[Code of Federal Regulations]
[Title 26, Volume 1]
[Revised as of April 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.1-2]

[Page 10-11]
 
                       TITLE 26--INTERNAL REVENUE
 
     CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.1-2  Limitation on tax.

    (a) Taxable years ending before January 1, 1971. For taxable years 
ending before January 1, 1971, the tax imposed by section 1 (whether by 
subsection (a) or subsection (b) thereof) shall not exceed 87 percent of 
the taxable income for the taxable year. For purposes of determining 
this limitation the tax under section 1 (a) or (b) and the tax at the 
87-percent rate shall each be computed before the allowance of any 
credits against the tax. Where the alternative tax on capital gains is 
imposed under section 1201(b), the 87-percent limitation shall apply 
only to the partial tax computed on the taxable income reduced by 50 
percent of the excess of net long-term capital gains over net short-term 
capital losses. Where, for purposes of computations under the income 
averaging provisions, section 1201(b) is treated as imposing the 
alternative tax on capital gains computed under section 1304(e)(2), the 
87-percent limitation shall apply only to the tax equal to the tax 
imposed by section 1, reduced by the amount of the tax imposed by 
section 1 which is attributable to capital gain net income for the 
computation year.
    (b) Taxable years beginning after December 31, 1970. If, for any 
taxable year beginning after December 31, 1970, an individual has earned 
taxable income which exceeds his taxable income as defined by section 
1348, the tax imposed by section 1, as amended by the Tax Reform Act of 
1969, shall not exceed the sum computed under the provisions

[[Page 11]]

of section 1348. For imposition of minimum tax for tax preferences see 
sections 56 through 58.

[T.D. 7117, 36 FR 9397, May 25, 1971]