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TITLE 26-INTERNAL REVENUE CODE § 50B. Definitions; special rules (a) Work incentive program expenses (1) In general For purposes of this subpart, the term "work incentive program expenses" means the sum of- (A) the amount of wages paid or incurred by the taxpayer for services rendered during the first 12 months of employment (whether or not consecutive) of employees who are certified by the Secretary of Labor ks- (i) having been placed in employment under a work incentive program estab- lished under section 432(b)(1) of the Social Security Act, and (ii) not having displaced any individual from employment, plus (B) the amount of Federal welfare recipi- ent employment incentive expenses paid or incurred by the taxpayer for services ren- dered during the first 12 months of employ- ment (whether or not consecutive). (2) Definitions For purposes of this section, the term "Fed- eral welfare recipient employment incentive expenses" means the amount of wages paid or incurred by the taxpayer for services ren- dered to the taxpayer by an eligible employ- ee- (A) before January 1, 1980, or (B) in the case of an eligible employee whose services are performed in connection with a child day care services program of the taxpayer, before October 1, 1977. (3) Exclusion No item taken into account under para- graph (1)(A) shall be taken into account under paragraph (1)(B). No item taken into account under paragraph (1)(B) shall be taken into account under paragraph 1(A). (b) Wages For purposes of subsection (a), the term "wages" means only cash remuneration (includ- ing amounts deducted and withheld). (c) Limitations (1) Trade or business expenses No item shall be taken into account under subsection (a)(1)(A) unless such item is in- curred in a trade or business of the taxpayer. (2) Reimbursed expenses No item shall be taken into account under subsection (a) to the extent that the taxpayer Is reimbursed for such item. (3) Geographical limitation No item shall be taken into account under subsection (a) with respect to any expense paid or incurred by the taxpayer with respect to employment outside the United States. (4) Maximum period of training or instruction No item with respect to any employee shall be taken into account under subsection (a)(1)(A) after the end of the 24-month period beginning with the date of initial em- ployment of such employee by the taxpayer. (5) Ineligible individuals No item shall be taken into account under subsection (a) with respect to an individual who- (A) bears any of the relationships de- scribed in paragraphs (1) through (8) of sec- tion 152(a) to the taxpayer, or, if the tax- payer is a corporation, to an individual who owns, directly or indirectly, more than 50 percent in value of the outstanding stock of the corporation (determined with the appli- cation of section 267(c)), (B) if the taxpayer is an estate or trust, is a grantor, beneficiary, or fiduciary of the estate or trust, or is an individual who bears any of the relationships described in para- graphs (1) through (8) of section 152(a) to a grantor, beneficiary, or fiduciary of the estate or trust, or (C) is a dependent (described in section 152(a)(9)) of the taxpayer, or, if the taxpay- er is a corporation, of an individual de- scribed in subparagraph (A), or, if the tax- payer is an estate or trust, of a grantor, beneficiary, or fiduciary of the estate or trust. (d) Subchapter S corporations In case of an electing small business corpora- tion (as defined in section 1371)- (1) the work incentive program expenses for each taxable year shall be apportioned pro rata among the persons who are shareholders of such corporation on the last day of such taxable year, and (2) any person to whom any expenses have been apportioned under paragraph (1) shall be treated (for purposes of this subpart) as the taxpayer with respect to such expenses. (e) Estates and trusts In the case of an estate or trust- (1) the work incentive program expenses for any taxable year shall be apportioned be- tween the estate or trust and the beneficia- ries on the basis of the income of the estate or trust allocable to each, (2) any beneficiary to whom any expenses have been apportioned under paragraph (1) shall be treated (for purposes of this subpart) as the taxpayer with respect to such ex- penses, and (3) the $50,000 amount specified under sub- paragraphs (A) and (B) of section 50A(a)(2) applicable to such estate or trust shall be re- duced to an amount which bears the same ratio to $50,000 as the amount of the ex- penses allocated to the trust under paragraph (1) bears to the entire amount of such ex- penses. (f) Limitations with respect to certain persons In the case of- (1) an organization to which section 593 ap- plies, (2) a regulated investment company or a real estate investment trust subject to tax- ation under subchapter M (section 851 and following), and (3) a cooperative organization described in section 1381(a), § 50B Page 86