Allyson Christina Briggs - Page 9

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          effective for 1971 and thereafter.  Section 1348(b), as so                  
          enacted, defined “earned income” in pertinent part as follows:              
               SEC. 1348.  FIFTY-PERCENT MAXIMUM RATE ON EARNED INCOME.               
                           *    *    *    *    *    *    *                            
                    (b) Definitions.--For purposes of this section--                  
                         (1) Earned income.--The term “earned income” means           
                    any income which is earned income within the meaning of           
                    section 401(c)(2)(C) or section 911(b), except that               
                    such term does not include any distribution to which              
                    section 72(m)(5), 72(n), 402(a)(2), or 403(a)(2)(A)               
                    applies or any deferred compensation within the meaning           
                    of section 404.                                                   
               Section 911(b), as then in effect, provided as follows:                
               SEC. 911.  EARNED INCOME FROM SOURCES WITHOUT THE                      
               UNITED STATES                                                          
                           *    *    *    *    *    *    *                            
                    (b) Definition of Earned Income.--For purposes of this            
               section, 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.  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 or              
               his delegate, 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.                        
               The Revenue Act of 1971                                                
               In 1971, the Congress became concerned that                            
               The increases in the standard deduction * * * have                     
               enhanced the desirability of diverting income * * *                    

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