BENEFITS OF GRADUATED CORPORATE RATES NOT ALLOWED TO PERSONAL SERVICE CORPORATIONS.

SEC. 10224. BENEFITS OF GRADUATED CORPORATE RATES NOT ALLOWED TO PERSONAL SERVICE CORPORATIONS. (a) General Rule.— Subsection (b) of section 11 (relating to corporate tax rates) is amended to read as follows: “(b) Amount of Tax.— “(1) In general.— The amount of the tax imposed by subsection (a) shall be the sum of— “(A) 15 percent of so much of the taxable income as does not exceed $50,000, “(B) 25 percent of so much of the taxable income as exceeds $50,000 but does not exceed $75,000, and 101 STAT. 1330–413 “(C) 34 percent of so much of the taxable income as exceeds $75,000. In the case of a corporation which has taxable income in excess of $100,000 for any taxable year, the amount of tax determined under the preceding sentence for such taxable year shall be increased by the lesser of (i) 5 percent of such excess, or (ii) $11,750. “(2) Certain personal service corporations not eligible for graduated rates.— Notwithstanding paragraph (1), the amount of the tax imposed by subsection (a) on the taxable income of a qualified personal service corporation (as defined in section 448(a)(2)) shall be equal to 34 percent of the taxable income.” (b) Effective Date.— The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1987.