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TITLE 26-INTERNAL REVENUE CODE ployee whose services are not performed in connection with a trade or business of the taxpayer shall not exceed $1,000. (B) Child day care services eligible employees Notwithstanding paragraph (1), the credit allowed by section 40 with respect to Feder- al welfare recipient employment incentive expenses paid or incurred by the taxpayer during the taxable year to an eligible em- ployee whose services are performed in con- nection with a child day care services pro- gram, conducted by the taxpayer, shall not exceed $1,000. (b) Carryback and carryover of unused credit (1) Allowance of credit If the amount of the credit determined under subsection (a)(1) for any taxable year exceeds the limitation provided by subsection (a)(2) for such taxable year (hereinafter in this subsection referred to as "unused credit year"), such excess shall be- (A) a work incentive program credit carry- back to each of the 3 taxable years preced- ing the unused credit year, and (B) a work incentive program credit car- ryover to each of the 7 taxable years follow- ing the unused credit year. and shall be added to the amount allowable as a credit by section 40 for such years, except that such excess may be a carryback only to a taxable year beginning after Decem- ber 31, 1971. The entire amount of the unused credit for an unused credit year shall be car- ried to the earliest of the 10 taxable years to which (by reason of subparagraphs (A) and (B)) such credit may be carried, and then to each of the other 9 taxable years to the extent that, because of the limitation con- tained in paragraph (2), such unused credit may not be added for a prior taxable year to which such unused credit may be carried. (2) Limitation The amount of the unused credit which may be added under paragraph (1) for any preceding or succeeding taxable year shall not exceed the amount by which the limita- tion provided by subsection (a)(2) for such taxable year exceeds the sum of- (A) the credit allowable under subsection (a)(1) for such taxable year, and (B) the amounts which, by reason of this subsection, are added to the amount allowa- ble for such taxable year and attributable to taxable years preceding the unused credit year. (c) Early termination of employment by employer, etc. (1) General rule Under regulations prescribed by the Secre- tary- (A) Work incentive program expenses If the employment of any employee with respect to whom work incentive program expenses are taken into account under sub- section (a) is terminated by the taxpayer at any time during the first 90 days of such employment (whether or not consecutive) or before the close of the 90th calendar day after the day in which such employee com- pletes 90 days of employment with the tax- payer, the tax under this chapter for the taxable year in which such employment is terminated shall be increased by an amount (determined under such regulations) equal to the credits allowed under section 40 for such taxable year and all prior taxable years attributable to work incentive pro- gram expenses paid or incurred with respect to such employee. (B) Carrybacks and carryovers adjusted In the case of any termination of employ- ment to which subparagraph (A) applies, the carrybacks and carryovers under sub- section (b) shall be properly adjusted. (2) Subsection not to apply in certain cases (A) In general Paragraph (1) shall not apply to- (i) a termination of employment of an employee who voluntarily leaves the em- ployment of the taxpayer. (ii) a termination of employment of an individual who, before the close of the period referred to in paragraph (1)(A), be- comes disabled to perform the services of such employment, unless such disability is removed before the close of such period and the taxpayer fails to offer reemploy- ment to such individual, (iii) a termination of employment of an individual, if it is determined under the applicable State unemployment compen- sation law that the termination was due to the misconduct of such individual, or (iv) a termination of employment of an individual with respect to whom Federal welfare recipient employment incentive expenses (as described in section 50B(a)(2)) are taken into account under subsection (a). (v) a termination of employment of an individual due to a substantial reduction in the trade or business operations of the taxpayer. (B) Change in form of business, etc. For purposes of paragraph (1), the em- ployment relationship between the taxpay- er and an employee shall not be treated as terminated- (i) by a transaction to which section 381(a) applies, if the employee continues to be employed by the acquiring corpora- tion, or (ii) by reason of a mere change in the form of conducting the trade of business of the taxpayer, if the employee contin- ues to be employed in such trade or busi- uess and the taxpayer retains a substan- 1'ial interest in such trade or business. (Si Special rule Any increase in tax under paragraph (1) shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit allowable under subpart A. (d) Failure to pay comparable wages (1) General rule Under regulations prescribed by the Secre- tary, if during the period described in subsec- Page 84 § 50A