74TH C ONGRESS . SESS. II. CH. 690. JUNE 22, 1936 .
1 663 corporation is an instrumentality of the United States ; and (B) Ante,p .1657 . suc h intere st is in cluded in gross i ncome un der sect ion 22; and (C) unde r the Act authorizing the issue thereof, as amended and supplemented, such interest is exempt from normal tax . EARNED INCOME CREDIT.-10 per centum of the amount of Ear ned income th (3) arned net income, but not in excess of 10 per centum of the credit . amount of the net income .
Earned income defl- (4) EARNED INCOME DEFINITIONS .-For the purposes of this nitionss s ection- (A) "E arn ed in com e" me ans wages, salaries, rofessional "Earned income ." fees, and other amounts received as compensation for personal services actually rendered, but does not include any amount not included in gross income, nor that part of the compensation derived by the taxpayer for personal services rendered by him to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered . In the case of a tax- payer engaged in a trade or business in which both personal services and capital are material income producing factors, a reasonable allowance as compensation for the personal services actually rendered by the taxpayer, not in excess of 20 per centum of his share of the net profits of such trade or business, shall be considered as earned income . ( B) "Earne d income deduction s" means such deduc tions as "Earned i ncome de- are allowed by section 23 for the purpose of computing net ductions" income, and are properly allocable to or chargeable against earned income . (C) "Earned net income" means the excess of the amount of "Earned net in. the earned income over the sum of the earned income deductions . co me-" If the taxpayer's net income is not more than $3,000, his entire net income shall be considered to be earned net income, and if his net income is more than $3,000 his earned net income shall not be considered to be less than 3,000 . In no case shall the earned net income be considered to be more than $14,000 . (b) CREDITS FOR BOTH NOR MAL TAX AND SuRTAx .-There shall be r,'6111, for both nor- mal tax and surtax . allowed for the purposes of the normal tax and the surtax the follow- ing credits against net income PERSONAL EXEMPTION .-In the case of a single person, a Pe rsonal exemp tion . (1)
Single perso n . personal exemption of $1,000 ; or in the case of the head of a family or a marr ied person living wit h husband o r wife, a personal Husband and wife exe mp tio n of $2 ,50 0 . A husba nd and w ife livi ng toget her shall living together . receive but one personal exemption . The amount of such personal exemption shall be $2,500 . If such husband and wife make sepa- Separate returns . rate returns, the personal exemption may be taken by either or divided between them .
Credit for depend- (2) CREDIT FOR DEPENDENTS .-$400 for each person (other than ents . husband or wife) dependent upon and receiving his chief support from the taxpayer if such dependent person is under eighteen years of age or is in capable o f self-s upport b ecause m entally or physi cally d efec tiv e.
Chan ge of status (3) CHANGE OF STATUS .-If the status of the taxpayer, insofar during taxable y ear . as it affects the personal exemption or credit for dependents, c hanges duri ng the tax able year, the person al exempti on and credit shall be apportioned, under rules and regulations prescribed by the Commissioner with the approval of the Secretary, in accordance with the number of months before and aft er su ch change. For the purpose of such apportionment a fractional part Apportionment . of a month shall be disregarded unless it amounts to more than half a month in which case it shall be considered as a month .
