Page:United States Statutes at Large Volume 95.djvu/219

 PUBLIC LAW 97-34—AUG. 13, 1981

95 STAT. 193

"(A) IN GENERAL.—The term 'earned income' means wages, salaries, or professional fees, and other amounts received as compensation for personal services actually rendered, but does not include that part of the compensation derived by the taxpayer for personal services rendered by him to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered. "(B) TAXPAYER ENGAGED IN TRADE OR BUSINESS.—In the

case of a taxpayer engaged in a trade or business in which both personal services and capital are material incomeproducing factors, under regulations prescribed by the Secretary, a reasonable allowance as compensation for the personal services rendered by the taxpayer, not in excess of 30 percent of his share of the net profits of such trade or business, shall be considered as earned income. "(3) TAX HOME.—The term 'tax home' means, with respect to any individual, such individual's home for purposes of section 162(a)(2) (relating to traveling expenses while away from home). 26 USC 162. An individual shall not be treated as having a tax home in a foreign country for any period for which his abode is within the United States. "(4) WAIVER OF PERIOD OF STAY IN FOREIGN COUNTRY.—Notwith-

standing paragraph (1), an individual who— "(A) is a bona fide resident of, or is present in, a foreign country for any period, "(B) leaves such foreign country after August 31, 1978— "(i) during any period during which the Secretary determines, after consultation with the Secretary of State or his delegate, that individuals were required to leave such foreign country because of war, civil unrest, or similar adverse conditions in such foreign country which precluded the normal conduct of business by such individuals, and "(ii) before meeting the requirements of such paragraph (1), and "(C) establishes to the satisfaction of the Secretary that such individual could reasonably have been expected to have met such requirements but for the conditions referred to in clause (i) of subparagraph (B), shall be treated as a qualified individual with respect to the period described in subparagraph (A) during which he was a bona fide resident of, or was present in, the foreign country, and in applying subsections (b)(2)(A) and (c)(l)(B)(ii) with respect to such individual, only the days within such period shall be taken into account. "(5) TEST OF BONA FIDE RESIDENCE.—If—

"(A) an individual who has earned income from sources within a foreign country submits a statement to the authorities of that country that he is not a resident of that country, and "(B) such individual is held not subject as a resident of that country to the income tax of that country by its authorities with respect to such earnings, then such individual shall not be considered a bona fide resident of that country for purposes of paragraph (1)(A). "(6) DENIAL OF DOUBLE BENEFITS.—No deduction or exclusion

from gross income under this subtitle or credit against the tax

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