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97 STAT. 80 PUBLIC LAW 98-21—APR. 20, 1983 PART C—REVENUE PROVISIONS SEC. 121. TAXATION OF SOCIAL SECURITY AND TIER 1 RAILROAD RETIRE- MENT BENEFITS. (a) GENERAL RULE.—Part II of subchapter B of chapter 1 of the Internal Revenue Code of 1954 (relating to amounts specifically included in gross income) is amended by redesignating section 86 as section 87 and by inserting after section 85 the following new section: 26 use 86. "SEC. 86. SOCIAL SECURITY AND TIER 1 RAILROAD RETIREMENT BENE- FITS. "(a) IN GENERAL.—Gross income for the taxable year of any taxpayer described in subsection Ot)) includes social security benefits in an amount equal to the lesser of— "(1) one-half of the social security benefits received during the taxable year, or "(2) one-half of the excess described in subsection (b)(1). "(b) TAXPAYERS TO WHOM SUBSECTION (a) APPLIES.— "(1) IN GENERAL.—A tsixpayer is described in this subsection if— "(A) the sum of— "(i) the modified adjusted gross income of the taxpay- er for the taxable year, plus "(ii) one-half of the social security benefits received during the taxable year, exceeds "(B) the base amount. "(2) MODIFIED ADJUSTED GROSS INCOME.—For purposes of this subsection, the term 'modified adjusted gross income' means adusted gross income— "(A) determined without regard to this section and sec- tions 221, 911, 931, and 933, and "(B) increased by the amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax. "(c) BASE AMOUNT.—For purposes of this section, the term 'base amount' means— "(1) except as otherwise provided in this subsection, $25,000, "(2) $32,000, in the case of a joint return, and "(3) zero, in the case of a taxpayer who— "(A) is married at the close of the taxable year (within the meaning of section 143) but does not file a joint return for such year, and "(B) does not live apart from his spouse at all times during the taxable year. "(d) SOCIAL SECURITY BENEFIT.— "(1) IN GENERAL.—For purposes of this section, the term 'social security benefit' means any amount received by the taxpayer by reason of entitlement to— "(A) a monthly benefit under title II of the Social Secu- 42 use 401. rity Act, or "(B) a tier 1 railroad retirement benefit. For purposes of the preceding sentence, the amount received by any taxpayer shall be determined as if the Social Security Act 42 use 403. did not contain section 203(i) thereof. "(2) ADJUSTMENT FOR REPAYMENTS DURING YEAR.—