For purposes of this subtitle, the term
''adjusted gross income'' means, in the case of an individual,
gross income minus the following deductions:
(1)
Trade and business deductions
The deductions allowed by this chapter
(other than by part VII of this subchapter) which are attributable
to a trade or business carried on by the taxpayer, if such trade
or business does not consist of the performance of services by the
taxpayer as an employee.
(2)
Certain trade and business
deductions of employees
(A)
Reimbursed expenses of
employees
The deductions allowed by part VI (section
161 and following) which consist of expenses paid or incurred by
the taxpayer, in connection with the performance by him of
services as an employee, under a reimbursement or other expense
allowance arrangement with his employer. The fact that the
reimbursement may be provided by a third party shall not be
determinative of whether or not the preceding sentence applies.
(B)
Certain expenses of
performing artists
The deductions allowed by section 162 which
consist of expenses paid or incurred by a qualified performing
artist in connection with the performances by him of services in
the performing arts as an employee.
(C)
Certain expenses of officials
The deductions allowed by section 162 which
consist of expenses paid or incurred with respect to services
performed by an official as an employee of a State or a political
subdivision thereof in a position compensated in whole or in part
on a fee basis.
(3)
Losses from sale or exchange
of property
The deductions allowed by part VI (sec. 161
and following) as losses from the sale or exchange of property.
(4)
Deductions attributable to
rents and royalties
The deductions allowed by part VI (sec. 161
and following), by section 212 (relating to expenses for
production of income), and by section 611 (relating to depletion)
which are attributable to property held for the production of
rents or royalties.
(5)
Certain deductions of life
tenants and income beneficiaries of property
In the case of a life tenant of property,
or an income beneficiary of property held in trust, or an heir,
legatee, or devisee of an estate, the deduction for depreciation
allowed by section 167 and the deduction allowed by section 611.
(6)
Pension, profit-sharing, and
annuity plans of self-employed individuals
In the case of an individual who is an
employee within the meaning of section 401(c)(1), the deduction
allowed by section 404.
The deduction allowed by section 219
(relating to deduction of certain retirement savings).
(8)
Repealed. Pub.
L. 104-188, title I, Sec. 1401(b)(4), Aug. 20, 1996, 110 Stat.
1788)
(9)
Penalties forfeited because
of premature withdrawal of funds from time savings accounts or
deposits
The deductions allowed by section 165 for
losses incurred in any transaction entered into for profit, though
not connected with a trade or business, to the extent that such
losses include amounts forfeited to a bank, mutual savings bank,
savings and loan association, building and loan association,
cooperative bank or homestead association as a penalty for
premature withdrawal of funds from a time savings account,
certificate of deposit, or similar class of deposit.
(10)
Alimony
The deduction allowed by section 215.
(11)
Reforestation expenses
The deduction allowed by section 194.
(12)
Certain required repayments
of supplemental unemployment compensation benefits
The deduction allowed by section 165 for
the repayment to a trust described in paragraph (9) or (17) of
section 501(c) of supplemental unemployment compensation benefits
received from such trust if such repayment is required because of
the receipt of trade readjustment allowances under section 231 or
232 of the Trade Act of 1974 (19 U.S.C. 2291
and 2292).
(13)
Jury duty pay remitted to
employer
Any deduction allowable under this chapter
by reason of an individual remitting any portion of any jury pay
to such individual's employer in exchange for payment by the
employer of compensation for the period such individual was
performing jury duty. For purposes of the preceding sentence, the
term ''jury pay'' means any payment received by the individual for
the discharge of jury duty.
(14)
Deduction for clean-fuel
vehicles and certain refueling property
The deduction allowed by section 179A.
(15)
Moving expenses
The deduction allowed by section 217.
(16)
Archer MSAs
The deduction allowed by section 220.
(17)
Interest on education loans
The deduction allowed by section 221.
Nothing in this section shall permit the
same item to be deducted more than once.
(b) Qualified
performing artist
For purposes of subsection (a)(2)(B), the
term ''qualified performing artist'' means, with respect to any
taxable year, any individual if -
(A)
such individual performed services in the
performing arts as an employee during the taxable year for at
least 2 employers,
(B)
the aggregate amount allowable as a
deduction under section 162 in connection with the performance of
such services exceeds 10 percent of such individual's gross income
attributable to the performance of such services, and
(C)
the adjusted gross income of such
individual for the taxable year (determined without regard to
subsection (a)(2)(B)) does not exceed $16,000.
(2)
Nominal employer not taken
into account
An individual shall not be treated as
performing services in the performing arts as an employee for any
employer during any taxable year unless the amount received by
such individual from such employer for the performance of such
services during the taxable year equals or exceeds $200.
(3)
Special rules for married
couples
Except in the case of a husband and wife
who lived apart at all times during the taxable year, if the
taxpayer is married at the close of the taxable year, subsection
(a)(2)(B) shall apply only if the taxpayer and his spouse file a
joint return for the taxable year.
(B)
Application of paragraph (1)
In the case of a joint return -
(i)
paragraph (1) (other than subparagraph (C)
thereof) shall be applied separately with respect to each spouse,
but
(ii)
paragraph (1)(C) shall be applied with
respect to their combined adjusted gross income.
(C)
Determination of marital
status
For purposes of this subsection, marital
status shall be determined under section 7703(a).
For purposes of this subsection, the term
''joint return'' means the joint return of a husband and wife made
under section 6013.
(c) Certain
arrangements not treated as reimbursement arrangements
For purposes of subsection (a)(2)(A), an
arrangement shall in no event be treated as a reimbursement or
other expense allowance arrangement if -
(1)
such arrangement does not require the
employee to substantiate the expenses covered by the arrangement
to the person providing the reimbursement, or
(2)
such arrangement provides the employee the
right to retain any amount in excess of the substantiated expenses
covered under the arrangement.
The substantiation requirements of the
preceding sentence shall not apply to any expense to the extent
that substantiation is not required under section 274(d) for such
expense by reason of the regulations prescribed under the 2nd
sentence thereof
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