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

 90 STAT. 1554

PUBLIC LAW 94-455—OCT. 4, 1976

Ante, p. 1520.

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

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

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26 USC 1348.

"(a)

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

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

26 USC 1301.

" (1) PERSONAL SERVICE INCOME.—

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

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

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