[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: 26CFR1.42A-1]

[Page 179-181]
 
                       TITLE 26--INTERNAL REVENUE
 
     CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY
 
PART 1--INCOME TAXES--Table of Contents
 
Sec. 1.42A-1  General tax credit for taxable years ending after December 31, 1975, and before January 1, 1979.

    (a)(1) Allowance of credit for taxable years ending after December 
31, 1975, and beginning before January 1, 1977. Subject to the special 
rules of paragraphs (b)(1), (c) and (d) and the limitation of paragraph 
(e)(1) of this section, an individual is allowed as a credit against the 
tax imposed by chapter 1 for the taxable year in the case of taxable 
years ending after December 31, 1975, and beginning before January 1, 
1977, an amount equal to the greater of--
    (i) 2 percent of so much of the individual's taxable income as does 
not exceed $9,000, or
    (ii) $35 multiplied by the total number of deductions for personal 
exemptions to which the individual is entitled for the taxable year 
under section 151 (b) and (e) and the regulations thereunder (relating 
to allowance of deductions for personal exemptions with respect to the 
individual, the individual's spouse, and dependents).

For purposes of applying subdivision (ii) of this paragraph (a)(1), the 
total number of deductions for personal exemptions shall not include any 
additional exemptions to which the individual or his spouse may be 
entitled based upon age of 65 or more or blindness under section 151 (c) 
or (d) and the regulations thereunder.y
    (2) Allowance of credit for taxable years beginning after December 
31, 1976, and ending before January 1, 1979. Subject to the special 
rules of paragraphs (b)(2), (c) and (d) and the limitation of paragraph 
(e)(2) of this section, an individual is allowed as a credit against the 
tax imposed by section 1, or against the tax imposed in lieu of the tax 
imposed by section 1, for the taxable year in the case of taxable years 
beginning after December 31, 1976, and ending before January 1, 1979, an 
amount equal to the greater of--
    (i) 2 percent of so much of the individual's taxable income for the 
taxable year, reduced by the zero bracket amount determined under 
section 63 (d), as does not exceed $9,000, or
    (ii) $35 multiplied by the total number of deductions for personal 
exemptions to which the individual is entitled for the taxable year 
under section 151 and the regulations thereunder (relating to allowance 
of deductions for personal exemptions).
    (b) Married individuals filing separate returns--(1) For taxable 
years ending after December 31, 1975, and beginning before January 1, 
1977. In the case of taxable years ending after December 31, 1975, and 
beginning before January 1, 1977, a married individual who files a 
separate return for the taxable year is allowed as a credit for the 
taxable year an amount equal to either--
    (i) 2 percent of so much of the individual's taxable income as does 
not exceed $4,500, or
    (ii) $35 multiplied by the total number of deductions for personal 
exemptions to which the individual is entitled for the taxable year 
under section 151 (b) and (e) and the regulations thereunder, but only 
if both the individual and the individual's spouse elect to have the 
credit determined in the manner described in this subdivision (ii) for 
their corresponding taxable years. The elections shall be made by both 
married individuals separately calculating and claiming the credit in 
the manner and amount described in this subdivision (ii) on their 
separate returns for their corresponding taxable years. The rules of 
section 142 (a) and the regulations thereunder (relating to individuals 
not eligible for the standard deduction) in effect for taxable years 
beginning before January 1, 1977, apply to determine whether the taxable

[[Page 180]]

years of the individual and the individual's spouse correspond to each 
other. For purposes of applying this subdivision (ii), the total number 
of deductions for personal exemptions shall not include any additional 
exemptions to which the individual may be entitled based upon age of 65 
or more or blindness under section 151 (c) or (d) and the regulations 
thereunder.
    (2) For taxable years beginning after December 31, 1976, and ending 
before January 1, 1979. In the case of taxable years beginning after 
December 31, 1976, and ending before January 1, 1979, a married 
individual who files a separate return for the taxable year shall 
determine the amount of the credit for the taxable year under section 
42(a)(2) and Sec. 1.42A-1(a)(2)(ii).
    (3) Determination of marital status. For purposes of this paragraph, 
the determination of marital status shall be made as provided by section 
143 and the regulations thereunder (relating to the determination of 
marital status).
    (c) Return for short period on change of annual accounting period. 
In computing the credit provided by section 42 and this section for a 
period of less than 12 months (hereinafter referred to as a ``short 
period''), where income is to be annualized under section 443(b)(1) in 
order to determine the tax--
    (1) The credit allowed by paragraphs (a) (1)(i) and (2)(i) of this 
section shall be computed based upon the amount of the taxable income 
annualized under the rules of section 443(b)(1) and Sec. 1.443-1(b)(1), 
or
    (2)(i) The credit allowed by paragraph (a)(1)(ii) of this section 
shall be computed based upon the total number of deductions for personal 
exemptions to which the individual is entitled for the short period 
under section 151 (b) and (e) and the regulations thereunder (relating 
to allowance of deductions for personal exemptions with respect to the 
individual, the individual's spouse, and dependents), and
    (ii) The credit allowed by paragraph (a)(2)(ii) of this section 
shall be computed based upon the total number of deductions for personal 
exemptions to which the individual is entitled for the short period 
under section 151 and the regulations thereunder (relating to allowance 
of deductions for personal exemptions).

As so computed, the credit allowed by section 42 and this section shall 
be allowed against the tax computed on the basis of the annualized 
taxable income. See Sec. 1.443-1(b)(1)(vi).
    (d) Certain persons not eligible--(1) Estates and trusts. The credit 
provided by section 42 and this section shall not be allowed in the case 
of any estate or trust. Thus, the credit shall not be allowed to an 
estate of an individual in bankruptcy or to an estate of a deceased 
individual. However, in the case of a deceased individual, the credit 
shall be allowed on the decedent's final return filed by his executor or 
other representative. Also, the credit provided by section 42 and this 
section shall be allowed in the case of a return filed by an estate of 
an infant, incompetent, or an individual under a disability.
    (2) Nonresident alien individuals. The credit provided by section 42 
and this section shall not be allowed in the case of any nonresident 
alien individual. As used in this subparagraph, the term ``nonresident 
alien individual'' has the meaning provided by Sec. 1.871-2. See, 
however, section 6013(g) for election to treat nonresident alien 
individual as resident of the United States. The credit shall be allowed 
to an alien individual who is a resident of the United States for part 
of the taxable year. See Sec. 1.871-2(b) for rules relating to the 
determination of residence of an alien individual. For purposes of 
paragraphs (a) (1)(i) and (2)(i) of this section, the credit allowed 
shall be computed by taking into account only that portion of the 
individual's taxable income which is attributable to the period of his 
residence in the United States. For purposes of paragraph (a)(1)(ii) of 
this section, the credit allowed shall be computed by taking into 
account only the total number of deductions for personal exemptions to 
which the individual is entitled under section 151 (b) and (e) for the 
period of his residence in the United States. For purposes of paragraph 
(a)(2)(ii) of this section, the credit allowed shall be computed by 
taking into account only the total

[[Page 181]]

number of deductions for personal exemptions to which the individual is 
entitled under section 151 for the period of his residence in the United 
States. See Sec. 1.871-13 for rules relating to changes of residence 
status during a taxable year.
    (e) Limitation--(1) For taxable years ending after December 31, 
1975, and beginning before January 1, 1977. For taxable years ending 
after December 31, 1975, and beginning before January 1, 1977, the 
credit allowed by section 42 and this section shall not exceed the 
amount of tax imposed by chapter 1 for the taxable year. In the case of 
an alien individual who is a resident of the United States for a part of 
the taxable year, the credit allowed by section 42 and this section 
shall not exceed the amount of tax imposed by chapter 1 for that portion 
of the taxable year during which the alien individual was a resident of 
the United States. See Sec. 1.871-13.
    (2) For taxable years beginning after December 31, 1976, and ending 
before January 1, 1979. For taxable years beginning after December 31, 
1976, and ending before January 1, 1979, the credit allowed by section 
42 and this section shall not exceed the amount of tax imposed by 
section 1, or the amount of tax imposed in lieu of the tax imposed by 
section 1, for the taxable year. In the case of an alien individual who 
is a resident of the United States for a part of the taxable year, the 
credit allowed by section 42 and this section shall not exceed the 
amount of tax imposed by section 1, or the amount of tax imposed in lieu 
of the tax imposed by section 1, for that portion of the taxable year 
during which the alien individual was a resident of the United States. 
See Sec. 1.871-13.
    (f) Application with other credits. In determining the credits 
allowed under--
    (1) Section 33 (relating to foreign tax credit),
    (2) Section 37 (relating to credit for the elderly),
    (3) Section 38 (relating to investment in certain depreciable 
property),
    (4) Section 40 (relating to expenses of work incentive programs), 
and
    (5) Section 41 (relating to contributions to candidates for public 
office),

the tax imposed for the taxable year shall first be reduced (before any 
other reduction) by the credit allowed by section 42 and this section 
for the taxable year.
    (g) Income tax tables to reflect credit. The tables prescribed under 
section 3 shall reflect the credit allowed by section 42 and this 
section.
    (h) Effective dates. The credit allowed by section 42 and this 
section applies only for taxable years ending after December 31, 1975, 
and before January 1, 1979.

[T.D. 7547, 43 FR 19653, May 8, 1978]