Technical Corrections Act of 1979
PL 96-222 (H.R.2797), enacted 04/01/1980

94 STAT. 194 
PUBLIC LAW 96-222—APR. 1, 1980 
Public Law 96-222 
96th Congress 
An Act 
Apr. 1, 1980 
-pQ make technical corrections related to the Revenue Act of 1978. 
[H.R. 2797] 
Be it enacted by the Senate and House of Representatives of the 
Technical 
United States of A merica in Congress assembled, 
C^OTTPctionR Act 
of 1979. 
SECTION 1. SHORT TITLE, ETC. 
26 use 1 note. 
(a) SHORT TITLE.—This Act may be cited as the "Technical Correc-
tions Act of 1979". 
(b) AMENDMENT OF 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 
26 use 1 et seq. other provision of the Internal Revenue Code of 1954. 
26 u s e 1 note. 
SEC. 2. COORDINATION OF ENACTMENT DATES OP REVENUE ACT OF 1978 
AND ENERGY TAX ACT OF 1978. 
The Revenue Act of 1978 is amended by inserting after section 3 the 
following new section: 
26 u s e 46 note. 
"SEC. 4. COORDINATION OF ENACTMENT DATES WITH ENERGY TAX ACT 
OF 1978. 
"For purposes of applying the amendments made by this Act to 
26 use 46, 48. 
sections 46 and 48 of the Internal Revenue Code of 1954, the Energy 
26 use 1 note. 
Tax Act of 1978 shall be deemed to have been enacted immediately 
before this Act." 
TITLE I—AMENDMENTS RELATED TO 
REVENUE ACT OF 1978 
SEC. 101. AMENDMENTS RELATED TO TITLE I. 
(a) GENERAL RULE.— 
(1) AMENDMENT RELATED TO SECTION I04 OF THE ACT.—Subpara-
26 use 43. 
graph (C) of section 43(c)(1) (relating to individual entitled to 
exclude income under section 911 not eligible individual) is 
amended to read as follows: 
"(C) INDIVIDUAL WHO CLAIMS BENEFITS OF SECTION 9 I I , 913, 
O
R 931 NOT ELIGIBLE INDIVIDUAL.—The term 'eligible individ-
ual' does not include an individual who, for the taxable year, 
claims the benefits o
f
— 
"(i) section 911 (relating to income earned by individ-
uals in certain camps outside the United States), 
"(ii) section 913 (relating to deduction for certain 
expenses of living abroad), or 
"(iii) section 931 (relating to income from sources 
within possessions of the United States)." 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 195 
(2) AMENDMENTS RELATED TO SECTION I05 OP THE ACT.— 
92 stat. 2773. 
(A) PAYMENTS TREATED AS EARNED INCOME FOR AFDC— 
Section 402 of the Social Security Act is amended by adding 42 use 602. 
at the end thereof the following new subsection: 
"(dXD For purposes of paragraphs (7) and (8) of subsection (a), any 
refund of Federal income taxes made by reason of section 43 of the 
Internal Revenue Code of 1954 (relating to earned income credit) and 26 use 43. 
any payment made by an employer under section 3507 of such Code 
(relating to advance payment of earned income credit) shall be 
considered earned income. 
"(2) In any case in which such advance payments for a taxable year 
made by all employers to an individual under section 3507 of such 
Code exceed the amount of such individual's earned income credit 
allowable under section 43 of such Code for such year, so that such 
individual is liable under section 43(g) of such Code for a tax equal to 
such excess, such individual's benefit amount must be appropriately 
adjusted so as to provide payment to such individual of an amount 
equal to the amount of the benefits lost by such individual on account 
of such excess advance pa3rments." 
(B) PAYMENT TREATED AS EARNED INCOME FOR SSI.—Section 
1612(a)(1) of 
the Social Security Act is amended— 
42 use I382a. 
(i) by striking out "and" at the end of subparagraph 
(A); and 
(ii) by adding after subparagraph (B) the following 
new subparagraph: 
"(C) any refund of Federal income taxes made by reason of 
section 43 of the Internal Revenue Code of 1954 (relating to 26 use 43. 
earned income credit) and any payment made by an 
employer under section 3507 of such Code (relating to ad-
vance payment of 
earned income credit); and". 
(C) TREATMENT OF EXCESS PAYMENTS UNDER SSI.—Section 
1631(b) of the Social Security Act is amended by inserting 42 use 1383. 
"(1)" after "(b)" and by adding at the end thereof the 
following new paragraph: 
"(2) In any case in which advance payments for a taxable year 
made by all employers to an individual under section 3507 of the 
Internal Revenue CJode of 1954 (relating to advance payment of 26 use 3507. 
earned income credit) exceed the amount of such individual's earned 
income credit allowable under section 43 of such Code for such year, 
so that such individual is liable under section 43(g) of such Code for a 
tax equal to such excess, the Secretary shall provide for an appropri-
ate adjustment of such individual's benefit amount under this title so 
as to provide payment to such individual of an amount equal to the 
amount of such benefits lost by such individual on account of such 
excess advance payments." 
(D) EFFECTIVE DATE FOR ADVANCE PAYMENT OF EARNED 26 use 3507 
INCOME CREDIT.—Paragraph (2) of section 105(g) of the Reve- note. 
nue Act of 1978 (relating to effective date for advance 
payment of earned income credit) is amended by striking out 
June 30, 1978" and inserting in lieu thereof "June 30, 
1979". 
(E) CLERICAL ADMENDMENT.—Subsection (h) of section 43 26 use 43. 
(relating to coordination with advance payments of earned 
income credit) is redesignated as subsection (g). 
(3) AMENDMENT RELATED TO SECTION 112 OF THE ACT.—Para- 92 stat. 2777. 
graph (8) of section 128(a) (relating to cross references) is 26 use 128. 
amended by striking out "benefits, see" and inserting in lieu 
thereof "benefits which are not includible in gross income under 
section 85,". 
94 STAT. 196 
PUBLIC LAW 96-222—APR. 1, 1980 
2
6 use 457. 
(4) AMENDMENT ^IELATED TO SECTION I31 OF THE ACT.—Subpara-
graph (B) of section 457(d)(9) (relating to application to rural 
electric cooperatives of rules for eligible State deferred compen-
sation pleins) is amended to read as follows: 
"(B) RURAL ELECTRIC COOPERATIVE DEFINED.—For purposes 
of subparagraph (A), the term 'rural electric cooperative' 
means— 
"(i) any organization which is exempt from tax under 
section 501(a) and which is engaged primarily in provid-
ing electric service on a mutual or cooperative basis, and 
"(ii) any organization described in paragraph (4) or (6) 
of section 501(c) which is exempt from tax under section 
501(a) and at least 80 percent of the members of which 
are organizations described in clause (i)." 
(5) AMENDMENT RELATED TO SECTION 133 OF THE ACT.—Subsec-
92 Stat. 2783. 
tion (c) of section 133 of the Revenue Act of 1978 (relating to 
effective date for clarification of deductibility of payments of 
deferred compensation, etc., to independent contractors) is 
amended to read as follows: 
26 u s e 404 note. 
"(c) EFFECTIVE D A T E S . — 
"(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to deductions for 
taxable years beginning after December 31,1978. 
"(2) SPECIAL RULE FOR CERTAIN TITLE INSURANCE COMPANIES.— 
"(A) IN GENERAL.—In the case of a qualified title insurance 
company plan, the amendment made by subsection (a) shall 
apply to deductions for taxable years beginning after Decem-
ber 31,1979. 
"(B) QUAUFIED TITLE INSURANCE COMPANY PLAN.—For pur-
poses of subparagraph (A), the term 'qualified title insurance 
company plan* means a plan of a qualified title insurance 
company— 
"(i) which defers the payment of amounts credited by 
such company to separate accounts for members of such 
company in consideration of their issuance of policies of 
title insurance, and 
"(ii) under which no part of such amounts is payable 
to or withdrawable by the members until after the 
period for the adverse possession of real property under 
applicable State law. 
"(C) QUAUFIED TITLE INSURANCE COMPANY.—For purposes 
of subparagraph (B), the term 'qualified title insurance 
company' means an unincorporated title insurance company 
organized as a business trust— 
"(i) which is engaged in the business of providing title 
insurance coverage on interests in and liens upon real 
property obtained by clients of the members of such 
company, and 
"(ii) which is subject to tax under section 831 of the 
2
6 use 831. 
Internal Revenue Code of 1954." 
92 Stat. 2783. 
(6) AMENDMENTS RELATED TO SECTION 134 OF THE ACT.— 
(A) EMPLOYMENT REQUIREMENT.—Subparagraph (B) of sec-
26 use 125. 
tion 125(g)(3) (relating to certain participation eligibility 
rules not treated as discriminatory) is amended by striking 
out "service requirement" each place it appears and insert-
ing in lieu thereof "employment requirement". 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 197 
(B) EFFECTIVE DATE.—Subsection (c) of section 134 of the 
Revenue Act of 1978 is amended by striking out "taxable 
years" and inserting in lieu thereof "plan years". 
(7) AMENDMENTS RELATED TO SECTION 141 OF THE ACT.— 
(A) AMENDMENT TO ANTI-FLOW-THROUGH RULES.—Para-
graph (9) of section 46(f) (relating to special rule for 
additional credit) is amended— 
(i) by striking out "subparagraph (B) of subsection 
(a)(2)" each place it appears and inserting in lieu thereof 
"subparagraph (E) of subsection (a)(2)", and 
(ii) by striking out "an employee stock ownership plan 
which meets the requirements of section 301(d) of the 
Tax Reduction Act of 1975" in subparagraph (A) and 
inserting in lieu thereof "a tax credit employee stock 
ownership plan which meets the requirements of section 
409A". 
(B) CLARIFICATION OF EFFECTIVE DATE.—Section 141 of the 
Revenue Act of 1978 (relating to ESOPS) is amended by 
striking out subsection (g) and inserting in lieu thereof the 
following new subsections: 
"(g) EFFECTIVE DATES FOR TAX CREDIT EMPLOYEE STOCK OWNERSHIP 
PLANS.— 
"(1) IN GENERAL.—Except as otherwise provided in this subsec-
tion and subsection (h), the amendments made by this section 
shall apply with respect to qualified investment for taxable years 
beginning after December 31,1978. 
"(2) ELECTION TO HAVE AMENDMENTS APPLY DURING 1978.—At 
the election of the taxpayer, paragraph (1) shall be applied by 
substituting 'December 31,1977' for 'December 31, 1978^; except 
that in the case of a plan in existence before December 31,1978, 
any such election shall not affect the required allocation of 
employer securities attributable to qualified investment for tax-
able years beginning before January 1, 1979. An election under 
the preceding sentence shall be made at such time and in such 
manner as the Secretary of the Treasury or his delegate shall 
prescribe. Such an election, once made, shall be irrevocable. 
''(3) VOTING RIGHT PROVISIONS.—Section 409A(e) of the Internal 
Revenue Code of 1954 (as added by subsection (a)) shall apply to 
plans to which section 409A of such Code applies, beginning with 
the first day of such application. 
"(4) RIGHT TO DEMAND EMPLOYER SECURITIES, ETC.—Paragraphs 
(1)(A) and (2) of section 409A(h) of the Internal Revenue Code of 
1954 (as added by subsection (a)) shall apply to distributions after 
December 31,1978, made by a plan to which section 409A of such 
Code applies. 
"(5) SUBSECTION (f)(7).—The amendment made by subsection 
(f)(7) shall apply to years beginning after December 31, 1978. 
"(6) RETROACTIVE APPLICATION OF AMENDMENT MADE BY SUBSEC-
TION (d).—In determining the regular tax deduction under 
section 56(c) of the Internal Revenue Code of 1954 for any taxable 
year beginning before January 1, 1979, the amount of the credit 
allowable under section 38 of such Code shall be determined 
without regard to section 46(a)(2)(B) of such Code (as in effect 
before the enactment of the Energy Tax Act of 1978). 
"(h) EFFECTIVE DATES FOR SECTION 4975 EMPLOYEE STOCK OWNER-
SHIP PLANS.—Paragraphs (5) and (6) of subsection (f) shall apply— 
"(1) insofar as they make the requirements of subsections (e) 
and (h)(1)(B) of section 409A of the Internal Revenue Code of 1954 
26 use 125 note. 
92 Stat. 2787. 
26 use 46. 
26 use 409A 
note. 
26 use 409A. 
26 use 415 note. 
26 use 56 note. 
26 use 1 note. 
26 use 4975 
note. 
94 STAT. 198 
PUBLIC LAW 96-222—APR. 1, 1980 
26 use 4975. 
applicable to section 4975 of such Code, to stock acquired after 
December 31,1979, and 
"(2) insofar as they make paragraphs (1)(A) and (2) of section 
409A(h) of such Code applicable to such section 4975, to distribu-
tions after December 31,1978." 
(C) DEFINITION OF QUALIFYING EMPLOYER SECURITY FOR 
EMPLOYEE S
T
O
C
K OWNERSHIP PLAN.—The first Sentence of 
26 use 4975. 
paragraph (8) of section 4975(e) (defining qualifying em-
ployer security) is amended to read as follows: 
"The term 'qualifying employer security' means any employer 
security within the meaning of section 409 
A(l)." 
(D) NONRECOGNITION OF GAIN ON CONTRIBUTION T
O T
A
X 
CREDIT EMPLOYEE STOCK OWNERSHIP PLAN.—Subsection (m) of 
26 use 409A. 
section 409A (relating to contributions of stock of control-
ling corporation) is amended to read as follows: 
"(m) NoNRECOGNITION OF G A I N OR LoSS ON CONTRIBUTION OF 
EMPLOYER SECURITIES TO TAX CREDIT EMPLOYEE STOCK OWNERSHIP 
PLAN.—No gain or loss shall be recognized to the taxpayer with 
respect to the transfer of employer securities to a tax credit employee 
stock ownership plan maintained by the taxpayer to the extent that 
such transfer is required under subparagraph (A) or (B) of section 
48(n)(l)." 
(E) SECTION 4975 EMPLOYEE STOCK OWNERSHIP PLANS MAY 
DISTRIBUTE CASH IN CERTAIN CASES.—Paragraph (2) of section 
409A(h) (relating to allowing plan to distribute cash in 
certain cases) is amended by inserting "or of section 
4975(e)(7)" after "the requirements of this section". 
(F) MATCHED EMPLOYER AND EMPLOYEE CONTRIBUTIONS 
MUST STAY IN PLAN.—Subsection (d) of section 409A (relating 
to employer securities must stay in plan) is amended by 
inserting "(or allocated to a participant's account in connec-
tion with matched employer and employee contributions)" 
after "under subsection (b)", 
(G) LIMITATION ON REQUIRED TRANSFERS FOR MATCHING 
EMPLOYEES 
PLAN 
PERCENTAGE.—ClaUSe 
(i) 
of 
Section 
26 use 48. 
48(n)(l)(B) (relating to matching percentage) is amended to 
read as follows: 
"(i) to make transfers of employer securities to a tax 
credit employee stock ownership plan maintained by the 
employer having an aggregate value equal to the lesser 
of— 
"(I) the sum of the qualified matching employee 
contributions made to such plan for the taxable 
year, or 
"(II) one-half of 1 percent of the amount of the 
qualified investment (as determined under subsec-
tions (c) and (d) of section 46) for the taxable year, 
and". 
(H) TIME FOR MAKING TRANSFERS ATTRIBUTABLE TO QUALI-
FIED MATCHING EMPLOYEE CONTRIBUTIONS.—The last Sen-
tence of section 48(n)(l)(C) (relating to times for making 
transfers) is amended by inserting before the period at the 
end thereof the following: "(including where such excess is 
attributable to qualified matching employee contributions 
made after the close of the taxable year)". 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 199 
(I) DATE FOR ESTABLISHING PLAN.— 
(i) Paragraph (1) of section 409A(f) (relating to plan 26 use 409A. 
must be established before employer's due date) is 
amended to read as follows: 
"(1) IN GENERAL.—A plan meets the requirements of this 
subsection only if it is established on or before the due date 
(including any extension of such date) for the filing of the 
employer s tax return for the first taxable year of the employer 
for which an employee plan credit is claimed by the employer 
with respect to the plan." 
(ii) Paragraph (2) of section 409A(f) is amended by 
inserting before the period at the end thereof the follow-
ing: "with respect to the plan". 
(J) DEFINITION OF EMPLOYER SECURITIES.— 
(i) Subparagraph (B) of section 409A(1)(2) (relating to 
special rule where there is no readily tradable common 
stock) is amended by striking out "class of stock" and 
inserting in lieu thereof "class of common stock". 
(ii) Paragraph (3) of section 409 
A(l) is amended to read 
as follows: 
"(3) PREFERRED STOCK MAY BE ISSUED IN CERTAIN CASES.— 
Noncallable preferred stock shall be treated as employer securi-
ties if such stock is convertible at any time into stock which 
meets the requirements of paragraph (1) or (2) (whichever is 
applicable) and if such conversion is at a conversion price which 
(as of the date of the acquisition by the ESOP) is reasonable. For 
purposes of the preceding sentence, under regulations pre-
scribed by the Secretary, preferred stock shall be treated as 
noncallable if after the call there will be a reasonable oppor-
tunity for a conversion which meets the requirements of the 
preceding sentence." 
(K) VOTING RIGHTS REQUIREMENTS.—Paragraph (7) of sec-
tion 4975(e) (defining leveraged employee stock ownership 26 use 4975. 
plan) is amended by striking out the last sentence and 
inserting in lieu thereof the following: 
"A plan shall not be treated as an employee stock ownership plan 
unless it meets the requirements of section 409A(h) and, if the 
employer has a registration-type class of securities (as defined in 
section 409A(e)(4)), it meets the requirements of section 409A(e)." 
(L) NAME CHANGES.— 
(i) The following provisions are each amended by 
striking out "an ESOP" each place it appears (other 
than in any heading) and inserting in lieu thereof "a tax 
credit employee stock ownership plan": 
(I) Section 48(n)( 1)(A)(i). 
26 USC 48. 
(II) Section 48(n)(2). 
(III) Section 48(n)(2)(A). 
(IV) Section 48(n)(5). 
(V) Section 401(a)(21). 
26 use 401. 
(VI) Section 409A(m). 
26 use 409A. 
(VII) Section 415(c)(6)(B)(i). 
26 use 415. 
(VIII) The last sentence of section 1504(a). 
26 use 1504. 
(ii) The following provisions are each amended by 
striking out "ESOP" each place it appears and inserting 
in lieu thereof "tax credit employee stock ownership 
plan": 
(I) Section 409A(a) (other than in the subsection 
heading). 
(II) Section 409A(1)(3). 
94 STAT. 200 
PUBLIC LAW 96-222—APR. 1, 1980 
26 use 48. 
(Ill) Section 48(n)(l)(B)(i) (as amended by clause 
(i)). 
(IV) Section 48(n)(2). 
(V) Section 48(n)(3). 
(VI) Section 48(n)(4)(A). 
(iii) The following provisions are each amended by 
striking out "ESOP each place it appears (other than in 
any heading) and inserting in lieu thereof "employee 
plan": 
26 use 46. 
(I) Section 46(a)(2). 
(II) Section 48(n) (as amended by clauses (i) and 
(ii)). 
(III) Section 48(o). 
26 use 56. 
(IV) Section 56(c). 
26 use 409A. 
(V) Section 409A (as amended by subparagraph (I) 
and clauses (i) and (ii)). 
26 use 6699. 
(VI) Section 6699. 
(iv) The following provisions are each amended by 
striking out "leveraged employee" each place it appears 
and inserting in lieu thereof "employee": 
26 use 415. 
(I) Section 415(c)(6)(B)(i). 
26 use 1504. 
(II) The last sentence of section 1504(a). 
Ante, p. 199. 
(HI) Section 4975(e)(7) (other than in the para-
graph heading). 
(v)(I) The heading of subparagraph (E) of section 
26 use 46. 
46(a)(2) is amended by striking out "ESOP" and inserting 
in lieu thereof "EMPLOYEE PLAN". 
(II) The subsection heading for section 48(n) is 
amended by striking out "ESOP" and inserting in lieu 
thereof "EMPLOYEE PLAN". 
(III) The subparagraph headings for subparagraphs 
(A) and (B) of section 48(n)(l) are each amended by 
striking out "ESOP" and inserting in lieu thereof "EM-
PLOYEE PLAN". 
(rV) The paragraph headings for paragraph (4) of 
section 48(n) and paragraphs (4), (5), (6), and (7) of section 
48(o) are each amended by striking out "ESOP" and 
inserting in lieu thereof "EMPLOYEE PLAN". 
(V) The paragraph heading for section 48(o)(3) is 
amended by striking out "ESOP" and inserting in lieu 
thereof "EMPLOYEE PLAN". 
(VI) The subsection heading for subsection (a) of 
section 409A is amended by striking out "ESOP" and 
inserting in lieu thereof "TAX CREDIT EMPLOYEE STOCK 
OWNERSHIP PLAN". 
26 use 409A. 
(VII) The section heading for section 409A is amended 
by striking out "ESOPS" and inserting in lieu thereof 
"TAX CREDIT EMPLOYEE STOCK OWNERSHIP 
PLANS". 
(VIII) The table of sections for subpart A of part I of 
subchapter D of chapter 1 is amended by striking out 
"ESOPS" in the item relating to section 409A and 
inserting in lieu thereof "tax credit employee stock 
ownership plans". 
26 use 6699. 
(IX) The section heading of section 6699 is amended by 
striking out "ESOP" and inserting in lieu thereof "TAX 
CREDIT EMPLOYEE STOCK OWNERSHIP PLAN". 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 201 
(X) The table of 
sections for subchapter B of chapter 68 
is amended by striking out "ESOP" in the item relating 
to section 6699 and inserting in lieu thereof "tax credit 26 use 6699. 
employee stock ownership plan". 
(5Q) The paragraph heading for paragraph (7) of 
section 4975(e) is amended by striking out "LEVERAGED 26 use 4975. 
EMPLOYEE" and inserting in lieu thereof "EMPLOYEE". 
(M) CLERICAL AMENDMENTS.— 
(i) Subparagraph (E) of section 46(a)(2) is amended by 26 use 46. 
inserting "and ending on" before "December 31, 1983 ' 
each place it appears. 
(ii) Subparagraph (B) of section 48(n)(2) is amended by 26 use 48. 
adding "and" at the end of clause (i), by striking out 
clause (ii), and by redesignating clause (iii) as clause (ii). 
(iii) Paragraph (5) of section 48(o) (as amended by 
subparagraph (D) is amended by inserting "percentage' 
after "attributable to the matching employee plan". 
(8) AMENDMENTS RELATED TO SECTION 14 
2 OF THE ACT.— 
92 stat. 2796. 
(A) Subsection (c) of section 691 (relating to deduction for 26 use 69i. 
estate tax) is eunended by adding at the end thereof the 
following new paragraph: 
"(5) COORDINATION WITH SECTION 402(E).—For purposes of 26 use 402. 
section 402(e) (other than paragraph (1)(D) thereof), the total 
taxable amount of any lump sum distribution shall be reduced by 
the amount of the deduction allowable under paragraph (1) of 
this subsection which is attributable to the total taxable amount 
(determined without regard to this paragraph)." 
(B) Paragraph (2) of section 2039(f) (relating to lump sum 26 use 2039. 
distributions) is amended by striking out "without the appli-
cation of paragraph (2) thereof and inserting in lieu thereof 
"(without the application of paragraph (2) thereof), except 
to the extent that section 402(e)(4)(J) applies to such 
distribution". 
(9) AMENDMENT RELATED TO SECTION 143 OF THE ACT.—Subpara- 92 Stat. 2796. 
graph (B) of section 401(aX22) is amended by striking "as securi- 26 use 401. 
ties and inserting in lieu thereof "are securities". 
(10) AMENDMENTS RELATED TO SECTION 1
*
5
2 OF THE ACT.— 92 stat. 2797. 
(A) CERTAIN EMPLOYEES MAY BE EXCLUDED.—Paragraph (2) 
of section 408(k) (relating to participation requirements for 26 use 408. 
simplified employee i)ensions) is amended by adding at the 
end thereof the following new sentence: 
"For purposes of this paragraph, there shall be excluded from 
consideration employees described in subparagraph (A) or (C) of 
section 410(bX2)." 
(B) CONTRIBUTIONS UNDER SIMPLIFIED EMPLOYEE PENSION 
NOT SUBJECT TO FICA OR FUTA TAXES.— 
(i) FICA TAX.—Paragraph (5) of section 3121(a) (defm- 26 use 3121. 
ing wages) is amended by strildng out "or" at the end of 
subparagraph (B), by striking out the semicolon at the 
end of subparagraph (C) and inserting in lieu thereof ", 
or", and by adding at the end thereof the following new 
subparagraph: 
"(D) under a simplified employee pension if, at the time of 
the payment, it is reasonable to believe that the employee 
will be entitled to a deduction under section 219 for such 
payment;". 
(ii) FUTA TAX.—Paragraph (5) of section 3306(b) (de- 26 use 3306. 
fining wages) is amended by striking out "or" at the end 
94 STAT. 202 
' 
PUBLIC LAW 96-222—APR. 1, 1980 
of subparagraph (B), by striking out the semicolon at the 
end of subparagraph (C) and inserting in lieu thereof 
", or", and by adding at the end thereof the following new 
subparagraph: 
"(D) under a simplified employee pension if, at the time of 
the payment, it is reasonable to believe that the employee 
26 use 219. 
will be entitled to a deduction under section 219 for such 
payment;". 
(C) CORRECTION OF CERTAIN EXCESS CONTRIBUTIONS.—Sub-
26 use 408. 
paragraph (A) of section 408(d)(5) (relating to certain distri-
butions of excess contributions after due date for taxable 
year) is amended by adding at the end thereof the following 
new sentence: 
"If employer contributions on behalf of the individual are 
paid for the taxable year to a simplified employee pension, 
the dollar limitation of the preceding sentence shall be 
increeised by the lesser of the amount of such contributions 
or $7,500." 
(D) CLARIFICATION OF SECTION 219(b)(7).—Paragraph (7) of 
26 use 219. 
section 2190t)) (relating to simplified employee pensions) is 
amended to read as follows: 
"(7) SPECIAL RULES IN CASE OF SIMPUFIED EMPLOYEE PENSIONS.— 
"(A) LIMITATION.—If there is an employer contribution on 
behalf of the employee to a simplified employee pension, the 
limitation under paragraph (1) shall be the lesser of— 
"(i) 15 percent of the compensation includible in the 
employee's gross income for the taxable year (deter-
mined without regard to the employer contribution to 
the simplified employee pension), or 
"(ii) the sum of— 
"(I) the amount contributed by the employer to 
the simplified employee pension and included in 
gross income G)ut not in excess of $7,500), and 
"(II) $1,500, reduced (but not below zero) by the 
amount described in subclause (I). 
"(B) CERTAIN UMITATIONS DO NOT APPLY TO EMPLOYER 
CONTRIBUTION.—Paragraphs (2) and (3) shall not apply 
with respect to the employer contribution to a simplified 
employee pension. 
"(C) SPECIAL RULE FOR APPLYING SUBPARAGRAPH (A)(ii).— 
In the case of an employee who is an officer, shareholder, or 
owner-employee described in section 408(k)(3), the $7,500 
amount specified in subparagraph (A)(ii)(I) shall be reduced 
by the amount of tax taken into account with respect to such 
individual under subparagraph (D) of section 408(k)(3)." 
(E) COORDINATION WITH PLAN FOR SHAREHOLDER-EMPLOY-
26 use 404. 
EES.—Paragraph (4) of section 404(h) (relating to effect on 
self-employed individuals) is amended— 
(i) by inserting "or described in section 1379(b)(1)" 
after "of subsection (e)", 
(ii) by inserting "or a shareholder-employee (as de-
fined in section 1379(d))" after "section 401(c)(1)", and 
(iii) by striking out "SELF-EMPLOYED INDIVIDUALS" in 
the paragraph heading and inserting in lieu thereof 
"SELF-EMPLOYED 
INDIVIDUALS 
OR 
SHAREHOLDER-
EMPLOYEES". 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 203 
(F) COORDINATION WITH SECTION 401 (j) .—Subsection (k) of 26 use 40i. 
section 408 (defining simplified employee pension) is 26usc408. 
amended— 
(i) by striking out "and (5)" in paragraph (1) and 
inserting in lieu thereof "(5), and (6)", 
(ii) by redesignating paragraph (6) as paragraph (7), 
and 
(iii) by inserting after paragraph (5) the following new 
paragraph: 
"(6) EMPLOYER MAY NOT MAINTAIN PLAN TO WHICH SECTION 
401 (j) APPLIES.—The requirements of this paragraph are met 
with respect to a simplified employee pension for a calendar year 
unless the employer maintains during any part of such year a 
plan— 
"(A) some or all of the active participants in which are 
employees (within the meaning of section 401(cXl)) or share-
holder-employees (as defined in section 1379(d)), and 
"(B) to which section 4010*) applies." 
(G) EMPLOYER MAY NOT MAINTAIN INTEGRATED PLAN.— 
(i) The second sentence of 
section 408(kX3XD) (relating 
to treatment of certain contributions and taxes) is 
amended by striking out "Taxes paid" and inserting in 
lieu thereof "If the employer does not maintain an 
integrated plan at any time during the taxable year, 
taxes paid". 
(ii) Paragraph (3) of section 408(k) is amended by 
adding at the end thereof the following new subpara-
graph: 
"(E) INTEGRATED PLAN DEFINED.—For purposes of subpara-
graph (D), the term 'integrated plan' means a plan which 
meets the requirements of 
section 401(a), 403(a), or 405(a) but 
would not meet such requirements if contributions or bene-
fits under chapter 2 (relating to tax on self-employment 
income), chapter 21 (relating to Federal Insurance CJontribu- 26 use i40i. 
tions Act), title H of the Social Security Act, or any other 2
6 use 3ioi. 
Federal or State law were not taken into account." 
^2 use 40i. 
(H) PENALTY FOR FAILURE TO nLE REPORTS.—Subsection (a) 
of section 6693 (relating to failure to provide reports on 26 use 6693. 
individual retirement accounts or annuities) is amended— 
(i) by striking out "section 408(i)" the first place it 
appears and inserting in lieu thereof "subsection (i) or (1) 
or section 408", and 
(ii) by striking out "section 408(i)" the second place it 
appears and inserting in lieu thereof "such subsection". 
(I) APPUCATION WFFH SECTION 415.—Paragraph (5) of sec- 26 use 4i5. 
tion 415(e) is amended— 
(i) by striking out "any simplified employee pension" 
in the first sentence, and 
(ii) by inserting after the first sentence the following 
new sentence: "For purposes of this section, any contri-
bution by an employer to a simplified employee pension 
for an individual for a taxable year shall be treated as 
an employer contribution to a defined contribution plan 
for such individual for such year." 
(J) CLERICAL AMENDMENTS.— 
(i) Subsection (j) of 
section 408 is amended by inserting 2
6 use 408. 
"and" at the end of 
paragraph (1), by striking out", and 
94 STAT. 204 
PUBLIC LAW 96-222—APR. 1, 1980 
at the end of paragraph (2) and inserting in Heu thereof 
a period, and by striking out paragraph (3). 
26 use 404. 
(ii) Paragraphs (2), (3), and (4) of section 404(h) are 
each amended by striking out "subparagraph (1)" each 
place it appears and inserting in lieu thereof "para-
graph (1)". 
(iii) Paragraph (2) of section 152(g) of the Revenue Act 
92 Stat. 2797. 
of 1978 is amended by striking out "section 415(b)(2)" 
26 use 415. 
and inserting in lieu thereof "section 415(a)(2)". 
92 Stat. 2800. 
(H) AMENDMENTS REIATED TO SECTION 153 OF THE ACT.— 
(A) WAIVER OF SECTION 4i5(bxiXB) LIMITATION DOES NOT 
APPLY WHERE PARTICIPANT IS ALSO A PARTICIPANT OF ANOTHER 
26 use 415. 
QUAUFiED PLAN.—Paragraph (7) of section 415(b) (relating to 
benefits under certain collectively bargained plans) is 
amended by inserting after the second sentence the follow-
ing new sentence: "This paragraph shall not apply to a 
participant for any period for which he is a participant 
under another plan to which this section applies which is 
maintained by an employer maintaining this plan." 
(B) FORMULA FOR DETERMINING BENEFITS IN THE CASE OF 
SECTION 4i5(bX7) PLANS.—Subparagraph (C) of section 
415(b)(7) is amended to read as follows: 
"(C) under which benefits are determined solely by refer-
ence to length of service, the particular years during which 
service was rendered, age at retirement, and date of retire-
ment,". 
92 Stat. 2801. 
(12) AMENDMENT RELATED TO SECTION 154 OF THE ACT.—Subpar-
26 use 403. 
agraph (A) of section 403(b)(7) is amended by striking out "which 
satisfied" and inserting in lieu thereof "which satisfies". 
92 Stat. 2801. 
(13) AMENDMENT RELATED TO SECTION 156 OF THE ACT.— 
26 use 403 note. 
(A) EFFECTIVE DATE.—Subsection (d) of soction 156 of the 
Revenue Act of 1978 (relating to effective date for provision 
allowing rollover of section 403(b) annuities) is amended by 
striking out "December 31, 1978" and inserting in lieu 
thereof "December 31,1977". 
26 use 403 note. 
(B) TRANSITIONAL RULE FOR MAKING SECTION 403(bX8) 
ROLLOVER IN THE CASE OF PAYMENTS DURING 1978.—In the 
case of any payment made during 1978 in a qualifying 
distribution described in section 403(b)(8) of the Internal 
Revenue Code of 1954, the applicable period specified in 
section 402(a)(5)(C) of such Code shall not expire before the 
close of December 31,1980. 
(C) 
CLERICAL 
AMENDMENTS.—Sections 
403(b)(1) 
and 
26 use 403, 
4973(c)(1) are each amended by striking out "409(d)(3)(C)", 
49'73. 
and inserting in lieu thereof "409(b)(3)(C)^'. 
92 Stat. 2803. 
(14) AMENDMENTS RELATED TO SECTION 157 OF THE ACT.— 
26 use 402 note. 
(A) EFFECTIVE DATE FOR REMOVAL OF CERTAIN REQUIRE-
MENTS.—Paragraph (3) of section 157(h) of the Revenue Act 
of 1978 is amended by striking out "the amendments made 
by this section" each place it appears and inserting in lieu 
thereof "the amendments made by this subsection". 
(B) CONFORMING AMENDMENTS FOR SPOUSAL ROLLOVERS.— 
26USC219 220, 
Soctions 
219(b)(4), 
220(b)(5), 
408(a)(1), 
409(a)(4), and 
408,409,4973, 
4973(b)(1)(A) are each amended by inserting "402(a)(7)," after 
"section 402(a)(5),". 
26 use 402. 
(C) SPOUSAL ROLLOVERS.—Clause (i) of 
section 402(a)(7)(A) is 
amended to read as follows: 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 205 
"(i) any portion of a qualifying rollover distribution 
attributable to an employee is paid to the spouse of the 
employee after the employee's death,". 
(D) EXTENSION OF TRANSITIONAL RULE.—Subparagraph (B) 
of section 157(h)(3) of the Revenue Act of 1978 (relating to 92 Stat. 2803. 
transitional rule for removal of certain requirements) is 26 use 402 note. 
amended— 
(i) by striking out "any payment" and inserting in lieu 
thereof "any payment made during 1978", and 
(ii) by striking out "December 31,1978" and inserting 
in lieu thereof "December 31,1980". 
(E) CLERICAL AMENDMENTS.— 
(i) Clause (iii) of section 402(a)(6)(D) (relating to sales of 26 use 402. 
distributed property) is amended by striking out "many 
designate" and inserting in lieu thereof "may desig-
nate". 
(ii) Subparagraph (B) of section 408(d)(5) is amended 26 use 408. 
by striking out all that follows clause (i) and inserting in 
lieu thereof the following: 
"(ii) the information was erroneous, 
subparagraph (A) shall be applied by increasing the dollar 
limit set forth therein by that portion of the excess contribu-
tion which was attributable to such information." 
(iii) Paragraph (20) of section 401(a)(1) is amended by 26 use 401. 
striking out "makes a payment or distribution described 
in section 402(a)(5)(i) or 403(a)(4)(i)" and inserting in lieu 
thereof "makes a qualifying rollover distribution (deter-
mined as if section 402(a)(5)(D)(i) did not contain sub-
clause (II) thereof) described in section 402(a)(5)(A)(i) or 
403(a)(4)(A)(i)". 
O
t
)
) EFFECTIVE DATES.— 
(1) SPECIAL EFFECTIVE DATES.— 
(A) SUBSECTION (axi).—The amendment made by subsec- 26 use 43 note. 
tion (a)(1) shall apply to taxable years beginning after 
December 31,1977. 
(B) SUBSECTION (aK2).—The amendments made by sub- 26 use 602 note. 
paragraphs (A) and (B) of subsection (a)(2) shall apply to 
payments for months beginning after December 31, 1979. 
(C) DEFINITION OF QUALIFYING EMPLOYER SECURITIES.—The 26 use 4975 
amendment made by subparagraph (C) of subsection (a)(6) "°*^^-
shall apply to stock acquired after December 31, 1979. 
(D) COORDINATION WITH SECTION 691.—The amendment 26 use 691 note. 
made by subsection (a)(7) shall apply with respect to the 
estates of decedents dying after the date of the enactment of 
this Act. 
(E) CONTRIBUTIONS UNDER SIMPLIFIED EMPLOYEE PENSION.— 26 use 3i2i 
The amendments made by subparagraph (B) of subsection ^°^^-
(a)(10) shall apply to payments made on or after January 1, 
1979. 
(F) PENALTY FOR FAILURE TO FURNISH REPORTS.—The 26 use 6693 
amendment made by subparagraph (I) of subsection (a)(10) "°*®-
shall apply with respect to failures occuring after the date of 
the enactment of this Act. 
(G) COORDINATION WITH SECTION 415.—The amendment 26 use 415 note. 
made by subparagraph (I) of subsection (a)(10) shall apply to 
taxable years beginning after the date of the enactment of 
this Act. 
(2) GENERAL EFFECTIVE DATE.— 
For general effective date, see section 201. 
94 STAT. 206 
PUBLIC LAW 96-222—APR. 1, 1980 
SEC. 102. AMENDMENTS RELATED TO TITLE IL 
(a) GENERAL RULE.— 
(1) AMENDMENTS RELATED TO SUBTITLE A OF TITLE II OF THE 
92 Stat. 2814. 
^CT. 
26 use 465. 
(A) STOCK OWNERSHIP RULES.—Subsection (a) of section 465 
(relating to deductions limited to amount at risk) is 
amended— 
(i) by striking out "(determined by reference to the 
rules contained in section 318 rather than under section 
544)" in paragraph (1)(C), and 
(ii) by adding at the end thereof the following new 
paragraph: 
"(3) SPECIAL RULES FOR APPLYING PARAGRAPH (ixc).—For 
purposes of paragraph (IXC)— 
26 use 544. 
"(A) section 544(a)(2) shall be applied as if such section did 
not contain the phrase *or by or for his partner'; and 
"(B) sections 544(a)(4)(A) and 544(b)(1) shall be applied by 
substituting 'the corporation meet the stock ownership 
requirements of section 542(aX2)' for 'the corporation a 
personal holding company*." 
(B) CLARIFICATION OF RULES FOR RECAPTURE OF LOSSES 
WHERE AMOUNT AT RISK IS LESS THAN ZERO.—Subsection (d) of 
section 465 (defining loss) is amended by inserting before the 
period at the end thereof the following: "(determined with-
out regard to subsection (e)(lXA))". 
(C) 
CLARIFICATION OF UMITATION ON RECAPTURE OP 
LOSSES.—Subparagraph (A) of section 465(eX2) (relating to 
limitation on recapture of losses where amount at risk is less 
than zero) is amended by inserting "by reason of losses" after 
"with respect to the activity". 
(D) EXCLUSION FOR CERTAIN EQUIPMENT LEASING BY 
CLOSELY-HELD CORPORATIONS.— 
(i) Subsection (c) of section 465 (relating to deductions 
limited to amount at risk) is amended by adding at the 
end thereof the following new paragraphs: 
"(4) EXCLUSION FOR CERTAIN EQUIPMENT LEASING BY CLOSELY-
HELD CORPORATIONS.— 
"(A) IN GENERAL.—In the case of a corporation described in 
subsection (aXl)(C) actively engaged in equipment leasing— 
"(i) the activity of equipment leasing shsill be treated 
as a separate activity, and 
"(ii) subsection (a) shall not apply to losses from such 
activity. 
"(B) 50-PERCENT GROSS RECEIPTS TEST.—For purposes of 
subparagraph (A), a corporation shall not be considered to be 
actively engaged in equipment leasing unless 50 percent or 
more of the gross receipts of the corporation for the teixable 
year is attributable, under regulations prescribed by the 
Secretary, to equipment leasing. 
"(C) COMPONENT MEMBERS OF CONTROLLED GROUP TREATED 
AS A SINGLE CORPORATION.—For purposes of subparagraph 
(A), the component members of a controlled group of corpo-
rations shall be treated as a single corporation. 
"(5) WAIVER OF CONTROLLED GROUP RULE WHERE THERE IS 
SUBSTANTIAL LEASING ACTIVITY.— 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 207 
"(A) IN GENERAL.—In the case of the component members 
of a qualified leasing group, paragraph (4) shall be applied— 
"(i) by substituting *80 percent' for '50 percent' in 
subparagraph (B) thereof, and 
"(ii) as if paragraph (4) did not include subparagraph 
(C) thereof. 
"(B) QuAUFiED LEASING GROUP.—For purposes of this para-
graph, the term 'qualified leasing group' means a controlled 
group of corporations which, for the taxable year and each of 
the 2 immediately preceding taxable years, satisfied each of 
the following 3 requirements: 
"(i) AT LEAST 3 EMPLOYEES.—During the entire year, 
the group had at least 3 full-time employees substan-
tially all of the services of whom were services directly 
related to the equipment leasing activity of the qualified 
leasing members. 
"(ii) AT LEAST 5 SEPARATE LEASING TRANSACTIONS.— 
During the year, the qualified leasing members in the 
aggregate entered into at least 5 separate equipment 
leasing transactions. 
"(iii) 
AT 
LEAST 
$1,000,000 
EQUIPMENT 
LEASING 
RECEIPTS.—During the year, the qualified leasing mem-
bers in the aggregate had at least $1,000,000 in gross 
receipts from equipment leasing. 
The term 'qualified leasing group' does not include any 
controlled group of corporations to which, without regard to 
this paragraph, paragraph (4) applies. 
"(C) QuAUFiED LEASING MEMBER.—For purposes of this 
paragraph, a corporation shall be treated as a qualified 
leasing member for the taxable year only if for each of the 
taxable years referred to in subparagraph (B)— 
"(i) it is a component member of the controlled group 
of corporations, and 
"(ii) it meets the requirements of paragraph (4)(B) (as 
modified by subparagraph (A)(i) of this paragraph). 
"(6) DEFINITIONS RELATING TO PARAGRAPHS (4) AND (5).—For 
purposes of paragraphs (4) and (5)— 
"(A) EQUIPMENT LEASING.—The term 'equipment leasing' 
means— 
"(i) the leasing of equipment which is section 1245 26 use 1245. 
property, and 
"(ii) the purchasing, servicing, and selling of such 
equipment. 
"(B) 
LEASING OF MASTER 
SOUND 
RECORDINGS, ETC., 
EXCLUDED.—The term 'equipment leasing' does not include 
the leasing of master sound recordings, and other similar 
contractual arrangements with respect to tangible or intan-
gible assets associated with literary, artistic, or musical 
properties. 
"(C) CONTROLLED GROUP OF CORPORATIONS; COMPONENT 
MEMBER.—The terms 'controlled group of corporations' and 
'component member' have the same meanings as when used 
in section 1563. The determination of the taxable years 
taken into account with respect to any controlled group of 
corporations shall be made in a manner consistent with the 
manner set forth in section 1563." 
(ii) Subparagraph (D) of section 465(c)(3) is amended to 26 use 465. 
read as follows: 
79-194 
O—81—pt. 1 
17 : QL3 
94 STAT. 208 
PUBLIC LAW 96-222—APR. 1, 1980 
"(D) EXCLUSION FOR REAL PROPERTY.—In the case of activi-
ties described in subparagraph (A), the holding of real 
property (other than mineral property) shall be treated as a 
separate activity, and subsection (a) shall not apply to losses 
from such activity. For purposes of the preceding sentence, 
personal property and services which are incidental to 
making real property available as living accommodations 
shall be treated as part of the activity of holding such real 
property." 
26 use 465. 
(iii) Paragraph (5) of section 465(b) is amended by 
striking out "to which this section applies" and insert-
ing in lieu thereof "to which subsection (a) applies". 
26 use 465 note. 
(E) CLERICAL AMENDMENT T
O EFFECTIVE DATE.—Subpara-
graph (A) of section 204(b)(2) of the Revenue Act of 1978 
(relating to special transitional rules for leasing activities) is 
amended by striking out "this section" and inserting in lieu 
thereof "this subtitle". 
(2) AMENDMENTS RELATED TO SUBTITLE B OF TITLE II OF THE 
92 Stat. 2817. 
ACT.— 
26 use 6501. 
(A) AMENDMENT OF SECTION 6501.—Section 6501 (relating 
to limitations on assessment and collection) is amended by 
redesignating the subsection added by section 212(a) of the 
Revenue Act of 1978 as subsection (o). 
26 use 6511. 
(B) AMENDMENT OF SECTION 65ii(gX2).—Paragraph (2) of 
section 6511(g) (relating to special rule for partnership items 
of federally registered partnerships) is amended by striking 
out "6501(q)" and inserting in lieu thereof "6501(o)'\ 
26 use 761. 
(C) AMENDMENT OF SECTION 761.—Subsection (a) of section 
761 (defining partnership) is amended by striking out "or" at 
the end of paragraph (1), by inserting "or" at the end of 
paragraph (2), and by inserting after paragraph (2) the 
following new paragraph: 
"(3) by dealers in securities for a short period for the purpose of 
underwriting, selling, or distributing a particular issue of 
securities,", 
(b) EFFECTIVE DATE.— 
For general effective date, see section 201. 
92 Stat. 2820. 
SEC. 103. AMENDMENTS RELATED TO TITLE IIL 
(a) GENERAL RULE.— 
(1) AMENDMENT RELATED TO SECTION 301 OF THE ACT.—Subpara-
26 use 857. 
graph (A) of section 857(b)(4) (relating to imposition of tax on 
income from foreclosure property) is amended to read as follows: 
"(A) IMPOSITION OF TAX.—A tax is hereby imposed for each 
taxable year on the net income from foreclosure property of 
every real estate investment trust. Such tax shall be com-
puted by multiplying the net income from foreclosure prop-
erty by the highest rate of tax specified in section 11(b)." 
92 Stat. 2824. 
(2) AMENDMENTS RELATED TO SECTION 312 OF THE ACT.— 
(A) CLARIFICATION OF FLOW-THROUGH PROVISIONS.—Para-
graph (2) of section 312(c) of the Revenue Act of 1978 
(relating to repeal of certain obsolete provisions) is amended 
to read as follows: 
26 use 46. 
"(2) Paragraphs (1) and (2) of section 46(f) and subparagraph (B) 
26 use 48. 
of section 48(a)(7) are each amended by striking out 'described in 
section 50' and inserting in lieu thereof 'described in section 50 
26 use 1 note. 
(as in effect before its repeal by the Revenue Act of 1978)'." 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 209 
(B) CLERICAL AMENDMENTS TO SPECIAL RULES FOR ENERGY 
PROPERTY.— 
(i) Subsection (a) of section 46 (relating to amount of 26 use 46. 
investment credit) is amended by redesignating para-
graph (10) as paragraph (9). 
(ii) Clause (i) of section 46(a)(9)(B) (as redesignated by 
clause (i)) is amended to read as follows: 
"(i) paragraph (3)(B) shall be applied by substituting 
'100 percent' for the percentage determined under the 
table contained in such paragraph,". 
(iii) Clause (ii) of section 46(a)(9)(B) (as so redesignated) 
is amended by striking out "(7), (8), and (9)" and insert-
ing in lieu thereof "(7) and (8)". 
(iv) Subsection (d) of section 6401 is amended by 26 USC 6401. 
striking out "46(a)(10)(C)" and inserting in lieu thereof 
"46(a)(9)(C)". 
(3) AMENDMENT RELATED TO SECTION 313 OF THE ACT.—Subpara- 92 Stat. 2826. 
graph (B) of section 46(c)(5) (relating to applicable percentage in 26 USC 46. 
the case of certain pollution control facilities) is amended by 
adding at the end thereof the following new sentence: "This 
subparagraph shall not apply for purposes of applying the energy 
percentage, 
(4) AMENDMENTS RELATED TO SECTION 315 OF THE ACT.— 
92 Stat. 2828. 
(A) CREDIT ALLOWED TO NONCORPORATE LESSORS.—Para-
graph (3) of section 46(e) (relating to special rule for noncor- 26 USC 46. 
porate lessors) is amended by adding at the end thereof the 
following new sentence: "This paragraph shall not apply 
with respect to any property which is treated as section 38 
property by reason of section 48(a)(1)(E)." 
(B) COORDINATION WITH ENERGY PROPERTY.—Clause (i) of 
section 48(g)(2)(B) is amended by striking out "subsection 26 USC 48. 
(a)(1)(E)" and inserting in lieu thereof "subsections (a)(1)(E) 
and(l))". 
(5) AMENDMENT RELATED TO SECTION 316 OF THE ACT.—Sections 92 Stat. 2829. 
50B(f) and 52(f) (and the predecessor of section 52(f), section 52(h)) 26 use 50B, 52. 
are each amended by striking out "section 46(e)" and inserting in 
lieu thereof "subsections (e) and (h) of section 46". 
(6) AMENDMENTS RELATED TO SECTION 321 OF THE ACT.— 
92 stat. 2830. 
(A) EXTENSION OF TERMINATION DATE.—Paragraph (4) of 
section 51(c) (relating to termination) is amended by striking 26 USC 51. 
out "December 31, 1980" and inserting in lieu thereof 
"December 31,1981". 
(B) EFFECTIVE DATE FOR PROVISION MAKING NEW JOBS 
CREDIT ELECTIVE.—Subsection (d) of section 321 of the Reve-
nue Act of 1978 (relating to effective dates) is amended by 92 Stat. 2830. 
adding at the end thereof the following new paragraph: 
"(5) SUBSECTION (b).—The amendments made by subsection 0^) 26 use 44B note, 
shall apply to taxable years beginning after December 31,1976." 
(C) CLARIFICATION OF EFFECTIVE DATE.—Subparagraph (A) 26 use 51 note, 
of section 321(d)(2) of the Revenue Act of 1978 (relating to 
special rules for newly targeted groups) is amended by 
inserting ", for purposes of applying the amendments made 
by this section" after "newly targeted group". 
(D) CLARIFICATION OF TRANSITIONAL RULE.—Paragraph (3) 26 use 51 note, 
of section 321(d) of the Revenue Act of 1978 (relating to 
transitional rule) is amended to read as follows: 
"(3) TRANSITIONAL RULE.—In the case of a taxable year which 
begins in 1978 and ends after December 31, 1978, the amount of 
94 STAT. 210 
PUBLIC LAW 96-222—APR. 1, 1980 
the credit determined under section 51 of the Internal Revenue 
26 use 51. 
Code of 1954 shall be the sum of— 
"(A) the amount of the credit which would be so deter-
mined without regard to the amendments made by this 
section, plus 
"(B) the amount of the credit which would be so deter-
mined by reason of the amendments made by this section." 
(E) F U T A WAGES TO BE TREATED AS INCLUDING REMUNERA-
TION OF YOUTH PARTICIPATING IN A COOPERATIVE EDUCATION 
PROGRAM.— 
26 use 51. 
(i) Subparagraph (D) of section 51(d)(8) (relating to 
members of targeted groups) is amended to read as 
follows: 
"(D) WAGES.—In the case of remuneration attributable to 
services performed while the individual meets the require-
ments of subparagraph (A), wages, and unemployment insur-
ance wages, shall be determined without regard to section 
26 use 3306. 
3306(c)(10)(C)." 
(ii) Paragraph (1) of section 51(c) (defining wages) is 
amended by striking out "and subsection (h)(2)," and 
inserting in lieu thereof ", subsection (d)(8)(D), and 
subsection (h)(2),". 
(F) AGE REQUIREMENT FOR QUAUFIED COOPERATIVE EDUCA-
TION PROGRAMS.—Clause (i) of section 51(d)(8)(A) (defining 
youth participating in a qualified cooperative education 
program) is amended by striking out "19" and inserting in 
lieu thereof "20". 
(G) CLERICAL AMENDMENTS.— 
26 use 44B. 
(i) Subsection (a) of section 44B is amended by striking 
out "at the taxpayer" and inserting in lieu thereof "of 
the taxpayer". 
(ii) Paragraph (2) of section 44B(c) is amended by 
striking out "may be" and inserting in lieu thereof "may 
by". 
26 use 51. 
(iii) Paragraph (2) of section 51(c) is amended by 
striking out 
amounts paid" and inserting in lieu 
thereof "amounts paid or incurred". 
(iv) Paragraph (1) of section 51(d) is amended by 
striking out "or" at the end of subparagraph (E). 
(v) Clause (i) of section 51(d)(4)(A) is amended by 
striking out "active day" and inserting in lieu thereof 
"active duty". 
(vi) Subparagraph (B) of section 51(d)(4) is amended by 
striking out 
premployment" and inserting in lieu 
thereof "preemployment". 
(vii) Paragraph (5) of section 51(d) is amended by 
striking out "pre-emplovment" and inserting in lieu 
thereof "preemployment . 
(viii) Paragraph (12) of section 51(d) is amended by 
striking out "employer" and inserting in lieu thereof 
"employers". 
(ix) The last sentence of section 51(e) is amended by 
inserting "except as provided in subsection (h)(1)," after 
"the preceding sentence,". 
26 use 6501. 
(x) Section 6501 is amended by redesignating the 
subsection added by section 321(b)(2) of the Revenue Act 
92 Stat. 2830. 
of 1978 as subsection (p). 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 211 
(xi) Subparagraph (B) of section 321(d)(2) of the Reve-
nue Act of 1978 is amended by striking out clauses (i) 26 use 51 note. 
and (ii) and inserting in lieu thereof the following: 
"(i) such individual meets the requirements of para-
graph (1) of section 51(d) of such Code, and 
"(ii) in the case of an individual meeting the require-
ments of subparagraph (A) of such paragraph (1), a 
credit was not claimed for such individual by the tax-
payer for a taxable year beginning before January 1, 
1979." 
(xii) Paragraph (4) of section 321(d) of the Revenue Act 
of 1978 is amended by striking out "subsection (u)(2)" 26 use 53 note. 
and inserting in lieu thereof "subsection (c)(2)". 
(xiii) Section 383 and subsection (a) of section 6411 are 26 use 383, 
each amended by striking out "section 53(c)" and insert- ^^^^• 
ing in lieu thereof "section 53(b)". 
(7) AMENDMENTS RELATED TO SECTION 322 OF THE ACT.— 
92 Stat. 2836. 
(A) CLARIFICATION OF EFFECTIVE DATE.—Paragraph (1) of 
section 322(e) of the Revenue Act of 1978 (relating to effec- 26 use 50A note. 
tive date) is amended by adding at the end thereof the 
following new sentence: For purposes of applying section 
50A(a)(2) of the Internal Revenue Code of 1954 with respect 
to a taxable year beginning before January 1,1979, the rules 
of sections 50A(aX4), 50A(a)(5), and 50B(e)(3) of such Code (as 
in effect on the day before the date of the enactment of this 
Act) shall apply." 
(B) TRANSITIONAL RULE FOR EMPLOYEES HIRED AFTER SEP-
TEMBER 26, 1978.—Subparagraph (B) of section 322(e)(2) of 
the Revenue Act of 1978 (relating to eligible employees hired 
after September 26,1978) is amended— 
(i) by striking out "September 27,1978," and inserting 
in lieu thereof "September 26, 1978, for purposes of 
applying the amendments made by this section,"; and 
(ii) by striking out "January 1,1979." and inserting in 
lieu thereof "January 1, 1979, and any wages paid or 
incurred after December 31, 1978, with respect to such 
individual shall be considered to be attributable to 
services rendered after that date." 
(C) FEDERAL WELFARE RECIPIENT EMPLOYMENT INCENTIVE 
EXPENSES.—Effective with respect to wages paid or incurred 
after September 30, 1978, and before January 1, 1979, 
subparagraph (B) of section 50B(a)(2) (relating to work incen- 26 use 50B. 
tive program expenses), as in effect before the amendments 
made by section 322 of the Revenue Act of 1978, is amended by 92 Stat. 2836. 
striking out "October 1, 1978" and inserting in lieu thereof 
"January 1, 1979". 
(D) CLERICAL AMENDMENTS.— 
(i) Subparagraph (C) of section 50A(a)(4) (relating to 26 use 50A. 
limitation with respect to nonbusiness eligible em-
ployees) is amended by striking out " '$6,000' and" and 
inserting in lieu thereof " '$6,000' for". 
(ii) Subparagraph (B) of section 50B(g)(2) is amended 26 use 50B. 
by striking out "giving to such credit" and inserting in 
lieu thereof "giving rise to such credit". 
(iii) Clause (i) of section 50B(h)(l)(A) is amended by 
striking out "9-day" and inserting in lieu thereof "90-
day". 
94 STAT. 212 
PUBLIC LAW 96-222—APR. 1, 1980 
(iv) The second subsection designated as subsection (d) 
92 Stet. 2836. 
of section 322 of the Revenue Act of 1978 is amended by 
26 use 280C. 
striking out "our" in paragraph (1)(A) thereof and 
inserting in Ueu thereof "out". 
92 Stat. 2842. 
(g) AMENDMENT RELATED TO SECTION 337 OF THE ACT.—SubseC-
26 use 103 note. 
tion (a) of section 337 of the Revenue Act of 1978 (relating to 
disposition of amounts generated by advance refunding of cer-
tain governmental obligations) is amended by striking out "or a 
refund profit" and inserting in lieu thereof' of a refund profit". 
92 Stat. 2844. 
(9) AMENDMENT RELATING TO SECTION 345 OF THE ACT.—SubseC-
26 use 1244 
tion (e) of section 345 of the Revenue Act of 1978 (relating to 
^°^- 
effective date for small business corporation stock provision) is 
amended to read as follows: 
"(e) EFFECTIVE DATES.— 
"(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to stock issued 
after November 6,1978. 
"(2) SUBSECTION (b).—The amendments made by subsection (b) 
shall apply to taxable years beginning after December 31, 1978. 
"(3) TRANSITIONAL RULE FOR SUBSECTION (b).—In the case of a 
taxable year which includes November 6,1978, the amendments 
made by subsection (b) shall apply with respect to stock issued 
after such date." 
92 Stat. 2847. 
(IQ) AMENDMENTS RELATED TO SECTION 361 OF THE ACT.— 
26 use 274. 
(A) OTHER CLUBS.—Subparagraph (C) of section 274(a)(2) 
(relating to special rule for country clubs) is amended by 
striking out "country". 
(B) CLERICAL AMENDMENT.—Subsection (b) of section 361 of 
the Revenue Act of 1978 is amended— 
(i) by striking out "section 274(2)" and inserting in lieu 
thereof "section 274(a)", and 
(ii) by striking out "COUNTRY" in the subsection head-
ing. 
26 u s e 274 note. 
(C) USE OF FACILITIES IN CASE OF INDEPENDENT CONTRAC-
TORS, ETC.— 
(i) IN GENERAL.—Subsoction (a) of section 274 of the 
Internal Revenue Code of 1954 (relating to disallowance 
of certain entertainment, etc., expenses) shall not apply 
to expenses paid or incurred by the taxpayer for goods, 
services, and facilities to the extent that the expenses 
are includible in the gross income of a recipient of the 
entertainment, amusement, or recreation who is not an 
employee of the taxpayer as compensation for services 
26 use 74. 
rendered or as a prize or award under section 74 of such 
Code. 
(ii) INFORMATION RETURN REQUIREMENT.—Clause (i) 
shall not apply to any amount paid or incurred by the 
taxpayer if such amount is required to be included in 
any information return filed by such taxpayer under 
26 use 6031. 
part III of subchapter A of chapter 61 of such Code and is 
not so included. 
(iii) APPLICATION OF SUBPARAGRAPH.—This subpara-
graph shall only apply with respect to expenses paid or 
incurred during 1979 or 1980. 
92 Stat. 2848. 
( H ) AMENDMENTS RELATED TO SECTION 362 OF THE ACT.— 
26 use 860 note. 
(A) Subsection (e) of section 362 of the Revenue Act of 1978 
(relating to effective date for deficiency dividend procedure 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 213 
for regulated investment companies) is amended by striking 
out "860(d)" and inserting in lieu thereof "860(e)". 
26 use 860. 
(B) The subsection heading of subsection (f) of section 860 is 
amended by striking out "EFFICIENCY" and inserting in lieu 
thereof "DEFICIENCY". 
(C) Clause (i) of section 860(f)(2)(A) is amended by striking 26 use 860. 
out "computed without regard" and inserting in lieu thereof 
"(computed without regard". 
(12) AMENDMENT RELATED TO SECTION 365 OF THE ACT.—Subpar- 92 Stat. 2854. 
agraph (A) of section 357(c)(3) (relating to liabilities in excess of 26 use 357. 
basis) is amended to read as follows: 
"(A) IN GENERAL.—If a taxpayer transfers, in an exchange 
to which section 351 applies, a liability the payment of which 26 use 351. 
either— 
"(i) would give rise to a deduction, or 
"(ii) would be described in section 736(a), 
then, for purposes of paragraph (1), the amount of such 
liability shall be excluded in determining the amount of 
liabilities assumed or to which the property transferred is 
subject." 
(13) AMENDMENTS RELATED TO SECTION 366 OF THE ACT.— 92 stat. 2855. 
(A) WITHHOLDING.—Subsection (a) of section 3401 (defining 26 use 3401. 
wages) is amended— 
(i) by striking out "or" at the end of paragraph (17), 
(ii) by striking out the period at the end of the 
paragraph (18) added by section 207(a) of the Foreign 
Earned Income Act of 1978 and inserting in lieu thereof 92 Stat. 3108. 
a semicolon, 
(iii) by redesignating the paragraph (18) added by 
section 164(b)(1) of the Revenue Act of 1978 as paragraph 
92 Stat. 2811. 
(19), 
(iv) by striking out "section 124." in paragraph (19) (as 
so redesignated) and inserting in lieu thereof "section 
127; or", and 
(v) by adding at the end thereof the following new 
paragraph: 
"(20) for any medical care reimbursement made to or for the 
benefit of an employee under a self-insured medical reimburse-
ment plan (within the meaning of section 105(h)(6))." 
(B) 
CLARIFICATION OF NONDISCRIMINATORY ELIGIBILITY 
CLASSIFICATIONS.—Clause (ii) of section 
105(h)(3)(A) is 26usei05. 
amended by striking out "highly compensated participants" 
and inserting in lieu thereof "highly compensated individ-
uals". 
(C) CLARIFICATION OF EXCESS REIMBURSEMENT OF HIGHLY 
COMPENSATED INDIVIDUALS.—Subparagraph (A) of section 
105(h)(7) is amended to read as follows: 
"(A) in the case of a benefit available to highly compen-
sated individuals but not to all other participants (or which 
otherwise fails to satisfy the requirements of paragraph 
(2)(B)), the amount reimbursed under the plan to the em-
ployee with respect to such benefit, and". 
(D) CLARIFICATION OF EFFECTIVE DATE.—Subsection (b) of 
section 366 of the Revenue Act of 1978 is amended to read as 26 use 105 note, 
follows: 
"(h) EFFECTIVE DATE.—The amendment made by this section shall 
26 use 105 note. 
apply to amounts reimbursed after December 31, 1979. For purposes 
94 STAT. 214 
PUBLIC LAW 96-222—APR. 1, 1980 
of applying such amendment, there shall not be taken into account 
any amount reimbursed before January 1,1980." 
92 Stat. 2857. 
(14) AMENDMENT RELATED TO SECTION 369 OF THE ACT.—ClaUSe 
26 use 374. 
(iv) of Section 374(e)(1)(A) (relating to use of expired net operating 
loss carryovers to offset income arising from certain railroad 
reorganization 
proceedings) is amended by striking out 
"March 31,1967" and inserting in lieu thereof "March 31,1976". 
92 Stat. 2859. 
(15) AMENDMENT RELATED T
O SECTION 371 OF THE ACT.—Para-
graph (2) of section 371(a) of the Revenue Act of 1978 (relating to 
net operating losses attributable to product liability losses) is 
26 use 172. 
amended by striking out "Clause (i) of section 172(b)(1)(A)" and 
inserting in lieu thereof "Subparagraph (A) of section 172(b)(1)". 
92 Stat. 2863. 
(16) AMENDMENT RELATED TO SECTION 373 OF THE ACT.—Subpar-
26 use 466. 
agraph (B) of section 466(e)(2) (relating to initial opening balance 
of suspense account) is amended by striking out "first taxable 
years" and inserting in lieu thereof "first taxable year", 
(b) EFFECTIVE DATES.— 
26 use 51 note. 
(1) SPECIAL EFFECTIVE DATE.—The amendment made by subsec-
tion (a)(5)(F) shall apply to wages paid or incurred on or after 
November 27,1979, in taxable years ending on or after such date. 
(2) GENERAL EFFECTIVE DATE.— 
Post, p. 228. 
For general effective date, see section 201. 
SEC. 104. AMENDMENTS RELATED TO TITLE IV. 
(a) IN GENERAL.— 
92 Stat. 2866. 
(1) AMENDMENT RELATED TO SECTION 401 OF THE ACT.—SubseC-
26 use 877. 
tion (b) of section 877 is amended by striking out "402(e)(1), or 
section 1201(b)" and inserting in lieu thereof "or 402(e)(1)". 
92 Stat. 2867. 
(2) AMENDMENTS RELATED TO SECTION 402 OF THE ACT.— 
(A) AMENDMENTS OF TRANSITIONAL RULE.—Subsection (c) of 
26 use 1202. 
section 1202 (relating to transitional rule of taxable years 
which include November 1,1978) is amended— 
(i) by striking out so much of such subsection as 
precedes "a taxpayer other than a corporation" and 
inserting in lieu thereof: 
"(c) TRANSITIONAL RULE.—If for any taxable year ending after 
October 31, 1978, and beginning before November 1, 1979,"; and 
(ii) by amending subparagraph (B) of paragraph (1) to 
read as follows: 
"(B) the net capital gain taking into account only gain or 
loss properly taken into account for the portion of the 
taxable year after October 31,1978, plus". 
(B) COMPUTATION OF MAXIMUM 25 PERCENT ALTERNATIVE 
CAPITAL G A I N S TAX FOR 1978.— 
26 use 1201. 
(i) Paragraph (1) of section 1201(b) (as such paragraph 
was in effect for taxable years beginning before 
January 1,1979) is amended by striking out "50 percent 
of the net capital gain" and inserting in lieu thereof 
"the excess of the net capital gain over the deduction 
under section 1202". 
(ii) Subsection (c) of section 1201 (as such subsection 
was in effect for taxable years beginning before 
January 1,1979) is amended to read as follows: 
"(c) COMPUTATION OF TAX WHERE CAPITAL GAIN EXCEEDS $50,000.— 
The tax computed for purposes of subsection (b)(3) shall be the 
26 use 1,511. 
amount by which a tax determined under section 1 or 511 on an 
amount equal to the taxable income (but not less than the excess of 
the net capital gain over the deduction under section 1202) for the 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 215 
taxable year exceeds a tax determined under section 1 or 511 on an 26 use i, 5ii. 
amount equal to the sum o
f
— 
"(1) the amount subject to tax under subsection (b)(1), plus 
"(2) an amount determined by multiplying the sum referred to 
in subsection (bX2)(A) by a fraction— 
"(A) the numerator of 
which is the excess of the net capital 
gain over the deduction under section 1202, and 
26 use 1202. 
"(B) the denominator of which is the net capital gain." 
(C) SPECIAL RULE FOR PASS-THROUGH ENTITIES.-
(i) IN GENERAL—In applying sections 1201(c)(2)(A)(ii) 26 use 1201 
and 1202(c)(1)(B) of the Internal Revenue Code of 1954 "o\«-
with respect to any pass-through entitjf, the determina- ^202 
tion of the period for which gain or loss is properly taken 
into account shall be made at the entity level. 
(ii) PASS-THROUGH ENTITY DEFINED.—For purposes of 
clause (i), the term "pass-through entity" means— 
(I) a regulated investment company, 
(II) a real estate investment trust, 
(III) an electing small business corporation, 
(IV) a partnership, 
(V) an estate or trust, and 
(\^) a common trust fund. 
(3) AMENDMENTS RELATED TO SECTION 403 OF THE ACT.— 
92 stat. 2868. 
(A) CLARIFICATION OF TRANSITIONAL RULE.—Subsection (c) 
of section 1201 (relating to transitional rule for taxable years 26 use 1201. 
which include January 1,1979) is amended— 
(i) by striking out so much of such section as precedes 
"a corporation" and inserting in lieu thereof the 
following: 
"(c) TRANSITIONAL RULE.—If for any taxable year ending after 
December 31, 1978, and beginning before January 1, 1980,", and 
(ii) by amending clause (ii) of paragraph (2)(A) to read 
as follows: 
"(ii) the net capital gain taking into account only gain 
or loss properly taken into account for the portion of the 
taxable year after December 31,1978, plus . 
(B) UNDISTRIBUTED CAPITAL GAIN OF REGULATED INVEST-
MENT COMPANY.—Clause (iii) of section 852(b)(3)(D) (relating 26 use 852. 
to treatment by shareholders of undistributed capital gain) 
is amended by striking out "70 percent" and inserting in lieu 
thereof "72 percent". 
(C) ADDITION TO RESERVES FOR BAD DEBTS.—Clause (iv) of 
section 5930bX2XE) is amended by striking out "%" each 26 use 593. 
place it appears and inserting in lieu thereof " * %«". 
(D) CLERICAL AMENDMENTS.— 
(i) Paragraph (3) of section 904(b) is amended by 26 use 904. 
redesignating the subparagraph (E) added by section 
403(cX4) of the Revenue Act of 1978 as subparagraph (F). 
(ii) Subparagraph (B) of section 403(cX4) of the Reve-
nue Act of 1978 is amended by striking out "striking the 
period at the end of subparagraph (D) of paragraph (3), 
inserting in lieu thereof a comma, and inserting imme-
diately thereafter" and inserting in lieu thereof adding 
at the end of paragraph (3)". 
(4) AMENDMENTS RELATED TO SECTION 421 OF THE ACT.— 
92 stat. 287i. 
(A) CERTAIN DEDUCTIONS WHICH MAY BE CARRIED OVER NOT 
TAKEN INTO ACCOUNT.—Paragraph (1) of section 55(b) (defin- 26 use 55. 
94 STAT. 216 
PUBLIC LAW 96-222—APR. 1, 1980 
ing alternative minimum taxable income) is amended by 
adding at the end thereof the following new sentence: 
"For purposes of subparagraph (A), a deduction shall not be 
taken into account to the extent such deduction may be carried to 
another taxable year." 
(B) TREATMENT OF FOREIGN TAX CREDIT.—Paragraphs (1) 
26 use 55. 
and (2) of section 55(c) (relating to credits) are amended to 
read as follows: 
"(1) CREDITS OTHER THAN FOREIGN TAX CREDIT NOT ALLOWABLE, 
ETC.—For purposes of determining the amount of any credit 
26 use 31. 
allowable under subpart A of part IV of this subchapter (other 
26 use 33. 
than the foreign tax credit allowed under section 33(a))— 
"(A) the tax imposed by this section shall not be treated as 
a tax imposed by this chapter, and 
"(B) the amount of the foreign tax credit allowed under 
section 33(a) shall be determined without regard to this 
section. 
"(2) FOREIGN TAX CREDIT ALLOWED AGAINST ALTERNATIVE MINI-
MUM TAX.— 
"(A) DETERMINATION OF FOREIGN TAX CREDIT.—The total 
amount of the foreign tax credit which can be taken against 
the tax imposed by subsection (a) shall be determined under 
26 use 901. 
subpart A of part III of subchapter N (sec. 901 and following). 
"(B) INCREASE IN AMOUNT OF FOREIGN TAXES TAKEN INTO 
ACCOUNT.—For purposes of the determination provided by 
subparagraph (A), the amount of taxes paid or accrued to 
foreign countries or possessions of the United States during 
the taxable year sh^l be increased by an amount equal to 
the lesser of— 
"(i) the foreign tax credit allowable under section 33(a) 
in computing the regular tax for the taxable year, or 
"(ii) the tax imposed by subsection (a). 
26 use 904. 
"(C) SECTION 904(a) UMITATION.—For purposes of the 
determination provided by subparagraph (A), the limitation 
of section 904(a) shall be an amount equal to the same 
proportion of the sum of the tax imposed by subsection (a) 
against which such credit is taken and the regular tax 
26 use 56. 
(excluding the tax imposed by section 56) £is— 
"(i) the taxpayer's alternative minimum tsixable 
income from sources without the United States Ot>ut not 
in excess of the taxpayer's entire alternative minimum 
taxable income), bears to 
"(ii) his entire alternative minimum taxable income. 
For such purpose, the amount of the limitation of section 
904(a) shall not exceed the tax imposed by subsection (a). 
"(D) 
DEFINITION 
OF ALTERNATIVE 
MINIMUM 
TAXABLE 
INCOME FROM SOURCES WITHOUT THE UNITED STATES.—For 
purposes of subparagraph (C), the term 'alternative mini-
mum taxable income from sources without the United 
States' means the items of gross income from sources with-
out the United States adjusted as provided in subparagraph 
26 use 55. 
(A), (B), and (C) of section 55(b)(1) (taking into account in such 
adjustment only items described in such subparagraphs 
which are properly attributable to items of gross income 
from sources without the United States). 
"(E) SPECIAL RULE FOR APPLYING SECTION 904(C).—In deter-
mining the amount of foreign taxes paid or accrued during 
the taxable year which may be deemed to be paid or accrued 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 217 
in a preceding or succeeding taxable year under section 
904(c)— 
26 u s e 904. 
"(i) the limitation of section 904(a) shall be increased 
by the amount of the limitation determined under 
subparagraph (C), and 
"(ii) any increase under subparagraph (B) shall be 
taken into account." 
(C) REGULAR TAX DETERMINED WITHOUT REGARD TO FOREIGN 
TAX CREDIT ALLOWED AGAINST MINIMUM TAX.—Paragraph (2) 
of section 55(b) is amended by adding at the end thereof the 26 use 55. 
following new sentence: "For purposes of 
this paragraph, the 
amount of the credit allowable under section 33 shall be 26 use 33. 
determined without regard to this section." 
(D) TREATMENT OF ZERO BRACKET AMOUNT.—Subsection (b) 
of section 55 (relating to definitions for purposes of alterna-
tive minimum tax) is amended by adding at the end thereof 
the following new paragraph: 
"(3) TREATMENT OF ZERO BRACKET AMOUNT.—In the case of an 
individual who does not itemize his itemized deductions, the zero 
bracket amount shall be treated as a deduction allowed." 
(E) TREATMENT OF CERTAIN FOREIGN TAXES FOR THE 
ADJUSTED ITEMIZED DEDUCTION PREFERENCE.—Paragraphs 
(IXA) and (2XAXv) of section 57(b) (relating to aSusted 26 use 57. 
itemized deductions) are each amended by inserting , and 
foreign," after "State and local". 
(F) ADJUSTED ITEMIZED DEDUCTIONS OF ESTATE OR TRUST.— 
Subparagraph (A) of section 57(bX2) (defining adjusted item-
ized deductions of estate or trust) is amended by striking out 
"clauses (i) through (vi)" and inserting in lieu thereof 
"clauses (iii) through (vi)". 
(G) CARRYOVER OF RESIDENTIAL ENERGY CREDIT.—Para-
graph (3) of section 55(c) is amended by adding at the end 26 use 55. 
thereof the following new sentence: 
"In determining any carryover under subsection 44C(bX6), a rule 26 use 44. 
similar to the rule set forth in subparagraph (A) shall be treated 
as inserted in this paragraph before subparagraph (A), and the 
applications of subparagraphs (A), (B), and (C) shall be adjusted 
accordingly." 
(H) CT^RICAL AMENDMENTS.— 
(i) Subsection (a) of section 55 (relating to alternative 
minimum tax) is amended by striking out all after 
paragraph (1) and inserting in lieu thereof the following: 
"(2) the regular tax for the taxable year, 
then there is imposed (in addition to all other taxes imposed by this 
title) a tax equal to the amount of 
such excess." 
(ii) Subparagraph (A) of section 55(cX3) (relating to 
carryover and carryback of certain credits) is amended 
by striking out "section 53(c)" and inserting in lieu 26 use 53. 
thereof "section 53(b)". 
(iii) Paragraph (2) of section 443(d) (relating to adjust- 26 use 443. 
ment in computing minimum tax for tax preferences) is 
amended by striking out "in the case of a corporation,". 
(iv) Paragraph (3) of section 453(c) is amended by 26 use 453. 
striking out "section 56" and inserting in lieu thereof 
(v) Sections 871(bXl) and 877(b) are each amended by 26 use 871,877. 
striking out "section 55" and inserting in lieu thereof 
"55". 
94 STAT. 218 
PUBLIC LAW 96-222—APR. 1, 1980 
26 use 666. 
(vi) The second sentence of section 666(c) (relating to 
pro rata portion of taxes deemed distributed) is amended 
by inserting "(other than the tax imposed by section 55)" 
after "equal to the taxes". 
26 use 5. 
(vii) Paragraph (4) of section 5(a) is amended by 
striking out "section 55" and inserting in lieu thereof 
"sections 55 and 56". 
26 use 55. 
(viii) Paragraph (2) of section 55(b) is amended by 
inserting "409(c)," after "408(f),". 
92 Stat. 2878. 
(5) AMENDMENTS RELATED TO SECTION 441 OP THE ACT.— 
(A) TRANSITIONAL RULE.—Paragraph (2) of section 441(b) of 
26 use 1348 
the Revenue Act of 1978 (relating to transitional rules) is 
^°^- 
amended to read as follows: 
"(2) TAXABLE YEARS WHICH STRADDLE NOVEMBER i, 1978.—In 
the case of a taxable year which begins before November 1,1978, 
and ends after October 31,1978, the amount taken into account 
26 use 1348. 
under section 1348(b)(2XB) of the Internal Revenue Code of 1954 
26 use 57. 
by reason of section 57(a)(9) of such Code shall be 50 percent of 
the lesser of— 
"(A) the net capitsd gain for the taxable year, or 
"(B) the net capital gain taking into account only gain or 
loss properly taken into account for the portion of the 
taxable year before November 1,1978." 
(B) CLERICAL AMENDMENT.—Subsection (a) of section 441 of 
26 use 1348. 
the Revenue Act of 1978 is amended by striking out "subpar-
agraph 0))" and inserting in lieu thereof "subparagraph (B)". 
(b) EFFECTIVE DATES.— 
26 use 1201 
(1) SPECIAL EFFECTIVE DATE FOR SUBSECTION (a)(2)(B).—The 
^° ' 
amendments made by subsection (a)(2)(B) shall apply to taxable 
years beginning in 1978. 
(2) GENERAL EFFECTIVE DATE.— 
Post, p. 228. 
For general effective date, see section 201. 
SEC. 105. AMENDMENTS RELATED TO TITLE V. 
(a) GENERAL RULE.— 
92 Stat. 2879. 
(1) AMENDMENTS RELATED TO SECTION 502 OF THE ACT.— 
26 use 7463. 
(A) Subsection (g) of section 7463 (relating to small tax case 
procedures) is hereby repealed. 
26 use 7456. 
(B) Subsection (c) of section 7456 (relating to commission-
ers of the Tax Court) is amended by striking out "sections 
7428" and inserting in lieu thereof "sections 7428, 7463". 
92 Stat. 2880. 
(2) AMENDMENT RELATED TO SECTION 504 OF THE ACT.—Para-
26 use 6411. 
graph (2) of section 6411(d) (relating to tentative refund of tax 
under claim of right adjustment) is amended to read as follows: 
"(2) ALLOWANCE OF ADJUSTMENTS.—Within a period of 90 days 
from the date on which an application is filed under paragraph 
(1) or from the date of the overpayment (determined under 
26 use 1341. 
section 1341(b)(1)), whichever is later, the Secretary shall— 
"(A) review the application, 
"(B) determine the amount of the overpayment, and 
"(C) apply, credit, or refund such overpayment, 
in a manner similar to the manner provided in subsection Qo)." 
92 Stat. 2881. 
(3) AMENDMENTS RELATED TO SECTION 511 OF THE ACT.— 
(A) AGGREGATE ADJUSTED CONSIDERATION MUST BE LESS 
26 use 2040. 
THAN VALUE.—Paragraph (2) of section 2040(c) (relating to 
limitations) is amended by adding at the end thereof the 
following new subparagraph: 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 219 
"(C) AGGREGATE ADJUSTED CONSIDERATION MUST BE LESS 
T
H
A
N VALUE.—Paragraph (1) shall not apply if the sum o
f
— 
"(i) the adjusted consideration furnished by the dece-
dent, and 
"(ii) the adjusted consideration furnished by the dece-
dent's spouse, 
equals or exceeds the value of 
the interest." 
(B) CLERICAL AMENDMENT.—Paragraph (1) of section 
2040(c) is amended by striking out "subsections (a)" and 2
6 use 2040. 
inserting in lieu thereof "subsection (a)". 
(4) AMENDMENTS RELATED TO SECTION 5 14 OF THE ACT.— 
92 stat. 2883. 
(A) The first sentence of paragraph (3) of section 2055(e) is 26 use 2055. 
amended— 
(i) by striking out "subparagraph (a) or (B)" and 
inserting in lieu thereof "subparagraph (A) or (B)", and 
(ii) by striking out "so that interest" and inserting in 
lieu thereof "so that the interest". 
(B) Section 514 of the Revenue Act of 1978 is amended by 
adding at the end thereof the following new subsection: 
"(c) EFFECTIVE DATES.— 
26 use 2055 
"(1) FOR SUBSECTION (a).—The amendment made by subsection "°*^ 
(a) shall apply in the case of decedents dying after December 31, 
1969. 
"(2) FOR SUBSECTION (b).—Subsection (b)— 
"(A) insofar as it relates to section 170 of the Internal 
Revenue CJode of 1954 shall apply to transfers in trust and 26 use 170. 
contributions made after July 31,1969, and 
"(B) insofar as it relates to section 2522 of the Internal 
Revenue Code of 1954 shall apply to transfers made after 2
6 use 2522. 
December 31,1969." 
(5) AMENDMENTS RELATED TO SECTION 515 OF THE ACT.— 
^2 stat. 2884. 
(A) AMENDMENT OF SECTION IO40 OF THE CODE.—Section 2
6 use 1040. 
1040 (relating to use of certain appreciated carryover basis 
property to satisfy pecuniary bequest) is amended by adding 
at the end thereof the followmg new suteection: 
"(d) APPUCATION TO SECTION 2032A PROPERTY.—For purposes of 26 use 2032A. 
this section, references to carryover basis property shall be treated as 
including a reference to property the valuation of which is deter-
mined under section 2032A." 
(B) PERIOD FOR WHICH SECTION 1040 APPUES.—Notwith- 26 use i040 
standing section 515 of the Revenue Act of 1978, section 1040 ^°^-
of the Internal Revenue Code of 1954 (as amended by 
subparagraph (A)) shall apply with respect to the estates of Supra. 
decedents dying after December 31,1976. 
(6) AMENDMENTS RELATED TO SECTION 531 OF THE ACT.— 
92 stat. 2886. 
(A) Paragraph (6) of section 216(b) (relating to deduction of 26 use 216. 
taxes, interest, and business depreciation by cooperative 
housing corporation tenant-stockholder) is amended by 
redesignating subparagraphs (B) and (C) as subparagraphs 
(C) and (D), respectively, and by striking out subparagraph 
(A) and inserting in lieu thereof the following new subpara-
graphs: 
"(A) IN GENERAL.—If the original seller acquires any stock 
of the corporation from the corporation or by foreclosure, the 
original seller shall be treated as a tenant-stockholder for a 
period not to exceed 3 years from the date of the acquisition 
of such stock. 
94 STAT. 220 
PUBLIC LAW 96-222—APR. 1, 1980 
"By foreclosure." 
Ante, p. 219. 
92 Stat. 2888. 
26 use 126. 
26 use 1255. 
26 use 1016. 
"(B) STOCK ACQUISITION MUST TAKE PLACE NOT LATER THAN 
1 YEAR AFTER TRANSFER OF DWELLING UNITS.—Except in the 
case of an acquisition of stock of a corporation by foreclosure, 
subparagraph (A) shall apply only if the acquisition of stock 
occurs not later than 1 year after the date on which the 
apartments or houses (or leaseholds therein) are transferred 
by the original seller to the corporation. For purposes of this 
subparagraph and subparagraph (A), the term 'by foreclo-
sure' means by foreclosure (or by instrument in lieu of 
foreclosure) of any purchase-money security interest in the 
stock held by the original seller." 
(B) Subparagraph (D) of section 216(b)(6) (as redesignated 
by subparagraph (A) of this paragraph) is amended by 
adding at the end thereof the following new sentence: "The 
estate of an original seller shall succeed to, and take into 
account, the tax treatment of the original seller under this 
paragraph." 
(7) AMENDMENTS RELATED TO SECTION 543 OF THE ACT.— 
(A) Section 126 (relating to certain cost-sharing payments) 
is amended by striking out subsections (b) and (c) and 
inserting in lieu thereof the following: 
"(b) EXCLUDABLE PORTION.—For purposes of this section— 
"(1) IN GENERAL.—The term 'excludable portion' means that 
portion (or all) of a payment made to any person under any 
program described in subsection (a) which— 
"(A) is determined by the Secretary of Agriculture to be 
made primarily for the purpose of conserving soil and water 
resources, protecting or restoring the environment, improv-
ing forests, or providing a habitat for wildlife, and 
"(B) is determined by the Secretary of the Treasury or his 
delegate as not increasing substantially the annual income 
derived from the property. 
"(2) PAYMENTS NOT CHARGEABLE TO CAPITAL ACCOUNT.—The 
term 'excludable portion' does not include that portion of any 
payment which is properly associated with an amount which is 
allowable as a deduction for the taxable year in which such 
amount is paid or incurred. 
"(c) ELECTION FOR SECTION NOT TO APPLY.— 
"(1) IN GENERAL.—The taxpayer may elect not to have this 
section (and section 1255) apply to any excludable portion (or 
portion thereof). 
"(2) MANNER AND TIME FOR MAKING ELECTION.—Any election 
under paragraph (1) shall be made in the manner prescribed by 
the Secretary by regulations and shall be made not later than the 
due date prescribed by law (including extensions) for filing the 
return of tax under this chapter for the taxable year in which the 
payment was received or accrued. 
"(d) DENIAL OF DOUBLE BENEFITS.—No deduction or credit shall be 
allowed with respect to any expenditure which is properly associated 
with any amount excluded from gross income under subsection (a). 
"(e) BASIS OF PROPERTY NOT INCREASED BY REASON OF EXCLUDABLE 
PAYMENTS.—Notwithstanding any provision of section 1016 to the 
contrary, no adjustment to basis shall be made with respect to 
property acquired or improved through the use of any payment, to 
the extent that such adjustment would reflect any amount which is 
excluded from gross income under subsection (a)." 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 221 
(B) Paragraph (1) of section 1255(a) is amended by striking 2
6 use 1255. 
out all after subparagraph (B)(i) and inserting in lieu thereof 
the following: 
"(ii) the adjusted basis of such property, 
shall be treated as ordinary income. Such gain shall be recog-
nized notwithstanding any other provision of this subtitle, except 
that this section shall not apply to the extent such gain is 
recognized as ordinary income under any other provision of this 
part." 
(C) Subsection (a)(9) of section 126 (relating to certain cost- 2
6 use 126. 
sharing payments) is amended bv inserting "or his delegate" 
after "Secretary of 
the Treasury . 
(D) Paragraph (2) of section 1255(b) (relating to special 2
6 use 1255. 
rules applicable to gain from disposition of section 126 
property) is amended by striking out "(2)" and inserting in 
lieu thereof "(2) for purposes of sections 163(d), 170(e), 
341(e)(12), 453(dX4)(B), and 751(c),". 
(E) Paragraph (10) of section 126(a) (relating to certain 2
6 use 126. 
cost-sharing payments) is amended by striking out "Any 
State program" and inserting in lieu thereof "Any program 
of a State, possession of the United States, a political 
subdivision of any of the foregoing, or the District of Colum-
bia", 
(b) EFFECTIVE DATES.— 
26 use 7456 
(1) SPECIAL EFFECTIVE DATE FOR SUBSECTION (a)(1).—The ^°^^-
amendments made by subsection (a)(1) shall take effect on the 
date of the enactment of 
this Act. 
(2) GENERAL EFFECTIVE DATE.— 
For general effective date, see section 201. 
Post, p. 228. 
SEC. 106. AMENDMENTS RELATED TO TITLE VL 
(a) IN GENERAL.— 
(1) Paragraph (1) of section 172(b) (relating to net operating loss 2
6 use 172. 
carrybacks and carryovers) is amended by redesignating the 
subparagraph (H) added by section 6010^X1) of the Revenue Act of 
1978 as subparagraph (l). 
92 Stat. 2892. 
(2) Subsection (a) of section 1016 (relating to adjustments of 2
6 use ioi6. 
basis) is amended by redesignating the paragraph (21) added by 
section 601(bX3) of the Revenue Act of 1978 as paragraph (22). 
(3) Paragraph (3) of section 601fl3) of the Revenue Act of 1978 is 
amended by striking out "by redesignating paragraph (23) as (22) 
and by inserting after paragraph (20)" and inserting in lieu 
thereof "by inserting before paragraph (23)". 
(4) Subsection (a) of section 1391 (defining general stock owner- 2
6 use i39i. 
ship corporation) is amended— 
(A) by striking out", and" at the end of paragraph (1) and 
inserting in lieu thereof a semicolon, 
(B) by inserting "or" at the end of paragraph (4)(D)(ii), 
(C) by inserting "and" at the end of paragraph (4)(D)(iii), 
and 
(D) by inserting "and" at the end of paragraph (4)(E). 
(5) Subsection (c) of section 1392 is amended by striking out 2
6 use 1392. 
"WHERE" in the subsection heading and inserting in lieu thereof 
"WHEN". 
(6) Subparagraph (A) of section 172(bXl) is amended by striking 26 use 172. 
out "and {Hr and inserting in lieu thereof ", (H), and (I) . 
(7) Subparagraph (B) of section 1720bXl) is amended by striking 
out "and (G)^' and inserting in lieu thereof "(G), and (I) . 
94 STAT. 222 
PUBLIC LAW 96-222—APR. 1, 1980 
(b) EFFECTIVE DATE.— 
Post, p. 228. 
For general effective date, see section 201. 
SEC. 107. AMENDMENTS RELATED TO TITLE VIL 
(a) I N GENERAL.— 
92 Stat. 2897. 
(1) AMENDMENTS RELATED TO SECTION 701 OF THE ACT.— 
(A) COMPUTATION OF ADJUSTED ITEMIZED DEDUCTIONS IN 
CASE OF ESTATES AND TRUSTS.—Subparagraph (C) of section 
26 use 57. 
570b)(2) (relating to special rules for estates and trusts) is 
amended by striking out "section 170(c)(2)(B)" each place it 
appears and inserting in lieu thereof "section 170(c) (deter-
mined without regard to section 170(c)(2)(A))". 
26 use 911 note. 
(B) EFFECTIVE DATE FOR PROVISION RELATING TO FOREIGN 
26 use 911. 
TAXES ATTRIBUTABLE TO SECTION 911 EXCLUSION.—Subpara-
graph (B) of section 701(u)(10) of the Revenue Act of 1978 
(relating to effective date) is amended to read as follows: 
"(B) EFFECTIVE DATE.—The amendment made by subpara-
graph (A) shall apply to taxable years beginning in calendar 
year 1978 but only in the case of taxpayers who make an 
election under section 209(c) of the Foreign Earned Income 
26 use 911 note. 
Act of 1978." 
(C) ALLOCATION OF ITEMS OF TAX PREFERENCE IN THE CASE 
26 use 58. 
OF ESTATES AND TRUSTS.—Paragraph (1) of section 58(c) (relat-
ing to estates and trusts) is amended by striking out "on the 
basis of the income of the estate or trust allocable to each" 
and inserting in lieu thereof "in accordance with regulations 
prescribed by the Secretary". 
26 use 1250. 
(D) AMENDMENT OF SECTION 1250.—The last sentence of 
section 1250(a)(1)(B) (relating to gain from disposition of 
certain depreciable property) is amended by inserting before 
the period at the end thereof the following: "which was 
allowed under section 167(k)". 
(E) CLERICAL AMENDMENTS.— 
(i) Paragraph (3) of section 701(a) of the Revenue Act 
26 use 37. 
of 1978 is amended by striking out "Subsection (c)" and 
inserting in lieu thereof "Subsection (e)". 
26 use 191. 
(ii) Subparagraph (C) of section 191(f)(2) is amended by 
striking out "the date o f and inserting in lieu thereof 
"the date". 
92 Stat. 2925. 
(2) AMENDMENTS RELATED TO SECTION 702 OF THE ACT.— 
26 use 1014. 
(A) Paragraph (3) of section 1014(a) is amended by striking 
out "section 2032.1" and inserting in lieu thereof "section 
2032 
A" 
26 use 2613. 
(B)(i)'Clause (i) of section 2613(e)(2)(A) is amended by 
inserting "(other than as a potential appointee under a 
power of appointment held by another)" after "the trust". 
(ii) Subparagraph (B) of section 2613(e)(2) is amended— 
(I) by inserting after clause (ii) the following new 
clause: 
"(iii) an employee of the grantor or of any benefici-
ary,". 
(II) by striking out clause (vi), by redesignating clauses 
(iii), (iv), and (v) as clauses (iv), (v), and (vi), respectively, 
and 
(III) by inserting "or" at the end of clause (vi) (as so 
redesignated). 
S???^J;.... 
(C) Paragraph (3) of section 702(r) of the Revenue Act of 
26 use 1016. 
1978 ig hereby repealed. 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 223 
(D) The section 6698 which relates to failure to file infor-
mation with respect to carryover basis property is redesig-
nated as section 6698A. 
(E) The table of sections for subchapter B of chapter 68 is 
amended by striking out 
"Sec. 6698. Failure to file information with respect to carryover basis 
property." 
and inserting in lieu thereof the following: 
"Sec. 6698A. Failure to file information with respect to carryover basis 
property." 
(F)(i) If the executor elects the benefits of this subpara-
graph with respect to any estate, section 2035(b) of the 
Internal Revenue Code of 1954 (relating to adjustments for 
gifts made within 3 years of decedent's death) shall be 
applied with respect to transfers made by the decedent 
during 1977 as if paragraph (2) of such section 2035(b) read as 
follows: 
"(2) to any gift to a donee made during 1977 to the extent of the 
amount of such gift which was excludable in computing taxable 
gifts by reason of section 2503(b) (relating to $3,000 annual 
exclusion for purposes of the gift tax) determined without regard 
to section 2513(a)." 
(ii) The election under clause (i) with respect to any estate 
shall be made on or before the later o
f
— 
(I) the due date for filing the estate tax return, or 
(II) the day which is 120 days after the date of the 
enactment of this Act. 
(3) AMENDMENTS RELATED TO SECTION 703 OF THE ACT.— 
(A) The first sentence of paragraph (8) of section 46(f) is 
amended by striking out "subsection (a)(7)(D)" and inserting 
in lieu thereof "subsection (a)(7)(C)". 
(B) Subsection (e) of section 703 of the Revenue Act of 1978 
is hereby repealed. 
(C) Paragraph (1) of section 703(q) of the Revenue Act of 
1978 is amended bv striking out "section 103(d)" and insert-
ing in lieu thereof section 103(c)". 
(b) EFFECTIVE DATE.— 
For general effective date, see section 201. 
SEC. 108. AMENDMENTS RELATED TO CERTAIN OTHER ACTS ENACTED 
DURING 1978. 
(a) FOREIGN EARNED INCOME ACT OF 1978.— 
(1) IN GENERAL.— 
(A) TAX TABLES TO APPLY TO INDIVIDUALS CLAIMING SECTION 
911 EXCLUSION.—Section 202 of the Foreign Earned Income 
Act of 1978 is amended by redesignating subsection (f) as 
subsection (g) and by inserting after subsection (e) the 
following new subsection: 
"(f) TAX TABLES TO APPLY TO INDIVIDUALS CLAIMING SECTION 911 
EXCLUSION.—Paragraph (1) of section 3(b) (relating to tax tables not 
to apply to certain individuals) is amended by striking out subpara-
graph (A)." 
(B) DETERMINATION OF HOUSING DEDUCTION.— 
(i) Clause (i) of section 913(e)(3)(A) is amended by 
striking out "earned income" each place it appears and 
inserting in lieu thereof "housing income". 
(ii) Subsection (e) of section 913 is amended by adding 
at the end thereof the following new paragraphs: 
26 use 6698A. 
26 use 6698A. 
26 use 2035 
note. 
26 use 2035. 
26 use 2503. 
26 use 2513. 
92 Stat. 2939. 
26 use 46. 
Repeal. 
26 use 911. 
26 use 103. 
Post, p. 228. 
26 use 1 note. 
92 Stat. 3098. 
26 use 43, 911, 
1302, 1304, 1402, 
6012, 6091. 
26 use 3. 
26 use 913. 
79-194 
O—81—pt. 1 
18 : QL3 
94 STAT. 224 
PUBLIC LAW 96-222—APR. 1, 1980 
"(6) HOUSING INCOME.—For purposes of this subsection, the 
term 'housing income' has the meaning given to the term 'earned 
26 use 911. 
income' by section 9110t>) (determined with the rule set forth in 
paragraph (3) of section 911(c)). 
"(7) RECAPTURE OF EXCESS HOUSING DEDUCTIONS ATTRIBUTABLE 
TO TREATMENT OF AFTER-RECEIVED COMPENSATION.— 
"(A) IN GENERAL.—There shall be included in the gross 
income of the individual for the taxable year in which any 
after-received compensation is received an amount equal to 
any excess housing deduction determined for such year. 
"(B) EXCESS HOUSING DEDUCTION.—For purposes of subpar-
agraph (A), the excess housing deduction determined for any 
taxable year is the excess (if any) of^ 
"(i) the aggregate amount which has been allowed £is a 
housing deduction (for such taxable year and all prior 
taxable years), over 
"(ii) the aggregate amount which would have been 
allowable as a housing deduction (for such taxable year 
and all prior taxable years for which a housing deduc-
tion has been allowed), by taking after-received compen-
sation into account under this subsection as if it had 
been received in the taxable year in which the services 
were performed. 
In applying the preceding sentence to any taxable year, 
proper adjustment shall be made for the effect of appl5dng 
such sentence for purposes of all prior taxable years. 
"(C) TREATMENT OP AMOUNT INCLUDED IN INCOME.—Any 
amount included in gross income under subparagraph (A) 
shall not be treated as income for purposes of appl3dng 
subsection (c) of this section. 
"(D) DEFINITIONS.—For purposes of this paragraph— 
"(i) HOUSING DEDUCTION.—The t^rm 'housing deduc-
tion' means that portion of the deduction allowable 
under subsection (a) for any taxable year which is 
attributable to qualified housing expenses. For such 
purpose, qualified housing expenses shall be taken into 
account after all other amounts described in subsection 
(b). 
"(ii) 
AFTER-RECEIVED 
COMPENSATION.—The 
term 
'after-received 
compensation' 
means 
compensation 
received by an individual in a taxable year which is 
attributable to services performed by such individual in 
the third preceding, second preceding, or first preceding 
taxable year." 
26 use 911. 
(C) CLERICAL AMENDMENT.—Paragraph (2) of section 911(a) 
(relating to income earned by individuals in certain camps) 
is amended by striking out "qualified foreign" and inserting 
in lieu thereof "a foreign country or". 
(D) AMENDMENT OF LAST SENTENCE OP SECTION 911(a).— 
The last sentence of section 911(a) (relating to income earned 
by individuals in certain camps) is amended— 
(i) by inserting "any deduction," after "his gross 
income", and 
(ii) by striking out "deductions allowed by sections 
26 use 217. 
217" and inserting in lieu thereof "deduction allowed by 
section 217". 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 225 
(E) AMENDMENT OF SECTION 3(b).—Paragraph (1) of section 26 use 3. 
3(b) is amended by redesignating subparagraphs (B) and (C) 
£is subparagraphs (A) and (B), respectively. 
(F) QUALIFIED HOME LEAVE TRAVEL EXPENSES.— 
(i) Subsection (g) of section 913 (relating to qualified 26 USC 913. 
home leave travel expenses) is amended to read as 
follows: 
"(g) QuAUFiED HOME LEAVE TRAVEL EXPENSES.— 
"(1) IN GENERAL.—For purposes of this section, the term 
'qualified home leave travel expenses' means the reasonable 
amounts paid or incurred by or on behalf of £in individual for the 
transportation of such individual, his spouse, and each 
dependent— 
"(A) from a point of outside the United States to the 
individual's principal domestic residence, and 
"(B) from the individual's principal domestic residence to 
a point outside the United States. 
"(2) LIMITATION TO COST BETWEEN TAX HOME AND PLACE OF 
RESIDENCE.—The amount taken into account under subpara-
graph (A) or (B) of paragraph (1) with respect to any transporta-
tion shall not exceed the reasonable amount for transportation 
between the location of the individual's tax home outside the 
United States and the individual's principal domestic residence. 
"(3) SUBSTITUTION OF NEAREST PORT OF ENTRY IN CERTAIN 
CASES.—With respect to any person whose travel in the United 
States is not travel to and from the individual's principal 
domestic residence, paragraphs (1) and (2) shall be applied by 
substituting the nearest port of entry in the United States for the 
individual's principal domestic residence. 
"(4) NEAREST PORT OF ENTRY.—For purposes of paragraph (3), 
the nearest port of entry in the United States shall not include a 
nearest port of entry located in Alaska or Hawaii unless the 
individual elects to have such port of entry taken into account. 
"(5) PRINCIPAL DOMESTIC RESIDENCE DEFINED.—For purposes of 
this subsection, an individual's principal domestic residence is 
the location of such individual's present (or, if none, most recent) 
principal residence in the United States. 
"(6) 1 ROUND TRIP PER 12-MONTH PERIOD ABROAD.—Amounts 
may be taken into account under paragraph (4) of subsection (b) 
only with respect to 1 trip to the United States, and 1 trip from 
the United States, per person for each continuous period of 12 
months for which the individual's tax home is in a foreign 
country." 
(ii) Clause (ii) of section 913(i)G)(C) (relating to quali-
fied second household) is amended by striking out , and 
paragraph (1) of subsection (g)," and inserting in lieu 
thereof , and subsection (g),". 
(G) AMENDMENT OF SECTION II9.—Subsection (a) of section 26 use 119. 
119 (as in effect on the day before the date of the enactment 
of the Foreign Earned Income Act of 1978) is amended by 26 use i note, 
striking out (a) GENERAL RULE.—". 
(2) EFFECTIVE DATES.— 
26 use 3 note. 
(A) IN GENERAL.—Except as provided in subparagraph (B), 
the amendments made by paragraph (1) shall take effect as if 
included in the Foreign Earned Income Act of 1978. 
(B) PARAGRAPH (IXE).—The amendment made by para-
graph (1)(E) shall apply to taxable years beginning aiter 
December 31,1978. 
94 STAT. 226 
PUBLIC LAW 96-222—APR. 1, 1980 
(b) AMENDMENTS RELATED TO THE BLACK LUNG BENEFITS REVENUE 
26 u s e 1 note. 
ACT.— 
(1) 
CORRECTION OF 
PROVISIONS RELATED TO TAX COURT 
JURISDICTION.— 
26 use 6503. 
(A) Subsection (g) of section 6503 is amended— 
(i) by striking out "4971, 4975, 4985, or 4986" and 
inserting in lieu thereof "4951, 4952, 4971, or 4975", and 
(ii) by striking out "4971(c)(3), 4975(f)(6), 4985(e)(4), or 
4986(e)(2)" and inserting in lieu thereof "4951(e)(4), 
4952(e)(2), 4971(c)(3), or 4975(f)(6)". 
26 use 6511. 
(B) Subsection (f) of section 6511 is amended— 
(i) by inserting "or section 4975" after "chapter 42", 
and 
(ii) by striking out "CHAPTER 42" in the subsection 
heading and inserting in lieu thereof "CHAPTER 42 AND 
CERTAIN CHAPTER 43". 
26 use 6862. 
(Q) Section 6862 is amended by striking out "certain excise 
taxes" and inserting in lieu thereof "the taxes imposed by 
chapters 41,42,43, and 44". 
26 use 7422. 
(])) Subsection (g) of section 7422 is amended by striking 
out "4944, 4945" each place it appears and inserting in lieu 
thereof "4944,4945,4951,4952". 
(E) Paragraph (1) of section 7422(g) is amended by striking 
out "section 4945(a) (relating to initial taxes on taxable 
expenditures)" and inserting in lieu thereof "section 4945(a) 
(relating to initial taxes on taxable expenditures), section 
4951(a) (relating to initial taxes on self-dealing), 4952(a) 
(relating to initial taxes on taxable expenditures)". 
(F) Subsection (g) of section 7422 is amended by striking 
out "section 4945(b) (relating to additional taxes on taxable 
expenditures)" and inserting in lieu thereof "section 4945(b) 
(relating to additional taxes on taxable expenditures), sec-
tion 4951(b) (relating to additional taxes on self-dealing), 
4952(b) 
(relating 
to 
additional 
taxes 
on 
taxable 
expenditures)". 
(2) CORRECTION OF REFERENCES TO 1969 ACT.— 
(A) Subsections Q)), (c)(1), and (d) of section 3 of the Black 
92 Stat. 12. 
Lung Benefits Revenue Act of 1977 are each amended by 
30 use 934, 
striking out "Federal Coal Mine Health and Safety Act of 
30 use 801 note 
1969" each place it appears and inserting in lieu thereof 
30 use 801 note. 
"Federal Mine Safety and Health Act of 1977". 
26 use 501,192. 
(B) Sections 501(c)(21) and 192(e) are each amended by 
striking out "Federal Coal Mine Health and Safety Act of 
1969" and inserting in lieu thereof "Federal Mine Safety and 
Health Act of 1977". 
(3) CLERICAL AMENDMENTS.— 
(A) Paragraph (1) of section 3(c) of the Black Lung Benefits 
92 Stat. 12. 
Revenue Act of 1977 is amended by striking out "subsection 
30 use 934a. 
(a)(4)" and inserting in lieu thereof "subsection (a)(5)". 
26 use 7454. 
(B) Subsection (b) of section 7454 is amended by striking 
out "section 502(c)(21)" and inserting in lieu thereof "section 
501(c)(21)". 
26 use 192 note. 
(4) EFFECTIVE DATE.—Any amendment made by this subsection 
shall take effect as if included in the provision of the Black Lung 
26 use 1 note. 
Benefits Revenue Act of 1977 to which such amendment relates. 
26 u s e 1 note. 
(c) AMENDMENTS RELATED TO ENERGY T A X A C T OF 1978.— 
(1) REPAYMENT OF TAX ON GASOLINE USED IN COMMERCIAL 
26 use 6421. 
FISHERIES.—Subparagraph (B) of section 6421(d)(2) (defining 
PUBLIC LAW 96-222—APR. 1, 1980 
94 STAT. 227 
qualified business use) is amended by adding at the end thereof 
the following new sentence: "The preceding sentence shall not 
apply to use in a vessel employed in the fisheries or in the 
whaling business." 
(2) TIRES USED IN MANUFACTURE OF BUSES.— 
(A) Subparagraph (C) of section 6416(b)(3) (relating to tax- 26 use 6416. 
paid articles used for further manufacture, etc.) is amended 
by striking out "such other article is" and all that follows 
and inserting in lieu thereof the following: 
"such other article is— 
"(i) an automobile bus chassis or an automobile bus 
body, or 
"(ii) by any person exported, sold to a State or local 
government for the exclusive use of a State or local 
government, sold to a nonprofit educational organiza-
tion for its exclusive use, or used or sold for use as 
supplies for vessels or aircraft;". 
(B) Subparagraph (B) of section 6416(b)(4) (relating to tires 
and inner tubes) is amended to read as follows: 
"(B) such other article is— 
"(i) an automobile bus chassis or an automobile bus 
body, or 
"(ii) by any person exported, sold to a State or local 
government for the exclusive use of a State or local 
government, sold to a nonprofit educational organiza-
tion for its exclusive use, or used or sold for use as 
supplies for vessels or aircraft,". 
(C) Subsection (e) of section 4071 (relating to tires on 26 use 4071. 
imported articles) is amended by striking out "under section 
4061" and inserting in lieu thereof "under section 4061 or if 26 use 406i. 
such article is an automobile bus chassis or an automobile 
bus body". 
(3) REFUND OF TAX ON LUBRICATING OIL USED IN PRODUCING 
REREFiNED OIL.—Paragraph (2) of section 6416(b) (relating to 26 use 6416. 
credit or refund for certain uses) is amended by striking out or" 
at the end of subparagraph (L), by striking out the period at the 
end of subparagraph QA) and inserting in lieu thereof "; or", and 
by inserting after subparagraph (M) the following: 
"(N) in the case of lubricating oil taxable under section 
4091 which is contained in a mixture which is rerefined oil 26 use 409i. 
(as defined in section 4093(b)(3)), used or sold. 
26 use 4093. 
The amount of the credit or refund under subparagraph (N) with 
respect to any lubricating oil shall be the amount which would be 
exempt from tax under section 4093," 
(4) CREDIT OR REFUND OF TAX ON TRUCK CHASSIS OR BODY USED IN 
THE MANUFACTURE OF A BUS.—Subparagraph (A) of section 
641603)(3) (relating to tax-paid articles used for further manufac-
ture, etc.) is amended by striking out "component part of," and 
all that follows and inserting in lieu thereof the following: 
"component part of— 
"(i) another article taxable under chapter 32, or 
26 use 406i et 
"(ii) an automobile bus chassis or an automobile bus body, ^^^ 
manufactured or produced by him;". 
(5) Section 4221(e)(6) (relating to bus parts and accessories) is 26 use 4221. 
amended to read as follows: 
"(6) Bus PARTS AND ACCESSORIES.—Under regulations pre-
scribed by the Secretary, the tax imposed by section 4061(b) shall 
not apply to any part or accessory which is sold for use by the 
94 STAT. 228 
PUBLIC LAW 96-222—APR. 1, 1980 
purchaser on or in connection with an automobile bus, or is to be 
resold by the purchaser or a second purchaser for such use." 
(6) CLERICAL AMENDMENT.—The last sentence of section 
26 use 48. 
48(aX10)(B) is amended by striking out "51" and inserting in lieu 
thereof "5". 
26 use 48 note. 
(7) EFFECTIVE DATE.—Any amendment made by this subsection 
shall take effect as if included in the provision of the Energy Tax 
26 use 1 note. 
Act of 1978 to which such amendment relates; except that the 
amendment made by paragraph (6) shall take effect on the first 
day of the first calendar month which begins more than 10 days 
after the date of 
the enactment of this Act. 
92 Stat. 1332. 
(d) AMENDMENTS RELATED TO PUBUC L A W 95-472.—Subsection (c) 
26 use 6324B. 
of section 6324B (relating to special lien for additional estate tax 
attributable to farm, etc., valuation) is amended to read £is follows: 
"(c) CERTAIN RULES AND DEFINITIONS MADE APPUCABLE.— 
"(1) IN GENERAL.—The rule set forth in paragraphs (1), (3), and 
(4) of section 6324A(d) shall apply with respect to the lien 
imposed by this section as if it were a lien imposed by section 
6324A. 
"(2) QUALIFIED REAL PROPERTY.—For purposes of this section, 
the term 'qualified real property' includes qualified replacement 
property (within the meaning of section 2032A(h)(3)(B))." 
TITLE II—GENERAL EFFECTIVE DATE 
26 u s e 43 note. 
SEC, 201. GENERAL EFFECTIVE DATE. 
Except as otherwise provided in title I, any amendment made by 
title I shall take effect as if it had been included in the provision of the 
26 use 1 note. 
Revenue Act of 1978 to which such amendment relates. 
Approved April 1, 1980. 
LEGISLATIVE HISTORY: 
HOUSE REPORT No. 96-250 (Comm. on Ways and Means). 
SENATE REPORT No. 96-498 (Comm. on Finance). 
C O N G R E S S I O N A L RECORD: 
Vol. 125 (1979): July 16, considered and passed House. 
Vol. 126 (1980): Feb. 26, considered and passed Senate, amended. 
Feb. 28, House concurred in certain Senate amendments and 
disagreed to Senate amendment No. 67. 
Mar. 18, Senate receded from its amendment No. 67 and offered 
another amendment to the House bill. 
Mar. 19, House concurred in Senate amendment.