In the case of a corporation which has taxable income in

excess of $15,000,000, the amount of the tax determined under the

foregoing provisions of this paragraph shall be increased by an

additional amount equal to the lesser of (i) 3 percent of such

excess, or (ii) $100,000.

(2) Certain personal service corporations not eligible for

graduated rates

Notwithstanding paragraph (1), the amount of the tax imposed by

subsection (a) on the taxable income of a qualified personal

service corporation (as defined in section 448(d)(2)) shall be

equal to 35 percent of the taxable income.

(c) Exceptions

Subsection (a) shall not apply to a corporation subject to a tax

imposed by -

(1) section 594 (relating to mutual savings banks conducting

life insurance business),

(2) subchapter L (sec. 801 and following, relating to insurance

companies), or

(3) subchapter M (sec. 851 and following, relating to regulated

investment companies and real estate investment trusts).

(d) Foreign corporations

In the case of a foreign corporation, the taxes imposed by

subsection (a) and section 55 shall apply only as provided by

section 882.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 11; Mar. 30, 1955, ch. 18, Sec.

2, 69 Stat. 14; Mar. 29, 1956, ch. 115, Sec. 2, 70 Stat. 66; Pub.

L. 85-12, Sec. 2, Mar. 29, 1957, 71 Stat. 9; Pub. L. 85-475, Sec.

2, June 30, 1958, 72 Stat. 259; Pub. L. 86-75, Sec. 2, June 30,

1959, 73 Stat. 157; Pub. L. 86-564, title II, Sec. 201, June 30,

1960, 74 Stat. 290; Pub. L. 86-779, Sec. 10(d), Sept. 14, 1960, 74

Stat. 1009; Pub. L. 87-72, Sec. 2, June 30, 1961, 75 Stat. 193;

Pub. L. 87-508, Sec. 2, June 28, 1962, 76 Stat. 114; Pub. L. 88-52,

Sec. 2, June 29, 1963, 77 Stat. 72; Pub. L. 88-272, title I, Sec.

121, Feb. 26, 1964, 78 Stat. 25; Pub. L. 89-809, title I, Sec.

104(b)(2), Nov. 13, 1966, 80 Stat. 1557; Pub. L. 91-172, title IV,

Sec. 401(b)(2)(B), Dec. 30, 1969, 83 Stat. 602; Pub. L. 94-12,

title III, Sec. 303(a), (b), Mar. 29, 1975, 89 Stat. 44; Pub. L.

94-164, Sec. 4(a)-(c), Dec. 23, 1975, 89 Stat. 973, 974; Pub. L.

94-455, title IX, Sec. 901(a), Oct. 4, 1976, 90 Stat. 1606; Pub. L.

95-30, title II, Sec. 201(1), (2), May 23, 1977, 91 Stat. 141; Pub.

L. 95-600, title III, Sec. 301(a), Nov. 6, 1978, 92 Stat. 2820;

Pub. L. 97-34, title II, Sec. 231(a), Aug. 13, 1981, 95 Stat. 249;

Pub. L. 98-369, div. A, title I, Sec. 66(a), July 18, 1984, 98

Stat. 585; Pub. L. 99-514, title VI, Sec. 601(a), Oct. 22, 1986,

100 Stat. 2249; Pub. L. 100-203, title X, Sec. 10224(a), Dec. 22,

1987, 101 Stat. 1330-412; Pub. L. 100-647, title I, Sec.

1007(g)(13)(B), Nov. 10, 1988, 102 Stat. 3436; Pub. L. 103-66,

title XIII, Sec. 13221(a), (b), Aug. 10, 1993, 107 Stat. 477.)

-MISC1-

AMENDMENTS

1993 - Subsec. (b)(1). Pub. L. 103-66, Sec. 13221(a)(3), inserted

at end of closing provisions "In the case of a corporation which

has taxable income in excess of $15,000,000, the amount of the tax

determined under the foregoing provisions of this paragraph shall

be increased by an additional amount equal to the lesser of (i) 3

percent of such excess, or (ii) $100,000."

Subsec. (b)(1)(C), (D). Pub. L. 103-66, Sec. 13221(a)(1), (2),

added subpars. (C) and (D) and struck out former subpar. (C) which

read as follows: "34 percent of so much of the taxable income as

exceeds $75,000."

Subsec. (b)(2). Pub. L. 103-66, Sec. 13221(b), substituted "35

percent" for "34 percent".

1988 - Subsec. (d). Pub. L. 100-647 substituted "the taxes

imposed by subsection (a) and section 55" for "the tax imposed by

subsection (a)".

1987 - Subsec. (b). Pub. L. 100-203 amended subsec. (b)

generally. Prior to amendment, subsec. (b) read as follows: "The

amount of the tax imposed by subsection (a) shall be the sum of -

"(1) 15 percent of so much of the taxable income as does not

exceed $50,000,

"(2) 25 percent of so much of the taxable income as exceeds

$50,000 but does not exceed $75,000, and

"(3) 34 percent of so much of the taxable income as exceeds

$75,000.

In the case of a corporation which has taxable income in excess of

$100,000 for any taxable year, the amount of tax determined under

the preceding sentence for such taxable year shall be increased by

the lesser of (A) 5 percent of such excess, or (B) $11,750."

1986 - Subsec. (b). Pub. L. 99-514 amended subsec. (b) generally.

Prior to amendment, subsec. (b) read as follows: "The amount of the

tax imposed by subsection (a) shall be the sum of -

"(1) 15 percent (16 percent for taxable years beginning in

1982) of so much of the taxable income as does not exceed

$25,000;

"(2) 18 percent (19 percent for taxable years beginning in

1982) of so much of the taxable income as exceeds $25,000 but

does not exceed $50,000;

"(3) 30 percent of so much of the taxable income as exceeds

$50,000 but does not exceed $75,000;

"(4) 40 percent of so much of the taxable income as exceeds

$75,000 but does not exceed $100,000; plus

"(5) 46 percent of so much of the taxable income as exceeds

$100,000.

In the case of a corporation with taxable income in excess of

$1,000,000 for any taxable year, the amount of tax determined under

the preceding sentence for such taxable year shall be increased by

the lesser of (A) 5 percent of such excess, or (B) $20,250."

1984 - Subsec. (b). Pub. L. 98-369 inserted "In the case of a

corporation with taxable income in excess of $1,000,000 for any

taxable year, the amount of tax determined under the preceding

sentence for such taxable year shall be increased by the lesser of

(A) 5 percent of such excess, or (B) $20,250."

1981 - Subsec. (b)(1). Pub. L. 97-34, Sec. 231(a)(1), substituted

"15 percent (16 percent for taxable years beginning in 1982)" for

"17 percent".

Subsec. (b)(2). Pub. L. 97-34, Sec. 231(a)(2), substituted "18

percent (19 percent for taxable years beginning in 1982)" for "20

percent".

1978 - Pub. L. 95-600 reduced corporate tax rates by substituting

provisions imposing a five-step tax rate structure on corporate

taxable income for provisions using a normal tax and surtax

approach to the taxation of corporate taxable income.

1977 - Subsec. (b)(1). Pub. L. 95-30, Sec. 201(1), substituted

"December 31, 1978" for "December 31, 1977".

Subsec. (b)(2). Pub. L. 95-30, Sec. 201(1), substituted "January

1, 1979" for "January 1, 1978" in provisions preceding subpar. (A).

Subsec. (d)(1). Pub. L. 95-30, Sec. 201(2), substituted "December

31, 1978" for "December 31, 1977".

Subsec. (d)(2). Pub. L. 95-30, Sec. 201(2), substituted "January

1, 1979" for "January 1, 1978".

1976 - Subsec. (a). Pub. L. 94-455 reenacted subsec. (a) without

change.

Subsec. (b). Pub. L. 94-455, among other changes, substituted

"December 31, 1977, 22 percent" for "December 31, 1976, 22 percent"

and "after December 31, 1974 and before January 1, 1978" for "after

December 31, 1974 and before January 1, 1977" and struck out

provisions relating to the six-month application of the general

rule.

Subsec. (c). Pub. L. 94-455 struck out provisions relating to the

special rule for 1976 for calendar year taxpayers.

Subsec. (d). Pub. L. 94-455, among other changes, substituted

provisions relating to surtax exemption of $25,000 for a taxable

year ending Dec. 31, 1977, or $50,000 for a taxable year ending

after Dec. 31, 1974, and before Jan. 1, 1978, for provisions

relating to surtax exemption of $50,000 for any taxable year and

struck out provisions relating to six-month application of the

general rule.

1975 - Subsec. (b). Pub. L. 94-164 redesignated existing pars.

(1) and (2) as pars. (1)(A) and (1)(B), and in par. (1)(A) as so

redesignated substituted "after December 31, 1976" for "before

January 1, 1975 or after December 31, 1975", and in par. (1)(B) as

so redesignated substituted "January 1, 1977" for "January 1,

1976", and added par. (2).

Pub. L. 94-12, Sec. 303(a), reduced the normal tax for a taxable

year ending after Dec. 31, 1974, and before Jan. 1, 1976, to 20

percent of so much of the taxable income as does not exceed $25,000

plus 22 percent of so much of the taxable income as exceeds

$25,000.

Subsec. (c). Pub. L. 94-164 designated existing provisions as

par. (1), struck out special percentages for taxable years

beginning before Jan. 1, 1964, and after Dec. 31, 1963 and before

Jan. 1, 1965, and added par. (2).

Subsec. (d). Pub. L. 94-164 designated existing provisions as

par. (1), substituted "$50,000" for "$25,000", inserted reference

to section 1564 of this title, and added par. (2).

Pub. L. 94-12, Sec. 303(b), substituted "$50,000" for "$25,000".

1969 - Subsec. (d). Pub. L. 91-172 substituted "section 1561 or

1564" for "section 1561".

1966 - Subsec. (e)(4). Pub. L. 89-809, Sec. 104(b)(2)(A), struck

out par. (4) which made reference to section 881(a) (relating to

foreign corporations not engaged in business in United States).

Subsec. (f). Pub. L. 89-809, Sec. 104(b)(2)(B), added subsec.

(f).

1964 - Subsec. (b). Pub. L. 88-272 applied the 30 percent tax to

years beginning before Jan. 1, 1964 instead of July 1, 1964 in par.

(1), and in par. (2), reduced the rate from 25 percent to 22

percent, and applied it to years beginning after Dec. 31, 1963,

instead of June 30, 1964.

Subsec. (c). Pub. L. 88-272 increased the percentage from 22 to

28 for taxable years beginning after Dec. 31, 1963, and before Jan.

1, 1965, and to 26 percent for taxable years beginning after Dec.

31, 1964. The surtax exemption previously carried in subsec. (c),

is now stated in subsec. (d).

Subsecs. (d), (e). Pub. L. 88-272 added subsec. (d) and

redesignated former subsec. (d) as (e).

1963 - Subsec. (b). Pub. L. 88-52 substituted "July 1, 1964" for

"July 1, 1963" and "June 30, 1964" for "June 30, 1963" wherever

appearing.

1962 - Subsec. (b). Pub. L. 87-508 substituted "July 1, 1963" for

"July 1, 1962" and "June 30, 1963" for "June 30, 1962" wherever

appearing.

1961 - Subsec. (b). Pub. L. 87-72 substituted "July 1, 1962" for

"July 1, 1961" and "June 30, 1962" for "June 30, 1961" wherever

appearing.

1960 - Subsec. (b). Pub. L. 86-564 substituted "July 1, 1961" for

"July 1, 1960" and "June 30, 1961" for "June 30, 1960" wherever

appearing.

Subsec. (d)(3). Pub. L. 86-779 inserted "and real estate

investment trusts" after "regulated investment companies".

1959 - Subsec. (b). Pub. L. 86-75 substituted "July 1, 1960" for

"July 1, 1959" and "June 30, 1960" for "June 30, 1959" wherever

appearing.

1958 - Subsec. (b). Pub. L. 85-475 substituted "July 1, 1959" for

"July 1, 1958" and "June 30, 1959" for "June 30, 1958" wherever

appearing.

1957 - Subsec. (b). Pub. L. 85-12 substituted "July 1, 1958" for

"April 1, 1957" and "June 30, 1958" for "March 31, 1957" wherever

appearing.

1956 - Subsec. (b). Act Mar. 29, 1956, substituted "April 1,

1957" for "April 1, 1956" and "March 31, 1957" for "March 31, 1956"

wherever appearing.

1955 - Subsec. (b). Act Mar. 30, 1955, substituted "April 1,

1956" for "April 1, 1955" and "March 31, 1956" for "March 31, 1955"

wherever appearing.

EFFECTIVE DATE OF 1993 AMENDMENT

Section 13221(d) of Pub. L. 103-66 provided that: "The amendments

made by this section [amending this section and sections 852, 1201,

and 1445 of this title] shall apply to taxable years beginning on

or after January 1, 1993; except that the amendment made by

subsection (c)(3) [amending section 1445 of this title] shall take

effect on the date of the enactment of this Act [Aug. 10, 1993]."

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-647 effective, except as otherwise

provided, as if included in the provision of the Tax Reform Act of

1986, Pub. L. 99-514, to which such amendment relates, see section

1019(a) of Pub. L. 100-647, set out as a note under section 1 of

this title.

EFFECTIVE DATE OF 1987 AMENDMENT

Section 10224(b) of Pub. L. 100-203 provided that: "The amendment

made by subsection (a) [amending this section] shall apply to

taxable years beginning after December 31, 1987."

EFFECTIVE DATE OF 1986 AMENDMENT

Section 601(b) of Pub. L. 99-514 provided that:

"(1) In general. - The amendment made by subsection (a) [amending

this section] shall apply to taxable years beginning on or after

July 1, 1987.

"(2) Cross reference. -

"For treatment of taxable years which include July 1, 1987,

see section 15 of the Internal Revenue Code of 1986."

EFFECTIVE DATE OF 1984 AMENDMENT

Section 66(c) of Pub. L. 98-369, as amended by Pub. L. 99-514,

Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

"(1) In general. - The amendments made by this section [amending

this section and section 1561 of this title] shall apply to taxable

years beginning after December 31, 1983.

"(2) Amendments not treated as changed in rate of tax. - The

amendments made by this subsection [probably should be "section"]

shall not be treated as a change in a rate of tax for purposes of

section 21 of the Internal Revenue Code of 1986 [formerly I.R.C.

1954]."

EFFECTIVE DATE OF 1981 AMENDMENT

Section 231(c) of Pub. L. 97-34 provided that: "The amendments

made by subsection (a) [amending this section] shall apply to

taxable years beginning after December 31, 1981."

EFFECTIVE DATE OF 1978 AMENDMENT

Section 301(c) of Pub. L. 95-600 provided that: "The amendments

made by this section [amending this section and sections 12, 57,

244, 247, 511, 527, 528, 802, 821, 826, 852, 857, 882, 907, 922,

962, 1351, 1551, 1561, 6154, and 6655 of this title] shall apply to

taxable years beginning after December 31, 1978."

EFFECTIVE DATE OF 1976 AMENDMENT

Section 901(d) of Pub. L. 94-455 provided that: "The amendment

made by subsection (a) [amending this section] shall take effect on

December 23, 1975. The amendments made by subsection (b) [amending

section 821 of this title] shall apply to taxable years ending

after December 31, 1974. The amendments made by subsection (c)

[amending sections 21, 1561, and 6154 of this title] shall apply to

taxable years ending after December 31, 1975."

EFFECTIVE AND TERMINATION DATES OF 1975 AMENDMENTS

Section 4(e) of Pub. L. 94-164 provided that: "The amendments

made by subsections (b), (c), and (d) [amending this section and

sections 21, 962, and 1561 of this title] apply to taxable years

beginning after December 31, 1975. The amendment made by subsection

(c) [amending this section] ceases to apply for taxable years

beginning after December 31, 1976."

Section 305(b)(1) of Pub. L. 94-12 provided that: "The amendments

made by section 303 [amending this section and sections 12, 962,

and 1561 of this title and enacting provisions set out as a note

under this section] shall apply to taxable years ending after

December 31, 1974. The amendments made by subsections (b) and (c)

of such section [amending this section and sections 12, 962, and

1561 of this title and enacting provisions set out as a note under

this section] shall cease to apply for taxable years ending after

December 31, 1975."

EFFECTIVE DATE OF 1969 AMENDMENT

Amendment by Pub. L. 91-172 applicable with respect to taxable

years beginning after Dec. 31, 1969, see section 401(h)(2) of Pub.

L. 91-172, set out as a note under section 1561 of this title.

EFFECTIVE DATE OF 1966 AMENDMENT

Section 104(n) of Pub. L. 89-809 provided that: "The amendments

made by this section (other than subsection (k)) [enacting section

6683 to this title and amending this section and sections 245, 301,

512, 542, 543, 545, 819, 821, 822, 831, 832, 841, 842, 881, 882,

884, 952, 953, 1249, 1442, and 6016 of this title] shall apply with

respect to taxable years beginning after December 31, 1966. The

amendment made by subsection (k) [amending section 1248(d)(4) of

this title] shall apply with respect to sales or exchanges

occurring after December 31, 1966."

EFFECTIVE DATE OF 1964 AMENDMENT

Amendment by Pub. L. 88-272, except for purposes of section 21 of

this title, effective with respect to taxable years beginning after

Dec. 31, 1963, see section 131 of Pub. L. 88-272, set out as a note

under section 1 of this title.

EFFECTIVE DATE OF 1960 AMENDMENT

Amendment by Pub. L. 86-779 applicable with respect to taxable

years of real estate investment trusts beginning after Dec. 31,

1960, see section 10(k) of Pub. L. 86-779, set out as an Effective

Date note under section 856 of this title.

ALLOCATION OF 1975 TAXABLE INCOME AMONG COMPONENT MEMBERS OF

CONTROLLED GROUP OF CORPORATIONS

Section 303(c)(1) of Pub. L. 94-12 provided in part that: "In

applying subsection (b)(2) of section 11 [subsec. (b)(2) of this

section], the first $25,000 of taxable income and the second

$25,000 of taxable income shall each be allocated among the

component members of a controlled group of corporations in the same

manner as the surtax exemption is allocated."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 15, 59, 80, 244, 247,

280C, 453A, 460, 468B, 511, 527, 594, 774, 801, 804, 831, 835, 847,

852, 857, 860E, 860G, 860K, 882, 891, 904, 907, 954, 962, 1201,

1291, 1293, 1351, 1374, 1375, 1381, 1446, 1551, 1561, 4942, 6033,

6242, 6425, 6655, 7518, 7704 of this title; title 46 App. section

1177.

-End-

-CITE-

26 USC Sec. 12 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART II - TAX ON CORPORATIONS

-HEAD-

Sec. 12. Cross references relating to tax on corporations

-STATUTE-

(1) For tax on the unrelated business income of certain

charitable and other corporations exempt from tax under this

chapter, see section 511.

(2) For accumulated earnings tax and personal holding company

tax, see parts I and II of subchapter G (sec. 531 and

following).

(3) For doubling of tax on corporations of certain foreign

countries, see section 891.

(4) For alternative tax in case of capital gains, see section

1201(a).

(5) For rate of withholding in case of foreign corporations,

see section 1442.

(6) For limitation on benefits of graduated rate schedule

provided in section 11(b), see section 1551.

(7) For alternative minimum tax, see section 55.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 11; Pub. L. 88-272, title II,

Sec. 234(b)(4), Feb. 26, 1964, 78 Stat. 115; Pub. L. 91-172, title

III, Sec. 301(b)(3), Dec. 30, 1969, 83 Stat. 585; Pub. L. 94-12,

title III, Sec. 303(c)(2), Mar. 29, 1975, 89 Stat. 44; Pub. L.

95-600, title III, Sec. 301(b)(1), Nov. 6, 1978, 92 Stat. 2820;

Pub. L. 98-369, div. A, title I, Sec. 474(r)(29)(E), July 18, 1984,

98 Stat. 844; Pub. L. 99-514, title VII, Sec. 701(e)(4)(B), Oct.

22, 1986, 100 Stat. 2343.)

-MISC1-

AMENDMENTS

1986 - Par. (7). Pub. L. 99-514 amended par. (7) generally,

substituting "alternative minimum tax" and "55" for "minimum tax

for tax preferences" and "56", respectively.

1984 - Pars. (6) to (8). Pub. L. 98-369 redesignated pars. (7)

and (8) as (6) and (7), respectively. Former par. (6), which

referred to section 1451 for withholding of tax on tax-free

covenant bonds, was struck out.

1978 - Par. (7). Pub. L. 95-600 substituted "benefits of

graduated rate schedule provided in section 11(b)" for "the $25,000

exemption from surtax provided in section 11(c)".

1975 - Par. (7). Pub. L. 94-12 substituted "$50,000" for

"$25,000" for a limited period. See Effective and Termination Dates

of 1975 Amendment note set out below.

1969 - Par. (8). Pub. L. 91-172 added par. (8).

1964 - Par. (8). Pub. L. 88-272 struck out par. (8) which

referred to section 1503 for additional tax for corporations filing

consolidated returns.

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by Pub. L. 99-514 applicable to taxable years beginning

after Dec. 31, 1986, with certain exceptions and qualifications,

see section 701(f) of Pub. L. 99-514, set out as an Effective Date

note under section 55 of this title.

EFFECTIVE DATE OF 1984 AMENDMENT

Amendment by Pub. L. 98-369 not applicable with respect to

obligations issued before Jan. 1, 1984, see section 475(b) of Pub.

L. 98-369, set out as a note under section 33 of this title.

EFFECTIVE DATE OF 1978 AMENDMENT

Amendment by Pub. L. 95-600 applicable to taxable years beginning

after Dec. 31, 1978, see section 301(c) of Pub. L. 95-600, set out

as a note under section 11 of this title.

EFFECTIVE AND TERMINATION DATES OF 1975 AMENDMENT

Amendment by Pub. L. 94-12 applicable to taxable years ending

after Dec. 31, 1974, but to cease to apply for taxable years ending

after Dec. 31, 1975, see section 305(b)(1) of Pub. L. 94-12, set

out as a note under section 11 of this title.

EFFECTIVE DATE OF 1969 AMENDMENT

Amendment by Pub. L. 91-172 applicable to taxable years ending

after Dec. 31, 1969, see section 301(c) of Pub. L. 91-172, set out

as a note under section 5 of this title.

EFFECTIVE DATE OF 1964 AMENDMENT

Amendment by Pub. L. 88-272 applicable to taxable years beginning

after Dec. 31, 1963, see section 234(c) of Pub. L. 88-272, set out

as a note under section 1503 of this title.

APPLICABILITY OF CERTAIN AMENDMENTS BY PUBLIC LAW 99-514 IN

RELATION TO TREATY OBLIGATIONS OF UNITED STATES

For applicability of amendment by Pub. L. 99-514 notwithstanding

any treaty obligation of the United States in effect on Oct. 22,

1986, see section 1012(aa)(2) of Pub. L. 100-647, set out as a note

under section 861 of this title.

-End-

-CITE-

26 USC PART III - CHANGES IN RATES DURING A TAXABLE YEAR 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART III - CHANGES IN RATES DURING A TAXABLE YEAR

-HEAD-

PART III - CHANGES IN RATES DURING A TAXABLE YEAR

-MISC1-

Sec.

15. Effect of changes.

AMENDMENTS

1984 - Pub. L. 98-369, div. A, title IV, Sec. 474(b)(3), July 18,

1984, 98 Stat. 830, substituted "15. Effect of changes" for "21.

Effect of changes".

-End-

-CITE-

26 USC Sec. 15 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART III - CHANGES IN RATES DURING A TAXABLE YEAR

-HEAD-

Sec. 15. Effect of changes

-STATUTE-

(a) General rule

If any rate of tax imposed by this chapter changes, and if the

taxable year includes the effective date of the change (unless that

date is the first day of the taxable year), then -

(1) tentative taxes shall be computed by applying the rate for

the period before the effective date of the change, and the rate

for the period on and after such date, to the taxable income for

the entire taxable year; and

(2) the tax for such taxable year shall be the sum of that

proportion of each tentative tax which the number of days in each

period bears to the number of days in the entire taxable year.

(b) Repeal of tax

For purposes of subsection (a) -

(1) if a tax is repealed, the repeal shall be considered a

change of rate; and

(2) the rate for the period after the repeal shall be zero.

(c) Effective date of change

For purposes of subsections (a) and (b) -

(1) if the rate changes for taxable years "beginning after" or

"ending after" a certain date, the following day shall be

considered the effective date of the change; and

(2) if a rate changes for taxable years "beginning on or after"

a certain date, that date shall be considered the effective date

of the change.

(d) Section not to apply to inflation adjustments

This section shall not apply to any change in rates under

subsection (f) of section 1 (relating to adjustments in tax tables

so that inflation will not result in tax increases).

(e) References to highest rate

If the change referred to in subsection (a) involves a change in

the highest rate of tax imposed by section 1 or 11(b), any

reference in this chapter to such highest rate (other than in a

provision imposing a tax by reference to such rate) shall be

treated as a reference to the weighted average of the highest rates

before and after the change determined on the basis of the

respective portions of the taxable year before the date of the

change and on or after the date of the change.

(f) Rate reductions enacted by Economic Growth and Tax Relief

Reconciliation Act of 2001

This section shall not apply to any change in rates under

subsection (i) of section 1 (relating to rate reductions after

2000).

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 12, Sec. 21; Pub. L. 88-272,

title I, Sec. 132, Feb. 26, 1964, 78 Stat. 30; Pub. L. 91-172,

title VIII, Sec. 803(e), Dec. 30, 1969, 83 Stat. 685; Pub. L.

92-178, title II, Sec. 205, Dec. 10, 1971, 85 Stat. 511; Pub. L.

94-12, title III, Sec. 305(b)(2), Mar. 29, 1975, 89 Stat. 45; Pub.

L. 94-164, Sec. 4(d)(2), Dec. 23, 1975, 89 Stat. 975; Pub. L.

94-455, title IX, Sec. 901(c)(2), Oct. 4, 1976, 90 Stat. 1607; Pub.

L. 95-30, title I, Sec. 101(d)(2), May 23, 1977, 91 Stat. 133; Pub.

L. 95-600, title I, Sec. 106, Nov. 6, 1978, 92 Stat. 2776; Pub. L.

97-34, title I, Sec. 101(d)(3), Aug. 13, 1981, 95 Stat. 184;

renumbered Sec. 15, Pub. L. 98-369, div. A, title IV, Sec.

474(b)(1), July 18, 1984, 98 Stat. 830; Pub. L. 99-514, title I,

Sec. 101(b), Oct. 22, 1986, 100 Stat. 2099; Pub. L. 100-647, title

I, Sec. 1006(a), Nov. 10, 1988, 102 Stat. 3393; Pub. L. 107-16,

title I, Sec. 101(c)(3), June 7, 2001, 115 Stat. 43.)

-STATAMEND-

AMENDMENT OF SECTION

For termination of amendment by section 901 of Pub. L. 107-16,

see Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

2001 - Subsec. (f). Pub. L. 107-16, Secs. 101(c)(3), 901,

temporarily added subsec. (f). See Effective and Termination Dates

of 2001 Amendment note below.

1988 - Subsec. (e). Pub. L. 100-647 added subsec. (e).

1986 - Subsec. (d). Pub. L. 99-514 amended subsec. (d) generally,

substituting "apply to inflation adjustments" for "apply to section

1 rate changes made by Economic Recovery Tax Act of 1981" in

heading and struck out "section 1 attributable to the amendments

made by section 101 of the Economic Tax Act of 1981 or" before

"subsection (f)" in text.

1984 - Pub. L. 98-369 renumbered section 21 of this title as this

section.

1981 - Subsec. (d). Pub. L. 97-34 substituted provisions that

this section shall not apply to any change in rates under section 1

attributable to the amendments made by section 101 of the Economic

Recovery Tax Act of 1981 or subsec. (f) of section 1 for provisions

that had related to the changes made by section 303(b) of the Tax

Reduction Act of 1975 in the surtax exemption.

Subsecs. (e), (f). Pub. L. 97-34 struck out subsecs. (e) and (f)

which had related, respectively, to changes made by the Tax

Reduction and Simplification Act of 1977 and to changes made by

Revenue Act of 1978.

1978 - Subsec. (f). Pub. L. 95-600 added subsec. (f).

1977 - Subsec. (d). Pub. L. 95-30, Sec. 101(d)(2)(A), (B),

redesignated subsec. (f) as (d). Former subsec. (d), which directed

that, in applying subsec. (a) to a taxable year of an individual

which was not a calendar year, each change made by the Tax Reform

Act of 1969 in part I or in the application of part IV or V of

subchapter B for purposes of the determination of taxable income

should be treated as a change in a rate of tax, was struck out.

Subsec. (e). Pub. L. 95-30, Sec. 101(d)(2)(A), (C), added subsec.

(e). Former subsec. (e), which directed that, in applying subsec.

(a) to a taxable year of an individual which was not a calendar

year, each change made by the Revenue Act of 1971 in section 141

(relating to the standard deduction) and section 151 (relating to

personal exemptions) should be treated as a change in a rate of

tax, was struck out.

Subsec. (f). Pub. L. 95-30, Sec. 101(d)(2)(B), redesignated

subsec. (f) as (d).

1976 - Subsec. (f). Pub. L. 94-455 substituted "in the surtax

exemption and any change under section 11(d) in the surtax

exemption" for "and the change made by section 3(c) of the Revenue

Adjustment Act of 1975 in section 11(d) (relating to corporate

surtax exemption)".

1975 - Subsec. (f). Pub. L. 94-164 inserted reference to change

made by section 3(c) of the Revenue Adjustment Act of 1975.

Pub. L. 94-12 added subsec. (f).

1971 - Subsec. (e). Pub. L. 92-178 added subsec. (e).

1969 - Subsec. (d). Pub. L. 91-172 substituted provisions

covering changes made by the Tax Reform Act of 1969 in case of

individuals for provisions covering changes made by Revenue Act of

1964.

1964 - Subsec. (d). Pub. L. 88-272 amended subsection generally

by substituting provisions relating to changes made by the Revenue

Act of 1964, for provisions relating to taxable years beginning

before Jan. 1, 1954, and ending after Dec. 31, 1953.

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Amendment by Pub. L. 107-16 applicable to taxable years beginning

after Dec. 31, 2000, see section 101(d)(1) of Pub. L. 107-16, set

out as a note under section 1 of this title.

Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or

limitation years beginning after Dec. 31, 2010, and the Internal

Revenue Code of 1986 to be applied and administered to such years

as if such amendment had never been enacted, see section 901 of

Pub. L. 107-16, set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by Pub. L. 100-647 effective, except as otherwise

provided, as if included in the provision of the Tax Reform Act of

1986, Pub. L. 99-514, to which such amendment relates, see section

1019(a) of Pub. L. 100-647, set out as a note under section 1 of

this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by Pub. L. 99-514 applicable to taxable years beginning

after Dec. 31, 1986, see section 151(a) of Pub. L. 99-514, set out

as a note under section 1 of this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Amendment by Pub. L. 97-34 applicable to taxable years beginning

after Dec. 31, 1981, see section 101(f)(1) of Pub. L. 97-34, set

out as a note under section 1 of this title.

EFFECTIVE DATE OF 1977 AMENDMENT

Amendment by Pub. L. 95-30 applicable to taxable years beginning

after Dec. 31, 1976, see section 106(a) of Pub. L. 95-30, set out

as a note under section 1 of this title.

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-455 applicable with respect to taxable

years ending after Dec. 31, 1975, see section 901(d) of Pub. L.

94-455, set out as a note under section 11 of this title.

EFFECTIVE DATE OF 1975 AMENDMENT

Amendment by Pub. L. 94-164 applicable to taxable years beginning

after Dec. 31, 1975, see section 4(e) of Pub. L. 94-164, set out as

an Effective and Termination Dates of 1975 Amendments note under

section 11 of this title.

EFFECTIVE DATE OF 1964 AMENDMENT

Section 132 of Pub. L. 88-272 provided that the amendment made by

that section is effective with respect to taxable years ending

after Dec. 31, 1963.

COORDINATION OF 1997 AMENDMENT WITH SECTION 15

Pub. L. 105-34, title I, Sec. 1(c), Aug. 5, 1997, 111 Stat. 788,

provided that: "No amendment made by this Act [see Tables for

classification] shall be treated as a change in a rate of tax for

purposes of section 15 of the Internal Revenue Code of 1986."

COORDINATION OF 1993 AMENDMENT WITH SECTION 15

Pub. L. 103-66, title XIII, Sec. 13001(c), Aug. 10, 1993, 107

Stat. 416, provided that: "Except in the case of the amendments

made by section 13221 [amending sections 11, 852, 1201, and 1445 of

this title] (relating to corporate rate increase), no amendment

made by this chapter [chapter 1 (Secs. 13001-13444) of title XIII

of Pub. L. 103-66, see Tables for classification] shall be treated

as a change in a rate of tax for purposes of section 15 of the

Internal Revenue Code of 1986."

COORDINATION OF 1990 AMENDMENT WITH SECTION 15

Pub. L. 101-508, title XI, Sec. 11001(c), Nov. 5, 1990, 104 Stat.

1388-400, provided that: "Except as otherwise expressly provided in

this title, no amendment made by this title [see Tables for

classification] shall be treated as a change in a rate of tax for

purposes of section 15 of the Internal Revenue Code of 1986."

COORDINATION OF 1987 AMENDMENT WITH SECTION 15

Pub. L. 100-203, title X, Sec. 10000(c), Dec. 22, 1987, 101 Stat.

1330-382, provided that: "No amendment made by this title [see

Tables for classification] shall be treated as a change in a rate

of tax for purposes [of] section 15 of the Internal Revenue Code of

1986."

COORDINATION OF 1986 AMENDMENT WITH SECTION 15

Section 3(b) of Pub. L. 99-514 provided that:

"(1) In general. - Except as provided in paragraph (2), for

purposes of section 15 of the Internal Revenue Code of 1986, no

amendment or repeal made by this Act [see Tables for

classification] shall be treated as a change in the rate of a tax

imposed by chapter 1 of such Code.

"(2) Exception. - Paragraph (1) shall not apply to the amendment

made by section 601 [amending section 11 of this title] (relating

to corporate rate reductions)."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 59A, 441, 6013 of this

title.

-End-

-CITE-

26 USC PART IV - CREDITS AGAINST TAX 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

-HEAD-

PART IV - CREDITS AGAINST TAX

-MISC1-

Subpart

A. Nonrefundable personal credits.

B. Other credits.

C. Refundable credits.

D. Business-related credits.

E. Rules for computing investment credit.

F. Rules for computing work opportunity credit.

G. Credit against regular tax for prior year minimum tax

liability.(!1)

AMENDMENTS

1996 - Pub. L. 104-188, title I, Secs. 1201(e)(3),

1601(b)(2)(F)(ii), Aug. 20, 1996, 110 Stat. 1772, 1833, substituted

"Other credits" for "Foreign tax credit, etc." in item for subpart

B and "work opportunity credit" for "targeted jobs credit" in item

for subpart F.

1990 - Pub. L. 101-508, title XI, Sec. 11813(b)(26), Nov. 5,

1990, 104 Stat. 1388-555, substituted "Rules for computing

investment credit" for "Rules for computing credit for investment

in certain depreciable property" in item for subpart E.

1984 - Pub. L. 98-369, div. A, title IV, Secs. 471(a), 474(n)(3),

July 18, 1984, 98 Stat. 825, 834, substituted "Nonrefundable

personal credits" for "Credits allowable" in item for subpart A,

"Foreign tax credit, etc" for "Rules for computing credit for

investment in certain depreciable property" in item for subpart B,

"Refundable credits" for "Rules for computing credit for expense of

work incentive programs" in item for subpart C, and

"Business-related credits" for "Rules for computing credit for

employment of certain new employees" in item for subpart D, and

added items for subparts E and F.

1977 - Pub. L. 95-30, title II, Sec. 202(d)(1)(B), May 23, 1977,

91 Stat. 147, added subpart D.

1971 - Pub. L. 92-178, title VI, Sec. 601(c)(1), Dec. 10, 1971,

85 Stat. 557, added subpart C.

-SECREF-

PART REFERRED TO IN OTHER SECTIONS

This part is referred to in sections 665, 1374, 1375, 1397E,

1398, 1503, 6096, 6425, 6428, 6654, 6655, 6682 of this title.

-FOOTNOTE-

(!1) Editorially supplied. Subpart G of part IV added by Pub. L.

99-514 without corresponding amendment of part analysis.

-End-

-CITE-

26 USC Subpart A - Nonrefundable Personal Credits 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart A - Nonrefundable Personal Credits

-HEAD-

SUBPART A - NONREFUNDABLE PERSONAL CREDITS

-MISC1-

Sec.

21. Expenses for household and dependent care services

necessary for gainful employment.

22. Credit for the elderly and the permanently and totally

disabled.

23. Adoption expenses.

24. Child tax credit.

25. Interest on certain home mortgages.

25A. Hope and Lifetime Learning credits.

25B. Elective deferrals and IRA contributions by certain

individuals.

26. Limitation based on tax liability; definition of tax

liability.

AMENDMENTS

2001 - Pub. L. 107-16, title VI, Sec. 618(c), June 7, 2001, 115

Stat. 108, added item 25B.

1998 - Pub. L. 105-206, title VI, Sec. 6004(a)(1), July 22, 1998,

112 Stat. 792, substituted "Hope and Lifetime Learning credits" for

"Higher education tuition and related expenses" in item 25A.

1997 - Pub. L. 105-34, title I, Sec. 101(d)(3), title II, Sec.

201(e), Aug. 5, 1997, 111 Stat. 799, 806, added items 24 and 25A.

1996 - Pub. L. 104-188, title I, Sec. 1807(c)(6), Aug. 20, 1996,

110 Stat. 1902, added item 23.

1990 - Pub. L. 101-508, title XI, Sec. 11801(b)(1), Nov. 5, 1990,

104 Stat. 1388-522, struck out item 23 "Residential energy credit".

1986 - Pub. L. 99-514, title I, Sec. 112(b)(5), Oct. 22, 1986,

100 Stat. 2109, struck out item 24 "Contributions to candidates for

public office".

1984 - Pub. L. 98-369, div. A, title IV, Secs. 471(b), 612(f),

July 18, 1984, 98 Stat. 826, 913, substituted "Nonrefundable

Personal Credits" for "Credits Allowable" as subpart A heading,

struck out analysis of sections 31 through 45 formerly comprising

subpart A, and inserted a new analysis of sections consisting of

items 21 (formerly 44A), 22 (formerly 37), 23 (formerly 44C), 24

(formerly 41), and 25 and 26 (newly enacted).

1983 - Pub. L. 98-67 repealed amendments made by Pub. L. 97-248.

See 1982 Amendment note below.

Pub. L. 98-21, title I, Sec. 122(c)(7), Apr. 20, 1983, 97 Stat.

87, inserted "and the permanently and totally disabled" to item 37.

Pub. L. 97-424, title V, Sec. 515(b)(6)(D), Jan. 6, 1983, 96

Stat. 2181, substituted "and special fuels" for ", special fuels,

and lubricating oil" after "gasoline" in item 39.

Pub. L. 97-414, Sec. 4(c)(1), Jan. 4, 1983, 96 Stat. 2056, added

item 44H.

1982 - Pub. L. 97-248, title III, Secs. 307(b)(3), 308(a), Sept.

3, 1982, 96 Stat. 590, 591, provided that, applicable to payments

of interest, dividends, and patronage dividends paid or credited

after June 30, 1983, item 31 is amended to read "Tax withheld on

wages, interest, dividends, and patronage dividends". Section

102(a), (b) of Pub. L. 98-67, title I, Aug. 5, 1983, 97 Stat. 369,

repealed subtitle A (Secs. 301-308) of title III of Pub. L. 97-248

as of the close of June 30, 1983, and provided that the Internal

Revenue Code of 1954 [now 1986] [this title] shall be applied and

administered (subject to certain exceptions) as if such subtitle A

(and the amendments made by such subtitle A) had not been enacted.

1981 - Pub. L. 97-34, title II, Sec. 221(c)(2), title III, Sec.

331(e)(2), Aug. 13, 1981, 95 Stat. 247, 295, added items 44F and

44G.

1980 - Pub. L. 96-223, title II, Secs. 231(b)(1), 232(b)(3)(B),

Apr. 2, 1980, 94 Stat. 272, 276, added items 44D and 44E.

1978 - Pub. L. 95-618, title I, Sec. 101(b)(1), Nov. 9, 1978, 92

Stat. 3179, added item 44C.

1977 - Pub. L. 95-30, title I, Sec. 101(e)(1), title II, Sec.

202(d)(1)(A), May 23, 1977, 91 Stat. 134, 147, added item 44B and

struck out item 36 "Credit not allowed to individuals taking

standard deduction".

1976 - Pub. L. 94-455, title IV, Sec. 401(a)(2)(D), title V,

Secs. 501(c)(2), 503(b)(5), 504(a)(2), title XIX, Sec.

1901(b)(1)(Z), Oct. 4, 1976, 90 Stat. 1555, 1559, 1562, 1565, 1792,

substituted in item 42 "General tax credit" for "Taxable income

credit", struck out in item 36 "pay optional tax or", inserted in

item 33 "possession tax credit", substituted in item 37 "Credit of

the elderly" for "Retirement income", added item 44A, and struck

out item 35 "Partially tax-exempt interest received by

individuals".

1975 - Pub. L. 94-164, Sec. 3(a)(2), Dec. 23, 1975, 89 Stat. 973,

substituted "Taxable income credit" for "Credit for personal

exemptions" in item 42.

Pub. L. 94-12, title II, Secs. 203(b)(1), 204(c), 208(d)(1), Mar.

29, 1975, 89 Stat. 30, 32, 35, renumbered item 42 as 45 and added

item 42 applicable to taxable years ending after Dec. 31, 1974, but

to cease to apply to taxable years ending after Dec. 31, 1975, item

43 applicable to taxable years beginning after Dec. 31, 1974, but

before Jan. 1, 1976, and item 44.

1971 - Pub. L. 92-178, title VI, Sec. 601(c)(2), Dec. 10, 1971,

85 Stat. 557, added items 40 and 41, and redesignated former item

40 as 42.

1970 - Pub. L. 91-258, title II, Sec. 207(d)(10), May 21, 1970,

84 Stat. 249, inserted ", special fuels," after "gasoline" in item

39.

1965 - Pub. L. 89-44, title VIII, Sec. 809(d)(1), June 21, 1965,

79 Stat. 167, added item 39 and redesignated former item 39 as 40.

1964 - Pub. L. 88-272, title II, Sec. 201(d)(1), Feb. 26, 1964,

78 Stat. 32, struck out item 34.

1962 - Pub. L. 87-834, Sec. 2(g)(1), (2), Oct. 16, 1962, 76 Stat.

972, 973, added headings of subparts A and B and item 38, and

redesignated former item 38 as 39.

-SECREF-

SUBPART REFERRED TO IN OTHER SECTIONS

This subpart is referred to in sections 29, 30, 38, 53, 904,

1400C, 6401, 6428 of this title; title 12 section 1831q.

-End-

-CITE-

26 USC Sec. 21 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart A - Nonrefundable Personal Credits

-HEAD-

Sec. 21. Expenses for household and dependent care services

necessary for gainful employment

-STATUTE-

(a) Allowance of credit

(1) In general

In the case of an individual who maintains a household which

includes as a member one or more qualifying individuals (as

defined in subsection (b)(1)), there shall be allowed as a credit

against the tax imposed by this chapter for the taxable year an

amount equal to the applicable percentage of the

employment-related expenses (as defined in subsection (b)(2))

paid by such individual during the taxable year.

(2) Applicable percentage defined

For purposes of paragraph (1), the term "applicable percentage"

means 35 percent reduced (but not below 20 percent) by 1

percentage point for each $2,000 (or fraction thereof) by which

the taxpayer's adjusted gross income for the taxable year exceeds

$15,000.

(b) Definitions of qualifying individual and employment-related

expenses

For purposes of this section -

(1) Qualifying individual

The term "qualifying individual" means -

(A) a dependent of the taxpayer who is under the age of 13

and with respect to whom the taxpayer is entitled to a

deduction under section 151(c),

(B) a dependent of the taxpayer who is physically or mentally

incapable of caring for himself, or

(C) the spouse of the taxpayer, if he is physically or

mentally incapable of caring for himself.

(2) Employment-related expenses

(A) In general

The term "employment-related expenses" means amounts paid for

the following expenses, but only if such expenses are 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 taxpayer:

(i) expenses for household services, and

(ii) expenses for the care of a qualifying individual.

Such term shall not include any amount paid for services

outside the taxpayer's household at a camp where the qualifying

individual stays overnight.

(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 -

(i) a qualifying individual described in paragraph (1)(A),

or

(ii) a qualifying individual (not described in paragraph

(1)(A)) who regularly spends at least 8 hours each day in the

taxpayer's household.

(C) Dependent care centers

Employment-related expenses described in subparagraph (A)

which are incurred for services provided outside the taxpayer's

household by a dependent care center (as defined in

subparagraph (D)) shall be taken into account only if -

(i) such center complies with all applicable laws and

regulations of a State or unit of local government, and

(ii) the requirements of subparagraph (B) are met.

(D) Dependent care center defined

For purposes of this paragraph, the term "dependent care

center" means any facility which -

(i) provides care for more than six individuals (other than

individuals who reside at the facility), and

(ii) receives a fee, payment, or grant for providing

services for any of the individuals (regardless of whether

such facility is operated for profit).

(c) Dollar limit on amount creditable

The amount of the employment-related expenses incurred during any

taxable year which may be taken into account under subsection (a)

shall not exceed -

(1) $3,000 if there is 1 qualifying individual with respect to

the taxpayer for such taxable year, or

(2) $6,000 if there are 2 or more qualifying individuals with

respect to the taxpayer for such taxable year.

The amount determined under paragraph (1) or (2) (whichever is

applicable) shall be reduced by the aggregate amount excludable

from gross income under section 129 for the taxable year.

(d) Earned income limitation

(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 (b)(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) $250 if subsection (c)(1) applies for the taxable year,

or

(B) $500 if subsection (c)(2) applies for the taxable year.

In the case of any husband and wife, this paragraph shall apply

with respect to only one spouse for any one month.

(e) 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 taxpayer is married at the close of the taxable year,

the credit shall be allowed under subsection (a) only if the

taxpayer 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

(ii) 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) Special dependency test in case of divorced parents, etc.

If -

(A) paragraph (2) or (4) of section 152(e) applies to any

child with respect to any calendar year, and

(B) such child is under the age of 13 or is physically or

mentally incapable of caring for himself,

in the case of any taxable year beginning in such calendar year,

such child shall be treated as a qualifying individual described

in subparagraph (A) or (B) of subsection (b)(1) (whichever is

appropriate) with respect to the custodial parent (within the

meaning of section 152(e)(1)), and shall not be treated as a

qualifying individual with respect to the noncustodial parent.

(6) Payments to related individuals

No credit shall be allowed under subsection (a) for any amount

paid by the taxpayer to an individual -

(A) with respect to whom, for the taxable year, a deduction

under section 151(c) (relating to deduction for personal

exemptions for dependents) is allowable either to the taxpayer

or his spouse, or

(B) who is a child of the taxpayer (within the meaning of

section 151(c)(3)) who has not attained the age of 19 at the

close of the taxable year.

For purposes of this paragraph, the term "taxable year" means the

taxable year of the taxpayer in which the service is performed.

(7) Student

The term "student" means an individual who during each of 5

calendar months during the taxable year is a full-time student at

an educational organization.

(8) Educational organization

The term "educational organization" means an educational

organization described in section 170(b)(1)(A)(ii).

(9) Identifying information required with respect to service

provider

No credit shall be allowed under subsection (a) for any amount

paid to any person unless -

(A) the name, address, and taxpayer identification number of

such person are included on the return claiming the credit, or

(B) if such person is an organization described in section

501(c)(3) and exempt from tax under section 501(a), the name

and address of such person are included on the return claiming

the credit.

In the case of a failure to provide the information required

under the preceding sentence, the preceding sentence shall not

apply if it is shown that the taxpayer exercised due diligence in

attempting to provide the information so required.

(10) Identifying information required with respect to qualifying

individuals

No credit shall be allowed under this section with respect to

any qualifying individual unless the TIN of such individual is

included on the return claiming the credit.

(f) Regulations

The Secretary shall prescribe such regulations as may be

necessary to carry out the purposes of this section.

-SOURCE-

(Added Pub. L. 94-455, title V, Sec. 504(a)(1), Oct. 4, 1976, 90

Stat. 1563, Sec. 44A; amended Pub. L. 95-600, title I, Sec. 121(a),

Nov. 6, 1978, 92 Stat. 2779; Pub. L. 97-34, title I Sec. 124

(a)-(d), Aug. 13, 1981, 95 Stat. 197, 198; Pub. L. 98-21, title I,

Sec. 122(c)(1), Apr. 20, 1983, 97 Stat. 87; renumbered Sec. 21 and

amended Pub. L. 98-369, div. A, title IV, Secs. 423(c)(4), 471(c),

474(c), July 18, 1984, 98 Stat. 801, 826, 830; Pub. L. 99-514,

title I, Sec. 104(b)(1), Oct. 22, 1986, 100 Stat. 2104; Pub. L.

100-203, title X, Sec. 10101(a), Dec. 22, 1987, 101 Stat. 1330-384;

Pub. L. 100-485, title VII, Sec. 703(a)-(c)(1), Oct. 13, 1988, 102

Stat. 2426, 2427; Pub. L. 104-188, title I, Sec. 1615(b), Aug. 20,

1996, 110 Stat. 1853; Pub. L. 107-16, title II, Sec. 204(a), (b),

June 7, 2001, 115 Stat. 49; Pub. L. 107-147, title IV, Sec. 418(b),

Mar. 9, 2002, 116 Stat. 57.)

-STATAMEND-

AMENDMENT OF SECTION

For termination of amendment by section 901 of Pub. L. 107-16,

see Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

PRIOR PROVISIONS

A prior section 21 was renumbered section 15 of this title.

AMENDMENTS

2002 - Subsec. (d)(2)(A). Pub. L. 107-147, Sec. 418(b)(1),

substituted "$250" for "$200".

Subsec. (d)(2)(B). Pub. L. 107-147, Sec. 418(b)(2), substituted

"$500" for "$400".

2001 - Subsec. (a)(2). Pub. L. 107-16, Secs. 204(b), 901,

temporarily substituted "35 percent" for "30 percent" and "$15,000"

for "$10,000". See Effective and Termination Dates of 2001

Amendment note below.

Subsec. (c)(1). Pub. L. 107-16, Secs. 204(a)(1), 901, temporarily

substituted "$3,000" for "$2,400". See Effective and Termination

Dates of 2001 Amendment note below.

Subsec. (c)(2). Pub. L. 107-16, Secs. 204(a)(2), 901, temporarily

substituted "$6,000" for "$4,800". See Effective and Termination

Dates of 2001 Amendment note below.

1996 - Subsec. (e)(10). Pub. L. 104-188 added par. (10).

1988 - Subsec. (b)(1)(A). Pub. L. 100-485, Sec. 703(a),

substituted "age of 13" for "age of 15".

Subsec. (c). Pub. L. 100-485, Sec. 703(b), inserted at end: "The

amount determined under paragraph (1) or (2) (whichever is

applicable) shall be reduced by the aggregate amount excludable

from gross income under section 129 for the taxable year."

Subsec. (e)(5)(B). Pub. L. 100-485, Sec. 703(a), substituted "age

of 13" for "age of 15".

Subsec. (e)(9). Pub. L. 100-485, Sec. 703(c)(1), added par. (9).

1987 - Subsec. (b)(2)(A). Pub. L. 100-203 inserted at end "Such

term shall not include any amount paid for services outside the

taxpayer's household at a camp where the qualifying individual

stays overnight."

1986 - Subsecs. (b)(1)(A), (e)(6)(A). Pub. L. 99-514, Sec.

104(b)(1)(A), substituted "section 151(c)" for "section 151(e)".

Subsec. (e)(6)(B). Pub. L. 99-514, Sec. 104(b)(1)(B), substituted

"section 151(c)(3)" for "section 151(e)(3)".

1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 44A of

this title as this section.

Subsec. (a)(1). Pub. L. 98-369, Sec. 474(c)(2), (3), substituted

"subsection (b)(1)" for "subsection (c)(1)" and "subsection (b)(2)"

for "subsection (c)(2)".

Subsec. (b). Pub. L. 98-369, Sec. 474(c)(1), redesignated subsec.

(c) as (b). Former subsec. (b), which provided that the credit

allowed by subsec. (a) could not exceed the amount of the tax

imposed by this chapter for the taxable year reduced by the sum of

the credits allowable under sections 33, 37, 38, 40, 41, 42, and

44, was struck out.

Subsec. (c). Pub. L. 98-369, Sec. 474(c)(1), redesignated subsec.

(d) as (c). Former subsec. (c) redesignated (b).

Subsec. (d). Pub. L. 98-369, Sec. 474(c)(1), redesignated subsec.

(e) as (d). Former subsec. (d) redesignated (c).

Subsec. (d)(2). Pub. L. 98-369, Sec. 474(c)(4), substituted

"subsection (b)(1)(C)" for "subsection (c)(1)(C)" in introductory

provisions.

Subsec. (d)(2)(A). Pub. L. 98-369, Sec. 474(c)(5), substituted

"subsection (c)(1)" for "subsection (d)(1)".

Subsec. (d)(2)(B). Pub. L. 98-369, Sec. 474(c)(6), substituted

"subsection (c)(2)" for "subsection (d)(2).

Subsec. (e). Pub. L. 98-369, Sec. 474(c)(1), redesignated subsec.

(f) as (e). Former subsec. (e) redesignated (d).

Subsec. (e)(5). Pub. L. 98-369, Sec. 474(c)(7), substituted

"subsection (b)(1)" for "subsection (c)(1)" in provisions following

subpar. (B).

Pub. L. 98-369, Sec. 423(c)(4), amended par. (5) generally,

substituting subpars. (A) and (B) reading:

"(A) paragraph (2) or (4) of section 152(e) applies to any

child with respect to any calendar year, and

"(B) such child is under the age of 15 or is physically or

mentally incapable of caring for himself,"

for former provisions:

"(A) a child (as defined in section 151(e)(3)) who is under the

age of 15 or who is physically or mentally incapable of caring

for himself receives over half of his support during the calendar

year from his parents who are divorced or legally separated under

a decree of divorce or separate maintenance or who are separated

under a written separation agreement, and

"(B) such child is in the custody of one or both of his parents

for more than one-half of the calendar year."

and substituted in concluding text "(whichever is appropriate) with

respect to the custodial parent (within the meaning of section

152(e)(1)), and shall not be treated as a qualifying individual

with respect to the noncustodial parent" for ", as the case may be,

with respect to that parent 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."

Subsecs. (f), (g). Pub. L. 98-369, Sec. 474(c)(1), redesignated

subsecs. (f) and (g) as (e) and (f), respectively.

1983 - Subsec. (b)(2). Pub. L. 98-21 substituted "relating to

credit for the elderly and the permanently and totally disabled"

for "relating to credit for the elderly".

1981 - Subsec. (a). Pub. L. 97-34, Sec. 124(a), designated

existing provisions as par. (1), substituted "the applicable

percentage" for "20 percent" in par. (1) as so designated, and

added par. (2).

Subsec. (c)(2)(B). Pub. L. 97-34, Sec. 124(c), designated

existing provisions as cl. (i) and added cl. (ii).

Subsec. (c)(2)(C), (D). Pub. L. 97-34, Sec. 124(d), added

subpars. (C) and (D).

Subsec. (d)(1). Pub. L. 97-34, Sec. 124(b)(1)(A), substituted

"$2,400" for "$2,000".

Subsec. (d)(2). Pub. L. 97-34, Sec. 124(b)(1)(B), substituted

"$4,800" for "$4,000".

Subsec. (e)(2)(A). Pub. L. 97-34, Sec. 124(b)(2)(A), substituted

"$200" for "$166".

Subsec. (e)(2)(B). Pub. L. 97-34, Sec. 124(b)(2)(B), substituted

"$400" for "$333".

1978 - Subsec. (f)(6). Pub. L. 95-600 substituted provision

disallowing a credit for any amount paid by a taxpayer to an

individual with respect to whom, for the taxable year, a deduction

under section 151(e) is allowable either to the taxpayer or his

spouse or who is a child of the taxpayer who has not attained the

age of 19 at the close of the taxpayer year and defining "taxpayer

year" for provision disallowing a credit for any amount paid by the

taxpayer to an individual bearing a relationship described in

section 152(a)(1) through (8), or a dependent described in section

152(a)(9), except that a credit was allowed for an amount paid by a

taxpayer to an individual with respect to whom, for the taxable

year of the taxpayer in which the service was performed, neither

the taxpayer nor his spouse was entitled to a deduction under

section 151(e), provided the service constituted employment within

the meaning of section 3121(b).

EFFECTIVE DATE OF 2002 AMENDMENT

Pub. L. 107-147, title IV, Sec. 418(c), Mar. 9, 2002, 116 Stat.

58, provided that: "The amendments made by this section [amending

this section and sections 23 and 137 of this title] shall take

effect as if included in the provisions of the Economic Growth and

Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16] to which

they relate."

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Pub. L. 107-16, title II, Sec. 204(c), June 7, 2001, 115 Stat.

50, provided that: "The amendments made by this section [amending

this section] shall apply to taxable years beginning after December

31, 2002."

Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or

limitation years beginning after Dec. 31, 2010, and the Internal

Revenue Code of 1986 to be applied and administered to such years

as if such amendment had never been enacted, see section 901 of

Pub. L. 107-16, set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1996 AMENDMENT

Section 1615(d) of Pub. L. 104-188 provided that:

"(1) In general. - The amendments made by this section [amending

this section and sections 151, 6109, 6213, and 6724 of this title]

shall apply with respect to returns the due date for which (without

regard to extensions) is on or after the 30th day after the date of

the enactment of this Act [Aug. 20, 1996].

"(2) Special rule for 1995 and 1996. - In the case of returns for

taxable years beginning in 1995 or 1996, a taxpayer shall not be

required by the amendments made by this section to provide a

taxpayer identification number for a child who is born after

October 31, 1995, in the case of a taxable year beginning in 1995

or November 30, 1996, in the case of a taxable year beginning in

1996."

EFFECTIVE DATE OF 1988 AMENDMENT

Section 703(d) of Pub. L. 100-485 provided that: "The amendments

made by this section [amending this section and sections 129 and

6109 of this title] shall apply to taxable years beginning after

December 31, 1988."

EFFECTIVE DATE OF 1987 AMENDMENT

Section 10101(b) of Pub. L. 100-203, as amended by Pub. L.

100-647, title II, Sec. 2004(a), Nov. 10, 1988, 102 Stat. 3598,

provided that:

"(1) In general. - The amendment made by subsection (a) [amending

this section] shall apply to expenses paid in taxable years

beginning after December 31, 1987.

"(2) Special rule for cafeteria plans. - For purposes of section

125 of the Internal Revenue Code of 1986, a plan shall not be

treated as failing to be a cafeteria plan solely because under the

plan a participant elected before January 1, 1988, to receive

reimbursement under the plan for dependent care assistance for

periods after December 31, 1987, and such assistance included

reimbursement for expenses at a camp where the dependent stays

overnight."

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by Pub. L. 99-514 applicable to taxable years beginning

after Dec. 31, 1986, see section 151(a) of Pub. L. 99-514, set out

as a note under section 1 of this title.

EFFECTIVE DATE OF 1984 AMENDMENT

Amendment by section 423(c)(4) of Pub. L. 98-369 applicable to

taxable years beginning after Dec. 31, 1984, see section 423(d) of

Pub. L. 98-369, set out as a note under section 2 of this title.

Section 475(a) of Pub. L. 98-369 provided that: "The amendments

made by this title [probably means subtitle F (Secs. 471-475) of

title IV of Pub. L. 98-369, which enacted sections 25, 38, and 39

of this title, amended this section and sections 12, 15, 22 to 24,

27 to 35, 37, 39 to 41, 44A, 44C to 44H, 45 to 48, 51, 52, 55, 56,

86, 87, 103, 108, 129, 168, 196, 213, 280C, 381, 383, 401, 404,

409, 441, 527, 642, 691, 874, 882, 901, 904, 936, 1016, 1033, 1351,

1366, 1374, 1375, 1441, 1442, 1451, 3507, 6013, 6096, 6201, 6211,

6213, 6362, 6401, 6411, 6420, 6421, 6427, 6501, 6511, 7701, 7871,

9502, and 9503 of this title, repealed sections 38, 40, 44, 44B,

50A, 50B, and 53 of this title, and enacted provisions set out as

notes under sections 30, 33, 46, and 48 of this title] shall apply

to taxable years beginning after December 31, 1983, and to

carrybacks from such years."

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 98-21 applicable to taxable years beginning

after Dec. 31, 1983, except that if an individual's annuity

starting date was deferred under section 105(d)(6) of this title as

in effect on the day before Apr. 20, 1983, such deferral shall end

on the first day of such individual's first taxable year beginning

after Dec. 31, 1983, see section 122(d) of Pub. L. 98-21, set out

as a note under section 22 of this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Section 124(f) of Pub. L. 97-34 provided that:

"(1) Except as provided in paragraph (2), the amendments made by

this section [amending this section and enacting section 129 of

this title] shall apply to taxable years beginning after December

31, 1981.

"(2) The amendments made by subsection (e)(2) [amending sections

3121, 3306, and 3401 of this title and section 409 of Title 42, The

Public Health and Welfare] shall apply to remuneration paid after

December 31, 1981."

EFFECTIVE DATE OF 1978 AMENDMENT

Section 121(b) of Pub. L. 95-600 provided that: "The amendment

made by subsection (a) [amending this section] shall apply to

taxable years beginning after December 31, 1978."

EFFECTIVE DATE

Section applicable to taxable years beginning after Dec. 31,

1975, see section 508 of Pub. L. 94-455, set out as an Effective

Date of 1976 Amendment note under section 3 of this title.

PROGRAM TO INCREASE PUBLIC AWARENESS

Pub. L. 101-508, title XI, Sec. 11114, Nov. 5, 1990, 104 Stat.

1388-414, provided that: "Not later than the first calendar year

following the date of the enactment of this subtitle [Nov. 5,

1990], the Secretary of the Treasury, or the Secretary's delegate,

shall establish a taxpayer awareness program to inform the

taxpaying public of the availability of the credit for dependent

care allowed under section 21 of the Internal Revenue Code of 1986

and the earned income credit and child health insurance under

section 32 of such Code. Such public awareness program shall be

designed to assure that individuals who may be eligible are

informed of the availability of such credit and filing procedures.

The Secretary shall use appropriate means of communication to carry

out the provisions of this section."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 23, 35, 129, 213, 6213 of

this title; title 7 section 2015.

-End-

-CITE-

26 USC Sec. 22 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart A - Nonrefundable Personal Credits

-HEAD-

Sec. 22. Credit for the elderly and the permanently and totally

disabled

-STATUTE-

(a) General rule

In the case of a qualified individual, 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 22

amount for such taxable year.

(b) Qualified individual

For purposes of this section, the term "qualified individual"

means any individual -

(1) who has attained age 65 before the close of the taxable

year, or

(2) who retired on disability before the close of the taxable

year and who, when he retired, was permanently and totally

disabled.

(c) Section 22 amount

For purposes of subsection (a) -

(1) In general

An individual's section 22 amount for the taxable year shall be

the applicable initial amount determined under paragraph (2),

reduced as provided in paragraph (3) and in subsection (d).

(2) Initial amount

(A) In general

Except as provided in subparagraph (B), the initial amount

shall be -

(i) $5,000 in the case of a single individual, or a joint

return where only one spouse is a qualified individual,

(ii) $7,500 in the case of a joint return where both

spouses are qualified individuals, or

(iii) $3,750 in the case of a married individual filing a

separate return.

(B) Limitation in case of individuals who have not attained age

65

(i) In general

In the case of a qualified individual who has not attained

age 65 before the close of the taxable year, except as

provided in clause (ii), the initial amount shall not exceed

the disability income for the taxable year.

(ii) Special rules in case of joint return

In the case of a joint return where both spouses are

qualified individuals and at least one spouse has not

attained age 65 before the close of the taxable year -

(I) if both spouses have not attained age 65 before the

close of the taxable year, the initial amount shall not

exceed the sum of such spouses' disability income, or

(II) if one spouse has attained age 65 before the close

of the taxable year, the initial amount shall not exceed

the sum of $5,000 plus the disability income for the

taxable year of the spouse who has not attained age 65

before the close of the taxable year.

(iii) Disability income

For purposes of this subparagraph, the term "disability

income" means the aggregate amount includable in the gross

income of the individual for the taxable year under section

72 or 105(a) to the extent such amount constitutes wages (or

payments in lieu of wages) for the period during which the

individual is absent from work on account of permanent and

total disability.

(3) Reduction

(A) In general

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 or

as a disability benefit -

(i) which is excluded from gross income and payable under -

(I) title II of the Social Security Act,

(II) the Railroad Retirement Act of 1974, or

(III) a law administered by the Veterans' Administration,

or

(ii) which is excluded from gross income under any

provision of law not contained in this title.

No reduction shall be made under clause (i)(III) for any amount

described in section 104(a)(4).

(B) Treatment of certain workmen's compensation benefits

For purposes of subparagraph (A), any amount treated as a

social security benefit under section 86(d)(3) shall be treated

as a disability benefit received under title II of the Social

Security Act.

(d) Adjusted gross income limitation

If the adjusted gross income of the taxpayer exceeds -

(1) $7,500 in the case of a single individual,

(2) $10,000 in the case of a joint return, or

(3) $5,000 in the case of a married individual filing a

separate return,

the section 22 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.

(e) Definitions and special rules

For purposes of this section -

(1) Married couple must file joint return

Except in the case of a husband and wife who live apart at all

times during the taxable year, if the taxpayer is married at 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

return for the taxable year.

(2) Marital status

Marital status shall be determined under section 7703.

(3) Permanent and total disability defined

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. An individual shall not be considered to be permanently

and totally disabled unless he furnishes proof of the existence

thereof in such form and manner, and at such times, as the

Secretary may require.

(f) Nonresident alien ineligible for credit

No credit shall be allowed under this section to any nonresident

alien.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 15, Sec. 37; Aug. 9, 1955, ch.

659, Sec. 1, 69 Stat. 591; Jan. 28, 1956, ch. 17, Sec. 1, 70 Stat.

8; Pub. L. 87-792, Sec. 7(a), Oct. 10, 1962, 76 Stat. 828; Pub. L.

87-876, Sec. 1, Oct. 24, 1962, 76 Stat. 1199; Pub. L. 88-272, title

I, Sec. 113(a), title II, Secs. 201(d)(3), 202(a), Feb. 26, 1964,

78 Stat. 24, 32, 33; Pub. L. 93-406, title II, Sec. 2002(g)(1),

Sept. 2, 1974, 88 Stat. 968; Pub. L. 94-455, title V, Sec. 503(a),

title XIX, Sec. 1901(c)(1), Oct. 4, 1976, 90 Stat. 1559, 1803; Pub.

L. 95-600, title VII, Secs. 701(a)(1)-(3), 703(j)(11), Nov. 6,

1978, 92 Stat. 2897, 2942; Pub. L. 96-222, title I, Sec.

107(a)(1)(E)(i), Apr. 1, 1980, 94 Stat. 222; Pub. L. 97-34, title

I, Sec. 111(b)(4), Aug. 13, 1981, 95 Stat. 194; Pub. L. 98-21,

title I, Sec. 122(a), Apr. 20, 1983, 97 Stat. 85; renumbered Sec.

22 and amended Pub. L. 98-369, div. A, title IV, Secs. 471(c),

474(d), July 18, 1984, 98 Stat. 826, 830; Pub. L. 99-514, title

XIII, Sec. 1301(j)(8), Oct. 22, 1986, 100 Stat. 2658.)

-REFTEXT-

REFERENCES IN TEXT

The Social Security Act, referred to in subsec. (c)(3)(A)(i)(I),

(B), is act Aug. 14, 1935, ch. 531, 49 Stat. 620, as amended. Title

II of the Social Security Act is classified generally to subchapter

II (Sec. 401 et seq.) of chapter 7 of Title 42, The Public Health

and Welfare. For complete classification of this Act to the Code,

see section 1305 of Title 42 and Tables.

The Railroad Retirement Act of 1974, referred to in subsec.

(c)(3)(A)(i)(II), is act Aug. 29, 1935, ch. 812, as amended

generally by Pub. L. 93-445, title I, Sec. 101, Oct. 16, 1974, 88

Stat. 1305, which is classified generally to subchapter IV (Sec.

231 et seq.) of chapter 9 of Title 45, Railroads. For further

details and complete classification of this Act to the Code, see

Codification note set out preceding section 231 of Title 45,

section 231t of Title 45, and Tables.

-MISC1-

AMENDMENTS

1986 - Subsec. (e)(2). Pub. L. 99-514 substituted "section 7703"

for "section 143".

1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 37 of this

title as this section.

Subsec. (a). Pub. L. 98-369, Sec. 474(d)(1), substituted "section

22 amount" for "section 37 amount".

Subsec. (c). Pub. L. 98-369, Sec. 474(d)(2), substituted "Section

22 amount" for "Section 37 amount" in heading.

Subsec. (c)(1). Pub. L. 98-369, Sec. 474(d)(1), substituted

"section 22 amount" for "section 37 amount".

Subsec. (d). Pub. L. 98-369, Sec. 474(d)(3), amended subsec. (d)

generally, striking out heading "Limitations" and designation "(1)"

before "Adjusted gross income limitation" thereby making existing

par. (1) the entire subsec. (d), redesignating existing subpars.

(A), (B), and (C) as pars. (1), (2), and (3), respectively, and

striking out provisions, formerly comprising par. (2), which had

limited the amount of the credit allowed by this section for the

taxable year to the amount of the tax imposed by this chapter for

such taxable year.

1983 - Pub. L. 98-21 inserted reference to permanently and

totally disabled in section catchline.

Subsec. (a). Pub. L. 98-21 amended subsec. (a) generally,

substituting reference to a qualified individual for reference to

an individual who has attained the age of 65 before the close of

the taxable year.

Subsec. (b). Pub. L. 98-21 in amending section generally added

subsec. (b). Former subsec. (b) redesignated (c).

Subsec. (c). Pub. L. 98-21 in amending section generally,

redesignated former subsec. (b) as (c) and, in (c) as so

redesignated, added par. (2) and struck out former (2), which had

provided that the initial amount was $2,500 in the case of a single

individual, $2,500 in the case of a joint return where only one

spouse was eligible for the credit under subsection (a), $3,750 in

the case of a joint return where both spouses were eligible for the

credit under subsection (a), or $1,875 in the case of a married

individual filing a separate return, redesignated existing

provisions as par. (3)(A), inserted "benefit" after "disability"

therein, struck out former subpars. (A) to (C), which had specified

sources of amounts received under title II of the Social Security

Act, under the Railroad Retirement Act of 1935 or 1937, or

otherwise excluded from gross income, added cls. (i) and (ii),

substituted provision that no reduction would be made under cl.

(i)(III) for any amount described in section 104(a)(4) for

provision that no reduction would be made under former par. (3) 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 plans), 120 (relating

to amounts received under qualified group legal services plans),

402 (relating to taxability of beneficiary of employees' trust),

403 (relating to taxation of employee annuities), or 405 (relating

to qualified bond purchase plans), and added subpar. (B). Former

subsec. (c) redesignated (d).

Subsec. (d). Pub. L. 98-21 in amending section generally

redesignated former subsec. (c) as (d). Former subsec. (d)

redesignated (e).

Subsec. (e). Pub. L. 98-21 in amending section generally,

redesignated former subsec. (d) as (e) and struck out provision

that "joint return" meant the joint return of a husband and wife

made under section 6013 and inserted provisions defining permanent

and total disability. Former subsec. (e), which provided for an

election of prior law with respect to public retirement system

income, was struck out.

Subsec. (f). Pub. L. 98-21 reenacted subsec. (f) without change.

1981 - Subsec. (e)(9)(B). Pub. L. 97-34 substituted "section

911(d)(2)" for "section 911(b)".

1978 - Subsec. (e)(2). Pub. L. 95-600, Sec. 701(a)(1), inserted

"(and whose gross income includes income described in paragraph

(4)(B))" after "who has not attained age 65 before the close of the

taxable year".

Subsec. (e)(4)(B). Pub. L. 95-600, Sec. 701(a)(2), (3)(B), as

amended by Pub. L. 96-222, Sec. 107(a)(1)(E)(i), inserted "and who

performed the services giving rise to the pension or annuity (or is

the spouse of the individual who performed the services)" after

"before the close of the taxable year" and substituted reference to

paragraph (9)(A) for reference to paragraph (8)(A).

Subsec. (e)(5)(B). Pub. L. 95-600, Sec. 701(a)(3)(C), as amended

by Pub. L. 96-222, Sec. 107(a)(1)(E)(i), substituted reference to

paragraph (9)(A) for reference to paragraph (8)(A).

Subsec. (e)(8), (9). Pub. L. 95-600, Sec. 701(a)(3)(A), as

amended by Pub. L. 96-222, Sec. 107(a)(1)(E)(i), added par. (8) and

redesignated former par. (8) as (9).

1976 - Pub. L. 94-455, Sec. 503(a), among other changes,

substituted "Credits for the elderly" for "Retirement income" in

section catchline and in text substituted provisions permitting

taxpayers who have all types of income to be eligible for the tax

credit for provisions permitting taxpayers who have only retirement

income to be eligible for the tax credit, eliminated provisions

requiring taxpayers to earn $600 for the previous ten years for tax

credit eligibility and provisions relating variations in treatment

of married couples, and inserted provisions broadening coverage of

the tax credit relief to low and middle income taxpayers.

Pub. L. 94-455, Sec. 1901(c)(1), purported to amend subsec. (f)

of this section by striking out "a Territory". The amendment could

not be executed in view of the prior general amendment of this

section by section 503(a) of Pub. L. 94-455. Section 1901(c)(1) was

repealed by section 703(j)(11) of Pub. L. 95-600.

1974 - Subsec. (c)(1)(E), (F). Pub. L. 93-406 inserted reference

in subpar. (E) to retirement bonds described in section 409 and

added subpar. (F).

1964 - Subsec. (a). Pub. L. 88-272, Secs. 113(a), 201(d)(3),

substituted "an amount equal to 17 percent, in the case of a

taxable year beginning in 1964, or 15 percent, in the case of a

taxable year beginning after December 31, 1964, of the amount

received by such individual as retirement income (as defined in

subsection (c) and as limited by subsection (d));" for "an amount

equal to the amount received by such individual as retirement

income (as defined in subsection (c) and as limited by subsection

(d)), multiplied by the rate provided in section 1 for the first

$2,000 of taxable income;", and struck out "section 34 (relating to

credit for dividends received by individuals)", before "and section

35".

Subsecs. (i), (j). Pub. L. 88-272, Sec. 202(a), added subsec. (i)

and redesignated former subsec. (i) as (j).

1962 - Subsec. (c)(1). Pub. L. 87-792 inserted provisions in

subpar. (A) requiring inclusion, in the case of an individual who

is, or has been, an employee within the meaning of section

401(c)(1), distributions by a trust described in section 401(a)

which is exempt from tax under section 501(a), and added subpar.

(E).

Subsec. (d). Pub. L. 87-876 increased the limit on retirement

income from $1,200 to $1,524, lowered the age requirement in par.

(2)(A) from 65 to 62, and substituted provisions in par. (2)(B)

which reduce the amount of retirement income for individuals who

reach age 62, by one-half the amount of earned income in excess of

$1,200 but not in excess of $1,700, and by the amount received over

$1,700, for provisions which reduced such income by the amount

earned over $1,200 by persons having reached age 65, and which

defined income as in subsec. (g) of this section.

1956 - Subsec. (d)(2). Act Jan. 28, 1956, reduced from 75 to 72

the age at which there will be no limitation on earned income and

increased from $900 to $1,200 the amount that an individual over 65

can earn without reducing the $1,200 on which the retirement credit

is computed.

1955 - Subsec. (f). Act Aug. 9, 1955, extended the retirement

income tax credit to members of the Armed Forces.

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by Pub. L. 99-514 applicable to bonds issued after Aug.

15, 1986, except as otherwise provided, see sections 1311 to 1318

of Pub. L. 99-514, set out as an Effective Date; Transitional Rules

note under section 141 of this title.

EFFECTIVE DATE OF 1984 AMENDMENT

Amendment by section 474(d) of Pub. L. 98-369 applicable to

taxable years beginning after Dec. 31, 1983, and to carrybacks from

such years, see section 475(a) of Pub. L. 98-369, set out as a note

under section 21 of this title.

EFFECTIVE DATE OF 1983 AMENDMENT

Section 122(d) of Pub. L. 98-21, as amended by Pub. L. 99-514,

Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

"(1) In general. - The amendments made by this section [amending

sections 37 [now 22], 41 [now 24], 44A [now 21], 46, 53, 85, 105,

128, 403, 415, 904, and 7871 of this title] shall apply to taxable

years beginning after December 31, 1983.

"(2) Transitional rule. - If an individual's annuity starting

date was deferred under section 105(d)(6) of the Internal Revenue

Code of 1986 [formerly I.R.C. 1954] (as in effect on the day before

the date of the enactment of this section [Apr. 20, 1983]), such

deferral shall end on the first day of such individual's first

taxable year beginning after December 31, 1983."

EFFECTIVE DATE OF 1981 AMENDMENT

Amendment by Pub. L. 97-34 applicable with respect to taxable

years beginning after Dec. 31, 1981, see section 115 of Pub. L.

97-34, set out as a note under section 911 of this title.

EFFECTIVE DATE OF 1978 AMENDMENT

Section 701(a)(4) of Pub. L. 95-600 provided that:

"(A) The amendments made by paragraphs (1) and (2) [amending this

section] shall apply to taxable years beginning after December 31,

1975.

"(B) The amendments made by paragraph (3) [amending this section]

shall apply to taxable years beginning after December 31, 1977."

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-455 applicable with respect to taxable

years beginning after Dec. 31, 1975, see section 508 of Pub. L.

94-455, set out as a note under section 3 of this title.

EFFECTIVE DATE OF 1974 AMENDMENT

Amendment by Pub. L. 93-406 effective Jan. 1, 1974, see section

2002(i)(2) of Pub. L. 93-406, set out as an Effective Date note

under section 4973 of this title.

EFFECTIVE DATE OF 1964 AMENDMENT

Amendment by section 113(a) of Pub. L. 88-272, except for

purposes of section 21 [now 15] of this title, effective with

respect to taxable years beginning after Dec. 31, 1963, see section

131 of Pub. L. 88-272, set out as a note under section 1 of this

title.

Section 201(e) of Pub. L. 88-272 provided that: "The amendments

made by subsection (a) [amending section 34 of this title] shall

apply with respect to taxable years ending after December 31, 1963.

The amendment made by subsection (b) [repealing section 34 of this

title] shall apply with respect to taxable years ending after

December 31, 1964. The amendment made by subsection (c) [amending

section 116 of this title] shall apply with respect to taxable

years beginning after December 31, 1963. The amendments made by

subsection (d) [amending sections 35, 37 [now 22], 46, 116, 584,

642, 702, 854, 857, 871, 1375, and 6014 of this title] shall apply

with respect to dividends received after December 31, 1964, in

taxable years ending after such date".

Section 202(b) of Pub. L. 88-272 provided that: "The amendments

made by subsection (a) [amending this section] shall apply to

taxable years beginning after December 31, 1963."

EFFECTIVE DATE OF 1962 AMENDMENTS

Section 2 of Pub. L. 87-876 provided that: "The amendment made by

the first section of this Act [amending this section] shall apply

only to taxable years ending after the date of the enactment of

this Act [Oct. 24, 1962]."

Section 8 of Pub. L. 87-792 provided that: "The amendments made

by this Act [enacting sections 405 and 6047 of this title and

amending sections 37 [now 22], 62, 72, 101, 104, 105, 172, 401 to

404, 503, 805, 1361, 2039, 2517, 3306, 3401 and 7207 of this title]

shall apply to taxable years beginning after December 31, 1962."

EFFECTIVE DATE OF 1956 AMENDMENT

Section 2 of act Jan. 28, 1956, provided that: "The amendment

made by the first section of this Act [amending this section] shall

apply only with respect to taxable years beginning after December

31, 1955."

EFFECTIVE DATE OF 1955 AMENDMENT

Section 2 of act Aug. 9, 1955, provided that: "The amendment made

by this Act [amending this section] shall be applicable to taxable

years beginning after December 31, 1954."

DETERMINATION OF RETIREMENT INCOME CREDIT UNDER PROVISIONS AS THEY

EXISTED PRIOR TO AMENDMENT BY PUB. L. 94-455 ELECTION

Pub. L. 95-30, title IV, Sec. 403, May 23, 1977, 91 Stat. 155, as

amended by Pub. L. 99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095,

provided that: "A taxpayer may elect (at such time and in such

manner as the Secretary of the Treasury or his delegate shall

prescribe) to determine the amount of his credit under section 37

[now 22] of the Internal Revenue Code of 1986 [formerly I.R.C.

1954] for his first taxable year beginning in 1976 under the

provisions of such section as they existed before the amendment

made by section 503 of the Tax Reform Act of 1976 [Pub. L.

94-455]."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 32, 86, 151, 415 of this

title.

-End-

-CITE-

26 USC Sec. 23 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart A - Nonrefundable Personal Credits

-HEAD-

Sec. 23. Adoption expenses

-STATUTE-

(a) Allowance of credit

(1) In general

In the case of an individual, there shall be allowed as a

credit against the tax imposed by this chapter the amount of the

qualified adoption expenses paid or incurred by the taxpayer.

(2) Year credit allowed

The credit under paragraph (1) with respect to any expense

shall be allowed -

(A) in the case of any expense paid or incurred before the

taxable year in which such adoption becomes final, for the

taxable year following the taxable year during which such

expense is paid or incurred, and

(B) in the case of an expense paid or incurred during or

after the taxable year in which such adoption becomes final,

for the taxable year in which such expense is paid or incurred.

(3) $10,000 credit for adoption of child with special needs

regardless of expenses

In the case of an adoption of a child with special needs which

becomes final during a taxable year, the taxpayer shall be

treated as having paid during such year qualified adoption

expenses with respect to such adoption in an amount equal to the

excess (if any) of $10,000 over the aggregate qualified adoption

expenses actually paid or incurred by the taxpayer with respect

to such adoption during such taxable year and all prior taxable

years.

(b) Limitations

(1) Dollar limitation

The aggregate amount of qualified adoption expenses which may

be taken into account under subsection (a) for all taxable years

with respect to the adoption of a child by the taxpayer shall not

exceed $10,000.

(2) Income limitation

(A) In general

The amount allowable as a credit under subsection (a) for any

taxable year (determined without regard to subsection (c))

shall be reduced (but not below zero) by an amount which bears

the same ratio to the amount so allowable (determined without

regard to this paragraph but with regard to paragraph (1)) as -

(i) the amount (if any) by which the taxpayer's adjusted

gross income exceeds $150,000, bears to

(ii) $40,000.

(B) Determination of adjusted gross income

For purposes of subparagraph (A), adjusted gross income shall

be determined without regard to sections 911, 931, and 933.

(3) Denial of double benefit

(A) In general

No credit shall be allowed under subsection (a) for any

expense for which a deduction or credit is allowed under any

other provision of this chapter.

(B) Grants

No credit shall be allowed under subsection (a) for any

expense to the extent that funds for such expense are received

under any Federal, State, or local program.

(4) Limitation based on amount of tax

The credit allowed under subsection (a) for any taxable year

shall not exceed the excess of -

(A) the sum of the regular tax liability (as defined in

section 26(b)) plus the tax imposed by section 55, over

(B) the sum of the credits allowable under this subpart

(other than this section) and section 27 for the taxable year.

(c) Carryforwards of unused credit

If the credit allowable under subsection (a) for any taxable year

exceeds the limitation imposed by subsection (b)(4) for such

taxable year, such excess shall be carried to the succeeding

taxable year and added to the credit allowable under subsection (a)

for such taxable year. No credit may be carried forward under this

subsection to any taxable year following the fifth taxable year

after the taxable year in which the credit arose. For purposes of

the preceding sentence, credits shall be treated as used on a

first-in first-out basis.

(d) Definitions

For purposes of this section -

(1) Qualified adoption expenses

The term "qualified adoption expenses" means reasonable and

necessary adoption fees, court costs, attorney fees, and other

expenses -

(A) which are directly related to, and the principal purpose

of which is for, the legal adoption of an eligible child by the

taxpayer,

(B) which are not incurred in violation of State or Federal

law or in carrying out any surrogate parenting arrangement,

(C) which are not expenses in connection with the adoption by

an individual of a child who is the child of such individual's

spouse, and

(D) which are not reimbursed under an employer program or

otherwise.

(2) Eligible child

The term "eligible child" means any individual who -

(A) has not attained age 18, or

(B) is physically or mentally incapable of caring for

himself.

(3) Child with special needs

The term "child with special needs" means any child if -

(A) a State has determined that the child cannot or should

not be returned to the home of his parents,

(B) such State has determined that there exists with respect

to the child a specific factor or condition (such as his ethnic

background, age, or membership in a minority or sibling group,

or the presence of factors such as medical conditions or

physical, mental, or emotional handicaps) because of which it

is reasonable to conclude that such child cannot be placed with

adoptive parents without providing adoption assistance, and

(C) such child is a citizen or resident of the United States

(as defined in section 217(h)(3)).

(e) Special rules for foreign adoptions

In the case of an adoption of a child who is not a citizen or

resident of the United States (as defined in section 217(h)(3)) -

(1) subsection (a) shall not apply to any qualified adoption

expense with respect to such adoption unless such adoption

becomes final, and

(2) any such expense which is paid or incurred before the

taxable year in which such adoption becomes final shall be taken

into account under this section as if such expense were paid or

incurred during such year.

(f) Filing requirements

(1) Married couples must file joint returns

Rules similar to the rules of paragraphs (2), (3), and (4) of

section 21(e) shall apply for purposes of this section.

(2) Taxpayer must include TIN

(A) In general

No credit shall be allowed under this section with respect to

any eligible child unless the taxpayer includes (if known) the

name, age, and TIN of such child on the return of tax for the

taxable year.

(B) Other methods

The Secretary may, in lieu of the information referred to in

subparagraph (A), require other information meeting the

purposes of subparagraph (A), including identification of an

agent assisting with the adoption.

(g) Basis adjustments

For purposes of this subtitle, if a credit is allowed under this

section for any expenditure with respect to any property, the

increase in the basis of such property which would (but for this

subsection) result from such expenditure shall be reduced by the

amount of the credit so allowed.

(h) Adjustments for inflation

In the case of a taxable year beginning after December 31, 2002,

each of the dollar amounts in subsection (a)(3) and paragraphs (1)

and (2)(A)(i) of subsection (b) shall be increased by an amount

equal to -

(1) such dollar amount, multiplied by

(2) the cost-of-living adjustment determined under section

1(f)(3) for the calendar year in which the taxable year begins,

determined by substituting "calendar year 2001" for "calendar

year 1992" in subparagraph (B) thereof.

If any amount as increased under the preceding sentence is not a

multiple of $10, such amount shall be rounded to the nearest

multiple of $10.

(i) Regulations

The Secretary shall prescribe such regulations as may be

appropriate to carry out this section and section 137, including

regulations which treat unmarried individuals who pay or incur

qualified adoption expenses with respect to the same child as 1

taxpayer for purposes of applying the dollar amounts in subsections

(a)(3) and (b)(1) of this section and in section 137(b)(1).

-SOURCE-

(Added Pub. L. 104-188, title I, Sec. 1807(a), Aug. 20, 1996, 110

Stat. 1899; amended Pub. L. 105-34, title XVI, Sec. 1601(h)(2)(A),

(B), Aug. 5, 1997, 111 Stat. 1092; Pub. L. 105-206, title VI, Secs.

6008(d)(6), 6018(f)(1), July 22, 1998, 112 Stat. 812, 823; Pub. L.

107-16, title II, Secs. 201(b)(2)(E), 202(a)(1), (b)(1)(A), (2)(A),

(c), (d)(1), (e)(1), (f)(1), (2)(A), June 7, 2001, 115 Stat. 46-49;

Pub. L. 107-147, title IV, Secs. 411(c)(1)(A)-(E), 418(a)(1), Mar.

9, 2002, 116 Stat. 45, 57.)

-STATAMEND-

ADOPTION EXPENSES CREDIT ADJUSTMENT FOR TAX YEARS BEGINNING IN 2003

For inflation adjustment of maximum credit allowed in subsection

(a)(3) of this section for an adoption of a child with special

needs, maximum credit allowed in subsection (b)(1) of this section

for other adoptions, and the income limits for phaseout of adoption

credit in subsection (b)(2)(A) of this section, see section 3.03 of

Revenue Procedure 2002-70, set out as a note under section 1 of

this title.

AMENDMENT OF SECTION

For termination of amendment by section 901 of Pub. L. 107-16,

see Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

PRIOR PROVISIONS

A prior section 23, added Pub. L. 95-618, title I, Sec. 101(a),

Nov. 9, 1978, 92 Stat. 3175, Sec. 44C; amended Pub. L. 96-223,

title II, Secs. 201, 202(a)-(d), 203(a), Apr. 2, 1980, 94 Stat.

256, 258; renumbered Sec. 23 and amended Pub. L. 98-369, div. A,

title IV, Secs. 471(c), 474(e), title VI, Sec. 612(e)(2), July 18,

1984, 98 Stat. 826, 831, 912, related to residential energy credit,

prior to repeal by Pub. L. 101-508, title XI, Sec. 11801(a)(1),

Nov. 5, 1990, 104 Stat. 1388-520.

AMENDMENTS

2002 - Subsec. (a)(1). Pub. L. 107-147, Sec. 411(c)(1)(A),

reenacted heading without change and amended text of par. (1)

generally. Prior to amendment, text read as follows: "In the case

of an individual, there shall be allowed as a credit against the

tax imposed by this chapter -

"(A) in the case of an adoption of a child other than a child

with special needs, the amount of the qualified adoption expenses

paid or incurred by the taxpayer, and

"(B) in the case of an adoption of a child with special needs,

$10,000."

Subsec. (a)(2). Pub. L. 107-147, Sec. 411(c)(1)(C), struck out

concluding provisions which read as follows: "In the case of the

adoption of a child with special needs, the credit allowed under

paragraph (1) shall be allowed for the taxable year in which the

adoption becomes final."

Subsec. (a)(3). Pub. L. 107-147, Sec. 411(c)(1)(B), added par.

(3).

Subsec. (b)(1). Pub. L. 107-147, Sec. 411(c)(1)(D), substituted

"subsection (a)" for "subsection (a)(1)(A)".

Subsec. (h). Pub. L. 107-147, Sec. 418(a)(1), substituted

"subsection (a)(3)" for "subsection (a)(1)(B)" in introductory

provisions and inserted concluding provisions.

Subsec. (i). Pub. L. 107-147, Sec. 411(c)(1)(E), substituted "the

dollar amounts in subsections (a)(3) and (b)(1)" for "the dollar

limitation in subsection (b)(1)".

2001 - Subsec. (a)(1). Pub. L. 107-16, Secs. 202(a)(1), 901,

temporarily amended heading and text of par. (1) generally. Prior

to amendment, text read as follows: "In the case of an individual,

there shall be allowed as a credit against the tax imposed by this

chapter the amount of the qualified adoption expenses paid or

incurred by the taxpayer." See Effective and Termination Dates of

2001 Amendment note below.

Subsec. (a)(2). Pub. L. 107-16, Secs. 202(c), 901, temporarily

inserted concluding provisions. See Effective and Termination Dates

of 2001 Amendment note below.

Subsec. (b)(1). Pub. L. 107-16, Secs. 202(b)(1)(A), 901,

temporarily substituted "subsection (a)(1)(A)" for "subsection (a)"

and "$10,000" for "$5,000" and struck out "($6,000, in the case of

a child with special needs)" before period at end. See Effective

and Termination Dates of 2001 Amendment note below.

Subsec. (b)(2)(A)(i). Pub. L. 107-16, Secs. 202(b)(2)(A), 901,

temporarily substituted "$150,000" for "$75,000". See Effective and

Termination Dates of 2001 Amendment note below.

Subsec. (b)(4). Pub. L. 107-16, Secs. 202(f)(1), 901, temporarily

added par. (4). See Effective and Termination Dates of 2001

Amendment note below.

Subsec. (c). Pub. L. 107-16, Secs. 202(f)(2)(A), 901, temporarily

substituted "subsection (b)(4)" for "section 26(a)" and struck out

"reduced by the sum of the credits allowable under this subpart

(other than this section and sections 24 and 1400C)" before ", such

excess". See Effective and Termination Dates of 2001 Amendment note

below.

Pub. L. 107-16, Secs. 201(b)(2)(E), 901, temporarily substituted

"and sections 24 and 1400C" for "and section 1400C". See Effective

and Termination Dates of 2001 Amendment note below.

Subsec. (d)(2). Pub. L. 107-16, Secs. 202(d)(1), 901, temporarily

amended heading and text of par. (2) generally. Prior to amendment,

text read as follows: "The term 'eligible child' means any

individual -

"(A) who -

"(i) has not attained age 18, or

"(ii) is physically or mentally incapable of caring for

himself, and

"(B) in the case of qualified adoption expenses paid or

incurred after December 31, 2001, who is a child with special

needs."

See Effective and Termination Dates of 2001 Amendment note below.

Subsecs. (h), (i). Pub. L. 107-16, Secs. 202(e)(1), 901,

temporarily added subsec. (h) and redesignated former subsec. (h)

as (i). See Effective and Termination Dates of 2001 Amendment note

below.

1998 - Subsec. (b)(2)(A). Pub. L. 105-206, Sec. 6018(f)(1),

inserted "(determined without regard to subsection (c))" after "for

any taxable year" in introductory provisions.

Subsec. (c). Pub. L. 105-206, Sec. 6008(d)(6), inserted "and

section 1400C" after "other than this section".

1997 - Subsec. (a)(2). Pub. L. 105-34, Sec. 1601(h)(2)(A),

amended heading and text of par. (2) generally. Prior to amendment,

text read as follows: "The credit under paragraph (1) with respect

to any expense shall be allowed -

"(A) for the taxable year following the taxable year during

which such expense is paid or incurred, or

"(B) in the case of an expense which is paid or incurred during

the taxable year in which the adoption becomes final, for such

taxable year."

Subsec. (b)(2)(B). Pub. L. 105-34, Sec. 1601(h)(2)(B),

substituted "determined without regard to sections 911, 931, and

933." for "determined -

"(i) without regard to sections 911, 931, and 933, and

"(ii) after the application of sections 86, 135, 137, 219, and

469."

EFFECTIVE DATE OF 2002 AMENDMENT

Pub. L. 107-147, title IV, Sec. 411(c)(3), Mar. 9, 2002, 116

Stat. 46, provided that: "The amendments made by this subsection

[amending this section and section 137 of this title] shall apply

to taxable years beginning after December 31, 2002; except that the

amendments made by paragraphs (1)(C), (1)(D) [amending this

section], and (2)(B) [amending section 137 of this title] shall

apply to taxable years beginning after December 31, 2001."

Amendment by section 418(a)(1) of Pub. L. 107-147 effective as if

included in the provisions of the Economic Growth and Tax Relief

Reconciliation Act of 2001, Pub. L. 107-16, to which such amendment

relates, see section 418(c) of Pub. L. 107-147, set out as a note

under section 21 of this title.

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Pub. L. 107-147, title VI, Sec. 601(b)(2), Mar. 9, 2002, 116

Stat. 59, provided that: "The amendments made by sections 201(b),

202(f), and 618(b) of the Economic Growth and Tax Relief

Reconciliation Act of 2001 [Pub. L. 107-16, amending this section

and sections 24, 25, 25B, 26, 904, and 1400C of this title] shall

not apply to taxable years beginning during 2002 and 2003."

Amendment by section 201(b)(2)(E) of Pub. L. 107-16 applicable to

taxable years beginning after Dec. 31, 2001, see section 201(e)(2)

of Pub. L. 107-16, set out as a note under section 24 of this

title.

Pub. L. 107-16, title II, Sec. 202(g), June 7, 2001, 115 Stat.

49, provided that:

"(1) In general. - Except as provided in paragraph (2), the

amendments made by this section [amending this section and sections

24, 26, 137, 904, and 1400C of this title] shall apply to taxable

years beginning after December 31, 2001.

"(2) Subsection (a). - The amendments made by subsection (a)

[amending this section and section 137 of this title] shall apply

to taxable years beginning after December 31, 2002."

Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or

limitation years beginning after Dec. 31, 2010, and the Internal

Revenue Code of 1986 to be applied and administered to such years

as if such amendment had never been enacted, see section 901 of

Pub. L. 107-16, set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1998 AMENDMENT

Pub. L. 105-206, title VI, Sec. 6018(h), July 22, 1998, 112 Stat.

823, provided that: "The amendments made by this section [amending

this section and sections 219, 408, 414, and 679 of this title and

amending provisions set out as notes under sections 167 and 4091 of

this title] shall take effect as if included in the provisions of

the Small Business Job Protection Act of 1996 [Pub. L. 104-188] to

which they relate."

Amendment by section 6008(d)(6) of Pub. L. 105-206 effective,

except as otherwise provided, as if included in the provisions of

the Taxpayer Relief Act of 1997, Pub. L. 105-34, to which such

amendment relates, see section 6024 of Pub. L. 105-206, set out as

a note under section 1 of this title.

EFFECTIVE DATE OF 1997 AMENDMENT

Section 1601(j) of Pub. L. 105-34 provided that:

"(1) In general. - Except as provided in paragraph (2), the

amendments made by this section [amending this section, sections

30A, 52, 55, 137, 401, 403, 404, 408, 414, 512, 529, 593, 641, 679,

860L, 956, 1361, 1374, 4001, 4041, 4092, 4261, 6039D, 6048, 6050R,

6501, 6693, 7701, and 9503 of this title, section 1055 of Title 29,

Labor, and provisions set out as notes under sections 529 and 4091

of this title] shall take effect as if included in the provisions

of the Small Business Job Protection Act of 1996 [Pub. L. 104-188]

to which they relate.

"(2) Certain administrative requirements with respect to certain

pension plans. - The amendment made by subsection (d)(2)(D)

[amending section 401 of this title] shall apply to calendar years

beginning after the date of the enactment of this Act [Aug. 5,

1997]."

EFFECTIVE DATE

Section 1807(e) of Pub. L. 104-188 provided that: "The amendments

made by this section [enacting this section and section 137 of this

title, renumbering former section 137 of this title as section 138,

and amending sections 25, 86, 135, 219, 469, and 1016 of this

title] shall apply to taxable years beginning after December 31,

1996."

EXPENSES PAID OR INCURRED BEFORE 2002

Pub. L. 107-147, title IV, Sec. 411(c)(1)(F), Mar. 9, 2002, 116

Stat. 45, provided that: "Expenses paid or incurred during any

taxable year beginning before January 1, 2002, may be taken into

account in determining the credit under section 23 of the Internal

Revenue Code of 1986 only to the extent the aggregate of such

expenses does not exceed the applicable limitation under section

23(b)(1) of such Code as in effect on the day before the date of

the enactment of the Economic Growth and Tax Relief Reconciliation

Act of 2001 [June 7, 2001]."

TAX CREDIT AND GROSS INCOME EXCLUSION STUDY AND REPORT

Section 1807(d) of Pub. L. 104-188 provided that: "The Secretary

of the Treasury shall study the effect on adoptions of the tax

credit and gross income exclusion established by the amendments

made by this section [enacting this section and section 137 of this

title, renumbering former section 137 of this title as section 138,

and amending sections 25, 86, 135, 219, 469, and 1016 of this

title] and shall submit a report regarding the study to the

Committee on Finance of the Senate and the Committee on Ways and

Means of the House of Representatives not later than January 1,

2000."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 24, 25, 25B, 26, 137,

904, 1016, 1400C of this title.

-End-

-CITE-

26 USC Sec. 24 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart A - Nonrefundable Personal Credits

-HEAD-

Sec. 24. Child tax credit

-STATUTE-

(a) Allowance of credit

(1) In general

There shall be allowed as a credit against the tax imposed by

this chapter for the taxable year with respect to each qualifying

child of the taxpayer an amount equal to the per child amount.

(2) Per child amount

For purposes of paragraph (1), the per child amount shall be

determined as follows:

In the case of any taxable year 2The per child

beginning in - amount is -

--------------------------------------------------------------------

2001, 2002, 2003, or 2004 $ 600

2005, 2006, 2007, or 2008 700

2009 800

2010 or thereafter 1,000.

--------------------------------------------------------------------

(b) Limitations

(1) Limitation based on adjusted gross income

The amount of the credit allowable under subsection (a) shall

be reduced (but not below zero) by $50 for each $1,000 (or

fraction thereof) by which the taxpayer's modified adjusted gross

income exceeds the threshold amount. For purposes of the

preceding sentence, the term "modified adjusted gross income"

means adjusted gross income increased by any amount excluded from

gross income under section 911, 931, or 933.

(2) Threshold amount

For purposes of paragraph (1), the term "threshold amount"

means -

(A) $110,000 in the case of a joint return,

(B) $75,000 in the case of an individual who is not married,

and

(C) $55,000 in the case of a married individual filing a

separate return.

For purposes of this paragraph, marital status shall be

determined under section 7703.

(3) Limitation based on amount of tax

The credit allowed under subsection (a) for any taxable year

shall not exceed the excess of -

(A) the sum of the regular tax liability (as defined in

section 26(b)) plus the tax imposed by section 55, over

(B) the sum of the credits allowable under this subpart

(other than this section and sections 23 and 25B) and section

27 for the taxable year.

(c) Qualifying child

For purposes of this section -

(1) In general

The term "qualifying child" means any individual if -

(A) the taxpayer is allowed a deduction under section 151

with respect to such individual for the taxable year,

(B) such individual has not attained the age of 17 as of the

close of the calendar year in which the taxable year of the

taxpayer begins, and

(C) such individual bears a relationship to the taxpayer

described in section 32(c)(3)(B).

(2) Exception for certain noncitizens

The term "qualifying child" shall not include any individual

who would not be a dependent if the first sentence of section

152(b)(3) were applied without regard to all that follows

"resident of the United States".

(d) Portion of credit refundable

(1) In general

The aggregate credits allowed to a taxpayer under subpart C

shall be increased by the lesser of -

(A) the credit which would be allowed under this section

without regard to this subsection and the limitation under

subsection (b)(3), or

(B) the amount by which the amount of credit allowed by this

section (determined without regard to this subsection) would

increase if the limitation imposed by subsection (b)(3) were

increased by the greater of -

(i) 15 percent (10 percent in the case of taxable years

beginning before January 1, 2005) of so much of the

taxpayer's earned income (within the meaning of section 32)

which is taken into account in computing taxable income for

the taxable year as exceeds $10,000, or

(ii) in the case of a taxpayer with 3 or more qualifying

children, the excess (if any) of -

(I) the taxpayer's social security taxes for the taxable

year, over

(II) the credit allowed under section 32 for the taxable

year.

The amount of the credit allowed under this subsection shall not

be treated as a credit allowed under this subpart and shall

reduce the amount of credit otherwise allowable under subsection

(a) without regard to subsection (b)(3).

(2) Social security taxes

For purposes of paragraph (1) -

(A) In general

The term "social security taxes" means, with respect to any

taxpayer for any taxable year -

(i) the amount of the taxes imposed by sections 3101 and

3201(a) on amounts received by the taxpayer during the

calendar year in which the taxable year begins,

(ii) 50 percent of the taxes imposed by section 1401 on the

self-employment income of the taxpayer for the taxable year,

and

(iii) 50 percent of the taxes imposed by section 3211(a) on

amounts received by the taxpayer during the calendar year in

which the taxable year begins.

(B) Coordination with special refund of social security taxes

The term "social security taxes" shall not include any taxes

to the extent the taxpayer is entitled to a special refund of

such taxes under section 6413(c).

(C) Special rule

Any amounts paid pursuant to an agreement under section

3121(l) (relating to agreements entered into by American

employers with respect to foreign affiliates) which are

equivalent to the taxes referred to in subparagraph (A)(i)

shall be treated as taxes referred to in such subparagraph.

(3) Inflation adjustment

In the case of any taxable year beginning in a calendar year

after 2001, the $10,000 amount contained in paragraph (1)(B)

shall be increased by an amount equal to -

(A) such dollar amount, multiplied by

(B) the cost-of-living adjustment determined under section

1(f)(3) for the calendar year in which the taxable year begins,

determined by substituting "calendar year 2000" for "calendar

year 1992" in subparagraph (B) thereof.

Any increase determined under the preceding sentence shall be

rounded to the nearest multiple of $50.

(e) Identification requirement

No credit shall be allowed under this section to a taxpayer with

respect to any qualifying child unless the taxpayer includes the

name and taxpayer identification number of such qualifying child on

the return of tax for the taxable year.

(f) Taxable year must be full taxable year

Except in the case of a taxable year closed by reason of the

death of the taxpayer, no credit shall be allowable under this

section in the case of a taxable year covering a period of less

than 12 months.

-SOURCE-

(Added Pub. L. 105-34, title I, Sec. 101(a), Aug. 5, 1997, 111

Stat. 796; amended Pub. L. 105-206, title VI, Sec. 6003(a), July

22, 1998, 112 Stat. 790; Pub. L. 105-277, div. J, title II, Sec.

2001(b), Oct. 21, 1998, 112 Stat. 2681-901; Pub. L. 106-170, title

V, Sec. 501(b)(1), Dec. 17, 1999, 113 Stat. 1919; Pub. L. 107-16,

title II, Secs. 201(a)-(b)(2)(C), (c)(1), (2), (d), 202(f)(2)(B),

title VI, Sec. 618(b)(2)(A), June 7, 2001, 115 Stat. 45-47, 49,

108; Pub. L. 107-90, title II, Sec. 204(e)(1), Dec. 21, 2001, 115

Stat. 893; Pub. L. 107-147, title IV, Secs. 411(b), 417(23)(A),

Mar. 9, 2002, 116 Stat. 45, 57.)

-STATAMEND-

CHILD TAX CREDIT ADJUSTMENT FOR TAXABLE YEARS BEGINNING IN 2003

For inflation adjustment of value in subsection (d)(1)(B)(i) of

this section used in determining refundable amount for taxable

years beginning in 2003, see section 3.04 of Revenue Procedure

2002-70, set out as a note under section 1 of this title.

AMENDMENT OF SECTION

For termination of amendment by section 901 of Pub. L. 107-16,

see Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

PRIOR PROVISIONS

A prior section 24, added Pub. L. 92-178, title VII, Sec. 701(a),

Dec. 10, 1971, 85 Stat. 560, Sec. 41; amended Pub. L. 93-625, Secs.

11(a)-(c), (e), 12(a), Jan. 3, 1975, 88 Stat. 2119, 2120; Pub. L.

94-455, title V, Sec. 503(b)(4), title XIX, Secs. 1901(b)(1)(B),

(H)(ii), 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1562, 1790, 1791,

1834; Pub. L. 95-600, title I, Sec. 113(c), Nov. 6, 1978, 92 Stat.

2778; Pub. L. 97-473, title II, Sec. 202(b)(1), Jan. 14, 1983, 96

Stat. 2609; Pub. L. 98-21, title I, Sec. 122(c)(1), Apr. 20, 1983,

97 Stat. 87; renumbered Sec. 24 and amended Pub. L. 98-369, div. A,

title IV, Secs. 471(c), 474(f), July 18, 1984, 98 Stat. 826, 831,

related to contributions to candidates for public office, prior to

repeal by Pub. L. 99-514, title I, Secs. 112(a), 151(a), Oct. 22,

1986, 100 Stat. 2108, 2121, applicable to taxable years beginning

after Dec. 31, 1986.

AMENDMENTS

2002 - Subsec. (b)(3)(B). Pub. L. 107-147, Sec. 417(23)(A),

amended directory language of Pub. L. 107-16, Sec. 618(b)(2)(A).

See 2001 Amendment note below.

Subsec. (d)(1)(B). Pub. L. 107-147, Sec. 411(b), substituted

"aggregate amount of credits allowed by this subpart" for "amount

of credit allowed by this section" in introductory provisions.

2001 - Subsec. (a). Pub. L. 107-16, Secs. 201(a), 901,

temporarily amended heading and text of subsec. (a) generally.

Prior to amendment, text read as follows: "There shall be allowed

as a credit against the tax imposed by this chapter for the taxable

year with respect to each qualifying child of the taxpayer an

amount equal to $500 ($400 in the case of taxable years beginning

in 1998)." See Effective and Termination Dates of 2001 Amendment

note below.

Subsec. (b). Pub. L. 107-16, Secs. 201(b)(2)(A), 901, temporarily

amended heading generally, substituting "Limitations" for

"Limitation based on adjusted gross income". See Effective and

Termination Dates of 2001 Amendment note below.

Subsec. (b)(1). Pub. L. 107-16, Secs. 201(b)(2)(B), 901,

temporarily amended heading generally, substituting "Limitation

based on adjusted gross income" for "In general". See Effective and

Termination Dates of 2001 Amendment note below.

Subsec. (b)(3). Pub. L. 107-16, Secs. 201(b)(1), 901, temporarily

added par. (3). See Effective and Termination Dates of 2001

Amendment note below.

Subsec. (b)(3)(B). Pub. L. 107-16, Secs. 618(b)(2)(A), 901, as

amended by Pub. L. 107-147, Sec. 417(23)(A), temporarily

substituted "sections 23 and 25B" for "section 23". See Effective

and Termination Dates of 2001 Amendment note below.

Pub. L. 107-16, Secs. 202(f)(2)(B), 901, temporarily substituted

"this section and section 23" for "this section". See Effective and

Termination Dates of 2001 Amendment note below.

Subsec. (d). Pub. L. 107-16, Secs. 201(c)(1), 901, temporarily

amended subsec. heading and heading and text of par. (1) generally.

Prior to amendment, text read as follows: "In the case of a

taxpayer with three or more qualifying children for any taxable

year, the aggregate credits allowed under subpart C shall be

increased by the lesser of -

"(A) the credit which would be allowed under this section

without regard to this subsection and the limitation under

section 26(a); or

"(B) the amount by which the aggregate amount of credits

allowed by this subpart (without regard to this subsection) would

increase if the limitation imposed by section 26(a) were

increased by the excess (if any) of -

"(i) the taxpayer's Social Security taxes for the taxable

year, over

"(ii) the credit allowed under section 32 (determined without

regard to subsection (n)) for the taxable year.

The amount of the credit allowed under this subsection shall not be

treated as a credit allowed under this subpart and shall reduce the

amount of credit otherwise allowable under subsection (a) without

regard to section 26(a)."

See Effective and Termination Dates of 2001 Amendment note below.

Subsec. (d)(1). Pub. L. 107-16, Secs. 201(b)(2)(C)(i), 901,

temporarily substituted "subsection (b)(3)" for "section 26(a)"

wherever appearing in subsec. (d), as amended by Pub. L. 107-16,

Sec. 201(c). See Effective and Termination Dates of 2001 Amendment

note below.

Subsec. (d)(1)(B). Pub. L. 107-16, Secs. 201(b)(2)(C)(ii), 901,

substituted "amount of credit allowed by this section" for

"aggregate amount of credits allowed by this subpart" in subpar.

(B) as amended by Pub. L. 107-16, Sec. 201(c). See Effective and

Termination Dates of 2001 Amendment note below.

Subsec. (d)(2). Pub. L. 107-16, Secs. 201(d), 901, temporarily

redesignated par. (3) as (2) and struck out heading and text of

former par. (2). Text read as follows: "For taxable years beginning

after December 31, 2001, the credit determined under this

subsection for the taxable year shall be reduced by the excess (if

any) of -

"(A) the amount of tax imposed by section 55 (relating to

alternative minimum tax) with respect to such taxpayer for such

taxable year, over

"(B) the amount of the reduction under section 32(h) with

respect to such taxpayer for such taxable year."

See Effective and Termination Dates of 2001 Amendment note below.

Subsec. (d)(2)(A)(iii). Pub. L. 107-90, which directed the

amendment of par. (3)(A)(iii) by substituting "section 3211(a)" for

"section 3211(a)(1)", was executed to par. (2)(A)(iii), to reflect

the probable intent of Congress and the redesignation of par. (3)

as (2) by Pub. L. 107-16, Sec. 201(d)(2). See above.

Subsec. (d)(3). Pub. L. 107-16, Secs. 201(d)(2), 901, temporarily

redesignated par. (4) as (3). Former par. (3) temporarily

redesignated (2). See Effective and Termination Dates of 2001

Amendment note below.

Subsec. (d)(4). Pub. L. 107-16, Secs. 201(c)(2), 901, temporarily

added par. (4). Former par. (4) temporarily redesignated (3). See

Effective and Termination Dates of 2001 Amendment note below.

1999 - Subsec. (d)(2). Pub. L. 106-170 substituted "2001" for

"1998" in introductory provisions.

1998 - Subsec. (d)(1). Pub. L. 105-206, Sec. 6003(a)(1)(C), added

par. (1) and struck out heading and text of former par. (1). Text

read as follows: "In the case of a taxpayer with 3 or more

qualifying children for any taxable year, the amount of the credit

allowed under this section shall be equal to the greater of -

"(A) the amount of the credit allowed under this section

(without regard to this subsection and after application of the

limitation under section 26), or

"(B) the alternative credit amount determined under paragraph

(2)."

Subsec. (d)(2). Pub. L. 105-277 substituted "For taxable years

beginning after December 31, 1998, the credit" for "The credit".

Pub. L. 105-206, Sec. 6003(a)(1)(C), added par. (2) and struck

out heading and text of former par. (2). Text read as follows: "For

purposes of this subsection, the alternative credit amount is the

amount of the credit which would be allowed under this section if

the limitation under paragraph (3) were applied in lieu of the

limitation under section 26."

Subsec. (d)(3). Pub. L. 105-206, Sec. 6003(a)(1)(A), (B), (2),

redesignated par. (5) as (3), substituted "paragraph (1)" for

"paragraph (3)" in introductory provisions, and struck out heading

and text of former par. (3). Text read as follows: "The limitation

under this paragraph for any taxable year is the limitation under

section 26 (without regard to this subsection) -

"(A) increased by the taxpayer's social security taxes for such

taxable year, and

"(B) reduced by the sum of -

"(i) the credits allowed under this part other than under

subpart C or this section, and

"(ii) the credit allowed under section 32 without regard to

subsection (m) thereof."

Subsec. (d)(4). Pub. L. 105-206, Sec. 6003(a)(1)(A), struck out

heading and text of par. (4). Text read as follows: "If the amount

of the credit under paragraph (1)(B) exceeds the amount of the

credit under paragraph (1)(A), such excess shall be treated as a

credit to which subpart C applies. The rule of section 32(h) shall

apply to such excess."

Subsec. (d)(5). Pub. L. 105-206, Sec. 6003(a)(1)(B), redesignated

par. (5) as (3).

EFFECTIVE DATE OF 2002 AMENDMENT

Amendment by section 411(b) of Pub. L. 107-147 effective as if

included in the provisions of the Economic Growth and Tax Relief

Reconciliation Act of 2001, Pub. L. 107-16, to which such amendment

relates, see section 411(x) of Pub. L. 107-147, set out as a note

under section 25B of this title.

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENTS

Amendment by sections 201(b), 202(f), and 618(b) of Pub. L.

107-16 inapplicable to taxable years beginning during 2002 and

2003, see section 601(b)(2) of Pub. L. 107-147, set out as a note

under section 23 of this title.

Pub. L. 107-90, title II, Sec. 204(f), Dec. 21, 2001, 115 Stat.

893, provided that: "The amendments made by this section [enacting

subchapter E of chapter 22 of this title and amending this section

and sections 72, 3201, 3211, 3221, and 3231 of this title] shall

apply to calendar years beginning after December 31, 2001."

Pub. L. 107-16, title II, Sec. 201(e), June 7, 2001, 115 Stat.

47, provided that:

"(1) In general. - Except as provided in paragraph (2), the

amendments made by this section [amending this section and sections

23, 25, 26, 32, 904, and 1400C of this title] shall apply to

taxable years beginning after December 31, 2000.

"(2) Subsection (b). - The amendments made by subsection (b)

[amending this section and sections 23, 25, 26, 904, and 1400C of

this title] shall apply to taxable years beginning after December

31, 2001."

Amendment by section 202(f)(2)(B) of Pub. L. 107-16 applicable to

taxable years beginning after Dec. 31, 2001, see section 202(g)(1)

of Pub. L. 107-16, set out as a note under section 23 of this

title.

Pub. L. 107-16, title VI, Sec. 618(d), June 7, 2001, 115 Stat.

108, provided that: "The amendments made by this section [enacting

section 25B of this title and amending this section and sections

25, 25B, 26, 904, and 1400C of this title] shall apply to taxable

years beginning after December 31, 2001."

Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or

limitation years beginning after Dec. 31, 2010, and the Internal

Revenue Code of 1986 to be applied and administered to such years

as if such amendment had never been enacted, see section 901 of

Pub. L. 107-16, set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1999 AMENDMENT

Pub. L. 106-170, title V, Sec. 501(c), Dec. 17, 1999, 113 Stat.

1919, provided that: "The amendments made by this section [amending

this section and sections 26 and 904 of this title] shall apply to

taxable years beginning after December 31, 1998."

EFFECTIVE DATE OF 1998 AMENDMENTS

Pub. L. 105-277, div. J, title II, Sec. 2001(c), Oct. 21, 1998,

112 Stat. 2681-901, provided that: "The amendments made by this

section [amending this section and section 26 of this title] shall

apply to taxable years beginning after December 31, 1997."

Amendment by Pub. L. 105-206 effective, except as otherwise

provided, as if included in the provisions of the Taxpayer Relief

Act of 1997, Pub. L. 105-34, to which such amendment relates, see

section 6024 of Pub. L. 105-206, set out as a note under section 1

of this title.

EFFECTIVE DATE

Section 101(e) of Pub. L. 105-34 provided that: "The amendments

made by this section [enacting this section and amending sections

32, 501, and 6213 of this title and section 1324 of Title 31, Money

and Finance] shall apply to taxable years beginning after December

31, 1997."

REFUNDS DISREGARDED IN ADMINISTRATION OF FEDERAL AND FEDERALLY

ASSISTED PROGRAMS

Pub. L. 107-16, title II, Sec. 203, June 7, 2001, 115 Stat. 49,

provided that: "Any payment considered to have been made to any

individual by reason of section 24 of the Internal Revenue Code of

1986, as amended by section 201, shall not be taken into account as

income and shall not be taken into account as resources for the

month of receipt and the following month, for purposes of

determining the eligibility of such individual or any other

individual for benefits or assistance, or the amount or extent of

benefits or assistance, under any Federal program or under any

State or local program financed in whole or in part with Federal

funds."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 25, 26, 32, 151, 501,

904, 1400C, 6211, 6213 of this title.

-End-

-CITE-

26 USC Sec. 25 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart A - Nonrefundable Personal Credits

-HEAD-

Sec. 25. Interest on certain home mortgages

-STATUTE-

(a) Allowance of credit

(1) In general

There shall be allowed as a credit against the tax imposed by

this chapter for the taxable year an amount equal to the product

of -

(A) the certificate credit rate, and

(B) the interest paid or accrued by the taxpayer during the

taxable year on the remaining principal of the certified

indebtedness amount.

(2) Limitation where credit rate exceeds 20 percent

(A) In general

If the certificate credit rate exceeds 20 percent, the amount

of the credit allowed to the taxpayer under paragraph (1) for

any taxable year shall not exceed $2,000.

(B) Special rule where 2 or more persons hold interests in

residence

If 2 or more persons hold interests in any residence, the

limitation of subparagraph (A) shall be allocated among such

persons in proportion to their respective interests in the

residence.

(b) Certificate credit rate; certified indebtedness amount

For purposes of this section -

(1) Certificate credit rate

The term "certificate credit rate" means the rate of the credit

allowable by this section which is specified in the mortgage

credit certificate.

(2) Certified indebtedness amount

The term "certified indebtedness amount" means the amount of

indebtedness which is -

(A) incurred by the taxpayer -

(i) to acquire the principal residence of the taxpayer,

(ii) as a qualified home improvement loan (as defined in

section 143(k)(4)) with respect to such residence, or

(iii) as a qualified rehabilitation loan (as defined in

section 143(k)(5)) with respect to such residence, and

(B) specified in the mortgage credit certificate.

(c) Mortgage credit certificate; qualified mortgage credit

certificate program

For purposes of this section -

(1) Mortgage credit certificate

The term "mortgage credit certificate" means any certificate

which -

(A) is issued under a qualified mortgage credit certificate

program by the State or political subdivision having the

authority to issue a qualified mortgage bond to provide

financing on the principal residence of the taxpayer,

(B) is issued to the taxpayer in connection with the

acquisition, qualified rehabilitation, or qualified home

improvement of the taxpayer's principal residence,

(C) specifies -

(i) the certificate credit rate, and

(ii) the certified indebtedness amount, and

(D) is in such form as the Secretary may prescribe.

(2) Qualified mortgage credit certificate program

(A) In general

The term "qualified mortgage credit certificate program"

means any program -

(i) which is established by a State or political

subdivision thereof for any calendar year for which it is

authorized to issue qualified mortgage bonds,

(ii) under which the issuing authority elects (in such

manner and form as the Secretary may prescribe) not to issue

an amount of private activity bonds which it may otherwise

issue during such calendar year under section 146,

(iii) under which the indebtedness certified by mortgage

credit certificates meets the requirements of the following

subsections of section 143 (as modified by subparagraph (B)

of this paragraph):

(I) subsection (c) (relating to residence requirements),

(II) subsection (d) (relating to 3-year requirement),

(III) subsection (e) (relating to purchase price

requirement),

(IV) subsection (f) (relating to income requirements),

(V) subsection (h) (relating to portion of loans required

to be placed in targeted areas), and

(VI) paragraph (1) of subsection (i) (relating to other

requirements),

(iv) under which no mortgage credit certificate may be

issued with respect to any residence any of the financing of

which is provided from the proceeds of a qualified mortgage

bond or a qualified veterans' mortgage bond,

(v) except to the extent provided in regulations, which is

not limited to indebtedness incurred from particular lenders,

(vi) except to the extent provided in regulations, which

provides that a mortgage credit certificate is not

transferrable, and

(vii) if the issuing authority allocates a block of

mortgage credit certificates for use in connection with a

particular development, which requires the developer to

furnish to the issuing authority and the homebuyer a

certificate that the price for the residence is no higher

than it would be without the use of a mortgage credit

certificate.

Under regulations, rules similar to the rules of subparagraphs

(B) and (C) of section 143(a)(2) shall apply to the

requirements of this subparagraph.

(B) Modifications of section 143

Under regulations prescribed by the Secretary, in applying

section 143 for purposes of subclauses (II), (IV), and (V) of

subparagraph (A)(iii) -

(i) each qualified mortgage certificate credit program

shall be treated as a separate issue,

(ii) the product determined by multiplying -

(I) the certified indebtedness amount of each mortgage

credit certificate issued under such program, by

(II) the certificate credit rate specified in such

certificate,

shall be treated as proceeds of such issue and the sum of

such products shall be treated as the total proceeds of such

issue, and

(iii) paragraph (1) of section 143(d) shall be applied by

substituting "100 percent" for "95 percent or more".

Clause (iii) shall not apply if the issuing authority submits a

plan to the Secretary for administering the 95-percent

requirement of section 143(d)(1) and the Secretary is satisfied

that such requirement will be met under such plan.

(d) Determination of certificate credit rate

For purposes of this section -

(1) In general

The certificate credit rate specified in any mortgage credit

certificate shall not be less than 10 percent or more than 50

percent.

(2) Aggregate limit on certificate credit rates

(A) In general

In the case of each qualified mortgage credit certificate

program, the sum of the products determined by multiplying -

(i) the certified indebtedness amount of each mortgage

credit certificate issued under such program, by

(ii) the certificate credit rate with respect to such

certificate,

shall not exceed 25 percent of the nonissued bond amount.

(B) Nonissued bond amount

For purposes of subparagraph (A), the term "nonissued bond

amount" means, with respect to any qualified mortgage credit

certificate program, the amount of qualified mortgage bonds

which the issuing authority is otherwise authorized to issue

and elects not to issue under subsection (c)(2)(A)(ii).

(e) Special rules and definitions

For purposes of this section -

(1) Carryforward of unused credit

(A) In general

If the credit allowable under subsection (a) for any taxable

year exceeds the applicable tax limit for such taxable year,

such excess shall be a carryover to each of the 3 succeeding

taxable years and, subject to the limitations of subparagraph

(B), shall be added to the credit allowable by subsection (a)

for such succeeding taxable year.

(B) Limitation

The amount of the unused credit which may be taken into

account under subparagraph (A) for any taxable year shall not

exceed the amount (if any) by which the applicable tax limit

for such taxable year exceeds the sum of -

(i) the credit allowable under subsection (a) for such

taxable year determined without regard to this paragraph, and

(ii) the amounts which, by reason of this paragraph, are

carried to such taxable year and are attributable to taxable

years before the unused credit year.

(C) Applicable tax limit

For purposes of this paragraph, the term "applicable tax

limit" means the limitation imposed by section 26(a) for the

taxable year reduced by the sum of the credits allowable under

this subpart (other than this section and sections 23, 24, 25B,

and 1400C).

(2) Indebtedness not treated as certified where certain

requirements not in fact met

Subsection (a) shall not apply to any indebtedness if all the

requirements of subsection (c)(1), (d), (e), (f), and (i) of

section 143 and clauses (iv), (v), and (vii) of subsection

(c)(2)(A), were not in fact met with respect to such

indebtedness. Except to the extent provided in regulations, the

requirements described in the preceding sentence shall be treated

as met if there is a certification, under penalty of perjury,

that such requirements are met.

(3) Period for which certificate in effect

(A) In general

Except as provided in subparagraph (B), a mortgage credit

certificate shall be treated as in effect with respect to

interest attributable to the period -

(i) beginning on the date such certificate is issued, and

(ii) ending on the earlier of the date on which -

(I) the certificate is revoked by the issuing authority,

or

(II) the residence to which such certificate relates

ceases to be the principal residence of the individual to

whom the certificate relates.

(B) Certificate invalid unless indebtedness incurred within

certain period

A certificate shall not apply to any indebtedness which is

incurred after the close of the second calendar year following

the calendar year for which the issuing authority made the

applicable election under subsection (c)(2)(A)(ii).

(C) Notice to Secretary when certificate revoked

Any issuing authority which revokes any mortgage credit

certificate shall notify the Secretary of such revocation at

such time and in such manner as the Secretary shall prescribe

by regulations.

(4) Reissuance of mortgage credit certificates

The Secretary may prescribe regulations which allow the

administrator of a mortgage credit certificate program to reissue

a mortgage credit certificate specifying a certified mortgage

indebtedness that replaces the outstanding balance of the

certified mortgage indebtedness specified on the original

certificate to any taxpayer to whom the original certificate was

issued, under such terms and conditions as the Secretary

determines are necessary to ensure that the amount of the credit

allowable under subsection (a) with respect to such reissued

certificate is equal to or less than the amount of credit which

would be allowable under subsection (a) with respect to the

original certificate for any taxable year ending after such

reissuance.

(5) Public notice that certificates will be issued

At least 90 days before any mortgage credit certificate is to

be issued after a qualified mortgage credit certificate program,

the issuing authority shall provide reasonable public notice of -

(A) the eligibility requirements for such certificate,

(B) the methods by which such certificates are to be issued,

and

(C) such other information as the Secretary may require.

(6) Interest paid or accrued to related persons

No credit shall be allowed under subsection (a) for any

interest paid or accrued to a person who is a related person to

the taxpayer (within the meaning of section 144(a)(3)(A)).

(7) Principal residence

The term "principal residence" has the same meaning as when

used in section 121.

(8) Qualified rehabilitation and home improvement

(A) Qualified rehabilitation

The term "qualified rehabilitation" has the meaning given

such term by section 143(k)(5)(B).

(B) Qualified home improvement

The term "qualified home improvement" means an alteration,

repair, or improvement described in section 143(k)(4).

(9) Qualified mortgage bond

The term "qualified mortgage bond" has the meaning given such

term by section 143(a)(1).

(10) Manufactured housing

For purposes of this section, the term "single family

residence" includes any manufactured home which has a minimum of

400 square feet of living space and a minimum width in excess of

102 inches and which is of a kind customarily used at a fixed

location. Nothing in the preceding sentence shall be construed as

providing that such a home will be taken into account in making

determinations under section 143.

(f) Reduction in aggregate amount of qualified mortgage bonds which

may be issued where certain requirements not met

(1) In general

If for any calendar year any mortgage credit certificate

program which satisfies procedural requirements with respect to

volume limitations prescribed by the Secretary fails to meet the

requirements of paragraph (2) of subsection (d), such

requirements shall be treated as satisfied with respect to any

certified indebtedness of such program, but the applicable State

ceiling under subsection (d) of section 146 for the State in

which such program operates shall be reduced by 1.25 times the

correction amount with respect to such failure. Such reduction

shall be applied to such State ceiling for the calendar year

following the calendar year in which the Secretary determines the

correction amount with respect to such failure.

(2) Correction amount

(A) In general

For purposes of paragraph (1), the term "correction amount"

means an amount equal to the excess credit amount divided by

0.25.

(B) Excess credit amount

(i) In general

For purposes of subparagraph (A)(ii), the term "excess

credit amount" means the excess of -

(I) the credit amount for any mortgage credit certificate

program, over

(II) the amount which would have been the credit amount

for such program had such program met the requirements of

paragraph (2) of subsection (d).

(ii) Credit amount

For purposes of clause (i), the term "credit amount" means

the sum of the products determined under clauses (i) and (ii)

of subsection (d)(2)(A).

(3) Special rule for States having constitutional home rule

cities

In the case of a State having one or more constitutional home

rule cities (within the meaning of section 146(d)(3)(C)), the

reduction in the State ceiling by reason of paragraph (1) shall

be allocated to the constitutional home rule city, or to the

portion of the State not within such city, whichever caused the

reduction.

(4) Exception where certification program

The provisions of this subsection shall not apply in any case

in which there is a certification program which is designed to

ensure that the requirements of this section are met and which

meets such requirements as the Secretary may by regulations

prescribe.

(5) Waiver

The Secretary may waive the application of paragraph (1) in any

case in which he determines that the failure is due to reasonable

cause.

(g) Reporting requirements

Each person who makes a loan which is a certified indebtedness

amount under any mortgage credit certificate shall file a report

with the Secretary containing -

(1) the name, address, and social security account number of

the individual to which the certificate was issued,

(2) the certificate's issuer, date of issue, certified

indebtedness amount, and certificate credit rate, and

(3) such other information as the Secretary may require by

regulations.

Each person who issues a mortgage credit certificate shall file a

report showing such information as the Secretary shall by

regulations prescribe. Any such report shall be filed at such time

and in such manner as the Secretary may require by regulations.

(h) Regulations; contracts

(1) Regulations

The Secretary shall prescribe such regulations as may be

necessary to carry out the purposes of this section, including

regulations which may require recipients of mortgage credit

certificates to pay a reasonable processing fee to defray the

expenses incurred in administering the program.

(2) Contracts

The Secretary is authorized to enter into contracts with any

person to provide services in connection with the administration

of this section.

(i) Recapture of portion of Federal subsidy from use of mortgage

credit certificates

For provisions increasing the tax imposed by this chapter to

recapture a portion of the Federal subsidy from the use of

mortgage credit certificates, see section 143(m).

-SOURCE-

(Added Pub. L. 98-369, div. A, title VI, Sec. 612(a), July 18,

1984, 98 Stat. 905; amended Pub. L. 99-514, title XIII, Sec.

1301(f), title XVIII, Secs. 1862(a)-(d)(1), 1899A(1), Oct. 22,

1986, 100 Stat. 2655, 2883, 2884, 2958; Pub. L. 100-647, title I,

Sec. 1013(a)(25), (26), title IV, Sec. 4005(a)(2), (g)(7), Nov. 10,

1988, 102 Stat. 3543, 3645, 3651; Pub. L. 101-239, title VII, Sec.

7104(b), Dec. 19, 1989, 103 Stat. 2305; Pub. L. 101-508, title XI,

Sec. 11408(b), Nov. 5, 1990, 104 Stat. 1388-477; Pub. L. 102-227,

title I, Sec. 108(b), Dec. 11, 1991, 105 Stat. 1688; Pub. L.

103-66, title XIII, Sec. 13141(b), Aug. 10, 1993, 107 Stat. 436;

Pub. L. 104-188, title I, Sec. 1807(c)(1), Aug. 20, 1996, 110 Stat.

1902; Pub. L. 105-34, title III, Sec. 312(d)(1), Aug. 5, 1997, 111

Stat. 839; Pub. L. 105-206, title VI, Sec. 6008(d)(7), July 22,

1998, 112 Stat. 812; Pub. L. 107-16, title II, Sec. 201(b)(2)(F),

title VI, Sec. 618(b)(2)(B), June 7, 2001, 115 Stat. 46, 108.)

-STATAMEND-

AMENDMENT OF SECTION

For termination of amendment by section 901 of Pub. L. 107-16,

see Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

PRIOR PROVISIONS

A prior section 25 was renumbered section 26 of this title.

AMENDMENTS

2001 - Subsec. (e)(1)(C). Pub. L. 107-16, Secs. 618(b)(2)(B),

901, temporarily inserted "25B," after "24,". See Effective and

Termination Dates of 2001 Amendment note below.

Pub. L. 107-16, Secs. 201(b)(2)(F), 901, temporarily inserted ",

24," after "sections 23". See Effective and Termination Dates of

2001 Amendment note below.

1998 - Subsec. (e)(1)(C). Pub. L. 105-206 substituted "sections

23 and 1400C" for "section 23".

1997 - Subsec. (e)(7). Pub. L. 105-34 substituted "section 121"

for "section 1034".

1996 - Subsec. (e)(1)(C). Pub. L. 104-188 inserted "and section

23" after "other than this section".

1993 - Subsecs. (h) to (j). Pub. L. 103-66 redesignated subsecs.

(i) and (j) as (h) and (i), respectively, and struck out heading

and text of former subsec. (h). Text read as follows: "No election

may be made under subsection (c)(2)(A)(ii) for any period after

June 30, 1992."

1991 - Subsec. (h). Pub. L. 102-227 substituted "June 30, 1992"

for "December 31, 1991".

1990 - Subsec. (h). Pub. L. 101-508 substituted "December 31,

1991" for "September 30, 1990".

1989 - Subsec. (h). Pub. L. 101-239 substituted "for any period

after September 30, 1990" for "for any calendar year after 1989".

1988 - Subsec. (c)(2)(A)(ii). Pub. L. 100-647, Sec. 1013(a)(25),

amended Pub. L. 99-514, Sec. 1301(f)(2)(C)(ii), see 1986 Amendment

note below.

Subsec. (h). Pub. L. 100-647, Sec. 4005(a)(2), substituted "1989"

for "1988".

Pub. L. 100-647, Sec. 1013(a)(26), substituted "1988" for "1987".

Subsec. (j). Pub. L. 100-647, Sec. 4005(g)(7), added subsec. (j).

1986 - Subsec. (a)(1)(B). Pub. L. 99-514, Sec. 1862(d)(1),

substituted "paid or accrued" for "paid or incurred".

Subsec. (b)(2)(A)(ii). Pub. L. 99-514, Sec. 1301(f)(2)(A),

substituted "section 143(k)(4)" for "section 103A(l)(6)".

Subsec. (b)(2)(A)(iii). Pub. L. 99-514, Sec. 1301(f)(2)(B),

substituted "section 143(k)(5)" for "section 103A(l)(7)".

Subsec. (c)(2)(A). Pub. L. 99-514, Sec. 1301(f)(2)(E),

substituted "section 143(a)(2)" for "section 103A(c)(2)" in

provision following cl. (vii).

Pub. L. 99-514, Sec. 1862(b), inserted "Under regulations, rules

similar to the rules of subparagraphs (B) and (C) of section

103A(c)(2) shall apply to the requirements of this subparagraph."

Subsec. (c)(2)(A)(ii). Pub. L. 99-514, Sec. 1301(f)(2)(C)(ii), as

amended by Pub. L. 100-647, Sec. 1013(a)(25), substituted "private

activity bonds which it may otherwise issue during such calendar

year under section 146" for "qualified mortgage bonds which it may

otherwise issue during such calendar year under section 103A".

Subsec. (c)(2)(A)(iii). Pub. L. 99-514, Sec. 1301(f)(2)(C)(i),

substituted "section 143" for "section 103A" in introductory

provisions, added subcls. (I) to (VI), and struck out former

subcls. (I) to (V) which read as follows:

"(I) subsection (d) (relating to residence requirements),

"(II) subsection (e) (relating to 3-year requirement),

"(III) subsection (f) (relating to purchase price requirement),

"(IV) subsection (h) (relating to portion of loans required to be

placed in targeted areas), and

"(V) subsection (j), other than paragraph (2) thereof (relating

to other requirements),".

Subsec. (c)(2)(A)(iii)(V). Pub. L. 99-514, Sec. 1862(a),

substituted "subsection (j), other than paragraph (2) thereof" for

"paragraph (1) of subsection (j)".

Subsec. (c)(2)(B). Pub. L. 99-514, Sec. 1301(f)(2)(C)(i),

substituted in heading and introductory provisions "section 143"

for "section 103A".

Pub. L. 99-514, Sec. 1301(f)(2)(F), inserted in introductory

provisions reference to subcl. (V), added cl. (iii) and closing

provisions, and struck out former cl. (iii) and closing provisions

which read as follows:

"(iii) paragraph (1) of section 103A(e) shall be applied by

substituting '100 percent' for '90 percent or more'.

Clause (iii) shall not apply if the issuing authority submits a

plan to the Secretary for administering the 90-percent requirement

of section 103A(e)(1) and the Secretary is satisfied that such

requirement will be met under such plan."

Subsec. (d)(2)(A). Pub. L. 99-514, Sec. 1301(f)(1)(A),

substituted "25 percent" for "20 percent" in concluding provisions.

Subsec. (d)(3). Pub. L. 99-514, Sec. 1301(f)(2)(G), struck out

par. (3) "Additional limit in certain cases" which read as follows:

"In the case of a qualified mortgage credit certificate program in

a State which -

"(A) has a State ceiling (as defined in section 103A(g)(4)) for

the year an election is made that exceeds 20 percent of the

average annual aggregate principal amount of mortgages executed

during the immediately preceding 3 calendar years for single

family owner-occupied residences located within the jurisdiction

of such State, or

"(B) issued qualified mortgage bonds in an aggregate amount

less than $150,000,000 for calendar year 1983,

the certificate credit rate for any mortgage credit certificate

shall not exceed 20 percent unless the issuing authority submits a

plan to the Secretary to ensure that the weighted average of the

certificate credit rates in such mortgage credit certificate

program does not exceed 20 percent and the Secretary approves such

plan."

Subsec. (e)(1)(B). Pub. L. 99-514, Sec. 1862(c), amended subpar.

(B) generally. Prior to amendment, subpar. (B) "Limitations" read

as follows: "The amount of the unused credit which may be taken

into account under subparagraph (A) for any taxable year shall not

exceed the amount by which the applicable tax limit for such

taxable year exceeds the sum of the amounts which, by reason of

this paragraph, are carried to such taxable year and are

attributable to taxable years before the unused credit year."

Subsec. (e)(2). Pub. L. 99-514, Sec. 1301(f)(2)(H), substituted

"subsections (c)(1), (d), (e), (f), and (i) of section 143" for

"subsection (d)(1), (e), (f), and (j) of section 103A".

Subsec. (e)(6). Pub. L. 99-514, Sec. 1301(f)(2)(I), substituted

"section 144(a)(3)(A)" for "section 103(b)(6)(C)(i)".

Subsec. (e)(8)(A). Pub. L. 99-514, Sec. 1301(f)(2)(J),

substituted "section 143(k)(5)(B)" for "section 103A(l)(7)(B)".

Subsec. (e)(8)(B). Pub. L. 99-514, Sec. 1301(f)(2)(K),

substituted "section 143(k)(4)" for "section 103A(l)(6)".

Subsec. (e)(9). Pub. L. 99-514, Sec. 1301(f)(2)(L), substituted

"section 143(a)(1)" for "section 103A(c)(1)".

Subsec. (e)(10). Pub. L. 99-514, Sec. 1301(f)(2)(M), substituted

"section 143" for "section 103A".

Subsec. (f)(1). Pub. L. 99-514, Sec. 1301(f)(2)(N), substituted

"subsection (d) of section 146" for "paragraph (4) of section

103A(g)".

Subsec. (f)(2)(A). Pub. L. 99-514, Sec. 1301(f)(1)(B),

substituted "0.25" for "0.20".

Subsec. (f)(3). Pub. L. 99-514, Sec. 1301(f)(2)(O), substituted

"section 146(d)(3)(C)" for "section 103A(g)(5)(C)".

Subsec. (f)(4). Pub. L. 99-514, Sec. 1899A(1), substituted

"ensure" for "insure".

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Amendment by Pub. L. 107-16 inapplicable to taxable years

beginning during 2002 and 2003, see section 601(b)(2) of Pub. L.

107-147, set out as a note under section 23 of this title.

Amendment by section 201(b)(2)(F) of Pub. L. 107-16 applicable to

taxable years beginning after Dec. 31, 2001, see section 201(e)(2)

of Pub. L. 107-16, set out as a note under section 24 of this

title.

Amendment by section 618(b)(2)(B) of Pub. L. 107-16 applicable to

taxable years beginning after Dec. 31, 2001, see section 618(d) of

Pub. L. 107-16, set out as a note under section 24 of this title.

Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or

limitation years beginning after Dec. 31, 2010, and the Internal

Revenue Code of 1986 to be applied and administered to such years

as if such amendment had never been enacted, see section 901 of

Pub. L. 107-16, set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1998 AMENDMENT

Amendment by Pub. L. 105-206 effective, except as otherwise

provided, as if included in the provisions of the Taxpayer Relief

Act of 1997, Pub. L. 105-34, to which such amendment relates, see

section 6024 of Pub. L. 105-206, set out as a note under section 1

of this title.

EFFECTIVE DATE OF 1997 AMENDMENT

Amendment by Pub. L. 105-34 applicable to sales and exchanges

after May 6, 1997, with certain exceptions, see section 312(d) of

Pub. L. 105-34, set out as a note under section 121 of this title.

EFFECTIVE DATE OF 1996 AMENDMENT

Amendment by Pub. L. 104-188 applicable to taxable years

beginning after Dec. 31, 1996, see section 1807(e) of Pub. L.

104-188, set out as an Effective Date note under section 23 of this

title.

EFFECTIVE DATE OF 1993 AMENDMENT

Section 13141(f)(2) of Pub. L. 103-66 provided that: "The

amendment made by subsection (b) [amending this section] shall

apply to elections for periods after June 30, 1992."

EFFECTIVE DATE OF 1991 AMENDMENT

Section 108(c)(2) of Pub. L. 102-227 provided that: "The

amendment made by subsection (b) [amending this section] shall

apply to elections for periods after December 31, 1991."

EFFECTIVE DATE OF 1990 AMENDMENT

Amendment by Pub. L. 101-508 applicable to elections for periods

after Sept. 30, 1990, see section 11408(d)(2) of Pub. L. 101-508,

set out as a note under section 143 of this title.

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by section 1013(a)(25), (26) of Pub. L. 100-647

effective, except as otherwise provided, as if included in the

provision of the Tax Reform Act of 1986, Pub. L. 99-514, to which

such amendment relates, see section 1019(a) of Pub. L. 100-647, set

out as a note under section 1 of this title.

Amendment by section 4005(a)(2) of Pub. L. 100-647 applicable to

bonds issued, and nonissued bond amounts elected, after Dec. 31,

1988, see section 4005(h)(1) of Pub. L. 100-647, set out as a note

under section 143 of this title.

Amendment by section 4005(g)(7) of Pub. L. 100-647 applicable to

financing provided, and mortgage credit certificates issued, after

Dec. 31, 1990, with certain exceptions, see section 4005(h)(3) of

Pub. L. 100-647, set out as a note under section 143 of this title.

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by section 1301(f)(1) of Pub. L. 99-514 applicable to

nonissued bond amounts elected after Aug. 15, 1986, and amendment

by section 1301(f)(2) of Pub. L. 99-514 applicable to certificates

issued with respect to nonissued bond amounts elected after Aug.

15, 1986, see section 1311(b) of Pub. L. 99-514, as amended, set

out as an Effective Date; Transitional Rules note under section 141

of this title.

Amendment by section 1862(a)-(d)(1) of Pub. L. 99-514 effective,

except as otherwise provided, as if included in the provisions of

the Tax Reform Act of 1984, Pub. L. 98-369, div. A, to which such

amendment relates, see section 1881 of Pub. L. 99-514, set out as a

note under section 48 of this title.

EFFECTIVE DATE

Section 612(g) of Pub. L. 98-369, as amended by Pub. L. 99-514,

Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

"(1) In general. - Except as otherwise provided in this

subsection, the amendments made by this section [enacting this

section and section 6708 of this title, redesignating former

section 25 as 26, and amending sections 23, 28 to 30, 38, 55, 103A,

163, 168, and 901 of this title] shall apply to interest paid or

accrued after December 31, 1984, on indebtedness incurred after

December 31, 1984.

"(2) Elections. - The amendments made by this section shall apply

to elections under section 25(c)(2)(A)(ii) of the Internal Revenue

Code of 1986 [formerly I.R.C. 1954] (as added by this section) for

calendar years after 1983."

PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989

For provisions directing that if any amendments made by subtitle

A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or

title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an

amendment to any plan, such plan amendment shall not be required to

be made before the first plan year beginning on or after Jan. 1,

1989, see section 1140 of Pub. L. 99-514, as amended, set out as a

note under section 401 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 143, 146, 163, 6708 of

this title; title 42 section 12852.

-End-

-CITE-

26 USC Sec. 25A 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart A - Nonrefundable Personal Credits

-HEAD-

Sec. 25A. Hope and Lifetime Learning credits

-STATUTE-

(a) Allowance of credit

In the case of an individual, there shall be allowed as a credit

against the tax imposed by this chapter for the taxable year the

amount equal to the sum of -

(1) the Hope Scholarship Credit, plus

(2) the Lifetime Learning Credit.

(b) Hope Scholarship Credit

(1) Per student credit

In the case of any eligible student for whom an election is in

effect under this section for any taxable year, the Hope

Scholarship Credit is an amount equal to the sum of -

(A) 100 percent of so much of the qualified tuition and

related expenses paid by the taxpayer during the taxable year

(for education furnished to the eligible student during any

academic period beginning in such taxable year) as does not

exceed $1,000, plus

(B) 50 percent of such expenses so paid as exceeds $1,000 but

does not exceed the applicable limit.

(2) Limitations applicable to Hope Scholarship Credit

(A) Credit allowed only for 2 taxable years

An election to have this section apply with respect to any

eligible student for purposes of the Hope Scholarship Credit

under subsection (a)(1) may not be made for any taxable year if

such an election (by the taxpayer or any other individual) is

in effect with respect to such student for any 2 prior taxable

years.

(B) Credit allowed for year only if individual is at least 1/2

time student for portion of year

The Hope Scholarship Credit under subsection (a)(1) shall not

be allowed for a taxable year with respect to the qualified

tuition and related expenses of an individual unless such

individual is an eligible student for at least one academic

period which begins during such year.

(C) Credit allowed only for first 2 years of postsecondary

education

The Hope Scholarship Credit under subsection (a)(1) shall not

be allowed for a taxable year with respect to the qualified

tuition and related expenses of an eligible student if the

student has completed (before the beginning of such taxable

year) the first 2 years of postsecondary education at an

eligible educational institution.

(D) Denial of credit if student convicted of a felony drug

offense

The Hope Scholarship Credit under subsection (a)(1) shall not

be allowed for qualified tuition and related expenses for the

enrollment or attendance of a student for any academic period

if such student has been convicted of a Federal or State felony

offense consisting of the possession or distribution of a

controlled substance before the end of the taxable year with or

within which such period ends.

(3) Eligible student

For purposes of this subsection, the term "eligible student"

means, with respect to any academic period, a student who -

(A) meets the requirements of section 484(a)(1) of the Higher

Education Act of 1965 (20 U.S.C. 1091(a)(1)), as in effect on

the date of the enactment of this section, and

(B) is carrying at least 1/2 the normal full-time work load

for the course of study the student is pursuing.

(4) Applicable limit

For purposes of paragraph (1)(B), the applicable limit for any

taxable year is an amount equal to 2 times the dollar amount in

effect under paragraph (1)(A) for such taxable year.

(c) Lifetime Learning Credit

(1) Per taxpayer credit

The Lifetime Learning Credit for any taxpayer for any taxable

year is an amount equal to 20 percent of so much of the qualified

tuition and related expenses paid by the taxpayer during the

taxable year (for education furnished during any academic period

beginning in such taxable year) as does not exceed $10,000

($5,000 in the case of taxable years beginning before January 1,

2003).

(2) Special rules for determining expenses

(A) Coordination with Hope Scholarship

The qualified tuition and related expenses with respect to an

individual who is an eligible student for whom a Hope

Scholarship Credit under subsection (a)(1) is allowed for the

taxable year shall not be taken into account under this

subsection.

(B) Expenses eligible for Lifetime Learning Credit

For purposes of paragraph (1), qualified tuition and related

expenses shall include expenses described in subsection (f)(1)

with respect to any course of instruction at an eligible

educational institution to acquire or improve job skills of the

individual.

(d) Limitation based on modified adjusted gross income

(1) In general

The amount which would (but for this subsection) be taken into

account under subsection (a) for the taxable year shall be

reduced (but not below zero) by the amount determined under

paragraph (2).

(2) Amount of reduction

The amount determined under this paragraph is the amount which

bears the same ratio to the amount which would be so taken into

account as -

(A) the excess of -

(i) the taxpayer's modified adjusted gross income for such

taxable year, over

(ii) $40,000 ($80,000 in the case of a joint return), bears

to

(B) $10,000 ($20,000 in the case of a joint return).

(3) Modified adjusted gross income

The term "modified adjusted gross income" means the adjusted

gross income of the taxpayer for the taxable year increased by

any amount excluded from gross income under section 911, 931, or

933.

(e) Election not to have section apply

A taxpayer may elect not to have this section apply with respect

to the qualified tuition and related expenses of an individual for

any taxable year.

(f) Definitions

For purposes of this section -

(1) Qualified tuition and related expenses

(A) In general

The term "qualified tuition and related expenses" means

tuition and fees required for the enrollment or attendance of -

(i) the taxpayer,

(ii) the taxpayer's spouse, or

(iii) any dependent of the taxpayer with respect to whom

the taxpayer is allowed a deduction under section 151,

at an eligible educational institution for courses of

instruction of such individual at such institution.

(B) Exception for education involving sports, etc.

Such term does not include expenses with respect to any

course or other education involving sports, games, or hobbies,

unless such course or other education is part of the

individual's degree program.

(C) Exception for nonacademic fees

Such term does not include student activity fees, athletic

fees, insurance expenses, or other expenses unrelated to an

individual's academic course of instruction.

(2) Eligible educational institution

The term "eligible educational institution" means an

institution -

(A) which is described in section 481 of the Higher Education

Act of 1965 (20 U.S.C. 1088), as in effect on the date of the

enactment of this section, and

(B) which is eligible to participate in a program under title

IV of such Act.

(g) Special rules

(1) Identification requirement

No credit shall be allowed under subsection (a) to a taxpayer

with respect to the qualified tuition and related expenses of an

individual unless the taxpayer includes the name and taxpayer

identification number of such individual on the return of tax for

the taxable year.

(2) Adjustment for certain scholarships, etc.

The amount of qualified tuition and related expenses otherwise

taken into account under subsection (a) with respect to an

individual for an academic period shall be reduced (before the

application of subsections (b), (c), and (d)) by the sum of any

amounts paid for the benefit of such individual which are

allocable to such period as -

(A) a qualified scholarship which is excludable from gross

income under section 117,

(B) an educational assistance allowance under chapter 30, 31,

32, 34, or 35 of title 38, United States Code, or under chapter

1606 of title 10, United States Code, and

(C) a payment (other than a gift, bequest, devise, or

inheritance within the meaning of section 102(a)) for such

individual's educational expenses, or attributable to such

individual's enrollment at an eligible educational institution,

which is excludable from gross income under any law of the

United States.

(3) Treatment of expenses paid by dependent

If a deduction under section 151 with respect to an individual

is allowed to another taxpayer for a taxable year beginning in

the calendar year in which such individual's taxable year begins

-

(A) no credit shall be allowed under subsection (a) to such

individual for such individual's taxable year, and

(B) qualified tuition and related expenses paid by such

individual during such individual's taxable year shall be

treated for purposes of this section as paid by such other

taxpayer.

(4) Treatment of certain prepayments

If qualified tuition and related expenses are paid by the

taxpayer during a taxable year for an academic period which

begins during the first 3 months following such taxable year,

such academic period shall be treated for purposes of this

section as beginning during such taxable year.

(5) Denial of double benefit

No credit shall be allowed under this section for any expense

for which a deduction is allowed under any other provision of

this chapter.

(6) No credit for married individuals filing separate returns

If the taxpayer is a married individual (within the meaning of

section 7703), this section shall apply only if the taxpayer and

the taxpayer's spouse file a joint return for the taxable year.

(7) Nonresident aliens

If the taxpayer is a nonresident alien individual for any

portion of the taxable year, this section shall apply only if

such individual is treated as a resident alien of the United

States for purposes of this chapter by reason of an election

under subsection (g) or (h) of section 6013.

(h) Inflation adjustments

(1) Dollar limitation on amount of credit

(A) In general

In the case of a taxable year beginning after 2001, each of

the $1,000 amounts under subsection (b)(1) shall be increased

by an amount equal to -

(i) such dollar amount, multiplied by

(ii) the cost-of-living adjustment determined under section

1(f)(3) for the calendar year in which the taxable year

begins, determined by substituting "calendar year 2000" for

"calendar year 1992" in subparagraph (B) thereof.

(B) Rounding

If any amount as adjusted under subparagraph (A) is not a

multiple of $100, such amount shall be rounded to the next

lowest multiple of $100.

(2) Income limits

(A) In general

In the case of a taxable year beginning after 2001, the

$40,000 and $80,000 amounts in subsection (d)(2) shall each be

increased by an amount equal to -

(i) such dollar amount, multiplied by

(ii) the cost-of-living adjustment determined under section

1(f)(3) for the calendar year in which the taxable year

begins, determined by substituting "calendar year 2000" for

"calendar year 1992" in subparagraph (B) thereof.

(B) Rounding

If any amount as adjusted under subparagraph (A) is not a

multiple of $1,000, such amount shall be rounded to the next

lowest multiple of $1,000.

(i) Regulations

The Secretary may prescribe such regulations as may be necessary

or appropriate to carry out this section, including regulations

providing for a recapture of the credit allowed under this section

in cases where there is a refund in a subsequent taxable year of

any amount which was taken into account in determining the amount

of such credit.

-SOURCE-

(Added Pub. L. 105-34, title II, Sec. 201(a), Aug. 5, 1997, 111

Stat. 799; amended Pub. L. 107-16, title IV, Sec. 401(g)(2)(A),

June 7, 2001, 115 Stat. 59.)

-STATAMEND-

INFLATION ADJUSTED ITEMS FOR TAXABLE YEARS BEGINNING IN 2003

For inflation adjustment of amounts in subsection (b)(1) of this

section used in determining Hope Scholarship Credit and amounts in

subsection (d)(2)(A)(ii) of this section used in determining

reduction in amount of credits otherwise allowable for taxable

years beginning in 2003, see section 3.05 of Revenue Procedure

2002-70, set out as a note under section 1 of this title.

AMENDMENT OF SECTION

For termination of amendment by section 901 of Pub. L. 107-16,

see Effective and Termination Dates of 2001 Amendment note below.

-REFTEXT-

REFERENCES IN TEXT

The date of the enactment of this section, referred to in

subsecs. (b)(3)(A) and (f)(2)(A), is the date of enactment of Pub.

L. 105-34 which was approved Aug. 5, 1997.

The Higher Education Act of 1965, referred to in subsec.

(f)(2)(B), is Pub. L. 89-329, Nov. 8, 1965, 79 Stat. 1219, as

amended. Title IV of the Act is classified generally to subchapter

IV (Sec. 1070 et seq.) of chapter 28 of Title 20, Education, and

part C (Sec. 2751 et seq.) of subchapter I of chapter 34 of Title

42, The Public Health and Welfare. For complete classification of

this Act to the Code, see Short Title note set out under section

1001 of Title 20 and Tables.

-MISC1-

AMENDMENTS

2001 - Subsec. (e). Pub. L. 107-16, Secs. 401(g)(2)(A), 901,

temporarily amended heading and text of subsec. (e) generally.

Prior to amendment, text read as follows:

"(1) In general. - No credit shall be allowed under subsection

(a) for a taxable year with respect to the qualified tuition and

related expenses of an individual unless the taxpayer elects to

have this section apply with respect to such individual for such

year.

"(2) Coordination with exclusions. - An election under this

subsection shall not take effect with respect to an individual for

any taxable year if any portion of any distribution during such

taxable year from an education individual retirement account is

excluded from gross income under section 530(d)(2)."

See Effective and Termination Dates of 2001 Amendment note below.

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT

Pub. L. 107-16, title IV, Sec. 401(h), June 7, 2001, 115 Stat.

60, provided that: "The amendments made by this section [amending

this section and sections 135, 530, and 4973 of this title] shall

apply to taxable years beginning after December 31, 2001."

Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or

limitation years beginning after Dec. 31, 2010, and the Internal

Revenue Code of 1986 to be applied and administered to such years

as if such amendment had never been enacted, see section 901 of

Pub. L. 107-16, set out as a note under section 1 of this title.

EFFECTIVE DATE

Section 201(f) of Pub. L. 105-34 provided that:

"(1) In general. - The amendments made by this section [enacting

this section and section 6050S of this title and amending sections

135, 6213, and 6724 of this title] shall apply to expenses paid

after December 31, 1997 (in taxable years ending after such date),

for education furnished in academic periods beginning after such

date.

"(2) Lifetime learning credit. - Section 25A(a)(2) of the

Internal Revenue Code of 1986 shall apply to expenses paid after

June 30, 1998 (in taxable years ending after such date), for

education furnished in academic periods beginning after such

dates."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 72, 135, 221, 222, 529,

530, 6050S, 6213 of this title; title 20 sections 1087oo, 1087pp,

1087qq, 1087ss, 1087vv.

-End-

-CITE-

26 USC Sec. 25B 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart A - Nonrefundable Personal Credits

-HEAD-

Sec. 25B. Elective deferrals and IRA contributions by certain

individuals

-STATUTE-

(a) Allowance of credit

In the case of an eligible individual, there shall be allowed as

a credit against the tax imposed by this subtitle for the taxable

year an amount equal to the applicable percentage of so much of the

qualified retirement savings contributions of the eligible

individual for the taxable year as do not exceed $2,000.

(b) Applicable percentage

For purposes of this section, the applicable percentage is the

percentage determined in accordance with the following table:

Adjusted Gross Income Appl

icable

perc

entage

Joint Head All

retu of a other

rnh hous case

3Ove ehol sh3

rh3 dh3 Over

Not Over h3Not

over h3Not over

over

--------------------------------------------------------------------

$30,000 $22,500 $15,000 50

30,000 32,500 22,500 24,375 15,000 16,250 20

32,500 50,000 24,375 37,500 16,250 25,000 10

50,000 37,500 25,000 0

--------------------------------------------------------------------

(c) Eligible individual

For purposes of this section -

(1) In general

The term "eligible individual" means any individual if such

individual has attained the age of 18 as of the close of the

taxable year.

(2) Dependents and full-time students not eligible

The term "eligible individual" shall not include -

(A) any individual with respect to whom a deduction under

section 151 is allowed to another taxpayer for a taxable year

beginning in the calendar year in which such individual's

taxable year begins, and

(B) any individual who is a student (as defined in section

151(c)(4)).

(d) Qualified retirement savings contributions

For purposes of this section -

(1) In general

The term "qualified retirement savings contributions" means,

with respect to any taxable year, the sum of -

(A) the amount of the qualified retirement contributions (as

defined in section 219(e)) made by the eligible individual,

(B) the amount of -

(i) any elective deferrals (as defined in section

402(g)(3)) of such individual, and

(ii) any elective deferral of compensation by such

individual under an eligible deferred compensation plan (as

defined in section 457(b)) of an eligible employer described

in section 457(e)(1)(A), and

(C) the amount of voluntary employee contributions by such

individual to any qualified retirement plan (as defined in

section 4974(c)).

(2) Reduction for certain distributions

(A) In general

The qualified retirement savings contributions determined

under paragraph (1) shall be reduced (but not below zero) by

the aggregate distributions received by the individual during

the testing period from any entity of a type to which

contributions under paragraph (1) may be made. The preceding

sentence shall not apply to the portion of any distribution

which is not includible in gross income by reason of a

trustee-to-trustee transfer or a rollover distribution.

(B) Testing period

For purposes of subparagraph (A), the testing period, with

respect to a taxable year, is the period which includes -

(i) such taxable year,

(ii) the 2 preceding taxable years, and

(iii) the period after such taxable year and before the due

date (including extensions) for filing the return of tax for

such taxable year.

(C) Excepted distributions

There shall not be taken into account under subparagraph (A)

-

(i) any distribution referred to in section 72(p),

401(k)(8), 401(m)(6), 402(g)(2), 404(k), or 408(d)(4), and

(ii) any distribution to which section 408A(d)(3) applies.

(D) Treatment of distributions received by spouse of individual

For purposes of determining distributions received by an

individual under subparagraph (A) for any taxable year, any

distribution received by the spouse of such individual shall be

treated as received by such individual if such individual and

spouse file a joint return for such taxable year and for the

taxable year during which the spouse receives the distribution.

(e) Adjusted gross income

For purposes of this section, adjusted gross income shall be

determined without regard to sections 911, 931, and 933.

(f) Investment in the contract

Notwithstanding any other provision of law, a qualified

retirement savings contribution shall not fail to be included in

determining the investment in the contract for purposes of section

72 by reason of the credit under this section.

(g) Limitation based on amount of tax

The credit allowed under subsection (a) for the taxable year

shall not exceed the excess of -

(1) the sum of the regular tax liability (as defined in section

26(b)) plus the tax imposed by section 55, over

(2) the sum of the credits allowable under this subpart (other

than this section and section 23) and section 27 for the taxable

year.

(h) Termination

This section shall not apply to taxable years beginning after

December 31, 2006.

-SOURCE-

(Added and amended Pub. L. 107-16, title VI, Sec. 618(a), (b)(1),

June 7, 2001, 115 Stat. 106, 108; Pub. L. 107-147, title IV, Secs.

411(m), 417(1), Mar. 9, 2002, 116 Stat. 48, 56.)

-STATAMEND-

TERMINATION OF SECTION

For termination of section by section 901 of Pub. L. 107-16, see

Effective and Termination Dates note below.

-MISC1-

AMENDMENTS

2002 - Subsec. (d)(2)(A). Pub. L. 107-147, Sec. 411(m), reenacted

heading without change and amended text of subpar. (A) generally.

Prior to amendment, text read as follows: "The qualified retirement

savings contributions determined under paragraph (1) shall be

reduced (but not below zero) by the sum of -

"(i) any distribution from a qualified retirement plan (as

defined in section 4974(c)), or from an eligible deferred

compensation plan (as defined in section 457(b)), received by the

individual during the testing period which is includible in gross

income, and

"(ii) any distribution from a Roth IRA or a Roth account

received by the individual during the testing period which is not

a qualified rollover contribution (as defined in section 408A(e))

to a Roth IRA or a rollover under section 402(c)(8)(B) to a Roth

account."

Subsecs. (g), (h). Pub. L. 107-147, Sec. 417(1), redesignated

subsec. (g), relating to termination, as (h).

2001 - Subsec. (g). Pub. L. 107-16, Secs. 618(b)(1), 901,

temporarily added subsec. (g) relating to limitation based on

amount of tax. See Effective and Termination Dates note below.

EFFECTIVE DATE OF 2002 AMENDMENT

Pub. L. 107-147, title IV, Sec. 411(x), Mar. 9, 2002, 116 Stat.

53, provided that: "Except as provided in subsection (c) [amending

sections 23 and 137 of this title and enacting provisions set out

as a note under section 23 of this title], the amendments made by

this section [amending this section, sections 23, 24, 38, 45E, 45F,

63, 137, 401 to 404, 408, 409, 412, 414 to 417, 457, 530, 2016,

2101, 2511, 4980F, and 6428 of this title, sections 1003, 1054,

1055, 1082, and 1104 of Title 29, Labor, and provisions set out as

notes under sections 38, 415, and 4980F of this title] shall take

effect as if included in the provisions of the Economic Growth and

Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16] to which

they relate."

EFFECTIVE AND TERMINATION DATES

Amendment by section 618(b)(1) of Pub. L. 107-16 inapplicable to

taxable years beginning during 2002 and 2003, see section 601(b)(2)

of Pub. L. 107-147, set out as an Effective and Termination Dates

of 2001 Amendment note under section 23 of this title.

Amendment by section 618(b)(1) of Pub. L. 107-16 applicable to

taxable years beginning after Dec. 31, 2001, see section 618(d) of

Pub. L. 107-16, set out as an Effective and Termination Dates of

2001 Amendment note under section 24 of this title.

Section inapplicable to taxable, plan, or limitation years

beginning after Dec. 31, 2010, and the Internal Revenue Code of

1986 to be applied and administered to such years as if it had

never been enacted, see section 901 of Pub. L. 107-16, set out as

an Effective and Termination Dates of 2001 Amendment note under

section 1 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 24, 25, 26, 904, 1400C of

this title.

-End-

-CITE-

26 USC Sec. 26 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart A - Nonrefundable Personal Credits

-HEAD-

Sec. 26. Limitation based on tax liability; definition of tax

liability

-STATUTE-

(a) Limitation based on amount of tax

(1) In general

The aggregate amount of credits allowed by this subpart (other

than sections 23, 24, and 25B) for the taxable year shall not

exceed the excess (if any) of -

(A) the taxpayer's regular tax liability for the taxable

year, over

(B) the tentative minimum tax for the taxable year

(determined without regard to the alternative minimum tax

foreign tax credit).

For purposes of subparagraph (B), the taxpayer's tentative

minimum tax for any taxable year beginning during 1999 shall be

treated as being zero.

(2) Special rule for 2000, 2001, 2002, and 2003

For purposes of any taxable year beginning during 2000, 2001,

2002, or 2003, the aggregate amount of credits allowed by this

subpart for the taxable year shall not exceed the sum of -

(A) the taxpayer's regular tax liability for the taxable year

reduced by the foreign tax credit allowable under section

27(a), and

(B) the tax imposed by section 55(a) for the taxable year.

(b) Regular tax liability

For purposes of this part -

(1) In general

The term "regular tax liability" means the tax imposed by this

chapter for the taxable year.

(2) Exception for certain taxes

For purposes of paragraph (1), any tax imposed by any of the

following provisions shall not be treated as tax imposed by this

chapter:

(A) section 55 (relating to minimum tax),

(B) section 59A (relating to environmental tax),

(C) subsection (m)(5)(B), (q), (t), or (v) of section 72

(relating to additional taxes on certain distributions),

(D) section 143(m) (relating to recapture of proration of

Federal subsidy from use of mortgage bonds and mortgage credit

certificates),

(E) section 530(d)(3) (relating to additional tax on certain

distributions from Coverdell education savings accounts),

(F) section 531 (relating to accumulated earnings tax),

(G) section 541 (relating to personal holding company tax),

(H) section 1351(d)(1) (relating to recoveries of foreign

expropriation losses),

(I) section 1374 (relating to tax on certain built-in gains

of S corporations),

(J) section 1375 (relating to tax imposed when passive

investment income of corporation having subchapter C earnings

and profits exceeds 25 percent of gross receipts),

(K) subparagraph (A) of section 7518(g)(6) (relating to

nonqualified withdrawals from capital construction funds taxed

at highest marginal rate),

(L) sections 871(a) and 881 (relating to certain income of

nonresident aliens and foreign corporations),

(M) section 860E(e) (relating to taxes with respect to

certain residual interests),

(N) section 884 (relating to branch profits tax),

(O) sections 453(l)(3) and 453A(c) (relating to interest on

certain deferred tax liabilities),

(P) section 860K (relating to treatment of transfers of

high-yield interests to disqualified holders),

(Q) section 220(f)(4) (relating to additional tax on Archer

MSA distributions not used for qualified medical expenses), and

(R) section 138(c)(2) (relating to penalty for distributions

from Medicare+Choice MSA not used for qualified medical

expenses if minimum balance not maintained).

(c) Tentative minimum tax

For purposes of this part, the term "tentative minimum tax" means

the amount determined under section 55(b)(1).

-SOURCE-

(Added Sec. 25, renumbered Sec. 26, Pub. L. 98-369, div. A, title

IV, Sec. 472, title VI, Sec. 612(a), July 18, 1984, 98 Stat. 827,

905; amended Pub. L. 99-499, title V, Sec. 516(b)(1)(A), Oct. 17,

1986, 100 Stat. 1770; Pub. L. 99-514, title II, Sec. 261(c), title

VI, Sec. 632(c)(1), title VII, Sec. 701(c)(1), Oct. 22, 1986, 100

Stat. 2214, 2277, 2340; Pub. L. 100-647, title I, Secs.

1006(t)(16)(C), 1007(g)(1), 1011A(c)(10), 1012(q)(8), title IV,

Sec. 4005(g)(4), title V, Sec. 5012(b)(2), Nov. 10, 1988, 102 Stat.

3425, 3434, 3476, 3524, 3650, 3662; Pub. L. 101-239, title VII,

Secs. 7811(c)(1), (2), 7821(a)(4)(A), Dec. 19, 1989, 103 Stat.

2406, 2407, 2424; Pub. L. 104-188, title I, Sec. 1621(b)(1), Aug.

20, 1996, 110 Stat. 1866; Pub. L. 105-34, title II, Sec. 213(e)(1),

title XVI, Sec. 1602(a)(1), Aug. 5, 1997, 111 Stat. 817, 1093; Pub.

L. 105-277, div. J, title II, Sec. 2001(a), Oct. 21, 1998, 112

Stat. 2681-901; Pub. L. 106-170, title V, Sec. 501(a), Dec. 17,

1999, 113 Stat. 1918; Pub. L. 106-554, Sec. 1(a)(7) [title II, Sec.

202(a)(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A-628; Pub. L.

107-16, title II, Secs. 201(b)(2)(D), 202(f)(2)(C), title VI, Sec.

618(b)(2)(C), June 7, 2001, 115 Stat. 46, 49, 108; Pub. L. 107-22,

Sec. 1(b)(2)(A), July 26, 2001, 115 Stat. 197; Pub. L. 107-147,

title IV, Secs. 415(a), 417(23)(B), title VI, Sec. 601(a), Mar. 9,

2002, 116 Stat. 54, 57, 59.)

-STATAMEND-

AMENDMENT OF SECTION

For termination of amendment by section 901 of Pub. L. 107-16,

see Effective and Termination Dates of 2001 Amendment note below.

-MISC1-

AMENDMENTS

2002 - Subsec. (a)(1). Pub. L. 107-147, Sec. 417(23)(B), amended

directory language of Pub. L. 107-16, Sec. 618(b)(2)(C). See 2001

Amendment note below.

Subsec. (a)(2). Pub. L. 107-147, Sec. 601(a), substituted "rule

for 2000, 2001, 2002, and 2003" for "rule for 2000 and 2001" in

heading and "during 2000, 2001, 2002, or 2003," for "during 2000 or

2001," in introductory provisions.

Subsec. (b)(2)(P), (Q). Pub. L. 107-147, Sec. 415(a), which

directed striking "and" at end of subpar. (P) and substituting ",

and" for the period at the end of subpar. (Q), was executed to

subpars. (P) and (Q) as redesignated by Pub. L. 105-34, Sec.

213(e)(1), to reflect the probable intent of Congress. See 1997

Amendment notes below.

Subsec. (b)(2)(R). Pub. L. 107-147, Sec. 415(a), added subpar.

(R).

2001 - Subsec. (a)(1). Pub. L. 107-16, Secs. 618(b)(2)(C), 901,

as amended by Pub. L. 107-147, Sec. 417(23)(B), temporarily

substituted ", 24, and 25B" for "and 24" in introductory

provisions. See Effective and Termination Dates of 2001 Amendment

note below.

Pub. L. 107-16, Secs. 202(f)(2)(C), 901, temporarily substituted

"sections 23 and 24" for "section 24" in introductory provisions.

See Effective and Termination Dates of 2001 Amendment note below.

Pub. L. 107-16, Secs. 201(b)(2)(D), 901, temporarily inserted

"(other than section 24)" after "this subpart" in introductory

provisions. See Effective and Termination Dates of 2001 Amendment

note below.

Subsec. (b)(2)(E). Pub. L. 107-22 substituted "Coverdell

education savings" for "education individual retirement".

2000 - Subsec. (b)(2)(Q). Pub. L. 106-554 substituted "Archer

MSA" for "medical savings account".

1999 - Subsec. (a). Pub. L. 106-170 reenacted subsec. heading

without change and amended text generally. Prior to amendment, text

read as follows: "The aggregate amount of credits allowed by this

subpart for the taxable year shall not exceed the excess (if any)

of -

"(1) the taxpayer's regular tax liability for the taxable year,

over

"(2) the tentative minimum tax for the taxable year (determined

without regard to the alternative minimum tax foreign tax

credit).

For purposes of paragraph (2), the taxpayer's tentative minimum tax

for any taxable year beginning during 1998 shall be treated as

being zero."

1998 - Subsec. (a). Pub. L. 105-277 inserted concluding

provisions.

1997 - Subsec. (b)(2)(E) to (O). Pub. L. 105-34, Sec. 213(e)(1),

added subpar. (E) and redesignated former subpars. (E) to (N) as

(F) to (O), respectively. Former subpar. (O) redesignated (P).

Subsec. (b)(2)(P). Pub. L. 105-34, Sec. 213(e)(1), redesignated

subpar. (P) as (Q).

Pub. L. 105-34, Sec. 1602(a)(1), added subpar. (P).

Subsec. (b)(2)(Q). Pub. L. 105-34, Sec. 213(e)(1), redesignated

subpar. (P) as (Q).

1996 - Subsec. (b)(2)(O). Pub. L. 104-188 added subpar. (O).

1989 - Subsec. (b)(2)(C), (D). Pub. L. 101-239, Sec. 7811(c)(1),

amended subpars. (C) and (D) generally. Prior to amendment,

subpars. (C) and (D) read as follows:

"(C) subsection (m)(5)(B) (q), or (v) of section 72 (relating to

additional tax on certain distributions),

"(D) section 72(t) (relating to 10-percent additional tax on

early distributions from qualified retirement plans),".

Subsec. (b)(2)(K). Pub. L. 101-239, Sec. 7811(c)(2), added

subpar. (K) and struck out former subpar. (K) which was identical.

Subsec. (b)(2)(L), (M). Pub. L. 101-239, Sec. 7811(c)(2), added

subpars. (L) and (M) and struck out former subpars. (L) and (M)

which read as follows:

"(L) section 860E(e) (relating to taxes with respect to certain

residual interests), and

"(L) section 884 (relating to branch profits tax), and

"(M) section 143(m) (relating to recapture of portion of federal

subsidy from use of mortgage bonds and mortgage credit

certificates)."

Subsec. (b)(2)(N). Pub. L. 101-239, Sec. 7821(a)(4)(A), which

directed amendment of subsec. (b)(2) of this section "as amended by

section 11811" by adding subpar. (N), was executed as if it

directed amendment of subsec. (b)(2) of this section "as amended by

section 7811", to reflect the probable intent of Congress and the

renumbering of section 11811 of H.R. 3299 as section 7811 prior to

the enactment of H.R. 3299 into law as Pub. L. 101-239.

1988 - Subsec. (b)(2)(C). Pub. L. 100-647, Sec. 1011A(c)(10)(A),

struck out ", (o)(2)," after "subsection (m)(5)(B)".

Pub. L. 100-647, Sec. 5012(b)(2), substituted "(q), or (v)" for

"or (q)".

Subsec. (b)(2)(D). Pub. L. 100-647, Sec. 1011A(c)(10)(B),

substituted "72(t) (relating to 10-percent additional tax on early

distributions from qualified retirement plans)" for "408(f)

(relating to additional tax on income from certain retirement

accounts)".

Subsec. (b)(2)(K). Pub. L. 100-647, Sec. 1007(g)(1), substituted

"corporations)." for "corporations,".

Subsec. (b)(2)(L). Pub. L. 100-647, Sec. 1012(q)(8), added

subpar. (L) relating to branch profits tax.

Pub. L. 100-647, Sec. 1006(t)(16)(C), added subpar. (L) relating

to taxes with respect to certain residual interests.

Subsec. (b)(2)(M). Pub. L. 100-647, Sec. 4005(g)(4), added

subpar. (M).

1986 - Subsec. (a). Pub. L. 99-514, Sec. 701(c)(1)(A), amended

subsec. (a) generally. Prior to amendment, subsec. (a) read as

follows: "The aggregate amount of credits allowed by this subpart

for the taxable year shall not exceed the taxpayer's tax liability

for such taxable year."

Subsec. (b). Pub. L. 99-514, Sec. 701(c)(1)(B)(i), (v),

substituted "Regular tax liability" for "Tax liability" in heading

and "this part" for "this section" in introductory provisions.

Subsec. (b)(1). Pub. L. 99-514, Sec. 701(c)(1)(B)(ii),

substituted "regular tax liability" for "tax liability".

Subsec. (b)(2). Pub. L. 99-499 added subpar. (B) and redesignated

former subpars. (B) to (J) as (C) to (K), respectively.

Pub. L. 99-514, Sec. 701(c)(1)(B)(iii), substituted "section 55

(relating to minimum tax)" for "section 56 (relating to corporate

minimum tax)" in subpar. (A).

Pub. L. 99-514, Sec. 632(c)(1), substituted "certain built-in

gains" for "certain capital gains" in subpar. (G).

Pub. L. 99-514, Sec. 261(c), added subpar. (I).

Pub. L. 99-514, Sec. 701(c)(1)(B)(iv), added subpar. (J).

Subsec. (c). Pub. L. 99-514, Sec. 701(c)(1)(C), amended subsec.

(c) generally, substituting provisions relating to tentative

minimum tax for provisions referring to section 55(c) of this title

for similar rule for alternative minimum tax for taxpayers other

than corporations.

EFFECTIVE DATE OF 2002 AMENDMENT

Pub. L. 107-147, title IV, Sec. 415(b), Mar. 9, 2002, 116 Stat.

54, provided that: "The amendment made by this section [amending

this section] shall take effect as if included in section 4006 of

the Balanced Budget Act of 1997 [Pub. L. 105-33]."

Pub. L. 107-147, title VI, Sec. 601(c), Mar. 9, 2002, 116 Stat.

59, provided that: "The amendments made by this section [amending

this section and section 904 of this title] shall apply to taxable

years beginning after December 31, 2001."

EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENTS

Amendment by Pub. L. 107-16 inapplicable to taxable years

beginning during 2002 and 2003, see section 601(b)(2) of Pub. L.

107-147, set out as a note under section 23 of this title.

Pub. L. 107-22, Sec. 1(c), July 26, 2001, 115 Stat. 197, provided

that: "The amendments made by this section [amending this section

and sections 72, 135, 529, 530, 4973, 4975, and 6693 of this title]

shall take effect on the date of the enactment of this Act [July

26, 2001]."

Amendment by section 201(b)(2)(D) of Pub. L. 107-16 applicable to

taxable years beginning after Dec. 31, 2001, see section 201(e)(2)

of Pub. L. 107-16, set out as a note under section 24 of this

title.

Amendment by section 202(f)(2)(C) of Pub. L. 107-16 applicable to

taxable years beginning after Dec. 31, 2001, see section 202(g)(1)

of Pub. L. 107-16, set out as a note under section 23 of this

title.

Amendment by section 618(b)(2)(C) of Pub. L. 107-16 applicable to

taxable years beginning after Dec. 31, 2001, see section 618(d) of

Pub. L. 107-16, set out as a note under section 24 of this title.

Amendment by Pub. L. 107-16 inapplicable to taxable, plan, or

limitation years beginning after Dec. 31, 2010, and the Internal

Revenue Code of 1986 to be applied and administered to such years

as if such amendment had never been enacted, see section 901 of

Pub. L. 107-16, set out as a note under section 1 of this title.

EFFECTIVE DATE OF 1999 AMENDMENT

Amendment by Pub. L. 106-170 applicable to taxable years

beginning after Dec. 31, 1998, see section 501(c) of Pub. L.

106-170, set out as a note under section 24 of this title.

EFFECTIVE DATE OF 1998 AMENDMENT

Amendment by Pub. L. 105-277 applicable to taxable years

beginning after Dec. 31, 1997, see section 2001(c) of Pub. L.

105-277, set out as a note under section 24 of this title.

EFFECTIVE DATE OF 1997 AMENDMENT

Section 213(f) of Pub. L. 105-34 provided that: "The amendments

made by this section [enacting section 530 of this title and

amending this section and sections 135, 4973, 4975, and 6693 of

this title] shall apply to taxable years beginning after December

31, 1997."

Section 1602(i) of Pub. L. 105-34 provided that: "The amendments

made by this section [amending this section and sections 162, 220,

264, 877, 2107, 2501, 4975, 6050Q, 6652, 6693, 6724, and 7702B of

this title, renumbering section 6039F of this title as section

6039G of this title, and amending provisions set out as a note

under section 264 of this title] shall take effect as if included

in the provisions of the Health Insurance Portability and

Accountability Act of 1996 [Pub. L. 104-191] to which such

amendments relate."

EFFECTIVE DATE OF 1996 AMENDMENT

Section 1621(d) of Pub. L. 104-188 provided that: "The amendments

made by this section [enacting sections 860H to 860L of this title

and amending this section and sections 56, 382, 582, 856, 860G,

1202, and 7701 of this title] shall take effect on September 1,

1997."

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by section 7811(c)(1), (2) of Pub. L. 101-239

effective, except as otherwise provided, as if included in the

provision of the Technical and Miscellaneous Revenue Act of 1988,

Pub. L. 100-647, to which such amendment relates, see section 7817

of Pub. L. 101-239, set out as a note under section 1 of this

title.

Section 7823 of Pub. L. 101-239 provided that: "Except as

otherwise provided in this part [part II (Secs. 7821-7823) of

subtitle H of title VII of Pub. L. 101-239, amending this section

and sections 453A, 842, 1503, 6427, 6655, 6863, 7519, 7611, 9502,

9503, and 9508 of this title and enacting provisions set out as

notes under sections 56 and 7519 of this title], any amendment made

by this part shall take effect as if included in the provision of

the 1987 Act [Pub. L. 100-203, title X] to which such amendment

relates."

EFFECTIVE DATE OF 1988 AMENDMENT

Amendment by section 1006(t)(16)(C) of Pub. L. 100-647

applicable, with certain exceptions, to transfers after Mar. 31,

1988, and to excess inclusions for periods after Mar. 31, 1988, see

section 1006(t)(16)(D)(ii)-(iv) of Pub. L. 100-647, set out as a

note under section 860E of this title.

Amendment by sections 1007(g)(1), 1011A(c)(10), and 1012(q)(8) of

Pub. L. 100-647 effective, except as otherwise provided, as if

included in the provision of the Tax Reform Act of 1986, Pub. L.

99-514, to which such amendment relates, see section 1019(a) of

Pub. L. 100-647, set out as a note under section 1 of this title.

Amendment by section 4005(g)(4) of Pub. L. 100-647 applicable,

with certain exceptions, to financing provided, and mortgage credit

certificates issued, after Dec. 31, 1990, see section 4005(h)(3) of

Pub. L. 100-647, set out as a note under section 143 of this title.

Amendment by section 5012(b)(2) of Pub. L. 100-647 applicable to

contracts entered into on or after June 21, 1988, with special rule

where death benefit increases by more than $150,000, certain other

material changes taken into account, and certain exchanges

permitted, see section 5012(e) of Pub. L. 100-647, set out as an

Effective Date note under section 7702A of this title.

EFFECTIVE DATE OF 1986 AMENDMENTS

Amendment by section 261(c) of Pub. L. 99-514 applicable to

taxable years beginning after Dec. 31, 1986, see section 261(g) of

Pub. L. 99-514, set out as an Effective Date note under section

7518 of this title.

Amendment by section 632(c)(1) of Pub. L. 99-514 applicable to

taxable years beginning after Dec. 31, 1986, but only in cases

where the return for the taxable year is filed pursuant to an S

election made after Dec. 31, 1986, see section 633(b) of Pub. L.

99-514, as amended, set out as an Effective Date note under section

336 of this title.

Amendment by section 632(c)(1) of Pub. L. 99-514 not applicable

in the case of certain transactions, see section 54(d)(3)(D) of

Pub. L. 98-369, as amended, set out as an Effective Date of 1984

Amendment note under section 311 of this title.

Amendment by section 701(c)(1) of Pub. L. 99-514 applicable to

taxable years beginning after Dec. 31, 1986, with certain

exceptions and qualifications, see section 701(f) of Pub. L.

99-514, set out as an Effective Date note under section 55 of this

title.

Section 516(c) of Pub. L. 99-499 provided that: "The amendments

made by this section [enacting section 59A of this title and

amending this section and sections 164, 275, 936, 1561, 6154, 6425,

and 6655 of this title] shall apply to taxable years beginning

after December 31, 1986."

EFFECTIVE DATE

Section applicable to taxable years beginning after Dec. 31,

1983, and to carrybacks from such years, see section 475(a) of Pub.

L. 98-369, set out as an Effective Date of 1984 Amendment note

under section 21 of this title.

APPLICABILITY OF CERTAIN AMENDMENTS BY PUBLIC LAW 99-514 IN

RELATION TO TREATY OBLIGATIONS OF UNITED STATES

For applicability of amendment by section 701(c)(1) of Pub. L.

99-514 notwithstanding any treaty obligation of the United States

in effect on Oct. 22, 1986, with provision that for such purposes

any amendment by title I of Pub. L. 100-647 be treated as if it had

been included in the provision of Pub. L. 99-514 to which such

amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100-647,

set out as a note under section 861 of this title.

TREATMENT OF TAX IMPOSED UNDER FORMER SECTION 409(C)

Section 491(f)(5) of Pub. L. 98-369, as amended by Pub. L.

99-514, Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that: "For

purposes of section 26(b) of the Internal Revenue Code of 1986

[formerly I.R.C. 1954] (as amended by this Act), any tax imposed by

section 409(c) of such Code (as in effect before its repeal by this

section) shall be treated as a tax imposed by section 408(f) of

such Code."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 24, 25, 25B, 39, 55, 163,

469, 901, 1397E, 1400C, 6428 of this title.

-End-

-CITE-

26 USC Subpart B - Other Credits 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart B - Other Credits

-HEAD-

SUBPART B - OTHER CREDITS

-MISC1-

Sec.

27. Taxes of foreign countries and possessions of the

United States; possession tax credit.

[28. Renumbered.]

29. Credit for producing fuel from a nonconventional

source.

30. Credit for qualified electric vehicles.

30A. Puerto Rico economic activity credit.

AMENDMENTS

1997 - Pub. L. 105-34, title XVI, Sec. 1601(f)(1)(B), Aug. 5,

1997, 111 Stat. 1090, substituted "Puerto Rico" for "Puerto Rican"

in item 30A.

1996 - Pub. L. 104-188, title I, Secs. 1205(a)(3)(A),

1601(b)(2)(E), (F)(i), Aug. 20, 1996, 110 Stat. 1775, 1833,

substituted "Other Credits" for "Foreign Tax Credits, Etc." in

subpart heading, struck out item 28 "Clinical testing expenses for

certain drugs for rare diseases or conditions", and added item 30A.

1992 - Pub. L. 102-486, title XIX, Sec. 1913(b)(2)(A), Oct. 24,

1992, 106 Stat. 3020, added item 30.

1986 - Pub. L. 99-514, title II, Sec. 231(d)(3)(J), Oct. 22,

1986, 100 Stat. 2180, struck out item 30 "Credit for increasing

research activities".

1984 - Pub. L. 98-369, div. A, title IV, Sec. 471(b), July 18,

1984, 98 Stat. 826, added subpart B heading and analysis of

sections for subpart B consisting of items 27 (formerly 33), 28

(formerly 44H), 29 (formerly 44D), and 30 (formerly 44F). Former

subpart B was redesignated E.

-SECREF-

SUBPART REFERRED TO IN OTHER SECTIONS

This subpart is referred to in sections 38, 53, 469, 6401 of this

title.

-End-

-CITE-

26 USC Sec. 27 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart B - Other Credits

-HEAD-

Sec. 27. Taxes of foreign countries and possessions of the United

States; possession tax credit

-STATUTE-

(a) Foreign tax credit

The amount of taxes imposed by foreign countries and possessions

of the United States shall be allowed as a credit against the tax

imposed by this chapter to the extent provided in section 901.

(b) Section 936 credit

In the case of a domestic corporation, the amount provided by

section 936 (relating to Puerto Rico and possession tax credit)

shall be allowed as a credit against the tax imposed by this

chapter.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 13, Sec. 33; Pub. L. 94-455,

title X, Sec. 1051(a), Oct. 4, 1976, 90 Stat. 1643; renumbered Sec.

27, Pub. L. 98-369, div. A, title IV, Sec. 471(c), July 18, 1984,

98 Stat. 826.)

-MISC1-

AMENDMENTS

1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 33 of this

title as this section.

1976 - Pub. L. 94-455 designated existing provisions as subsec.

(a) and added subsec. (b).

EFFECTIVE DATE OF 1976 AMENDMENT

Section 1051(i) of Pub. L. 94-455, as amended by Pub. L. 99-514,

Sec. 2, Oct. 22, 1986, 100 Stat. 2095, provided that:

"(1) Except as provided by paragraph (2), the amendments made by

this section [enacting section 936 of this title and amending

sections 33 [now 27], 48, 116, 243, 246, 861, 901, 904, 931, 1504,

and 6091 of this title] shall apply to taxable years beginning

after December 31, 1975, except that 'qualified possession source

investment income' as defined in section 936(d)(2) of the Internal

Revenue Code of 1986 [formerly I.R.C. 1954] shall include income

from any source outside the United States if the taxpayer

establishes to the satisfaction of the Secretary of the Treasury or

his delegate that the income from such sources was earned before

October 1, 1976.

"(2) The amendment made by subsection (d)(2) [amending section

901 of this title] shall not apply to any tax imposed by a

possession of the United States with respect to the complete

liquidation occurring before January 1, 1979, of a corporation to

the extent that such tax is attributable to earnings and profits

accumulated by such corporation during periods ending before

January 1, 1976."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 23, 24, 25B, 26, 29, 30,

55, 59, 108, 469, 691, 1351 of this title.

-End-

-CITE-

26 USC [Sec. 28 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart B - Other Credits

-HEAD-

[Sec. 28. Renumbered Sec. 45C]

-STATUTE-

-End-

-CITE-

26 USC Sec. 29 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart B - Other Credits

-HEAD-

Sec. 29. Credit for producing fuel from a nonconventional source

-STATUTE-

(a) Allowance of credit

There shall be allowed as a credit against the tax imposed by

this chapter for the taxable year an amount equal to -

(1) $3, multiplied by

(2) the barrel-of-oil equivalent of qualified fuels -

(A) sold by the taxpayer to an unrelated person during the

taxable year, and

(B) the production of which is attributable to the taxpayer.

(b) Limitations and adjustments

(1) Phaseout of credit

The amount of the credit allowable under subsection (a) shall

be reduced by an amount which bears the same ratio to the amount

of the credit (determined without regard to this paragraph) as -

(A) the amount by which the reference price for the calendar

year in which the sale occurs exceeds $23.50, bears to

(B) $6.

(2) Credit and phaseout adjustment based on inflation

The $3 amount in subsection (a) and the $23.50 and $6 amounts

in paragraph (1) shall each be adjusted by multiplying such

amount by the inflation adjustment factor for the calendar year

in which the sale occurs. In the case of gas from a tight

formation, the $3 amount in subsection (a) shall not be adjusted.

(3) Credit reduced for grants, tax-exempt bonds, and subsidized

energy financing

(A) In general

The amount of the credit allowable under subsection (a) with

respect to any project for any taxable year (determined after

the application of paragraphs (1) and (2)) shall be reduced by

the amount which is the product of the amount so determined for

such year and a fraction -

(i) the numerator of which is the sum, for the taxable year

and all prior taxable years, of -

(I) grants provided by the United States, a State, or a

political subdivision of a State for use in connection with

the project,

(II) proceeds of any issue of State or local government

obligations used to provide financing for the project the

interest on which is exempt from tax under section 103, and

(III) the aggregate amount of subsidized energy financing

(within the meaning of section 48(a)(4)(C)) provided in

connection with the project, and

(ii) the denominator of which is the aggregate amount of

additions to the capital account for the project for the

taxable year and all prior taxable years.

(B) Amounts determined at close of year

The amounts under subparagraph (A) for any taxable year shall

be determined as of the close of the taxable year.

(4) Credit reduced for energy credit

The amount allowable as a credit under subsection (a) with

respect to any project for any taxable year (determined after the

application of paragraphs (1), (2), and (3)) shall be reduced by

the excess of -

(A) the aggregate amount allowed under section 38 for the

taxable year or any prior taxable year by reason of the energy

percentage with respect to property used in the project, over

(B) the aggregate amount recaptured with respect to the

amount described in subparagraph (A) -

(i) under section 49(b) or 50(a) for the taxable year or

any prior taxable year, or

(ii) under this paragraph for any prior taxable year.

The amount recaptured under section 49(b) or 50(a) with respect

to any property shall be appropriately reduced to take into

account any reduction in the credit allowed by this section by

reason of the preceding sentence.

(5) Credit reduced for enhanced oil recovery credit

The amount allowable as a credit under subsection (a) with

respect to any project for any taxable year (determined after

application of paragraphs (1), (2), (3), and (4)) shall be

reduced by the excess (if any) of -

(A) the aggregate amount allowed under section 38 for the

taxable year and any prior taxable year by reason of any

enhanced oil recovery credit determined under section 43 with

respect to such project, over

(B) the aggregate amount recaptured with respect to the

amount described in subparagraph (A) under this paragraph for

any prior taxable year.

(6) Application with other credits

The credit allowed by subsection (a) for any taxable year shall

not exceed the excess (if any) of -

(A) the regular tax for the taxable year reduced by the sum

of the credits allowable under subpart A and section 27, over

(B) the tentative minimum tax for the taxable year.

(c) Definition of qualified fuels

For purposes of this section -

(1) In general

The term "qualified fuels" means -

(A) oil produced from shale and tar sands,

(B) gas produced from -

(i) geopressured brine, Devonian shale, coal seams, or a

tight formation, or

(ii) biomass, and

(C) liquid, gaseous, or solid synthetic fuels produced from

coal (including lignite), including such fuels when used as

feedstocks.

(2) Gas from geopressured brine, etc.

(A) In general

Except as provided in subparagraph (B), the determination of

whether any gas is produced from geopressured brine, Devonian

shale, coal seams, or a tight formation shall be made in

accordance with section 503 of the Natural Gas Policy Act of

1978.

(B) Special rules for gas from tight formations

The term "gas produced from a tight formation" shall only

include gas from a tight formation -

(i) which, as of April 20, 1977, was committed or dedicated

to interstate commerce (as defined in section 2(18) of the

Natural Gas Policy Act of 1978, as in effect on the date of

the enactment of this clause), or

(ii) which is produced from a well drilled after such date

of enactment.

(3) Biomass

The term "biomass" means any organic material other than -

(A) oil and natural gas (or any product thereof), and

(B) coal (including lignite) or any product thereof.

(d) Other definitions and special rules

For purposes of this section -

(1) Only production within the United States taken into account

Sales shall be taken into account under this section only with

respect to qualified fuels the production of which is within -

(A) the United States (within the meaning of section 638(1)),

or

(B) a possession of the United States (within the meaning of

section 638(2)).

(2) Computation of inflation adjustment factor and reference

price

(A) In general

The Secretary shall, not later than April 1 of each calendar

year, determine and publish in the Federal Register the

inflation adjustment factor and the reference price for the

preceding calendar year in accordance with this paragraph.

(B) Inflation adjustment factor

The term "inflation adjustment factor" means, with respect to

a calendar year, a fraction the numerator of which is the GNP

implicit price deflator for the calendar year and the

denominator of which is the GNP implicit price deflator for

calendar year 1979. The term "GNP implicit price deflator"

means the first revision of the implicit price deflator for the

gross national product as computed and published by the

Department of Commerce.

(C) Reference price

The term "reference price" means with respect to a calendar

year the Secretary's estimate of the annual average wellhead

price per barrel for all domestic crude oil the price of which

is not subject to regulation by the United States.

(3) Production attributable to the taxpayer

In the case of a property or facility in which more than 1

person has an interest, except to the extent provided in

regulations prescribed by the Secretary, production from the

property or facility (as the case may be) shall be allocated

among such persons in proportion to their respective interests in

the gross sales from such property or facility.

(4) Gas from geopressured brine, Devonian shale, coal seams, or a

tight formation

The amount of the credit allowable under subsection (a) shall

be determined without regard to any production attributable to a

property from which gas from Devonian shale, coal seams,

geopressured brine, or a tight formation was produced in

marketable quantities before January 1, 1980.

(5) Barrel-of-oil equivalent

The term "barrel-of-oil equivalent" with respect to any fuel

means that amount of such fuel which has a Btu content of 5.8

million; except that in the case of qualified fuels described in

subparagraph (C) of subsection (c)(1), the Btu content shall be

determined without regard to any material from a source not

described in such subparagraph.

(6) Barrel defined

The term "barrel" means 42 United States gallons.

(7) Related persons

Persons shall be treated as related to each other if such

persons would be treated as a single employer under the

regulations prescribed under section 52(b). In the case of a

corporation which is a member of an affiliated group of

corporations filing a consolidated return, such corporation shall

be treated as selling qualified fuels to an unrelated person if

such fuels are sold to such a person by another member of such

group.

(8) Pass-thru in the case of estates and trusts

Under regulations prescribed by the Secretary, rules similar to

the rules of subsection (d) of section 52 shall apply.

(e) Application with the Natural Gas Policy Act of 1978

(1) No credit if section 107 of the Natural Gas Policy Act of

1978 is utilized

Subsection (a) shall apply with respect to any natural gas

described in subsection (c)(1)(B)(i) which is sold during the

taxable year only if such natural gas is sold at a lawful price

which is determined without regard to the provisions of section

107 of the Natural Gas Policy Act of 1978 and subtitle B of title

I of such Act.

(2) Treatment of this section

For purposes of section 107(d) of the Natural Gas Policy Act of

1978, this section shall not be treated as allowing any credit,

exemption, deduction, or comparable adjustment applicable to the

computation of any Federal tax.

(f) Application of section

This section shall apply with respect to qualified fuels -

(1) which are -

(A) produced from a well drilled after December 31, 1979, and

before January 1, 1993, or

(B) produced in a facility placed in service after December

31, 1979, and before January 1, 1993, and

(2) which are sold before January 1, 2003.

(g) Extension for certain facilities

(1) In general

In the case of a facility for producing qualified fuels

described in subparagraph (B)(ii) or (C) of subsection (c)(1) -

(A) for purposes of subsection (f)(1)(B), such facility shall

be treated as being placed in service before January 1, 1993,

if such facility is placed in service before July 1, 1998,

pursuant to a binding written contract in effect before January

1, 1997, and

(B) if such facility is originally placed in service after

December 31, 1992, paragraph (2) of subsection (f) shall be

applied with respect to such facility by substituting "January

1, 2008" for "January 1, 2003".

(2) Special rule

Paragraph (1) shall not apply to any facility which produces

coke or coke gas unless the original use of the facility

commences with the taxpayer.

-SOURCE-

(Added Pub. L. 96-223, title II, Sec. 231(a), Apr. 2, 1980, 94

Stat. 268, Sec. 44D; amended Pub. L. 97-34, title VI Sec. 611(a),

Aug. 13, 1981, 95 Stat. 339; Pub. L. 97-354, Sec. 5(a)(1), Oct. 19,

1982, 96 Stat. 1692; Pub. L. 97-448, title II, Sec. 202(a), Jan.

12, 1983, 96 Stat. 2396; renumbered Sec. 29 and amended Pub. L.

98-369, div. A, title IV, Secs. 471(c), 474(h), title VI, Sec.

612(e)(1), title VII, Sec. 722(d)(1), (2), July 18, 1984, 98 Stat.

826, 831, 912, 973; Pub. L. 99-514, title VII, Sec. 701(c)(3),

title XVIII, Sec. 1879(c)(1), Oct. 22, 1986, 100 Stat. 2340, 2906;

Pub. L. 100-647, title VI, Sec. 6302, Nov. 10, 1988, 102 Stat.

3755; Pub. L. 101-508, title XI, Secs. 11501(a), (b)(1), (c)(1),

11813(b)(1), 11816, Nov. 5, 1990, 104 Stat. 1388-479, 1388-550,

1388-558; Pub. L. 102-486, title XIX, Sec. 1918, Oct. 24, 1992, 106

Stat. 3025; Pub. L. 104-188, title I, Secs. 1205(d)(3), 1207(a),

Aug. 20, 1996, 110 Stat. 1776.)

-REFTEXT-

REFERENCES IN TEXT

The Natural Gas Policy Act of 1978, referred to in subsecs.

(c)(2)(A), (B)(i) and (e), is Pub. L. 95-621, Nov. 9, 1978, 92

Stat. 3350, as amended, which is classified generally to chapter 60

(Sec. 3301 et seq.) of Title 15, Commerce and Trade. Subtitle B of

title I of the Act, which was classified generally to part B of

subchapter I (Sec. 3331 et seq.) of chapter 60 of Title 15, was

repealed by Pub. L. 101-60, Sec. 2(b), July 26, 1989, 103 Stat.

158, effective Jan. 1, 1993. Section 2(18) of the Act is classified

to section 3301(18) of Title 15. Sections 107 and 503 of the Act,

which were classified to sections 3317 and 3413 of Title 15,

respectively, were repealed by Pub. L. 101-60, Secs. 2(b), 3(b)(5),

July 26, 1989, 103 Stat. 158, 159, effective Jan. 1, 1993. For

complete classification of this Act to the Code, see Short Title

note set out under section 3301 of Title 15 and Tables.

The date of the enactment of this clause, and such date of

enactment, referred to in subsec. (c)(2)(B), probably mean the date

of enactment of Pub. L. 101-508, which amended subsec. (c)(2)(B) of

this section generally, and which was approved Nov. 5, 1990.

-MISC1-

AMENDMENTS

1996 - Subsec. (b)(6)(A). Pub. L. 104-188, Sec. 1205(d)(3),

substituted "section 27" for "sections 27 and 28".

Subsec. (g)(1)(A). Pub. L. 104-188, Sec. 1207(a), substituted

"July 1, 1998" for "January 1, 1997" and "January 1, 1997" for

"January 1, 1996".

1992 - Subsec. (g). Pub. L. 102-486 added subsec. (g).

1990 - Subsec. (b)(3)(A)(i)(III). Pub. L. 101-508, Sec.

11813(b)(1)(A), substituted "section 48(a)(4)(C)" for "section

48(l)(11)(C)".

Subsec. (b)(4). Pub. L. 101-508, Sec. 11813(b)(1)(B), substituted

"section 49(b) or 50(a)" for "section 47" in two places.

Subsec. (b)(5), (6). Pub. L. 101-508, Sec. 11501(c)(1), added

par. (5) and redesignated former par. (5) as (6).

Subsec. (c)(1)(B) to (E). Pub. L. 101-508, Sec. 11816(a),

inserted "and" at end of subpar. (B), substituted a period for a

comma at end of subpar. (C), and struck out subpar. (D) which

related to qualifying processed wood fuels, and subpar. (E) which

related to steam produced from solid agricultural byproducts (not

including timber byproducts).

Subsec. (c)(2)(B). Pub. L. 101-508, Sec. 11501(b)(1), amended

subpar. (B) generally. Prior to amendment, subpar. (B) read as

follows: "The term 'gas produced from a tight formation' shall only

include -

"(i) gas the price of which is regulated by the United States,

and

"(ii) gas for which the maximum lawful price applicable under

the Natural Gas Policy Act of 1978 is at least 150 percent of the

then applicable price under section 103 of such Act."

Subsec. (c)(3). Pub. L. 101-508, Sec. 11813(b)(1)(C), amended

par. (3) generally. Prior to amendment, par. (3) read as follows:

"The term 'biomass' means any organic material which is an

alternate substance (as defined in section 48(l)(3)(B)) other than

coal (including lignite) or any product of such coal."

Subsec. (c)(4). Pub. L. 101-508, Sec. 11816(b)(1), struck out

par. (4) "Qualifying processed wood fuel" which read as follows:

"(A) In general. - The term 'qualifying processed wood fuel'

means any processed solid wood fuel (other than charcoal, fireplace

products, or a product used for ornamental or recreational

purposes) which has a Btu content per unit of volume or weight,

determined without regard to any nonwood elements, which is at

least 40 percent greater per unit of volume or weight than the Btu

content of the wood from which it is produced (determined

immediately before the processing).

"(B) Election. - A taxpayer shall elect, at such time and in such

manner as the Secretary by regulations may prescribe, as to whether

Btu content per unit shall be determined for purposes of this

paragraph on a volume or weight basis. Any such election -

"(i) shall apply to all production from a facility; and

"(ii) shall be effective for the taxable year with respect to

which it is made and for all subsequent taxable years and, once

made, may be revoked only with the consent of the Secretary."

Subsec. (c)(5). Pub. L. 101-508, Sec. 11816(b)(1), struck out

par. (5) "Agricultural byproduct steam" which read as follows:

"Steam produced from solid agricultural byproducts which is used by

the taxpayer in his trade or business shall be treated as having

been sold by the taxpayer to an unrelated person on the date on

which it is used."

Subsec. (d)(4). Pub. L. 101-508, Sec. 11816(b)(2), amended par.

(4) generally, striking out "Special rules applicable to" before

"Gas" in heading, redesignating former subpar. (A) as par. (4),

striking out subpar. (B) which related to the reference price and

application of phaseout for Devonian shale, and making minor

changes in phraseology.

Subsec. (d)(5), (6). Pub. L. 101-508, Sec. 11816(b)(3), (4),

redesignated par. (6) as (5), substituted "subparagraph (C)" for

"subparagraph (C), (D), or (E)", and struck out former par. (5)

which read as follows: "In the case of a facility for the

production of -

"(A) qualifying processed wood fuel,

or

"(B) steam from solid agricultural byproducts,

paragraph (1) of subsection (b) shall not apply with respect to the

amount of the credit allowable under subsection (a) for fuels sold

during the 3-year period beginning on the date the facility is

placed in service."

Subsec. (d)(7) to (9). Pub. L. 101-508, Sec. 11816(b)(3),

redesignated pars. (7) to (9) as (6) to (8), respectively.

Subsec. (f). Pub. L. 101-508, Sec. 11816(b)(5), amended subsec.

(f) generally, redesignating former par. (1) as subsec. (f), making

minor changes in phraseology, substituting par. (2) for former par.

(1)(B) which read as follows: "which are sold after December 31,

1979, and before January 1, 2003.", and striking out former par.

(2) which related to special rules applicable to qualified

processed wood and solid agricultural byproduct steam.

Subsec. (f)(1)(A)(i), (ii). Pub. L. 101-508, Sec. 11501(a)(1),

substituted "1993" for "1991".

Subsec. (f)(1)(B). Pub. L. 101-508, Sec. 11501(a)(2), substituted

"2003" for "2001".

1988 - Subsec. (f)(1)(A)(i), (ii). Pub. L. 100-647 substituted

"1991" for "1990".

1986 - Subsec. (b)(5). Pub. L. 99-514, Sec. 701(c)(3), amended

par. (5) generally. Prior to amendment, par. (5) read as follows:

"The credit allowed by subsection (a) for a taxable year shall not

exceed the taxpayer's tax liability for the taxable year (as

defined in section 26(b)), reduced by the sum of the credits

allowable under subpart A and sections 27 and 28."

Subsec. (d)(8). Pub. L. 99-514, Sec. 1879(c)(1), inserted

provision directing that a corporation which is a member of an

affiliated group of corporations filing a consolidated return shall

be treated as selling qualified fuels to an unrelated person if

such fuels are sold to such person by another member of such group.

1984 - Pub. L. 98-369, Sec. 471(c), renumbered section 44D of

this title as this section.

Subsec. (b)(1)(A). Pub. L. 98-369, Sec. 722(d)(1), substituted

"in which the sale occurs" for "in which the taxable year begins".

Subsec. (b)(2). Pub. L. 98-369, Sec. 722(d)(2), substituted "in

which the sale occurs" for "in which a taxable year begins".

Subsec. (b)(5). Pub. L. 98-369, Sec. 612(e)(1), substituted

"section 26(b)" for "section 25(b)".

Pub. L. 98-369, Sec. 474(h), amended par. (5) generally,

substituting "shall not exceed the taxpayer's tax liability for the

taxable year (as defined in section 25(b)), reduced by the sum of

the credits allowable under subpart A and sections 27 and 28" for

"shall not exceed the tax imposed by this chapter for such taxable

year, reduced by the sum of the credits allowable under a section

of this subpart having a lower number or letter designation than

this section, other than the credits allowable by sections 31, 39,

and 43. For purposes of the preceding sentence, the term 'tax

imposed by this chapter' shall not include any tax treated as not

imposed by this chapter under the last sentence of section 53(a)".

1983 - Subsec. (f)(1)(B), (2)(A)(i). Pub. L. 97-448 substituted

"December 31, 1979" for "December 3, 1979".

1982 - Subsec. (d)(9). Pub. L. 97-354 substituted "Pass-thru in

the case of estates and trusts" for "Pass-through in the case of

subchapter S corporations, etc." in par. heading, and substituted

provisions relating to the applicability of rules similar to rules

of subsec. (d) of section 52 for provisions relating to the

applicability of rules similar to rules of subsecs. (d) and (e) of

section 52.

1981 - Subsec. (e). Pub. L. 97-34 substituted provisions

respecting application with the Natural Gas Policy Act of 1978 for

prior provision reading "If the taxpayer makes an election under

section 107(d) of the Natural Gas Policy Act of 1978 to have

subsections (a) and (b) of section 107 of that Act, and subtitle B

of title I of that Act, apply with respect to gas described in

subsection (c)(1)(B)(i) produced from any well on a property, then

the credit allowable by subsection (a) shall not be allowed with

respect to any gas produced on that property."

EFFECTIVE DATE OF 1996 AMENDMENT

Section 1205(e) of Pub. L. 104-188 provided that: "The amendments

made by this section [amending this section and sections 30, 38,

39, 45C, 53, 55, and 280C of this title] shall apply to amounts

paid or incurred in taxable years ending after June 30, 1996."

Section 1207(b) of Pub. L. 104-188 provided that: "The amendment

made by this section [amending this section] shall take effect on

the date of the enactment of this Act [Aug. 20, 1996]."

EFFECTIVE DATE OF 1990 AMENDMENT

Section 11501(b)(2) of Pub. L. 101-508 provided that: "The

amendment made by paragraph (1) [amending this section] shall apply

to gas produced after December 31, 1990."

Section 11501(c)(2) of Pub. L. 101-508 provided that: "The

amendment made by paragraph (1) [amending this section] shall apply

to taxable years beginning after December 31, 1990."

Section 11813(c) of Pub. L. 101-508 provided that:

"(1) In general. - Except as provided in paragraph (2), the

amendments made by this section [enacting section 50 of this title

and amending this section and sections 38, 42, 46 to 49, 52, 55,

108, 145, 147, 168, 170, 179, 196, 280F, 312, 465, 469, 861, 865,

1016, 1033, 1245, 1274A, 1371, 1388 and 1503 of this title] shall

apply to property placed in service after December 31, 1990.

"(2) Exceptions. - The amendments made by this section shall not

apply to -

"(A) any transition property (as defined in section 49(e) of

the Internal Revenue Code of 1986 (as in effect on the day before

the date of the enactment of this Act [Nov. 5, 1990]),

"(B) any property with respect to which qualified progress

expenditures were previously taken into account under section

46(d) of such Code (as so in effect), and

"(C) any property described in section 46(b)(2)(C) of such Code

(as so in effect)."

Section 11821(a) of Pub. L. 101-508 provided that: "Except as

otherwise provided in this part, the amendments made by this part

[part I (Secs. 11801-11821) of subtitle H of title XI of Pub. L.

101-508, see Tables for classification] shall take effect on the

date of the enactment of this Act [Nov. 5, 1990]."

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by section 701(c)(3) of Pub. L. 99-514 applicable to

taxable years beginning after Dec. 31, 1986, with certain

exceptions and qualifications, see section 701(f) of Pub. L.

99-514, set out as an Effective Date note under section 55 of this

title.

Section 1879(c)(2) of Pub. L. 99-514 provided that: "The

amendment made by paragraph (1) [amending this section] shall take

effect as if included in the amendments made by section 231 of

Public Law 96-223 [see Effective Date note below]."

EFFECTIVE DATE OF 1984 AMENDMENT

Amendment by section 474(h) of Pub. L. 98-369 applicable to

taxable years beginning after Dec. 31, 1983, and to carrybacks from

such years, see section 475(a) of Pub. L. 98-369, set out as a note

under section 21 of this title.

Amendment by section 612(e)(1) of Pub. L. 98-369 applicable to

interest paid or accrued after Dec. 31, 1984, on indebtedness

incurred after Dec. 31, 1984, see section 612(g) of Pub. L. 98-369,

set out as an Effective Date note under section 25 of this title.

Section 722(d)(3) of Pub. L. 98-369 provided that: "The

amendments made by this subsection [amending this section] shall

apply to taxable years ending after December 31, 1979."

EFFECTIVE DATE OF 1983 AMENDMENT

Amendment by Pub. L. 97-448 effective, except as otherwise

provided, as if it had been included in the provision of the Crude

Oil Windfall Profit Tax Act of 1980, Pub. L. 96-223 to which such

amendment relates, see section 203(a) of Pub. L. 97-448, set out as

a note under section 6652 of this title.

EFFECTIVE DATE OF 1982 AMENDMENT

Amendment by Pub. L. 97-354 applicable to taxable years beginning

after Dec. 31, 1982, see section 6(a) of Pub. L. 97-354, set out as

an Effective Date note under section 1361 of this title.

EFFECTIVE DATE OF 1981 AMENDMENT

Section 611(b) of Pub. L. 97-34 provided that: "The amendment

made by this section [amending this section] shall apply to taxable

years ending after December 31, 1979."

EFFECTIVE DATE

Section 231(c) of Pub. L. 96-223 provided that: "The amendments

made by this section [enacting this section and amending section

6096 of this title] shall apply to taxable years ending after

December 31, 1979."

SAVINGS PROVISION

Section 11821(b) of Pub. L. 101-508 provided that: "If -

"(1) any provision amended or repealed by this part [part I

(Secs. 11801-11821) of subtitle H of title XI of Pub. L. 101-508,

see Tables for classification] applied to -

"(A) any transaction occurring before the date of the

enactment of this Act [Nov. 5, 1990],

"(B) any property acquired before such date of enactment, or

"(C) any item of income, loss, deduction, or credit taken

into account before such date of enactment, and

"(2) the treatment of such transaction, property, or item under

such provision would (without regard to the amendments made by

this part) affect liability for tax for periods ending after such

date of enactment,

nothing in the amendments made by this part shall be construed to

affect the treatment of such transaction, property, or item for

purposes of determining liability for tax for periods ending after

such date of enactment."

APPLICABILITY OF CERTAIN AMENDMENTS BY PUB. L. 99-514 IN RELATION

TO TREATY OBLIGATIONS OF UNITED STATES

For applicability of amendment by section 701(c)(3) of Pub. L.

99-514 notwithstanding any treaty obligation of the United States

in effect on Oct. 22, 1986, with provision that for such purposes

any amendment by title I of Pub. L. 100-647 be treated as if it had

been included in the provision of Pub. L. 99-514 to which such

amendment relates, see section 1012(aa)(2), (4) of Pub. L. 100-647,

set out as a note under section 861 of this title.

PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1989

For provisions directing that if any amendments made by subtitle

A or subtitle C of title XI [Secs. 1101-1147 and 1171-1177] or

title XVIII [Secs. 1800-1899A] of Pub. L. 99-514 require an

amendment to any plan, such plan amendment shall not be required to

be made before the first plan year beginning on or after Jan. 1,

1989, see section 1140 of Pub. L. 99-514, as amended, set out as a

note under section 401 of this title.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 30, 43, 53, 55, 613A, 772

of this title; title 42 section 13317.

-End-

-CITE-

26 USC Sec. 30 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart B - Other Credits

-HEAD-

Sec. 30. Credit for qualified electric vehicles

-STATUTE-

(a) Allowance of credit

There shall be allowed as a credit against the tax imposed by

this chapter for the taxable year an amount equal to 10 percent of

the cost of any qualified electric vehicle placed in service by the

taxpayer during the taxable year.

(b) Limitations

(1) Limitation per vehicle

The amount of the credit allowed under subsection (a) for any

vehicle shall not exceed $4,000.

(2) Phaseout

In the case of any qualified electric vehicle placed in service

after December 31, 2003, the credit otherwise allowable under

subsection (a) (determined after the application of paragraph

(1)) shall be reduced by -

(A) 25 percent in the case of property placed in service in

calendar year 2004,

(B) 50 percent in the case of property placed in service in

calendar year 2005, and

(C) 75 percent in the case of property placed in service in

calendar year 2006.

(3) Application with other credits

The credit allowed by subsection (a) for any taxable year shall

not exceed the excess (if any) of -

(A) the regular tax for the taxable year reduced by the sum

of the credits allowable under subpart A and sections 27 and

29, over -

(B) the tentative minimum tax for the taxable year.

(c) Qualified electric vehicle

For purposes of this section -

(1) In general

The term "qualified electric vehicle" means any motor vehicle -

(A) which is powered primarily by an electric motor drawing

current from rechargeable batteries, fuel cells, or other

portable sources of electrical current,

(B) the original use of which commences with the taxpayer,

and

(C) which is acquired for use by the taxpayer and not for

resale.

(2) Motor vehicle

For purposes of paragraph (1), the term "motor vehicle" means

any vehicle which is manufactured primarily for use on public

streets, roads, and highways (not including a vehicle operated

exclusively on a rail or rails) and which has at least 4 wheels.

(d) Special rules

(1) Basis reduction

The basis of any property for which a credit is allowable under

subsection (a) shall be reduced by the amount of such credit

(determined without regard to subsection (b)(3)).

(2) Recapture

The Secretary shall, by regulations, provide for recapturing

the benefit of any credit allowable under subsection (a) with

respect to any property which ceases to be property eligible for

such credit.

(3) Property used outside United States, etc., not qualified

No credit shall be allowed under subsection (a) with respect to

any property referred to in section 50(b) or with respect to the

portion of the cost of any property taken into account under

section 179.

(4) Election to not take credit

No credit shall be allowed under subsection (a) for any vehicle

if the taxpayer elects to not have this section apply to such

vehicle.

(e) Termination

This section shall not apply to any property placed in service

after December 31, 2006.

-SOURCE-

(Added Pub. L. 102-486, title XIX, Sec. 1913(b)(1), Oct. 24, 1992,

106 Stat. 3019; amended Pub. L. 104-188, title I, Secs. 1205(d)(4),

1704(j)(4)(A), Aug. 20, 1996, 110 Stat. 1776, 1881; Pub. L.

107-147, title VI, Sec. 602(a), Mar. 9, 2002, 116 Stat. 59.)

-MISC1-

PRIOR PROVISIONS

A prior section 30 was renumbered section 41 of this title.

AMENDMENTS

2002 - Subsec. (b)(2). Pub. L. 107-147, Sec. 602(a)(1)(A),

substituted "December 31, 2003," for "December 31, 2001," in

introductory provisions.

Subsec. (b)(2)(A). Pub. L. 107-147, Sec. 602(a)(1)(B),

substituted "2004" for "2002".

Subsec. (b)(2)(B). Pub. L. 107-147, Sec. 602(a)(1)(B),

substituted "2005" for "2003".

Subsec. (b)(2)(C). Pub. L. 107-147, Sec. 602(a)(1)(B),

substituted "2006" for "2004".

Subsec. (e). Pub. L. 107-147, Sec. 602(a)(2), substituted

"December 31, 2006" for "December 31, 2004".

1996 - Subsec. (b)(3)(A). Pub. L. 104-188, Sec. 1205(d)(4),

substituted "sections 27 and 29" for "sections 27, 28, and 29".

Subsec. (d)(1). Pub. L. 104-188, Sec. 1704(j)(4)(A)(i), inserted

"(determined without regard to subsection (b)(3))" before period at

end.

Subsec. (d)(4). Pub. L. 104-188, Sec. 1704(j)(4)(A)(ii), added

par. (4).

EFFECTIVE DATE OF 2002 AMENDMENT

Pub. L. 107-147, title VI, Sec. 602(c), Mar. 9, 2002, 116 Stat.

59, provided that: "The amendments made by this section [amending

this section, section 280F of this title, and provisions set out as

a note under section 280F of this title] shall apply to property

placed in service after December 31, 2001."

EFFECTIVE DATE OF 1996 AMENDMENT

Amendment by section 1205(d)(4) of Pub. L. 104-188 applicable to

amounts paid or incurred in taxable years ending after June 30,

1996, see section 1205(e) of Pub. L. 104-188, set out as a note

under section 29 of this title.

EFFECTIVE DATE

Section 1913(c) of Pub. L. 102-486 provided that: "The amendments

made by this section [enacting this section and 179A of this title

and amending sections 53, 55, 62, and 1016 of this title] shall

apply to property placed in service after June 30, 1993."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 53, 55, 179A, 1016, 6501

of this title.

-End-

-CITE-

26 USC Sec. 30A 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart B - Other Credits

-HEAD-

Sec. 30A. Puerto Rico economic activity credit

-STATUTE-

(a) Allowance of credit

(1) In general

Except as otherwise provided in this section, if the conditions

of both paragraph (1) and paragraph (2) of subsection (b) are

satisfied with respect to a qualified domestic corporation, there

shall be allowed as a credit against the tax imposed by this

chapter an amount equal to the portion of the tax which is

attributable to the taxable income, from sources without the

United States, from -

(A) the active conduct of a trade or business within Puerto

Rico, or

(B) the sale or exchange of substantially all of the assets

used by the taxpayer in the active conduct of such trade or

business.

In the case of any taxable year beginning after December 31,

2001, the aggregate amount of taxable income taken into account

under the preceding sentence (and in applying subsection (d))

shall not exceed the adjusted base period income of such

corporation, as determined in the same manner as under section

936(j).

(2) Qualified domestic corporation

For purposes of paragraph (1), the term "qualified domestic

corporation" means a domestic corporation -

(A) which is an existing credit claimant with respect to

Puerto Rico, and

(B) with respect to which section 936(a)(4)(B) does not apply

for the taxable year.

(3) Separate application

For purposes of determining -

(A) whether a taxpayer is an existing credit claimant with

respect to Puerto Rico, and

(B) the amount of the credit allowed under this section,

this section (and so much of section 936 as relates to this

section) shall be applied separately with respect to Puerto Rico.

(b) Conditions which must be satisfied

The conditions referred to in subsection (a) are -

(1) 3-year period

If 80 percent or more of the gross income of the qualified

domestic corporation for the 3-year period immediately preceding

the close of the taxable year (or for such part of such period

immediately preceding the close of such taxable year as may be

applicable) was derived from sources within a possession

(determined without regard to section 904(f)).

(2) Trade or business

If 75 percent or more of the gross income of the qualified

domestic corporation for such period or such part thereof was

derived from the active conduct of a trade or business within a

possession.

(c) Credit not allowed against certain taxes

The credit provided by subsection (a) shall not be allowed

against the tax imposed by -

(1) section 59A (relating to environmental tax),

(2) section 531 (relating to the tax on accumulated earnings),

(3) section 541 (relating to personal holding company tax), or

(4) section 1351 (relating to recoveries of foreign

expropriation losses).

(d) Limitations on credit for active business income

The amount of the credit determined under subsection (a) for any

taxable year shall not exceed the sum of the following amounts:

(1) 60 percent of the sum of -

(A) the aggregate amount of the qualified domestic

corporation's qualified possession wages for such taxable year,

plus

(B) the allocable employee fringe benefit expenses of the

qualified domestic corporation for such taxable year.

(2) The sum of -

(A) 15 percent of the depreciation allowances for the taxable

year with respect to short-life qualified tangible property,

(B) 40 percent of the depreciation allowances for the taxable

year with respect to medium-life qualified tangible property,

and

(C) 65 percent of the depreciation allowances for the taxable

year with respect to long-life qualified tangible property.

(3) If the qualified domestic corporation does not have an

election to use the method described in section 936(h)(5)(C)(ii)

(relating to profit split) in effect for the taxable year, the

amount of the qualified possession income taxes for the taxable

year allocable to nonsheltered income.

(e) Administrative provisions

For purposes of this title -

(1) the provisions of section 936 (including any applicable

election thereunder) shall apply in the same manner as if the

credit under this section were a credit under section

936(a)(1)(A) for a domestic corporation to which section

936(a)(4)(A) applies,

(2) the credit under this section shall be treated in the same

manner as the credit under section 936, and

(3) a corporation to which this section applies shall be

treated in the same manner as if it were a corporation electing

the application of section 936.

(f) Denial of double benefit

Any wages or other expenses taken into account in determining the

credit under this section may not be taken into account in

determining the credit under section 41.

(g) Definitions

For purposes of this section, any term used in this section which

is also used in section 936 shall have the same meaning given such

term by section 936.

(h) Application of section

This section shall apply to taxable years beginning after

December 31, 1995, and before January 1, 2006.

-SOURCE-

(Added Pub. L. 104-188, title I, Sec. 1601(b)(1), Aug. 20, 1996,

110 Stat. 1830; amended Pub. L. 105-34, title XVI, Sec.

1601(f)(1)(A), Aug. 5, 1997, 111 Stat. 1090; Pub. L. 106-554, Sec.

1(a)(7) [title III, Sec. 311(a)(2)], Dec. 21, 2000, 114 Stat. 2763,

2763A-640.)

-MISC1-

AMENDMENTS

2000 - Subsecs. (f) to (h). Pub. L. 106-554 added subsec. (f) and

redesignated former subsecs. (f) and (g) as (g) and (h),

respectively.

1997 - Pub. L. 105-34 substituted "Puerto Rico" for "Puerto

Rican" in section catchline.

EFFECTIVE DATE OF 2000 AMENDMENT

Pub. L. 106-554, Sec. 1(a)(7) [title III, Sec. 311(d)], Dec. 21,

2000, 114 Stat. 2763, 2763A-640, provided that: "Subsection (c)

[not classified to the Code] and the amendments made by this

section [amending this section and sections 280C and 857 of this

title] shall take effect as if included in the provisions of the

Ticket to Work and Work Incentives Improvement Act of 1999 [Pub. L.

106-170, see Tables for classification] to which they relate."

EFFECTIVE DATE OF 1997 AMENDMENT

Amendment by Pub. L. 105-34 effective as if included in the

provisions of the Small Business Job Protection Act of 1996, Pub.

L. 104-188, to which it relates, see section 1601(j) of Pub. L.

105-34, set out as a note under section 23 of this title.

EFFECTIVE DATE

Section 1601(c) of Pub. L. 104-188 provided that:

"(1) In general. - Except as provided in paragraph (2), the

amendments made by this section [enacting this section and amending

sections 55, 56, 59, and 936 of this title] shall apply to taxable

years beginning after December 31, 1995.

"(2) Special rule for qualified possession source investment

income. - The amendments made by this section shall not apply to

qualified possession source investment income received or accrued

before July 1, 1996, without regard to the taxable year in which

received or accrued.

"(3) Special transition rule for payment of estimated tax

installment. - In determining the amount of any installment due

under section 6655 of the Internal Revenue Code of 1986 after the

date of the enactment of this Act [Aug. 20, 1996] and before

October 1, 1996, only 1/2 of any increase in tax (for the taxable

year for which such installment is made) by reason of the

amendments made by subsections (a) and (b) [enacting this section

and amending sections 55, 56, 59, and 936 of this title] shall be

taken into account. Any reduction in such installment by reason of

the preceding sentence shall be recaptured by increasing the next

required installment for such year by the amount of such

reduction."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 55, 56, 59, 936 of this

title.

-End-

-CITE-

26 USC Subpart C - Refundable Credits 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart C - Refundable Credits

-HEAD-

SUBPART C - REFUNDABLE CREDITS

-MISC1-

Sec.

31. Tax withheld on wages.

32. Earned income.

33. Tax withheld at source on nonresident aliens and

foreign corporations.

34. Certain uses of gasoline and special fuels.

35. Health insurance costs of eligible individuals.

36. Overpayments of tax.

AMENDMENTS

2002 - Pub. L. 107-210, div. A, title II, Sec. 201(c)(2), Aug. 6,

2002, 116 Stat. 960, which directed amendment of the table of

sections for subpart C of part IV of this chapter by adding items

35 and 36 and striking out the last item, was executed to the table

of sections for this subpart which is in part IV of subchapter A of

this chapter by adding those items and striking out former item 35

"Overpayments of tax" to reflect the probable intent of Congress.

1984 - Pub. L. 98-369, div. A, title IV, Sec. 471(b), July 18,

1984, 98 Stat. 826, added subpart C heading and analysis of

sections for subpart C consisting of items 31, 32 (formerly 43), 33

(formerly 32), 34 (formerly 39), and 35 (formerly 45). Former

subpart C, setting out the rules for computing credit for expenses

of work incentive programs, was repealed.

-SECREF-

SUBPART REFERRED TO IN OTHER SECTIONS

This subpart is referred to in sections 24, 1397E, 6096, 6401,

6428 of this title.

-End-

-CITE-

26 USC Sec. 31 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart C - Refundable Credits

-HEAD-

Sec. 31. Tax withheld on wages

-STATUTE-

(a) Wage withholding for income tax purposes

(1) In general

The amount withheld as tax under chapter 24 shall be allowed to

the recipient of the income as a credit against the tax imposed

by this subtitle.

(2) Year of credit

The amount so withheld during any calendar year shall be

allowed as a credit for the taxable year beginning in such

calendar year. If more than one taxable year begins in a calendar

year, such amount shall be allowed as a credit for the last

taxable year so beginning.

(b) Credit for special refunds of social security tax

(1) In general

The Secretary may prescribe regulations providing for the

crediting against the tax imposed by this subtitle of the amount

determined by the taxpayer or the Secretary to be allowable under

section 6413(c) as a special refund of tax imposed on wages. The

amount allowed as a credit under such regulations shall, for

purposes of this subtitle, be considered an amount withheld at

source as tax under section 3402.

(2) Year of credit

Any amount to which paragraph (1) applies shall be allowed as a

credit for the taxable year beginning in the calendar year during

which the wages were received. If more than one taxable year

begins in the calendar year, such amount shall be allowed as a

credit for the last taxable year so beginning.

(c) Special rule for backup withholding

Any credit allowed by subsection (a) for any amount withheld

under section 3406 shall be allowed for the taxable year of the

recipient of the income in which the income is received.

-SOURCE-

(Aug. 16, 1954, ch. 736, 68A Stat. 12; Pub. L. 94-455, title XIX,

Sec. 1906(b)(13)(D), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97-248,

title III, Secs. 302(a), 308(a), Sept. 3, 1982, 96 Stat. 585, 591;

Pub. L. 97-354, Sec. 3(i)(4), Oct. 19, 1982, 96 Stat. 1691; Pub. L.

97-448, title III, Sec. 306(b)(1), Jan. 12, 1983, 96 Stat. 2405;

Pub. L. 98-67, title I, Secs. 102(a), 104(d)(2), Aug. 5, 1983, 97

Stat. 369, 379; Pub. L. 98-369, div. A, title IV, Sec. 471(c),

title VII, Sec. 714(j)(2), July 18, 1984, 98 Stat. 826, 962.)

-MISC1-

AMENDMENTS

1984 - Subsec. (a)(1). Pub. L. 98-369, Sec. 714(j)(2),

substituted "as tax under chapter 24" for "under section 3402 as

tax on the wages of any individual".

1983 - Pub. L. 98-67 added subsec. (c) and repealed amendments

made by Pub. L. 97-248. See 1982 Amendment note below.

Pub. L. 97-448 amended subsec. (d) generally. See 1982 Amendment

note below.

1982 - Pub. L. 97-248, as amended by Pub. L. 97-354 and Pub. L.

97-448, amended section generally, applicable to payments of

interest, dividends, and patronage dividends paid or credited after

June 30, 1983. Section 102(a), (b) of Pub. L. 98-67, title I, Aug.

5, 1983, 97 Stat. 369, repealed subtitle A (Secs. 301-308) of title

III of Pub. L. 97-248 as of the close of June 30, 1983, and

provided that the Internal Revenue Code of 1954 [now 1986] [this

title] shall be applied and administered (subject to certain

exceptions) as if such subtitle A (and the amendments made by such

subtitle A) had not been enacted.

1976 - Subsec. (b)(1). Pub. L. 94-455 struck out "or his

delegate" after "The Secretary" and "(or his delegate)" after

"taxpayer or the Secretary".

EFFECTIVE DATE OF 1984 AMENDMENT

Section 715 of Pub. L. 98-369 provided that: "Any amendment made

by this subtitle [subtitle A (Secs. 711-715) of title VII of Pub.

L. 98-369, see Tables for classification] shall take effect as if

included in the provision of the Tax Equity and Fiscal

Responsibility Act of 1982 [Pub. L. 97-248] to which such amendment

relates."

EFFECTIVE DATE OF 1983 AMENDMENTS

Section 110 of title I of Pub. L. 98-67 provided that:

"(a) General Rule. - Except as otherwise provided in this

section, the amendments made by this title [enacting sections 3406

and 6705 of this title, amending this section and sections 274,

275, 643, 661, 3402, 3403, 3502, 3507, 6011, 6013, 6015, 6042,

6044, 6049, 6051, 6365, 6401, 6413, 6652, 6653, 6654, 6676, 6678,

6682, 7205, 7215, 7431, 7654, and 7701 of this title, repealing

sections 3451 to 3456 of this title, enacting provisions set out as

notes under sections 1, 3451, and 6011 of this title, and repealing

provisions set out as a note under section 3451 of this title]

shall apply with respect to payments made after December 31, 1983.

"(b) Section 102. - The amendments made by section 102 [amending

this section and sections 274, 275, 643, 661, 3403, 3502, 3507,

6013, 6015, 6042, 6044, 6049, 6051, 6365, 6401, 6413, 6654, 6682,

7205, 7215, 7654, and 7701 of this title, repealing sections 3451

to 3456 of this title, enacting provisions set out as a note under

section 3451 of this title, and repealing provisions set out as a

note under section 3451 of this title] shall take effect as of the

close of June 30, 1983.

"(c) Sections 104(b) and 107. - The amendments made by sections

104(b) and 107 [amending sections 6682, 7205, and 7431 of this

title] shall take effect on the date of the enactment of this Act

[Aug. 5, 1983]."

Section 311(d) of Pub. L. 97-448 provided that: "The amendments

made by section 306 [amending this section and sections 48, 55,

263, 291, 312, 338, 401, 501, 1232, 6038A, 6226, 6228, 6679, and

7701 of this title, enacting provisions set out as notes under

sections 338 and 1232 of this title, and amending provisions set

out as notes under sections 56, 72, 101, 103, 168, 302, 311, 338,

415, 907, and 5701 of this title] shall take effect as if included

in the provisions of the Tax Equity and Fiscal Responsibility Act

of 1982 [Pub. L. 97-248] to which such amendments relate."

CONSTRUCTION OF AMENDMENT BY TITLE VII OF DIVISION A OF PUB. L.

98-369

Section 701 of title VII of div. A of Pub. L. 98-369 provided

that: "For purposes of applying the amendments made by any title of

this Act [see Tables for classification] other than this title, the

provisions of this title shall be treated as having been enacted

immediately before the provisions of such other titles."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 643, 874, 995, 3406,

3510, 6211, 6413, 6513, 6654 of this title.

-End-

-CITE-

26 USC Sec. 32 01/06/03

-EXPCITE-

TITLE 26 - INTERNAL REVENUE CODE

Subtitle A - Income Taxes

CHAPTER 1 - NORMAL TAXES AND SURTAXES

Subchapter A - Determination of Tax Liability

PART IV - CREDITS AGAINST TAX

Subpart C - Refundable Credits

-HEAD-

Sec. 32. Earned income

-STATUTE-

(a) Allowance of credit

(1) In general

In the case of an eligible individual, there shall be allowed

as a credit against the tax imposed by this subtitle for the

taxable year an amount equal to the credit percentage of so much

of the taxpayer's earned income for the taxable year as does not

exceed the earned income amount.

(2) Limitation

The amount of the credit allowable to a taxpayer under

paragraph (1) for any taxable year shall not exceed the excess

(if any) of -

(A) the credit percentage of the earned income amount, over

(B) the phaseout percentage of so much of the adjusted gross

income (or, if greater, the earned income) of the taxpayer for

the taxable year as exceeds the phaseout amount.

(b) Percentages and amounts

For purposes of subsection (a) -

(1) Percentages

The credit percentage and the phaseout percentage shall be

determined as follows:

(A) In general

In the case of taxable years beginning after 1995:

In the case of an eligible The credit The

individual with: percentage phaseout

is: percentage

is:

--------------------------------------------------------------------

1 qualifying child 34 15.98

2 or more qualifying children 40 21.06

No qualifying children 7.65 7.65

--------------------------------------------------------------------

(B) Transitional percentages for 1995

In the case of taxable years beginning in 1995:

In the case of an eligible The credit The

individual with: percentage phaseout

is: percentage

is:

--------------------------------------------------------------------

1 qualifying child 34 15.98

2 or more qualifying children 36 20.22

No qualifying children 7.65 7.65

--------------------------------------------------------------------

(C) Transitional percentages for 1994

In the case of a taxable year beginning in 1994:

In the case of an eligible The credit The

individual with: percentage phaseout

is: percentage

is:

--------------------------------------------------------------------

1 qualifying child 26.3 15.98

2 or more qualifying children 30 17.68

No qualifying children 7.65 7.65

--------------------------------------------------------------------

(2) Amounts

(A) In general

Subject to subparagraph (B), the earned income amount and the

phaseout amount shall be determined as follows:

In the case of an eligible The earned The

individual with: income amount phaseout

is: amount is:

--------------------------------------------------------------------

1 qualifying child $6,330 $11,610

2 or more qualifying children $8,890 $11,610

No qualifying children $4,220 $5,280

--------------------------------------------------------------------

(B) Joint returns

In the case of a joint return filed by an eligible individual

and such individual's spouse, the phaseout amount determined

under subparagraph (A) shall be increased by -

(i) $1,000 in the case of taxable years beginning in 2002,

2003, and 2004,

(ii) $2,000 in the case of taxable years beginning in 2005,

2006, and 2007, and

(iii) $3,000 in the case of taxable years beginning after

2007.

(c) Definitions and special rules

For purposes of this section -

(1) Eligible individual

(A) In general

The term "eligible individual" means -

(i) any individual who has a qualifying child for the

taxable year, or

(ii) any other individual who does not have a qualifying

child for the taxable year, if -

(I) such individual's principal place of abode is in the

United States for more than one-half of such taxable year,

(II) such individual (or, if the individual is married,

either the individual or the individual's spouse) has

attained age 25 but not attained age 65 before the close of

the taxable year, and

(III) such individual is not a dependent for whom a

deduction is allowable under section 151 to another

taxpayer for any taxable year beginning in the same

calendar year as such taxable year.

For purposes of the preceding sentence, marital status shall

be determined under section 7703.

(B) Qualifying child ineligible

If an individual is the qualifying child of a taxpayer for

any taxable year of such taxpayer beginning in a calendar year,

such individual shall not be treated as an eligible individual

for any taxable year of such individual beginning in such

calendar year.

(C) 2 or more claiming qualifying child

(i) In general

Except as provided in clause (ii), if (but for this

paragraph) an individual may be claimed, and is claimed, as a

qualifying child by 2 or more taxpayers for a taxable year

beginning in the same calendar year, such individual shall be

treated as the qualifying child of the taxpayer who is -

(I) a parent of the individual, or

(II) if subclause (I) does not apply, the taxpayer with

the highest adjusted gross income for such taxable year.

(ii) More than 1 claiming credit

If the parents claiming the credit with respect to any

qualifying child do not file a joint return together, such

child shall be treated as the qualifying child of -

(I) the parent with whom the child resided for the

longest period of time during the taxable year, or

(II) if the child resides with both parents for the same

amount of time during such taxable year, the parent with

the highest adjusted gross income.

(D) Exception for individual claiming benefits under section

911

The term "eligible individual" does not include any

individual who claims the benefits of section 911 (relating to

citizens or residents living abroad) for the taxable year.

(E) Limitation on eligibility of nonresident aliens

The term "eligible individual" shall not include any

individual who is a nonresident alien individual for any

portion of the taxable year unless such individual is treated

for such taxable year as a resident of the United States for

purposes of this chapter by reason of an election under

subsection (g) or (h) of section 6013.

(F) Identification number requirement

No credit shall be allowed under this section to an eligible

individual who does not include on the return of tax for the

taxable year -

(i) such individual's taxpayer identification number, and

(ii) if the individual is married (within the meaning of

section 7703), the taxpayer identification number of such

individual's spouse.

(G) Individuals who do not include TIN, etc., of any qualifying

child

No credit shall be allowed under this section to any eligible

individual who has one or more qualifying children if no

qualifying child of such individual is taken into account under

subsection (b) by reason of paragraph (3)(D).

(2) Earned income

(A) The term "earned income" means -

(i) wages, salaries, tips, and other employee compensation,

but only if such amounts are includible in gross income for the

taxable year, plus

(ii) the amount of the taxpayer's net earnings from

self-employment for the taxable year (within the meaning of

section 1402(a)), but such net earnings shall be determined

with regard to the deduction allowed to the taxpayer by section

164(f).

(B) For purposes of subparagraph (A) -

(i) the earned income of an individual shall be computed

without regard to any community property laws,

(ii) no amount received as a pension or annuity shall be

taken into account,

(iii) no amount to which section 871(a) applies (relating to

income of nonresident alien individuals not connected with

United States business) shall be taken into account,

(iv) no amount received for services provided by an

individual while the individual is an inmate at a penal

institution shall be taken into account, and

(v) no amount described in subparagraph (A) received for

service performed in work activities as defined in paragraph

(4) or (7) of section 407(d) of the Social Security Act to

which the taxpayer is assigned under any State program under

part A of title IV of such Act shall be taken into account, but

only to the extent such amount is subsidized under such State

program.

(3) Qualifying child

(A) In general

The term "qualifying child" means, with respect to any

taxpayer for any taxable year, an individual -

(i) who bears a relationship to the taxpayer described in

subparagraph (B),

(ii) who has the same principal place of abode as the

taxpayer for more than one-half of such taxable year, and

(iii) who meets the age requirements of subparagraph (C).

(B) Relationship test

(i) In general

An individual bears a relationship to the taxpayer

described in this subparagraph if such individual is -

(I) a son, daughter, stepson, or stepdaughter, or a

descendant of any such individual,

(II) a brother, sister, stepbrother, or stepsister, or a

descendant of any such individual, who the taxpayer cares

for as the taxpayer's own child, or

(III) an eligible foster child of the taxpayer.

(ii) Married children

Clause (i) shall not apply to any individual who is married

as of the close of the taxpayer's taxable year unless the

taxpayer is entitled to a deduction under section 151 for

such taxable year with respect to such individual (or would

be so entitled but for paragraph (2) or (4) of section

152(e)).

(iii) Eligible foster child

For purposes of clause (i), the term "eligible foster

child" means an individual not described in subclause (I) or

(II) of clause (i) who -

(I) is placed with the taxpayer by an authorized

placement agency, and

(II) the taxpayer cares for as the taxpayer's own child.

(iv) Adoption

For purposes of this subparagraph, a child who is legally

adopted, or who is placed with the taxpayer by an authorized

placement agency for adoption by the taxpayer, shall be

treated as a child by blood.

(C) Age requirements

An individual meets the requirements of this subparagraph if

such individual -

(i) has not attained the age of 19 as of the close of the

calendar year in which the taxable year of the taxpayer

begins,

(ii) is a student (as defined in section 151(c)(4)) who has

not attained the age of 24 as of the close of such calendar

year, or

(iii) is permanently and totally disabled (as defined in

section 22(e)(3)) at any time during the taxable year.

(D) Identification requirements

(i) In general

A qualifying child shall not be taken into account under

subsection (b) unless the taxpayer includes the name, age,

and TIN of the qualifying child on the return of tax for the

taxable year.

(ii) Other methods

The Secretary may prescribe other methods for providing the

information described in clause (i).

(E) Abode must be in the United States

The requirements of subparagraph (A)(ii) shall be met only if

the principal place of abode is in the United States.

(4) Treatment of military personnel stationed outside the United

States

For purposes of paragraphs (1)(A)(ii)(I) and (3)(E), the

principal place of abode of a member of the Armed Forces of the

United States shall be treated as in the United States during any

period during which such member is stationed outside the United

States while serving on extended active duty with the Armed

Forces of the United States. For purposes of the preceding

sentence, the term "extended active duty" means any period of

active duty pursuant to a call or order to such duty for a period

in excess of 90 days or for an indefinite period.

(d) Married individuals

In the case of an individual who is married (within the meaning

of section 7703), this section shall apply only if a joint return

is filed for the taxable year under section 6013.

(e) Taxable year must be full taxable year

Except in the case of a taxable year closed by reason of the

death of the taxpayer, no credit shall be allowable under this

section in the case of a taxable year covering a period of less

than 12 months.

(f) Amount of credit to be determined under tables

(1) In general

The amount of the credit allowed by this section shall be

determined under tables prescribed by the Secretary.

(2) Requirements for tables

The tables prescribed under paragraph (1) shall reflect the

provisions of subsections (a) and (b) and shall have income

brackets of not greater than $50 each -

(A) for earned income between $0 and the amount of earned

income at which the credit is phased out under subsection (b),

and

(B) for adjusted gross income between the dollar amount at

which the phaseout begins under subsection (b) and the amount

of adjusted gross income at which the credit is phased out

under subsection (b).

(g) Coordination with advance payments of earned income credit

(1) Recapture of excess advance payments

If any payment is made to the individual by an employer under

section 3507 during any calendar year, then the tax imposed by

this chapter for the individual's last taxable year beginning in

such calendar year shall be increased by the aggregate amount of

such payments.

(2) Reconciliation of payments advanced and credit allowed

Any increase in tax under paragraph (1) shall not be treated as

tax imposed by this chapter for purposes of determining the

amount of any credit (other than the credit allowed by subsection

(a)) allowable under this part.

[(h) Repealed. Pub. L. 107-16, title III, Sec. 303(c), June 7,

2001, 115 Stat. 55]

(i) Denial of credit for individuals having excessive investment

income

(1) In general

No credit shall be allowed under subsection (a) for the taxable

year if the aggregate amount of disqualified income of the

taxpayer for the taxable year exceeds $2,200.

(2) Disqualified income

For purposes of paragraph (1), the term "disqualified income"

means -

(A) interest or dividends to the extent includible in gross

income for the taxable year,

(B) interest received or accrued during the taxable year

which is exempt from tax imposed by this chapter,

(C) the excess (if any) of -

(i) gross income from rents or royalties not derived in the

ordinary course of a trade or business, over

(ii) the sum of -

(I) the deductions (other than interest) which are

clearly and directly allocable to such gross income, plus

(II) interest deductions properly allocable to such gross

income,

(D) the capital gain net income (as defined in section 1222)

of the taxpayer for such taxable year, and

(E) the excess (if any) of -

(i) the aggregate income from all passive activities for

the taxable year (determined without regard to any amount

included in earned income under subsection (c)(2) or

described in a preceding subparagraph), over

(ii) the aggregate losses from all passive activities for

the taxable year (as so determined).

For purposes of subparagraph (E), the term "passive activity" has

the meaning given such term by section 469.

(j) Inflation adjustments

(1) In general

In the case of any taxable year beginning after 1996, each of

the dollar amounts in subsections (b)(2) and (i)(1) shall be

increased by an amount equal to -

(A) such dollar amount, multiplied by

(B) the cost-of-living adjustment determined under section

1(f)(3) for the calendar year in which the taxable year begins,

determined -

(i) in the case of amounts in subsections (b)(2)(A) and

(i)(1), by substituting "calendar year 1995" for "calendar

year 1992" in subparagraph (B) thereof, and

(ii) in the case of the $3,000 amount in subsection

(b)(2)(B)(iii), by substituting "calendar year 2007" for

"calendar year 1992" in subparagraph (B) of such section 1.

(2) Rounding

(A) In general

If any dollar amount in subsection (b)(2)(A) (after being

increased under subparagraph (B) thereof), after being

increased under paragraph (1), is not a multiple of $10, such

dollar amount shall be rounded to the nearest multiple of $10.

(B) Disqualified income threshold amount

If the dollar amount in subsection (i)(1), after being

increased under paragraph (1), is not a multiple of $50, such

amount shall be rounded to the next lowest multiple of $50.

(k) Restrictions on taxpayers who improperly claimed credit in

prior year

(1) Taxpayers making prior fraudulent or reckless claims

(A) In general

No credit shall be allowed under this section for any taxable

year in the disallowance period.

(B) Disallowance period

For purposes of paragraph (1), the disallowance period is -

(i) the period of 10 taxable years after the most recent

taxable year for which there was a final determination that

the taxpayer's claim of credit under this section was due to

fraud, and

(ii) the period of 2 taxable years after the most recent

taxable year for which there was a final determination that

the taxpayer's claim of credit under this section was due to

reckless or intentional disregard of rules and regulations

(but not due to fraud).

(2) Taxpayers making improper prior claims

In the case of a taxpayer who is denied credit under this

section for any taxable year as a result of the deficiency

procedures under subchapter B of chapter 63, no credit shall be

allowed under this section for any subsequent taxable year unless

the taxpayer provides such information as the Secretary may

require to demonstrate eligibility for such credit.

(g742l) Coordination with certain means-tested programs

For purposes of -

(1) the United States Housing Act of 1937,

(2) title V of the Housing Act of 1949,

(3) section 101 of the Housing and Urban Development Act of

1965,

(4) sections 221(d)(3), 235, and 236 of the National Housing

Act, and

(5) the Food Stamp Act of 1977,

any refund made to an individual (or the spouse of an individual)

by reason of this section, and any payment made to such individual

(or such spouse) by an employer under section 3507, shall not be

treated as income (and shall not be taken into account in

determining resources for the month of its receipt and the

following month).

(m) Identification numbers

Solely for purposes of subsections (c)(1)(F) and (c)(3)(D), a

taxpayer identification number means a social security number

issued to an individual by the Social Security Administration

(other than a social security number issued pursuant to clause (II)

(or that portion of clause (III) that relates to clause (II)) of

section 205(c)(2)(B)(i) of the Social Security Act).