§ 6014. Income tax return—tax not computed by taxpayer

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1954

   Aug. 16, 1954, ch. 736, 68A Stat. 736 · 68A Stat. 736

   Enacted · 26 U.S.C. § 6014

   Aug. 16, 1954, ch. 736, 68A Stat. 736

   Source evidence

   Code source credit
   Aug. 16, 1954, ch. 736, 68A Stat. 736

2. 1964

   Revenue Act of 1964

   Pub. L. 88–272 title II § 201(d)(14) · 78 Stat. 19

   1. Struck · 26 U.S.C. § 6014(a)

      Pub. L. 88–272 struck out “34 or” before “37 shall not be allowed”

   2. Inserted · 26 U.S.C. § 6014(a)

      Pub. L. 88–272 inserted provision that in case of a married individual filing a separate return and electing benefits of this subsection, neither Table V in section 3(a) nor Table V in section 3(b) shall apply

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 88–272 struck out “34 or” before “37 shall not be allowed”, and inserted provision that in case of a married individual filing a separate return and electing benefits of this subsection, neither Table V in section 3(a) nor Table V in section 3(b) shall apply.

   Enacted provision · exact public law section
   (14) Section 6014(a) is amended by striking out “34 or”.

3. 1969

   Tax Reform Act of 1969

   Pub. L. 91–172 § 803(d)(1) · 83 Stat. 487

   Struck · 26 U.S.C. § 6014(a)

   Pub. L. 91–172, § 803(d)(1), raised the individual gross income limit of $5,000 to $10,000 for exercising the option to pay the tax under section 3 of this title, and struck out provisions relating to heads of household, surviving spouses and married individuals filing separate returns

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 91–172, § 803(d)(1), raised the individual gross income limit of $5,000 to $10,000 for exercising the option to pay the tax under section 3 of this title, and struck out provisions relating to heads of household, surviving spouses and married individuals filing separate returns.

   Enacted provision · exact public law section
   (1) Section 6014(a) (relating to election by taxpayer) is amended— (A) by striking out “$5,000” in the first sentence, and inserting in lieu thereof “$10,000”, and (B) by striking out the last two sentences.

4. 1969

   Tax Reform Act of 1969

   Pub. L. 91–172 § 942(a) · 83 Stat. 487

   Substituted · 26 U.S.C. § 6014(b)

   Pub. L. 91–172, § 942(a), substituted provisions authorizing the Secretary to promulgate regulations to compute the tax in cases where the gross income is $10,000 or more, where the gross income from sources other than wages on which the tax has been withheld at the source is more than $100, where the taxpayer is entitled to a credit under section 37 of this title, or where the taxpayer does not elect the standard deduction, for provisions authorizing the computation of the tax in cases where the gross income is $5,000 but not more than $5,200, or where the gross income from sources other than wages on which the tax has been withheld at the source is more than $100, but not more than $200

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 91–172, § 942(a), substituted provisions authorizing the Secretary to promulgate regulations to compute the tax in cases where the gross income is $10,000 or more, where the gross income from sources other than wages on which the tax has been withheld at the source is more than $100, where the taxpayer is entitled to a credit under section 37 of this title, or where the taxpayer does not elect the standard deduction, for provisions authorizing the computation of the tax in cases where the gross income is $5,000 but not more than $5,200, or where the gross income from sources other than wages on which the tax has been withheld at the source is more than $100, but not more than $200.

   Enacted provision · exact public law section
   (a) In General.— The first sentence of section 6014(b) (relating to regulations; tax not computed by taxpayer) is amended to read as follows: “The Secretary or his delegate shall prescribe regulations for carrying out this section, and such regulations may provide for the application of the rules of this section— “(1) to cases where the gross income includes items other than those enumerated by subsection (a), “(2) to cases where the gross income from sources other than wages on which the tax has been withheld at the source is more than $100, “(3) to cases where the gross income is $10,000 or more, “(4) to cases where the taxpayer is entitled to the credit provided by section 37 (relating to retirement income credit), or 26 USC 37. “(5) to cases where the taxpayer does not elect the standard deduction.”

5. 1976

   Pub. L. 94–455 title V · 90 Stat. 1520

   1. Substituted · 26 U.S.C. § 6014(a)

      Pub. L. 94–455, §§ 501(b)(8), 503(b)(2), 1906(b)(13(A), substituted “entitled to take the standard deduction provided by section 141 (other than an individual described in section 141(e))” for “entitled to elect to pay the tax imposed by section 3”

   2. Substituted · 26 U.S.C. § 6014(a)

      Pub. L. 94–455, §§ 501(b)(8), 503(b)(2), 1906(b)(13(A), substituted “take the standard deduction” for “pay the tax imposed by section 3”

   3. Struck · 26 U.S.C. § 6014(a)

      Pub. L. 94–455, §§ 501(b)(8), 503(b)(2), 1906(b)(13(A), struck out provision relating to disallowance of section 37 credit in determination of tax imposed by section 3 of this title

   4. Struck · 26 U.S.C. § 6014(a)

      Pub. L. 94–455, §§ 501(b)(8), 503(b)(2), 1906(b)(13(A), struck out “or his delegate” after “Secretary”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 94–455, §§ 501(b)(8), 503(b)(2), 1906(b)(13(A), substituted “entitled to take the standard deduction provided by section 141 (other than an individual described in section 141(e))” for “entitled to elect to pay the tax imposed by section 3” and “take the standard deduction” for “pay the tax imposed by section 3” and struck out provision relating to disallowance of section 37 credit in determination of tax imposed by section 3 of this title, and struck out “or his delegate” after “Secretary”.

   Enacted provision · exact public law
   TITLE V— TAX SIMPLIFICATION IN THE INDIVIDUAL INCOME TAX SEC. 501. REVISION OF TAX TABLES FOR INDIVIDUALS. (a) In General.— Section 3 (relating to optional tax tables for individuals) is amended to read as follows: “SEC. 3. TAX TABLES FOR INDIVIDUALS HAVING TAXABLE INCOME OF LESS THAN $20,000. “(a) General Rule.— In lieu of the tax imposed by section 1, there is hereby imposed for each taxable year on the taxable income of every individual whose taxable income for such year does not exceed $20,000, a tax determined under tables, applicable, to such taxable year, which shall be prescribed by the Secretary. in the tables so prescribed, the amounts of tax shall be computed on the basis of the rates prescribed by section 1. “(b) 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.” (b) Conforming Amendments.— (1) Section 4 (relating to rules for optional tax) is hereby repealed. (2) Section 36 (relating to credits not allowed to individuals paying optional tax or taking standard deduction) is amended— (A) by Striking out “PAYING OPTIONAL TAX OR” in the heading; and (B) by striking out “elects to pay the optional tax imposed by section 3, or if he” in such section. (3) Subsection (a) of section 144 (relating to election of standard deduction) is amended to read as follows: “(a) Method of Election.— The standard deduction shall be allowed if the taxpayer so elects in his return, and the Secretary shall prescribe the manner of signifying such election in the return. ”. (4) Subsection (c) of section 144 is amended— (A) by striking out paragraph (2); (B) by inserting “or” at the end of paragraph (1); and (C) by redesignating paragraph (3) as paragraph (2). (5) Subsection (d) of section 144 is hereby repealed. 26 USC 144. 26 USC 1211. (6) Section 1211(b)(3) (relating to computation of taxable income for purposes of limitation on capital losses) is amended by striking out the last sentence thereof. (7) Section 1304(b) (relating to certain provisions inapplicable 26 USC 1304. for income averaging) is amended by striking out paragraph (I) and by redesignating paragraphs (2), (3), (4), and (5) as paragraphs (1), (2), (3), and (4), respectively. (8) Section 6014(a) (relating to tax not computed by taxpayer) 26 USC 6014. is amended— (A) by striking out in the first sentence “entitled to elect to pay The tax imposed by section 3” and inserting in lieu Ante, p. 1558. thereof “entitled to take the standard deduction provided by section 141 (other than an individual described in section 141(e))”; and (B) by striking out in the second sentence “pay the tax imposed by section 3” and inserting in lieu thereof “take the standard deduction”. (9) Paragraph (5) of section 6014(b) is amended to read as follows: “(5) to cases where the taxpayer does not elect the standard deduction or where the taxpayer elects the standard deduction but is subject to the provisions of section 141(e) (relating to limitations in case of certain dependent taxpayers).” (c) Clerical Amendments.— (1) The table of sections for part I of subchapter A of chapter 1 is amended by striking out the items relating to sections 3 and 4 and inserting in lieu thereof: “Sec. 3. Tax tables for individuals having taxable income of less than 520.000.” (2) The table of sections for part IV of subchapter A of chapter 1 is amended by striking out “paying optional tax or” in the item relating to section 36. SEC. 502. DEDUCTION FOR ALIMONY ALLOWED IN DETERMINING ADJUSTED GROSS INCOME. (a) In General.— Section 62 (defining adjusted gross income) is 26 USC 62. amended by inserting after paragraph (12) the following new paragraph: “(13) Alimony.— The deduction allowed by section 215.” (b) Conforming Amendment.— The first sentence of subparagraph (A) of section 3402(m)(2) (relating to withholding allowances based 26 USC 3402. on itemized deductions) is amended by striking out “under section 62” and inserting in lieu thereof “under section 62 (other than paragraph (13) thereof)”. (c) Effective Date.— The amendments made by this section shall 26 USC 62 note. apply to taxable years beginning after December 31, 1976. SEC. 503. REVISION OF RETIREMENT INCOME CREDIT. (a) In General.— Section 37 (relating to retirement income) is 26 USC 37. amended to read as follows: “SEC. 37. CREDIT FOR THE ELDERLY. “(a) General Rule.— In the case of an individual who has attained age 65 before the close of the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 15 percent of such individual’s section 37 amount for such taxable year. “(b) Section 37 Amount.— For purposes of subsection (a) — “(1) In general.— An individual’s section 37 amount for the taxable year is the applicable initial amount determined under paragraph (2), reduced as provided in paragraph (3) and in subsection (c). “(2) Initial amount.— The initial amount is— “(A) $2,500 in the case of a single individual, “(B) $2,500 in the case of a joint return where only one spouse is eligible for the credit under subsection (a), “(C) $3,750 in the case of a joint return where both spouses are eligible for the credit under subsection (a), or “(D) $1,875 in the case of a married individual filing a separate return. “(3) Reduction.— The reduction under this paragraph is an amount equal to the sum of the amounts received by the individual (or, in the case of a joint return, by either spouse) as a pension or annuity— “(A) under title II of the Social Security Act, “(B) under the Railroad Retirement Act of 1935 or 1937, or “(C) otherwise excluded from gross income. No reduction shall be made under this paragraph for any amount 26 USC 72. excluded from gross income under section 72 (relating to annuities), 101 (relating to life insurance proceeds), 101 (relating to compensation for injuries or sickness), 105 (relating to amounts received under accident and health plans), 120 (relating to amounts Post, p. 1926. 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). “(c) Limitations.— “(1) Adjusted gross income limitation.— If the adjusted gross income of the taxpayer exceeds— “(A) $7,500 in the case of a single individual, “(B) $10,000 in the case of a joint return, or “(C) $5,000 in the case of a married individual filing a separate return, the section 87 amount shall be reduced by one-half of the excess of the adjusted gross income over $7,500, $10,000, or $5,000, as the case may be. “(2) Limitation based on amount of tax.— The amount of the credit allowed by this section for the taxable year shall not 26 USC 1. exceed the amount of the tax imposed by this chapter for such taxable year. “(d) Definitions and Special Rules.— For purposes of this section— “(1) Married couple must file joint 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 143. “(3) Joint return.— The term ‘joint return’ means the joint return of a husband and wife made under section 6013. “(e) Election of Prior Law With Respect to Public Retirement System Income.— “(1) In general.— In the case of a taxpayer who has not attained age 65 before the close of the taxable year (other than a married individual whose spouse has attained age 65 before the close of the taxable year), his credit (if any) under this section shall be determined under this subsection. “(2) One spouse age 65 or over.— In the case of a married individual who has not attained age 65 before the close of the taxable year but whose spouse has attained such age, this paragraph shall apply for the taxable year only if both spouses elect, at such time and in such manner as the Secret ary shall by regulations prescribe, to have this paragraph apply, If this paragraph applies for the taxable year, the credit (if any) of each spouse under this section shall be determined under this subsection. “(3) Computation of credit.— In the case of an individual whose credit under this section for the taxable year is determined under this subsection, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 15 percent of the amount received by such individual as retirement income (as defined in paragraph (4) and as limited by paragraph (5)). “(4) Retirement income.— For purposes of this subsection, the “Retirement income.” term ‘retirement income’ means— “(A) in the case of an individual who has attained age 65 before the close of the taxable year, income from— “(i) pensions and annuities (including, in the case of an individual who is, or has been, an employee within the meaning of section 401(c)(1), distributions by a trust 26 USC 401. described in section 401(a) which is exempt from tax under section 501 (a)), “(ii) interest, “(iii) rents, “(iv) dividends, “(v) bonds described in section 405(b)(1) which are received under a qualified bond purchase plan described in section 405(a) or in a distribution from a trust described in section 401(a) which is exempt from tax under section 501(a), or retirement bonds described in section 409, and “(vi) an individual retirement account described in section 408(a) or an individual retirement annuity described in section 408(b), or “(B) in the case of an individual who has not attained age 65 before the close of the taxable year, income from pensions and annuities under a public retirement system (as defined in paragraph (8)(A)), to the extent included in gross income without reference to this subsection, but only to the extent such income does not represent compensation for personal services rendered during the taxable year. “(5) Limitation on retirement income.— For purposes of this subsection, the amount of retirement income shall not exceed $2,500 less— “(A) the reduction provided by subsection (b)(3), and “(B) in the case of any individual who has not attained age 72 before the close of the taxable year— “(i) if such individual has not attained age 62 before the close of the taxable year, any amount of earned income (as defined in paragraph (8)(B)) in excess of $900 received by such individual in the taxable year, or “(ii) if such individual has attained age 62 before the close, of the taxable year, the sum of one-half the amount of earned income received by such individual in the taxable year in excess of $1,200 but not in excess of $1,700, and the amount of earned income so received in excess of $1,700. “(6) Limitation in case of mark led individuals.— In the case, of a joint return, paragraph (5) shall be applied by substituting ‘$3,750’ for ‘$2,500’. The $3,750 provided by the preceding sentence shall be divided between the spouses in such amounts as may be agreed on by them, except that not more than $2,500 may be assigned to either spouse. “(7) Limitation in the case of separate returns.— In the case of a married individual filing a separate return, paragraph (5) shall be applied by substituting ‘$1,875’ for ‘$2,500’, “(8) Definitions.— For purposes of this subsection— “(A) Public retirement system defined.— The term ‘public retirement system’ means a pension, annuity, retirement, or similar fund or system established by the United States, a State, a possession of the United States, any political subdivision of any of the foregoing, or the District of Columbia. “(B) Earned income.— The term ‘earned income’ has the meaning assigned to such term by section 911(b), except that such term does not include any amount received as a pension or annuity. “(f) Nonresident Alien Ineligible for Credit.— No credit shall be allowed tinder this section to any nonresident alien.” (b) Technical Amendments.— (1) Section 904 (relating to limitation on foreign tax credit), as amended by this Act, is amended by redesignating subsection (g) as subsection (h), and by inserting after subsection (f)(he following new subsection: “(g) Coordination With Credit for the Elderly.— In the case of an individual, for purposes of subsection (a) the tax against which the credit is taken is such tax reduced by the amount of the credit (if any) Ante, p. 1559. for the taxable year allowable under section 37 (relating to credit for the elderly).” (2) Section 6014(a) (relating to tax not computed by tax-payer) is amended by striking out the last sentence thereof. (3) Section 6014(b) is amended— (A) by striking out paragraph (4). (B) by redesignating paragraph (5)(as amended by section 501(b)(9)) as paragraph (4),and (C) by inserting “or” at the end of paragraph (3). (4) Sections 41(b)(2), 42(b)(2). 46(a)(3)(C), and 50A(a)(3)(C) are each amended by striking out “retirement income” and inserting in lieu thereof “credit for the elderly”. (5) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 37 and inserting in lien thereof the following: “Sec. 37. Credit for the elderly.” SEC. 504. CREDIT FOR CHILD CARE EXPENSES. (a) Allowances of Credit for Child Care Expenses.— (1) In general.— Subpart A of part IV of subchapter A of chapter 1 (relating to credits allowable) is amended by inserting before section 45 the following new section: “SEC. 44A. EXPENSES FOR HOUSEHOLD AND DEPENDENT CARE SERVICES NECESSARY FOR GAINFUL EMPLOYMENT. “(a) Allowance of Credit.— In the case of an individual who maintains a household which includes as a member one or more qualifying individuals (as defined in subsection (c)(1)). there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to ¿0 percent of the employment-related expenses (as defined in subsection (c)(2)) paid by such individual during the taxable year. “(b) Application With Other Credits.— The credit allowed by subsection (a) shall not exceed the amount of the tax imposed by this chapter for the taxable year reduced by the stun of the credits allowable under— “(1) section 33 (relating to foreign tax credit), Post, p. 1643. Ante, p. 1559. “(2) section 37 (relating to credit for the elderly). “(3) section 38 (relating to investment in certain depreciable property), “(4) section 40 (relating to expenses of work incentive programs), “(5) section 41 (relating to contributions to candidates for public office), “(6) section 42 (relating to general tax credit), and “(7) section 44 (relating to purchase of new principal residence). “(c) 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 ago of 15 and with respect to whom the taxpayer is entitled to a deduction under section 151(e), “(B) a dependent of the taxpayer who is physically or mentally incapable of caring for himself, or “(C) the spouse of the taxpayer, if he is physically or mentally incapable of caring for himself. “(2) Employment-related expenses.— “(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. “(B) Exception.— Employment-related expenses described in subparagraph (A) which are incurred for services outside the taxpayer’s household shall be taken into account only if incurred for the care of a qualifying individual described in paragraph (1)(A). “(d) Dollar 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) $2,000 if there is 1 qualifying individual with respect to the taxpayer for such taxable year, or “(2) $4,000 if there are 2 or more qualifying individuals with respect to the taxpayer for such taxable year. “(e) Earned 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 (be close of such year, the lesser of such individual’s earned income or the earned income of his spouse for such year, “(2) Special rule for spouse who is a student or incapable of caring for himself.— In the case of a spouse who is a student or a qualifying individual described in Subsection (c)(1)(C), for purposes of paragraph (1), such spouse shall be deemed for each month during which such spouse is a full-time student at an educational institution, or is such a qualifying individual, to be gainfully employed and to have earned income of not less than— “(A) $166 if subsection (d)(1) applies for the taxable year, or “(B) $333 if subsection (d)(2) applies for the taxable year. In the case of any husband and wife, this paragraph shall apply with respect, to only one spouse for any one month. “(f) Special Rules.— For purposes of this section— “(1) Maintaining household.— An individual shall be treated as maintaining a household for any period only if over half the cost of maintaining the household for such period is furnished by such individual (or, if such individual is married during such period, is furnished by such individual and his spouse). “(2) Married couples must file joint return.— If tile tax-payer is married at the close of the taxable year, the credit shall be allowed under subsection (a) only if the taxpayer and Ids 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) 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 hi the custody of one or both of his parents for more than one-half of the calendar year, in the case of any taxable, year beginning in such calendar year such child shall be treated as being a qualifying individual described in subparagraph (A) or (B) of subsection (c)(1). as the case may be with respect to that 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. “(6) Payments to related individuals.— “(A) In general.— Except as provided in subparagraph (B), no credit, shall be allowed under subsection (a) for any amount paid by the taxpayer to an individual bearing a relationship to the taxpayer described in paragraphs (1) through (8) of section 152(a) (relating to definition of dependent) or to a dependent described in paragraph (9) of such section. “(B) Exception.— Subparagraph (A) shall not apply to any amount paid by the taxpayer to an individual with respect to whom, for the taxable year of the taxpayer in which the service is performed, neither the taxpayer nor his spouse is entitled to a deduction under section 151(e) (relating to deduction for personal exemptions for dependents), but only if the service with respect to which such amount is paid constitutes employment within the meaning of section 3121(b). “(7) Student.— The term ‘student’ means an individual who “Student.” during each of 5 calendar months during the taxable year is a full-time student at an educational organization. “(8) Educational organization.— The term ‘educational organization’ “Educational organization.” means an educational organization described in section 170(b)(1)(A)(ii). “(g) Regulations.— The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.” (2) Clerical amendment.— The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by inserting before the item relating to section 45 the following new item: “Sec. 44A. Expenses for household and dependent cure services necessary for gainful employment.” (b) Repeal of Deduction for Child Care Expenses.— (1) In general.— Section 214 (relating to expenses for household 26 USC 214. and dependent care services necessary for gainful employment) is hereby repealed. (2) Clerical amendment.— The table of sections for part VII of subchapter B of chapter 1 is amended by striking out the item relating to section 214. (c) Technical Amendments.— (1) Section 213(f) (relating to exclusion of amounts allowed 26 USC 213. for care of certain dependents) is amended by striking out “a deduction under section 214” and inserting in lieu thereof “a credit under section 44A”. Ante, p. 1563. 26 USC 6096. (2) Section 9096(b)(defining income tax liability) is amended by striking out “and 44” and inserting in lieu thereof “, 44, and 44A”. (3) Paragraph (4) of section 3402(m) (relating to withholding allowances based on itemized deductions) is amended by striking out “and” at the end of subparagraph (A), by striking out the period at the end of subparagraph (B) and inserting in lieu thereof “, and” , and by adding at the end thereof the following new subparagraph: “(C) may take into account tax credits to which employees are entitled.” SEC. 505. CHANGES IN EXCLUSIONS FOR SICK PAY AND CERTAIN MILITARY, ETC, DISABILITY PENSIONS; CERTAIN DISABILITY INCOME. (a) Sick Pay.— Subsection (d) of section 105 (relating to amounts excluded from gross income under wage continuation plans) is amended to read as follows: “(d) Certain Disability Payments.— “(1) In general.— In the case of a taxpayer who— “(A) has not attained age 65 before the close of the taxable year, and “(B) retired on disability and, when he retired, was permanently and totally disabled, gross income does not include amounts referred to in subsection (a) if such amounts constitute wages or payments in lieu of wages for a period during which the employee is absent from work on account of permanent and total disability. “(2) Limitation.— This subsection shall not apply to the extent that the amounts referred to in paragraph (1) exceed a weekly rate of $100. “(3) Phaseout over $15,000.— If the adjusted gross income of the taxpayer for the taxable year (determined without regard to this subsection) exceeds $15,000, the amount which but for this paragraph would be excluded under this subsection for the taxable year shall be reduced by an amount equal to tire excess of the adjusted gross income (as so determined) over $15,000. “(4) Married couple must file joint return.— Except in the ease 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 exclusion provided by this subsection shall be allowed only if the taxpayer and his spouse file a joint return for the taxable year. For purposes of this subsection, marital status shall be determined under section 143. “(5) Permanent and total disability defined.— For purposes of this subsection, an individual is permanently and totally disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. 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. “(6) Joint return.— For purposes of this subsection, the term ‘joint return’ means the joint return of a husband and wife made under section 6013. “(7) Coordination with section 72.— In the case of an individual described in subparagraphs (A) and (B) of paragraph (1), for purposes of section 72 the annuity starting date shall not be deemed to occur before the beginning of the taxable year in which the taxpayer attains age 65, or before the beginning of an earlier taxable year for which the taxpayer makes an irrevocable election not to seek the benefits of this subsection for such year and all subsequent years.” (b) Certain Military, Etc., Disability Pensions.— Section 104 26 USC 104. (relating to compensation for injuries or sickness) is amended by redesignating subsection (b) as subsection (c) and by inserting after subsection (a) the following new subsection: “(b) Termination of Application of Subsection (a)(4) in Certain Cases.— “(1) In general.— Subsection (a)(4) shall not apply in the case of any individual who is not described in paragraph (2). “(2) Individuals to whom subsection (a)(4) continues to apply.— An individual is described in this paragraph if— “(A) on or before September 24, 1975, he was entitled to receive any amount described in subsection (a)(4), “(B) on September 24, 1975, be was a member of any organization (or reserve component thereof) referred to in subsection (a)(4) or under a binding written commitment to become such a member, “(C) he receives an amount described in subsection (a)(4) by reason of a com bat-related injury, or “(D) on application therefor, he would be entitled to receive disability compensation from the Veterans’ Administration. “(3) Special rules for combat-related injuries.— For purposes “Combat-related injury.” of this subsection, the term ‘combat-related injury’ means personal injury or sickness— “(A) which is incurred— “(i) as a direct result of armed conflict. “(ii) while engaged in extrahazardous service, or “(iii) under conditions stimulating war; or “(B) which is caused by an instrumentality of war. In the case of an individual who is not described in subparagraph (A) or (B) of paragraph (2), except as provided in paragraph (4), the only amounts taken into account under subsection (a)(4) shall be the amounts which he receives by reason of a combat-related injury. “(4) Amount excluded to be not less than veterans’ disability compensation.— In the case of any individual described in paragraph (2), the amounts excludable under subsection (a)(4) for any period with respect to any individual shall not be less than the maximum amount which such individual, on application therefor, would be entitled to receive as disability compensation from the Veterans’ Administration.” (c) Special Rule for Existing Permanent and Total Disability Cases.— In the case of any individual who— (1) retired before January 1, 1976, (2) either retired on disability or was entitled to retire on disability, and (3) on January 1, 1976, was permanently and totally disabled (within the meaning of section 105(d)(5) ‘of the Internal Revenue Code of 1954), Ante, p. 1566. such individual shall be deemed to have met the requirements of section Ante, p. 1566. 105(d)(1)(B) of such Code (as amended by subsection (a) of this section). (d) Special Rule for Coordination With Section 72.— In the case of an individual who— (1) retired on disability before January 1, 1976, and (2) on December 31, 1975, was entitled to exclude any amount with respect to such retirement disability from gross income under section 105(d) of the Internal Revenue. Code of 1954, for purposes of section 72 the annuity starting date shall not be deemed to occur before the beginning of the taxable year in which the taxpayer attains age 65, or before the beginning of an earlier taxable year for which the taxpayer makes an irrevocable election not to seek the benefits of this subsection for such year and all subsequent years. (e) Certain Disability Income.— (1) In general.— Section 104(a) (relating to compensation for injuries or sickness) is amended— (A) by striking out “and” at the end of paragraph (3); (B) by striking out the period at the end of paragraph (4) and inserting in lieu thereof a semicolon and the word “and”; and (C) by adding at the end thereof the following new paragraph: “(5) amounts received by an individual as disability income attributable to injuries incurred as a direct result of a violent attack which the Secretary’ of State determines to be a terrorist attack and which occurred while such individual was an employee of the United States engaged in the performance of his official duties outside the United States.” (2) Effective date.— The amendments made by this subsection shall apply to taxable years beginning after December 31, 1976. SEC. 506. MOVING EXPENSES. (a) Decrease in Mileage Test From 50 Miles to 35 Miles.— Paragraph (1) of section 217(c) (relating to conditions for allowance of deduction for moving expenses) is amended by striking out “50 miles” each place it appears and inserting in lieu thereof “35 miles”. (b) Increase in Dollar Amounts.— (1) Certain expenses of traveling, meals, and lodging after obtaining employment.— The first sentence of subparagraph (A) of section 217(b)(3) (relating to dollar limits) is amended by Striking out “$1,000” and inserting in lieu thereof “$1,500”. (2) Aggregate dollar limit.— The second sentence of subparagraph (A) of section 217(b)(3) is amended by striking out “$2,500” and inserting in lieu thereof “$3,000”. (3) Separate returns.— The second sentence of subparagraph (B) of section 217(b)(3) (relating to dollar limits in the case of husband and wife) is amended to read as follows: “In the case of a husband and wife filing separate returns, subparagraph (A) shall be applied by substituting ‘$750’ for ‘$1,500’, and by substituting ‘$1,500’ for ‘$3,000’.” (c) Rules for Members of the Armed Forces of the United States.— Section 217 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection: “(g) Rules for Members of the Armed Forces of the United States.— In the case of a member of the Armed Forces of the United States on active duty who moves pursuant to a military order and incident to a permanent change of station— “(1) the limitations under subsection (c) shall not apply; “(2) any moving and storage expenses which are furnished in kind (or for which reimbursement or an allowance is provided, but only to the extent of the expenses paid or incurred) to such member, his spouse, or his dependents, shall not be includible in gross income, and no reporting with respect to such expenses shall be required by the Secretary of Defense or the Secretary of Transportation, as the care may be; and “(3) if moving and storage expenses are furnished in kind (or if reimbursement, or an allowance for such expenses is provided) to such member’s spouse and his dependents with regard to moving to a location other than the one to which such member moves (or from a location other than the one from which such member moves), this section shall apply with respect to the moving expenses of his spouse and dependents— “(A) as if his spouse commenced work as an employee at a new principal place of work at such location; “(B) for purposes of subsection (b)(3), as if such place of work was within the same general location as the member’s new principal place, of work, and “(C) without regard to the limitations under subsection (c)” (d) Effective Date.— The amendments made by subsections (a) 26 USC 217 note. and (b) shall apply to taxable years beginning after December 31, 1976. SEC. 507. TAX REVISION STUDY. (a) Study.— The Joint Committee on Taxation shall make a full and complete study and investigation with respect to simplifying and indexing the tax laws of the United States. Such study and investigation shall include a consideration of whether the rates of tax can be reduced by repealing any or all tax deductions, exemptions, or credits. (b) Report.— Before July 1, 1977, the Joint Committee on Taxation Report to congressional committees. shall submit to the Committee on Finance of the Senate and to the Committee on Ways and Means of the House of Representatives a report of its study and investigation together with its recommendations, including recommendations for legislation. SEC. 508. EFFECTIVE DATE. Except as other wise provided, the amendments made by this title shall apply to taxable years beginning after December 31, 1975.

6. 1976

   Pub. L. 94–455 title V · 90 Stat. 1520

   1. Struck · 26 U.S.C. § 6014(b)

      Pub. L. 94–455, §§ 501(b)(9), 503(b)(3), 1906(b)(13)(A), struck out an introductory provision, “or his delegate” after “Secretary”

   2. Redesignated · 26 U.S.C. § 6014(b)

      Pub. L. 94–455, §§ 501(b)(9), 503(b)(3), 1906(b)(13)(A), redesignated former par. (5) as (4), and as so redesignated

   3. Struck and inserted · 26 U.S.C. § 6014(b)

      Pub. L. 94–455, §§ 501(b)(9), 503(b)(3), 1906(b)(13)(A), inserted reference to where the taxpayer elects the standard deduction but is subject to the provisions of section 141(e) (relating to limitations in case of certain dependent taxpayers). Former par. (4), which related to cases where the taxpayer is entitled to credit provided by section 37 of this title, was struck out

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 94–455, §§ 501(b)(9), 503(b)(3), 1906(b)(13)(A), struck out an introductory provision, “or his delegate” after “Secretary”, redesignated former par. (5) as (4), and as so redesignated, inserted reference to where the taxpayer elects the standard deduction but is subject to the provisions of section 141(e) (relating to limitations in case of certain dependent taxpayers). Former par. (4), which related to cases where the taxpayer is entitled to credit provided by section 37 of this title, was struck out.

   Enacted provision · exact public law
   TITLE V— TAX SIMPLIFICATION IN THE INDIVIDUAL INCOME TAX SEC. 501. REVISION OF TAX TABLES FOR INDIVIDUALS. (a) In General.— Section 3 (relating to optional tax tables for individuals) is amended to read as follows: “SEC. 3. TAX TABLES FOR INDIVIDUALS HAVING TAXABLE INCOME OF LESS THAN $20,000. “(a) General Rule.— In lieu of the tax imposed by section 1, there is hereby imposed for each taxable year on the taxable income of every individual whose taxable income for such year does not exceed $20,000, a tax determined under tables, applicable, to such taxable year, which shall be prescribed by the Secretary. in the tables so prescribed, the amounts of tax shall be computed on the basis of the rates prescribed by section 1. “(b) 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.” (b) Conforming Amendments.— (1) Section 4 (relating to rules for optional tax) is hereby repealed. (2) Section 36 (relating to credits not allowed to individuals paying optional tax or taking standard deduction) is amended— (A) by Striking out “PAYING OPTIONAL TAX OR” in the heading; and (B) by striking out “elects to pay the optional tax imposed by section 3, or if he” in such section. (3) Subsection (a) of section 144 (relating to election of standard deduction) is amended to read as follows: “(a) Method of Election.— The standard deduction shall be allowed if the taxpayer so elects in his return, and the Secretary shall prescribe the manner of signifying such election in the return. ”. (4) Subsection (c) of section 144 is amended— (A) by striking out paragraph (2); (B) by inserting “or” at the end of paragraph (1); and (C) by redesignating paragraph (3) as paragraph (2). (5) Subsection (d) of section 144 is hereby repealed. 26 USC 144. 26 USC 1211. (6) Section 1211(b)(3) (relating to computation of taxable income for purposes of limitation on capital losses) is amended by striking out the last sentence thereof. (7) Section 1304(b) (relating to certain provisions inapplicable 26 USC 1304. for income averaging) is amended by striking out paragraph (I) and by redesignating paragraphs (2), (3), (4), and (5) as paragraphs (1), (2), (3), and (4), respectively. (8) Section 6014(a) (relating to tax not computed by taxpayer) 26 USC 6014. is amended— (A) by striking out in the first sentence “entitled to elect to pay The tax imposed by section 3” and inserting in lieu Ante, p. 1558. thereof “entitled to take the standard deduction provided by section 141 (other than an individual described in section 141(e))”; and (B) by striking out in the second sentence “pay the tax imposed by section 3” and inserting in lieu thereof “take the standard deduction”. (9) Paragraph (5) of section 6014(b) is amended to read as follows: “(5) to cases where the taxpayer does not elect the standard deduction or where the taxpayer elects the standard deduction but is subject to the provisions of section 141(e) (relating to limitations in case of certain dependent taxpayers).” (c) Clerical Amendments.— (1) The table of sections for part I of subchapter A of chapter 1 is amended by striking out the items relating to sections 3 and 4 and inserting in lieu thereof: “Sec. 3. Tax tables for individuals having taxable income of less than 520.000.” (2) The table of sections for part IV of subchapter A of chapter 1 is amended by striking out “paying optional tax or” in the item relating to section 36. SEC. 502. DEDUCTION FOR ALIMONY ALLOWED IN DETERMINING ADJUSTED GROSS INCOME. (a) In General.— Section 62 (defining adjusted gross income) is 26 USC 62. amended by inserting after paragraph (12) the following new paragraph: “(13) Alimony.— The deduction allowed by section 215.” (b) Conforming Amendment.— The first sentence of subparagraph (A) of section 3402(m)(2) (relating to withholding allowances based 26 USC 3402. on itemized deductions) is amended by striking out “under section 62” and inserting in lieu thereof “under section 62 (other than paragraph (13) thereof)”. (c) Effective Date.— The amendments made by this section shall 26 USC 62 note. apply to taxable years beginning after December 31, 1976. SEC. 503. REVISION OF RETIREMENT INCOME CREDIT. (a) In General.— Section 37 (relating to retirement income) is 26 USC 37. amended to read as follows: “SEC. 37. CREDIT FOR THE ELDERLY. “(a) General Rule.— In the case of an individual who has attained age 65 before the close of the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 15 percent of such individual’s section 37 amount for such taxable year. “(b) Section 37 Amount.— For purposes of subsection (a) — “(1) In general.— An individual’s section 37 amount for the taxable year is the applicable initial amount determined under paragraph (2), reduced as provided in paragraph (3) and in subsection (c). “(2) Initial amount.— The initial amount is— “(A) $2,500 in the case of a single individual, “(B) $2,500 in the case of a joint return where only one spouse is eligible for the credit under subsection (a), “(C) $3,750 in the case of a joint return where both spouses are eligible for the credit under subsection (a), or “(D) $1,875 in the case of a married individual filing a separate return. “(3) Reduction.— The reduction under this paragraph is an amount equal to the sum of the amounts received by the individual (or, in the case of a joint return, by either spouse) as a pension or annuity— “(A) under title II of the Social Security Act, “(B) under the Railroad Retirement Act of 1935 or 1937, or “(C) otherwise excluded from gross income. No reduction shall be made under this paragraph for any amount 26 USC 72. excluded from gross income under section 72 (relating to annuities), 101 (relating to life insurance proceeds), 101 (relating to compensation for injuries or sickness), 105 (relating to amounts received under accident and health plans), 120 (relating to amounts Post, p. 1926. 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). “(c) Limitations.— “(1) Adjusted gross income limitation.— If the adjusted gross income of the taxpayer exceeds— “(A) $7,500 in the case of a single individual, “(B) $10,000 in the case of a joint return, or “(C) $5,000 in the case of a married individual filing a separate return, the section 87 amount shall be reduced by one-half of the excess of the adjusted gross income over $7,500, $10,000, or $5,000, as the case may be. “(2) Limitation based on amount of tax.— The amount of the credit allowed by this section for the taxable year shall not 26 USC 1. exceed the amount of the tax imposed by this chapter for such taxable year. “(d) Definitions and Special Rules.— For purposes of this section— “(1) Married couple must file joint 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 143. “(3) Joint return.— The term ‘joint return’ means the joint return of a husband and wife made under section 6013. “(e) Election of Prior Law With Respect to Public Retirement System Income.— “(1) In general.— In the case of a taxpayer who has not attained age 65 before the close of the taxable year (other than a married individual whose spouse has attained age 65 before the close of the taxable year), his credit (if any) under this section shall be determined under this subsection. “(2) One spouse age 65 or over.— In the case of a married individual who has not attained age 65 before the close of the taxable year but whose spouse has attained such age, this paragraph shall apply for the taxable year only if both spouses elect, at such time and in such manner as the Secret ary shall by regulations prescribe, to have this paragraph apply, If this paragraph applies for the taxable year, the credit (if any) of each spouse under this section shall be determined under this subsection. “(3) Computation of credit.— In the case of an individual whose credit under this section for the taxable year is determined under this subsection, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 15 percent of the amount received by such individual as retirement income (as defined in paragraph (4) and as limited by paragraph (5)). “(4) Retirement income.— For purposes of this subsection, the “Retirement income.” term ‘retirement income’ means— “(A) in the case of an individual who has attained age 65 before the close of the taxable year, income from— “(i) pensions and annuities (including, in the case of an individual who is, or has been, an employee within the meaning of section 401(c)(1), distributions by a trust 26 USC 401. described in section 401(a) which is exempt from tax under section 501 (a)), “(ii) interest, “(iii) rents, “(iv) dividends, “(v) bonds described in section 405(b)(1) which are received under a qualified bond purchase plan described in section 405(a) or in a distribution from a trust described in section 401(a) which is exempt from tax under section 501(a), or retirement bonds described in section 409, and “(vi) an individual retirement account described in section 408(a) or an individual retirement annuity described in section 408(b), or “(B) in the case of an individual who has not attained age 65 before the close of the taxable year, income from pensions and annuities under a public retirement system (as defined in paragraph (8)(A)), to the extent included in gross income without reference to this subsection, but only to the extent such income does not represent compensation for personal services rendered during the taxable year. “(5) Limitation on retirement income.— For purposes of this subsection, the amount of retirement income shall not exceed $2,500 less— “(A) the reduction provided by subsection (b)(3), and “(B) in the case of any individual who has not attained age 72 before the close of the taxable year— “(i) if such individual has not attained age 62 before the close of the taxable year, any amount of earned income (as defined in paragraph (8)(B)) in excess of $900 received by such individual in the taxable year, or “(ii) if such individual has attained age 62 before the close, of the taxable year, the sum of one-half the amount of earned income received by such individual in the taxable year in excess of $1,200 but not in excess of $1,700, and the amount of earned income so received in excess of $1,700. “(6) Limitation in case of mark led individuals.— In the case, of a joint return, paragraph (5) shall be applied by substituting ‘$3,750’ for ‘$2,500’. The $3,750 provided by the preceding sentence shall be divided between the spouses in such amounts as may be agreed on by them, except that not more than $2,500 may be assigned to either spouse. “(7) Limitation in the case of separate returns.— In the case of a married individual filing a separate return, paragraph (5) shall be applied by substituting ‘$1,875’ for ‘$2,500’, “(8) Definitions.— For purposes of this subsection— “(A) Public retirement system defined.— The term ‘public retirement system’ means a pension, annuity, retirement, or similar fund or system established by the United States, a State, a possession of the United States, any political subdivision of any of the foregoing, or the District of Columbia. “(B) Earned income.— The term ‘earned income’ has the meaning assigned to such term by section 911(b), except that such term does not include any amount received as a pension or annuity. “(f) Nonresident Alien Ineligible for Credit.— No credit shall be allowed tinder this section to any nonresident alien.” (b) Technical Amendments.— (1) Section 904 (relating to limitation on foreign tax credit), as amended by this Act, is amended by redesignating subsection (g) as subsection (h), and by inserting after subsection (f)(he following new subsection: “(g) Coordination With Credit for the Elderly.— In the case of an individual, for purposes of subsection (a) the tax against which the credit is taken is such tax reduced by the amount of the credit (if any) Ante, p. 1559. for the taxable year allowable under section 37 (relating to credit for the elderly).” (2) Section 6014(a) (relating to tax not computed by tax-payer) is amended by striking out the last sentence thereof. (3) Section 6014(b) is amended— (A) by striking out paragraph (4). (B) by redesignating paragraph (5)(as amended by section 501(b)(9)) as paragraph (4),and (C) by inserting “or” at the end of paragraph (3). (4) Sections 41(b)(2), 42(b)(2). 46(a)(3)(C), and 50A(a)(3)(C) are each amended by striking out “retirement income” and inserting in lieu thereof “credit for the elderly”. (5) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 37 and inserting in lien thereof the following: “Sec. 37. Credit for the elderly.” SEC. 504. CREDIT FOR CHILD CARE EXPENSES. (a) Allowances of Credit for Child Care Expenses.— (1) In general.— Subpart A of part IV of subchapter A of chapter 1 (relating to credits allowable) is amended by inserting before section 45 the following new section: “SEC. 44A. EXPENSES FOR HOUSEHOLD AND DEPENDENT CARE SERVICES NECESSARY FOR GAINFUL EMPLOYMENT. “(a) Allowance of Credit.— In the case of an individual who maintains a household which includes as a member one or more qualifying individuals (as defined in subsection (c)(1)). there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to ¿0 percent of the employment-related expenses (as defined in subsection (c)(2)) paid by such individual during the taxable year. “(b) Application With Other Credits.— The credit allowed by subsection (a) shall not exceed the amount of the tax imposed by this chapter for the taxable year reduced by the stun of the credits allowable under— “(1) section 33 (relating to foreign tax credit), Post, p. 1643. Ante, p. 1559. “(2) section 37 (relating to credit for the elderly). “(3) section 38 (relating to investment in certain depreciable property), “(4) section 40 (relating to expenses of work incentive programs), “(5) section 41 (relating to contributions to candidates for public office), “(6) section 42 (relating to general tax credit), and “(7) section 44 (relating to purchase of new principal residence). “(c) 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 ago of 15 and with respect to whom the taxpayer is entitled to a deduction under section 151(e), “(B) a dependent of the taxpayer who is physically or mentally incapable of caring for himself, or “(C) the spouse of the taxpayer, if he is physically or mentally incapable of caring for himself. “(2) Employment-related expenses.— “(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. “(B) Exception.— Employment-related expenses described in subparagraph (A) which are incurred for services outside the taxpayer’s household shall be taken into account only if incurred for the care of a qualifying individual described in paragraph (1)(A). “(d) Dollar 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) $2,000 if there is 1 qualifying individual with respect to the taxpayer for such taxable year, or “(2) $4,000 if there are 2 or more qualifying individuals with respect to the taxpayer for such taxable year. “(e) Earned 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 (be close of such year, the lesser of such individual’s earned income or the earned income of his spouse for such year, “(2) Special rule for spouse who is a student or incapable of caring for himself.— In the case of a spouse who is a student or a qualifying individual described in Subsection (c)(1)(C), for purposes of paragraph (1), such spouse shall be deemed for each month during which such spouse is a full-time student at an educational institution, or is such a qualifying individual, to be gainfully employed and to have earned income of not less than— “(A) $166 if subsection (d)(1) applies for the taxable year, or “(B) $333 if subsection (d)(2) applies for the taxable year. In the case of any husband and wife, this paragraph shall apply with respect, to only one spouse for any one month. “(f) Special Rules.— For purposes of this section— “(1) Maintaining household.— An individual shall be treated as maintaining a household for any period only if over half the cost of maintaining the household for such period is furnished by such individual (or, if such individual is married during such period, is furnished by such individual and his spouse). “(2) Married couples must file joint return.— If tile tax-payer is married at the close of the taxable year, the credit shall be allowed under subsection (a) only if the taxpayer and Ids 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) 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 hi the custody of one or both of his parents for more than one-half of the calendar year, in the case of any taxable, year beginning in such calendar year such child shall be treated as being a qualifying individual described in subparagraph (A) or (B) of subsection (c)(1). as the case may be with respect to that 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. “(6) Payments to related individuals.— “(A) In general.— Except as provided in subparagraph (B), no credit, shall be allowed under subsection (a) for any amount paid by the taxpayer to an individual bearing a relationship to the taxpayer described in paragraphs (1) through (8) of section 152(a) (relating to definition of dependent) or to a dependent described in paragraph (9) of such section. “(B) Exception.— Subparagraph (A) shall not apply to any amount paid by the taxpayer to an individual with respect to whom, for the taxable year of the taxpayer in which the service is performed, neither the taxpayer nor his spouse is entitled to a deduction under section 151(e) (relating to deduction for personal exemptions for dependents), but only if the service with respect to which such amount is paid constitutes employment within the meaning of section 3121(b). “(7) Student.— The term ‘student’ means an individual who “Student.” during each of 5 calendar months during the taxable year is a full-time student at an educational organization. “(8) Educational organization.— The term ‘educational organization’ “Educational organization.” means an educational organization described in section 170(b)(1)(A)(ii). “(g) Regulations.— The Secretary shall prescribe such regulations as may be necessary to carry out the purposes of this section.” (2) Clerical amendment.— The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by inserting before the item relating to section 45 the following new item: “Sec. 44A. Expenses for household and dependent cure services necessary for gainful employment.” (b) Repeal of Deduction for Child Care Expenses.— (1) In general.— Section 214 (relating to expenses for household 26 USC 214. and dependent care services necessary for gainful employment) is hereby repealed. (2) Clerical amendment.— The table of sections for part VII of subchapter B of chapter 1 is amended by striking out the item relating to section 214. (c) Technical Amendments.— (1) Section 213(f) (relating to exclusion of amounts allowed 26 USC 213. for care of certain dependents) is amended by striking out “a deduction under section 214” and inserting in lieu thereof “a credit under section 44A”. Ante, p. 1563. 26 USC 6096. (2) Section 9096(b)(defining income tax liability) is amended by striking out “and 44” and inserting in lieu thereof “, 44, and 44A”. (3) Paragraph (4) of section 3402(m) (relating to withholding allowances based on itemized deductions) is amended by striking out “and” at the end of subparagraph (A), by striking out the period at the end of subparagraph (B) and inserting in lieu thereof “, and” , and by adding at the end thereof the following new subparagraph: “(C) may take into account tax credits to which employees are entitled.” SEC. 505. CHANGES IN EXCLUSIONS FOR SICK PAY AND CERTAIN MILITARY, ETC, DISABILITY PENSIONS; CERTAIN DISABILITY INCOME. (a) Sick Pay.— Subsection (d) of section 105 (relating to amounts excluded from gross income under wage continuation plans) is amended to read as follows: “(d) Certain Disability Payments.— “(1) In general.— In the case of a taxpayer who— “(A) has not attained age 65 before the close of the taxable year, and “(B) retired on disability and, when he retired, was permanently and totally disabled, gross income does not include amounts referred to in subsection (a) if such amounts constitute wages or payments in lieu of wages for a period during which the employee is absent from work on account of permanent and total disability. “(2) Limitation.— This subsection shall not apply to the extent that the amounts referred to in paragraph (1) exceed a weekly rate of $100. “(3) Phaseout over $15,000.— If the adjusted gross income of the taxpayer for the taxable year (determined without regard to this subsection) exceeds $15,000, the amount which but for this paragraph would be excluded under this subsection for the taxable year shall be reduced by an amount equal to tire excess of the adjusted gross income (as so determined) over $15,000. “(4) Married couple must file joint return.— Except in the ease 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 exclusion provided by this subsection shall be allowed only if the taxpayer and his spouse file a joint return for the taxable year. For purposes of this subsection, marital status shall be determined under section 143. “(5) Permanent and total disability defined.— For purposes of this subsection, an individual is permanently and totally disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. 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. “(6) Joint return.— For purposes of this subsection, the term ‘joint return’ means the joint return of a husband and wife made under section 6013. “(7) Coordination with section 72.— In the case of an individual described in subparagraphs (A) and (B) of paragraph (1), for purposes of section 72 the annuity starting date shall not be deemed to occur before the beginning of the taxable year in which the taxpayer attains age 65, or before the beginning of an earlier taxable year for which the taxpayer makes an irrevocable election not to seek the benefits of this subsection for such year and all subsequent years.” (b) Certain Military, Etc., Disability Pensions.— Section 104 26 USC 104. (relating to compensation for injuries or sickness) is amended by redesignating subsection (b) as subsection (c) and by inserting after subsection (a) the following new subsection: “(b) Termination of Application of Subsection (a)(4) in Certain Cases.— “(1) In general.— Subsection (a)(4) shall not apply in the case of any individual who is not described in paragraph (2). “(2) Individuals to whom subsection (a)(4) continues to apply.— An individual is described in this paragraph if— “(A) on or before September 24, 1975, he was entitled to receive any amount described in subsection (a)(4), “(B) on September 24, 1975, be was a member of any organization (or reserve component thereof) referred to in subsection (a)(4) or under a binding written commitment to become such a member, “(C) he receives an amount described in subsection (a)(4) by reason of a com bat-related injury, or “(D) on application therefor, he would be entitled to receive disability compensation from the Veterans’ Administration. “(3) Special rules for combat-related injuries.— For purposes “Combat-related injury.” of this subsection, the term ‘combat-related injury’ means personal injury or sickness— “(A) which is incurred— “(i) as a direct result of armed conflict. “(ii) while engaged in extrahazardous service, or “(iii) under conditions stimulating war; or “(B) which is caused by an instrumentality of war. In the case of an individual who is not described in subparagraph (A) or (B) of paragraph (2), except as provided in paragraph (4), the only amounts taken into account under subsection (a)(4) shall be the amounts which he receives by reason of a combat-related injury. “(4) Amount excluded to be not less than veterans’ disability compensation.— In the case of any individual described in paragraph (2), the amounts excludable under subsection (a)(4) for any period with respect to any individual shall not be less than the maximum amount which such individual, on application therefor, would be entitled to receive as disability compensation from the Veterans’ Administration.” (c) Special Rule for Existing Permanent and Total Disability Cases.— In the case of any individual who— (1) retired before January 1, 1976, (2) either retired on disability or was entitled to retire on disability, and (3) on January 1, 1976, was permanently and totally disabled (within the meaning of section 105(d)(5) ‘of the Internal Revenue Code of 1954), Ante, p. 1566. such individual shall be deemed to have met the requirements of section Ante, p. 1566. 105(d)(1)(B) of such Code (as amended by subsection (a) of this section). (d) Special Rule for Coordination With Section 72.— In the case of an individual who— (1) retired on disability before January 1, 1976, and (2) on December 31, 1975, was entitled to exclude any amount with respect to such retirement disability from gross income under section 105(d) of the Internal Revenue. Code of 1954, for purposes of section 72 the annuity starting date shall not be deemed to occur before the beginning of the taxable year in which the taxpayer attains age 65, or before the beginning of an earlier taxable year for which the taxpayer makes an irrevocable election not to seek the benefits of this subsection for such year and all subsequent years. (e) Certain Disability Income.— (1) In general.— Section 104(a) (relating to compensation for injuries or sickness) is amended— (A) by striking out “and” at the end of paragraph (3); (B) by striking out the period at the end of paragraph (4) and inserting in lieu thereof a semicolon and the word “and”; and (C) by adding at the end thereof the following new paragraph: “(5) amounts received by an individual as disability income attributable to injuries incurred as a direct result of a violent attack which the Secretary’ of State determines to be a terrorist attack and which occurred while such individual was an employee of the United States engaged in the performance of his official duties outside the United States.” (2) Effective date.— The amendments made by this subsection shall apply to taxable years beginning after December 31, 1976. SEC. 506. MOVING EXPENSES. (a) Decrease in Mileage Test From 50 Miles to 35 Miles.— Paragraph (1) of section 217(c) (relating to conditions for allowance of deduction for moving expenses) is amended by striking out “50 miles” each place it appears and inserting in lieu thereof “35 miles”. (b) Increase in Dollar Amounts.— (1) Certain expenses of traveling, meals, and lodging after obtaining employment.— The first sentence of subparagraph (A) of section 217(b)(3) (relating to dollar limits) is amended by Striking out “$1,000” and inserting in lieu thereof “$1,500”. (2) Aggregate dollar limit.— The second sentence of subparagraph (A) of section 217(b)(3) is amended by striking out “$2,500” and inserting in lieu thereof “$3,000”. (3) Separate returns.— The second sentence of subparagraph (B) of section 217(b)(3) (relating to dollar limits in the case of husband and wife) is amended to read as follows: “In the case of a husband and wife filing separate returns, subparagraph (A) shall be applied by substituting ‘$750’ for ‘$1,500’, and by substituting ‘$1,500’ for ‘$3,000’.” (c) Rules for Members of the Armed Forces of the United States.— Section 217 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection: “(g) Rules for Members of the Armed Forces of the United States.— In the case of a member of the Armed Forces of the United States on active duty who moves pursuant to a military order and incident to a permanent change of station— “(1) the limitations under subsection (c) shall not apply; “(2) any moving and storage expenses which are furnished in kind (or for which reimbursement or an allowance is provided, but only to the extent of the expenses paid or incurred) to such member, his spouse, or his dependents, shall not be includible in gross income, and no reporting with respect to such expenses shall be required by the Secretary of Defense or the Secretary of Transportation, as the care may be; and “(3) if moving and storage expenses are furnished in kind (or if reimbursement, or an allowance for such expenses is provided) to such member’s spouse and his dependents with regard to moving to a location other than the one to which such member moves (or from a location other than the one from which such member moves), this section shall apply with respect to the moving expenses of his spouse and dependents— “(A) as if his spouse commenced work as an employee at a new principal place of work at such location; “(B) for purposes of subsection (b)(3), as if such place of work was within the same general location as the member’s new principal place, of work, and “(C) without regard to the limitations under subsection (c)” (d) Effective Date.— The amendments made by subsections (a) 26 USC 217 note. and (b) shall apply to taxable years beginning after December 31, 1976. SEC. 507. TAX REVISION STUDY. (a) Study.— The Joint Committee on Taxation shall make a full and complete study and investigation with respect to simplifying and indexing the tax laws of the United States. Such study and investigation shall include a consideration of whether the rates of tax can be reduced by repealing any or all tax deductions, exemptions, or credits. (b) Report.— Before July 1, 1977, the Joint Committee on Taxation Report to congressional committees. shall submit to the Committee on Finance of the Senate and to the Committee on Ways and Means of the House of Representatives a report of its study and investigation together with its recommendations, including recommendations for legislation. SEC. 508. EFFECTIVE DATE. Except as other wise provided, the amendments made by this title shall apply to taxable years beginning after December 31, 1975.

7. 1977

   Tax Reduction and Simplification Act of 1977

   Pub. L. 95–30 § 101(d)(13) · 91 Stat. 126

   1. Substituted · 26 U.S.C. § 6014(a)

      Pub. L. 95–30, § 101(d)(13), substituted “An individual who does not itemize his deductions and who does not have an unused zero bracket amount (determined under section 63(e)), whose gross income” for “An individual entitled to take the standard deduction provided by section 141 (other than an individual described in section 141(e)) whose gross income”

   2. Struck · 26 U.S.C. § 6014(a)

      Pub. L. 95–30, § 101(d)(13), struck out “and shall constitute an election to take the standard deduction” after “Such election shall be made by using the form prescribed for purposes of this section”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 95–30, § 101(d)(13), substituted “An individual who does not itemize his deductions and who does not have an unused zero bracket amount (determined under section 63(e)), whose gross income” for “An individual entitled to take the standard deduction provided by section 141 (other than an individual described in section 141(e)) whose gross income” and struck out “and shall constitute an election to take the standard deduction” after “Such election shall be made by using the form prescribed for purposes of this section”.

   Enacted provision · exact public law section
   (13) Subsection (a) of section 6014 (relating to tax not computed by taxpayer) is amended— (A) by striking out “entitled to take” through “section 141(e))” in the first sentence thereof and inserting in lieu thereof “who does not itemize his deductions and who does not have an unused zero bracket amount (determined under section 63(e)),”,and (B) by striking out “and shall constitute an election to take the standard deduction” in the second sentence thereof.

8. 1977

   Tax Reduction and Simplification Act of 1977

   Pub. L. 95–30 § 101(d)(14) · 91 Stat. 126

   Substituted · 26 U.S.C. § 6014(b)(4)

   Pub. L. 95–30, § 101(d)(14), substituted “itemizes his deductions or has an unused zero bracket amount” for “does not elect the standard deduction or where the taxpayer elects the standard deduction but is subject to the provision of section 141(e) (relating to limitations in case of certain dependent taxpayers)”

   Source evidence

   Code amendment note
   Subsec. (b)(4). Pub. L. 95–30, § 101(d)(14), substituted “itemizes his deductions or has an unused zero bracket amount” for “does not elect the standard deduction or where the taxpayer elects the standard deduction but is subject to the provision of section 141(e) (relating to limitations in case of certain dependent taxpayers)”.

   Enacted provision · exact public law section
   (14) Paragraph (4) of section 6014(b) (relating to regulations) is amended to read as follows: “(4) to cases where the taxpayer itemizes his deductions or has an unused zero bracket amount.”

9. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 § 104(b)(16)(A) · 100 Stat. 2085

   Substituted · 26 U.S.C. § 6014(a)

   Pub. L. 99–514, § 104(b)(16)(A), substituted “who is not described in section 6012(a)(1)(C)(i)” for “who does not have an unused zero bracket amount (determined under section 63(e))”

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 99–514, § 104(b)(16)(A), substituted “who is not described in section 6012(a)(1)(C)(i)” for “who does not have an unused zero bracket amount (determined under section 63(e))”.

   Enacted provision · exact public law section
   (A) Subsection (a) of section 6014 (relating to income tax return—tax not computed by taxpayer) is amended by striking out “who does not have an unused zero bracket amount (determined under section 63(e))” and inserting in lieu thereof “who is not described in section 6012(a)(1)(C)(i)”.

   Effective date note
   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.

10. 1986

    Tax Reform Act of 1986

    Pub. L. 99–514 § 104(b)(16)(B) · 100 Stat. 2085

    1. Amended · 26 U.S.C. § 6014(b)(4)

       Pub. L. 99–514, § 104(b)(16)(B), amended par. (4) generally

    2. Substituted · 26 U.S.C. § 6014(b)(4)

       Pub. L. 99–514, § 104(b)(16)(B), substituting “where the taxpayer claims a reduced standard deduction by reason of section 63(c)(5)” for “has an unused zero bracket amount”

    Source evidence

    Code amendment note
    Subsec. (b)(4). Pub. L. 99–514, § 104(b)(16)(B), amended par. (4) generally, substituting “where the taxpayer claims a reduced standard deduction by reason of section 63(c)(5)” for “has an unused zero bracket amount”.

    Enacted provision · exact public law section
    (B) Paragraph (4) of section 6014(b) is amended to read as follows: “(4) to cases where the taxpayer itemizes his deductions or where the taxpayer claims a reduced standard deduction by reason of section 63(c)(5).”

    Effective date note
    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.

10 of 18 references resolved to an enrolled provision · 8 partial