95
STAT.
172
Aug.
13,
1981
[H.R.
4242]
Economic
Recovery
Tax
Act
of
1981.26
USC
1
note.
PUBLIC
LAW
97-34-AUG.
13,
1981
Public
Law
97-34
97th
Congress
An
Act
To
amend
the
Internal
Revenue
Code
of
1954
to
encourage
economic
growth
through
reductionof
the
tax
rates
for individual
taxpayers,
accelerationof
capital
cost
recovery
of investment
in
plant,
equipment,
and real
property,
and
incentives
for
savings,
and
for
other
purposes.
Be
it
enacted
by
the
Senate
and
House
of
Representatives
of
the
United
StatesofAmerica
in
Congress
assembled,
SECTION
1.
SHORT
TITLE;
TABLE
OF
CONTENTS;AMENDMENT
OF
1954
CODE.
(a)
SHORT
TrrLE.-This
Act
maybe cited
as the
"EconomicRecovery
TaxAct
of
1981".
(b)
ABLE
OF
CoNTENTS.-
Sec.
1.
Shorttitle;table
of
contents;
amendment
of
1954
Code.
TITLE
I-INDIVIDUAL
INCOME
TAXPROVISIONS
Subtitle
A-Tax
Reductions
Sec.
101.
Rate
cuts;
rate
reduction
credit.
Sec.
102.
20-percent
maximum
rate
on
net
capital
gain
for
portion
of
1981.
Sec.
103.
Deductionfor
two-earner
married
couples.
Sec.
104.
Adjustment
to
prevent
inflation-caused
tax
increase.
Subtitle
B-Income
Earned
Abroad
Sec.
111.
Partial
exclusion
for
earned
income
fromsources
without
the
United
States
and
foreign
housing
costs.
Sec.
112.
Repeal
of
deduction
for
certain
expenses
of
living
abroad.
Sec.
113.
Employees
living
in
camps.
Sec.
114.
Reports
by
Secretary.
See.
115.
Effective
date.
Subtitle
C-Miscellaneous
Provisions
Sec.
121.
Deduction
for
charitable
contributions
to
be
allowed
for
individualswho
do
not
itemize deductions.
Sec.
122.
18-month
periods
for
rollover
of
principal
residence
increased
to
2
years.
Sec.
123.
One-timeexclusionof
gain
increased
to
$125,000.
Sec.
124.
Increases
in
credit
allowable
for
expenses
for
household
and
dependent
care
services
necessary
for
gainful
employment.
Sec.
125.
Deduction for
adoption
expenses
paid
by
an
individual.
Sec.
126.
Maximum
rate
of
imputed
interest
for sale
ofland
between
related per-
sons.
Sec.
127.
State
legislators
travel
expenses
away
from
home.
Sec.
128.
Rates
of
tax
for
principal
campaigncommittees.
TITLE
Il-BUSINESS
INCENTIVE
PROVISIONS
Subtitle A--Cost
Recovery
Provisions
Sec.
201.
Acceleratedcost recovery
system.
Sec.
202.
Election
to
expense
certain
depreciablebusiness assets.
Sec.
203.
Amendments
relatedto
depreciation.
Sec.
204.
Recaptureon
disposition
of
recovery
property.
95 Stat. 172 1981
PUBLIC
LAW
97-34-AUG.
13,
1981
95
STAT.
173
Sec.
205.
Minimum
taxtreatment.
Sec.
206.
Earningsandprofits.
Sec.
207.
Extensionof carryover period
for
net
operating
losses
and
certain
credits.
Sec.
208.
Carryover
of
recovery
attribute
insection
381
transactions.
Sec.
209.
Effective
dates.Subtitle
B-Investment
Tax
Credit
Provisions
Sec.
211.
Modification
of investmenttax credit
to
reflectaccelerated
costrecovery.
Sec.
212.
Increase
in
investment
tax
credit
for
qualified
rehabilitation
expenditures.
Sec.
213.
Investmentcredit
forused
property;
increase
in
dollar
limit.
Sec.
214.
Investmenttax credit
allowedfor
certainrehabilitated
buildings
leased
to
tax-exemptorganizations
or
to
governmental
units.
Subtitle
C-Incentives
for
Research
and
Experimentation
Sec.
221.
Credit
for
increasing researchactivities.
Sec.
222.
Charitablecontributions
ofscientific
property
used
for
research.
Sec.
223.
Suspension
of
regulations
relating
to
allocation
under
section
861
of
researchandexperimentalexpenditures.Subtitle
D-Small
BusinessProvisions
Sec.
231.
Reductionin
corporate
rate
taxes.
Sec.
232.
Increase
in
accumulatedearningscredit.
Sec.
233.
Subchapter
S
shareholders.
Sec.
234.
Treatment
of
trusts
assubchapter
S
shareholders.
Sec.
235.
Simplificationof
LIFO
by
use of
Government
indexes to be provided
by
regulations.
Sec.
236.
Three-year
averaging
permitted
for
increases
in
inventoryvalue.
Sec.
237.
Election
by
small
businessto use one
inventory
pool
when
LIFO
is
elected.
Subtitle
E-Savings
and
Loan
Associations
Sec.
241.
Reorganizationsinvolving
financiallytroubled
thrift
institutions.
Sec.
242.
Limitations
on
carryoversof
financial
institutions.
Sec.
243.
Reservesfor losses on
loans.
Sec.
244.
FSLIC
financial assistance.
Sec.
245.
Mutual
savings
banks withcapital
stock.
Sec.
246.
Effective
dates.Subtitle
F-Stock
Options,Etc.
Sec.
251.
Stock
options.
Sec.
252.
Property
transferred
to
employees
subject
to
certain
restrictions.Subtitle
G-Miscellaneous
Provisions
Sec.
261.
Adjustmentsto
new jobs
credit.
Sec. 262.
Section
189
madeinapplicableto
low-income
housing.
Sec.
263.
Increase
in deductionallowableto
a
corporation
in
any
taxable
year
for
charitablecontributions.
Sec.
264.
Amortization
of low-income
housing.
Sec.
265.
Deductibilityof gifts
by
employersto
employees.
Sec.
266.
Deduction
for
motor
carrier
operating
authority.
Sec.
267.
Limitation
on
additions
to
bank
loss
reserves.
TITLE
III-SAVINGS
PROVISIONS
Subtitle
A-Interest
Exclusion
Sec.
301.
Exclusionof
interest
on
certain
savings certificates.
Sec.
302.
Partial
exclusion of
interest.
Subtitle
B-Retirement
SavingsProvisions
Sec.
311.
Retirement
savings.
Sec.
312.
Increase
in
amountof
self-employed
retirement
plan
deduction.
Sec.
313.
Rollovers
under
bond
purchaseplans.
Sec.
314.
Miscellaneous
provisions.
95 Stat. 173 1981
95
STAT.
174
PUBLIC
LAW
97-34-AUG.
13,1981
Subtitle
C-Reinvestment
of
Dividends
in
Public
Utilities
Sec.
321.
Encouragementof reinvestment
of dividends
in
the
stock
of
public
utili-
ties.Subtitle
D-Employee
StockOwnershipProvisions
Sec.
331.
Payroll-based
credit
for
establishing
employee
stockownership
plan.
Sec.
332.
Terminationof
the
portionof
the
investment
credit
attributable
to
employee
plan
percentage.
Sec.
333.
Tax
treatment
of contributions
attributable
to principal
and
interest
pay-ments
in
connection
with
an
employee
stockownership
plan.
Sec.
334.
Cash
distributions
from
an
employee
stockownership
plan.
Sec.
335.
Put
optionforstock bonus
plans.
Sec.
336.
Put
option
requirements
forbanks;
put
optionperiod.
Sec.
337.
Distribution
of employer
securities
from
atax
credit
employee
stock
own-
ership
planin
the
caseof
a
sale
of employer
assets
or
stock.
Sec.
338.
Pass
through
of
voting
rights
on
employer
securities.
Sec.
339.
Effective
date.
TITLE
W-ESTATE
AND
GIFT
TAXPROVISIONS
Subtitle
A-Increase
in
UnifiedCredit;
Rate
Reduction;
Unlimited
Marital
Deduction
Sec.
401.
Increase
in
unified
credit.
Sec.
402.
Reduction
inmaximum
rates
of
tax.
Sec.
403.
Unlimited
marital
deduction.
Subtitle
B-Other
Estate
Tax
Provisions
Sec.
421.
Valuationof
certain
farm,
etc.,
real
property.
Sec.
422.
Coordination
of
extensionsof
time
for
paymentofestate
tax
where
estate
consistslargelyof
interestin
closely
held
business.
Sec.423.
Treatment
of
certain
contributionsof
works
of
art,
etc.
Sec.
424.
Gifts
made
within
3
yearsof
decedent's
deathnot
included
in
gross
estate.
Sec.425.
Basis
of
certain
appreciated
propertytransferredto
decedent
by
gift
within
one
year
of
death.
Sec.
426.
Disclaimers.
Sec.
427.
Repeal
of deductionforbequests,
etc.,
to
certainminor
children.
Sec.
428.
Postponementof generation-skipping
tax
effective
date.
Sec.429.
Credit
againstestatetax
for
transfer
to Smithsonian.Subtitle
C-Other
GiftTaxProvisions
Sec.
441.
Increase
in annual
gift
tax
exclusion;
unlimited
exclusionfor
certain
transfers.
Sec.
442.
Time
for
paymentof
gift
taxes.
TITLE
V-TAX
STRADDLES
Sec.
501.
Postponement
of recognition
of
losses,
etc.
Sec.
502.
Capitalization
of
certaininterestandcarrying
charges
in
the
case
of
strad-
dles.
Sec.
503.
Regulated
futures
contractsmarkedto
market.
Sec.
504.
Carrybackof
losses
from
regulated
futures
contractsto
offer
prior
gains
from such
contracts.
Sec.
505.
Certaingovernmental
obligationsissued
at
discount
treated
as
capital
assets.
Sec.
506.
Prompt
identificationof
securities
by
dealersinsecurities.
Sec.
507.
Treatment
of
gainor
loss
from
certainterminations.
Sec.
508.
Effective
dates.
Sec.
509.
Electionforextension
of time
for
paymentandapplication
of
section
1256
for
the
taxable
year
including
June
23,
1981.
95 Stat. 174 1981
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