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section 141(e) to section 63(e). The method of calculating the
amount of the limitation also was revised. However, the earned
income definition continued to be “earned income (as defined in
section 911(b)).”
The Tax Reform Act of 1986
The Tax Reform Act of 1986 (TRA 1986), Pub. L. 99-514, 100
Stat. 2085, eliminated the ZBA. Section 102(a), TRA 1986, 100
Stat. at 2099, revised section 63 to accomplish that change as
well as numerous other changes. As may be seen supra note 3, the
revision of the dependent taxpayer rule continues the term
“earned income”, but eliminates the reference to section 911 and
does not provide any replacement definition.
Section 32
Respondent urges us to follow the approach of section 32.
As to trade or business income, section 911 focuses on
compensation for personal services, while section 32 deals with
“net earnings from self-employment”.
Section 32, the earned income credit, was initially enacted
as section 436 by section 204(a) of the Tax Reduction Act of
1975, Pub. L. 94-12, 89 Stat. 26, 30-31. Subsection
(c)(2)(A)(ii) of then-new section 43, in defining “earned income”
for purposes of the earned income credit, included the same
6 Sec. 43 was renumbered as sec. 32 by sec. 471(c)(1) of
the Deficit Reduction Act of 1984, Pub. L. 98-369, 98 Stat. 494,
826.
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