Page:United States Statutes at Large Volume 92 Part 3.djvu/147

 PUBLIC LAW 95-600—NOV. 6, 1978

92 STAT. 2779

Subtitle C—Credits SEC. 121. PAYMENTS TO RELATED INDIVIDUALS UNDER CHILD CARE CREDIT.

(a) IN GENERAL.—Paragraph (6) of section 44A(f) (relating to payments to related individuals) is amended to read as follows: "(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(e) (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(e)(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." (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1978.

26 USC 44A.

26 USC 151.

"Taxable year. 26 USC 44A note.

Subtitle D—Deferred Compensation PART I—DEFERRED COMPENSATION PROVISIONS SEC. 131. DEFERRED COMPENSATION PLANS WITH RESPECT TO SERVICE FOR STATE AND LOCAL GOVERNMENTS.

(a) IN GENERAL.—Subpart B of part II of subchapter E of chapter 1 (relating to taxable years for which gross income included) is amended by adding at the end thereof the following new section: "SEC. 457. DEFERRED COMPENSATION PLANS WITH RESPECT TO SERVICE FOR STATE AND LOCAL GOVERNMENTS.

"(a) YEAR OF INCLUSION IN GROSS INCOME.—In the case of a participant in an eligible State deferred compensation plan, any amount of compensation deferred under the plan, and any income attributable to the amounts so deferred, shall be includible in gross income only for the taxable year in which such compensation or other income is paid or otherwise made available to the participant or other beneficiary. "(b) ELIGIBLE STATE DEFERRED COMPENSATION PLAN DEFINED.—For

purposes of this section, the term 'eligible State deferred compensation plan' means a plan established and maintained by a State— "(1) in which only individuals who perform service for the State may be participants, "(2) which provides that (except as provided in paragraph (3)) the maximum that may be deferred under the plan for the taxable year shall not exceed the lesser of— "(A) $7,500, or "(B) 33 Va percent of the participant's includible compensation, "(3) which may provide that, for 1 or more of the participant's last 3 taxable years ending before he attains normal retirement age under the plan, the ceiling set forth in paragraph (2) shall be the lesser of—

26 USC 457.

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