Page:United States Statutes at Large Volume 85.djvu/585

 85 STAT. ]

PUBLIC LAW 92-178-DEC. 10, 1971

555

carried to the earliest of the 10 taxable years to which (by reason of subparagraphs (A) and (B)) such credit may be carried, and then to each of the other 9 taxable years to the extent that, because of the limitation contained in paragraph (2), such unused credit may not be added for a prior taxable year to which such unused credit may be carried. " (2) LIMITATION.—The amount of the unused credit which may be added under paragraph (1) for any preceding or succeeding taxable year shall not exceed the amount by which the limitation provided by subsection (a)(2) for such taxable year exceeds the sum of— " (A) the credit allowable under subsection (a)(1) for such taxable year, and " (B) the amounts which, by reason of this subsection, are added to the amount allowable for such taxable year and attributable to taxable years preceding the unused credit year. "(c)

EARLY TERMINATION OF EMPLOYMENT BY EMPLOYER, E T C. — "(1) GENERAL RULE.—Under regulations prescribed by the

Secretary or his delegate— "(A)

WORK

INCENTIVE

PROGRAM

EXPENSES.—If

the

employment of any employee with respect to whom work incentive program expenses are taken into account under subsection (a) is terminated by the taxpayer at any time during the first 12 months of such employment (whether or not consecutive) or before the close of the 12th calendar month after the calendar month in which such employee completes 12 months of employment with the taxpayer, the tax under this chapter for the taxable year in which such employment is terminated shall be increased by an amount (determined under such regulations) equal to the credits allowed under section 40 for such taxable year and all prior taxable years attributable to work incentive program expenses paid or incurred with respect to such employee. " (B) CARRYBACKS AND CARRYOVERS ADJUSTED.—In the case of any termination of employment to which subparagraph (A) applies, the carrybacks and carryovers under subsection (b) shall be properly adjusted. "(2)

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SUBSECTION NOT TO APPLY I N CERTAIN CASES.—

" (A) IN GENERAL.—Paragraph (1) shall not apply to— " (i) a termination of employment of an employee who voluntarily leaves the employment of the taxpayer, "(ii) a termination of employment of an individual who, before the close of the period referred to in paragraph (1)(A), becomes disabled to perform the services of such employment, unless such disability is removed before the close of such period and the taxpayer fails to offer reemployment to such individual, or "(iii) a termination of employment of an individual, if it is determined under the applicable State unemployment compensation law that the termination was due to the misconduct of such individual. " (B) CHANGE I N FORM OF BUSINESS, ETC.—For purposes of paragraph (1), the employment relationship between the taxpayer and an employee shall not be treated as terminated— " (i) by a transaction to which section 381(a) applies, if the employee continues to be employed by the acquiring corporation, or "(ii) by reason of a mere change in the form of conducting the trade or business of the taxpayer, if the employee continues to be employed in such trade or busi-

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