I 
114TH CONGRESS 
1ST SESSION H. R. 1824 
To repeal the current Internal Revenue Code and replace it with a flat 
tax, thereby guaranteeing economic growth and fairness for all Americans. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 15, 2015 
Mr. ROGERS of Alabama introduced the following bill; which was referred to 
the Committee on Ways and Means, and in addition to the Committee 
on Rules, for a period to be subsequently determined by the Speaker, in 
each case for consideration of such provisions as fall within the jurisdic-
tion of the committee concerned 
A BILL 
To repeal the current Internal Revenue Code and replace 
it with a flat tax, thereby guaranteeing economic growth 
and fairness for all Americans. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Simplified, Manageable, And Responsible Tax Act’’ or 
the ‘‘SMART Act’’. 
(b) TABLE OF CONTENTS.— 
Sec. 1. Short title; table of contents. 
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TITLE I—TAX REDUCTION AND SIMPLIFICATION 
Sec. 101. Individual income tax. 
Sec. 102. Tax on business activities. 
Sec. 103. Simplification of rules relating to qualified retirement plans. 
Sec. 104. Repeal of alternative minimum tax. 
Sec. 105. Repeal of credits. 
Sec. 106. Repeal of estate and gift taxes and obsolete income tax provisions. 
Sec. 107. Effective date. 
TITLE II—SUPERMAJORITY REQUIRED FOR TAX CHANGES 
Sec. 201. Supermajority required. 
TITLE I—TAX REDUCTION AND 
SIMPLIFICATION 
SEC. 101. INDIVIDUAL INCOME TAX. 
(a) IN GENERAL.—Section 1 of the Internal Revenue 
Code of 1986 is amended to read as follows: 
‘‘SEC. 1. TAX IMPOSED. 
‘‘There is hereby imposed on the taxable income of 
every individual a tax equal to 17 percent of the taxable 
income of such individual for such taxable year.’’. 
(b) TAXABLE INCOME.—Section 63 of such Code is 
amended to read as follows: 
‘‘SEC. 63. TAXABLE INCOME. 
‘‘(a) IN GENERAL.—For purposes of this subtitle, the 
term ‘taxable income’ means the excess of— 
‘‘(1) the sum of— 
‘‘(A) wages (as defined in section 3121(a) 
without regard to paragraph (1) thereof) which 
are paid in cash and which are received during 
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the taxable year for services performed in the 
United States, 
‘‘(B) retirement distributions which are in-
cludible in gross income for such taxable year, 
plus 
‘‘(C) amounts received under any law of 
the United States or of any State which is in 
the nature of unemployment compensation, over 
‘‘(2) the standard deduction. 
‘‘(b) STANDARD DEDUCTION.— 
‘‘(1) IN GENERAL.—For purposes of this sub-
title, the term ‘standard deduction’ means the sum 
of— 
‘‘(A) the basic standard deduction, plus 
‘‘(B) the additional standard deduction. 
‘‘(2) BASIC STANDARD DEDUCTION.—For pur-
poses of paragraph (1), the basic standard deduction 
is— 
‘‘(A) $28,960 in the case of— 
‘‘(i) a joint return, or 
‘‘(ii) a surviving spouse (as defined in 
section 2(a)), 
‘‘(B) $18,490 in the case of a head of 
household (as defined in section 2(b)), and 
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‘‘(C) $14,480 in the case of an indi-
vidual— 
‘‘(i) who is not married and who is 
not a surviving spouse or head of house-
hold, or 
‘‘(ii) who is a married individual filing 
a separate return. 
‘‘(3) ADDITIONAL STANDARD DEDUCTION.—For 
purposes of paragraph (1), the additional standard 
deduction is $6,240 for each dependent (as defined 
in section 152) who is described in section 151(c) 
for the taxable year and who is not required to file 
a return for such taxable year. 
‘‘(c) RETIREMENT DISTRIBUTIONS.—For purposes of 
subsection (a), the term ‘retirement distribution’ means 
any distribution from— 
‘‘(1) a plan described in section 401(a) which 
includes a trust exempt from tax under section 
501(a), 
‘‘(2) an annuity plan described in section 
403(a), 
‘‘(3) an annuity contract described in section 
403(b), 
‘‘(4) an individual retirement account described 
in section 408(a), 
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‘‘(5) an individual retirement annuity described 
in section 408(b), 
‘‘(6) an eligible deferred compensation plan (as 
defined in section 457), 
‘‘(7) a governmental plan (as defined in section 
414(d)), or 
‘‘(8) a trust described in section 501(c)(18). 
Such term includes any plan, contract, account, annuity, 
or trust which, at any time, has been determined by the 
Secretary to be such a plan, contract, account, annuity, 
or trust. 
‘‘(d) INCOME OF CERTAIN CHILDREN.—For purposes 
of this subtitle— 
‘‘(1) an individual’s taxable income shall include 
the taxable income of each dependent child of such 
individual who has not attained age 14 as of the 
close of such taxable year, and 
‘‘(2) such dependent child shall have no liability 
for tax imposed by section 1 with respect to such in-
come and shall not be required to file a return for 
such taxable year. 
‘‘(e) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning in a calendar year after 2016, each 
dollar amount contained in subsection (b) shall be 
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increased by an amount determined by the Secretary 
to be equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment for such 
calendar year. 
‘‘(2) COST-OF-LIVING ADJUSTMENT.—For pur-
poses of paragraph (1), the cost-of-living adjustment 
for any calendar year is the percentage (if any) by 
which— 
‘‘(A) the CPI for the preceding calendar 
year, exceeds 
‘‘(B) the CPI for the calendar year 2015. 
‘‘(3) CPI FOR ANY CALENDAR YEAR.—For pur-
poses of paragraph (2), the CPI for any calendar 
year is the average of the Consumer Price Index as 
of the close of the 12-month period ending on Au-
gust 31 of such calendar year. 
‘‘(4) CONSUMER PRICE INDEX.—For purposes 
of paragraph (3), the term ‘Consumer Price Index’ 
means the last Consumer Price Index for all-urban 
consumers published by the Department of Labor. 
For purposes of the preceding sentence, the revision 
of the Consumer Price Index which is most con-
sistent with the Consumer Price Index for calendar 
year 1986 shall be used. 
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‘‘(5) ROUNDING.—If any increase determined 
under paragraph (1) is not a multiple of $10, such 
increase shall be rounded to the next highest mul-
tiple of $10. 
‘‘(f) MARITAL STATUS.—For purposes of this section, 
marital status shall be determined under section 7703.’’. 
SEC. 102. TAX ON BUSINESS ACTIVITIES. 
(a) IN GENERAL.—Section 11 of the Internal Rev-
enue Code of 1986 (relating to tax imposed on corpora-
tions) is amended to read as follows: 
‘‘SEC. 11. TAX IMPOSED ON BUSINESS ACTIVITIES. 
‘‘(a) TAX IMPOSED.—There is hereby imposed on 
every person engaged in a business activity a tax equal 
to 17 percent of the business taxable income of such per-
son. 
‘‘(b) LIABILITY FOR TAX.—The tax imposed by this 
section shall be paid by the person engaged in the business 
activity, whether such person is an individual, partnership, 
corporation, or otherwise. 
‘‘(c) BUSINESS TAXABLE INCOME.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—The term ‘business taxable 
income’ means gross active income reduced by the 
deductions specified in subsection (d). 
‘‘(2) GROSS ACTIVE INCOME.— 
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‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘gross active income’ means 
gross receipts from— 
‘‘(i) the sale or exchange of property 
or services in the United States by any 
person in connection with a business activ-
ity, and 
‘‘(ii) the export of property or services 
from the United States in connection with 
a business activity. 
‘‘(B) EXCHANGES.—For purposes of this 
section, the amount treated as gross receipts 
from the exchange of property or services is the 
fair market value of the property or services re-
ceived, plus any money received. 
‘‘(C) COORDINATION WITH SPECIAL RULES 
FOR
FINANCIAL
SERVICES, ETC.—Except as 
provided in subsection (e)— 
‘‘(i) the term ‘property’ does not in-
clude money or any financial instrument, 
and 
‘‘(ii) the term ‘services’ does not in-
clude financial services. 
‘‘(3) EXEMPTION FROM TAX FOR ACTIVITIES OF 
GOVERNMENTAL ENTITIES AND TAX-EXEMPT ORGA-
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NIZATIONS.—For purposes of this section, the term 
‘business activity’ does not include any activity of a 
governmental entity or of any other organization 
which is exempt from tax under this chapter. 
‘‘(d) DEDUCTIONS.— 
‘‘(1) IN GENERAL.—The deductions specified in 
this subsection are— 
‘‘(A) the cost of business inputs for the 
business activity, 
‘‘(B) wages (as defined in section 3121(a) 
without regard to paragraph (1) thereof) which 
are paid in cash for services performed in the 
United States as an employee, and 
‘‘(C) retirement contributions to or under 
any plan or arrangement which makes retire-
ment distributions (as defined in section 63(c)) 
for the benefit of such employees to the extent 
such contributions are allowed as a deduction 
under section 404. 
‘‘(2) BUSINESS INPUTS.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the term ‘cost of business inputs’ 
means— 
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‘‘(i) the amount paid for property sold 
or used in connection with a business ac-
tivity, 
‘‘(ii) the amount paid for services 
(other than for the services of employees, 
including fringe benefits paid by reason of 
such services) in connection with a busi-
ness activity, and 
‘‘(iii) any excise tax, sales tax, cus-
toms duty, or other separately stated levy 
imposed by a Federal, State, or local gov-
ernment on the purchase of property or 
services which are for use in connection 
with a business activity. 
Such term shall not include any tax imposed by 
chapter 2 or 21. 
‘‘(B) EXCEPTIONS.—Such term shall not 
include— 
‘‘(i) items described in subparagraphs 
(B) and (C) of paragraph (1), and 
‘‘(ii) items for personal use not in 
connection with any business activity. 
‘‘(C) EXCHANGES.—For purposes of this 
section, the amount treated as paid in connec-
tion with the exchange of property or services 
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is the fair market value of the property or serv-
ices exchanged, plus any money paid. 
‘‘(e) SPECIAL RULES FOR FINANCIAL INTERMEDI-
ATION SERVICE ACTIVITIES.—In the case of the business 
activity of providing financial intermediation services, the 
taxable income from such activity shall be equal to the 
value of the intermediation services provided in such activ-
ity. 
‘‘(f) EXCEPTION FOR SERVICES PERFORMED AS EM-
PLOYEE.—For purposes of this section, the term ‘business 
activity’ does not include the performance of services by 
an employee for the employee’s employer. 
‘‘(g) CARRYOVER OF CREDIT-EQUIVALENT OF EX-
CESS DEDUCTIONS.— 
‘‘(1) IN GENERAL.—If the aggregate deductions 
for any taxable year exceed the gross active income 
for such taxable year, the credit-equivalent of such 
excess shall be allowed as a credit against the tax 
imposed by this section for the following taxable 
year. 
‘‘(2) CREDIT-EQUIVALENT OF EXCESS DEDUC-
TIONS.—For purposes of paragraph (1), the credit- 
equivalent of the excess described in paragraph (1) 
for any taxable year is an amount equal to— 
‘‘(A) the sum of— 
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‘‘(i) such excess, plus 
‘‘(ii) the product of such excess and 
the 3-month Treasury rate for the last 
month of such taxable year, multiplied by 
‘‘(B) the rate of the tax imposed by sub-
section (a) for such taxable year. 
‘‘(3) CARRYOVER OF UNUSED CREDIT.—If the 
credit allowable for any taxable year by reason of 
this subsection exceeds the tax imposed by this sec-
tion for such year, then (in lieu of treating such ex-
cess as an overpayment) the sum of— 
‘‘(A) such excess, plus 
‘‘(B) the product of such excess and the 3- 
month Treasury rate for the last month of such 
taxable year, shall be allowed as a credit 
against the tax imposed by this section for the 
following taxable year. 
‘‘(4) 3-MONTH TREASURY RATE.—For purposes 
of this subsection, the 3-month Treasury rate is the 
rate determined by the Secretary based on the aver-
age market yield (during any 1-month period se-
lected by the Secretary and ending in the calendar 
month in which the determination is made) on out-
standing marketable obligations of the United States 
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with remaining periods to maturity of 3 months or 
less.’’. 
(b) TAX
ON TAX-EXEMPT ENTITIES PROVIDING 
NONCASH
COMPENSATION
TO
EMPLOYEES.—Section 
4977 of such Code is amended to read as follows: 
‘‘SEC. 4977. TAX ON NONCASH COMPENSATION PROVIDED 
TO EMPLOYEES NOT ENGAGED IN BUSINESS 
ACTIVITY. 
‘‘(a) IMPOSITION OF TAX.—There is hereby imposed 
a tax equal to 17 percent of the value of excludable com-
pensation provided during the calendar year by an em-
ployer for the benefit of employees to whom this section 
applies. 
‘‘(b) LIABILITY FOR TAX.—The tax imposed by this 
section shall be paid by the employer. 
‘‘(c) EXCLUDABLE COMPENSATION.—For purposes 
of subsection (a), the term ‘excludable compensation’ 
means any remuneration for services performed as an em-
ployee other than— 
‘‘(1) wages (as defined in section 3121(a) with-
out regard to paragraph (1) thereof) which are paid 
in cash, 
‘‘(2) remuneration for services performed out-
side the United States, and 
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‘‘(3) retirement contributions to or under any 
plan or arrangement which makes retirement dis-
tributions (as defined in section 63(c)). 
‘‘(d) EMPLOYEES TO WHOM SECTION APPLIES.— 
This section shall apply to an employee who is employed 
in any activity by— 
‘‘(1) any organization which is exempt from 
taxation under this chapter, or 
‘‘(2) any agency or instrumentality of the 
United States, any State or political subdivision of 
a State, or the District of Columbia.’’. 
SEC. 103. SIMPLIFICATION OF RULES RELATING TO QUALI-
FIED RETIREMENT PLANS. 
(a) IN GENERAL.—The following provisions of the In-
ternal Revenue Code of 1986 are hereby repealed: 
(1) NONDISCRIMINATION RULES.— 
(A) Paragraphs (4) and (5) of section 
401(a) (relating to nondiscrimination require-
ments). 
(B) Sections 401(a)(10)(B) and 416 (re-
lating to top heavy plans). 
(C) Section 401(a)(17) (relating to com-
pensation limit). 
(D) Paragraphs (3), (6), and (26) of sec-
tion 401(a), and section 410(b) (relating to 
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minimum participation and coverage require-
ments). 
(E) Paragraphs (3), (8), (11), (12), and 
(13) of section 401(k), and section 4979 (relat-
ing to actual deferral percentage). 
(F) Section 401(l) (relating to permitted 
disparity in plan contributions or benefits). 
(G) Section 401(m) (relating to non-
discrimination test for matching contributions 
and employee contributions). 
(H) Paragraphs (1)(D) and (12) of section 
403(b) (relating to nondiscrimination require-
ments). 
(I) Paragraphs (3) and (6) (other than 
subparagraph (A)(i) thereof) of section 408(k) 
(relating to simplified employee pensions). 
(2) CONTRIBUTION LIMITS.— 
(A) 
Sections 
401(a)(16), 
402(h)(2), 
403(b)(3) and (4), and 415 (relating to limita-
tions on benefits and contributions under quali-
fied plans). 
(B) Sections 401(a)(30), 402(g), and 
403(b)(1)(E) (relating to limitation on exclu-
sion for elective deferrals). 
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(C) Paragraphs (3) and (7) of section 
404(a) (relating to percentage of compensation 
limits). 
(D) Section 404(l) (relating to limit on in-
cludible compensation). 
(3) RESTRICTIONS ON DISTRIBUTIONS.— 
(A) Section 72(t) (relating to 10-percent 
additional tax on early distributions from quali-
fied retirement plans). 
(B) Sections 401(a)(9), 403(b)(10), and 
4974 (relating to minimum distribution rules). 
(C) Section 402(e)(4) (relating to net un-
realized appreciation). 
(4) SPECIAL REQUIREMENTS FOR PLAN BENE-
FITTING
SELF-EMPLOYED
INDIVIDUALS.—Sub-
sections (a)(10)(A) and (d) of section 401. 
(5) PROHIBITION OF TAX-EXEMPT ORGANIZA-
TIONS AND GOVERNMENTS FROM HAVING QUALIFIED 
CASH
OR
DEFERRED
ARRANGEMENTS.—Section 
401(k)(4)(B). 
(b) EMPLOYER REVERSIONS OF EXCESS PENSION 
ASSETS PERMITTED SUBJECT ONLY TO INCOME INCLU-
SION.— 
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(1) REPEAL
OF
TAX
ON
EMPLOYER
REVER-
SIONS.—Section 4980 of such Code is hereby re-
pealed. 
(2) EMPLOYER REVERSIONS PERMITTED WITH-
OUT
PLAN
TERMINATION.—Section 420 of such 
Code is amended to read as follows: 
‘‘SEC. 420. TRANSFERS OF EXCESS PENSION ASSETS. 
‘‘(a) IN GENERAL.—If there is a qualified transfer 
of any excess pension assets of a defined benefit plan 
(other than a multiemployer plan) to an employer— 
‘‘(1) a trust which is part of such plan shall not 
be treated as failing to meet the requirements of sec-
tion 401(a) or any other provision of law solely by 
reason of such transfer (or any other action author-
ized under this section), and 
‘‘(2) such transfer shall not be treated as a pro-
hibited transaction for purposes of section 4975. 
The gross income of the employer shall include the amount 
of any qualified transfer made during the taxable year. 
‘‘(b) QUALIFIED TRANSFER.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—The term ‘qualified trans-
fer’ means a transfer— 
‘‘(A) of excess pension assets of a defined 
benefit plan to the employer, and 
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‘‘(B) with respect to which the vesting re-
quirements of subsection (c) are met in connec-
tion with the plan. 
‘‘(2) ONLY 1 TRANSFER PER YEAR.—No more 
than 1 transfer with respect to any plan during a 
taxable year may be treated as a qualified transfer 
for purposes of this section. 
‘‘(c) VESTING REQUIREMENTS OF PLANS TRANSFER-
RING ASSETS.—The vesting requirements of this sub-
section are met if the plan provides that the accrued pen-
sion benefits of any participant or beneficiary under the 
plan become nonforfeitable in the same manner which 
would be required if the plan had terminated immediately 
before the qualified transfer (or in the case of a partici-
pant who separated during the 1-year period ending on 
the date of the transfer, immediately before such separa-
tion). 
‘‘(d) DEFINITION AND SPECIAL RULE.—For pur-
poses of this section— 
‘‘(1) EXCESS PENSION ASSETS.—The term ‘ex-
cess pension assets’ means the excess (if any) of— 
‘‘(A) the lesser of— 
‘‘(i) the fair market value of the 
plan’s assets (reduced by the prefunding 
balance and funding standard carryover 
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balance determined under section 430(f)), 
or 
‘‘(ii) the value of plan assets as deter-
mined under section 430(g)(3) after reduc-
tion under section 430(f), over 
‘‘(B) 125 percent of the sum of the fund-
ing target and the target normal cost deter-
mined under section 430 for such plan year. 
‘‘(2) COORDINATION WITH SECTIONS 430 AND 
433.—In the case of a qualified transfer— 
‘‘(A) any assets so transferred shall not, 
for purposes of this section and sections 430 
and 433, be treated as assets in the plan, and 
‘‘(B) in the case of a CSEC plan, the plan 
shall be treated as having a net experience loss 
under section 433(b)(2)(B)(iv) in an amount 
equal to the amount of such transfer and for 
which amortization charges begin for the first 
plan year after the plan year in which such 
transfer occurs, except that such section shall 
be applied to such amount by substituting ‘10 
plan years’ for ‘5 plan years’.’’. 
SEC. 104. REPEAL OF ALTERNATIVE MINIMUM TAX. 
Part VI of subchapter A of chapter 1 of the Internal 
Revenue Code of 1986 is hereby repealed. 
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SEC. 105. REPEAL OF CREDITS. 
Part IV of subchapter A of chapter 1 of the Internal 
Revenue Code of 1986 is hereby repealed. 
SEC. 106. REPEAL OF ESTATE AND GIFT TAXES AND OBSO-
LETE INCOME TAX PROVISIONS. 
(a) REPEAL OF ESTATE AND GIFT TAXES.— 
(1) IN GENERAL.—Subtitle B of the Internal 
Revenue Code of 1986 is hereby repealed. 
(2) EFFECTIVE
DATE.—The repeal made by 
paragraph (1) shall apply to the estates of decedents 
dying, and gifts and generation-skipping transfers 
made, after December 31, 2015. 
(b) REPEAL
OF OBSOLETE INCOME TAX PROVI-
SIONS.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), chapter 1 of the Internal Revenue Code 
of 1986 is hereby repealed. 
(2) EXCEPTIONS.—Paragraph (1) shall not 
apply to— 
(A) sections 1, 11, and 63 of such Code, 
as amended by this Act, 
(B) those provisions of chapter 1 of such 
Code which are necessary for determining 
whether or not— 
(i) retirement distributions are includ-
ible in the gross income of employees, or 
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(ii) an organization is exempt from 
tax under such chapter, and 
(C) subchapter D of such chapter 1 (relat-
ing to deferred compensation). 
SEC. 107. EFFECTIVE DATE. 
Except as otherwise provided in this title, the amend-
ments made by this title shall apply to taxable years begin-
ning after December 31, 2015. 
TITLE II—SUPERMAJORITY 
REQUIRED FOR TAX CHANGES 
SEC. 201. SUPERMAJORITY REQUIRED. 
(a) IN GENERAL.—It shall not be in order in the 
House of Representatives or the Senate to consider any 
bill, joint resolution, amendment thereto, or conference re-
port thereon that includes any provision that— 
(1) increases any Federal income tax rate, 
(2) creates any additional Federal income tax 
rate, 
(3) reduces the standard deduction, or 
(4) provides any exclusion, deduction, credit, or 
other benefit which results in a reduction in Federal 
revenues. 
(b) WAIVER OR SUSPENSION.—This section may be 
waived or suspended in the House of Representatives or 
VerDate Sep 11 2014 
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