Foreign Earned Income Act
PL 95-615 (H.R.9251), enacted 11/08/1978

PUBLIC LAW 95-615—NOV. 8, 1978 
92 STAT. 3097 
Public Law 95-615 
95th Congress 
An Act 
To change the tax treatment of income earned abroad by United States citizens 
and residents, and for other purposes. 
Be it enacted hy the Seriate and House of Representatives of the 
United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the "Tax Treatment Extension Act of 
1977". 
SEC. 2. COMMUTING EXPENSES. 
With respect to transportation costs paid or incurred after Decem-
ber 31, 1976, and before April 30, 1978, the application of sections 
62,162, and 262 and of chapters 21,23, and 24 of tne Internal Revenue 
Code of 1954 to transportation expenses in traveling between a tax-
payer's residence and place of work shall be determined— 
(1) without regard to Revenue Ruling 76-453 (and without 
regard to any other regulation, ruling, or decision reaching the 
same result as, or a result similar to, the result set forth in such 
Revenue Ruling); and 
(2) with full regard to the rules in effect before Revenue 
Ruling 7e^53. 
SEC. 3. FRINGE BENEFITS. 
No regulations shall be issued in final form on or after October 1, 
1977, and before July 1, 1978, providing for the inclusion of any 
fringe benefit in gross income by reason of section 61 of the Internal 
Revenue Code of 1954. 
Nov. 8, 1978 
[H.R. 9251] 
Tax Treatment 
Extension Act of 
1977. 
26 use 1 note. 
26 use 62 note. 
26 use 62, 162, 
262, 3101, 3303, 
3401. 
26 use 61 note. 
26 use 61. 
SEC. 
4
. 
CHANGES 
IN 
TREATMENT 
OF 
INCOME 
EARNED 
ABROAD. 
(a) IN GENERAL.—Subsection (d) of section 1011 of the Tax Reform 
Act of 1976 is amended by striking out "December 31,1976" and insert- 26 USe 911 note, 
ing in lieu thereof "December 31,1977". 
(b) TRANSITIONAL RULE.—If for any taxable year beginning in 
1977— 
(1) an individual is entitled to the benefits of section 911 of the 
Internal Revenue Code of 1954, and 
26 USe 911. 
, 
(2) such individual chooses to take to any extent the benefits 
of section 901 of such Code. 
26 USC 901. 
then such individual shall be treated for such taxable year as an indi- 
* 
vidual for whom an unused zero bracket amount computation is pro-
vided by section 63 (e) of such Code. 
26 USe 63. 
SEC. 
5
. 
SALARY 
REDUCTION 
PENSION 
PLANS, 
CASH 
AND DEFERRED 
PROFIT-SHARING PLANS, 
AND CAFETERIA PLANS. 
Section 2006 of the Employee Retirement Income Security Act of 
1974 is amended— 
26 USC 401 note. 
(1) by striking out "January 1,1978" each place it appears and 
inserting in lieu thereof "January 1,1980", and 
(2) by striking out "December 31, 1977" in subsection (d) and 
inserting in lieu thereof "December 31,1979". 
39-194 O—80—pt. 3 
30 : QL3 
92 STAT. 3098 
PUBLIC LAW 95-615—NOV. 8, 1978 
SEC. 6. APPLICATION OF SECTION 117 TO CERTAIN EDUCATION PRO-
GRAMS FOR MEMBERS OF THE UNIFORMED SERVICES. 
26 use 117 note. 
Subsection (c) of section 4 of the Act entitled "An Act to suspend 
until the close of June 30, 1975, the duty on certain carboxmethyl 
•'. • • 
cellulose salts, and for other purposes", approved October 26, 1974 
' ; I 
!, 
(Public Law 93-483), is amended to read as follows: 
"(c) EFFECTIVE DATE.—The provisions of this section shall apply 
with respect to amounts received during calendar years 1973, 1974, 
, ..; 
and 1975, and, in the case of a member of a uniformed service receiving 
training after 1975 and before 1979 in programs described in sub-
section (a), with respect to amounts received after 1975 and before 
1983." 
SEC. 7. EXTENSION OF 5-YEAR AMORTIZATION FOR LOW-INCOME 
HOUSING. 
(a) I N GENERAL.—Subsection (k) of section 167 of the Internal 
26 use 167. 
Revenue Code of 1954 (relating to depreciation of expenditures to 
rehabilitate low-income rental housing) is amended by striking out 
\, 
"January 1, 1978" each place it appears and inserting in lieu thereof 
"January 1,1979". 
(b) TECHNICAL AMENDMENT.—Subsection (b) of section 203 of the 
26USC167note. 
Tax Reform Act of 1976 is amended by striking out ", and before 
January 1,1978, and expenditures made pursuant to a binding contract 
entered into before January 1,1978". 
26 use 382, 
SEC. 8. RULES FOR CARRYOVERS WHERE LOSS CORPORATIONS ARE 
383. 
ACQUIRED (SECTIONS 382 AND 383 OF THE INTERNAL 
REVENUE CODE OF 1954). 
Paragraphs (2) and (3) of section 806(g) of the Tax Reform Act 
26 use382 note, of 1976 (relating to effective dates for the amendments to sections 
383 note. 
382 and 383 of the Code) are amended by striking out "1978" each 
place it appears and inserting in lieu thereof "1980". 
SEC. 201. SHORT TITLE, ETC. 
Foreign Earned 
(a) SHORT TITLE.—This Act may be cited as the "Foreign Earned 
Income Act of 
Income Act of 1978". 
l^ukr 
^^^ AMENDMENTS or 1954 CODE.—Except as otherwise expressly 
°°*®" 
provided, whenever in this Act an amendment or repeal is expressed 
in terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other pro-
26 use 1. 
vision of the Internal Revenue Code of 1954. 
SEC. 202. INCOME EARNED BY INDIVIDUALS IN CERTAIN CAMPS. 
26 use 911. 
(a) SECTION 911 EXCLUSION.—Subsection (a) of section 911 (relat-
ing to earned income from sources without the United States) is 
amended to read as follows: 
"(a) 
GENERAL RULE.—In the case of an individual described in 
Pos^ p. 3100. 
section 913(a) who, because of his employment, resides in a camp 
located in a hardship area, the following items shall not be included 
in gross income and shall be exempt from taxation under this subtitle: 
"(1) BONA FIDE RESIDENT OF FOREIGN COUNTRY.—If such indi-
vidual is described in section 913(a) (1), amounts received from 
sources within a foreign country or countries (except amounts 
paid by the United States or any agency thereof) which consti-
tute earned income attributable to services performed during the 
period of bona fide residence. The amount excluded under this 
paragraph for any taxable year shall be computed by applying 
the special rules contained in subsection (c). 
PUBLIC LAW 95-615—NOV. 8, 1978 
92 STAT. 3099 
"(2) PRESENCE IN FOREIGN COUNTRY FOR IT MONTHS.—If such 
individual is described in section 913(a)(2), amounts received 
from sources within qualified foreign countries (except amounts 
paid by the United States or any agency thereof) which consti-
tute earned income attributable to services performed during the 
18-month period. The amount excluded under this paragraph for 
any taxable year shall be computed by applying the special rules 
contained in subsection (c). 
An individual shall not be allowed as a deduction from his gross 
income or as a credit against the tax imposed by this chapter any 
credit for the amount of taxes paid or accrued to a foreign country 
or possession of the United States, to the extent that such deduction 
or credit is properly allocable to or chargeable against amounts 
excluded from gross income under this subsection, other than the 
deductions allowed by sections 217 (relating to moving expenses)". 
26 USC 217. 
(b) LIMITATIONS ON AMOUNT OF EXCLUSION.—Paragraph (1) of 
£ 
section 911(c) 
(relating to special rules) is amended to read as 26 USC 911. 
follows: 
"(1) LIMITATIONS ON AMOUNT OF EXCLUSION.— 
- • 
' 
'-
" ( A ) I N GENERAL.—The amount excluded from the gross 
income of an individual under subsection (a) for any tax-
able year shall not exceed an amount which shall be com-
puted on a daily basis at an annual rate of $20,000 for days 
during which he resides in a camp. 
"(B) CAMP.—For purposes of this section, an individual 
shall not be considered to reside in a camp because of his 
employment unless the camp constitutes substandard lodging 
which is— 
A 
"(i) provided by or on behalf of the employer for the 
convenience of the employer because the place at which 
such individual renders services is in a remote area where 
, . 
satisfactory housing is not available on the open market, 
' '* 
" (ii) located, as near as practicable, in the vicinity of 
the place at which such individual renders services, and 
"(iii) furnished in a common area (or enclave) which 
is not available to the public and which normally accom-
modates 10 or more employees. 
" ( C ) 
HARDSHIP AREA.—For purposes of this section, the 
term 'hardship area' has the same meaning as in section 
913(h).". 
Post, p. 3100. 
(c) BUSINESS PREMISES OF THE EMPLOYER.—Subsection (c) of sec-
tion 911 (relating to special rules) is amended by inserting after para- 
26 USC 911. 
graph (6) the following new paragraph: 
"(7) BUSINESS PREMISES OF THE EMPLOYER.—In the case of an 
individual residing in a camp who elects the exclusion provided 
in this section for a taxable year, the camp shall be considered 
to be part of the business premises of the employer for purposes 
of section 119 for such taxable year." 
26 USC 119. 
(d) SECTION NOT To APPLY.— 
(1) I N GENERAL.—Section 911 is amended by striking out sub-
sections (d) and (e) and inserting in lieu thereof the following 
new subsection: 
"(d) SECTION NOT T O APPLY.—An individual entitled to the benefits 
of this section for a taxable year may elect, in such manner and at 
such time as shall be prescribed by the Secretary, not to have the 
provisions of this section apply for the taxable year." 
92 STAT. 3100 
PUBLIC LAW 95-615—NOV. 8, 1978 
26 use 911. 
(2) CONFORMING AMENDMENT.—Subsection (f) of section 911 
(relating to cross references) is redesignated as subsection (e). 
(e) REMOVAL or REQUIREMENT AS TO PLACE or RECEIPT.—Paragraph 
(8) of section 911(c) (relating to requirement as to place of receipt) 
is hereby repealed. 
(f) 
CLERICAL AMENDMENTS.— 
(1) The section heading for section 911 is amended to read as 
follows: 
"SEC. 911. INCOME EARNED BY INDIVIDUALS IN CERTAIN CAMPS." 
(2) The table of sections for subpart B of part I I I of sub-
chapter N of chapter 1 is amended by striking out the item 
relating to section 911 and inserting in lieu thereof the following: 
"Sec. 911. Income earned by individuals in certain camps." 
(3) The heading of subpart B of part I I I of subchapter N 
26 use 911. 
of chapter 1 is amended by striking out "Citizens" and inserting 
in lieu thereof "Citizens or Residents". 
(4) The table of subparts for part I I I of subchapter N of 
26 use 901. 
chapter 1 is amended by striking out "citizens" in the item relat-
ing to subpart B and inserting in lieu thereof "citizens or residents". 
26 use 43, 
(5) Sections 4 3 ( c ) ( 1 ) ( B ) , 1302(b) (2) (A) (i), 1304(b)(1), 
1302, 1304, 
1402(a) (8), 6012(c), and 6091(b) (1) (B) (iii) are each amended 
1402, 6012, 
by striking out "relating to earned income from sources without 
""^•^' 
the United States" and inserting in lieu thereof "relating to 
income earned by employees in certain camps". 
SEC. 203. DEDUCTION FOR CERTAIN EXPENSES OF LIVING ABROAD. 
(a) ALLOWANCE OF DEDUCTION.—Subpart B of part I I I of sub-
26 use 911. 
chapter N of chapter 1 (relating to earned income of citizens and 
residents of United States) is amended by adding at the end thereof 
the following new section: 
26 use 913. 
"SEC. 913. DEDUCTION FOR CERTAIN EXPENSES OF LIVING ABROAD. 
"(a) ALLOWANCE OF DEDUCTION.—In the case of an individual who 
is— 
"(1) 
BONA FIDE RESIDENT OF FOREIGN COUNTRY.—^A citizen of 
the United States and who establishes to the satisfaction of the 
Secretary that he has been a bona fide resident of a foreign coun-
try or countries for an uninterrupted period which includes an 
entire taxable year, or 
,ff 
.; 
"(2) PRESENCE I N FOREIGN COUNTRY FOR IT MONTHS.—^A citi-
zen or resident of the United States and who during any period 
of 18 consecutive months is present in a foreign country or coun-
tries during at least 510 full days in such period, 
there shall be allowed as a deduction for such taxable year or for any 
taxable year which contains part of such period, the sum of the 
amounts set forth in subsection (b). 
"(b) AMOUNTS.—The amounts referred to in this subsection are: 
" (1 ^ The qualified cost-of-living differential. 
"(2) The qualified housing expenses. 
"(3) The qualified schooling expenses. 
; , " (4 
W h e qualified home leave travel expenses. 
" (5) The qualified hardship area deduction. 
"(c) 
DEDUCTION NOT T O EXCEED N E T FOREIGN SOURCE EARNED 
INCOME.—• 
"(1) I N GENERAL.—^The deduction allowed by subsection (a) 
to any individual for the taxable year shall not exceed— 
" ( A ) such individual's earned income from sources out-
side the United States for the portion of the taxable year in 
PUBLIC LAW 95-615—NOV. 8, 1978 
92 STAT. 3101 
which such individual's tax home is in 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 use 119. 
" (ii) the allocable deductions. 
"(2) ALLOCABLE DEDUCTIONS DEFINED.—For purposes of para-
graph ( l ) ( B ) ( i i ) , the term 'allocable deductions' means the 
deductions properly allocable to or chargeable against the earned 
income referred to in paragraph (1) (A), other than the deduc-
tion allowed by this section. 
"(d) QUALIFIED COST-OF-LIVING DIFFERENTIAL.— 
"(1) I N GENERAL.—For purposes of this section, the term 'quali-
fied cost-of-living differentiar means a reasonable amount deter-
mined under tables (or under another method) prescribed by the 
Secretary establishing the amount (if any) by which the gen-
eral cost of living in the foreign place in 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) 
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 
1! 
the individual's tax home is in a foreign country. 
" ( B ) DIFFERENTIAL TO BE BASED ON DAILY LIVING EXPENSES.— 
An 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 place— 
"(i) shall vary depending on the composition of the 
family (spouse and dependents) residing with the indi-
vidual (or at a qualified second household), and 
"(ii) shall reflect the costs of living of a family whose 
income is equal to the salary of an employee of the 
United States who is compensated at a rate equal to the 
annual rate paid for step 1 of grade GS-14. 
5 USC 5332 note. 
" ( D ) 
STATE DEPARTMENT'S INDEX MAY BE TAKEN INTO 
ACCOUNT.—The Secretary, in determining the qualified cost-
of-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 ) No DIFFERENTIAL FOR PERIODS DURING WHICH INDIVID-
UAL IS ELIGIBLE UNDER SECTION 119.—Except as provided in 
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 HOUSING EXPENSES.— 
" (1) I N GENERAL.—For purposes of this section, the term 'quali-
fied housing expenses' means the excess of— 
" ( A ) the individual's housing expenses, over 
"(B) the individual's base housing amount. 
92 STAT. 3102 
PUBLIC LAW 95-615—NOV. 8, 1978 
» 5 f •, 
"(2) HOUSING EXPENSES.— 
" ( A ) I N GENERAL.—For purposes of paragraph (1), the 
term 'nousing expenses' means the reasonable expenses paid 
or incurred during the taxable year by or on behalf of the 
individual for housing for the individual (and, if they reside 
with him, for his spouse and dependents) in a foreign country. 
Such term— 
" (i) except as provided in clause (ii), includes expenses 
attributable to the housing (such as utilities and insur-
ance), and 
"(ii) does not include interest and taxes of the kind 
deductible under section 163 or 164 or any amount allow-
26 use 163, 
able as a deduction under section 216(a). 
164,216. 
" ( B ) 
PORTION 
WHICH IS LAVISH OR EXTRAVAGANT NOT 
ALLOWED.—For purposes of subparagraph 
( A ) , housing 
expenses shall not be treated as reasonable to the extent such 
expenses are lavish or extravagant under the circumstances. 
"(3) BASE 
HOUSING AMOUNT.—For purposes of 
paragraph 
( 1 ) -
"(A) I N GENERAL.—The term 'base housing amount' means 
20 percent of the excess of— 
"(i) the individual's earned income (reduced by the 
deductions properly allocable to or chargeable against 
such earned income (other than the deduction allowed 
by this section)), over 
"(ii) the sum of— 
" ( I ) the housing expenses taken into account 
under paragraph (1)(A) of this subsection, 
" ( I I ) the qualified cost-of-living differential, 
" ( I I I ) the qualified school expenses, 
" ( I V ) the qualified home leave travel expenses, 
and 
"(V) the qualified hardship area deduction. 
" ( B ) BASE HOUSING AMOUNT TO BE ZERO IN CERTAIN CASES.— 
If, because of adverse living conditions, the individual main-
tains a household for his spouse and dependents at a foreign 
place other than his tax home which is in addition to the 
household he maintains as his tax home, and if his tax home 
is in a hardship area as defined in subsection (h), the base 
I 
housing amount for the household maintained at his tax home 
shall be zero, 
t 
"(4) PERIODS TAKEN INTO ACCOUNT.— 
" (A) I N GENERAL.—The expenses taken into account under 
this subsection shall be only those which are attributable to 
housing during periods for which— 
. ; . = 
"(i) the individual's tax home is in a foreign country, 
and 
"(ii) except as provided in subsection (i) (1) (B) (iii), 
the value of the individual's housing is not excluded 
26 use 119. 
under section 119. 
" ( B ) DETERMINATION or BASE HOUSING AMOUNT.—The base 
housing amount shall be determined for the periods referred 
to in subparagraph (A) (as modified by subsection ( i ) ( l ) 
( B ) ( i i i ) ) . 
"(5) O N L Y ONE HOUSE PER PERIOD.—If, but for this paragraph, 
housing expenses for any individual would be taken into account 
under paragraph (2) of subsection (b) with respect to more than 
PUBLIC LAW 95-615—NOV. 8, 1978 
92 STAT. 3103 
one abode for any period, only housing expenses with respect to 
that abode which bears the closest relationship to the individual's 
tax home shall be taken into account under such paragraph (2) for 
such period. 
"(f) 
QUALIFIED SCHOOLING EXPENSES.— 
" (1) I N GENERAL.—For purposes of this section, the term 'quali-
fied schooling expenses' means the reasonable schooling expenses 
paid or incurred by or on behalf of the individual during the 
taxable year for the education of each dependent of the indi-
vidual at the elementary or secondary level. For purposes of 
the preceding sentence, the elementary or secondary level means 
education which is the equivalent of education from the kinder-
garten through the 12th grade in a United States-type school. 
"(2') EXPENSES INCLUDED.—For purposes of paragraph (1), the 
term 'schooling expenses' means tne cost of tuition, fees, books, 
and local transportation and of other expenses required by the 
school. Except as provided in paragraph (3), such term does not 
include expenses of room and board or expenses of transporta-
tion other than local transportation. 
"(3) 
ROOM, BOARD, AND TRAVEL ALLOWED I N CERTAIN CASES.—If 
an adequate United States-type school is not available within a 
reasonable commuting distance of the individual's tax home, the 
expenses of room and board of the dependent and the expenses 
of the transportation of the dependent each school year between 
such tax home and the location of the school shall be treated as 
schooling expenses. 
"(4) 
DETERMINATION or REASONABLE EXPENSES.—If— 
"(A) there is an adequate United States-type school avail- 
•
^ = ' 
able within a reasonable commuting distance of the individ-
ual's tax home, and 
" ( B ) the dependent attends a school other than the school 
referred to in subparagraph (A), 
then the amount taken into account under paragraph (2) shall 
not exceed the aggregate amount which would be charged for the 
period by the school referred to in subparagraph (A). 
"(5) 
PERIOD TAKEN INTO ACCOUNT.—An amount shall be taken 
into account as a qualified schooling expense only if it is attrib-
utable to education for a period during which the individual's 
tax home is in a foreign country. 
" (g) QUALIFIED HOME LEAVE TRAVEL EXPENSES.— 
" (1) I N GENERAL.—For purposes of this section, the term 'quali- 
^ 
fied home leave travel expenses' means the reasonable amounts 
paid or incurred by or on behalf of an individual for the trans-
portation of such individual, his spouse, and each dependent 
from the location of the individual's tax home outside the United 
States to— 
"(A) the individual's present (or, if none, most recent) 
principal residence in the United States, or 
" ( B ) if subparagraph (A) does not apply to the individ-
ual, the nearest port of entry in the continental United States 
(excluding Alaska) 
and return. 
"(2) 
O N E TRIP PER i2-MONTH PERIOD ABROAD.—Amounts may 
be 
taken into account under paragraph (4) of subsection (b) only 
with respect to one round trip per person for each continuous 
period of 12 months for which the individual's tax home is in 
a foreign country. 
92 STAT. 3104 
PUBLIC LAW 95-615—NOV. 8, 1978 
" ( h ) QUALIFIED HARDSHIP AREA DEDUCTION.— 
"(1) I N GENERAL.—For purposes of this section, the term'quali-
fied hardship area deduction' means an amount computed on a 
daily basis at an annual rate of $5,000 for days during which the 
individual's tax home is in a hardship area. 
" (2^ HARDSHIP AREA DEFINED,—For purposes of this section, the 
term 'hardship area' means any foreign place designated by the 
Secretary of State as a hardship post where extraordinarily dif-
ficult living conditions, notably unhealthful conditions, or exces-
sive physical hardships exist and for which a post differential of 
15 percent or more— 
" ( A ) is provided under section 5925 of title 5, United 
States Code, or 
" ( B ) would be so provided if officers and employees of 
the Government of the United States were present at that 
place. 
"(i) SPECIAL 
RULES 
W H E R E 
INDIVIDUAL 
MAINTAINS 
SEPARATE 
HOUSEHOLD FOR SPOUSE AND DEPENDENTS BECAUSE OF ADVERSE LIVING 
CONDITIONS AT TAX H O M E . — 
"(1) I N GENERAL.—For any period during which an individual 
maintains a qualified second household— 
" (A) QUALIFIED COST-OF-LIVING DIFFERENTIAL.— 
"(i) ALLOWANCE DETERMINED BY REFERENCE TO LOCA-
TION OF QUALIFIED SECOND HOUSEHOLD.—Paragraph (1) 
of subsection (d) shall be applied by substituting 'the 
qualified second household' for 'the individual's tax 
home'. 
26 use 119. 
"(ii) DISREGARD OF SECTION H 9 RULE.—Subparagraph 
(E) of subsection (d) (2) shall not apply with respect 
to the spouse and dependents. 
" (B) QUALIFIED HOUSING EXPENSES.— 
"(i) EXPENSES WITH 
RESPECT TO QUALIFIED SECOND 
HOUSEHOLD TAKEN INTO ACCOUNT.—For purposcs of sub-
section (e), the expenses for housing of an individual's 
spouse and dependents at the qualified second household 
shall be treated as housing expenses if they would meet 
the requirements of subsection (e) (2) if the individual 
• ' 
resided at such household. 
"(ii) SEPARATE APPLICATION OF SUBSECTION (e).—Sub-
section (e) shall be applied separately with respect to the 
housing expenses for the qualified second household; 
except that, in determining the base housing amount, the 
housing expenses (if any) of the individual for housing 
at his tax home shall also be taken into account under sub-
section (e) (3) (A) (ii). 
"(iii) 
CERTAIN 
RULES NOT TO APPLY.—Paragraphs 
' 
(4) (A) (ii) and (5) of subsection (e) shall not apply 
with respect to housing expenses for the qualified second 
household. 
" ( C ) REQUIREMENT THAT SPOUSE AND DEPENDENTS RESIDE 
WITH 
INDIVIDUAL FOR PURPOSES OF SCHOOLING AND HOME 
LEAVE.— 
"(i) I N GENERAL.—The requirement of subsection 
(j) (3) that the dependent or spouse of the individual (as 
the case may be) reside with the individual at his tax 
home shall be treated as met if such spouse or dependent 
resides at the qualified second household. 
PUBLIC LAW 95-615—NOV. 8, 1978 
92 STAT. 3105 
,4;^ ij 
"(ii) SUBSTITUTION OF HOUSEHOLD TOR TAX HOME.—In 
any case where clause (i) applies, paragraphs (3) and 
;;4f 
(4) of subsection (f), and paragraph (1) of subsection 
(g), shall be applied with respect to amounts paid or 
- -
incurred for the spouse or dependent by substituting the 
;t 
location of the qualified second household for the individ-
ual's tax home. 
"(2) DEFINITION OF QUALIFIED SECOND HOUSEHOLD.—For pur-
poses of this section, the term 'qualified second household' means 
any household maintained in a foreign country by an individual 
: i • 
' 
for the spouse and dependents of such individual at a place other 
than the tax home of such individual because of adverse living 
conditions at the individual's tax home. 
" (j) OTHER DEFINITIONS AND SPECIAL RULES.— 
"(1) DEFINITIONS.—For purposes of this section— 
"(A) EARNED INCOME.—The term 'earned income' has the 
meaning given to such term by section 911(b) (determined 
26 USC 911. 
with the rules set forth in paragraphs (2), (3), (4), and (5) 
of section 911(c)), except that such term does not include 
amounts paid by the United States or any agency thereof. 
"(B) 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 
26 USC 162. 
from home). 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. 
"(C) RESIDENCE AT TAX HOME.—A household or residence 
shall be treated as at the tax home of an individual if such 
household or residence is within a reasonable commuting 
distance of such tax home. 
v
^ 
: 
" ( D ) ADVERSE LIVING CONDITIONS.—The term 'adverse liv-
ing conditions' means living conditions which are dangerous, 
unhealthful, or otherwise adverse. 
" ( E ) 
UNITED STATES.—The term 'United States', when 
used in a geographical sense, includes the possessions of 
the United States and the areas set forth in paragraph (1) 
of section 638 and so much of paragraph (2) of section 638 26 USC 638. 
as relates to the possessions of the United States. 
"(2) 
LIMITATION TO COACH OR ECONOMY FARE.—The amount 
taken into account under this section for any transportation by 
air shall not exceed the lowest coach or economy rate at the time 
of such transportation charged by a commercial airline for such 
transportation during the calendar month in which such trans-
portation is furnished. If there is no such coach or economy 
rate or if the individual is required to use first-class transporta-
tion because of a physical impairment, the preceding sentence 
shall be applied by substituting 'first-class' for 'coach or economy'. 
"(3) REQUIREMENT THAT SPOUSE AND DEPENDENTS RESIDE WITH 
INDIVIDUAL FOR PURPOSES OF SCHOOLING AND HOME LEAVE.—Except 
as provided in subsection (i) (1) (C) (i), amounts may be taken 
into account under subsection (f) with respect to any dependent 
of the individual, and under subsection (g) with respect to the 
individual's spouse or any dependent of the individual, only for 
the period that such spouse or dependent (as the case may be) 
resides with the individual at his tax home. 
92 STAT. 3106 
PUBLIC LAW 95-615—NOV. 8, 1978 
" ( k ) CERTAIN DOUBLE BENEFITS DISALLOWED.—An individual shall 
not be allowed— 
"(1) as a deduction (other than the deduction under sec-
26 use 151. 
tionl51), 
" (2) as an exclusion, or 
26 use 44A. 
"(3) as a credit under section 44A (relating to household and 
dependent care services), 
any amount to the extent that such amount is taken into account 
under subsection (d), (e), (f),or ( g ) . 
26 use 911. 
"(1) APPLICATION W I T H SECTION 911.—An individual shall not be 
allowed the deduction allowed by subsection (a) for any taxable year 
with respect to which he elects the exclusion provided in section 911. 
" (m) REGULATIONS.— The Secretary shall prescribe such regulations 
as may be necessary or aj)propriate to carry out the purposes of this 
section, including regulations providing rules— 
"(1) for cases where a husband and wife each have earned 
* '•' ' 
income from sources outside the United States, and 
"(2) for married individuals filing separate returns.". 
(b) 
DEDUCTION 
ALLOWED 
I N 
DETERMINING 
ADJUSTED 
GROSS 
26 use 62. 
INCOME.—Section 62 (relating to definition of adjusted gross income) 
is amended by inserting after paragraph (13) the following new 
paragraph: 
"(14) 
DEDUCTION FOR CERTAIN EXPENSES OF LIVING ABROAD.— 
Ante, p. 3100. 
The deduction allowed by section 913." 
(c) CLERICAL AMENDMENT.—The table of sections for subpart B of 
part I I I of subchapter N of chapter 1 is amended by adding at the 
end thereof the following: 
"Sec. 913, Deduction for certain expenses of living abroad." 
SEC. 204. MOVING EXPENSES. 
26 use 217, 
(a) SPECIAL RULES FOR FOREIGN MOVES.—Section 217 (relating to 
moving expenses) is amended by redesignating subsection (h) as sub-
section (j) and by inserting after subsection (g) the following new 
subsections: 
" ( h ) SPECIAL RULES FOR FOREIGN MOVES.— 
" (1) INCREASE I N LIMITATIONS.—In the case of a foreign move— 
;,;yi. s 
" ( A ) subsection ( b ) ( 1 ) ( D ) shall be applied by substitut-
ing '90 consecutive days' for '30 consecutive days', 
" ( B ) subsection (b) (3) (A) shall be applied by substitut-
^ 
ing'$4,500'for'$1,500'and by substituting'$6,000'for'$3,000', 
and 
" ( C ) subsection (b) (3) (B) shall be applied as if the last 
sentence of such subsection read as follows: 'In the case of 
a husband and wife filing separate returns, subparagraph 
(A) shall be applied by substituting "$2,250" for "$4,500", 
and by substituting "$3,000" for "$6,000".' 
"(2) ALLOWANCE OF CERTAIN STORAGE FEES.—In the case of a 
foreign move, for purposes of this section, the moving expenses 
described in subsection 
( b ) ( 1 ) ( A ) 
include the reasonable 
expenses— 
" ( A ) of moving household goods and personal effects to 
and from storage, and 
" ( B ) of storing such goods and effects for part or all of 
• 
the period during which the new place of work continues to 
' 
be the taxpayer's principal place of work. 
PUBLIC LAW 95-615—NOV. 8, 1978 
92 STAT. 3107 
" (3) FOREIGN MOVE.—For purposes of this subsection, the term 
'foreign move' means the commencement of work by the tax-
payer at a new principal place of work located outside the United 
States. 
"(4) UNITED STATES DEFINED.—For purposes of this subsection 
and subsection (i), the term 'United States' includes the posses-
sions of the United States. 
"(i) ALLOWANCE or DEDUCTIONS IN CASE OF RETIREES OR DECEDENTS 
W H O WERE WORKING ABROAD.— 
"(1) I N GENERAL.—In the case of any qualified retiree moving 
expenses or qualified survivor moving expenses— 
"(A) this section (other than subsection (h)) shall be 
4 , 
applied with respect to such expenses as if they were incurred 
in connection with the commencement of work by the tax-
payer as an employee at a new principal place of work located 
within the United States, and 
"(B) the limitations of subsection (c) (2) shall not apply. 
"(2) QUALIFIED RETIREE MOVING EXPENSES.—For purposes of 
paragraph (1), the term 'qualified retiree moving expenses' means 
:, 
. , 
any moving expenses— 
"(A) which are incurred by an individual whose former 
principal place of work and former residence were outside the 
United States, and 
"(B) which are incurred for a move to a new residence 
in the United States in connection with the bona fide retire-
ment of the individual. 
"(3) QUALIFIED SURVIVOR MOVING EXPENSES.—For purposes of 
paragraph (1), the term 'qualified survivor moving expenses' 
means moving expenses— 
,. 
" ( A ) which are paid or incurred by the spouse or any 
dependent of any decedent who (as of the time of his death) 
had a principal place of work outside the United States, and 
"(B) which are incurred for a move which begins within 
6 months after the death of such decedent and which is to a 
residence in the United States from a former residence out-
side the United States which (as of the time of the decedent's 
death) was the residence of such decedent and the individual 
paying or incurring the expense.". 
SEC. 205. MEALS OR LODGING FURNISHED TO EMPLOYEES UNDER 
CERTAIN CONDITIONS. 
Section 119 (relating to meals or lodging furnished for the con- 26 USC 119. 
' 
venience of the employer) is amended— 
(1) by striking out "furnished to him by his employer for the 
convenience of the employer" and inserting in lieu thereof "fur-
nished to him, his spouse, or any of his dependents by or on behalf 
of his employer for the convenience of the employer", and 
(2) by striking out "There shall" and inserting in lien thereof 
"(a) MEALS AND LODGING FURNISHED TO EMPLOYEE, H I S SPOUSE, 
AND H I S DEPENDENTS, PURSUANT TO EMPLOYMENT.—There shall". 
SEC. 206. SUSPENSION OF RUNNING OF THE PERIOD UNDER SECTION 
1034 FOR PURCHASING A NEW PRINCIPAL RESIDENCE, 
26 USC 1034. 
Section 1034 (relating to sale or exchange of residence) is amended 
by redesignating subsection (k) as subsection (1) and by inserting 
after subsection (j) the following new subsection: 
92 STAT. 3108 
PUBLIC LAW 95-615—NOV. 8, 1978 
" ( k ) 
INDIVIDUAL WHOSE TAX HOME I S OUTSIDE THE UNITED 
STATES.—The running of any period of time specified in subsection (a) 
or (c) (other than the 18 months referred to in subsection (c) (4)) 
shall be suspended during any time that the taxpayer (or his spouse if 
the old residence and the new residence are each used by the taxpayer 
and his spouse as their principal residence) has a tax home (as defined 
in section 913(j) (1) (B)) outside the United States after the date of 
the sale of the old residence; except that any such period of time as 
so suspended shall not extend beyond the date 4 years after the date 
of the sale of the old residence." 
SEC. 207. MISCELLANEOUS AMENDMENTS. 
26 use 3401. 
(a) WAGE WITHHOLDING,—Subsection (a) of section 3401 (defining 
wages) is amended by striking out the period at the end of paragraph 
(17) and inserting in lieu thereof " ; or" and by adding at the end 
thereof the following new paragraph: 
"(18) to or on behalf of an employee if (and to the extent 
that) at the time of the payment of such remuneration it is rea-
sonable to believe that a corresponding deduction is allowable 
Anu, p. 3100. 
under section 913 (relating to deduction for certain expenses of 
living abroad)." 
26 use 6091. 
(b) PLACE FOR FILING RETURNS.—Clause (iii) of section 6091(b) 
(1) (B) (relating to place for filing tax returns) is amended by 
inserting "section 913 (relating to deduction for certain expenses of 
living abroad)," before "section 931". 
(c) AUTHORITY T O REQUIRE INFORMATION CONCERNING SECTION 
26 use 912. 
912 ALLOWANCES.—Section 6011 (relating to general requirement of 
26 use 6011. 
return, statement, or list) is amended by redesignating subsection 
(d) as subsection (e) and by inserting after subsection (c) the fol-
lowing new subsection: 
"(d) AUTHORITY To REQUIRE INFORMATION CONCERNING SECTION 
912 ALLOWANCES.—The Secretary may by regulations require any 
individual who receives allowances which are excluded from gross 
income under section 912 for any taxable year to include on his 
return of the taxes imposed by subtitle A for such taxable year such 
information with respect to the amount and type of such allowances 
as the Secretary determines to be appropriate." 
SEC. 208. REPORTS BY SECRETARY. 
Report to 
(a) GENERAL RULE.—As soon as practicable after the close of the 
congressional 
calendar year 1979 and after the close of each second calendar year 
9^'^rc:!rQTi 
thereafter, the Secretary of the Treasury shall transmit a report to 
26 UbC 911 note, 
^j^g Committee on Ways and Means of the House of Representatives 
and to the Committee on Finance of the Senate setting forth with 
respect to the preceding 2 calendar years— 
(1) the number, country of residence, and other pertinent char-
acteristics of persons claiming the benefits of sections 911, 912, 
26 use 911, 
and 913 of the Internal Revenue Code of 1954, 
912, 913. 
(2) the revenue cost and economic effects of the provisions of 
such sections 911,912, and 913, and 
(3) a detailed description of the manner in which the provisions 
of such sections 911, 912, and 913 have been administered during 
,. I' 
the preceding 2 calendar years. 
(b) INFORMATION FROM FEDERAL AGENCIES.—Each agency of the 
Federal Government which pays allowances excludable from gross 
income under section 912 of such Code shall furnish to the Secretary 
of the Treasury such information as he determines to be necessary 
to carry out his responsibility under subsection (a). 
PUBLIC LAW 95-615—NOV. 8, 1978 
92 STAT. 3109 
SEC. 209. EFFECTIVE DATES. 
26 USC 911 note. 
(a) GENERAL RULE.—Except as provided in subsections (b) and 
(c) the amendments made by this title shall apply to taxable years 
beginning after December 31,1977. 
(b) WAGE WITHHOLDING.—The amendment made by section 207(a) 
shall apply to remuneration paid after the date of the enactment 
of this Act. 
(c) ELECTION OF PRIOR LAW.— 
(1) A taxpayer may elect not to have the amendments made by 
this title apply with respect to any taxable year beginning after 
December 31,1977, and before January 1,1979. 
(2) An election under this subsection shall be filed with a tax-
payer's timely filed return for the first taxable year beginning 
after December 31,1977. 
SEC. 210. APPLICATION OF TITLE L 
(a) I N GENERAL.—Title I of this Act (other than sections 4 and 5 26 USC 61 note, 
thereof) shall cease to have effect on the day after the date of the 
enactment of this Act. 
(b) SPECIAL RULE FOR SECTION 5.—Section 5 of this Act shall not 26 USC 401 note, 
apply with respect to any type of plan for any period for which 
rules for that type of plan are provided by the Revenue Act of 1978. Ante, p. 2763. 
Approved November 8, 1978. 
LEGISLATIVE HISTORY: 
HOUSE REPORTS: No. 95-697 (Comm. on Ways and Means) and No. 95-1798 (Coram. 
of Conference). 
SENATE REPORT No. 95-746 (Comm. on Finance). 
CONGRESSIONAL RECORD: 
Vol. 123 (1977): Oct. 25, considered and passed House. 
Vol. 124 (1978): May 11, considered and passed Senate, amended. 
Sept. 25, House concurred in Senate amendment No. 3 with 
amendments, disagreed to other Senate amendments. 
Sept. 28, Senate disagreed to House amendment. 
Oct. 15, Senate agreed to conference report. 
Oct. 15, House agreed to conference report.