Page:United States Statutes at Large Volume 92 Part 3.djvu/469

 PUBLIC LAW 95-615—NOV. 8, 1978

9 2 STAT. 3101

which such individual's tax home is i n a foreign country, reduced by " (B) the sum of— " (i) any earned income referred to in subparagraph (A) which is excluded from gross income under section 119, and 26 USC 119. " (ii) the allocable deductions. " (2) ALLOCABLE DEDUCTIONS DEFINED.—For purposes of p a r a -

g r a p h (l)(B) ( i i), the term 'allocable deductions' means the deductions properly allocable to or chargeable against the earned income referred to i n paragraph (1)(A), other than the deduction allowed by this section. " (d) QUALIFIED COST-OF-LIVING D I F F E R E N T I A L. —

" (1) IN GENERAL.—For purposes of this section, the term 'qualified cost-of-living differentiar means a reasonable amount determined under tables (or under another method) prescribed by the Secretary establishing the amount (if any) by which the general cost of living i n the foreign place i n which the individual's tax home is located exceeds the general cost of living for the metropolitan area in the continental United States (excluding Alaska) having the highest general cost of living. The tables (or other methods) so prescribed shall be revised at least once during each calendar year. "(2)

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SPECIAL RULES.—For purposes of paragraph (1) — " (A) COMPUTATION ON DAILY BASIS.—The differential shall

be computed on a daily basis for the period during which the individual's tax home is in a foreign country. " (B) DIFFERENTIAL TO BE BASED ON DAILY LIVING EXPENSES.—

A n individual's cost-of-living differential shall be determined by reference to reasonable daily living expenses (excluding housing and schooling expenses). " (C) BASIS OF COMPARISON.—The differential prescribed for

any foreign "(i) family vidual "(ii) income United annual "(D)

place— shall vary depending on the composition of the (spouse and dependents) residing with the indi(or at a qualified second household), and shall reflect the costs of living of a family whose is equal to the salary of an employee of the States who is compensated at a rate equal to the rate paid for step 1 of grade GS-14. 5 USC 5332 note.

STATE DEPARTMENT'S INDEX MAY BE TAKEN INTO

ACCOUNT.—The Secretary, in determining the qualified costof-living differential for any foreign place, may take into account the Department of State's Local Index of Living Costs Abroad as it relates to such place. " (E) N o DIFFERENTIAL FOR PERIODS DURING W H I C H INDIVID-

UAL IS ELIGIBLE UNDER SECTION 119.—Except as provided i n subsection (i)(1)(A) (ii) an individual shall not be entitled to any qualified cost-of-living differential for any period for which such individual's meals and lodging are excluded from gross income under section 119. " (e) QUALIFIED H O U S I N G E X P E N S E S. —

" (1) IN GENERAL.—For purposes of this section, the term 'qualified housing expenses' means the excess of— " (A) the individual's housing expenses, over " (B) the individual's base housing amount.

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