,,ii  #aac? ,,congress  #b;d ,session   
,s4 #bafb  ,,9 ,,! ,,s5ate ,,( ,,!      
,,unit$ ,,/ates  ,m>* #bf1 #bjad ,mrs4  
,murray 7= h]self1 ,mr4 ,re$1 & ,mr4    
,br[n7 introduc$ ! foll[+ bill2 :i* 0   
read twice & ref]r$ to ! ,committee on  
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to e/abli% a      
d$uction = m>ri$ c\ples :o are bo?      
employ$ & h "y *ildr5 & to increase !   
e>n$ income tax cr$it = *ildless work]s1
 & to provide = budget (fsets4  #a4     
,%ort title  ,?is ,act may be cit$ z !  
#ba/ ,c5tury ,work] ,tax ,cut ,act4  #b4
 ,d$uction = dual-e>n] families  7a7 ,9 
g5]al ,"p ,,vii ( sub*apt] ,b ( *apt] #a
 ( ! ,int]nal ,rev5ue ,code ( #aihf is  
am5d$ by r$esignat+ section #bbd z      
section #bbe & by ins]t+ aft] section   
#bbc ! foll[+ new section3  #bbd4       
,dual-e>n] families  7a7 ,d$uction all[$
 ,9 ! case ( an eligible taxpay]1 !re   
%all be all[$ z a d$uction = ! taxable  
ye> an am\nt equal to #bj p]c5t ( !     
less] (-- 7#a7 #fj1jjj1 or  7#b7 ! e>n$ 

income ( ! sp\se ) ! l[] am\nt ( e>n$   
income = su* taxable ye>4  7b7          
,limitation ,! am\nt ( ! d$uction       
all[able "u subsection 7a7 %all be r$uc$
 7b n bel[ z]o7 by an am\nt :i* be>s !  
same ratio to ! am\nt det]m9$ "u        
subsection 7a7 7z det]m9$ )\t reg>d to  
?is subsection7 z ! am\nt ( ! taxpay]'s 
excess adju/$ gross income be>s to      
#bj1jjj4  7c7 ,def9itions ,9 ?is        
section3 7#a7 ,e>n$ income ,! t]m e>n$  
income has ! same mean+ giv5 su* t]m 9  
section #cb7;c77#b74  7#b7 ,eligible    
taxpay]  7,a7 ,9 g5]al ,! t]m eligible  
taxpay] means a taxpay] :o-- 7i7 files a
 jo9t return = ! taxable ye> "u section 
#fjac1 &  7ii7 has at lea/ #a qualify+  
*ild 7z def9$ 9 section #aeb7;c77 :o has
 n atta9$ #ab ye>s ( age be=e ! close ( 
! taxable ye>4  7#c7 ,excess adju/$     
gross income ,! t]m excess adju/$ gross 
income means ! am\nt ( ! eligible       
taxpay]'s adju/$ gross income 7z def9$ 9
 section #fb1 det]m9$ )\t reg>d to ?is  
section7 t exce$s #aaj1jjj = ! taxable  

ye>4  7d7 ,inflation adju/m5t  7#a7 ,9  
g5]al ,9 ! case ( any taxable ye> beg9n+
 aft] #bjae1 ea* ( ! doll> am\nts 9     
subsections 7a77#a7 & 7c77#c7 %all be   
increas$ by an am\nt equal to-- 7,a7 su*
 doll> am\nt1 multipli$ by  7,b7 !      
co/-(-liv+ adju/m5t det]m9$ "u section  
#a7;f77#c7 = ! cal5d> ye> 9 :i* !       
taxable ye> beg9s1 det]m9$ by sub/itut+ 
cal5d> ye> #bjad = cal5d> ye> #aiib 9   
subp>agraph 7,b7 !re(4  7#b7 ,r\nd+ ,if 
any doll> am\nt 9 subsection 7a77#a7 or 
7c77#c71 aft] be+ increas$ "u p>agraph  
7#a71 is n a multiple ( #a1jjj1 su*     
doll> am\nt %all be r\nd$ to ! ne>e/    
multiple ( #a1jjj4  7e7 ,additional     
eligibility requirem5ts  7#a7           
,individual claim+ b5efits "u section   
#iaa ,no d$uction %all be all[$ "u ?is  
section if an individual 7or !          
individual's sp\se7 claims ! b5efits (  
section #iaa = ! taxable ye>4  7#b7     
,non-resid5t ali5s ,no d$uction %all be 
all[$ "u ?is section if an individual   
7or ! individual's sp\se7 is a          

nonresid5t ali5 individual = any portion
 ( ! taxable ye> unless su* individual  
is treat$ = su* taxable ye> z a resid5t 
( ! ,unit$ ,/ates = purposes ( ?is *apt]
 by reason ( an election "u subsection  
7g7 or 7h7 ( section #fjac4  7#c7       
,id5tification numb] requirem5t  7,a7 ,9
 g5]al ,no d$uction %all be all[$ "u ?is
 section if ! eligible taxpay] does n   
include on ! jo9t return ( tax = !      
taxable ye>-- 7i7 ! taxpay]             
id5tification numb] ( ! individual & !  
individual's sp\se1 &  7ii7 ! "n1 age1 &
 taxpay] id5tification numb] ( any      
qualify+ *ildr54  7,b7 ,social security 
numb]s ,= purposes ( ?is p>agraph1 ! t]m
 taxpay] id5tification numb] means a    
social security numb] issu$ to an       
individual by ! ,social ,security       
,adm9i/ration 7o!r ?an a social security
 numb] issu$ pursuant to clause 7,,ii7  
7or t portion ( clause 7,,iii7 t relates
 to clause 7,,ii77 ( section            
#bje7;c77#b77;,b77i7 ( ! ,social        
,security ,act74  7f7 ,taxable ye> mu/  

be full taxable ye> ,except 9 ! case ( a
 taxable ye> clos$ by reason ( ! dea? ( 
an individual1 no d$uction %all be      
all[able "u ?is section 9 ! case ( a    
taxable ye> cov]+ a p]iod ( less ?an #ab
 mon?s4  4  7b7 ,d$uction all[$ 9       
comput+ adju/$ gross income ,section    
#fb7;a7 ( su* ,code is am5d$ by ins]t+  
aft] p>agraph 7#ba7 ! foll[+ new        
p>agraph3  7#bb7 ,dual-e>n] families ,! 
d$uction all[$ by section #bbd4  4  7c7 
,enhancem5t ( e>n$ income tax cr$it     
,section #cb ( su* ,code is am5d$-- 7#a7
 9 subsection 7a77#b77;,b71 by /rik+    
e>n$ income & ins]t+ modifi$ e>n$ income
 7z def9$ 9 subsection 7c77#e771 &  7#b7
 9 subsection 7c71 by add+ at ! end !   
foll[+ new p>agraph3  7#e7 ,modifi$ e>n$
 income ,! t]m modifi$ e>n$ income means
 an am\nt equal to ! e>n$ income ( !    
taxpay] m9us ! am\nt ( any d$uction     
all[$ to ! taxpay] "u section #bbd = !  
taxable ye>4  4  7d7 ,con=m+ am5dm5t ,! 
table ( sections = "p ,,vii ( sub*apt]  
,b ( *apt] #a ( su* ,code is am5d$ by   

r$esignat+ ! item relat+ to section #bbd
 z relat+ to section #bbe & by ins]t+   
aft] ! item relat+ to section #bbc !    
foll[+3  ,sec4 #bbd4 ,dual-e>n]         
families4  4  7e7 ,effective date ,!    
am5dm5ts made by ?is section %all apply 
to taxable ye>s beg9n+ aft] ! date ( !  
enactm5t ( ?is ,act4  #c4 ,/r5g!n+ !    
e>n$ income tax cr$it = individuals ) no
 qualify+ *ildr5  7a7 ,cr$it = c]ta9    
individuals ov] age #ba  7#a7 ,9 g5]al  
,p>agraph 7#a7 ( section #cb7;c7 ( !    
,int]nal ,rev5ue ,code ( #aihf is am5d$ 
by add+ at ! end ! foll[+ new           
subp>agraph3  7,g7 ,special rule = work+
 individuals ov] age #bj & )\t qualify+ 
*ild  7i7 ,9 g5]al ,9 ! case ( an       
individual 7or1 if ! individual is      
m>ri$1 ei!r ! individual or !           
individual's sp\se7 :o--  7,i7 has      
atta9$ ! age ( #ba b n atta9$ age #be   
be=e ! close ( ! taxable ye>1 &  7,,ii7 
is n a full-"t /ud5t at any "t dur+ !   
taxable ye>1  p>agraph                  
7#a77;,a77ii77,,ii7 %all n apply =      

purposes ( det]m9+ :e!r su* individual  
is an eligible individual4  7ii7 ,/ud5t 
,= purposes ( ?is subp>agraph1 an       
individual %all be consid]$ a full-"t   
/ud5t if su* individual is c>ry+ m ?an  
#a_/b ! normal full-"t "w load = ! c\rse
 ( /udy ! individual is pursu+4  4  7#b7
 ,in=mation return mat*+ ,n lat] ?an #a 
ye> aft] ! date ( ! enactm5t ( ?is ,act1
 ! ,secret>y ( ! ,treasury %all develop 
& implem5t proc$ures = *eck+ an         
individual's claim = a cr$it "u section 
#cb ( ! ,int]nal ,rev5ue ,code ( #aihf1 
by reason ( subsection 7c77#a77;,g7     
!re(1 aga9/ any in=mation return made ) 
respect to su* individual "u section    
#fjej,s4  7b7 ,increas$ cr$it  7#a7     
,cr$it p]c5tage & phase\t p]c5tage ,!   
table conta9$ 9 section #cb7;b77#a77;,a7
 ( su* ,code is am5d$ by /rik+ #g4fe ea*
 place x appe>s & ins]t+ #ae4c4  7#b7   
,e>n$ income am\nt & phase\t am\nt  7,a7
 ,9 g5]al ,! table conta9$ 9 section    
#cb7;b77#b77;,a7 ( su* ,code is am5d$-- 
7i7 by /rik+ #d1bbj & ins]t+ #h1hbj1 &  

7ii7 by /rik+ #e1bhj & ins]t+ #aj1dbe4  
7,b7 ,inflation adju/m5ts ,subp>agraph  
7,b7 ( section #cb7;j77#a7 ( su* ,code  
is am5d$--  7i7 by ins]t+ except z      
provid$ 9 clause 7iii7 9 clause 7i7 be=e
 9 ! case ( am\nts1  7ii7 by /rik+ & at 
! end ( clause 7i71 by /rik+ ! p]iod at 
! end ( clause 7ii7 & ins]t+ 1 &1 & by  
add+ at ! end ! foll[+ new clause3      
7iii7 9 ! case ( ! #h1hbj & #aj1dbe     
am\nts 9 subsection 7b77#b77;,a71 by    
sub/itut+ cal5d> ye> #bjad = cal5d> ye> 
#aiib 9 subp>agraph 7,b7 ( su* section  
#a4  4  7c7 ,effective date ,! am5dm5ts 
made by ?is section %all apply to       
taxable ye>s beg9n+ aft] ! date ( !     
enactm5t ( ?is ,act4  #d4 ,increas$     
p5alty = tax return prep>]s :o fail to  
comply ) due dilig5ce requirem5ts = !   
e>n$ income tax cr$it  7a7 ,9 g5]al     
,section #ffie7;g7 ( ! ,int]nal ,rev5ue 
,code ( #aihf is am5d$ by /rik+ #ejj &  
ins]t+ #a1jjj4  7b7 ,effective date ,!  
am5dm5ts made by ?is section %all apply 
to taxable ye>s beg9n+ aft] ! date ( !  

enactm5t ( ?is ,act4  #e4 ,expansion (  
d5ial ( d$uction = c]ta9 excessive      
employee remun]ation  7a7 ,application  
to all curr5t & =m] employees  7#a7 ,9  
g5]al ,section #afb7m7 ( ! ,int]nal     
,rev5ue ,code ( #aihf is am5d$--  7,a7  
by /rik+ cov]$ employee ea* place x     
appe>s 9 p>agraphs 7#a7 & 7#d7 & ins]t+ 
cov]$ individual1 &  7,b7 by /rik+ su*  
employee ea* place x appe>s 9           
subp>agraphs 7,a7 & 7,g7 ( p>agraph 7#d7
 & ins]t+ su* individual4  7#b7 ,cov]$  
individual ,p>agraph 7#c7 ( section     
#afb7m7 ( su* ,code is am5d$ to read z  
foll[s3  7#c7 ,cov]$ individual ,=      
purposes ( ?is subsection1 ! t]m cov]$  
individual means any individual :o is an
 (fic]1 director1 or employee ( !       
taxpay] or a =m] (fic]1 director1 or    
employee ( ! taxpay]4  4  7#c7 ,con=m+  
am5dm5ts  7,a7 ,section                 
#dh;,d7b77#c77;,a7 ( su* ,code is am5d$ 
by ins]t+ 7z 9 effect = taxable ye>s    
beg9n+ be=e ,janu>y #a1 #bjae7 aft]     
section #afb7m77#c74  7,b7 ,section     

#dji;,a7b77#c77;,d77ii7 ( su* ,code is  
am5d$ by ins]t+ 7z 9 effect = taxable   
ye>s beg9n+ be=e ,janu>y #a1 #bjae7 aft]
 section #afb7m77#c74  7b7 ,expansion ( 
applicable employee remun]ation  7#a7   
,elim9ation ( exception =               
commission-bas$ pay  7,a7 ,9 g5]al      
,p>agraph 7#d7 ( section #afb7m7 ( su*  
,code1 z am5d$ by subsection 7a71 is    
am5d$ by /rik+ subp>agraph 7,b7 & by    
r$esignat+ subp>agraphs 7,c7 ?r\gh 7,g7 
z subp>agraphs 7,b7 ?r\gh 7,f71         
respectively4  7,b7 ,con=m+ am5dm5ts    
7i7 ,section #afb7m77#e7 ( su* ,code is 
am5d$--  7,i7 by /rik+ subp>agraphs     
7,b71 7,c71 & 7,d7 !re( 9 subp>agraph   
7,e7 & ins]t+ subp>agraphs 7,b7 & 7,c7  
!re(1 &  7,,ii7 by /rik+ subp>agraphs   
7,f7 & 7,g7 9 subp>agraph 7,g7 & ins]t+ 
subp>agraphs 7,e7 & 7,f74  7ii7 ,section
 #afb7m77#f7 ( su* ,code is am5d$--     
7,i7 by /rik+ subp>agraphs 7,b71 7,c71 &
 7,d7 !re( 9 subp>agraph 7,d7 & ins]t+  
subp>agraphs 7,b7 & 7,c7 !re(1 &  7,,ii7
 by /rik+ subp>agraphs 7,f7 & 7,g7 9    

subp>agraph 7,g7 & ins]t+ subp>agraphs  
7,e7 & 7,f74  7#b7 ,inclusion (         
p]=mance-bas$ comp5sation  7,a7 ,9 g5]al
 ,p>agraph 7#d7 ( section #afb7m7 ( !   
,int]nal ,rev5ue ,code ( #aihf1 z am5d$ 
by subsection 7a7 & p>agraph 7#a7 ( ?is 
subsection1 is am5d$ by /rik+           
subp>agraph 7,b7 & r$esignat+           
subp>agraphs 7,c7 ?r\gh 7,f7 z          
subp>agraphs 7,b7 ?r\gh 7,e71           
respectively4  7,b7 ,con=m+ am5dm5ts    
7i7 ,section #afb7m77#e7 ( su* ,code1 z 
am5d$ by p>agraph 7#a71 is am5d$--  7,i7
 by /rik+ subp>agraphs 7,b7 & 7,c7 !re( 
9 subp>agraph 7,e7 & ins]t+ subp>agraph 
7,b7 !re(1 &  7,,ii7 by /rik+           
subp>agraphs 7,e7 & 7,f7 9 subp>agraph  
7,g7 & ins]t+ subp>agraphs 7,d7 & 7,e74 
7ii7 ,section #afb7m77#f7 ( su* ,code1 z
 am5d$ by p>agraph 7#a71 is am5d$--     
7,i7 by /rik+ subp>agraphs 7,b7 & 7,c7  
!re( 9 subp>agraph 7,d7 & ins]t+        
subp>agraph 7,b7 !re(1 &  7,,ii7 by     
/rik+ subp>agraphs 7,e7 & 7,f7 9        
subp>agraph 7,g7 & ins]t+ subp>agraphs  

7,d7 & 7,e74  7c7 ,expansion (          
applicable employ] ,p>agraph 7#b7 (     
section #afb7m7 ( ! ,int]nal ,rev5ue    
,code ( #aihf is am5d$ to read z foll[s3
  7#b7 ,publicly held corporation ,=    
purposes ( ?is subsection1 ! t]m        
publicly held corporation means any     
corporation :i* is an issu] 7z def9$ 9  
section #c ( ! ,securities ,ex*ange ,act
 ( #aicd 7#ae ,u4,s4,c4 #gh;c77 t--     
7,a7 has a class ( securities regi/]$ "u
 section #ab ( su* ,act 7#ae ,u4,s4,c4  
#ghl71 or  7,b7 is requir$ to file      
reports "u section #ae7;d7 ( su* ,act   
7#ae ,u4,s4,c4 #ghj7;d774  4  7d7       
,regulatory au?ority  7#a7 ,9 g5]al     
,section #afb7m7 ( ! ,int]nal ,rev5ue   
,code ( #aihf is am5d$ by add+ at ! end 
! foll[+ new p>agraph3  7#g7            
,regulations ,! ,secret>y may prescribe 
su* guidance1 rules1 or regulations1    
includ+ ) respect to report+1 z are     
necess>y to c>ry out ! purposes ( ?is   
subsection4  4  7#b7 ,con=m+ am5dm5t    
,p>agraph 7#f7 ( section #afb7m7 ( su*  

,code is am5d$ by /rik+ subp>agraph     
7,h74  7e7 ,effective date ,! am5dm5ts  
made by ?is section %all apply to       
taxable ye>s beg9n+ aft] ,decemb] #ca1  
#bjad4  #f4 ,l[-tax$ cross-bord] =eign  
income treat$ z subp>t ,f income  7a7 ,9
 g5]al ,subsection 7a7 ( section #ieb ( 
! ,int]nal ,rev5ue ,code ( #aihf is     
am5d$ by r$esignat+ p>agraphs 7#c71     
7#d71 & 7#e7 z p>agraphs 7#d71 7#e71 &  
7#f71 respectively1 & by ins]t+ aft]    
p>agraph 7#b7 ! foll[+ new p>agraph3    
7#c7 l[-tax$ cross-bord] income 7z def9$
 "u subsection 7e771  4  7b7 ,l[-,tax$  
cross-,bord] income ,section #ieb ( su* 
,code is am5d$ by add+ at ! end ! foll[+
 new subsection3  7e7 ,l[-,tax$         
cross-,bord] income  7#a7 ,9 g5]al ,=   
purposes ( subsection 7a71 ! t]m l[-tax$
 cross-bord] income means ! gross income
 ( ! controll$ =eign corporation unless 
! taxpay] e/abli%es to ! satisfaction ( 
! ,secret>y t--  7,a7 su* income 0 d]iv$
 9 ! home c\ntry ( ! controll$ =eign    
corporation1 or  7,b7 su* income 0      

subject to an effective rate ( income   
tax impos$ by a =eign c\ntry 9 excess ( 
#ae p]c5t4  7#b7 ,rules relat$ to income
 d]iv$ 9 home c\ntry ,= purposes (      
p>agraph 7#a77;,a71 income %all be      
treat$ z d]iv$ 9 ! home c\ntry ( a      
controll$ =eign corporation only if--   
7,a7 su* income is d]iv$ 9 ! conduct ( a
 trade or bus9ess ( su* corporation 9 ! 
c\ntry 9 :i* su* corporation is creat$  
or organiz$1  7,b7 su* corporation      
ma9ta9s an (fice or o!r fix$ place (    
bus9ess 9 su* c\ntry1 &  7,c7 su* income
 is d]iv$ 9 connection )--  7i7 prop]ty 
:i* is sold = use1 consumption1 or      
disposition 9 su* c\ntry1 or  7ii7      
s]vices provid$ ) respect to p]sons or  
prop]ty locat$ 9 su* c\ntry4  7#c7      
,rules relat$ to det]m9ation ( effective
 rate ( =eign income tax  7,a7          
,c\ntry-by-c\ntry det]m9ation ,p>agraph 
7#a77;,b7 %all be appli$--  7i7         
sep>ately ) respect to ea* =eign c\ntry 
9 :i* a controll$ =eign corporation     
conducts any trade or bus9ess1 &  7ii7 )

 respect to ! aggregate gross income    
d]iv$ ) respect to su* c\ntry4  7,b7    
,treatm5t ( losses ,= purposes ( det]m9+
 ! effective rate ( income tax impos$ by
 any =eign c\ntry "u p>agraph           
7#a77;,b7--  7i7 su* effective rate %all
 be det]m9$ )\t reg>d to any losses     
c>ri$ to ! relevant taxable ye>1 &  7ii7
 to ! ext5t ! income ( ! controll$ =eign
 corporation r$uces losses 9 ! relevant 
taxable ye>1 su* effective rate %all be 
treat$ z be+ ! effective rate :i* w\ld h
 be5 impos$ on su* income )\t reg>d to  
su* losses4  7#d7 ,d$uctions to be tak5 
into acc\nt ,! gross income ( a         
controll$ =eign corporation tak5 into   
acc\nt "u ?is subsection %all be r$uc$1 
"u regulations prescrib$ by ! ,secret>y1
 s z to take into acc\nt d$uctions      
7includ+ taxes7 prop]ly allocable to su*
 income4  4  7c7 ,effective date ,!     
am5dm5ts made by ?is section %all apply 
to taxable ye>s ( =eign corporations    
beg9n+ aft] ,decemb] #ca1 #bjad1 & to   
taxable ye>s ( ,unit$ ,/ates %>ehold]s 9

 :i* or ) :i* su* taxable ye>s ( =eign  
corporations end4