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TITLE 26-INTERNAL REVENUE CODE realized over the adjusted basis of the stock which is attributable to expenditures referred to in subsection (a)(1)(A) of this section. (Added Pub. L. 94-455, title II, § 205(a), Oct. 4, 1976, 90 Stat. 1533.) ErEcTIv DATE Section 205(e) of Pub. L. 94-455 provided that: "The amendments made by this section [adding this section and amending sections 103(d)(3), 170(e)(1), 301(b)(1). (d)(2), 312(c)(3), 341(e)(12). 453(d)(4) and 751(c) of this title] shall apply with respect to taxable years ending after December 31, 1975." SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 301, 341, 453, 751 of this title. Subchapter Q-Readjustment of Tax Between Years and Special Limitations Part I. II. [III, IV. V. VI. VII. Income averaging. Mitigation of effect of limitations and other provisions. Repealed.] Claim of right. Maximum rate on personal service income. Recoveries of foreign expropriation losses. AMENDMENTS 1976-Pub. L. 94-455, title XIX, §§ 1901(b)(36)(E), (37)(F), 1951(c)(3)(D), Oct. 4, 1976, 90 Stat. 1802, 1803, 1841, struck out Parts III and IV "Involuntary liquida- tion and replacement of LIFO inventories" and "War loss recoveries", respectively, and substituted in Part VI "Maximum rate on personal service income" for "Other limitations". 1966-Pub. L. 89-384, § l(g)(1), Apr. 8, 1966, 80 Stat. 104, added item VII. 1964-Pub. L. 88-272, title II, §232(f)(3), Feb. 26, 1964, 78 Stat. 112, substituted "averaging" for 'attrib- utable to several taxable years" in the heading to Part I. PART I-INCOME AVERAGING Sec. 1301. Limitation on tax. 1302. Definition of averagable income; related defini- tions. 1303. Eligible individuals. 1304. Special rules. 1305. Regulations. § 1301. Limitation on tax If an eligible individual has averagable income for the computation year, and if the amount of such income exceeds $3,000, then the tax imposed by section 1 for the computa- tion year which is attributable to averagable income shall be 5 times the increase in tax under such section which would result from adding 20 percent of such income to 120 per- cent of average base period income. (Added Pub. L. 88-272, title II, § 232(a), Feb. 26, 1964, 78 Stat. 106, and amended Pub. L. 91-172, title III, § 311(a), Dec. 30, 1969, 83 Stat. 586,) PRIOR PROVISIONS A prior section 1301, act Aug. 16, 1954, ch. 736, 68A Stat. 334, related to compensation from an employ- ment, defined "an employment" and stated the rule with respect to partners. See section 232(g) of Pub. L. 88-272 set out as an Effective Date note below. AMENDMENTS 1969-Pub. L. 91-172 substituted "20 percent of such income to 120 percent of average base period income" for "20 percent of such income to the sum of- "M() 133% percent of average base period income, and "(2) the amount (if any) of the average base period capital gain net income." EFFEcTIVx DATE or 1969 AMENDMENT Section 311(e) of Pub. L. 91-172 provided that: "The amendments made by this section [to sections 1301, 1302, 1303(c)(2), 1304(b)(5), (6). (c) to (g) and 6511(d)(2)(B) of this title] shall apply with respect to computation years (within the meaning of section 1302(c)(1) of the Internal Revenue Code of 1954 [sec- tion 1302(c)(1) of this title]) beginning after December 31, 1969, and to base period years (within the meaning of section 1302(c)(3) of such Code [section 1302(c)(3) of this title]) applicable to such computation years." EFFECTIVE DATE Section 232(g) of Pub. L. 88-272 provided that: "(1) General rule-Except as provided in paragraph (2), the amendments made by this section [adding sec- tions 1301 to 1305, amending sections 4, 5, 72, 144. 402, 403, 6511, and omitting former sections 1301 to 1307 of this title] shall apply with respect to taxable years be- ginning after December 31, 1963. "(2) Income from an employment-If, in a taxable year beginning after December 31, 1963, an individual or partnership receives or accrues compensation from an employment (as defined by section 1301(b) of the Internal Revenue Code of 1954 [subsec. (b) of this sec- tion] as in effect immediately before the enactment of this Act [Feb. 26, 1964] and the employment began before February 6, 1963, the tax attributable to such compensation may, at the election of the taxpayer, be computed under the provisions of sections 1301 and 1307 of such Code [former sections 1301 and 1307 of this title] as in effect immediately before the enact- ment of this Act. If a taxpayer so elects (at such time and in such manner as the Secretary of the Treasury or his delegate by regulations prescribes), he may not choose for such taxable year the benefits provided by part I of subchapter Q of chapter 1 of such Code [this title] (relating to income averaging) as amended by this Act and (if he elects to have subsection (e) of such section 1307 apply) section 170(b)(5) of such Code as amended by this Act shall not apply to charitable con- tributions paid in such taxable year." SECTION REMR TO IN OTHER SECTIONS This section is referred to in section 5 of this title. § 1302. Definition of averagable income; related defi- nitions (a) Averagable income (1) In general For purposes of this part, the term "avera- gable income" means the amount by which taxable income for the computation year (re- duced as provided in paragraph (2)) exceeds 120 percent of average base period income. (2) Reductions The taxable income for the computation year shall be reduced by- (A) the amount (if any) to which section 72(m)(5) applies, and (B) the amounts included in the income of a beneficiary of a trust under section 667(a). Page 718 § 1301