INCOME EARNED ABROAD BY UNITED STATES CITIZENS LIVING OR RESIDING ABROAD.

SEC. 1011. INCOME EARNED ABROAD BY UNITED STATES CITIZENS LIVING OR RESIDING ABROAD. (a) Reduction of Limitations on Amount Excludable.— Paragraph (1) of section 911(c) relating to limitations on amount of exclusion) is amended to read as follows: “(1) Limitations on amount of exclusion.— “(A) In general.— Except as provided in subparagraphs (B) and (C), the amount excluded from the gross income of an individual under subsection (a) for any taxable year shall not exceed an amount which shall be computed on a daily basis at an annual rate of $15,000. “(B) Employees of charitable organizations.— If any individual performs qualified charitable services during any taxable year, the amount of the earned income attributable to such services excluded from the gross income of the individual under subsection (a) for the taxable year shall not exceed an amount which shall be computed on a daily basis at an annual rate of $20,000. “(C) Special rule.— If any individual performs qualified charitable services and other services during any taxable year, the amount of the earned income attributable to such other services excluded from the gross income of the individual under subsection (a) for the taxable year shall not (after the application of subparagraph (A) with respect to such earned income) exceed $15,000 reduced by the amount of the earned income attributable to qualified charitable services excluded from gross income under subsection (a) for the taxable year. “(D) Qualified charitable services.— For purposes of this subsection, the term ‘qualified charitable services’ means services performed by an employee for an employer created or organized in the United States, or under the law of the United States, any State, or the District of Columbia, which meets the requirements of section 501 (c)(3).” (b) Additional Limitations on Exclusion.— (1) Disallowance of foreign tax credit with respect to excluded amounts.— The last sentence of subsection (a) of section 911 (relating to earned income from sources without the United States) is amended to read as follows: “An individual shall not be allowed as a deduction from his gross income any deductions (other than those allowed by section 151, relating to personal exemptions), or as a credit against the tax imposed by this chapter any credit for the amount of taxes paid or accrued to a foreign country or possession of the United States, to the extent that such deductions or credit is properly allocable to or chargeable against amounts excluded from gross income under this subsection.” 90 STAT. 1611 (2) Disallowance or exclusion for income received other than in country where earned.— Section 911(c) (relating to special rules for earned income from sources without the United States) is amended by adding at the end thereof the following new paragraph: “(8) Requirement as to place of receipt.— No amount received by an individual during the taxable year which constitutes earned income (entitled to the exclusion under subsection (a)) attributable to services performed in a foreign country or countries shall be excluded under subsection (a) if such amount is received by such individual outside of the foreign country or countries where such services were performed and if one of the purposes is the avoidance of any tax imposed by such foreign country or countries on such amount.” (3) Inclusion of earned income in computation of rate of tax.— Section 911 (relating to earned income from sources without the United States) is amended by redesignating subsection (d) as subsection, (f) and by inserting after subsection (e) the following new subsections: “(d) Amount Excluded Under Subsection (a) Included in Computation of Tax.— “(1) Computation of tax.— If for any taxable year an individual has earned income which is excluded from gross income under subsection (a), the tax imposed by section 1 or section 1201 shall be the excess of— “(A) the tax imposed by section 1 or section 1201 (whichever is applicable) on the amount of net taxable income, over “(B) the tax imposed by section 1 or section 1201 (whichever is applicable) on the amount of net excluded earned income. “(2) Definitions.— For purposes of this subsection— “(A) the term ‘net taxable income’ means an amount equal to the sum of the amount of taxable income for the taxable year plus the amount of net excluded earned income of such individual for such taxable year; and “(B) the term ‘net excluded earned income’ means the excess of the amount of earned income excluded under’ subsection (a) for the taxable year over the amount of the deductions disallowed with respect to such excluded earned income for such taxable year under subsection (a). “(e) Section Not to Apply.— “(1) In general.— An individual entitled to the benefits of this section for a taxable year may elect, in such manner and at such time as shall he prescribed by the Secretary, not to have the provisions of this section apply. “(2) Effect of election.— An election under paragraph (1) shall apply to the taxable year for which made and to all subsequent taxable years. Such election may not be revoked except with the consent of the Secretary.” (c) Allowance of Foreign Tax Credits to Individuals Taking Standard Deduction.— Section 36 (relating to credits not allowed to individuals paying optional tax or taking standard deduction) is amended by striking out “sections 32, 33, and” and inserting in lieu thereof “sections 32 and”. (d) Effective Date.— The amendments made by this section shall apply to taxable years beginning after December 31, 1975.