-CITE- 26 USC CHAPTER 1 - NORMAL TAXES AND SURTAXES 01/03/2007 -EXPCITE- TITLE 26 - INTERNAL REVENUE CODE Subtitle A - Income Taxes CHAPTER 1 - NORMAL TAXES AND SURTAXES -HEAD- CHAPTER 1 - NORMAL TAXES AND SURTAXES -MISC1- Subchapter Sec.(!1) A. Determination of tax liability 1 B. Computation of taxable income 61 C. Corporate distributions and adjustments 301 D. Deferred compensation, etc. 401 E. Accounting periods and methods of accounting 441 F. Exempt organizations 501 G. Corporations used to avoid income tax on shareholders 531 H. Banking institutions 581 I. Natural resources 611 J. Estates, trusts, beneficiaries, and decedents 641 K. Partners and partnerships 701 L. Insurance companies 801 M. Regulated investment companies and real estate investment trusts 851 N. Tax based on income from sources within or without the United States 861 O. Gain or loss on disposition of property 1001 P. Capital gains and losses 1201 Q. Readjustment of tax between years and special limitations 1301 S. Tax treatment of S corporations and their shareholders 1361 R.(!2) Election to determine corporate tax on certain international shipping activities using per ton rate 1352 T. Cooperatives and their patrons 1381 U. Designation and treatment of empowerment zones, enterprise communities, and rural development investment areas 1391 V. Title 11 cases 1398 W. District of Columbia Enterprise Zone 1400 X. Renewal Communities 1400E Y. Short-Term Regional Benefits 1400L AMENDMENTS 2005 - Pub. L. 109-135, title I, Sec. 101(b)(4), Dec. 21, 2005, 119 Stat. 2593, substituted "Short-Term Regional Benefits" for "New York Liberty Zone Benefits" in subchapter Y. 2004 - Pub. L. 108-357, title II, Sec. 248(b)(2), Oct. 22, 2004, 118 Stat. 1457, added subchapter R. 2002 - Pub. L. 107-147, title III, Sec. 301(c), Mar. 9, 2002, 116 Stat. 40, added subchapter Y. 2000 - Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 101(d)], Dec. 21, 2000, 114 Stat. 2763, 2763A-600, added subchapter X. 1997 - Pub. L. 105-34, title VII, Sec. 701(c), Aug. 5, 1997, 111 Stat. 869, added subchapter W. 1993 - Pub. L. 103-66, title XIII, Sec. 13301(b), Aug. 10, 1993, 107 Stat. 555, added subchapter U. 1986 - Pub. L. 99-514, title XIII, Sec. 1303(c)(1), Oct. 22, 1986, 100 Stat. 2658, struck out subchapter U "General stock ownership plans". 1982 - Pub. L. 97-354, Sec. 5(b), Oct. 19, 1982, 96 Stat. 1697, substituted in subchapter S "Tax treatment of S corporations and their shareholders" for "Election of certain small business corporations as to taxable status". 1980 - Pub. L. 96-589, Sec. 3(a)(2), Dec. 24, 1980, 94 Stat. 3400, added subchapter V. 1978 - Pub. L. 95-600, title VI, Sec. 601(c)(1), Nov. 6, 1978, 92 Stat. 2897, added subchapter U. 1966 - Pub. L. 89-389, Sec. 4(b)(2), Apr. 14, 1966, 80 Stat. 116, struck out subchapter R effective January 1, 1969. 1962 - Pub. L. 87-834, Sec. 17(b)(4), Oct. 16, 1962, 76 Stat. 1051, added subchapter T. 1960 - Pub. L. 86-779, Sec. 10(c), Sept. 14, 1960, 74 Stat. 1009, added to subchapter M heading "and real estate investment trusts". 1958 - Pub. L. 85-866, title I, Sec. 64(d)(1), Sept. 2, 1958, 72 Stat. 1656, added subchapter S. -FOOTNOTE- (!1) Section numbers editorially supplied. (!2) So in original. Probably should follow item for subchapter Q. -End- -CITE- 26 USC Subchapter A - Determination of Tax Liability 01/03/2007 -EXPCITE- TITLE 26 - INTERNAL REVENUE CODE Subtitle A - Income Taxes CHAPTER 1 - NORMAL TAXES AND SURTAXES Subchapter A - Determination of Tax Liability -HEAD- SUBCHAPTER A - DETERMINATION OF TAX LIABILITY -MISC1- Part I. Tax on individuals. II. Tax on corporations. III. Changes in rates during a taxable year. IV. Credits against tax. [V. Repealed.] VI. Minimum tax for tax preferences.(!1) VII. Environmental tax. [VIII. Repealed.] AMENDMENTS 1989 - Pub. L. 101-234, title I, Sec. 102(a), Dec. 13, 1989, 103 Stat. 1980, repealed Pub. L. 100-360, Sec. 111, and provided that the provisions of law amended by such section are restored or revived as if such section had not been enacted, see 1988 Amendment note below. 1988 - Pub. L. 100-360, title I, Sec. 111(c), July 1, 1988, 102 Stat. 697, added part VIII "Supplemental medicare premium". 1986 - Pub. L. 99-499, title V, Sec. 516(b)(5), Oct. 17, 1986, 100 Stat. 1771, added part VII. 1976 - Pub. L. 94-455, title XIX, Sec. 1901(b)(2), Oct. 4, 1976, 90 Stat. 1792, struck out part V "Tax surcharge". 1969 - Pub. L. 91-172, title III, Sec. 301(b)(1), Dec. 30, 1969, 83 Stat. 585, added part VI. 1968 - Pub. L. 90-364, title I, Sec. 102(d), June 28, 1968, 82 Stat. 259, added part V. -FOOTNOTE- (!1) Part heading amended by Pub. L. 99-514 without corresponding amendment of analysis. -End- -CITE- 26 USC PART I - TAX ON INDIVIDUALS 01/03/2007 -EXPCITE- TITLE 26 - INTERNAL REVENUE CODE Subtitle A - Income Taxes CHAPTER 1 - NORMAL TAXES AND SURTAXES Subchapter A - Determination of Tax Liability PART I - TAX ON INDIVIDUALS -HEAD- PART I - TAX ON INDIVIDUALS -MISC1- Sec. 1. Tax imposed. 2. Definitions and special rules. 3. Tax tables for individuals having taxable income of less than $20,000.(!1) [4. Repealed.] 5. Cross references relating to tax on individuals. AMENDMENTS 1976 - Pub. L. 94-455, title V, Sec. 501(c)(1), Oct. 4, 1976, 90 Stat. 1559, substituted "Tax tables for individuals having taxable income of less than $20,000" for "Optional tax tables for individuals" in item 3 and struck out item 4 relating to rules for optional tax. 1969 - Pub. L. 91-172, title VIII, Sec. 803(d)(9), Dec. 30, 1969, 83 Stat. 685, substituted "Definitions and special rules" and "Optional tax tables for individuals" for "Tax in case of joint return or return of surviving spouse" and "Optional tax if adjusted gross income is less than $5,000" in items 2 and 3, respectively. -FOOTNOTE- (!1) Section catchline amended by Pub. L. 95-30 without corresponding amendment of analysis. -End- -CITE- 26 USC Sec. 1 01/03/2007 -EXPCITE- TITLE 26 - INTERNAL REVENUE CODE Subtitle A - Income Taxes CHAPTER 1 - NORMAL TAXES AND SURTAXES Subchapter A - Determination of Tax Liability PART I - TAX ON INDIVIDUALS -HEAD- Sec. 1. Tax imposed -STATUTE- (a) Married individuals filing joint returns and surviving spouses There is hereby imposed on the taxable income of - (1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and (2) every surviving spouse (as defined in section 2(a)), a tax determined in accordance with the following table: If taxable income is: The tax is: -------------------------------------------------------------------- Not over $36,900 15% of taxable income. Over $36,900 but not over $5,535, plus 28% of the excess over $89,150 $36,900. Over $89,150 but not over $20,165, plus 31% of the excess $140,000 over $89,150. Over $140,000 but not $35,928.50, plus 36% of the excess over $250,000 over $140,000. Over $250,000 $75,528.50, plus 39.6% of the excess over $250,000. -------------------------------------------------------------------- (b) Heads of households There is hereby imposed on the taxable income of every head of a household (as defined in section 2(b)) a tax determined in accordance with the following table: If taxable income is: The tax is: -------------------------------------------------------------------- Not over $29,600 15% of taxable income. Over $29,600 but not over $4,440, plus 28% of the excess over $76,400 $29,600. Over $76,400 but not over $17,544, plus 31% of the excess $127,500 over $76,400. Over $127,500 but not $33,385, plus 36% of the excess over $250,000 over $127,500. Over $250,000 $77,485, plus 39.6% of the excess over $250,000. -------------------------------------------------------------------- (c) Unmarried individuals (other than surviving spouses and heads of households) There is hereby imposed on the taxable income of every individual (other than a surviving spouse as defined in section 2(a) or the head of a household as defined in section 2(b)) who is not a married individual (as defined in section 7703) a tax determined in accordance with the following table: If taxable income is: The tax is: -------------------------------------------------------------------- Not over $22,100 15% of taxable income. Over $22,100 but not over $3,315, plus 28% of the excess over $53,500 $22,100. Over $53,500 but not over $12,107, plus 31% of the excess $115,000 over $53,500. Over $115,000 but not $31,172, plus 36% of the excess over $250,000 over $115,000. Over $250,000 $79,772, plus 39.6% of the excess over $250,000. -------------------------------------------------------------------- (d) Married individuals filing separate returns There is hereby imposed on the taxable income of every married individual (as defined in section 7703) who does not make a single return jointly with his spouse under section 6013, a tax determined in accordance with the following table: If taxable income is: The tax is: -------------------------------------------------------------------- Not over $18,450 15% of taxable income. Over $18,450 but not over $2,767.50, plus 28% of the excess $44,575 over $18,450. Over $44,575 but not over $10,082.50, plus 31% of the excess $70,000 over $44,575. Over $70,000 but not over $17,964.25, plus 36% of the excess $125,000 over $70,000. Over $125,000 $37,764.25, plus 39.6% of the excess over $125,000. -------------------------------------------------------------------- (e) Estates and trusts There is hereby imposed on the taxable income of - (1) every estate, and (2) every trust, taxable under this subsection a tax determined in accordance with the following table: If taxable income is: The tax is: -------------------------------------------------------------------- Not over $1,500 15% of taxable income. Over $1,500 but not over $225, plus 28% of the excess over $3,500 $1,500. Over $3,500 but not over $785, plus 31% of the excess over $5,500 $3,500. Over $5,500 but not over $1,405, plus 36% of the excess over $7,500 $5,500. Over $7,500 $2,125, plus 39.6% of the excess over $7,500. -------------------------------------------------------------------- (f) Phaseout of marriage penalty in 15-percent bracket; adjustments in tax tables so that inflation will not result in tax increases (1) In general Not later than December 15 of 1993, and each subsequent calendar year, the Secretary shall prescribe tables which shall apply in lieu of the tables contained in subsections (a), (b), (c), (d), and (e) with respect to taxable years beginning in the succeeding calendar year. (2) Method of prescribing tables The table which under paragraph (1) is to apply in lieu of the table contained in subsection (a), (b), (c), (d), or (e), as the case may be, with respect to taxable years beginning in any calendar year shall be prescribed - (A) except as provided in paragraph (8), by increasing the minimum and maximum dollar amounts for each rate bracket for which a tax is imposed under such table by the cost-of-living adjustment for such calendar year, (B) by not changing the rate applicable to any rate bracket as adjusted under subparagraph (A), and (C) by adjusting the amounts setting forth the tax to the extent necessary to reflect the adjustments in the rate brackets. (3) Cost-of-living adjustment For purposes of paragraph (2), the cost-of-living adjustment for any calendar year is the percentage (if any) by which - (A) the CPI for the preceding calendar year, exceeds (B) the CPI for the calendar year 1992. (4) CPI for any calendar year For purposes of paragraph (3), the CPI for any calendar year is the average of the Consumer Price Index as of the close of the 12- month period ending on August 31 of such calendar year. (5) Consumer Price Index For purposes of paragraph (4), the term "Consumer Price Index" means the last Consumer Price Index for all-urban consumers published by the Department of Labor. For purposes of the preceding sentence, the revision of the Consumer Price Index which is most consistent with the Consumer Price Index for calendar year 1986 shall be used. (6) Rounding (A) In general If any increase determined under paragraph (2)(A), section 63(c)(4), section 68(b)(2) or section 151(d)(4) is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50. (B) Table for married individuals filing separately In the case of a married individual filing a separate return, subparagraph (A) (other than with respect to sections 63(c)(4) and 151(d)(4)(A)) shall be applied by substituting "$25" for "$50" each place it appears. (7) Special rule for certain brackets (A) Calendar year 1994 In prescribing the tables under paragraph (1) which apply with respect to taxable years beginning in calendar year 1994, the Secretary shall make no adjustment to the dollar amounts at which the 36 percent rate bracket begins or at which the 39.6 percent rate begins under any table contained in subsection (a), (b), (c), (d), or (e). (B) Later calendar years In prescribing tables under paragraph (1) which apply with respect to taxable years beginning in a calendar year after 1994, the cost-of-living adjustment used in making adjustments to the dollar amounts referred to in subparagraph (A) shall be determined under paragraph (3) by substituting "1993" for "1992". (8) Elimination of marriage penalty in 15-percent bracket With respect to taxable years beginning after December 31, 2003, in prescribing the tables under paragraph (1) - (A) the maximum taxable income in the 15-percent rate bracket in the table contained in subsection (a) (and the minimum taxable income in the next higher taxable income bracket in such table) shall be 200 percent of the maximum taxable income in the 15-percent rate bracket in the table contained in subsection (c) (after any other adjustment under this subsection), and (B) the comparable taxable income amounts in the table contained in subsection (d) shall be 1/2 of the amounts determined under subparagraph (A). (g) Certain unearned income of minor children taxed as if parent's income (1) In general In the case of any child to whom this subsection applies, the tax imposed by this section shall be equal to the greater of - (A) the tax imposed by this section without regard to this subsection, or (B) the sum of - (i) the tax which would be imposed by this section if the taxable income of such child for the taxable year were reduced by the net unearned income of such child, plus (ii) such child's share of the allocable parental tax. (2) Child to whom subsection applies This subsection shall apply to any child for any taxable year if - (A) such child has not attained age 18 before the close of the taxable year, (B) either parent of such child is alive at the close of the taxable year, and (C) such child does not file a joint return for the taxable year. (3) Allocable parental tax For purposes of this subsection - (A) In general The term "allocable parental tax" means the excess of - (i) the tax which would be imposed by this section on the parent's taxable income if such income included the net unearned income of all children of the parent to whom this subsection applies, over (ii) the tax imposed by this section on the parent without regard to this subsection. For purposes of clause (i), net unearned income of all children of the parent shall not be taken into account in computing any exclusion, deduction, or credit of the parent. (B) Child's share A child's share of any allocable parental tax of a parent shall be equal to an amount which bears the same ratio to the total allocable parental tax as the child's net unearned income bears to the aggregate net unearned income of all children of such parent to whom this subsection applies. (C) Special rule where parent has different taxable year Except as provided in regulations, if the parent does not have the same taxable year as the child, the allocable parental tax shall be determined on the basis of the taxable year of the parent ending in the child's taxable year. (4) Net unearned income For purposes of this subsection - (A) In general The term "net unearned income" means the excess of - (i) the portion of the adjusted gross income for the taxable year which is not attributable to earned income (as defined in section 911(d)(2)), over (ii) the sum of - (I) the amount in effect for the taxable year under section 63(c)(5)(A) (relating to limitation on standard deduction in the case of certain dependents), plus (II) the greater of the amount described in subclause (I) or, if the child itemizes his deductions for the taxable year, the amount of the itemized deductions allowed by this chapter for the taxable year which are directly connected with the production of the portion of adjusted gross income referred to in clause (i). (B) Limitation based on taxable income The amount of the net unearned income for any taxable year shall not exceed the individual's taxable income for such taxable year. (C) Treatment of distributions from qualified disability trusts For purposes of this subsection, in the case of any child who is a beneficiary of a qualified disability trust (as defined in section 642(b)(2)(C)(ii)), any amount included in the income of such child under sections 652 and 662 during a taxable year shall be considered earned income of such child for such taxable year. (5) Special rules for determining parent to whom subsection applies For purposes of this subsection, the parent whose taxable income shall be taken into account shall be - (A) in the case of parents who are not married (within the meaning of section 7703), the custodial parent (within the meaning of section 152(e)) of the child, and (B) in the case of married individuals filing separately, the individual with the greater taxable income. (6) Providing of parent's TIN The parent of any child to whom this subsection applies for any taxable year shall provide the TIN of such parent to such child and such child shall include such TIN on the child's return of tax imposed by this section for such taxable year. (7) Election to claim certain unearned income of child on parent's return (A) In general If - (i) any child to whom this subsection applies has gross income for the taxable year only from interest and dividends (including Alaska Permanent Fund dividends), (ii) such gross income is more than the amount described in paragraph (4)(A)(ii)(I) and less than 10 times the amount so described, (iii) no estimated tax payments for such year are made in the name and TIN of such child, and no amount has been deducted and withheld under section 3406, and (iv) the parent of such child (as determined under paragraph (5)) elects the application of subparagraph (B), such child shall be treated (other than for purposes of this paragraph) as having no gross income for such year and shall not be required to file a return under section 6012. (B) Income included on parent's return In the case of a parent making the election under this paragraph - (i) the gross income of each child to whom such election applies (to the extent the gross income of such child exceeds twice the amount described in paragraph (4)(A)(ii)(I)) shall be included in such parent's gross income for the taxable year, (ii) the tax imposed by this section for such year with respect to such parent shall be the amount equal to the sum of - (I) the amount determined under this section after the application of clause (i), plus (II) for each such child, 10 percent of the lesser of the amount described in paragraph (4)(A)(ii)(I) or the excess of the gross income of such child over the amount so described, and (iii) any interest which is an item of tax preference under section 57(a)(5) of the child shall be treated as an item of tax preference of such parent (and not of such child). (C) Regulations The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this paragraph. (h) Maximum capital gains rate (1) In general If a taxpayer has a net capital gain for any taxable year, the tax imposed by this section for such taxable year shall not exceed the sum of - (A) a tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of - (i) taxable income reduced by the net capital gain; or (ii) the lesser of - (I) the amount of taxable income taxed at a rate below 25 percent; or (II) taxable income reduced by the adjusted net capital gain; (B) 5 percent (0 percent in the case of taxable years beginning after 2007) of so much of the adjusted net capital gain (or, if less, taxable income) as does not exceed the excess (if any) of - (i) the amount of taxable income which would (without regard to this paragraph) be taxed at a rate below 25 percent, over (ii) the taxable income reduced by the adjusted net capital gain; (C) 15 percent of the adjusted net capital gain (or, if less, taxable income) in excess of the amount on which a tax is determined under subparagraph (B); (D) 25 percent of the excess (if any) of - (i) the unrecaptured section 1250 gain (or, if less, the net capital gain (determined without regard to paragraph (11))), over (ii) the excess (if any) of - (I) the sum of the amount on which tax is determined under subparagraph (A) plus the net capital gain, over (II) taxable income; and (E) 28 percent of the amount of taxable income in excess of the sum of the amounts on which tax is determined under the preceding subparagraphs of this paragraph. (2) Net capital gain taken into account as investment income For purposes of this subsection, the net capital gain for any taxable year shall be reduced (but not below zero) by the amount which the taxpayer takes into account as investment income under section 163(d)(4)(B)(iii). (3) Adjusted net capital gain For purposes of this subsection, the term "adjusted net capital gain" means the sum of - (A) net capital gain (determined without regard to paragraph (11)) reduced (but not below zero) by the sum of - (i) unrecaptured section 1250 gain, and (ii) 28-percent rate gain, plus (B) qualified dividend income (as defined in paragraph (11)). (4) 28-percent rate gain For purposes of this subsection, the term "28-percent rate gain" means the excess (if any) of - (A) the sum of - (i) collectibles gain; and (ii) section 1202 gain, over (B) the sum of - (i) collectibles loss; (ii) the net short-term capital loss; and (iii) the amount of long-term capital loss carried under section 1212(b)(1)(B) to the taxable year. (5) Collectibles gain and loss For purposes of this subsection - (A) In general The terms "collectibles gain" and "collectibles loss" mean gain or loss (respectively) from the sale or exchange of a collectible (as defined in section 408(m) without regard to paragraph (3) thereof) which is a capital asset held for more than 1 year but only to the extent such gain is taken into account in computing gross income and such loss is taken into account in computing taxable income. (B) Partnerships, etc. For purposes of subparagraph (A), any gain from the sale of an interest in a partnership, S corporation, or trust which is attributable to unrealized appreciation in the value of collectibles shall be treated as gain from the sale or exchange of a collectible. Rules similar to the rules of section 751 shall apply for purposes of the preceding sentence. (6) Unrecaptured section 1250 gain For purposes of this subsection - (A) In general The term "unrecaptured section 1250 gain" means the excess (if any) of - (i) the amount of long-term capital gain (not otherwise treated as ordinary income) which would be treated as ordinary income if section 1250(b)(1) included all depreciation and the applicable percentage under section 1250(a) were 100 percent, over (ii) the excess (if any) of - (I) the amount described in paragraph (4)(B); over (II) the amount described in paragraph (4)(A). (B) Limitation with respect to section 1231 property The amount described in subparagraph (A)(i) from sales, exchanges, and conversions described in section 1231(a)(3)(A) for any taxable year shall not exceed the net section 1231 gain (as defined in section 1231(c)(3)) for such year. (7) Section 1202 gain For purposes of this subsection, the term "section 1202 gain" means the excess of - (A) the gain which would be excluded from gross income under section 1202 but for the percentage limitation in section 1202(a), over (B) the gain excluded from gross income under section 1202. (8) Coordination with recapture of net ordinary losses under section 1231 If any amount is treated as ordinary income under section 1231(c), such amount shall be allocated among the separate categories of net section 1231 gain (as defined in section 1231(c)(3)) in such manner as the Secretary may by forms or regulations prescribe. (9) Regulations The Secretary may prescribe such regulations as are appropriate (including regulations requiring reporting) to apply this subsection in the case of sales and exchanges by pass-thru entities and of interests in such entities. (10) Pass-thru entity defined For purposes of this subsection, the term "pass-thru entity" means - (A) a regulated investment company; (B) a real estate investment trust; (C) an S corporation; (D) a partnership; (E) an estate or trust; (F) a common trust fund; and (G) a qualified electing fund (as defined in section 1295). (11) Dividends taxed as net capital gain (A) In general For purposes of this subsection, the term "net capital gain" means net capital gain (determined without regard to this paragraph) increased by qualified dividend income. (B) Qualified dividend income For purposes of this paragraph - (i) In general The term "qualified dividend income" means dividends received during the taxable year from - (I) domestic corporations, and (II) qualified foreign corporations. (ii) Certain dividends excluded Such term shall not include - (I) any dividend from a corporation which for the taxable year of the corporation in which the distribution is made, or the preceding taxable year, is a corporation exempt from tax under section 501 or 521, (II) any amount allowed as a deduction under section 591 (relating to deduction for dividends paid by mutual savings banks, etc.), and (III) any dividend described in section 404(k). (iii) Coordination with section 246(c) Such term shall not include any dividend on any share of stock - (I) with respect to which the holding period requirements of section 246(c) are not met (determined by substituting in section 246(c) "60 days" for "45 days" each place it appears and by substituting "121-day period" for "91-day period"), or (II) to the extent that the taxpayer is under an obligation (whether pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. (C) Qualified foreign corporations (i) In general Except as otherwise provided in this paragraph, the term "qualified foreign corporation" means any foreign corporation if - (I) such corporation is incorporated in a possession of the United States, or (II) such corporation is eligible for benefits of a comprehensive income tax treaty with the United States which the Secretary determines is satisfactory for purposes of this paragraph and which includes an exchange of information program. (ii) Dividends on stock readily tradable on United States securities market A foreign corporation not otherwise treated as a qualified foreign corporation under clause (i) shall be so treated with respect to any dividend paid by such corporation if the stock with respect to which such dividend is paid is readily tradable on an established securities market in the United States. (iii) Exclusion of dividends of certain foreign corporations Such term shall not include any foreign corporation which for the taxable year of the corporation in which the dividend was paid, or the preceding taxable year, is a passive foreign investment company (as defined in section 1297). (iv) Coordination with foreign tax credit limitation Rules similar to the rules of section 904(b)(2)(B) shall apply with respect to the dividend rate differential under this paragraph. (D) Special rules (i) Amounts taken into account as investment income Qualified dividend income shall not include any amount which the taxpayer takes into account as investment income under section 163(d)(4)(B). (ii) Extraordinary dividends If a taxpayer to whom this section applies receives, with respect to any share of stock, qualified dividend income from 1 or more dividends which are extraordinary dividends (within the meaning of section 1059(c)), any loss on the sale or exchange of such share shall, to the extent of such dividends, be treated as long-term capital loss. (iii) Treatment of dividends from regulated investment companies and real estate investment trusts A dividend received from a regulated investment company or a real estate investment trust shall be subject to the limitations prescribed in sections 854 and 857. (i) Rate reductions after 2000 (1) 10-percent rate bracket (A) In general In the case of taxable years beginning after December 31, 2000 - (i) the rate of tax under subsections (a), (b), (c), and (d) on taxable income not over the initial bracket amount shall be 10 percent, and (ii) the 15 percent rate of tax shall apply only to taxable income over the initial bracket amount but not over the maximum dollar amount for the 15-percent rate bracket. (B) Initial bracket amount For purposes of this paragraph, the initial bracket amount is - (i) $14,000 in the case of subsection (a), (ii) $10,000 in the case of subsection (b), and (iii) 1/2 the amount applicable under clause (i) (after adjustment, if any, under subparagraph (C)) in the case of subsections (c) and (d). (C) Inflation adjustment In prescribing the tables under subsection (f) which apply with respect to taxable years beginning in calendar years after 2003 - (i) the cost-of-living adjustment shall be determined under subsection (f)(3) by substituting "2002" for "1992" in subparagraph (B) thereof, and (ii) the adjustments under clause (i) shall not apply to the amount referred to in subparagraph (B)(iii). If any amount after adjustment under the preceding sentence is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50. (D) Coordination with acceleration of 10 percent rate bracket benefit for 2001 This paragraph shall not apply to any taxable year to which section 6428 applies. (2) Reductions in rates after June 30, 2001 In the case of taxable years beginning in a calendar year after 2000, the corresponding percentage specified for such calendar year in the following table shall be substituted for the otherwise applicable tax rate in the tables under subsections (a), (b), (c), (d), and (e). The corresponding percentages shall be substituted for the following percentages: 28% 31% 36% 39.6% -------------------------------------------------------------------- 2001 27.5% 30.5% 35.5% 39.1% 2002 27.0% 30.0% 35.0% 38.6% 2003 and thereafter 25.0% 28.0% 33.0% 35.0% -------------------------------------------------------------------- (3) Adjustment of tables The Secretary shall adjust the tables prescribed under subsection (f) to carry out this subsection. -SOURCE- (Aug. 16, 1954, ch. 736, 68A Stat. 5; Pub. L. 88-272, title I, Sec. 111, Feb. 26, 1964, 78 Stat. 19; Pub. L. 89-809, title I, Sec. 103(a)(2), Nov. 13, 1966, 80 Stat. 1550; Pub. L. 91-172, title VIII, Sec. 803(a), Dec. 30, 1969, 83 Stat. 678; Pub. L. 95-30, title I, Sec. 101(a), May 23, 1977, 91 Stat. 127; Pub. L. 95-600, title I, Sec. 101(a), Nov. 6, 1978, 92 Stat. 2767; Pub. L. 97-34, title I, Secs. 101(a), 104(a), Aug. 13, 1981, 95 Stat. 176, 188; Pub. L. 97-448, title I, Sec. 101(a)(3), Jan. 12, 1983, 96 Stat. 2366; Pub. L. 99-514, title I, Sec. 101(a), title III, Sec. 302(a), title XIV, Sec. 1411(a), Oct. 22, 1986, 100 Stat. 2096, 2218, 2714; Pub. L. 100-647, title I, Secs. 1001(a)(3), 1014(e)(1)-(3), (6), (7), title VI, Sec. 6006(a), Nov. 10, 1988, 102 Stat. 3349, 3561, 3562, 3686; Pub. L. 101-239, title VII, Secs. 7811(j)(1), 7816(b), 7831(a), Dec. 19, 1989, 103 Stat. 2411, 2420, 2425; Pub. L. 101- 508, title XI, Secs. 11101(a)-(c), (d)(1)(A), (2), 11103(c), 11104(b), Nov. 5, 1990, 104 Stat. 1388-403 to 1388-406, 1388-408; Pub. L. 103-66, title XIII, Secs. 13201(a), (b)(3)(A), (B), 13202(a), 13206(d)(2), Aug. 10, 1993, 107 Stat. 457, 459, 461, 467; Pub. L. 104-188, title I, Sec. 1704(m)(1), (2), Aug. 20, 1996, 110 Stat. 1882, 1883; Pub. L. 105-34, title III, Sec. 311(a), Aug. 5, 1997, 111 Stat. 831; Pub. L. 105-206, title V, Sec. 5001(a)(1)-(4), title VI, Secs. 6005(d)(1), 6007(f)(1), July 22, 1998, 112 Stat. 787, 788, 800, 810; Pub. L. 105-277, div. J, title IV, Sec. 4002(i)(1), (3), Oct. 21, 1998, 112 Stat. 2681-907, 2681-908; Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 117(b)(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A-604; Pub. L. 107-16, title I, Sec. 101(a), (c)(1), (2), title III, Secs. 301(c)(1), 302(a), (b), June 7, 2001, 115 Stat. 41, 43, 54; Pub. L. 108-27, title I, Secs. 102(a), (b)(1), 104(a), (b), 105(a), title III, Secs. 301(a)(1), (2)(A), (b)(1), 302(a), (e)(1), May 28, 2003, 117 Stat. 754, 755, 758, 760, 763; Pub. L. 108-311, title I, Sec. 101(c), (d), title IV, Secs. 402(a)(1)-(3), 408(a)(1), (2), Oct. 4, 2004, 118 Stat. 1167, 1168, 1184, 1190; Pub. L. 108-357, title IV, Sec. 413(c)(1), Oct. 22, 2004, 118 Stat. 1506; Pub. L. 109-222, title V, Sec. 510(a) - (c), May 17, 2006, 120 Stat. 364.) -STATAMEND- AMENDMENT OF SECTION For termination of amendment by section 105 of Pub. L. 108-311, see Effective and Termination Dates of 2004 Amendments note below. For termination of amendment by sections 107 and 303 of Pub. L. 108-27, see Effective and Termination Dates of 2003 Amendment note below. For termination of amendment by section 901 of Pub. L. 107-16, see Effective and Termination Dates of 2001 Amendment note below. TAX TABLES FOR TAXABLE YEARS BEGINNING IN 2007 Revenue Procedure 2006-53 provided: Section 1. Purpose This revenue procedure sets forth inflation adjusted items for 2007. Section 2. Changes .01 Under Sec. 25B eligible individuals are allowed a credit against tax equal to the applicable percentage of qualified retirement savings contributions of the individual that do not exceed $2,000. Section 833(a) of the Pension Protection Act of 2006, Pub. L. No. 109-280, 120 Stat. 780 (2006) (PPA), added Sec. 25B(b)(3), which provides that the adjusted gross income amounts in Sec. 25B(b) used to determine the applicable percentage for calculating the credit are adjusted for inflation. (See section 3.06 of this revenue procedure.) .02 Section 219(a) allows individuals to deduct qualified retirement contributions for a taxable year. Section 833(b) of the PPA added Sec. 219(g)(8), which provides that the applicable dollar amount under Sec. 219(g)(3) used to determine the amount of reduction for the limitation on deduction for taxpayers who are active participants and for spouses who are not active participants in certain pension plans is adjusted for inflation. (See section 3.21 of this revenue procedure.) .03 Section 408A(c) provides rules for the tax treatment of contributions made to Roth IRAs. Section 833(c) of the PPA added Sec. 408A(c)(3)(C), which provides that the applicable dollar amount under Sec. 408A(c)(3) used to determine the dollar limit, based on modified adjusted gross income, for the contribution limit to Roth IRAs is adjusted for inflation. (See section 3.25 of this revenue procedure.) .04 Q&A 14 of Rev. Proc. 2002-41, 2002-1 C.B. 1098, provides an inflation adjustment method for the hourly rates used to determine the amounts deemed substantiated for payments made by transportation mainline pipeline construction employers under accountable plans. (See section 3.10 of this revenue procedure.) Q&A 14 is modified to read as follows: Q-14. Will the amount deemed substantiated under this revenue procedure be adjusted for inflation? A-14. Yes. For calendar years after 2006, the hourly rate will be adjusted annually for inflation under Sec. 1(f)(3), except that the base year for such adjustment will be calendar year 2002 and any adjustment will be rounded to the nearest dollar. Any adjustment to the rates provided in this revenue procedure will be published annually. Section 3. 2007 Adjusted Items .01 Tax Rate Tables. For taxable years beginning in 2007, the tax rate tables under Sec. 1 are as follows: TABLE 1 - SECTION 1(A). - MARRIED INDIVIDUALS FILING JOINT RETURNS AND SURVIVING SPOUSES -------------------------------------------------------------------- If Taxable Income Is: The Tax Is: -------------------------------------------------------------------- Not Over $15,650 10% of the taxable income Over $15,650 but not over $1,565 plus 15% of the excess over $63,700 $15,650 Over $63,700 but not over $8,772.50 plus 25% of the excess $128,500 over $63,700 Over $128,500 but not over $24,972.50 plus 28% of the excess $195,850 over $128,500 Over $195,850 but not over $43,830.50 plus 33% of the excess $349,700 over $195,850 Over $349,700 $94,601 plus 35% of the excess over $349,700 -------------------------------------------------------------------- TABLE 2 - SECTION 1(B). - HEADS OF HOUSEHOLDS -------------------------------------------------------------------- If Taxable Income Is: The Tax Is: -------------------------------------------------------------------- Not Over $11,200 10% of the taxable income Over $11,200 but not over $1,120 plus 15% of the excess over $42,650 $11,200 Over $42,650 but not over $5,837.50 plus 25% of the excess $110,100 over $42,650 Over $110,100 but not over $22,700 plus 28% of the excess $178,350 over $110,100 Over $178,350 but not over $41,810 plus 33% of the excess $349,700 over $178,350 Over $349,700 $98,355.50 plus 35% of the excess over $349,700 -------------------------------------------------------------------- TABLE 3 - SECTION 1(C). - UNMARRIED INDIVIDUALS (OTHER THAN SURVIVING SPOUSES AND HEADS OF HOUSEHOLDS). -------------------------------------------------------------------- If Taxable Income Is: The Tax Is: -------------------------------------------------------------------- Not Over $7,825 10% of the taxable income Over $7,825 but not over $782.50 plus 15% of the excess $31,850 over $7,825 Over $31,850 but not over $4,386.25 plus 25% of the excess $77,100 over $31,850 Over $77,100 but not over $15,698.75 plus 28% of the excess $160,850 over $77,100 Over $160,850 but not over $39,148.75 plus 33% of the excess $349,700 over $160,850 Over $349,700 $101,469.25 plus 35% of the excess over $349,700 -------------------------------------------------------------------- TABLE 4 - SECTION 1(D). - MARRIED INDIVIDUALS FILING SEPARATE RETURNS -------------------------------------------------------------------- If Taxable Income Is: The Tax Is: -------------------------------------------------------------------- Not Over $7,825 10% of the taxable income Over $7,825 but not over $782.50 plus 15% of the excess $31,850 over $7,825 Over $31,850 but not over $4,386.25 plus 25% of the excess $64,250 over $31,850 Over $64,250 but not over $12,486.25 plus 28% of the excess $97,925 over $64,250 Over $97,925 but not over $21,915.25 plus 33% of the excess $174,850 over $97,925 Over $174,850 $47,300.50 plus 35% of the excess over $174,850 -------------------------------------------------------------------- TABLE 5 - SECTION 1(E). - ESTATES AND TRUSTS -------------------------------------------------------------------- If Taxable Income Is: The Tax Is: -------------------------------------------------------------------- Not Over $2,150 15% of the taxable income Over $2,150 but not over $322.50 plus 25% of the excess $5,000 over $2,150 Over $5,000 but not over $1,035 plus 28% of the excess over $7,650 $5,000 Over $7,650 but not over $1,777 plus 33% of the excess over $10,450 $7,650 Over $10,450 $2,701 plus 35% of the excess over $10,450 -------------------------------------------------------------------- .02 Unearned Income of Minor Children Taxed as if Parent's Income (the "Kiddie Tax"). For taxable years beginning in 2007, the amount in Sec. 1(g)(4)(A)(ii)(I), which is used to reduce the net unearned income reported on the child's return that is subject to the "kiddie tax," is $850. This amount is the same as the $850 standard deduction amount provided in section 3.11(2) of this revenue procedure. The same $850 amount is used for purposes of Sec. 1(g)(7) (that is, to determine whether a parent may elect to include a child's gross income in the parent's gross income and to calculate the "kiddie tax"). For example, one of the requirements for the parental election is that a child's gross income is more than the amount referenced in Sec. 1(g)(4)(A)(ii)(I) but less than 10 times that amount; thus, a child's gross income for 2007 must be more than $850 but less than $8,500. .03 Adoption Credit. For taxable years beginning in 2007, under Sec. 23(a)(3) the credit allowed for an adoption of a child with special needs is $11,390. For taxable years beginning in 2007, under Sec. 23(b)(1) the maximum credit allowed for other adoptions is the amount of qualified adoption expenses up to $11,390. The available adoption credit begins to phase out under Sec. 23(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $170,820 and is completely phased out for taxpayers with modified adjusted gross income of $210,820 or more. (See section 3.15 of this revenue procedure for the adjusted items relating to adoption assistance programs.) .04 Child Tax Credit. For taxable years beginning in 2007, the value used in Sec. 24(d)(1)(B)(i) to determine the amount of credit under Sec. 24 that may be refundable is $11,750. .05 Hope and Lifetime Learning Credits. (1) For taxable years beginning in 2007, the Hope Scholarship Credit under Sec. 25A(b)(1) is an amount equal to 100 percent of qualified tuition and related expenses not in excess of $1,100 plus 50 percent of those expenses in excess of $1,100, but not in excess of $2,200. Accordingly, the maximum Hope Scholarship Credit allowable under Sec. 25A(b)(1) for taxable years beginning in 2007 is $1,650. (2) For taxable years beginning in 2007, a taxpayer's modified adjusted gross income in excess of $47,000 ($94,000 for a joint return) is used to determine the reduction under Sec. 25A(d)(2)(A)(ii) in the amount of the Hope Scholarship and Lifetime Learning Credits otherwise allowable under Sec. 25A(a). .06 Elective Deferrals and IRA Contributions by Certain Individuals. For taxable years beginning in 2007, the applicable percentage under Sec. 25B(b) is determined based on the following amounts: MODIFIED ADJUSTED GROSS INCOME -------------------------------------------------------------------- Joint Return Head of Household All Other Cases Over Not Over Over Not Over Over Not Over Appli cable Perce ntage -------------------------------------------------------------------- $0 $31,000 $0 $23,250 $0 $15,500 50% $31,000 $34,000 $23,250 $25,500 $15,500 $17,000 20% $34,000 $52,000 $25,500 $39,000 $17,000 $26,000 10% $52,000 $39,000 $26,000 0% -------------------------------------------------------------------- .07 Earned Income Credit. (1) In general. For taxable years beginning in 2007, the following amounts are used to determine the earned income credit under Sec. 32(b). The "earned income amount" is the amount of earned income at or above which the maximum amount of the earned income credit is allowed. The "threshold phaseout amount" is the amount of adjusted gross income (or, if greater, earned income) above which the maximum amount of the credit begins to phase out. The "completed phaseout amount" is the amount of adjusted gross income (or, if greater, earned income) at or above which no credit is allowed. Number of Qualifying Children Item One Two or None More -------------------------------------------------------------------- Earned Income Amount $ 8,390 $11,790 $ 5,590 Maximum Amount of Credit $ 2,853 $ 4,716 $ 428 Threshold Phaseout Amount $15,390 $15,390 $ 7,000 (Single, Surviving Spouse, or Head of Household) Completed Phaseout Amount $33,241 $37,783 $12,590 (Single, Surviving Spouse, or Head of Household) Threshold Phaseout Amount $17,390 $17,390 $ 9,000 (Married Filing Jointly) Completed Phaseout Amount $35,241 $39,783 $14,590 (Married Filing Jointly) -------------------------------------------------------------------- The instructions for the Form 1040 series provide tables showing the amount of the earned income credit for each type of taxpayer. (2) Excessive investment income. For taxable years beginning in 2007, the earned income tax credit is not allowed under Sec. 32(i) if the aggregate amount of certain investment income exceeds $2,900. .08 Low-Income Housing Credit. For calendar year 2007, the amounts used under Sec. 42(h)(3)(C)(ii) to calculate the State housing credit ceiling for the low-income housing credit is the greater of (1) $1.95 multiplied by the State population, or (2) $2,275,000. .09 Alternative Minimum Tax Exemption for a Child Subject to the "Kiddie Tax." For taxable years beginning in 2007, for a child to whom the Sec. 1(g) "kiddie tax" applies, the exemption amount under Secs. 55 and 59(j) for purposes of the alternative minimum tax under Sec. 55 may not exceed the sum of (1) the child's earned income for the taxable year, plus (2) $6,300. .10 Transportation Mainline Pipeline Construction Industry Optional Expense Substantiation Rules for Payments to Employees under Accountable Plans. For calendar year 2007, an eligible employer may pay certain welders and heavy equipment mechanics an amount of up to $15 per hour for rig-related expenses that is deemed substantiated under an accountable plan if paid in accordance with Rev. Proc. 2002-41. If the employer provides fuel or otherwise reimburses fuel expenses, up to $9 per hour is deemed substantiated if paid under Rev. Proc. 2002-41. .11 Standard Deduction. (1) In general. For taxable years beginning in 2007, the standard deduction amounts under Sec. 63(c)(2) are as follows: Filing Status Standard Deduction -------------------------------------------------------------------- Married Individuals Filing Joint Returns and $10,700 Surviving Spouses (Sec. 1(a)) Heads of Households (Sec. 1(b)) $7,850 Unmarried Individuals (other than Surviving Spouses $5,350 and Heads of Households) (Sec. 1(c)) Married Individuals Filing Separate Returns (Sec. $5,350 1(d)) -------------------------------------------------------------------- (2) Dependent. For taxable years beginning in 2007, the standard deduction amount under Sec. 63(c)(5) for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of (1) $850, or (2) the sum of $300 and the individual's earned income. (3) Aged or blind. For taxable years beginning in 2007, the additional standard deduction amount under Sec. 63(f) for the aged or the blind is $1,050. These amounts are increased to $1,300 if the individual is also unmarried and not a surviving spouse. .12 Overall Limitation on Itemized Deductions. For taxable years beginning in 2007, the "applicable amount" of adjusted gross income under Sec. 68(b), above which the amount of otherwise allowable itemized deductions is reduced under Sec. 68, is $156,400 (or $78,200 for a separate return filed by a married individual). .13 Qualified Transportation Fringe. For taxable years beginning in 2007, the monthly limitation under Sec. 132(f)(2)(A), regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass, is $110. The monthly limitation under Sec. 132(f)(2)(B), regarding the fringe benefit exclusion amount for qualified parking, is $215. .14 Income from United States Savings Bonds for Taxpayers Who Pay Qualified Higher Education Expenses. For taxable years beginning in 2007, the exclusion under Sec. 135, regarding income from United States savings bonds for taxpayers who pay qualified higher education expenses, begins to phase out for modified adjusted gross income above $98,400 for joint returns and $65,600 for other returns. The exclusion is completely phased out for modified adjusted gross income of $128,400 or more for joint returns and $80,600 or more for other returns. .15 Adoption Assistance Programs. For taxable years beginning in 2007, under Sec. 137(a)(2) the amount that can be excluded from an employee's gross income for the adoption of a child with special needs is $11,390. For taxable years beginning in 2007, under Sec. 137(b)(1) the maximum amount that can be excluded from an employee's gross income for the amounts paid or expenses incurred by an employer for qualified adoption expenses furnished pursuant to an adoption assistance program for other adoptions by the employee is $11,390. The amount excludable from an employee's gross income begins to phase out under Sec. 137(b)(2)(A) for taxpayers with modified adjusted gross income in excess of $170,820 and is completely phased out for taxpayers with modified adjusted gross income of $210,820 or more. (See section 3.03 of this revenue procedure for the adjusted items relating to the adoption credit.) .16 Private Activity Bonds Volume Cap. For calendar year 2007, the amounts used under Sec. 146(d)(1) to calculate the State ceiling for the volume cap for private activity bonds are the greater of (1) $85 multiplied by the State population, or (2) $256,235,000. .17 Safe Harbor Rules for Broker Commissions on Guaranteed Investment Contracts or Investments Purchased for a Yield Restricted Defeasance Escrow. For calendar year 2007, under Sec. 1.148-5(e)(2)(iii)(B)(1), a broker's commission or similar fee for the acquisition of a guaranteed investment contract or investments purchased for a yield restricted defeasance escrow is reasonable if (1) the amount of the fee that the issuer treats as a qualified administrative cost does not exceed the lesser of (A) $33,000, or (B) 0.2 percent of the computational base (as defined in Sec. 1.148- 5(e)(2)(iii)(B)(2)) or, if more, $3,000; and (2) the issuer does not treat more than $93,000 in brokers' commissions or similar fees as qualified administrative costs for all guaranteed investment contracts and investments for yield restricted defeasance escrows purchased with gross proceeds of the issue. .18 Personal Exemption. (1) Exemption amount. For taxable years beginning in 2007, the personal exemption amount under Sec. 151(d) is $3,400. The exemption amount for taxpayers with adjusted gross income in excess of the maximum phaseout amount is $1,133 for taxable years beginning in 2007. (2) Phaseout. For taxable years beginning in 2007, the personal exemption amount begins to phase out at, and reaches the maximum phaseout amount after, the following adjusted gross income amounts: Filing Status AGI - AGI - Beginning Maximum of Phaseout Phaseout -------------------------------------------------------------------- Married Individuals Filing $234,600 $357,100 Joint Returns and Surviving Spouses (Sec. 1(a Heads of Households (Sec. $195,500 $318,000 1(b)) Unmarried Individuals $156,400 $278,900 (other than Surviving Spouses and Heads of Households) (Sec. 1(c)) Married Individuals Filing $117,300 $178,550 Separate Returns (Sec. 1(d) -------------------------------------------------------------------- .19 Election to Expense Certain Depreciable Assets. For taxable years beginning in 2007, under Sec. 179(b)(1) the aggregate cost of any Sec. 179 property a taxpayer may elect to treat as an expense can not exceed $112,000. Under Sec. 179(b)(2) the $112,000 limitation is reduced (but not below zero) by the amount by which the cost of Sec. 179 property placed in service during the 2007 taxable year exceeds $450,000. .20 Eligible Long-Term Care Premiums. For taxable years beginning in 2007, the limitations under Sec. 213(d)(10), regarding eligible long-term care premiums includible in the term "medical care," are as follows: Attained Age Before the Close of the Taxable Year Limi tation on Prem iums -------------------------------------------------------------------- 40 or less $ 290 More than 40 but not more than 50 $ 550 More than 50 but not more than 60 $1,110 More than 60 but not more than 70 $2,950 More than 70 $3,680 -------------------------------------------------------------------- .21 Retirement Savings. (1) For taxable years beginning in 2007, the applicable dollar amount under Sec. 219(g)(3)(B)(i) for taxpayers filing a joint return is $83,000. If the taxpayer's spouse is not an active participant, the applicable dollar amount for the spouse under Sec. 219(g)(3)(B)(i) is $156,000 for taxable years beginning in 2007. (2) For taxable years beginning in 2007, the applicable dollar amount under Sec. 219(g)(3)(B)(ii) for all other taxpayers (except for married taxpayers filing separately) is $52,000. (3) The applicable dollar amount under Sec. 219(g)(3)(B)(iii) for married taxpayers filing separately is $0. .22 Medical Savings Accounts. (1) Self-only coverage. For taxable years beginning in 2007, the term "high deductible health plan" as defined in Sec. 220(c)(2)(A) means, for self-only coverage, a health plan that has an annual deductible that is not less than $1,900 and not more than $2,850, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits does not exceed $3,750. (2) Family coverage. For taxable years beginning in 2007, the term "high deductible health plan" means, for family coverage, a health plan that has an annual deductible that is not less than $3,750 and not more than $5,650, and under which the annual out-of- pocket expenses required to be paid (other than for premiums) for covered benefits does not exceed $6,900. .23 Interest on Education Loans. For taxable years beginning in 2007, the $2,500 maximum deduction for interest paid on qualified education loans under Sec. 221 begins to phase out under Sec. 221(b)(2)(B) for taxpayers with modified adjusted gross income in excess of $55,000 ($110,000 for joint returns), and is completely phased out for taxpayers with modified adjusted gross income of $70,000 or more ($140,000 or more for joint returns). .24 Health Savings Accounts. (1) Monthly contribution limitation. For calendar year 2007, the monthly limitation for any month on deductions under Sec. 223(b)(2)(A) for an individual with self-only coverage under a high deductible plan as of the first day of the month is (!1/12) of the lesser of (1) the annual deductible, or (2) $2,850. For calendar year 2007, the monthly limitation for any month on deductions under Sec. 223(b)(2)(B) for an individual with family coverage under a high deductible plan as of the first day of the month is 1/12 of the lesser of (1) the annual deductible, or (2) $5,650. (2) High deductible health plan. For calendar year 2007, a "high deductible health plan" is defined under Sec. 223(c)(2)(A) as a health plan with an annual deductible that is not less than $1,100 for self-only coverage or $2,200 for family coverage, and the annual out-of pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $5,500 for self-only coverage or $11,000 for family coverage. .25 Roth IRAs. (1) For taxable years beginning in 2007, the applicable dollar amount under Sec. 408A(c)(3)(C)(ii)(I) for taxpayers filing a joint return is $156,000. (2) For taxable years beginning in 2007, the applicable dollar amount under Sec. 408A(c)(3)(C)(ii)(II) for all other taxpayers (except for married taxpayers filing separately) is $99,000. (3) The applicable dollar amount under Sec. 408A(c)(3)(C)(ii)(III) for married taxpayers filing separately is $0. .26 Treatment of Dues Paid to Agricultural or Horticultural Organizations. For taxable years beginning in 2007, the limitation under Sec. 512(d)(1), regarding the exemption of annual dues required to be paid by a member to an agricultural or horticultural organization, is $136. .27 Insubstantial Benefit Limitations for Contributions Associated with Charitable Fund-Raising Campaigns. (1) Low cost article. For taxable years beginning in 2007, the unrelated business income of certain exempt organizations under Sec. 513(h)(2) does not include a "low cost article" of $8.90 or less. (2) Other insubstantial benefits. For taxable years beginning in 2007, the $5, $25, and $50 guidelines in section 3 of Rev. Proc. 90- 12, 1990-1 C.B. 471 (as amplified by Rev. Proc. 92-49, 1992-1 C.B. 987, and modified by Rev. Proc. 92-102, 1992-2 C.B. 579), for disregarding the value of insubstantial benefits received by a donor in return for a fully deductible charitable contribution under Sec. 170, are $8.90, $44.50, and $89, respectively. .28 Funeral Trusts. For a contract entered into during calendar year 2007 for a "qualified funeral trust," as defined in Sec. 685, the trust may not accept aggregate contributions by or for the benefit of an individual in excess of $8,800. .29 Expatriation to Avoid Tax. For calendar year 2007, an individual with "average annual net income tax" of more than $136,000 for the five taxable years ending before the date of the loss of United States citizenship under Sec. 877(a)(2)(A) is subject to tax under Sec. 877(b). .30 Foreign Earned Income Exclusion. For taxable years beginning in 2007, the foreign earned income exclusion amount under Sec. 911(b)(2)(D)(i) is $85,700. .31 Valuation of Qualified Real Property in Decedent's Gross Estate. For an estate of a decedent dying in calendar year 2007, if the executor elects to use the special use valuation method under Sec. 2032A for qualified real property, the aggregate decrease in the value of qualified real property resulting from electing to use Sec. 2032A for purposes of the estate tax can not exceed $940,000. .32 Annual Exclusion for Gifts. (1) For calendar year 2007, the first $12,000 of gifts to any person (other than gifts of future interests in property) are not included in the total amount of taxable gifts under Sec. 2503 made during that year. (2) For calendar year 2007, the first $125,000 of gifts to a spouse who is not a citizen of the United States (other than gifts of future interests in property) are not included in the total amount of taxable gifts under Secs. 2503 and 2523(i)(2) made during that year. .33 Tax on Arrow Shafts. For calendar year 2007, the tax imposed under Sec. 4161(b)(2)(A) on the first sale by the manufacturer, producer, or importer of any shaft of a type used in the manufacture of certain arrows is $0.42 per shaft. .34 Passenger Air Transportation Excise Tax. For calendar year 2007, the tax under Sec. 4261(b) on the amount paid for each domestic segment of taxable air transportation is $3.40. For calendar year 2007, the tax under Sec. 4261(c) on any amount paid (whether within or without the United States) for any air transportation, if the transportation begins or ends in the United States, generally is $15.10. However, for a domestic segment beginning or ending in Alaska or Hawaii as described in Sec. 4261(c)(3), the tax applies only to departures and the rate is $7.50. .35 Reporting Exception for Certain Exempt Organizations with Nondeductible Lobbying Expenditures. For taxable years beginning in 2007, the annual per person, family, or entity dues limitation to qualify for the reporting exception under Sec. 6033(e)(3) (and section 5.05 of Rev. Proc. 98-19, 1998-1 C.B. 547), regarding certain exempt organizations with nondeductible lobbying expenditures, is $95 or less. .36 Notice of Large Gifts Received from Foreign Persons. For taxable years beginning in 2007, recipients of gifts from certain foreign persons may be required to report these gifts under Sec. 6039F if the aggregate value of gifts received in a taxable year exceeds $13,258. .37 Persons Against Whom a Federal Tax Lien Is Not Valid. For calendar year 2007, a federal tax lien is not valid against (1) certain purchasers under Sec. 6323(b)(4) who purchased personal property in a casual sale for less than $1,290, or (2) a mechanic's lienor under Sec. 6323(b)(7) that repaired or improved certain residential property if the contract price with the owner is not more than $6,450. .38 Property Exempt from Levy. For calendar year 2007, the value of property exempt from levy under Sec. 6334(a)(2) (fuel, provisions, furniture, and other household personal effects, as well as arms for personal use, livestock, and poultry) can not exceed $7,720. The value of property exempt from levy under Sec. 6334(a)(3) (books and tools necessary for the trade, business, or profession of the taxpayer) can not exceed $3,860. .39 Interest on a Certain Portion of the Estate Tax Payable in Installments. For an estate of a decedent dying in calendar year 2007, the dollar amount used to determine the "2-percent portion" (for purposes of calculating interest under Sec. 6601(j)) of the estate tax extended as provided in Sec. 6166 is $1,250,000. .40 Attorney Fee Awards. For fees incurred in calendar year 2007, the attorney fee award limitation under Sec. 7430(c)(1)(B)(iii) is $170 per hour. .41 Periodic Payments Received under Qualified Long-Term Care Insurance Contracts or under Certain Life Insurance Contracts. For calendar year 2007, the stated dollar amount of the per diem limitation under Sec. 7702B(d)(4), regarding periodic payments received under a qualified long-term care insurance contract or periodic payments received under a life insurance contract that are treated as paid by reason of the death of a chronically ill individual, is $260. Section 4. Effect on Other Documents Rev. Proc. 2002-41 is modified for taxable years beginning after December 31, 2006. Section 5. Effective Date .01 General Rule. Except as provided in section 5.02, this revenue procedure applies to taxable years beginning in 2007. .02 Calendar Year Rule. This revenue procedure applies to transactions or events occurring in calendar year 2007 for purposes of sections 3.08 (low-income housing credit), 3.10 (pipeline construction industry optional expense substantiation rules), 3.16 (private activity bond volume cap), 3.17 (safe harbor rules for broker commissions on guaranteed investment contracts or investments purchased for a yield restricted defeasance escrow), 3.24 (health savings accounts), 3.28 (funeral trusts), 3.29 (expatriation to avoid tax), 3.31 (valuation of qualified real property in decedent's gross estate), 3.32 (annual exclusion for gifts), 3.33 (tax on arrow shafts), 3.34 (passenger air transportation excise tax), 3.37 (persons against whom a federal tax lien is not valid), 3.38 (property exempt from levy), 3.39 (interest on a certain portion of the estate tax payable in installments), 3.40 (attorney fee awards), and 3.41 (periodic payments received under qualified long-term care insurance contracts or under certain life insurance contracts). Section 6. Drafting Information [Omitted-related to author of this revenue procedure.] TAX TABLES FOR PRIOR TAX YEARS Inflation adjusted items for certain prior tax years were contained in the following: Revenue Procedure 2005-70 provided for inflation adjusted items for tax years beginning in 2006. Revenue Procedure 2004-71 provided for inflation adjusted items for tax years beginning in 2005. Revenue Procedure 2003-85 provided inflation adjusted items for tax years beginning in 2004. Revenue Procedure 2002-70 provided inflation adjusted items for tax years beginning in 2003. Revenue Procedure 2001-59 provided inflation adjusted items for tax years beginning in 2002. Revenue Procedure 2001-13 provided inflation adjusted items for tax years beginning in 2001. Revenue Procedure 99-42 provided inflation adjusted items for tax years beginning in 2000. Revenue Procedure 98-61 provided inflation adjusted items for tax years beginning in 1999. Revenue Procedure 97-57 provided inflation adjusted items for tax years beginning in 1998. Revenue Procedure 96-59 provided inflation adjusted items for tax years beginning in 1997. Revenue Procedure 95-53 provided inflation adjusted items for tax years beginning in 1996. Revenue Procedure 94-72 provided inflation adjusted items for tax years beginning in 1995. Revenue Procedure 93-49 provided inflation adjusted items for tax years beginning in 1994. Revenue Procedure 92-102 provided inflation adjusted items for tax years beginning in 1993. Revenue Procedure 91-65 provided inflation adjusted items for tax years beginning in 1992. Revenue Procedure 90-64 provided inflation adjusted items for tax years beginning in 1991. Revenue Procedure 90-7 provided inflation adjusted items for tax years beginning in 1990. Revenue Procedure 88-56 provided inflation adjusted items for tax years beginning in 1989. Revenue Procedure 85-55 provided income tax cost-of-living adjustment (indexing) factor with respect to taxable years beginning in 1986. Revenue Procedure 84-79 provided income tax cost-of-living adjustment (indexing) factor with respect to taxable years beginning in 1985. -REFTEXT- REFERENCES IN TEXT The enactment of this clause, referred to in subsec. (h)(13)(A)(iii), means the date of enactment of Pub. L. 105-206, which was approved July 22, 1998. -MISC1- AMENDMENTS 2006 - Subsec. (g)(2)(A). Pub. L. 109-222, Sec. 510(a), substituted "age 18" for "age 14". Subsec. (g)(2)(C). Pub. L. 109-222, Sec. 510(c), added subpar. (C). Subsec. (g)(4)(C). Pub. L. 109-222, Sec. 510(b), added subpar. (C). 2004 - Subsec. (f)(8). Pub. L. 108-311, Secs. 101(c), 105, temporarily amended par. (8) generally, substituting provisions relating to elimination of marriage penalty in 15-percent bracket for provisions relating to phaseout of marriage penalty in 15- percent bracket. See Effective and Termination Dates of 2004 Amendments note below. Subsec. (g)(7)(B)(ii)(II). Pub. L. 108-311, Sec. 408(a)(1), substituted "10 percent" for "10 percent." Subsec. (h)(1)(D)(i). Pub. L. 108-311, Sec. 402(a)(1), inserted "(determined without regard to paragraph (11))" after "net capital gain". Subsec. (h)(6)(A)(ii)(I). Pub. L. 108-311, Sec. 408(a)(2)(A), substituted "(4)(B)" for "(5)(B)". Subsec. (h)(6)(A)(ii)(II). Pub. L. 108-311, Sec. 408(a)(2)(B), substituted "(4)(A)" for "(5)(A)". Subsec. (h)(10)(F) to (H). Pub. L. 108-357, Sec. 413(c)(1)(A), inserted "and" at end of subpar. (F), redesignated subpar. (H) as (G), and struck out former subpar. (G) which read as follows: "a foreign investment company which is described in section 1246(b)(1) and for which an election is in effect under section 1247; and". Subsec. (h)(11)(B)(iii)(I). Pub. L. 108-311, Sec. 402(a)(2), substituted "substituting in section 246(c)" for "substituting in section 246(c)(1)", "121-day period" for "120-day period", and "91- day period" for "90-day period". Subsec. (h)(11)(C)(iii). Pub. L. 108-357, Sec. 413(c)(1)(B), struck out "a foreign personal holding company (as defined in section 552), a foreign investment company (as defined in section 1246(b)), or" before "a passive foreign investment". Subsec. (h)(11)(D)(ii). Pub. L. 108-311, Sec. 402(a)(3), substituted "a taxpayer to whom this section applies" for "an individual". Subsec. (i)(1)(B)(i). Pub. L. 108-311, Secs. 101(d)(1), 105, temporarily struck out "($12,000 in the case of taxable years beginning after December 31, 2004, and before January 1, 2008)" after "$14,000". See Effective and Termination Dates of 2004 Amendments note below. Subsec. (i)(1)(C). Pub. L. 108-311, Secs. 101(d)(2), 105, temporarily reenacted heading without change and amended text generally, substituting provisions relating to inflation adjustment in calendar years after 2003 for such provisions in calendar years after 2000. See Effective and Termination Dates of 2004 Amendments note below. 2003 - Subsec. (f)(8)(A). Pub. L. 108-27, Secs. 102(b)(1), 107, temporarily substituted "2002" for "2004". See Effective and Termination Dates of 2003 Amendment note below. Subsec. (f)(8)(B). Pub. L. 108-27, Secs. 102(a), 107, temporarily inserted table item relating to years 2003 and 2004. See Effective and Termination Dates of 2003 Amendment note below. Subsec. (h)(1)(B). Pub. L. 108-27, Secs. 301(a)(1), 303, temporarily substituted "5 percent (0 percent in the case of taxable years beginning after 2007)" for "10 percent". See Effective and Termination Dates of 2003 Amendment note below. Subsec. (h)(1)(C). Pub. L. 108-27, Secs. 301(a)(2)(A), 303, temporarily substituted "15 percent" for "20 percent". See Effective and Termination Dates of 2003 Amendment note below. Subsec. (h)(2). Pub. L. 108-27, Secs. 301(b)(1)(A), (B), 303, temporarily redesignated par. (3) as (2) and struck out heading and text of former par. (2). Text read as follows: "(A) Reduction in 10-percent rate. - In the case of any taxable year beginning after December 31, 2000, the rate under paragraph (1)(B) shall be 8 percent with respect to so much of the amount to which the 10-percent rate would otherwise apply as does not exceed qualified 5-year gain, and 10 percent with respect to the remainder of such amount. "(B) Reduction in 20-percent rate. - The rate under paragraph (1)(C) shall be 18 percent with respect to so much of the amount to which the 20-percent rate would otherwise apply as does not exceed the lesser of - "(i) the excess of qualified 5-year gain over the amount of such gain taken into account under subparagraph (A) of this paragraph; or "(ii) the amount of qualified 5-year gain (determined by taking into account only property the holding period for which begins after December 31, 2000), and 20 percent with respect to the remainder of such amount. For purposes of determining under the preceding sentence whether the holding period of property begins after December 31, 2000, the holding period of property acquired pursuant to the exercise of an option (or other right or obligation to acquire property) shall include the period such option (or other right or obligation) was held." See Effective and Termination Dates of 2003 Amendment note below. Subsec. (h)(3). Pub. L. 108-27, Secs. 302(e)(1), 303, temporarily amended heading and text of par. (3) generally. Prior to amendment, text read as follows: "For purposes of this subsection, the term 'adjusted net capital gain' means net capital gain reduced (but not below zero) by the sum of - "(A) unrecaptured section 1250 gain; and "(B) 28-percent rate gain." See Effective and Termination Dates of 2003 Amendment note below. Pub. L. 108-27, Secs. 301(b)(1)(B), 303, temporarily redesignated par. (4) as (3). Former par. (3) temporarily redesignated (2). See Effective and Termination Dates of 2003 Amendment note below. Subsec. (h)(4) to (7). Pub. L. 108-27, Secs. 301(b)(1)(B), 303, temporarily redesignated pars. (5) to (8) as (4) to (7), respectively. Former par. (4) temporarily redesignated (3). See Effective and Termination Dates of 2003 Amendment note below. Subsec. (h)(8). Pub. L. 108-27, Secs. 301(b)(1)(C), 303, temporarily redesignated par. (10) as (8). Former par. (8) temporarily redesignated (7). See Effective and Termination Dates of 2003 Amendment note below. Subsec. (h)(9). Pub. L. 108-27, Secs. 301(b)(1)(A), (C), 303, temporarily redesignated par. (11) as (9) and struck out heading and text of former par. (9). Text read as follows: "For purposes of this subsection, the term 'qualified 5-year gain' means the aggregate long-term capital gain from property held for more than 5 years. The determination under the preceding sentence shall be made without regard to collectibles gain, gain described in paragraph (7)(A)(i), and section 1202 gain." See Effective and Termination Dates of 2003 Amendment note below. Subsec. (h)(10). Pub. L. 108-27, Secs. 301(b)(1)(C), 303, temporarily redesignated par. (12) as (10). Former par. (10) temporarily redesignated (8). See Effective and Termination Dates of 2003 Amendment note below. Subsec. (h)(11). Pub. L. 108-27, Secs. 302(a), 303, temporarily added par. (11). See Effective and Termination Dates of 2003 Amendment note below. Pub. L. 108-27, Secs. 301(b)(1)(C), 303, temporarily redesignated par. (11) as (9). See Effective and Termination Dates of 2003 Amendment note below. Subsec. (h)(12). Pub. L. 108-27, Secs. 301(b)(1)(C), 303, temporarily redesignated par. (12) as (10). See Effective and Termination Dates of 2003 Amendment note below. Subsec. (i)(1)(B)(i). Pub. L. 108-27, Secs. 104(a), 107, temporarily substituted "($12,000 in the case of taxable years beginning after December 31, 2004, and before January 1, 2008)" for "($12,000 in the case of taxable years beginning before January 1, 2008)". See Effective and Termination Dates of 2003 Amendment note below. Subsec. (i)(1)(C). Pub. L. 108-27, Secs. 104(b), 107, temporarily amended heading and text of subpar. (C) generally. Text read as follows: "In prescribing the tables under subsection (f) which apply with respect to taxable years beginning in calendar years after 2000 - "(i) the Secretary shall make no adjustment to the initial bracket amount for any taxable year beginning before January 1, 2009, "(ii) the cost-of-living adjustment used in making adjustments to the initial bracket amount for any taxable year beginning after December 31, 2008, shall be determined under subsection (f)(3) by substituting '2007' for '1992' in subparagraph (B) thereof, and "(iii) such adjustment shall not apply to the amount referred to in subparagraph (B)(iii). If any amount after adjustment under the preceding sentence is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50." See Effective and Termination Dates of 2003 Amendment note below. Subsec. (i)(2). Pub. L. 108-27, Secs. 105(a), 107, temporarily amended table generally. Prior to amendment, table read as follows: The corresponding percentages shall be substituted for the following percentages: 28% 31% 36% 39.6% -------------------------------------------------------------------- 2001 27.5% 30.5% 35.5% 39.1% 2002 and 2003 27.0% 30.0% 35.0% 38.6% 2004 and 2005 26.0% 29.0% 34.0% 37.6% 2006 and thereafter 25.0% 28.0% 33.0% 35.0%" -------------------------------------------------------------------- See Effective and Termination Dates of 2003 Amendment note below. 2001 - Subsec. (f). Pub. L. 107-16, Secs. 302(b)(2), 901, temporarily substituted "Phaseout of marriage penalty in 15-percent bracket; adjustments" for "Adjustments" in heading. See Effective and Termination Dates of 2001 Amendment note below. Subsec. (f)(2)(A). Pub. L. 107-16, Secs. 302(b)(1), 901, temporarily inserted "except as provided in paragraph (8)," before "by increasing". See Effective and Termination Dates of 2001 Amendment note below. Subsec. (f)(6)(B). Pub. L. 107-16, Secs. 301(c)(1), 901, temporarily substituted "(other than with respect to sections 63(c)(4) and 151(d)(4)(A)) shall be applied" for "(other than with respect to subsection (c)(4) of section 63 (as it applies to subsections (c)(5)(A) and (f) of such section) and section 151(d)(4)(A)) shall be applied". See Effective and Termination Dates of 2001 Amendment note below. Subsec. (f)(8). Pub. L. 107-16, Secs. 302(a), 901, temporarily added par. (8). See Effective and Termination Dates of 2001 Amendment note below. Subsec. (g)(7)(B)(ii)(II). Pub. L. 107-16, Secs. 101(c)(1), 901, temporarily substituted "10 percent." for "15 percent". See Effective and Termination Dates of 2001 Amendment note below. Subsec. (h)(1)(A)(ii)(I), (B)(i). Pub. L. 107-16, Secs. 101(c)(2)(A), 901, temporarily substituted "25 percent" for "28 percent". See Effective and Termination Dates of 2001 Amendment note below. Subsec. (h)(13). Pub. L. 107-16, Secs. 101(c)(2)(B), 901, temporarily struck out par. (13), which set out special rules for determination of 28-percent rate gain, unrecaptured section 1250 gain, pass-thru entities, and charitable remainder trusts. See Effective and Termination Dates of 2001 Amendment note below. Subsec. (i). Pub. L. 107-16, Secs. 101(a), 901, temporarily added subsec. (i). See Effective and Termination Dates of 2001 Amendment note below. 2000 - Subsec.(h)(8). Pub. L. 106-554 substituted "means the excess of - " and subpars. (A) and (B) for "means an amount equal to the gain excluded from gross income under section 1202(a)." 1998 - Subsec. (g)(3)(C), (D). Pub. L. 105-206, Sec. 6007(f)(1), redesignated subpar. (D) as (C) and struck out heading and text of former subpar. (C). Text read as follows: "If tax is imposed under section 644(a)(1) with respect to the sale or exchange of any property of which the parent was the transferor, for purposes of applying subparagraph (A) to the taxable year of the parent in which such sale or exchange occurs - "(i) taxable income of the parent shall be increased by the amount treated as included in gross income under section 644(a)(2)(A)(i), and "(ii) the amount described in subparagraph (A)(ii) shall be increased by the amount of the excess referred to in section 644(a)(2)(A)." Subsec. (h). Pub. L. 105-206, Sec. 6005(d)(1), reenacted subsec. heading without change and amended text of subsec. (h) generally, substituting present provisions comprising pars. (1) to (13) for former similar provisions comprising pars. (1) to (11). Subsec. (h)(5). Pub. L. 105-206, Sec. 5001(a)(1), amended par. (5) generally. Prior to amendment, par. (5) read as follows: "(5) 28-percent rate gain. - For purposes of this subsection - "(A) In general. - The term '28-percent rate gain' means the excess (if any) of - "(i) the sum of - "(I) the aggregate long-term capital gain from property held for more than 1 year but not more than 18 months; "(II) collectibles gain; and "(III) section 1202 gain, over "(ii) the sum of - "(I) the aggregate long-term capital loss (not described in subclause (IV)) from property referred to in clause (i)(I); "(II) collectibles loss; "(III) the net short-term capital loss; and "(IV) the amount of long-term capital loss carried under section 1212(b)(1)(B) to the taxable year. "(B) Special rules. - "(i) Short sale gains and holding periods. - Rules similar to the rules of section 1233(b) shall apply where the substantially identical property has been held more than 1 year but not more than 18 months; except that, for purposes of such rules - "(I) section 1233(b)(1) shall be applied by substituting '18 months' for '1 year' each place it appears; and "(II) the holding period of such property shall be treated as being 1 year on the day before the earlier of the date of the closing of the short sale or the date such property is disposed of. "(ii) Long-term losses. - Section 1233(d) shall be applied separately by substituting '18 months' for '1 year' each place it appears. "(iii) Options. - A rule similar to the rule of section 1092(f) shall apply where the stock was held for more than 18 months. "(iv) Section 1256 contracts. - Amounts treated as long-term capital gain or loss under section 1256(a)(3) shall be treated as attributable to property held for more than 18 months." Subsec. (h)(6)(A). Pub. L. 105-206, Sec. 5001(a)(2), substituted "1 year" for "18 months". Subsec. (h)(7)(A)(i), (ii). Pub. L. 105-206, Sec. 5001(a)(3), amended cls. (i) and (ii) generally. Prior to amendment, cls. (i) and (ii) read as follows: "(i) the amount of long-term capital gain (not otherwise treated as ordinary income) which would be treated as ordinary income if - "(I) section 1250(b)(1) included all depreciation and the applicable percentage under section 1250(a) were 100 percent, and "(II) only gain from property held for more than 18 months were taken into account, over "(ii) the excess (if any) of - "(I) the amount described in paragraph (5)(A)(ii), over "(II) the amount described in paragraph (5)(A)(i)." Subsec. (h)(13). Pub. L. 105-206, Sec. 5001(a)(4), struck out "for periods during 1997" after "Special rules" in par. heading and amended headings and text of subpars. (A) and (B) generally. Prior to amendment, subpars. (A) and (B) read as follows: "(A) Determination of 28-percent rate gain. - In applying paragraph (5) - "(i) the amount determined under subclause (I) of paragraph (5)(A)(i) shall include long-term capital gain (not otherwise described in paragraph (5)(A)(i)) which is properly taken into account for the portion of the taxable year before May 7, 1997; "(ii) the amounts determined under subclause (I) of paragraph (5)(A)(ii) shall include long-term capital loss (not otherwise described in paragraph (5)(A)(ii)) which is properly taken into account for the portion of the taxable year before May 7, 1997; and "(iii) clauses (i)(I) and (ii)(I) of paragraph (5)(A) shall be applied by not taking into account any gain and loss on property held for more than 1 year but not more than 18 months which is properly taken into account for the portion of the taxable year after May 6, 1997, and before July 29, 1997. "(B) Other special rules. - "(i) Determination of unrecaptured section 1250 gain not to include pre-may 7, 1997 gain. - The amount determined under paragraph (7)(A)(i) shall not include gain properly taken into account for the portion of the taxable year before May 7, 1997. "(ii) Other transitional rules for 18-month holding period. - Paragraphs (6)(A) and (7)(A)(i)(II) shall be applied by substituting '1 year' for '18 months' with respect to gain properly taken into account for the portion of the taxable year after May 6, 1997, and before July 29, 1997." Subsec. (h)(13)(B). Pub. L. 105-277, Sec. 4002(i)(1), substituted "paragraph (7)(A)(i)" for "paragraph (7)(A)" in introductory provisions. Subsec. (h)(13)(D). Pub. L. 105-277, Sec. 4002(i)(3), added subpar. (D). 1997 - Subsec. (h). Pub. L. 105-34 amended heading and text of subsec. (h) generally. Prior to amendment, text read as follows: "If a taxpayer has a net capital gain for any taxable year, then the tax imposed by this section shall not exceed the sum of - "(1) a tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of - "(A) taxable income reduced by the amount of the net capital gain, or "(B) the amount of taxable income taxed at a rate below 28 percent, plus "(2) a tax of 28 percent of the amount of taxable income in excess of the amount determined under paragraph (1). For purposes of the preceding sentence, the net capital gain for any taxable year shall be reduced (but not below zero) by the amount which the taxpayer elects to take into account as investment income for the taxable year under section 163(d)(4)(B)(iii)." 1996 - Subsec. (g)(7)(A)(ii). Pub. L. 104-188, Sec. 1704(m)(1), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: "such gross income is more than $500 and less than $5,000,". Subsec. (g)(7)(B)(i). Pub. L. 104-188, Sec. 1704(m)(2)(A), substituted "twice the amount described in paragraph (4)(A)(ii)(I)" for "$1,000". Subsec. (g)(7)(B)(ii)(II). Pub. L. 104-188, Sec. 1704(m)(2)(B), amended subcl. (II) generally. Prior to amendment, subcl. (II) read as follows: "for each such child, the lesser of $75 or 15 percent of the excess of the gross income of such child over $500, and". 1993 - Subsecs. (a) to (e). Pub. L. 103-66, Secs. 13201(a), 13202(a), amended subsecs. (a) to (e) generally, substituting five- tiered tax tables for all categories applicable to tax years after December 31, 1992, for prior three-tiered tax tables. Subsec. (f)(1). Pub. L. 103-66, Sec. 13201(b)(3)(A)(i), substituted "1993" for "1990". Subsec. (f)(3)(B). Pub. L. 103-66, Sec. 13201(b)(3)(A)(ii), substituted "1992" for "1989". Subsec. (f)(7). Pub. L. 103-66, Sec. 13201(b)(3)(B), added par. (7). Subsec. (h). Pub. L. 103-66, Sec. 13206(d)(2), inserted as concluding provision at end "For purposes of the preceding sentence, the net capital gain for any taxable year shall be reduced (but not below zero) by the amount which the taxpayer elects to take into account as investment income for the taxable year under section 163(d)(4)(B)(iii)." 1990 - Subsecs. (a) to (e). Pub. L. 101-508, Sec. 11101(a), amended subsecs. (a) to (e) generally, substituting three-tiered tax tables for all categories applicable to tax years after Dec. 31, 1990, for prior two-tiered tax tables. Subsec. (f)(1). Pub. L. 101-508, Sec. 11101(d)(1)(A)(i), substituted "1990" for "1988". Subsec. (f)(3)(B). Pub. L. 101-508, Sec. 11101(d)(1)(A)(ii), substituted "1989" for "1987". Subsec. (f)(6)(A). Pub. L. 101-508, Sec. 11104(b)(1), substituted "section 151(d)(4)" for "section 151(d)(3)". Pub. L. 101-508, Sec. 11103(c), inserted reference to section 68(b)(2). Pub. L. 101-508, Sec. 11101(b)(2), struck out "subsection (g)(4)," after "paragraph (2)(A),". Subsec. (f)(6)(B). Pub. L. 101-508, Sec. 11104(b)(2), substituted "section 151(d)(4)(A)" for "section 151(d)(3)". Subsec. (g). Pub. L. 101-508, Sec. 11101(d)(2), redesignated subsec. (i) as (g). Pub. L. 101-508, Sec. 11101(b)(1), struck out subsec. (g) which provided for phaseout of 15-percent rate and personal exemptions. Subsec. (h). Pub. L. 101-508, Sec. 11101(d)(2), redesignated subsec. (j) as (h) and struck out former subsec. (h) which provided tax schedules for taxable years beginning in 1987. Subsec. (i). Pub. L. 101-508, Sec. 11101(d)(2), redesignated subsec. (i) as (g). Subsec. (j). Pub. L. 101-508, Sec. 11101(d)(2), redesignated subsec. (j) as (h). Pub. L. 101-508, Sec. 11101(c), amended subsec. (j) generally. Prior to amendment, subsec. (j) read as follows: "(1) In general. - If a taxpayer has a net capital gain for any taxable year to which this subsection applies, then the tax imposed by this section shall not exceed the sum of - "(A) a tax computed at the rates and in the same manner as if this subsection had not been enacted on the greater of - "(i) the taxable income reduced by the amount of net capital gain, or "(ii) the amount of taxable income taxed at a rate below 28 percent, plus "(B) a tax of 28 percent of the amount of taxable income in excess of the amount determined under subparagraph (A), plus "(C) the amount of increase determined under subsection (g). "(2) Years to which subsection applies. - This subsection shall apply to - "(A) any taxable year beginning in 1987, and "(B) any taxable year beginning after 1987 if the highest rate of tax set forth in subsection (a), (b), (c), (d), or (e) (whichever applies) for such taxable year exceeds 28 percent." 1989 - Subsec. (f)(6)(B). Pub. L. 101-239, Sec. 7831(a), substituted "subsection (c)(4) of section 63 (as it applies to subsections (c)(5)(A) and (f) of such section) and section 151(d)(3)" for "section 63(c)(4)". Subsec. (i)(3)(C), (D). Pub. L. 101-239, Sec. 7811(j)(1), redesignated subpar. (C), relating to special rule where parent has different taxable year, as (D). Subsec. (i)(7)(A). Pub. L. 101-239, Sec. 7816(b), inserted "(other than for purposes of this paragraph)" after "shall be treated" in concluding provisions. 1988 - Subsec. (g)(2). Pub. L. 100-647, Sec. 1001(a)(3), inserted provision relating to application of subpar. (B) at end of last sentence. Subsec. (i)(3)(A). Pub. L. 100-647, Sec. 1014(e)(2), substituted "any exclusion, deduction, or credit" for "any deduction or credit". Subsec. (i)(3)(C). Pub. L. 100-647, Sec. 1014(e)(7), added subpar. (C) relating to special rule where parent has different taxable year. Pub. L. 100-647, Sec. 1014(e)(1), added subpar. (C) relating to coordination with section 644. Subsec. (i)(4)(A)(i). Pub. L. 100-647, Sec. 1014(e)(3)(A), substituted "adjusted gross income" for "gross income" and inserted "attributable to" after "which is not". Subsec. (i)(4)(A)(ii)(II). Pub. L. 100-647, Sec. 1014(e)(3)(B)- (D), substituted "his deductions" for "his deduction", "the itemized deductions allowed" for "the deductions allowed", and "adjusted gross income" for "gross income". Subsec. (i)(5)(A). Pub. L. 100-647, Sec. 1014(e)(6), substituted "custodial parent (within the meaning of section 152(e))" for "custodial parent". Subsec. (i)(7). Pub. L. 100-647, Sec. 6006(a), added par. (7). 1986 - Subsecs. (a) to (e). Pub. L. 99-514, Sec. 101(a), in amending subsecs. (a) to (e) generally, substituted a general tax table for tax tables (1), (2), and (3) in each subsec. applicable to taxable years beginning in 1982, 1983, and after 1983, respectively. Subsec. (f). Pub. L. 99-514, Sec. 101(a), in amending subsec. (f) generally, in par. (1) substituted "1988," for "1984" and struck out "paragraph (3) of" before "subsections", in par. (2) struck out "paragraph (3) of" before "subsection" in introductory provisions, substituted subpars. (A) to (C) for former subpars. (A) to (C) which read as follows: "(A) by increasing - "(i) the maximum dollar amount on which no tax is imposed under such table, and "(ii) the minimum and maximum dollar amounts for each rate bracket for which a tax is imposed under such table, by the cost-of-living adjustment for such calendar year, "(B) by not changing the rate applicable to any rate bracket as adjusted under subparagraph (A)(ii), and "(C) by adjusting the amounts setting forth the tax to the extent necessary to reflect the adjustments in the rate brackets.", and struck out concluding provisions which read as follows: "If any increase determined under subparagraph (A) is not a multiple of $10, such increase shall be rounded to the nearest multiple of $10 (or if such increase is a multiple of $5, such increase shall be increased to the next highest multiple of $10).", in par. (3)(B) substituted "1987" for "1983", in par. (4) substituted "August 31" for "September 30", in par. (5) inserted requirement that the Consumer Price Index most consistent with such Index for calendar year 1986 be used, and added par. (6). Subsecs. (g), (h). Pub. L. 99-514, Sec. 101(a), in amending section generally, added subsecs. (g) and (h). Subsec. (i). Pub. L. 99-514, Sec. 1411(a), added subsec. (i). Subsec. (j). Pub. L. 99-514, Sec. 302(a), added subsec. (j). 1982 - Subsecs. (d), (e). Pub. L. 97-448, Sec. 101(a)(3), set out as a note below, provided for amendment of the tables applying to married individuals filing separately or to estates and trusts so as to correct any figure differing by not more than 50 cents from the correct amount under the formula used in constructing such table. Corrections to the tables in subsecs. (d) and (e) appeared in Announcement 83-50 contained in Internal Revenue Bulletin No. 1983-12 of Mar. 21, 1983. 1981 - Subsecs. (a) to (e). Pub. L. 97-34, Sec. 101(a), generally revised tax tables downward providing for cumulative across-the- board reductions of 23 percent on a three phase schedule under which different new rates were set for taxable years beginning in 1982, for taxable years beginning in 1983, and for taxable years beginning after 1983. Subsec. (f). Pub. L. 97-34, Sec. 104(a), added subsec. (f). 1978 - Subsec. (a). Pub. L. 95-600 generally made a downward revision of tax table for married individuals filing joint returns and surviving spouses resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $3,400 or less was substituted for a bottom bracket imposing no tax on taxable income of $3,200 or less. Subsec. (b). Pub. L. 95-600 generally made a downward revision of tax table for heads of household resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $2,300 or less was substituted for a bottom bracket imposing no tax on taxable income of $2,200 or less. Subsec. (c). Pub. L. 95-600 generally made a downward revision of tax table for unmarried individuals other than surviving spouses and heads of households resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $2,300 or less was substituted for a bottom bracket imposing no tax on taxable income of $2,200 or less. Subsec. (d). Pub. L. 95-600 generally made a downward revision of tax tables for married individuals filing separate returns resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $1,700 or less was substituted for a bottom bracket imposing no tax on taxable income of $1,600 or less. Subsec. (e). Pub. L. 95-600 generally made a downward revision of tax tables for estates and trusts resulting in a table under which, among other changes, a bottom bracket under which a tax of 14% is imposed on taxable income of $1,050 for a bottom bracket under which a tax of 14% was imposed on taxable income of $500 or less. 1977 - Subsec. (a). Pub. L. 95-30 generally made a downward revision of tax table for married individuals filing joint returns and surviving spouses resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $3,200 or less was substituted for a bottom bracket under which a tax of 14% had been imposed on a taxable income of $1,000 or less. Subsec. (b). Pub. L. 95-30 generally made a downward revision of tax table for heads of households resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $2,200 or less was substituted for a bottom bracket under which a tax of 14% had been imposed on a taxable income of $1,000 or less. Subsec. (c). Pub. L. 95-30 generally made a downward revision of tax table for unmarried individuals other than surviving spouses and heads of households resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $2,200 or less was substituted for a bottom bracket under which a tax of 14% had been imposed on a taxable income of $500 or less. Subsec. (d). Pub. L. 95-30 generally made a downward revision of tax table for married individuals filing separate returns resulting in a table under which, among other changes, a bottom bracket imposing no tax on taxable income of $1,600 or less was substituted for a bottom bracket under which a tax of 14% had been imposed on a taxable income of $500 or less. Provisions making table applicable to estates and trusts were struck out. See subsec. (e). Subsec. (e). Pub. L. 95-30 added subsec. (e) consisting of table formerly contained in subsec. (d) but without any downward revision and limited so as to apply only to estates and trusts. 1969 - Subsec. (a). Pub. L. 91-172 substituted a table of rates of tax for married individuals filing joint returns and surviving spouses for the tables of rates of tax on individuals. For rates of taxes on unmarried individuals and married persons filing separate returns, see subsecs. (c) and (d) of this section. Subsec. (b). Pub. L. 91-172 generally revised rates of tax of heads of household downwards and struck out provisions defining head of household, determination of status, and limitations. For definition of head of household, determination of status, and limitations, see section 2(b) of this title. Subsec. (c). Pub. L. 91-172 substituted rates of tax on unmarried individuals (other than surviving spouses and heads of household) for special rules explaining the rates of tax imposed under former subsecs. (a) and (b)(1) and prescribing a maximum limit of 87 percent of the taxable year. Subsec. (d). Pub. L. 91-172 substituted a table of rates of tax for married individuals filing separate returns for provision prescribing the applicability of the rates to non-resident aliens. For applicability of rates of tax to non-resident aliens, see section 2(d) of this title. Subsec. (e). Pub. L. 91-172 struck out cross reference to section 63. See section 2(e) of this title. 1966 - Subsecs. (d), (e). Pub. L. 89-809 added subsec. (d) and redesignated former subsec. (d) as (e). 1964 - Pub. L. 88-272 amended section generally by splitting the former first bracket which started at $2,000 into four new brackets, the 14 percent bracket representing a 30 percent reduction, the 15 percent bracket a 25 percent cut, and the 16 percent bracket a 20 percent cut, and reducing all other brackets by cuts averaging about 20 percent and effectuated these cuts in two steps, one in 1964, and one in 1965. EFFECTIVE DATE OF 2006 AMENDMENT Pub. L. 109-222, title V, Sec. 510(d), May 17, 2006, 120 Stat. 364, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2005." EFFECTIVE AND TERMINATION DATES OF 2004 AMENDMENTS Pub. L. 108-357, title IV, Sec. 413(d), Oct. 22, 2004, 118 Stat. 1510, provided that: "(1) In general. - Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 170, 171, 245, 312, 443, 465, 508, 542, 543, 562, 563, 751, 864, 898, 904, 951, 954, 989, 1014, 1016, 1212, 1223, 1248, 1260, 1291, 1294, 4947, 4948, 6103, 6501, and 6679 of this title and repealing sections 551 to 558, 1246, 1247, and 6035 of this title] shall apply to taxable years of foreign corporations beginning after December 31, 2004, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end. "(2) Subsection (c)(27). - The amendments made by subsection (c)(27) [amending section 6103 of this title] shall apply to disclosures of return or return information with respect to taxable years beginning after December 31, 2004." Pub. L. 108-311, title I, Sec. 101(e), Oct. 4, 2004, 118 Stat. 1168, provided that: "The amendments made by this section [amending this section and sections 24 and 63 of this title] shall apply to taxable years beginning after December 31, 2003." Pub. L. 108-311, title I, Sec. 105, Oct. 4, 2004, 118 Stat. 1169, provided that: "Each amendment made by this title [amending this section and sections 24, 32, 55, and 63 of this title] shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, Sec. 901, set out as an Effective and Termination Dates of 2001 Amendment note below] to the same extent and in the same manner as the provision of such Act to which such amendment relates." Pub. L. 108-311, title IV, Sec. 402(b), Oct. 4, 2004, 118 Stat. 1186, provided that: "The amendments made by subsection (a) [amending this section and sections 691, 854, and 857 of this title and provisions set out as a note under this section] shall take effect as if included in section 302 of the Jobs and Growth Tax Relief Reconciliation Act of 2003 [Pub. L. 108-27]." EFFECTIVE AND TERMINATION DATES OF 2003 AMENDMENT Pub. L. 108-27, title I, Sec. 102(c), May 28, 2003, 117 Stat. 754, provided that: "The amendments made by this section [amending this section and provisions set out as a note under this section] shall apply to taxable years beginning after December 31, 2002." Pub. L. 108-27, title I, Sec. 104(c), May 28, 2003, 117 Stat. 755, provided that: "(1) In general. - The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2002. "(2) Tables for 2003. - The Secretary of the Treasury shall modify each table which has been prescribed under section 1(f) of the Internal Revenue Code of 1986 for taxable years beginning in 2003 and which relates to the amendment made by subsection (a) to reflect such amendment." Pub. L. 108-27, title I, Sec. 105(b), May 28, 2003, 117 Stat. 755, provided that: "The amendment made by this section [amending this section] shall apply to taxable years beginning after December 31, 2002." Pub. L. 108-27, title I, Sec. 107, May 28, 2003, 117 Stat. 755, provided that: "Each amendment made by this title [enacting section 6429 of this title, amending this section and sections 24, 55, and 63 of this title, and amending provisions set out as notes under this section] shall be subject to title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, Sec. 901, set out as an Effective and Termination Dates of 2001 Amendment note below] to the same extent and in the same manner as the provision of such Act to which such amendment relates." Pub. L. 108-27, title III, Sec. 301(d), May 28, 2003, 117 Stat. 760, provided that: "(1) In general. - Except as otherwise provided by this subsection, the amendments made by this section [amending this section, sections 55, 57, 1445, and 7518 of this title, and section 1177 of Title 46, Appendix, Shipping] shall apply to taxable years ending on or after May 6, 2003. "(2) Withholding. - The amendment made by subsection (a)(2)(C) [amending section 1445 of this title] shall apply to amounts paid after the date of the enactment of this Act [May 28, 2003]. "(3) Small business stock. - The amendments made by subsection (b)(3) [amending section 57 of this title] shall apply to dispositions on or after May 6, 2003." Pub. L. 108-27, title III, Sec. 302(f), May 28, 2003, 117 Stat. 764, as amended by Pub. L. 108-311, title IV, Sec. 402(a)(6), Oct. 4, 2004, 118 Stat. 1185, provided that: "(1) In general. - Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 163, 301, 306, 338, 467, 531, 541, 584, 702, 854, 857, 1255, and 1257 of this title and repealing section 341 of this title] shall apply to taxable years beginning after December 31, 2002. "(2) Pass-thru entities. - In the case of a pass-thru entity described in subparagraph (A), (B), (C), (D), (E), or (F) of section 1(h)(10) of the Internal Revenue Code of 1986, as amended by this Act, the amendments made by this section shall apply to taxable years ending after December 31, 2002; except that dividends received by such an entity on or before such date shall not be treated as qualified dividend income (as defined in section 1(h)(11)(B) of such Code, as added by this Act)." Pub. L. 108-27, title III, Sec. 303, May 28, 2003, 117 Stat. 764, as amended by Pub. L. 109-222, title I, Sec. 102, May 17, 2006, 120 Stat. 346, provided that: "All provisions of, and amendments made by, this title [amending this section, sections 55, 57, 163, 301, 306, 338, 467, 531, 541, 584, 702, 854, 857, 1255, 1257, 1445, and 7518 of this title, and section 1177 of Title 46, Appendix, Shipping, repealing section 341 of this title, and enacting provisions set out as notes under this section] shall not apply to taxable years beginning after December 31, 2010, and the Internal Revenue Code of 1986 shall be applied and administered to such years as if such provisions and amendments had never been enacted." EFFECTIVE AND TERMINATION DATES OF 2001 AMENDMENT Pub. L. 109-280, title VIII, Sec. 811, Aug. 17, 2006, 120 Stat. 996, provided that: "Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, Sec. 901, set out below] shall not apply to the provisions of, and amendments made by, subtitles A through F of title VI of such Act [subtitles A to F [Secs. 601-666] of title VI of Pub. L. 107-16, enacting sections 25B, 45E, 402A, and 4980F of this title, amending sections 24, 25, 25B, 26, 38, 39, 72, 132, 196, 219, 401, 402, 403, 404, 408, 408A, 409, 411, 412, 414 to 416, 457, 501, 505, 664, 861, 904, 1400C, 3401, 3405, 4972, 4973, 4975, 4979A, 6047, and 6051 of this title and sections 1003, 1053, 1054, 1082, 1104, and 1108 of Title 29, Labor, enacting provisions set out as notes under sections 24, 38, 72, 132, 219, 401, 402, 403, 404, 408, 409, 411, 412, 414 to 416, 457, 861, 4972, 4975, 4980F, and 7801 of this title and section 1107 of Title 29, and amending provisions set out as notes under section 414 of this title and section 1107 of Title 29] (relating to pension and individual retirement arrangement provisions)." Pub. L. 109-280, title XIII, Sec. 1304(a), Aug. 17, 2006, 120 Stat. 1109, provided that: "Section 901 of the Economic Growth and Tax Relief Reconciliation Act of 2001 [Pub. L. 107-16, set out below] (relating to sunset provisions) shall not apply to section 402 of such Act [amending sections 72, 135, 221, 529, 530, 4973, and 6693 of this title and enacting provisions set out as a note under section 72 of this title] (relating to modifications to qualified tuition programs)." Pub. L. 107-16, title I, Sec. 101(d), June 7, 2001, 115 Stat. 44, provided that: "(1) In general. - Except as provided in paragraph (2), the amendments made by this section [enacting section 6428 of this title and amending this section and sections 15, 531, 541, 3402, and 3406 of this title] shall apply to taxable years beginning after December 31, 2000. "(2) Amendments to withholding provisions. - The amendments made by paragraphs (6), (7), (8), (9), (10), and (11) of subsection (c) [amending sections 3402 and 3406 of this title] shall apply to amounts paid after the 60th day after the date of the enactment of this Act [June 7, 2001]. References to income brackets and rates of tax in such paragraphs shall be applied without regard to section 1(i)(1)(D) of the Internal Revenue Code of 1986." Pub. L. 107-16, title III, Sec. 301(d), June 7, 2001, 115 Stat. 54, as amended by Pub. L. 108-27, title I, Sec. 103(b), May 28, 2003, 117 Stat. 754, provided that: "The amendments made by this section [amending this section and section 63 of this title] shall apply to taxable years beginning after December 31, 2002." Pub. L. 107-16, title III, Sec. 302(c), June 7, 2001, 115 Stat. 54, as amended by Pub. L. 108-27, title I, Sec. 102(b)(2), May 28, 2003, 117 Stat. 754, provided that: "The amendments made by this section [amending this section] shall apply to taxable years beginning after December 31, 2002." Pub. L. 107-16, title IX, Sec. 901, June 7, 2001, 115 Stat. 150, as amended by Pub. L. 107-358, Sec. 2, Dec. 17, 2002, 116 Stat. 3015, provided that: "(a) In General. - All provisions of, and amendments made by, this Act [see Tables for classification] shall not apply - "(1) to taxable, plan, or limitation years beginning after December 31, 2010, or "(2) in the case of title V [see Tables for classification], to estates of decedents dying, gifts made, or generation skipping transfers, after December 31, 2010. "(b) Application of Certain Laws. - The Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 [29 U.S.C. 1001 et seq.] shall be applied and administered to years, estates, gifts, and transfers described in subsection (a) as if the provisions and amendments described in subsection (a) had never been enacted." "(c) Exception. - Subsection (a) shall not apply to section 803 [set out as a note preceding section 101 of this title] (relating to no federal income tax on restitution received by victims of the Nazi regime or their heirs or estates)." EFFECTIVE DATE OF 2000 AMENDMENT Pub. L. 106-554, Sec. 1(a)(7) [title I, Sec. 117(c)], Dec. 21, 2000, 114 Stat. 2763, 2763A-605, provided that: "The amendments made by this section [amending this section and section 1202 of this title] shall apply to stock acquired after the date of the enactment of this Act [Dec. 21, 2000]." EFFECTIVE DATE OF 1998 AMENDMENTS Pub. L. 105-277, div. J, title IV, Sec. 4002(k), Oct. 21, 1998, 112 Stat. 2681-908, provided that: "The amendments made by this section [amending this section and sections 408A, 6015, 6103, 6159, 7421, 7443A, and 7491 of this title and amending provisions set out as a note under section 6601 of this title] shall take effect as if included in the provisions of the 1998 Act [Pub. L. 105-206] to which they relate." Pub. L. 105-206, title V, Sec. 5001(b), July 22, 1998, 112 Stat. 788, provided that: "(1) In general. - Except as provided in paragraph (2), the amendments made by this section [amending this section and sections 1223 and