# Full Statutory Corpus: US

## 26 U.S.C. § 933: Income from sources within Puerto Rico / Ingresos de fuentes dentro de Puerto Rico
`Title 26 > Subtitle A > Chapter 1 > Subchapter N > Part III > Subpart D > § 933 (OLRC release point 119-121)`

### English
The following items shall not be included in gross income and shall be exempt from taxation under this subtitle:
(1) Resident of Puerto Rico for entire taxable year
In the case of an individual who is a bona fide resident of Puerto Rico during the entire taxable year, income derived from sources within Puerto Rico (except amounts received for services performed as an employee of the United States or any agency thereof); but such individual shall not be allowed as a deduction from his gross income any deductions (other than the deduction under section 151, relating to personal exemptions), or any credit, properly allocable to or chargeable against amounts excluded from gross income under this paragraph.
(2) Taxable year of change of residence from Puerto Rico
In the case of an individual citizen of the United States who has been a bona fide resident of Puerto Rico for a period of at least 2 years before the date on which he changes his residence from Puerto Rico, income derived from sources therein (except amounts received for services performed as an employee of the United States or any agency thereof) which is attributable to that part of such period of Puerto Rican residence before such date; but such individual shall not be allowed as a deduction from his gross income any deductions (other than the deduction for personal exemptions under section 151), or any credit, properly allocable to or chargeable against amounts excluded from gross income under this paragraph.

### Español
En el caso de un individuo que sea residente de buena fe de Puerto Rico durante todo el año tributario, el ingreso bruto no incluirá ingresos derivados de fuentes dentro de Puerto Rico (excepto cantidades recibidas por servicios prestados como empleado de los Estados Unidos o cualquiera de sus agencias); no permitiéndose deducciones atribuibles a dicho ingreso.

## 26 U.S.C. § 937: Residence and source rules involving possessions / Reglas de residencia y fuente relativas a las posesiones
`Title 26 > Subtitle A > Chapter 1 > Subchapter N > Part III > Subpart D > § 937 (OLRC release point 119-121)`

### English
(a) Bona fide resident
For purposes of this subpart, section 865(g)(3), section 876, section 881(b), paragraphs (2) and (3) of section 901(b), section 957(c), section 3401(a)(8)(C), and section 7654(a), except as provided in regulations, the term “bona fide resident” means a person—
(1) who is present for at least 183 days during the taxable year in Guam, American Samoa, the Northern Mariana Islands, Puerto Rico, or the Virgin Islands, as the case may be, and
(2) who does not have a tax home (determined under the principles of section 911(d)(3) without regard to the second sentence thereof) outside such specified possession during the taxable year and does not have a closer connection (determined under the principles of section 7701(b)(3)(B)(ii)) to the United States or a foreign country than to such specified possession.
For purposes of paragraph (1), the determination as to whether a person is present for any day shall be made under the principles of section 7701(b).
(b) Source rules
Except as provided in regulations, for purposes of this title—
(1) except as provided in paragraph (2), rules similar to the rules for determining whether income is income from sources within the United States or is effectively connected with the conduct of a trade or business within the United States shall apply for purposes of determining whether income is from sources within a possession specified in subsection (a)(1) or effectively connected with the conduct of a trade or business within any such possession, and
(2) any income treated as income from sources within the United States or as effectively connected with the conduct of a trade or business within the United States shall not be treated as income from sources within any such possession or as effectively connected with the conduct of a trade or business within any such possession.
(c) Reporting requirement
(1) In general
If, for any taxable year, an individual takes the position for United States income tax reporting purposes that the individual became, or ceases to be, a bona fide resident of a possession specified in subsection (a)(1), such individual shall file with the Secretary, at such time and in such manner as the Secretary may prescribe, notice of such position.
(2) Transition rule
If, for any of an individual’s 3 taxable years ending before the individual’s first taxable year ending after the date of the enactment of this subsection, the individual took a position described in paragraph (1), the individual shall file with the Secretary, at such time and in such manner as the Secretary may prescribe, notice of such position.

### Español
Establece los requisitos estatutarios para determinar residencia de buena fe en posesiones (presencia física de 183 días, centro de actividad tributaria 'tax home' y conexión más cercana), así como las reglas de fuente de ingresos aplicables a posesiones y territorios.

## 26 U.S.C. § 865: Source rules for personal property sales / Reglas de fuente para ventas de propiedad mueble
`Title 26 > Subtitle A > Chapter 1 > Subchapter N > Part I > § 865 (OLRC release point 119-121)`

### English
(a) General rule
Except as otherwise provided in this section, income from the sale of personal property—
(1) by a United States resident shall be sourced in the United States, or
(2) by a nonresident shall be sourced outside the United States.
(b) Exception for inventory property
In the case of income derived from the sale of inventory property—
(1) this section shall not apply, and
(2) such income shall be sourced under the rules of sections 861(a)(6), 862(a)(6), and 863.
Notwithstanding the preceding sentence, any income from the sale of any unprocessed timber which is a softwood and was cut from an area in the United States shall be sourced in the United States and the rules of sections 862(a)(6) and 863(b) shall not apply to any such income. For purposes of the preceding sentence, the term “unprocessed timber” means any log, cant, or similar form of timber.
(c) Exception for depreciable personal property
(1) In general
Gain (not in excess of the depreciation adjustments) from the sale of depreciable personal property shall be allocated between sources in the United States and sources outside the United States—
(A) by treating the same proportion of such gain as sourced in the United States as the United States depreciation adjustments with respect to such property bear to the total depreciation adjustments, and
(B) by treating the remaining portion of such gain as sourced outside the United States.
(2) Gain in excess of depreciation
Gain (in excess of the depreciation adjustments) from the sale of depreciable personal property shall be sourced as if such property were inventory property.
(3) United States depreciation adjustments
For purposes of this subsection—
(A) In general
The term “United States depreciation adjustments” means the portion of the depreciation adjustments to the adjusted basis of the property which are attributable to the depreciation deductions allowable in computing taxable income from sources in the United States.
(B) Special rule for certain property
Except in the case of property of a kind described in section 168(g)(4), if, for any taxable year—
(i) such property is used predominantly in the United States, or
(ii) such property is used predominantly outside the United States,
all of the depreciation deductions allowable for such year shall be treated as having been allocated to income from sources in the United States (or, where clause (ii) applies, from sources outside the United States).
(4) Other definitions
For purposes of this subsection—
(A) Depreciable personal property
The term “depreciable personal property” means any personal property if the adjusted basis of such property includes depreciation adjustments.
(B) Depreciation adjustments
The term “depreciation adjustments” means adjustments reflected in the adjusted basis of any property on account of depreciation deductions (whether allowed with respect to such property or other property and whether allowed to the taxpayer or to any other person).
(C) Depreciation deductions
The term “depreciation deductions” means any deductions for depreciation or amortization or any other deduction allowable under any provision of this chapter which treats an otherwise capital expenditure as a deductible expense.
(d) Exception for intangibles
(1) In general
In the case of any sale of an intangible—
(A) this section shall apply only to the extent the payments in consideration of such sale are not contingent on the productivity, use, or disposition of the intangible, and
(B) to the extent such payments are so contingent, the source of such payments shall be determined under this part in the same manner as if such payments were royalties.
(2) Intangible
For purposes of paragraph (1), the term “intangible” means any patent, copyright, secret process or formula, goodwill, trademark, trade brand, franchise, or other like property.
(3) Special rule in the case of goodwill
To the extent this section applies to the sale of goodwill, payments in consideration of such sale shall be treated as from sources in the country in which such goodwill was generated.
(4) Coordination with subsection (c)
(A) Gain not in excess of depreciation adjustments sourced under subsection (c)
Notwithstanding paragraph (1), any gain from the sale of an intangible shall be sourced under subsection (c) to the extent such gain does not exceed the depreciation adjustments with respect to such intangible.
(B) Subsection (c)(2) not to apply to intangibles
Paragraph (2) of subsection (c) shall not apply to any gain from the sale of an intangible.
(e) Special rules for sales through offices or fixed places of business
(1) Sales by residents
(A) In general
In the case of income not sourced under subsection (b), (c), (d)(1)(B) or (3), or (f), if a United States resident maintains an office or other fixed place of business in a foreign country, income from sales of personal property attributable to such office or other fixed place of business shall be sourced outside the United States.
(B) Tax must be imposed
Subparagraph (A) shall not apply unless an income tax equal to at least 10 percent of the income from the sale is actually paid to a foreign country with respect to such income.
(2) Sales by nonresidents
(A) In general
Notwithstanding any other provisions of this part, if a nonresident maintains an office or other fixed place of business in the United States, income from any sale of personal property (including inventory property) attributable to such office or other fixed place of business shall be sourced in the United States. The preceding sentence shall not apply for purposes of section 971 (defining export trade corporation).
(B) Exception
Subparagraph (A) shall not apply to any sale of inventory property which is sold for use, disposition, or consumption outside the United States if an office or other fixed place of business of the taxpayer in a foreign country materially participated in the sale.
(3) Sales attributable to an office or other fixed place of business
The principles of section 864(c)(5) shall apply in determining whether a taxpayer has an office or other fixed place of business and whether a sale is attributable to such an office or other fixed place of business.
(f) Stock of affiliates
If—
(1) a United States resident sells stock in an affiliate which is a foreign corporation,
(2) such sale occurs in a foreign country in which such affiliate is engaged in the active conduct of a trade or business, and
(3) more than 50 percent of the gross income of such affiliate for the 3-year period ending with the close of such affiliate’s taxable year immediately preceding the year in which the sale occurred was derived from the active conduct of a trade or business in such foreign country,
any gain from such sale shall be sourced outside the United States. For purposes of paragraphs (2) and (3), the United States resident may elect to treat an affiliate and all other corporations which are wholly owned (directly or indirectly) by the affiliate as one corporation.
(g) United States resident; nonresident
For purposes of this section—
(1) In general
Except as otherwise provided in this subsection—
(A) United States resident
The term “United States resident” means—
(i) any individual who—
(I) is a United States citizen or a resident alien and does not have a tax home (as defined in section 911(d)(3)) in a foreign country, or
(II) is a nonresident alien and has a tax home (as so defined) in the United States, and
(ii) any corporation, trust, or estate which is a United States person (as defined in section 7701(a)(30)).
(B) Nonresident
The term “nonresident” means any person other than a United States resident.
(2) Special rules for United States citizens and resident aliens
For purposes of this section, a United States citizen or resident alien shall not be treated as a nonresident with respect to any sale of personal property unless an income tax equal to at least 10 percent of the gain derived from such sale is actually paid to a foreign country with respect to that gain.
(3) Special rule for certain stock sales by residents of Puerto Rico
Paragraph (2) shall not apply to the sale by an individual who was a bona fide resident of Puerto Rico during the entire taxable year of stock in a corporation if—
(A) such corporation is engaged in the active conduct of a trade or business in Puerto Rico, and
(B) more than 50 percent of its gross income for the 3-year period ending with the close of such corporation’s taxable year immediately preceding the year in which such sale occurred was derived from the active conduct of a trade or business in Puerto Rico.
For purposes of the preceding sentence, the taxpayer may elect to treat a corporation and all other corporations which are wholly owned (directly or indirectly) by such corporation as one corporation.
(h) Treatment of gains from sale of certain stock or intangibles and from certain liquidations
(1) In general
In the case of gain to which this subsection applies—
(A) such gain shall be sourced outside the United States, but
(B) subsections (a), (b), and (c) of section 904 and sections 907 and 960 shall be applied separately with respect to such gain.
(2) Gain to which subsection applies
This subsection shall apply to—
(A) Gain from sale of certain stock or intangibles
Any gain—
(i) which is from the sale of stock in a foreign corporation or an intangible (as defined in subsection (d)(2)) and which would otherwise be sourced in the United States under this section,
(ii) which, under a treaty obligation of the United States (applied without regard to this section), would be sourced outside the United States, and
(iii) with respect to which the taxpayer chooses the benefits of this subsection.
(B) Gain from liquidation in possession
Any gain which is derived from the receipt of any distribution in liquidation of a corporation—
(i) which is organized in a possession of the United States, and
(ii) more than 50 percent of the gross income of which during the 3-taxable year period ending with the close of the taxable year immediately preceding the taxable year in which the distribution is received is from the active conduct of a trade or business in such possession.
(i) Other definitions
For purposes of this section—
(1) Inventory property
The term “inventory property” means personal property described in paragraph (1) of section 1221(a).
(2) Sale includes exchange
The term “sale” includes an exchange or any other disposition.
(3) Treatment of possessions
Any possession of the United States shall be treated as a foreign country.
(4) Affiliate
The term “affiliate” means a member of the same affiliated group (within the meaning of section 1504(a) without regard to section 1504(b)).
(5) Treatment of partnerships
In the case of a partnership, except as provided in regulations, this section shall be applied at the partner level.
(j) Regulations
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purpose of this section, including regulations—
(1) relating to the treatment of losses from sales of personal property,
(2) applying the rules of this section to income derived from trading in futures contracts, forward contracts, options contracts, and other instruments, and
(3) providing that, subject to such conditions (which may include provisions comparable to section 877) as may be provided in such regulations, subsections (e)(1)(B) and (g)(2) shall not apply for purposes of sections 931 and 933.
(k) Cross references
(1) For provisions relating to the characterization as dividends for source purposes of gains from the sale of stock in certain foreign corporations, see section 1248.
(2) For sourcing of income from certain foreign currency transactions, see section 988.

### Español
Salvo disposición expresa en contrario, el ingreso derivado de la venta de bienes personales (incluyendo acciones y valores negociables) se atribuirá a la residencia del vendedor.

## 26 U.S.C. § 1: Tax imposed / Imposición del impuesto
`Title 26 > Subtitle A > Chapter 1 > Subchapter A > Part I > § 1 (OLRC release point 119-121)`

### English
(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 $89,150 | $5,535, plus 28% of the excess over $36,900.
Over $89,150 but not over $140,000 | $20,165, plus 31% of the excess over $89,150.
Over $140,000 but not over $250,000 | $35,928.50, plus 36% of the excess 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 $76,400 | $4,440, plus 28% of the excess over $29,600.
Over $76,400 but not over $127,500 | $17,544, plus 31% of the excess over $76,400.
Over $127,500 but not over $250,000 | $33,385, plus 36% of the excess 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 $53,500 | $3,315, plus 28% of the excess over $22,100.
Over $53,500 but not over $115,000 | $12,107, plus 31% of the excess over $53,500.
Over $115,000 but not over $250,000 | $31,172, plus 36% of the excess 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 $44,575 | $2,767.50, plus 28% of the excess over $18,450.
Over $44,575 but not over $70,000 | $10,082.50, plus 31% of the excess over $44,575.
Over $70,000 but not over $125,000 | $17,964.25, plus 36% of the excess 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 $3,500 | $225, plus 28% of the excess over $1,500.
Over $3,500 but not over $5,500 | $785, plus 31% of the excess over $3,500.
Over $5,500 but not over $7,500 | $1,405, plus 36% of the excess over $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 bracket for which a tax is imposed under such table by the cost-of-living adjustment for such calendar year, determined—
(i) except as provided in clause (ii), by substituting “1992” for “2016” in paragraph (3)(A)(ii), and
(ii) in the case of adjustments to the dollar amounts at which the 36 percent rate bracket begins or at which the 39.6 percent rate bracket begins, by substituting “1993” for “2016” in paragraph (3)(A)(ii),
(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 this subsection—
(A) In general
The cost-of-living adjustment for any calendar year is the percentage (if any) by which—
(i) the C-CPI-U for the preceding calendar year, exceeds
(ii) the CPI for calendar year 2016, multiplied by the amount determined under subparagraph (B).
(B) Amount determined
The amount determined under this clause is the amount obtained by dividing—
(i) the C-CPI-U for calendar year 2016, by
(ii) the CPI for calendar year 2016.
(C) Special rule for adjustments with a base year after 2016
For purposes of any provision of this title which provides for the substitution of a year after 2016 for “2016” in subparagraph (A)(ii), subparagraph (A) shall be applied by substituting “the C-CPI-U for calendar year 2016” for “the CPI for calendar year 2016” and all that follows in clause (ii) thereof.
(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) C-CPI-U
For purposes of this subsection—
(A) In general
The term “C-CPI-U” means the Chained Consumer Price Index for All Urban Consumers (as published by the Bureau of Labor Statistics of the Department of Labor). The values of the Chained Consumer Price Index for All Urban Consumers taken into account for purposes of determining the cost-of-living adjustment for any calendar year under this subsection shall be the latest values so published as of the date on which such Bureau publishes the initial value of the Chained Consumer Price Index for All Urban Consumers for the month of August for the preceding calendar year.
(B) Determination for calendar year
The C-CPI-U for any calendar year is the average of the C-CPI-U as of the close of the 12-month period ending on August 31 of such calendar year.
(7) Rounding
(A) In general
If any increase determined under paragraph (2)(A), section 63(c)(4), section 68(b)(2) 1 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.
(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 ½ of the amounts determined under subparagraph (A).
(g) Certain unearned income of 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—
(i) has not attained age 18 before the close of the taxable year, or
(ii)(I) has attained age 18 before the close of the taxable year and meets the age requirements of section 152(c)(3) (determined without regard to subparagraph (B) thereof), and
(II) whose earned income (as defined in section 911(d)(2)) for such taxable year does not exceed one-half of the amount of the individual’s support (within the meaning of section 152(c)(1)(D) after the application of section 152(f)(5) (without regard to subparagraph (A) thereof)) for such 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) 0 percent 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 lesser of—
(i) so much of the adjusted net capital gain (or, if less, taxable income) as exceeds the amount on which a tax is determined under subparagraph (B), or
(ii) the excess of—
(I) the amount of taxable income which would (without regard to this paragraph) be taxed at a rate below 39.6 percent, over
(II) the sum of the amounts on which a tax is determined under subparagraphs (A) and (B),
(D) 20 percent of the adjusted net capital gain (or, if less, taxable income) in excess of the sum of the amounts on which tax is determined under subparagraphs (B) and (C),
(E) 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
(F) 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—
(I) 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), and
(II) any corporation which first becomes a surrogate foreign corporation (as defined in section 7874(a)(2)(B)) after the date of the enactment of this subclause, other than a foreign corporation which is treated as a domestic corporation under section 7874(b).
(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) ½ 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 “2016” in subparagraph (A)(ii) 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.
(2) 25-, 28-, and 33-percent rate brackets
The tables under subsections (a), (b), (c), (d), and (e) shall be applied—
(A) by substituting “25%” for “28%” each place it appears (before the application of subparagraph (B)),
(B) by substituting “28%” for “31%” each place it appears, and
(C) by substituting “33%” for “36%” each place it appears.
(3) Modifications to income tax brackets for high-income taxpayers
(A) 35-percent rate bracket
In the case of taxable years beginning after December 31, 2012—
(i) the rate of tax under subsections (a), (b), (c), and (d) on a taxpayer’s taxable income in the highest rate bracket shall be 35 percent to the extent such income does not exceed an amount equal to the excess of—
(I) the applicable threshold, over
(II) the dollar amount at which such bracket begins, and
(ii) the 39.6 percent rate of tax under such subsections shall apply only to the taxpayer’s taxable income in such bracket in excess of the amount to which clause (i) applies.
(B) Applicable threshold
For purposes of this paragraph, the term “applicable threshold” means—
(i) $450,000 in the case of subsection (a),
(ii) $425,000 in the case of subsection (b),
(iii) $400,000 in the case of subsection (c), and
(iv) ½ the amount applicable under clause (i) (after adjustment, if any, under subparagraph (C)) in the case of subsection (d).
(C) Inflation adjustment
For purposes of this paragraph, with respect to taxable years beginning in calendar years after 2013, each of the dollar amounts under clauses (i), (ii), and (iii) of subparagraph (B) shall be adjusted in the same manner as under paragraph (1)(C)(i), except that subsection (f)(3)(A)(ii) shall be applied by substituting “2012” for “2016”.
(4) Adjustment of tables
The Secretary shall adjust the tables prescribed under subsection (f) to carry out this subsection.
(j) Modifications for taxable years beginning after 2017
(1) In general
In the case of a taxable year beginning after December 31, 2017—
(A) subsection (i) shall not apply, and
(B) this section (other than subsection (i)) shall be applied as provided in paragraphs (2) through (6).
(2) Rate tables
(A) Married individuals filing joint returns and surviving spouses
The following table shall be applied in lieu of the table contained in subsection (a):
If taxable income is: | The tax is:
Not over $19,050 | 10% of taxable income.
Over $19,050 but not over $77,400 | $1,905, plus 12% of the excess over $19,050.
Over $77,400 but not over $165,000 | $8,907, plus 22% of the excess over $77,400.
Over $165,000 but not over $315,000 | $28,179, plus 24% of the excess over $165,000.
Over $315,000 but not over $400,000 | $64,179, plus 32% of the excess over $315,000.
Over $400,000 but not over $600,000 | $91,379, plus 35% of the excess over $400,000.
Over $600,000 | $161,379, plus 37% of the excess over $600,000.
(B) Heads of households
The following table shall be applied in lieu of the table contained in subsection (b):
If taxable income is: | The tax is:
Not over $13,600 | 10% of taxable income.
Over $13,600 but not over $51,800 | $1,360, plus 12% of the excess over $13,600.
Over $51,800 but not over $82,500 | $5,944, plus 22% of the excess over $51,800.
Over $82,500 but not over $157,500 | $12,698, plus 24% of the excess over $82,500.
Over $157,500 but not over $200,000 | $30,698, plus 32% of the excess over $157,500.
Over $200,000 but not over $500,000 | $44,298, plus 35% of the excess over $200,000.
Over $500,000 | $149,298, plus 37% of the excess over $500,000.
(C) Unmarried individuals other than surviving spouses and heads of households
The following table shall be applied in lieu of the table contained in subsection (c):
If taxable income is: | The tax is:
Not over $9,525 | 10% of taxable income.
Over $9,525 but not over $38,700 | $952.50, plus 12% of the excess over $9,525.
Over $38,700 but not over $82,500 | $4,453.50, plus 22% of the excess over $38,700.
Over $82,500 but not over $157,500 | $14,089.50, plus 24% of the excess over $82,500.
Over $157,500 but not over $200,000 | $32,089.50, plus 32% of the excess over $157,500.
Over $200,000 but not over $500,000 | $45,689.50, plus 35% of the excess over $200,000.
Over $500,000 | $150,689.50, plus 37% of the excess over $500,000.
(D) Married individuals filing separate returns
The following table shall be applied in lieu of the table contained in subsection (d):
If taxable income is: | The tax is:
Not over $9,525 | 10% of taxable income.
Over $9,525 but not over $38,700 | $952.50, plus 12% of the excess over $9,525.
Over $38,700 but not over $82,500 | $4,453.50, plus 22% of the excess over $38,700.
Over $82,500 but not over $157,500 | $14,089.50, plus 24% of the excess over $82,500.
Over $157,500 but not over $200,000 | $32,089.50, plus 32% of the excess over $157,500.
Over $200,000 but not over $300,000 | $45,689.50, plus 35% of the excess over $200,000.
Over $300,000 | $80,689.50, plus 37% of the excess over $300,000.
(E) Estates and trusts
The following table shall be applied in lieu of the table contained in subsection (e):
If taxable income is: | The tax is:
Not over $2,550 | 10% of taxable income.
Over $2,550 but not over $9,150 | $255, plus 24% of the excess over $2,550.
Over $9,150 but not over $12,500 | $1,839, plus 35% of the excess over $9,150.
Over $12,500 | $3,011.50, plus 37% of the excess over $12,500.
(F) References to rate tables
Any reference in this title to a rate of tax under subsection (c) shall be treated as a reference to the corresponding rate bracket under subparagraph (C) of this paragraph, except that the reference in section 3402(q)(1) to the third lowest rate of tax applicable under subsection (c) shall be treated as a reference to the fourth lowest rate of tax under subparagraph (C).
(3) Adjustments
(A) No adjustment in 2018
The tables contained in paragraph (2) shall apply without adjustment for taxable years beginning after December 31, 2017, and before January 1, 2019.
(B) Subsequent years
For taxable years beginning after December 31, 2018, the Secretary shall prescribe tables which shall apply in lieu of the tables contained in paragraph (2) in the same manner as under paragraphs (1) and (2) of subsection (f) (applied without regard to clauses (i) and (ii) of subsection (f)(2)(A)), except that in prescribing such tables—
(i) solely for purposes of determining the dollar amounts at which any rate bracket higher than 12 percent ends and at which any rate bracket higher than 22 percent begins, subsection (f)(3) shall be applied by substituting “calendar year 2017” for “calendar year 2016” in subparagraph (A)(ii) thereof,
(ii) subsection (f)(7)(B) shall apply to any unmarried individual other than a surviving spouse or head of household, and
(iii) subsection (f)(8) shall not apply.
[(4) Repealed. Pub. L. 116–94, div. O, title V, § 501(a), Dec. 20, 2019, 133 Stat. 3180]
(5) Application of current income tax brackets to capital gains brackets
(A) In general
Section 1(h)(1) shall be applied—
(i) by substituting “below the maximum zero rate amount” for “which would (without regard to this paragraph) be taxed at a rate below 25 percent” in subparagraph (B)(i), and
(ii) by substituting “below the maximum 15-percent rate amount” for “which would (without regard to this paragraph) be taxed at a rate below 39.6 percent” in subparagraph (C)(ii)(I).
(B) Maximum amounts defined
For purposes of applying section 1(h) with the modifications described in subparagraph (A)—
(i) Maximum zero rate amount
The maximum zero rate amount shall be—
(I) in the case of a joint return or surviving spouse, $77,200,
(II) in the case of an individual who is a head of household (as defined in section 2(b)), $51,700,
(III) in the case of any other individual (other than an estate or trust), an amount equal to ½ of the amount in effect for the taxable year under subclause (I), and
(IV) in the case of an estate or trust, $2,600.
(ii) Maximum 15-percent rate amount
The maximum 15-percent rate amount shall be—
(I) in the case of a joint return or surviving spouse, $479,000 (½ such amount in the case of a married individual filing a separate return),
(II) in the case of an individual who is the head of a household (as defined in section 2(b)), $452,400,
(III) in the case of any other individual (other than an estate or trust), $425,800, and
(IV) in the case of an estate or trust, $12,700.
(C) Inflation adjustment
In the case of any taxable year beginning after 2018, each of the dollar amounts in clauses (i) and (ii) of subparagraph (B) shall be increased by an amount equal to—
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment determined under subsection (f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2017” for “calendar year 2016” in subparagraph (A)(ii) thereof.
If any increase under this subparagraph is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.
(6) Section 15 not to apply
Section 15 shall not apply to any change in a rate of tax by reason of this subsection.

### Español
Resumen en español; el texto oficial está en inglés. Impone el impuesto sobre el ingreso tributable de individuos, caudales y fideicomisos mediante tablas según el estado civil: casados que rinden conjuntamente y cónyuges supérstites (a), jefes de familia (b), solteros (c), casados que rinden por separado (d) y caudales y fideicomisos (e). Incluye los ajustes por inflación (f), el impuesto sobre ingreso no devengado de ciertos menores (g), las tasas máximas para ganancias de capital y dividendos calificados (h) y las modificaciones para años contributivos que comienzan después de 2017 (j).

## 26 U.S.C. § 24: Child tax credit / Crédito por hijos
`Title 26 > Subtitle A > Chapter 1 > Subchapter A > Part IV > Subpart A > § 24 (OLRC release point 119-121)`

### English
(a) Allowance of credit
There shall be allowed as a credit against the tax imposed by this chapter for the taxable year with respect to each qualifying child of the taxpayer for which the taxpayer is allowed a deduction under section 151 an amount equal to $1,000.
(b) Limitations
(1) Limitation based on adjusted gross income
The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $50 for each $1,000 (or fraction thereof) by which the taxpayer’s modified adjusted gross income exceeds the threshold amount. For purposes of the preceding sentence, the term “modified adjusted gross income” means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.
(2) Threshold amount
For purposes of paragraph (1), the term “threshold amount” means—
(A) $110,000 in the case of a joint return,
(B) $75,000 in the case of an individual who is not married, and
(C) $55,000 in the case of a married individual filing a separate return.
For purposes of this paragraph, marital status shall be determined under section 7703.
(c) Qualifying child
For purposes of this section—
(1) In general
The term “qualifying child” means a qualifying child of the taxpayer (as defined in section 152(c)) who has not attained age 17.
(2) Exception for certain noncitizens
The term “qualifying child” shall not include any individual who would not be a dependent if subparagraph (A) of section 152(b)(3) were applied without regard to all that follows “resident of the United States”.
(d) Portion of credit refundable
(1) In general
The aggregate credits allowed to a taxpayer under subpart C shall be increased by the lesser of—
(A) the credit which would be allowed under this section without regard to this subsection and the limitation under section 26(a) or
(B) the amount by which the aggregate amount of credits allowed by this subpart (determined without regard to this subsection) would increase if the limitation imposed by section 26(a) were increased by the greater of—
(i) 15 percent of so much of the taxpayer’s earned income (within the meaning of section 32) which is taken into account in computing taxable income for the taxable year as exceeds $3,000, or
(ii) in the case of a taxpayer with 3 or more qualifying children, the excess (if any) of—
(I) the taxpayer’s social security taxes for the taxable year, over
(II) the credit allowed under section 32 for the taxable year.
The amount of the credit allowed under this subsection shall not be treated as a credit allowed under this subpart and shall reduce the amount of credit otherwise allowable under subsection (a) without regard to section 26(a). For purposes of subparagraph (B), any amount excluded from gross income by reason of section 112 shall be treated as earned income which is taken into account in computing taxable income for the taxable year.
(2) Social security taxes
For purposes of paragraph (1)—
(A) In general
The term “social security taxes” means, with respect to any taxpayer for any taxable year—
(i) the amount of the taxes imposed by sections 3101 and 3201(a) on amounts received by the taxpayer during the calendar year in which the taxable year begins,
(ii) 50 percent of the taxes imposed by section 1401 on the self-employment income of the taxpayer for the taxable year, and
(iii) 50 percent of the taxes imposed by section 3211(a) on amounts received by the taxpayer during the calendar year in which the taxable year begins.
(B) Coordination with special refund of social security taxes
The term “social security taxes” shall not include any taxes to the extent the taxpayer is entitled to a special refund of such taxes under section 6413(c).
(C) Special rule
Any amounts paid pursuant to an agreement under section 3121(l) (relating to agreements entered into by American employers with respect to foreign affiliates) which are equivalent to the taxes referred to in subparagraph (A)(i) shall be treated as taxes referred to in such subparagraph.
(3) Exception for taxpayers excluding foreign earned income
Paragraph (1) shall not apply to any taxpayer for any taxable year if such taxpayer elects to exclude any amount from gross income under section 911 for such taxable year.
(e) Identification requirements
(1) Qualifying child identification requirement
No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes the name and taxpayer identification number of such qualifying child on the return of tax for the taxable year and such taxpayer identification number was issued on or before the due date for filing such return.
(2) Taxpayer identification requirement
No credit shall be allowed under this section if the taxpayer identification number of the taxpayer was issued after the due date for filing the return for the taxable year.
(f) Taxable year must be full taxable year
Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months.
(g) Restrictions on taxpayers who improperly claimed credit in prior year
(1) Taxpayers making prior fraudulent or reckless claims
(A) In general
No credit shall be allowed under this section for any taxable year in the disallowance period.
(B) Disallowance period
For purposes of subparagraph (A), the disallowance period is—
(i) the period of 10 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of credit under this section was due to fraud, and
(ii) the period of 2 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of credit under this section was due to reckless or intentional disregard of rules and regulations (but not due to fraud).
(2) Taxpayers making improper prior claims
In the case of a taxpayer who is denied credit under this section for any taxable year as a result of the deficiency procedures under subchapter B of chapter 63, no credit shall be allowed under this section for any subsequent taxable year unless the taxpayer provides such information as the Secretary may require to demonstrate eligibility for such credit.
(h) Special rules for taxable years beginning after 2017
(1) In general
In the case of a taxable year beginning after December 31, 2017, this section shall be applied as provided in paragraphs (2) through (7).
(2) Credit amount
Subsection (a) shall be applied by substituting “$2,200” for “$1,000”.
(3) Limitation
In lieu of the amount determined under subsection (b)(2), the threshold amount shall be $400,000 in the case of a joint return ($200,000 in any other case).
(4) Partial credit allowed for certain other dependents
(A) In general
The credit determined under subsection (a) (after the application of paragraph (2)) shall be increased by $500 for each dependent of the taxpayer (as defined in section 152) other than a qualifying child described in subsection (c).
(B) Exception for certain noncitizens
Subparagraph (A) shall not apply with respect to any individual who would not be a dependent if subparagraph (A) of section 152(b)(3) were applied without regard to all that follows “resident of the United States”.
(C) Certain qualifying children
In the case of any qualifying child with respect to whom a credit is not allowed under this section by reason of paragraph (7), such child shall be treated as a dependent to whom subparagraph (A) applies.
(5) Maximum amount of refundable credit
The amount determined under subsection (d)(1)(A) with respect to any qualifying child shall not exceed $1,400, and such subsection shall be applied without regard to paragraph (4) of this subsection.
(6) Earned income threshold for refundable credit
Subsection (d)(1)(B)(i) shall be applied by substituting “$2,500” for “$3,000”.
(7) Social security number required
(A) In general
No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes on the return of tax for the taxable year—
(i) the taxpayer’s social security number (or, in the case of a joint return, the social security number of at least 1 spouse), and
(ii) the social security number of such qualifying child.
(B) Social security number
For purposes of this paragraph, the term “social security number” means a social security number issued to an individual by the Social Security Administration, but only if the social security number is issued—
(i) to a citizen of the United States or pursuant to subclause (I) (or that portion of subclause (III) that relates to subclause (I)) of section 205(c)(2)(B)(i) of the Social Security Act, and
(ii) before the due date for such return.
(i) Inflation adjustments
(1) Maximum amount of refundable credit
In the case of a taxable year beginning after 2024, the $1,400 amount in subsection (h)(5) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “2017” for “2016” in subparagraph (A)(ii) thereof.
(2) Special rule for adjustment of credit amount
In the case of a taxable year beginning after 2025, the $2,200 amount in subsection (h)(2) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “2024” for “2016” in subparagraph (A)(ii) thereof.
(3) Rounding
If any increase under this subsection is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100.
(j) Reconciliation of credit and advance credit
(1) In general
The amount of the credit allowed under this section to any taxpayer for any taxable year shall be reduced (but not below zero) by the aggregate amount of payments made under section 7527A to such taxpayer during such taxable year. Any failure to so reduce the credit shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1).
(2) Excess advance payments
(A) In general
If the aggregate amount of payments under section 7527A to the taxpayer during the taxable year exceeds the amount of the credit allowed under this section to such taxpayer for such taxable year (determined without regard to paragraph (1)), the tax imposed by this chapter for such taxable year shall be increased by the amount of such excess. Any failure to so increase the tax shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1).
(B) Safe harbor based on modified adjusted gross income
(i) In general
In the case of a taxpayer whose modified adjusted gross income (as defined in subsection (b)) for the taxable year does not exceed 200 percent of the applicable income threshold, the amount of the increase determined under subparagraph (A) with respect to such taxpayer for such taxable year shall be reduced (but not below zero) by the safe harbor amount.
(ii) Phase out of safe harbor amount
In the case of a taxpayer whose modified adjusted gross income (as defined in subsection (b)) for the taxable year exceeds the applicable income threshold, the safe harbor amount otherwise in effect under clause (i) shall be reduced by the amount which bears the same ratio to such amount as such excess bears to the applicable income threshold.
(iii) Applicable income threshold
For purposes of this subparagraph, the term “applicable income threshold” means—
(I) $60,000 in the case of a joint return or surviving spouse (as defined in section 2(a)),
(II) $50,000 in the case of a head of household, and
(III) $40,000 in any other case.
(iv) Safe harbor amount
For purposes of this subparagraph, the term “safe harbor amount” means, with respect to any taxable year, the product of—
(I) $2,000, multiplied by
(II) the excess (if any) of the number of qualified children taken into account in determining the annual advance amount with respect to the taxpayer under section 7527A with respect to months beginning in such taxable year, over the number of qualified children taken into account in determining the credit allowed under this section for such taxable year.
(k) Application of credit in possessions
(1) Mirror code possessions
(A) In general
The Secretary shall pay to each possession of the United States with a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of this section (determined without regard to this subsection) with respect to taxable years beginning after 2020. Such amounts shall be determined by the Secretary based on information provided by the government of the respective possession.
(B) Coordination with credit allowed against United States income taxes
No credit shall be allowed under this section for any taxable year to any individual to whom a credit is allowable against taxes imposed by a possession of the United States with a mirror code tax system by reason of the application of this section in such possession for such taxable year.
(C) Mirror code tax system
For purposes of this paragraph, the term “mirror code tax system” means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States.
(2) Puerto Rico
(A) Application to taxable years in 2021
(i) For application of refundable credit to residents of Puerto Rico, see subsection (i)(1).
(ii) For nonapplication of advance payment to residents of Puerto Rico, see section 7527A(e)(4)(A).
(B) Application to taxable years after 2021
In the case of any bona fide resident of Puerto Rico (within the meaning of section 937(a)) for any taxable year beginning after December 31, 2021—
(i) the credit determined under this section shall be allowable to such resident, and
(ii) subsection (d)(1)(B)(ii) shall be applied without regard to the phrase “in the case of a taxpayer with 3 or more qualifying children”.
(3) American Samoa
(A) In general
The Secretary shall pay to American Samoa amounts estimated by the Secretary as being equal to the aggregate benefits that would have been provided to residents of American Samoa by reason of the application of this section for taxable years beginning after 2020 if the provisions of this section had been in effect in American Samoa (applied as if American Samoa were the United States and without regard to the application of this section to bona fide residents of Puerto Rico under subsection (i)(1)).
(B) Distribution requirement
Subparagraph (A) shall not apply unless American Samoa has a plan, which has been approved by the Secretary, under which American Samoa will promptly distribute such payments to its residents.
(C) Coordination with credit allowed against United States income taxes
(i) In general
In the case of a taxable year with respect to which a plan is approved under subparagraph (B), this section (other than this subsection) shall not apply to any individual eligible for a distribution under such plan.
(ii) Application of section in event of absence of approved plan
In the case of a taxable year with respect to which a plan is not approved under subparagraph (B)—
(I) if such taxable year begins in 2021, subsection (i)(1) shall be applied by substituting “bona fide resident of Puerto Rico or American Samoa” for “bona fide resident of Puerto Rico”, and
(II) if such taxable year begins after December 31, 2021, rules similar to the rules of paragraph (2)(B) shall apply with respect to bona fide residents of American Samoa (within the meaning of section 937(a)).
(4) Treatment of payments
For purposes of section 1324 of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.

### Español
Resumen en español; el texto oficial está en inglés. Concede un crédito contra el impuesto por cada hijo calificado (a), sujeto a límites según el ingreso bruto ajustado modificado (b), con una porción reembolsable (d) y requisitos de número de identificación (e). La subsección (h) contiene las reglas especiales para años contributivos que comienzan después de 2017, la (i) los ajustes por inflación, la (j) la reconciliación con pagos por adelantado y la (k) la aplicación del crédito en las posesiones, incluido Puerto Rico.

## 26 U.S.C. § 32: Earned income / Crédito por ingreso devengado
`Title 26 > Subtitle A > Chapter 1 > Subchapter A > Part IV > Subpart C > § 32 (OLRC release point 119-121)`

### English
(a) Allowance of credit
(1) In general
In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this subtitle for the taxable year an amount equal to the credit percentage of so much of the taxpayer’s earned income for the taxable year as does not exceed the earned income amount.
(2) Limitation
The amount of the credit allowable to a taxpayer under paragraph (1) for any taxable year shall not exceed the excess (if any) of—
(A) the credit percentage of the earned income amount, over
(B) the phaseout percentage of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds the phaseout amount.
(b) Percentages and amounts
For purposes of subsection (a)—
(1) Percentages
The credit percentage and the phaseout percentage shall be determined as follows:
In the case of an eligible individual with: | The credit percentage is: | The phaseout percentage is:
1 qualifying child | 34 | 15.98
2 qualifying children | 40 | 21.06
3 or more qualifying children | 45 | 21.06
No qualifying children | 7.65 | 7.65
(2) Amounts
(A) In general
Subject to subparagraph (B), the earned income amount and the phaseout amount shall be determined as follows:
In the case of an eligible individual with: | The earned income amount is: | The phaseout amount is:
1 qualifying child | $6,330 | $11,610
2 or more qualifying children | $8,890 | $11,610
No qualifying children | $4,220 | $5,280
(B) Joint returns
In the case of a joint return filed by an eligible individual and such individual’s spouse, the phaseout amount determined under subparagraph (A) shall be increased by $5,000.
(c) Definitions and special rules
For purposes of this section—
(1) Eligible individual
(A) In general
The term “eligible individual” means—
(i) any individual who has a qualifying child for the taxable year, or
(ii) any other individual who does not have a qualifying child for the taxable year, if—
(I) such individual’s principal place of abode is in the United States for more than one-half of such taxable year,
(II) such individual (or, if the individual is married, either the individual or the individual’s spouse) has attained age 25 but not attained age 65 before the close of the taxable year, and
(III) such individual is not a dependent for whom a deduction is allowable under section 151 to another taxpayer for any taxable year beginning in the same calendar year as such taxable year.
(B) Qualifying child ineligible
If an individual is the qualifying child of a taxpayer for any taxable year of such taxpayer beginning in a calendar year, such individual shall not be treated as an eligible individual for any taxable year of such individual beginning in such calendar year.
(C) Exception for individual claiming benefits under section 911
The term “eligible individual” does not include any individual who claims the benefits of section 911 (relating to citizens or residents living abroad) for the taxable year.
(D) Limitation on eligibility of nonresident aliens
The term “eligible individual” shall not include any individual who is a nonresident alien individual for any portion of the taxable year unless such individual is treated for such taxable year as a resident of the United States for purposes of this chapter by reason of an election under subsection (g) or (h) of section 6013.
(E) Identification number requirement
No credit shall be allowed under this section to an eligible individual who does not include on the return of tax for the taxable year—
(i) such individual’s taxpayer identification number, and
(ii) if the individual is married, the taxpayer identification number of such individual’s spouse.
(2) Earned income
(A) The term “earned income” means—
(i) wages, salaries, tips, and other employee compensation, but only if such amounts are includible in gross income for the taxable year, plus
(ii) the amount of the taxpayer’s net earnings from self-employment for the taxable year (within the meaning of section 1402(a)), but such net earnings shall be determined with regard to the deduction allowed to the taxpayer by section 164(f).
(B) For purposes of subparagraph (A)—
(i) the earned income of an individual shall be computed without regard to any community property laws,
(ii) no amount received as a pension or annuity shall be taken into account,
(iii) no amount to which section 871(a) applies (relating to income of nonresident alien individuals not connected with United States business) shall be taken into account,
(iv) no amount received for services provided by an individual while the individual is an inmate at a penal institution shall be taken into account,
(v) no amount described in subparagraph (A) received for service performed in work activities as defined in paragraph (4) or (7) of section 407(d) of the Social Security Act to which the taxpayer is assigned under any State program under part A of title IV of such Act shall be taken into account, but only to the extent such amount is subsidized under such State program, and
(vi) a taxpayer may elect to treat amounts excluded from gross income by reason of section 112 as earned income.
(3) Qualifying child
(A) In general
The term “qualifying child” means a qualifying child of the taxpayer (as defined in section 152(c), determined without regard to paragraph (1)(D) thereof and section 152(e)).
(B) Married individual
The term “qualifying child” shall not include an individual who is married as of the close of the taxpayer’s taxable year unless the taxpayer is entitled to a deduction under section 151 for such taxable year with respect to such individual (or would be so entitled but for section 152(e)).
(C) Place of abode
For purposes of subparagraph (A), the requirements of section 152(c)(1)(B) shall be met only if the principal place of abode is in the United States.
(D) Identification requirements
(i) In general
A qualifying child shall not be taken into account under subsection (b) unless the taxpayer includes the name, age, and TIN of the qualifying child on the return of tax for the taxable year.
(ii) Other methods
The Secretary may prescribe other methods for providing the information described in clause (i).
(4) Treatment of military personnel stationed outside the United States
For purposes of paragraphs (1)(A)(ii)(I) and (3)(C), the principal place of abode of a member of the Armed Forces of the United States shall be treated as in the United States during any period during which such member is stationed outside the United States while serving on extended active duty with the Armed Forces of the United States. For purposes of the preceding sentence, the term “extended active duty” means any period of active duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.
(d) Married individuals
(1) In general
In the case of an individual who is married, this section shall apply only if a joint return is filed for the taxable year under section 6013.
(2) Determination of marital status
For purposes of this section—
(A) In general
Except as provided in subparagraph (B), marital status shall be determined under section 7703(a).
(B) Special rule for separated spouse
An individual shall not be treated as married if such individual—
(i) is married (as determined under section 7703(a)) and does not file a joint return for the taxable year,
(ii) resides with a qualifying child of the individual for more than one-half of such taxable year, and
(iii)(I) during the last 6 months of such taxable year, does not have the same principal place of abode as the individual’s spouse, or
(II) has a decree, instrument, or agreement (other than a decree of divorce) described in section 121(d)(3)(C) with respect to the individual’s spouse and is not a member of the same household with the individual’s spouse by the end of the taxable year.
(e) Taxable year must be full taxable year
Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months.
(f) Amount of credit to be determined under tables
(1) In general
The amount of the credit allowed by this section shall be determined under tables prescribed by the Secretary.
(2) Requirements for tables
The tables prescribed under paragraph (1) shall reflect the provisions of subsections (a) and (b) and shall have income brackets of not greater than $50 each—
(A) for earned income between $0 and the amount of earned income at which the credit is phased out under subsection (b), and
(B) for adjusted gross income between the dollar amount at which the phaseout begins under subsection (b) and the amount of adjusted gross income at which the credit is phased out under subsection (b).
[(g) Repealed. Pub. L. 111–226, title II, § 219(a)(2), Aug. 10, 2010, 124 Stat. 2403]
[(h) Repealed. Pub. L. 107–16, title III, § 303(c), June 7, 2001, 115 Stat. 55]
(i) Denial of credit for individuals having excessive investment income
(1) In general
No credit shall be allowed under subsection (a) for the taxable year if the aggregate amount of disqualified income of the taxpayer for the taxable year exceeds $10,000.
(2) Disqualified income
For purposes of paragraph (1), the term “disqualified income” means—
(A) interest or dividends to the extent includible in gross income for the taxable year,
(B) interest received or accrued during the taxable year which is exempt from tax imposed by this chapter,
(C) the excess (if any) of—
(i) gross income from rents or royalties not derived in the ordinary course of a trade or business, over
(ii) the sum of—
(I) the deductions (other than interest) which are clearly and directly allocable to such gross income, plus
(II) interest deductions properly allocable to such gross income,
(D) the capital gain net income (as defined in section 1222) of the taxpayer for such taxable year, and
(E) the excess (if any) of—
(i) the aggregate income from all passive activities for the taxable year (determined without regard to any amount included in earned income under subsection (c)(2) or described in a preceding subparagraph), over
(ii) the aggregate losses from all passive activities for the taxable year (as so determined).
For purposes of subparagraph (E), the term “passive activity” has the meaning given such term by section 469.
(j) Inflation adjustments
(1) In general
In the case of any taxable year beginning after 2015 (2021 in the case of the dollar amount in subsection (i)(1)), each of the dollar amounts in subsections (b)(2) and (i)(1) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting in subparagraph (A)(ii) thereof—
(i) in the case of amounts in subsection (b)(2)(A), “calendar year 1995” for “calendar year 2016”,
(ii) in the case of the $5,000 amount in subsection (b)(2)(B), “calendar year 2008” for “calendar year 2016”, and
(iii) in the case of the $10,000 amount in subsection (i)(1), “calendar year 2020” for “calendar year 2016”.
(2) Rounding
(A) In general
If any dollar amount in subsection (b)(2)(A) (after being increased under subparagraph (B) thereof), after being increased under paragraph (1), is not a multiple of $10, such dollar amount shall be rounded to the nearest multiple of $10.
(B) Disqualified income threshold amount
If the dollar amount in subsection (i)(1), after being increased under paragraph (1), is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50.
(k) Restrictions on taxpayers who improperly claimed credit in prior year
(1) Taxpayers making prior fraudulent or reckless claims
(A) In general
No credit shall be allowed under this section for any taxable year in the disallowance period.
(B) Disallowance period
For purposes of paragraph (1), the disallowance period is—
(i) the period of 10 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of credit under this section was due to fraud, and
(ii) the period of 2 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of credit under this section was due to reckless or intentional disregard of rules and regulations (but not due to fraud).
(2) Taxpayers making improper prior claims
In the case of a taxpayer who is denied credit under this section for any taxable year as a result of the deficiency procedures under subchapter B of chapter 63, no credit shall be allowed under this section for any subsequent taxable year unless the taxpayer provides such information as the Secretary may require to demonstrate eligibility for such credit.
(l) Coordination with certain means-tested programs
For purposes of—
(1) the United States Housing Act of 1937,
(2) title V of the Housing Act of 1949,
(3) section 101 of the Housing and Urban Development Act of 1965,
(4) sections 221(d)(3), 235, and 236 of the National Housing Act, and
(5) the Food and Nutrition Act of 2008,
any refund made to an individual (or the spouse of an individual) by reason of this section shall not be treated as income (and shall not be taken into account in determining resources for the month of its receipt and the following month).
(m) Identification numbers
Solely for purposes of subsections (c)(1)(E) and (c)(3)(D), a taxpayer identification number means a social security number issued to an individual by the Social Security Administration (other than a social security number issued pursuant to clause (II) (or that portion of clause (III) that relates to clause (II)) of section 205(c)(2)(B)(i) of the Social Security Act) on or before the due date for filing the return for the taxable year.
(n) Special rules for individuals without qualifying children
In the case of any taxable year beginning after December 31, 2020, and before January 1, 2022—
(1) Decrease in minimum age for credit
(A) In general
Subsection (c)(1)(A)(ii)(II) shall be applied by substituting “the applicable minimum age” for “age 25”.
(B) Applicable minimum age
For purposes of this paragraph, the term “applicable minimum age” means—
(i) except as otherwise provided in this subparagraph, age 19,
(ii) in the case of a specified student (other than a qualified former foster youth or a qualified homeless youth), age 24, and
(iii) in the case of a qualified former foster youth or a qualified homeless youth, age 18.
(C) Specified student
For purposes of this paragraph, the term “specified student” means, with respect to any taxable year, an individual who is an eligible student (as defined in section 25A(b)(3)) during at least 5 calendar months during the taxable year.
(D) Qualified former foster youth
For purposes of this paragraph, the term “qualified former foster youth” means an individual who—
(i) on or after the date that such individual attained age 14, was in foster care provided under the supervision or administration of an entity administering (or eligible to administer) a plan under part B or part E of title IV of the Social Security Act (without regard to whether Federal assistance was provided with respect to such child under such part E), and
(ii) provides (in such manner as the Secretary may provide) consent for entities which administer a plan under part B or part E of title IV of the Social Security Act to disclose to the Secretary information related to the status of such individual as a qualified former foster youth.
(E) Qualified homeless youth
For purposes of this paragraph, the term “qualified homeless youth” means, with respect to any taxable year, an individual who certifies, in a manner as provided by the Secretary, that such individual is either an unaccompanied youth who is a homeless child or youth, or is unaccompanied, at risk of homelessness, and self-supporting.
(2) Elimination of maximum age for credit
Subsection (c)(1)(A)(ii)(II) shall be applied without regard to the phrase “but not attained age 65”.
(3) Increase in credit and phaseout percentages
The table contained in subsection (b)(1) shall be applied by substituting “15.3” for “7.65” each place it appears therein.
(4) Increase in earned income and phaseout amounts
(A) In general
The table contained in subsection (b)(2)(A) shall be applied—
(i) by substituting “$9,820” for “$4,220”, and
(ii) by substituting “$11,610” for “$5,280”.
(B) Coordination with inflation adjustment
Subsection (j) shall not apply to any dollar amount specified in this paragraph.

### Español
Resumen en español; el texto oficial está en inglés. Concede a individuos elegibles un crédito reembolsable igual a un porcentaje del ingreso devengado hasta un tope, que se reduce gradualmente a partir de un nivel de ingreso (a). Fija los porcentajes y cantidades según el número de hijos calificados (b), define individuo elegible, hijo calificado e ingreso devengado (c) y deniega el crédito cuando el ingreso de inversión es excesivo (i). Las cantidades se ajustan por inflación (j).

## 26 U.S.C. § 61: Gross income defined / Definición de ingreso bruto
`Title 26 > Subtitle A > Chapter 1 > Subchapter B > Part I > § 61 (OLRC release point 119-121)`

### English
(a) General definition
Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Annuities;
(9) Income from life insurance and endowment contracts;
(10) Pensions;
(11) Income from discharge of indebtedness;
(12) Distributive share of partnership gross income;
(13) Income in respect of a decedent; and
(14) Income from an interest in an estate or trust.
(b) Cross references
For items specifically included in gross income, see part II (sec. 71 and following). For items specifically excluded from gross income, see part III (sec. 101 and following).

### Español
Resumen en español; el texto oficial está en inglés. Salvo disposición en contrario, el ingreso bruto comprende todo ingreso de cualquier fuente, incluidos, entre otros, la compensación por servicios, el ingreso de negocios, las ganancias en la venta de propiedad, intereses, rentas, regalías, dividendos, anualidades, pensiones, la condonación de deudas y la participación distributiva en sociedades.

## 26 U.S.C. § 62: Adjusted gross income defined / Definición de ingreso bruto ajustado
`Title 26 > Subtitle A > Chapter 1 > Subchapter B > Part I > § 62 (OLRC release point 119-121)`

### English
(a) General rule
For purposes of this subtitle, the term “adjusted gross income” means, in the case of an individual, gross income minus the following deductions:
(1) Trade and business deductions
The deductions allowed by this chapter (other than by part VII of this subchapter) which are attributable to a trade or business carried on by the taxpayer, if such trade or business does not consist of the performance of services by the taxpayer as an employee.
(2) Certain trade and business deductions of employees
(A) Reimbursed expenses of employees
The deductions allowed by part VI (section 161 and following) which consist of expenses paid or incurred by the taxpayer, in connection with the performance by him of services as an employee, under a reimbursement or other expense allowance arrangement with his employer. The fact that the reimbursement may be provided by a third party shall not be determinative of whether or not the preceding sentence applies.
(B) Certain expenses of performing artists
The deductions allowed by section 162 which consist of expenses paid or incurred by a qualified performing artist in connection with the performances by him of services in the performing arts as an employee.
(C) Certain expenses of officials
The deductions allowed by section 162 which consist of expenses paid or incurred with respect to services performed by an official as an employee of a State or a political subdivision thereof in a position compensated in whole or in part on a fee basis.
(D) Certain expenses of early childhood, elementary, and secondary school teachers
The deductions allowed by section 162 which consist of expenses, not in excess of $250, paid or incurred by an eligible educator—
(i) by reason of the participation of the educator in professional development courses related to the curriculum in which the educator provides instruction or to the students for which the educator provides instruction, and
(ii) in connection with books, supplies (other than nonathletic supplies for courses of instruction in health or physical education), computer equipment (including related software and services) and other equipment, and supplementary materials used by the eligible educator in the classroom.
(E) Certain expenses of members of reserve components of the Armed Forces of the United States
The deductions allowed by section 162 which consist of expenses, determined at a rate not in excess of the rates for travel expenses (including per diem in lieu of subsistence) authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, paid or incurred by the taxpayer in connection with the performance of services by such taxpayer as a member of a reserve component of the Armed Forces of the United States for any period during which such individual is more than 100 miles away from home in connection with such services.
(3) Losses from sale or exchange of property
The deductions allowed by part VI (sec. 161 and following) as losses from the sale or exchange of property.
(4) Deductions attributable to rents and royalties
The deductions allowed by part VI (sec. 161 and following), by section 212 (relating to expenses for production of income), and by section 611 (relating to depletion) which are attributable to property held for the production of rents or royalties.
(5) Certain deductions of life tenants and income beneficiaries of property
In the case of a life tenant of property, or an income beneficiary of property held in trust, or an heir, legatee, or devisee of an estate, the deduction for depreciation allowed by section 167 and the deduction allowed by section 611.
(6) Pension, profit-sharing, and annuity plans of self-employed individuals
In the case of an individual who is an employee within the meaning of section 401(c)(1), the deduction allowed by section 404.
(7) Retirement savings
The deduction allowed by section 219 (relating to deduction of certain retirement savings).
[(8) Repealed. Pub. L. 104–188, title I, § 1401(b)(4), Aug. 20, 1996, 110 Stat. 1788]
(9) Penalties forfeited because of premature withdrawal of funds from time savings accounts or deposits
The deductions allowed by section 165 for losses incurred in any transaction entered into for profit, though not connected with a trade or business, to the extent that such losses include amounts forfeited to a bank, mutual savings bank, savings and loan association, building and loan association, cooperative bank or homestead association as a penalty for premature withdrawal of funds from a time savings account, certificate of deposit, or similar class of deposit.
[(10) Repealed. Pub. L. 115–97, title I, § 11051(b)(2)(A), Dec. 22, 2017, 131 Stat. 2089]
(11) Reforestation expenses
The deduction allowed by section 194.
(12) Certain required repayments of supplemental unemployment compensation benefits
The deduction allowed by section 165 for the repayment to a trust described in paragraph (9) or (17) of section 501(c) of supplemental unemployment compensation benefits received from such trust if such repayment is required because of the receipt of trade readjustment allowances under section 231 or 232 of the Trade Act of 1974 (19 U.S.C. 2291 and 2292).
(13) Jury duty pay remitted to employer
Any deduction allowable under this chapter by reason of an individual remitting any portion of any jury pay to such individual’s employer in exchange for payment by the employer of compensation for the period such individual was performing jury duty. For purposes of the preceding sentence, the term “jury pay” means any payment received by the individual for the discharge of jury duty.
[(14) Repealed. Pub. L. 113–295, div. A, title II, § 221(a)(34)(C), Dec. 19, 2014, 128 Stat. 4042]
(15) Moving expenses
The deduction allowed by section 217.
(16) Archer MSAs
The deduction allowed by section 220.
(17) Interest on education loans
The deduction allowed by section 221.
[(18) Repealed. Pub. L. 116–260, div. EE, title I, § 104(b)(2)(A), Dec. 27, 2020, 134 Stat. 3041]
(19) Health savings accounts
The deduction allowed by section 223.
(20) Costs involving discrimination suits, etc.
Any deduction allowable under this chapter for attorney fees and court costs paid by, or on behalf of, the taxpayer in connection with any action involving a claim of unlawful discrimination (as defined in subsection (e)) or a claim of a violation of subchapter III of chapter 37 of title 31, United States Code, or a claim made under section 1862(b)(3)(A) of the Social Security Act (42 U.S.C. 1395y(b)(3)(A)). The preceding sentence shall not apply to any deduction in excess of the amount includible in the taxpayer’s gross income for the taxable year on account of a judgment or settlement (whether by suit or agreement and whether as lump sum or periodic payments) resulting from such claim.
(21) Attorneys’ fees relating to awards to whistleblowers
(A) In general
Any deduction allowable under this chapter for attorney fees and court costs paid by, or on behalf of, the taxpayer in connection with any award under—
(i) section 7623(b), or
(ii) in the case of taxable years beginning after December 31, 2017, any action brought under—
(I) section 21F of the Securities Exchange Act of 1934 (15 U.S.C. 78u–6),
(II) a State false claims act, including a State false claims act with qui tam provisions, or
(III) section 23 of the Commodity Exchange Act (7 U.S.C. 26).
(B) May not exceed award
Subparagraph (A) shall not apply to any deduction in excess of the amount includible in the taxpayer’s gross income for the taxable year on account of such award.
Nothing in this section shall permit the same item to be deducted more than once. Any deduction allowed by section 199A shall not be treated as a deduction described in any of the preceding paragraphs of this subsection.
(b) Qualified performing artist
(1) In general
For purposes of subsection (a)(2)(B), the term “qualified performing artist” means, with respect to any taxable year, any individual if—
(A) such individual performed services in the performing arts as an employee during the taxable year for at least 2 employers,
(B) the aggregate amount allowable as a deduction under section 162 in connection with the performance of such services exceeds 10 percent of such individual’s gross income attributable to the performance of such services, and
(C) the adjusted gross income of such individual for the taxable year (determined without regard to subsection (a)(2)(B)) does not exceed $16,000.
(2) Nominal employer not taken into account
An individual shall not be treated as performing services in the performing arts as an employee for any employer during any taxable year unless the amount received by such individual from such employer for the performance of such services during the taxable year equals or exceeds $200.
(3) Special rules for married couples
(A) In general
Except in the case of a husband and wife who lived apart at all times during the taxable year, if the taxpayer is married at the close of the taxable year, subsection (a)(2)(B) shall apply only if the taxpayer and his spouse file a joint return for the taxable year.
(B) Application of paragraph (1)
In the case of a joint return—
(i) paragraph (1) (other than subparagraph (C) thereof) shall be applied separately with respect to each spouse, but
(ii) paragraph (1)(C) shall be applied with respect to their combined adjusted gross income.
(C) Determination of marital status
For purposes of this subsection, marital status shall be determined under section 7703(a).
(D) Joint return
For purposes of this subsection, the term “joint return” means the joint return of a husband and wife made under section 6013.
(c) Certain arrangements not treated as reimbursement arrangements
For purposes of subsection (a)(2)(A), an arrangement shall in no event be treated as a reimbursement or other expense allowance arrangement if—
(1) such arrangement does not require the employee to substantiate the expenses covered by the arrangement to the person providing the reimbursement, or
(2) such arrangement provides the employee the right to retain any amount in excess of the substantiated expenses covered under the arrangement.
The substantiation requirements of the preceding sentence shall not apply to any expense to the extent that substantiation is not required under section 274(d) for such expense by reason of the regulations prescribed under the 2nd sentence thereof.
(d) Definition; special rules
(1) Eligible educator
(A) In general
For purposes of subsection (a)(2)(D), the term “eligible educator” means, with respect to any taxable year, an individual who is an early childhood or kindergarten through grade 12 teacher, instructor, counselor, principal, or aide in a school for at least 900 hours during a school year.
(B) School
The term “school” means—
(i) in the case of early childhood education, any school or childcare facility which—
(I) provides educational or childcare services for more than 2 individuals (other than individuals who reside at the school or facility) who have not attained age 6, and
(II) operates at the public expense or receives a fee, payment, or grant for providing such services for any of the individuals (regardless of whether such school or facility is operated for profit), and
(ii) in the case of elementary education or secondary education (kindergarten through grade 12), any school which provides such education, as determined under State law.
(2) Coordination with exclusions
A deduction shall be allowed under subsection (a)(2)(D) for expenses only to the extent the amount of such expenses exceeds the amount excludable under section 135, 529(c)(1), or 530(d)(2) for the taxable year.
(3) Inflation adjustment
In the case of any taxable year beginning after 2015, the $250 amount in subsection (a)(2)(D) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2014” for “calendar year 2016” in subparagraph (A)(ii) thereof.
Any increase determined under the preceding sentence shall be rounded to the nearest multiple of $50.
(e) Unlawful discrimination defined
For purposes of subsection (a)(20), the term “unlawful discrimination” means an act that is unlawful under any of the following:
(1) Section 302 of the Civil Rights Act of 1991 (42 U.S.C. 2000e–16b).
(2) Section 201, 202, 203, 204, 205, 206, 207, or 208 of the Congressional Accountability Act of 1995 (2 U.S.C. 1311, 1312, 1313, 1314, 1315, 1316, or 1317).1
(3) The National Labor Relations Act (29 U.S.C. 151 et seq.).
(4) The Fair Labor Standards Act of 1938 (29 U.S.C. 201 et seq.).
(5) Section 4 or 15 of the Age Discrimination in Employment Act of 1967 (29 U.S.C. 623 or 633a).
(6) Section 501 or 504 of the Rehabilitation Act of 1973 (29 U.S.C. 791 or 794).
(7) Section 510 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1140).
(8) Title IX of the Education Amendments of 1972 (20 U.S.C. 1681 et seq.).
(9) The Employee Polygraph Protection Act of 1988 (29 U.S.C. 2001 et seq.).
(10) The Worker Adjustment and Retraining Notification Act (29 U.S.C. 2102 et seq.).
(11) Section 105 of the Family and Medical Leave Act of 1993 (29 U.S.C. 2615).
(12) Chapter 43 of title 38, United States Code (relating to employment and reemployment rights of members of the uniformed services).
(13) Section 1977, 1979, or 1980 of the Revised Statutes (42 U.S.C. 1981, 1983, or 1985).
(14) Section 703, 704, or 717 of the Civil Rights Act of 1964 (42 U.S.C. 2000e–2, 2000e–3, or 2000e–16).
(15) Section 804, 805, 806, 808, or 818 of the Fair Housing Act (42 U.S.C. 3604, 3605, 3606, 3608, or 3617).
(16) Section 102, 202, 302, or 503 of the Americans with Disabilities Act of 1990 (42 U.S.C. 12112, 12132, 12182, or 12203).
(17) Any provision of Federal law (popularly known as whistleblower protection provisions) prohibiting the discharge of an employee, the discrimination against an employee, or any other form of retaliation or reprisal against an employee for asserting rights or taking other actions permitted under Federal law.
(18) Any provision of Federal, State, or local law, or common law claims permitted under Federal, State, or local law—
(i) providing for the enforcement of civil rights, or
(ii) regulating any aspect of the employment relationship, including claims for wages, compensation, or benefits, or prohibiting the discharge of an employee, the discrimination against an employee, or any other form of retaliation or reprisal against an employee for asserting rights or taking other actions permitted by law.

### Español
Resumen en español; el texto oficial está en inglés. Define el ingreso bruto ajustado de un individuo como el ingreso bruto menos las deducciones enumeradas en la subsección (a), entre ellas ciertos gastos de negocio, pérdidas en la venta de propiedad, deducciones atribuibles a rentas y regalías, y aportaciones a ciertos planes de retiro. Incluye reglas para artistas calificados (b) y para acuerdos de reembolso (c).

## 26 U.S.C. § 63: Taxable income defined / Definición de ingreso tributable
`Title 26 > Subtitle A > Chapter 1 > Subchapter B > Part I > § 63 (OLRC release point 119-121)`

### English
(a) In general
Except as provided in subsection (b), for purposes of this subtitle, the term “taxable income” means gross income minus the deductions allowed by this chapter (other than the standard deduction).
(b) Individuals who do not itemize their deductions
In the case of an individual who does not elect to itemize his deductions for the taxable year, for purposes of this subtitle, the term “taxable income” means adjusted gross income, minus—
(1) the standard deduction,
(2) the deduction for personal exemptions provided in section 151,
(3) any deduction provided in section 199A,
(4) the deduction provided in section 170(p),
(5) the deduction provided in section 224,
(6) the deduction provided in section 225,
(7) so much of the deduction allowed by section 163(a) as is attributable to the exception under section 163(h)(4)(A), and
(8) so much of the deduction allowed by section 165(a) as is attributable to the qualified net disaster loss (as defined in section 165(h)(6)(B)).
(c) Standard deduction
For purposes of this subtitle—
(1) In general
Except as otherwise provided in this subsection, the term “standard deduction” means the sum of—
(A) the basic standard deduction, and
(B) the additional standard deduction.
(2) Basic standard deduction
For purposes of paragraph (1), the basic standard deduction is—
(A) 200 percent of the dollar amount in effect under subparagraph (C) for the taxable year in the case of—
(i) a joint return, or
(ii) a surviving spouse (as defined in section 2(a)),
(B) $4,400 in the case of a head of household (as defined in section 2(b)), or
(C) $3,000 in any other case.
(3) Additional standard deduction for aged and blind
For purposes of paragraph (1), the additional standard deduction is the sum of each additional amount to which the taxpayer is entitled under subsection (f).
(4) Adjustments for inflation
In the case of any taxable year beginning in a calendar year after 1988, each dollar amount contained in paragraph (2)(B), (2)(C), or (5) or subsection (f) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting for “calendar year 2016” in subparagraph (A)(ii) thereof—
(i) “calendar year 1987” in the case of the dollar amounts contained in paragraph (2)(B), (2)(C), or (5)(A) or subsection (f), and
(ii) “calendar year 1997” in the case of the dollar amount contained in paragraph (5)(B).
(5) Limitation on basic standard deduction in the case of certain dependents
In the case of an individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual’s taxable year begins, the basic standard deduction applicable to such individual for such individual’s taxable year shall not exceed the greater of—
(A) $500, or
(B) the sum of $250 and such individual’s earned income.
(6) Certain individuals, etc., not eligible for standard deduction
In the case of—
(A) a married individual filing a separate return where either spouse itemizes deductions,
(B) a nonresident alien individual,
(C) an individual making a return under section 443(a)(1) for a period of less than 12 months on account of a change in his annual accounting period, or
(D) an estate or trust, common trust fund, or partnership,
the standard deduction shall be zero.
(7) Special rules for taxable years beginning after 2017
In the case of a taxable year beginning after December 31, 2017—
(A) Increase in standard deduction
Paragraph (2) shall be applied—
(i) by substituting “$23,625” for “$4,400” in subparagraph (B), and
(ii) by substituting “$15,750” for “$3,000” in subparagraph (C).
(B) Adjustment for inflation
(i) In general
Paragraph (4) shall not apply to the dollar amounts contained in paragraphs (2)(B) and (2)(C).
(ii) Adjustment of increased amounts
In the case of a taxable year beginning after 2025, the $23,625 and $15,750 amounts in subparagraph (A) shall each be increased by an amount equal to—
(I) such dollar amount, multiplied by
(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “2024” for “2016” in subparagraph (A)(ii) thereof.
If any increase under this clause is not a multiple of $50, such increase shall be rounded to the next lowest multiple of $50.
(d) Itemized deductions
For purposes of this subtitle, the term “itemized deductions” means the deductions allowable under this chapter other than—
(1) the deductions allowable in arriving at adjusted gross income, and
(2) any deduction referred to in any paragraph of subsection (b).
(e) Election to itemize
(1) In general
Unless an individual makes an election under this subsection for the taxable year, no itemized deduction shall be allowed for the taxable year. For purposes of this subtitle, the determination of whether a deduction is allowable under this chapter shall be made without regard to the preceding sentence.
(2) Time and manner of election
Any election under this subsection shall be made on the taxpayer’s return, and the Secretary shall prescribe the manner of signifying such election on the return.
(3) Change of election
Under regulations prescribed by the Secretary, a change of election with respect to itemized deductions for any taxable year may be made after the filing of the return for such year. If the spouse of the taxpayer filed a separate return for any taxable year corresponding to the taxable year of the taxpayer, the change shall not be allowed unless, in accordance with such regulations—
(A) the spouse makes a change of election with respect to itemized deductions, for the taxable year covered in such separate return, consistent with the change of treatment sought by the taxpayer, and
(B) the taxpayer and his spouse consent in writing to the assessment (within such period as may be agreed on with the Secretary) of any deficiency, to the extent attributable to such change of election, even though at the time of the filing of such consent the assessment of such deficiency would otherwise be prevented by the operation of any law or rule of law.
This paragraph shall not apply if the tax liability of the taxpayer’s spouse for the taxable year corresponding to the taxable year of the taxpayer has been compromised under section 7122.
(f) Aged or blind additional amounts
(1) Additional amounts for the aged
The taxpayer shall be entitled to an additional amount of $600—
(A) for himself if he has attained age 65 before the close of his taxable year, and
(B) for the spouse of the taxpayer if the spouse has attained age 65 before the close of the taxable year and an additional exemption is allowable to the taxpayer for such spouse under section 151(b).
(2) Additional amount for blind
The taxpayer shall be entitled to an additional amount of $600—
(A) for himself if he is blind at the close of the taxable year, and
(B) for the spouse of the taxpayer if the spouse is blind as of the close of the taxable year and an additional exemption is allowable to the taxpayer for such spouse under section 151(b).
For purposes of subparagraph (B), if the spouse dies during the taxable year the determination of whether such spouse is blind shall be made as of the time of such death.
(3) Higher amount for certain unmarried individuals
In the case of an individual who is not married and is not a surviving spouse, paragraphs (1) and (2) shall be applied by substituting “$750” for “$600”.
(4) Blindness defined
For purposes of this subsection, an individual is blind only if his central visual acuity does not exceed 20/200 in the better eye with correcting lenses, or if his visual acuity is greater than 20/200 but is accompanied by a limitation in the fields of vision such that the widest diameter of the visual field subtends an angle no greater than 20 degrees.
(g) Marital status
For purposes of this section, marital status shall be determined under section 7703.

### Español
Resumen en español; el texto oficial está en inglés. El ingreso tributable es el ingreso bruto menos las deducciones permitidas (a); para quien no detalla sus deducciones, es el ingreso bruto ajustado menos la deducción estándar y otras deducciones indicadas en (b). Define la deducción estándar y sus ajustes (c), las deducciones detalladas (d), la elección de detallar (e), las cantidades adicionales por edad o ceguera (f) y el estado civil (g).

## 26 U.S.C. § 911: Citizens or residents of the United States living abroad / Ciudadanos o residentes de los Estados Unidos que viven en el extranjero
`Title 26 > Subtitle A > Chapter 1 > Subchapter N > Part III > Subpart B > § 911 (OLRC release point 119-121)`

### English
(a) Exclusion from gross income
At the election of a qualified individual (made separately with respect to paragraphs (1) and (2)), there shall be excluded from the gross income of such individual, and exempt from taxation under this subtitle, for any taxable year—
(1) the foreign earned income of such individual, and
(2) the housing cost amount of such individual.
(b) Foreign earned income
(1) Definition
For purposes of this section—
(A) In general
The term “foreign earned income” with respect to any individual means the amount received by such individual from sources within a foreign country or countries which constitute earned income attributable to services performed by such individual during the period described in subparagraph (A) or (B) of subsection (d)(1), whichever is applicable.
(B) Certain amounts not included in foreign earned income
The foreign earned income for an individual shall not include amounts—
(i) received as a pension or annuity,
(ii) paid by the United States or an agency thereof to an employee of the United States or an agency thereof,
(iii) included in gross income by reason of section 402(b) (relating to taxability of beneficiary of nonexempt trust) or section 403(c) (relating to taxability of beneficiary under a nonqualified annuity), or
(iv) received after the close of the taxable year following the taxable year in which the services to which the amounts are attributable are performed.
(2) Limitation on foreign earned income
(A) In general
The foreign earned income of an individual which may be excluded under subsection (a)(1) for any taxable year shall not exceed the amount of foreign earned income computed on a daily basis at an annual rate equal to the exclusion amount for the calendar year in which such taxable year begins.
(B) Attribution to year in which services are performed
For purposes of applying subparagraph (A), amounts received shall be considered received in the taxable year in which the services to which the amounts are attributable are performed.
(C) Treatment of community income
In applying subparagraph (A) with respect to amounts received from services performed by a husband or wife which are community income under community property laws applicable to such income, the aggregate amount which may be excludable from the gross income of such husband and wife under subsection (a)(1) for any taxable year shall equal the amount which would be so excludable if such amounts did not constitute community income.
(D) Exclusion amount
(i) In general
The exclusion amount for any calendar year is $80,000.
(ii) Inflation adjustment
In the case of any taxable year beginning in a calendar year after 2005, the $80,000 amount in clause (i) shall be increased by an amount equal to the product of—
(I) such dollar amount, and
(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “2004” for “2016” in subparagraph (A)(ii) thereof.
If any increase determined under the preceding sentence is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100.
(c) Housing cost amount
For purposes of this section—
(1) In general
The term “housing cost amount” means an amount equal to the excess of—
(A) the housing expenses of an individual for the taxable year to the extent such expenses do not exceed the amount determined under paragraph (2), over
(B) an amount equal to the product of—
(i) 16 percent of the amount (computed on a daily basis) in effect under subsection (b)(2)(D) for the calendar year in which such taxable year begins, multiplied by
(ii) the number of days of such taxable year within the applicable period described in subparagraph (A) or (B) of subsection (d)(1).
(2) Limitation
(A) In general
The amount determined under this paragraph is an amount equal to the product of—
(i) 30 percent (adjusted as may be provided under subparagraph (B)) of the amount (computed on a daily basis) in effect under subsection (b)(2)(D) for the calendar year in which the taxable year of the individual begins, multiplied by
(ii) the number of days of such taxable year within the applicable period described in subparagraph (A) or (B) of subsection (d)(1).
(B) Regulations
The Secretary may issue regulations or other guidance providing for the adjustment of the percentage under subparagraph (A)(i) on the basis of geographic differences in housing costs relative to housing costs in the United States.
(3) Housing expenses
(A) In general
The term “housing expenses” means the reasonable expenses paid or incurred during the taxable year by or on behalf of an individual for housing for the individual (and, if they reside with him, for his spouse and dependents) in a foreign country. The term—
(i) includes expenses attributable to the housing (such as utilities and insurance), but
(ii) does not include interest and taxes of the kind deductible under section 163 or 164 or any amount allowable as a deduction under section 216(a).
Housing expenses shall not be treated as reasonable to the extent such expenses are lavish or extravagant under the circumstances.
(B) Second foreign household
(i) In general
Except as provided in clause (ii), only housing expenses incurred with respect to that abode which bears the closest relationship to the tax home of the individual shall be taken into account under paragraph (1).
(ii) Separate household for spouse and dependents
If an individual maintains a separate abode outside the United States for his spouse and dependents and they do not reside with him because of living conditions which are dangerous, unhealthful, or otherwise adverse, then—
(I) the words “if they reside with him” in subparagraph (A) shall be disregarded, and
(II) the housing expenses incurred with respect to such abode shall be taken into account under paragraph (1).
(4) Special rules where housing expenses not provided by employer
(A) In general
To the extent the housing cost amount of any individual for any taxable year is not attributable to employer provided amounts, such amount shall be treated as a deduction allowable in computing adjusted gross income to the extent of the limitation of subparagraph (B).
(B) Limitation
For purposes of subparagraph (A), the limitation of this subparagraph is the excess of—
(i) the foreign earned income of the individual for the taxable year, over
(ii) the amount of such income excluded from gross income under subsection (a) for the taxable year.
(C) 1-year carryover of housing amounts not allowed by reason of subparagraph (B)
(i) In general
The amount not allowable as a deduction for any taxable year under subparagraph (A) by reason of the limitation of subparagraph (B) shall be treated as a deduction allowable in computing adjusted gross income for the succeeding taxable year (and only for the succeeding taxable year) to the extent of the limitation of clause (ii) for such succeeding taxable year.
(ii) Limitation
For purposes of clause (i), the limitation of this clause for any taxable year is the excess of—
(I) the limitation of subparagraph (B) for such taxable year, over
(II) amounts treated as a deduction under subparagraph (A) for such taxable year.
(D) Employer provided amounts
For purposes of this paragraph, the term “employer provided amounts” means any amount paid or incurred on behalf of the individual by the individual’s employer which is foreign earned income included in the individual’s gross income for the taxable year (without regard to this section).
(E) Foreign earned income
For purposes of this paragraph, an individual’s foreign earned income for any taxable year shall be determined without regard to the limitation of subparagraph (A) of subsection (b)(2).
(d) Definitions and special rules
For purposes of this section—
(1) Qualified individual
The term “qualified individual” means an individual whose tax home is in a foreign country and who is—
(A) a citizen of the United States and establishes to the satisfaction of the Secretary that he has been a bona fide resident of a foreign country or countries for an uninterrupted period which includes an entire taxable year, or
(B) a citizen or resident of the United States and who, during any period of 12 consecutive months, is present in a foreign country or countries during at least 330 full days in such period.
(2) Earned income
(A) In general
The term “earned income” means wages, salaries, or professional fees, and other amounts received as compensation for personal services actually rendered, but does not include that part of the compensation derived by the taxpayer for personal services rendered by him to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered.
(B) Taxpayer engaged in trade or business
In the case of a taxpayer engaged in a trade or business in which both personal services and capital are material income-producing factors, under regulations prescribed by the Secretary, a reasonable allowance as compensation for the personal services rendered by the taxpayer, not in excess of 30 percent of his share of the net profits of such trade or business, shall be considered as earned income.
(3) Tax home
The term “tax home” means, with respect to any individual, such individual’s home for purposes of section 162(a)(2) (relating to traveling expenses while away from home). An individual shall not be treated as having a tax home in a foreign country for any period for which his abode is within the United States, unless such individual is serving in an area designated by the President of the United States by Executive order as a combat zone for purposes of section 112 in support of the Armed Forces of the United States.
(4) Waiver of period of stay in foreign country
Notwithstanding paragraph (1), an individual who—
(A) is a bona fide resident of, or is present in, a foreign country for any period,
(B) leaves such foreign country after August 31, 1978—
(i) during any period during which the Secretary determines, after consultation with the Secretary of State or his delegate, that individuals were required to leave such foreign country because of war, civil unrest, or similar adverse conditions in such foreign country which precluded the normal conduct of business by such individuals, and
(ii) before meeting the requirements of such paragraph (1), and
(C) establishes to the satisfaction of the Secretary that such individual could reasonably have been expected to have met such requirements but for the conditions referred to in clause (i) of subparagraph (B),
shall be treated as a qualified individual with respect to the period described in subparagraph (A) during which he was a bona fide resident of, or was present in, the foreign country, and in applying subsections (b)(2)(A), (c)(1)(B)(ii), and (c)(2)(A)(ii) with respect to such individual, only the days within such period shall be taken into account.
(5) Test of bona fide residence
If—
(A) an individual who has earned income from sources within a foreign country submits a statement to the authorities of that country that he is not a resident of that country, and
(B) such individual is held not subject as a resident of that country to the income tax of that country by its authorities with respect to such earnings,
then such individual shall not be considered a bona fide resident of that country for purposes of paragraph (1)(A).
(6) Denial of double benefits
No deduction or exclusion from gross income under this subtitle or credit against the tax imposed by this chapter (including any credit or deduction for the amount of taxes paid or accrued to a foreign country or possession of the United States) shall be allowed to the extent such deduction, exclusion, or credit is properly allocable to or chargeable against amounts excluded from gross income under subsection (a).
(7) Aggregate benefit cannot exceed foreign earned income
The sum of the amount excluded under subsection (a) and the amount deducted under subsection (c)(4)(A) for the taxable year shall not exceed the individual’s foreign earned income for such year.
(8) Limitation on income earned in restricted country
(A) In general
If travel (or any transaction in connection with such travel) with respect to any foreign country is subject to the regulations described in subparagraph (B) during any period—
(i) the term “foreign earned income” shall not include any income from sources within such country attributable to services performed during such period,
(ii) the term “housing expenses” shall not include any expenses allocable to such period for housing in such country or for housing of the spouse or dependents of the taxpayer in another country while the taxpayer is present in such country, and
(iii) an individual shall not be treated as a bona fide resident of, or as present in, a foreign country for any day during which such individual was present in such country during such period.
(B) Regulations
For purposes of this paragraph, regulations are described in this subparagraph if such regulations—
(i) have been adopted pursuant to the Trading With the Enemy Act (50 U.S.C. 4301 et seq.) or the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq.), and
(ii) include provisions generally prohibiting citizens and residents of the United States from engaging in transactions related to travel to, from, or within a foreign country.
(C) Exception
Subparagraph (A) shall not apply to any individual during any period in which such individual’s activities are not in violation of the regulations described in subparagraph (B).
(9) Regulations
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section, including regulations providing rules—
(A) for cases where a husband and wife each have earned income from sources outside the United States, and
(B) for married individuals filing separate returns.
(e) Election
(1) In general
An election under subsection (a) shall apply to the taxable year for which made and to all subsequent taxable years unless revoked under paragraph (2).
(2) Revocation
A taxpayer may revoke an election made under paragraph (1) for any taxable year after the taxable year for which such election was made. Except with the consent of the Secretary, any taxpayer who makes such a revocation for any taxable year may not make another election under this section for any subsequent taxable year before the 6th taxable year after the taxable year for which such revocation was made.
(f) Determination of tax liability
(1) In general
If, for any taxable year, any amount is excluded from gross income of a taxpayer under subsection (a), then, notwithstanding sections 1 and 55—
(A) if such taxpayer has taxable income for such taxable year, the tax imposed by section 1 for such taxable year shall be equal to the excess (if any) of—
(i) the tax which would be imposed by section 1 for such taxable year if the taxpayer’s taxable income were increased by the amount excluded under subsection (a) for such taxable year, over
(ii) the tax which would be imposed by section 1 for such taxable year if the taxpayer’s taxable income were equal to the amount excluded under subsection (a) for such taxable year, and
(B) if such taxpayer has a taxable excess (as defined in section 55(b)(1)(B)) for such taxable year, the amount determined under the first sentence of section 55(b)(1)(A) for such taxable year shall be equal to the excess (if any) of—
(i) the amount which would be determined under such sentence for such taxable year (subject to the limitation of section 55(b)(3)) if the taxpayer’s taxable excess (as so defined) were increased by the amount excluded under subsection (a) for such taxable year, over
(ii) the amount which would be determined under such sentence for such taxable year if the taxpayer’s taxable excess (as so defined) were equal to the amount excluded under subsection (a) for such taxable year.
For purposes of this paragraph, the amount excluded under subsection (a) shall be reduced by the aggregate amount of any deductions or exclusions disallowed under subsection (d)(6) with respect to such excluded amount.
(2) Special rules
(A) Regular tax
In applying section 1(h) for purposes of determining the tax under paragraph (1)(A)(i) for any taxable year in which, without regard to this subsection, the taxpayer’s net capital gain exceeds taxable income (hereafter in this subparagraph referred to as the capital gain excess)—
(i) the taxpayer’s net capital gain (determined without regard to section 1(h)(11)) shall be reduced (but not below zero) by such capital gain excess,
(ii) the taxpayer’s qualified dividend income shall be reduced by so much of such capital gain excess as exceeds the taxpayer’s net capital gain (determined without regard to section 1(h)(11) and the reduction under clause (i)), and
(iii) adjusted net capital gain, unrecaptured section 1250 gain, and 28-percent rate gain shall each be determined after increasing the amount described in section 1(h)(4)(B) by such capital gain excess.
(B) Alternative minimum tax
In applying section 55(b)(3) for purposes of determining the tax under paragraph (1)(B)(i) for any taxable year in which, without regard to this subsection, the taxpayer’s net capital gain exceeds the taxable excess (as defined in section 55(b)(1)(B))—
(i) the rules of subparagraph (A) shall apply, except that such subparagraph shall be applied by substituting “the taxable excess (as defined in section 55(b)(1)(B))” for “taxable income”, and
(ii) the reference in section 55(b)(3)(B) to the excess described in section 1(h)(1)(B), and the reference in section 55(b)(3)(C)(ii) to the excess described in section 1(h)(1)(C)(ii), shall each be treated as a reference to each such excess as determined under the rules of subparagraph (A) for purposes of determining the tax under paragraph (1)(A)(i).
(C) Definitions
Terms used in this paragraph which are also used in section 1(h) shall have the respective meanings given such terms by section 1(h), except that in applying subparagraph (B) the adjustments under part VI of subchapter A shall be taken into account.
(g) Cross references
For administrative and penal provisions relating to the exclusions provided for in this section, see sections 6001, 6011, 6012(c), and the other provisions of subtitle F.

### Español
Resumen en español; el texto oficial está en inglés. Permite a un individuo calificado elegir excluir de su ingreso bruto el ingreso devengado en el extranjero y la cantidad de vivienda (a). Define el ingreso devengado en el extranjero y su límite ajustado por inflación (b), la cantidad de costo de vivienda (c) y al individuo calificado con domicilio tributario (tax home) en un país extranjero (d). Regula la elección (e) y el cómputo del impuesto (f).

## 26 U.S.C. § 1411: Imposition of tax on net investment income / Impuesto sobre el ingreso neto de inversión
`Title 26 > Subtitle A > Chapter 2A > § 1411 (OLRC release point 119-121)`

### English
(a) In general
Except as provided in subsection (e)—
(1) Application to individuals
In the case of an individual, there is hereby imposed (in addition to any other tax imposed by this subtitle) for each taxable year a tax equal to 3.8 percent of the lesser of—
(A) net investment income for such taxable year, or
(B) the excess (if any) of—
(i) the modified adjusted gross income for such taxable year, over
(ii) the threshold amount.
(2) Application to estates and trusts
In the case of an estate or trust, there is hereby imposed (in addition to any other tax imposed by this subtitle) for each taxable year a tax of 3.8 percent of the lesser of—
(A) the undistributed net investment income for such taxable year, or
(B) the excess (if any) of—
(i) the adjusted gross income (as defined in section 67(e)) for such taxable year, over
(ii) the dollar amount at which the highest tax bracket in section 1(e) begins for such taxable year.
(b) Threshold amount
For purposes of this chapter, the term “threshold amount” means—
(1) in the case of a taxpayer making a joint return under section 6013 or a surviving spouse (as defined in section 2(a)), $250,000,
(2) in the case of a married taxpayer (as defined in section 7703) filing a separate return, ½ of the dollar amount determined under paragraph (1), and
(3) in any other case, $200,000.
(c) Net investment income
For purposes of this chapter—
(1) In general
The term “net investment income” means the excess (if any) of—
(A) the sum of—
(i) gross income from interest, dividends, annuities, royalties, and rents, other than such income which is derived in the ordinary course of a trade or business not described in paragraph (2),
(ii) other gross income derived from a trade or business described in paragraph (2), and
(iii) net gain (to the extent taken into account in computing taxable income) attributable to the disposition of property other than property held in a trade or business not described in paragraph (2), over
(B) the deductions allowed by this subtitle which are properly allocable to such gross income or net gain.
(2) Trades and businesses to which tax applies
A trade or business is described in this paragraph if such trade or business is—
(A) a passive activity (within the meaning of section 469) with respect to the taxpayer, or
(B) a trade or business of trading in financial instruments or commodities (as defined in section 475(e)(2)).
(3) Income on investment of working capital subject to tax
A rule similar to the rule of section 469(e)(1)(B) shall apply for purposes of this subsection.
(4) Exception for certain active interests in partnerships and S corporations
In the case of a disposition of an interest in a partnership or S corporation—
(A) gain from such disposition shall be taken into account under clause (iii) of paragraph (1)(A) only to the extent of the net gain which would be so taken into account by the transferor if all property of the partnership or S corporation were sold for fair market value immediately before the disposition of such interest, and
(B) a rule similar to the rule of subparagraph (A) shall apply to a loss from such disposition.
(5) Exception for distributions from qualified plans
The term “net investment income” shall not include any distribution from a plan or arrangement described in section 401(a), 403(a), 403(b), 408, 408A, or 457(b).
(6) Special rule
Net investment income shall not include any item taken into account in determining self-employment income for such taxable year on which a tax is imposed by section 1401(b).
(d) Modified adjusted gross income
For purposes of this chapter, the term “modified adjusted gross income” means adjusted gross income increased by the excess of—
(1) the amount excluded from gross income under section 911(a)(1), over
(2) the amount of any deductions (taken into account in computing adjusted gross income) or exclusions disallowed under section 911(d)(6) with respect to the amounts described in paragraph (1).
(e) Nonapplication of section
This section shall not apply to—
(1) a nonresident alien, or
(2) a trust all of the unexpired interests in which are devoted to one or more of the purposes described in section 170(c)(2)(B).

### Español
Resumen en español; el texto oficial está en inglés. Impone un impuesto de 3.8 por ciento a individuos sobre el menor entre el ingreso neto de inversión y el exceso del ingreso bruto ajustado modificado sobre la cantidad umbral, y una regla análoga para caudales y fideicomisos (a). Fija las cantidades umbral (b), define el ingreso neto de inversión (c) y el ingreso bruto ajustado modificado (d), y excluye a extranjeros no residentes y a ciertos fideicomisos (e).

## 26 U.S.C. § 6012: Persons required to make returns of income / Personas obligadas a rendir planillas de ingreso
`Title 26 > Subtitle F > Chapter 61 > Subchapter A > Part II > Subpart B > § 6012 (OLRC release point 119-121)`

### English
(a) General rule
Returns with respect to income taxes under subtitle A shall be made by the following:
(1)(A) Every individual having for the taxable year gross income which equals or exceeds the exemption amount, except that a return shall not be required of an individual—
(i) who is not married (determined by applying section 7703), is not a surviving spouse (as defined in section 2(a)), is not a head of a household (as defined in section 2(b)), and for the taxable year has gross income of less than the sum of the exemption amount plus the basic standard deduction applicable to such an individual,
(ii) who is a head of a household (as so defined) and for the taxable year has gross income of less than the sum of the exemption amount plus the basic standard deduction applicable to such an individual,
(iii) who is a surviving spouse (as so defined) and for the taxable year has gross income of less than the sum of the exemption amount plus the basic standard deduction applicable to such an individual, or
(iv) who is entitled to make a joint return and whose gross income, when combined with the gross income of his spouse, is, for the taxable year, less than the sum of twice the exemption amount plus the basic standard deduction applicable to a joint return, but only if such individual and his spouse, at the close of the taxable year, had the same household as their home.
Clause (iv) shall not apply if for the taxable year such spouse makes a separate return or any other taxpayer is entitled to an exemption for such spouse under section 151(c).
(B) The amount specified in clause (i), (ii), or (iii) of subparagraph (A) shall be increased by the amount of 1 additional standard deduction (within the meaning of section 63(c)(3)) in the case of an individual entitled to such deduction by reason of section 63(f)(1)(A) (relating to individuals age 65 or more), and the amount specified in clause (iv) of subparagraph (A) shall be increased by the amount of the additional standard deduction for each additional standard deduction to which the individual or his spouse is entitled by reason of section 63(f)(1).
(C) The exception under subparagraph (A) shall not apply to any individual—
(i) who is described in section 63(c)(5) and who has—
(I) income (other than earned income) in excess of the sum of the amount in effect under section 63(c)(5)(A) plus the additional standard deduction (if any) to which the individual is entitled, or
(II) total gross income in excess of the standard deduction, or
(ii) for whom the standard deduction is zero under section 63(c)(6).
(D) For purposes of this subsection—
(i) The terms “standard deduction”, “basic standard deduction” and “additional standard deduction” have the respective meanings given such terms by section 63(c).
(ii) The term “exemption amount” has the meaning given such term by section 151(d). In the case of an individual described in section 151(d)(2), the exemption amount shall be zero.
(2) Every corporation subject to taxation under subtitle A;
(3) Every estate the gross income of which for the taxable year is $600 or more;
(4) Every trust having for the taxable year any taxable income, or having gross income of $600 or over, regardless of the amount of taxable income;
(5) Every estate or trust of which any beneficiary is a nonresident alien;
(6) Every political organization (within the meaning of section 527(e)(1)), and every fund treated under section 527(g) as if it constituted a political organization, which has political organization taxable income (within the meaning of section 527(c)(1)) for the taxable year;
(7) Every homeowners association (within the meaning of section 528(c)(1)) which has homeowners association taxable income (within the meaning of section 528(d)) for the taxable year; and
(8) Every estate of an individual under chapter 7 or 11 of title 11 of the United States Code (relating to bankruptcy) the gross income of which for the taxable year is not less than the sum of the exemption amount plus the basic standard deduction under section 63(c)(2)(C);
except that subject to such conditions, limitations, and exceptions and under such regulations as may be prescribed by the Secretary, nonresident alien individuals subject to the tax imposed by section 871 and foreign corporations subject to the tax imposed by section 881 may be exempted from the requirement of making returns under this section.
(b) Returns made by fiduciaries and receivers
(1) Returns of decedents
If an individual is deceased, the return of such individual required under subsection (a) shall be made by his executor, administrator, or other person charged with the property of such decedent.
(2) Persons under a disability
If an individual is unable to make a return required under subsection (a), the return of such individual shall be made by a duly authorized agent, his committee, guardian, fiduciary or other person charged with the care of the person or property of such individual. The preceding sentence shall not apply in the case of a receiver appointed by authority of law in possession of only a part of the property of an individual.
(3) Receivers, trustees and assignees for corporations
In a case where a receiver, trustee in a case under title 11 of the United States Code, or assignee, by order of a court of competent jurisdiction, by operation of law or otherwise, has possession of or holds title to all or substantially all the property or business of a corporation, whether or not such property or business is being operated, such receiver, trustee, or assignee shall make the return of income for such corporation in the same manner and form as corporations are required to make such returns.
(4) Returns of estates and trusts
Returns of an estate, a trust, or an estate of an individual under chapter 7 or 11 of title 11 of the United States Code shall be made by the fiduciary thereof.
(5) Joint fiduciaries
Under such regulations as the Secretary may prescribe, a return made by one of two or more joint fiduciaries shall be sufficient compliance with the requirements of this section. A return made pursuant to this paragraph shall contain a statement that the fiduciary has sufficient knowledge of the affairs of the person for whom the return is made to enable him to make the return, and that the return is, to the best of his knowledge and belief, true and correct.
(6) IRA share of partnership income
In the case of a trust which is exempt from taxation under section 408(e), for purposes of this section, the trust’s distributive share of items of gross income and gain of any partnership to which subchapter C or D of chapter 63 applies shall be treated as equal to the trust’s distributive share of the taxable income of such partnership.
(c) Certain income earned abroad or from sale of residence
For purposes of this section, gross income shall be computed without regard to the exclusion provided for in section 121 (relating to gain from sale of principal residence) and without regard to the exclusion provided for in section 911 (relating to citizens or residents of the United States living abroad).
(d) Tax-exempt interest required to be shown on return
Every person required to file a return under this section for the taxable year shall include on such return the amount of interest received or accrued during the taxable year which is exempt from the tax imposed by chapter 1.
(e) Consolidated returns
For provisions relating to consolidated returns by affiliated corporations, see chapter 6.
(f) Special rule for taxable years 2018 through 2025
In the case of a taxable year beginning after December 31, 2017, and before January 1, 2026, subsection (a)(1) shall not apply, and every individual who has gross income for the taxable year shall be required to make returns with respect to income taxes under subtitle A, except that a return shall not be required of—
(1) an individual who is not married (determined by applying section 7703) and who has gross income for the taxable year which does not exceed the standard deduction applicable to such individual for such taxable year under section 63, or
(2) an individual entitled to make a joint return if—
(A) the gross income of such individual, when combined with the gross income of such individual’s spouse, for the taxable year does not exceed the standard deduction which would be applicable to the taxpayer for such taxable year under section 63 if such individual and such individual’s spouse made a joint return,
(B) such individual and such individual’s spouse have the same household as their home at the close of the taxable year,
(C) such individual’s spouse does not make a separate return, and
(D) neither such individual nor such individual’s spouse is an individual described in section 63(c)(5) who has income (other than earned income) in excess of the amount in effect under section 63(c)(5)(A).

### Español
Resumen en español; el texto oficial está en inglés. Establece quiénes deben rendir planilla de contribución sobre ingresos (a), incluidos los individuos cuyo ingreso bruto iguala o excede la cantidad aplicable, corporaciones, caudales, fideicomisos y sociedades, y las planillas de fiduciarios y síndicos (b). Contiene reglas para ingreso devengado en el extranjero (c), la divulgación de intereses exentos (d), las planillas consolidadas (e) y una regla especial para los años 2018 a 2025 (f).

## 26 U.S.C. § 957: Controlled foreign corporations; United States persons / Corporaciones foráneas controladas; personas de los Estados Unidos
`Title 26 > Subtitle A > Chapter 1 > Subchapter N > Part III > Subpart F > § 957 (OLRC release point 119-121)`

### English
(a) General rule
For purposes of this title, the term “controlled foreign corporation” means any foreign corporation if more than 50 percent of—
(1) the total combined voting power of all classes of stock of such corporation entitled to vote, or
(2) the total value of the stock of such corporation,
is owned (within the meaning of section 958(a)), or is considered as owned by applying the rules of ownership of section 958(b), by United States shareholders on any day during the taxable year of such foreign corporation.
(b) Special rule for insurance
For purposes only of taking into account income described in section 953(a) (relating to insurance income), the term “controlled foreign corporation” includes not only a foreign corporation as defined by subsection (a) but also one of which more than 25 percent of the total combined voting power of all classes of stock (or more than 25 percent of the total value of stock) is owned (within the meaning of section 958(a)), or is considered as owned by applying the rules of ownership of section 958(b), by United States shareholders on any day during the taxable year of such corporation, if the gross amount of premiums or other consideration in respect of the reinsurance or the issuing of insurance or annuity contracts not described in section 953(e)(2) exceeds 75 percent of the gross amount of all premiums or other consideration in respect of all risks.
(c) United States person
For purposes of this subpart, the term “United States person” has the meaning assigned to it by section 7701(a)(30) except that—
(1) with respect to a corporation organized under the laws of the Commonwealth of Puerto Rico, such term does not include an individual who is a bona fide resident of Puerto Rico, if a dividend received by such individual during the taxable year from such corporation would, for purposes of section 933(1), be treated as income derived from sources within Puerto Rico, and
(2) with respect to a corporation organized under the laws of Guam, American Samoa, or the Northern Mariana Islands—
(A) 80 percent or more of the gross income of which for the 3-year period ending at the close of the taxable year (or for such part of such period as such corporation or any predecessor has been in existence) was derived from sources within such a possession or was effectively connected with the conduct of a trade or business in such a possession, and
(B) 50 percent or more of the gross income of which for such period (or part) was derived from the active conduct of a trade or business within such a possession,
such term does not include an individual who is a bona fide resident of Guam, American Samoa, or the Northern Mariana Islands.
For purposes of subparagraphs (A) and (B) of paragraph (2), the determination as to whether income was derived from the active conduct of a trade or business within a possession shall be made under regulations prescribed by the Secretary.

### Español
Resumen en español; el texto oficial está en inglés. Define “corporación foránea controlada” como toda corporación foránea en la que accionistas de los Estados Unidos poseen más del 50 por ciento del poder combinado de voto o del valor de las acciones en cualquier día del año contributivo (a), con un umbral de 25 por ciento para el ingreso de seguros (b). Para fines de esta subparte, “persona de los Estados Unidos” no incluye, respecto a una corporación organizada bajo las leyes de Puerto Rico, al individuo residente de buena fe de Puerto Rico si un dividendo que reciba de dicha corporación se trataría como ingreso de fuentes dentro de Puerto Rico para fines de la sección 933(1) (c)(1), y contiene una regla análoga para Guam, Samoa Americana y las Islas Marianas del Norte (c)(2).

## 26 U.S.C. § 6688: Assessable penalties with respect to information required to be furnished under section 7654 / Penalidades tasables respecto a información que debe suministrarse bajo la sección 7654
`Title 26 > Subtitle F > Chapter 68 > Subchapter B > Part I > § 6688 (OLRC release point 119-121)`

### English
In addition to any criminal penalty provided by law, any person described in section 7654(a) who is required under section 937(c) or by regulations prescribed under section 7654 to furnish information and who fails to comply with such requirement at the time prescribed by such regulations unless it is shown that such failure is due to reasonable cause and not to willful neglect, shall pay (upon notice and demand by the Secretary and in the same manner as tax) a penalty of $1,000 for each such failure.

### Español
Resumen en español; el texto oficial está en inglés. Además de cualquier penalidad criminal, toda persona descrita en la sección 7654(a) que deba suministrar información bajo la sección 937(c) o bajo los reglamentos de la sección 7654 y no cumpla a tiempo, salvo que demuestre causa razonable y no negligencia voluntaria, pagará una penalidad de $1,000 por cada incumplimiento.

## 26 CFR § 1.937-1: Bona fide residency in a possession
`Title 26 > Chapter I > Subchapter A > Part 1 > § 1.937-1`

### English
Treasury Regulation detailing the physical presence test alternatives (183-day rule, 549-day 3-year rule with 60 days minimum per year, 90-day US limit rule), the tax home test, and closer connection evaluation factors for determining bona fide residency under 26 U.S.C. § 937.

### Español
Reglamentación del Tesoro que detalla las cinco alternativas de presencia física (regla de 183 días, regla de 549 días en 3 años, límite de 90 días en EE.UU.), el requisito de no mantener tax home fuera, y los factores de conexión más cercana para calificar como residente de buena fe.

## 26 CFR § 1.937-2: Income from sources within a possession
`Title 26 > Chapter I > Subchapter A > Part 1 > § 1.937-2`

### English
Sourcing rules for possessions and 10-year built-in gain lookback rules under Treas. Reg. § 1.937-2(f) for property held prior to establishing bona fide residency. Allows election under § 1.937-2(f)(1)(vi) to allocate gain based on FMV on residency date (marketable securities) or linear time apportionment.

### Español
Reglas de fuente para posesiones y regla de lookback de 10 años para ganancias acumuladas (built-in gains) sobre bienes adquiridos antes de establecer residencia bajo Treas. Reg. § 1.937-2(f), permitiendo elección para segregar valor acumulado previo y posterior.

## 26 CFR § 1.937-3: Income effectively connected with the conduct of a trade or business in a possession
`Title 26 > Chapter I > Subchapter A > Part 1 > § 1.937-3`

### English
(a) Scope. Section 937(b) and this section set forth the rules for determining whether income is effectively connected with the conduct of a trade or business within a particular possession (the relevant possession) for purposes of the Internal Revenue Code, including sections 881(b) and 957(c) and Subpart D, Part III, Subchapter N, Chapter 1 of the Internal Revenue Code. Paragraph (c) of this section does not apply, however, for purposes of section 881(b). In the case of a possession or territory that administers income tax laws that are identical (except for the substitution of the name of the possession or territory for the term “United States” where appropriate) to those in force in the United States, these rules do not apply for purposes of the application of such laws.
(b) In general. Except as provided in paragraphs (c) and (d) of this section, the principles of section 864(c) and the regulations under that section (relating to the determination of income, gain or loss that is effectively connected with the conduct of a trade or business within the United States) generally will be applied in determining whether income is effectively connected with the conduct of a trade or business within the relevant possession, without regard to whether the taxpayer qualifies as a nonresident alien individual or a foreign corporation with respect to such possession. Subject to the rules of this section, the principles of section 864(c)(4) will apply for purposes of determining whether income from sources without the relevant possession is effectively connected with the conduct of a trade or business in the relevant possession. For purposes of the preceding sentence, all income other than income from sources within the relevant possession (as determined under the rules of § 1.937-2) will be considered income from sources without the relevant possession in the application of the principles of section 864(c) under this paragraph (b), it generally will be sufficient to substitute the name of the relevant possession for the term “United States” where appropriate, but additional substitutions may be necessary to accomplish the intent of section 937(b) and this section. In no case, however, will a bona fide resident or other person have, as a result of the application of these principles, more income effectively connected with the conduct of a trade or business in the relevant possession than the amount of U.S. effectively connected income that a similarly situated U.S. person who is not a bona fide resident would have under section 864(c).
(c) U.S. income—(1) In general. Except as provided in paragraph (d) of this section, income considered to be effectively connected with the conduct of a trade or business within the relevant possession will not include any item of income determined under the rules of sections 861 through 865 and the regulations under those provisions to be—
(i) From sources within the United States; or
(ii) Effectively connected with the conduct of a trade or business within the United States.
(2) Conduit arrangements. Income will be considered to be from sources within the United States for purposes of paragraph (c)(1) of this section if, pursuant to a plan or arrangement—
(i) The income is received in exchange for consideration provided to another person; and
(ii) Such person (or another person) provides the same consideration (or consideration of a like kind) to a third person in exchange for one or more payments constituting income from sources within the United States.
(d) Income from certain sales of inventory property. Paragraph (c) of this section will not apply to income from sales of inventory property described in § 1.863-3(e).
(e) Examples. The provisions of this section may be illustrated by the following examples:
Example 1. X is a bona fide resident of Possession I, a section 931 possession (as defined in § 1.931-1(c)(1)). X has an office in Possession I from which X conducts a business consisting of the development and sale of specialized computer software. A purchaser of software will frequently pay X an additional amount to install the software on the purchaser's operating system and to ensure that the software is functioning properly. X performs the installation services at the purchaser's place of business, which may be in Possession I, in the United States, or in another country. The provision of such services is not de minimis and constitutes a separate transaction under the rules of § 1.861-18. Under the principles of section 864(c)(4) as applied pursuant to paragraph (b) of this section, the compensation that X receives for personal services performed outside of Possession I is not considered to be effectively connected with the conduct of a trade or business in Possession I for purposes of section 931(a)(2).
Example 2. (i) F Bank is organized under the laws of Country FC and operates an active banking business from offices in the U.S. Virgin Islands (USVI). In connection with this banking business, F Bank makes loans to and receives interest payments from borrowers who reside in the USVI, in the United States, and in Country FC.
(ii) Under the principles of section 861(a)(1) as applied pursuant to § 1.937-2(b), interest payments received by F Bank from borrowers who reside in the United States or in Country FC constitute income from sources outside of the USVI. Under the principles of section 864(c)(4) as applied pursuant to paragraph (b) of this section, interest income from sources outside of the USVI generally may constitute income that is effectively connected with the conduct of a trade or business within the USVI for purposes of the Internal Revenue Code. However, interest payments received by F Bank from borrowers who reside in the United States constitute income from sources within the United States under section 861(a)(1). Accordingly, under paragraph (c)(1) of this section, such interest income will not be treated as effectively connected with the conduct of a trade or business in the USVI for purposes of the Internal Revenue Code (for example, for purposes of section 934(b)). Interest payments received by F Bank from borrowers who reside in Country FC, however, may be treated as effectively connected with the conduct of a trade or business in the USVI for purposes of the Internal Revenue Code (including section 934(b)).
(iii) To the extent that, as described in section 934(a), the USVI administers income tax laws that are identical (except for the substitution of the name of the USVI for the term “United States” where appropriate) to those in force in the United States, interest payments received by F Bank from borrowers who reside in the United States or in Country FC may be treated as income that is effectively connected with the conduct of a trade or business in the USVI for purposes of F Bank's income tax liability to the USVI under mirrored section 882.
Example 3. (i) G is a partnership that is organized under the laws of, and that operates an active financing business from offices in, Possession I. Interests in G are owned by D, a bona fide resident of Possession I, and N, an alien individual who resides in Country FC. Pursuant to a pre-arrangement, G loans $x to T, a business entity organized under the laws of Country FC, and T in turn loans $y to E, a U.S. resident. In accordance with the arrangement, E pays interest to T, which in turn pays interest to G.
(ii) The arrangement constitutes a conduit arrangement under paragraph (c)(2) of this section, and the interest payments received by G are treated as income from sources within the United States for purposes of paragraph (c)(1) of this section. Accordingly, the interest received by G will not be treated as effectively connected with the conduct of a trade or business in Possession I for purposes of the Internal Revenue Code (including sections 931(a)(2) and 934(b), if applicable with respect to D). Whether such interest constitutes income from sources within the United States for other purposes of the Internal Revenue Code under generally applicable conduit principles will depend on the facts and circumstances. See, for example, Aiken Indus., Inc. v. Commissioner, 56 T.C. 925 (1971).
(iii) If Possession I administers income tax laws that are identical (except for the substitution of the name of the possession for the term “United States” where appropriate) to those in force in the United States, the interest received by G may be treated as income effectively connected with the conduct of a trade or business in Possession I under mirrored section 864(c)(4) for purposes of determining the Possession I territorial income tax liability of N under mirrored section 871.
(f) Effective/applicability date. Except as otherwise provided in this paragraph (f), this section applies to income earned in taxable years ending after April 9, 2008. Taxpayers may choose to apply paragraph (b) of this section to income earned in open taxable years ending after October 22, 2004.
Amendment history (eCFR source note): adopted by T.D. 9391, 73 FR 19374, Apr. 9, 2008; amended by T.D. 9391, 73 FR 27728, May 14, 2008 (correction), T.D. 9921, 85 FR 79853, Dec. 11, 2020, and T.D. 10022, 90 FR 3003, Jan. 14, 2025.

### Español
Resumen en español; el texto oficial está en inglés. Establece las reglas para determinar si un ingreso está efectivamente conectado con la conducción de una industria o negocio en una posesión (a), aplicando los principios de la sección 864(c) (b). Ese ingreso no incluye partidas de fuentes dentro de los Estados Unidos ni efectivamente conectadas con una industria o negocio en los Estados Unidos, incluidos los arreglos de conducto (c), salvo ciertas ventas de inventario (d). Incluye ejemplos (e) y aplica a ingresos de años contributivos que terminen después del 9 de abril de 2008 (f). Historial de enmiendas (nota de fuente del eCFR): adoptada por T.D. 9391, 73 FR 19374, 9 de abril de 2008; enmendada por T.D. 9391, 73 FR 27728, 14 de mayo de 2008 (corrección), T.D. 9921, 85 FR 79853, 11 de diciembre de 2020, y T.D. 10022, 90 FR 3003, 14 de enero de 2025.
