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language to achieve the same definition. The legislative history
does not indicate an intent to define “earned income” in section
63(c)(5)(B) by reference to net earnings from self-employment.
Accordingly, we conclude that “earned income” in section
63(c)(5)(B) means something different from “the amount of the
taxpayer’s net earnings from self-employment for the taxable year
(within the meaning of section 1402(a))”.8
Thus, the Congress (1) in TRA 1986 departed from the
previous section 911 definition, (2) in TRA 1986 did not move to
the section 32 definition, and (3) never adopted the “maxitax”
section 1348 approach of using both section 911 and net earnings.
In RA 1971 the Congress responded to what was perceived to
be an abuse situation involving attempts to “game” the tax
system. The legislative language went beyond the intrafamily
transfers complained of, but even then the Congress decided that
a dependent who received such an intrafamily transfer but also
8 Respondent implicitly recognized that the sec. 63 and sec.
32 concepts of earned income were not the same. The earned
income credit worksheet specifically directs the taxpayer to
“Enter any profit (or loss)”. (Emphasis added.) 1999
Publication 596, Earned Income Credit (EIC), at p. 30, Worksheet
B, line 2.b. In contrast the standard deduction worksheet tells
the taxpayer that “Generally, your earned income is the total of
the amount(s) you reported on Form 1040, lines * * * 12". 1999
1040 Forms and Instructions, at p. 30 (emphasis added). The
standard deduction worksheet does not explain “Generally”, and
does not specifically direct the taxpayer to include business
losses in the earned income computation.
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