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97 STAT. 90 PUBLIC LAW 98-21—APR. 20, 1983 the applicable percentage of the self-employment income of the individual for such taxable year. "(2) APPLICABLE PERCENTAGE.—For purposes of paragraph (1), the applicable percentage shall be determined in accordance with the following table: "In the case of taxable The applicable years begrinning in: percentage is: 1984 2.7 1985 2.3 1986,1987, 1988, or 1989 2.0." (c) ALLOWANCE OF DEDUCTION FOR YEARS AFTER 1989 FOR ONE- HALF OF TAXES ON SELF-EMPLOYMENT INCOME.— 26 use 164. (1) IN GENERAL.—Section 164 of such Code (relating to deduc- tion for taxes) is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection: "(f) DEDUCTION FOR ONE-HALF OF SELF-EMPLOYMENT TAXES.— "(1) IN GENERAL.—In the case of an individual, in addition to the taxes described in subsection (a), there shall be allowed as a deduction for the taxable year an amount equal to one-half of the taxes imposed by section 1401 for such taxable year. "(2) DEDUCTION TREATED AS ATTRIBUTABLE TO TRADE OR BUSI- NESS.—For purposes of this chapter, the deduction allowed by paragraph (1) shall be treated as attributable to a trade or business carried on by the taxpayer which does not consist of the performance of services by the taxpayer as an employee." (2) ALTERNATIVE DEDUCTION ALLOWED IN COMPUTING SELF-EM- 26 use 1402. PLOYMENT TAXES.—Subsection (a) of section 1402 of such Code (defining net earnings from self-employment) is amended by striking out "and" at the end of paragraph (11), by redes- ignating paragraph (12) as paragraph (13), and by inserting after paragraph (11) the following new paragraph: "(12) in lieu of the deduction provided by section 164(f) (relat- ing to deduction for one-half of self-emplojnnent taxes), there shall be allowed a deduction equal to the product of— "(A) the taxpayer's net earnings from self-employment for the taxable year (determined without regard to this paragraph), and "(B) one-half of the sum of the rates imposed by subsec- tions (a) and (b) of section 1401 for such year; and". (3) CONFORMING AMENDMENT TO SOCIAL SECURITY ACT.—Sub- 42 use 411. section (a) of section 211 of the Social Security Act is amended by striking out "and" at the end of paragraph (10), by redes- ignating paragraph (11) as paragraph (12), and by inserting after paragraph (10) the following new paragraph: "(11) In lieu of the deduction provided by section 164(f) of the Internal Revenue Code of 1954 (relating to deduction for one- half of self-employment taxes), there shall be allowed a deduc- tion equal to the product of— "(A) the taxpayer's net earnings from self-employment for the taxable year (determined without regard to this paragraph), and "(B) one-half of the sum of the rates imposed by subsec- tions (a) and (b) of section 1401 of such Code for such year; and". Supra. (4) SECTION 164(F) DEDUCTION TAKEN INTO ACCOUNT IN COM- PUTING EARNED INCOME.—