rp-99-42.pdf

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Part III
Administrative, Procedural, and Miscellaneous
26 CFR 601.602: Tax forms and instructions.
(Also Part I, §§ 1, 32, 59, 63, 68, 132, 135, 151, 170, 213, 220, 512, 513, 685, 877,
2032A, 2503, 2523, 2631, 4001, 4003, 4261, 6033, 6039F, 6323, 6334, 6601, 7430,
7702B)
Rev. Proc. 99-42
Table of Contents
SECTION 1. PURPOSE
SECTION 2. CHANGES MADE FROM PRECEDING YEAR
SECTION 3. 2000 ADJUSTED ITEMS
Code Section
.01 Tax Rate Tables 1(a)-(e)
.02 Unearned Income of Minor Children Taxed 1(g)
as if Parent's Income ("Kiddie Tax")
.03 Earned Income Credit 32
.04 Alternative Minimum Tax Exemption for a Child 59(j)
Subject to the "Kiddie Tax"
.05 Standard Deduction 63
.06 Overall Limitation on Itemized Deductions 68
.07 Qualified Transportation Fringe132(f)
.08 Income from United States Savings Bonds135
for Taxpayers Who Pay Qualified Higher
Education Expenses

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.09 Personal Exemption 151
.10 Eligible Long-Term Care Premiums 213(d)(10)
.11 Medical Savings Accounts220
.12 Treatment of Dues Paid to Agricultural or512(d)
Horticultural Organizations.
.13 Insubstantial Benefit Limitations for 513(h)
Contributions Associated with Charitable
Fund-Raising Campaigns
.14 Funeral Trusts685
.15 Expatriation to Avoid Tax877
.16 Valuation of Qualified Real Property 2032A
in Decedent’s Gross Estate
.17 Annual Exclusion for Gifts 2503 & 2523
.18 Generation-Skipping Transfer Tax Exemption 2631
.19 Luxury Automobile Excise Tax 4001 & 4003
.20 Passenger Air Transportation Excise Tax 4261
.21 Reporting Exception for Certain Exempt 6033(e)(3)
Organizations with Nondeductible
Lobbying Expenditures
.22 Notice of Large Gifts Received from 6039F
Foreign Persons
.23 Persons against Which a Federal Tax Lien6323
is Not Valid
.24 Property Exempt from Levy6334
.25 Interest on a Certain Portion of the 6601(j)
Estate Tax Payable in Installments
.26 Attorney Fee Awards 7430

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.27 Periodic Payments Received under Qualified 7702B(d)
Long-Term Care Insurance Contracts or under
Certain Life Insurance Contracts
SECTION 4. EFFECTIVE DATE
SECTION 5. DRAFTING INFORMATION
SECTION 1. PURPOSE
This revenue procedure sets forth inflation adjusted items for 2000.
SECTION 2. CHANGES MADE FROM PRECEDING YEAR
.01 The limitations in § 132(f) on the exclusion from gross income for qualified
transportation fringes, as amended by section 9010(b) of the Transportation Equity Act
for the 21st Century, Pub. L. 105-178, 112 Stat. 107 (1998), are adjusted for inflation
for tax years beginning in 2000 (section 3.07).
.02 The value of property exempt from levy under § 6334(a)(2) (fuel, provisions,
furniture, and other household personal effects, as well as arms for personal use,
livestock, and poultry) and under § 6334(a)(3) (books and tools necessary for the trade,
business, or profession of the taxpayer), as amended by section 3431 of the Internal Revenue
Service Restructuring and Reform Act of 1998, Pub. L. No. 105-206, 112 Stat. 685 (1998),
are adjusted for inflation for tax years beginning in 2000 (section 3.24).
SECTION 3. 2000 ADJUSTED ITEMS
.01 Tax Rate Tables
. For tax years beginning in 2000, the tax rate tables under § 1
are as follows:

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TABLE 1 - Section 1(a). -- MARRIED INDIVIDUALS FILING JOINT RETURNS AND
SURVIVING SPOUSES
If Taxable Income Is: The Tax Is:
Not Over $43,850 15% of the taxable income
Over $43,850 $6,577.50 plus 28% of
but not over $105,950 the excess over $43,850

Over $105,950 $23,965.50 plus 31% of
but not over $161,450 the excess over $105,950
Over $161,450 $41,170.50 plus 36% of
but not over $288,350 the excess over $161,450
Over $288,350 $86,854.50 plus 39.6% of
the excess over $288,350
TABLE 2 - Section 1(b). -- HEADS OF HOUSEHOLDS
If Taxable Income Is:The Tax Is:
Not Over $35,150 15% of the taxable income
Over $35,150 $5,272.50 plus 28% of
but not over $90,800 the excess over $35,150
Over $90,800 $20,854.50 plus 31% of
but not over $147,050 the excess over$90,800
Over $147,050 $38,292 plus 36% of
but not over $288,350 the excess over $147,050
Over $288,350 $89,160 plus 39.6% of
the excess over $288,350
TABLE 3 - Section 1(c). -- UNMARRIED INDIVIDUALS (OTHER THAN SURVIVING
SPOUSES AND HEADS OF HOUSEHOLDS)
If Taxable Income Is:The Tax Is:
Not Over $26,250 15% of the taxable income

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Over $26,250 $3,937.50 plus 28% of
but not over $63,550 the excess over $26,250
Over $63,550 $14,381.50 plus 31% of
but not over $132,600the excess over $63,550
Over $132,600 $35,787 plus 36% of
but not over $288,350 the excess over $132,600
Over $288,350 $91,857 plus 39.6% of
the excess over $288,350
TABLE 4 - Section 1(d). -- MARRIED INDIVIDUALS FILING SEPARATE RETURNS
If Taxable Income Is:The Tax Is:
Not Over $21,925 15% of the taxable income
Over $21,925 $3,288.75 plus 28% of
but not over $52,975 the excess over $21,925
Over $52,975$11,982.75 plus 31% of
but not over $80,725 the excess over $52,975
Over $80,725 $20,585.25 plus 36% of
but not over $144,175 the excess over $80,725
Over $144,175 $43,427.25 plus 39.6% of
the excess over $144,175

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TABLE 5 - Section 1(e). -- ESTATES AND TRUSTS
If Taxable Income Is:The Tax Is:
Not Over $1,750 15% of the taxable income
Over $1,750 $262.50 plus 28% of
but not over $4,150 the excess over $1,750
Over $4,150 $934.50 plus 31% of
but not over $6,300 the excess over $4,150
Over $6,300 $1,601 plus 36% of
but not over $8,650 the excess over $6,300
Over $8,650 $2,447 plus 39.6% of
the excess over $8,650
.02 Unearned Income of Minor Children Taxed as if Parent’s Income (the "Kiddie
Tax"). For tax years beginning in 2000, the amount in § 1(g)(4)(A)(ii)(I), which is used
to reduce the net unearned income reported on the child's return that is subject to the
"kiddie tax," is $700. (This amount is the same as the $700 standard deduction
amount provided in section 3.05(2) of this revenue procedure.) In the alternative, the
same $700 amount is used for purposes of § 1(g)(7) (that is, determining whether a
parent may elect to include a child's gross income in the parent's gross income and for
calculating the "kiddie tax").
.03 Earned Income Credit
.
(1) In general
. For tax years beginning in 2000, the following amounts are
used to determine the earned income credit under § 32(b). The "earned income
amount" is the amount of earned income at or above which the maximum amount of the
earned income credit is allowed. The "threshold phaseout amount" is the amount of

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modified adjusted gross income (or, if greater, earned income) above which the
maximum amount of the credit begins to phase out. The "completed phaseout amount"
is the amount of modified adjusted gross income (or if greater, earned income) at or
above which no credit is allowed.
Maximum ThresholdCompleted
Number Amount ofEarned Income PhaseoutPhaseout
of Children
the Credit Amount Amount Amount
1 $2,353 $6,920 $12,690$27,413
2 or more $3,888 $9,720 $12,690$31,152
None $ 353 $4,610 $ 5,770$10,380
The Internal Revenue Service, in the instructions for the Form 1040 series,
provides tables showing the amount of the earned income credit for each type of
taxpayer.
(2) Excessive investment income
. For tax years beginning in 2000, the earned
income credit is denied under § 32(i) if the aggregate amount of certain investment
income exceeds $2,400.
.04 Alternative Minimum Tax Exemption for a Child Subject to the "Kiddie Tax." For
tax years beginning in 2000, in the case of a child to whom the § 1(g) "kiddie tax"
applies, the exemption amount under § 55 and § 59(j) for purposes of the alternative
minimum tax under § 55 may not exceed the sum of (A) such child's earned income for
the taxable year, plus (B) $5,200.
.05 Standard Deduction
.
(1) In general
. For tax years beginning in 2000, the standard deduction
amounts under § 63(c)(2) are as follows:

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Filing Status
Standard Deduction
MARRIED INDIVIDUALS FILING JOINT RETURNS $7,350
AND SURVIVING SPOUSES (§ 1(a))
HEADS OF HOUSEHOLDS (§ 1(b)) $6,450
UNMARRIED INDIVIDUALS (OTHER THAN SURVIVING $4,400
SPOUSES AND HEADS OF HOUSEHOLDS) (§ 1(c))
MARRIED INDIVIDUALS FILING SEPARATE$3,675
RETURNS (§ 1(d))
(2) Dependent
. For tax years beginning in 2000, the standard deduction
amount under § 63(c)(5) for an individual who may be claimed as a dependent by
another taxpayer may not exceed the greater of $700, or the sum of $250 and the
individual's earned income.
(3) Aged and blind
. For tax years beginning in 2000, the additional standard
deduction amounts under § 63(f) for the aged and for the blind are $850 for each.
These amounts are increased to $1,100 if the individual is also unmarried and not a
surviving spouse.
.06 Overall Limitation on Itemized Deductions. For tax years beginning in 2000,
the "applicable amount" of adjusted gross income under § 68(b), above which the
amount of otherwise allowable itemized deductions is reduced under § 68, is $128,950
(or $64,475 for a separate return filed by a married individual).
.07 Qualified Transportation Fringe
. For tax years beginning in 2000, the
monthly limitation under § 132(f)(2)(A), regarding the aggregate fringe
benefit exclusion amount for transportation in a commuter highway vehicle and
any transit pass, is $65. The monthly limitation under § 132(f)(2)(B)

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regarding the fringe benefit exclusion amount for qualified parking is $175.
.08 Income from United States Savings Bonds for Taxpayers Who Pay Qualified
Higher Education Expenses. For tax years beginning in 2000, the exclusion under
§ 135, regarding income from United States savings bonds for taxpayers who pay
qualified higher education expenses, begins to phase out for modified adjusted gross
income above $81,100 for joint returns and $54,100 for other returns. This exclusion
completely phases out for modified adjusted gross income of $111,100 or more for
joint returns and $69,100 or more for other returns.
.09 Personal Exemption
.
(1) Exemption amount
. For tax years beginning in 2000, the personal
exemption amount under § 151(d) is $2,800.
(2) Phaseout
. For tax years beginning in 2000, the personal exemption amount
begins to phase out at, and is completely phased out after, the following adjusted gross
income amounts:
Threshold Completed
Filing Status
Phaseout Amount Phaseout Amount After
Code § 1(a) $193,400 $315,900
Code § 1(b) $161,150 $283,650
Code § 1(c) $128,950 $251,450
Code § 1(d) $ 96,700 $157,950
.10 Eligible Long-Term Care Premiums
. For tax years beginning in 2000, the
limitations under § 213(d), regarding eligible long-term care premiums includible in the
term "medical care," are as follows:

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Attained age before the close of the taxable year:
40 or less......................................... $ 220
More than 40 but not more than 50.................. $ 410
More than 50 but not more than 60.................. $ 820
More than 60 but not more than 70.................. $2,200
More than 70.................................................... $2,750
.11 Medical Savings Accounts
.
(1) Self-only coverage
. For tax years beginning in 2000, the term "high
deductible health plan" as defined in § 220(c)(2)(A) means, in the case of self-only
coverage, a health plan which has an annual deductible that is not less than $1,550
and not more than $2,350, and under which the annual out-of-pocket expenses
required to be paid (other than for premiums) for covered benefits does not exceed
$3,100.
(2) Family coverage
. For tax years beginning in 2000, the term "high deductible
health plan" means, in the case of family coverage, a health plan which has an annual
deductible that is not less than $3,100 and not more than $4,650, and under which the
annual out-of-pocket expenses required to be paid (other than for premiums) for
covered benefits does not exceed $5,700.
.12 Treatment of Dues Paid to Agricultural or Horticultural Organizations. For tax
years beginning in 2000, the limitation under § 512(d)(1), regarding the exemption of
annual dues required to be paid by a member to an agricultural or horticultural
organization, is $112.

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.13 Insubstantial Benefit Limitations for Contributions Associated with Charitable
Fund-Raising Campaigns.
(1) Low cost article
. For tax years beginning in 2000, the unrelated business
income of certain exempt organizations under § 513(h)(2) does not include a "low cost
article" of $7.40 or less.
(2) Other insubstantial benefits
. For tax years beginning in 2000, the $5, $25,
and $50 guidelines in section 3 of Rev. Proc. 90-12, 1990-1 C.B. 471 (as amplified and
modified), for disregarding the value of insubstantial benefits received by a donor in
return for a fully deductible charitable contribution under § 170, are $7.40, $37, and
$74, respectively.
.14 Funeral Trusts
. For a contract entered into during calendar year 2000 for a
"qualified funeral trust," as defined in § 685, the trust may not accept aggregate
contributions by or for the benefit of an individual in excess of $7,200.
.15 Expatriation to Avoid Tax
. For calendar year 2000, the thresholds used under
§ 877(a)(2), regarding whether an individual's loss of United States citizenship had the
avoidance of United States taxes as one of its principal purposes, are more than
$112,000 for "average annual net income tax" and $562,000 or more for "net worth."
.16 Valuation of Qualified Real Property in Decedent’s Gross Estate
. For an estate
of a decedent dying in calendar year 2000, if the executor elects to use the special use
valuation method under § 2032A for qualified real property, the aggregate decrease in
the value of qualified real property resulting from electing to use § 2032A that is taken
into account for purposes of the estate tax may not exceed $770,000.

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.17 Annual Exclusion for Gifts
.
(1) For calendar year 2000, the first $10,000 of gifts to any person (other than
gifts of future interests in property) are not included in the total amount of taxable gifts
under § 2503 made during that year.
(2) For calendar year 2000, the first $103,000 of gifts to a spouse who is not a
citizen of the United States (other than gifts of future interests in property) are not
included in the total amount of taxable gifts under §§ 2503 and 2523(i)(2) made during
that year.
.18 Generation-Skipping Transfer Tax Exemption
. For calendar year 2000, the
generation-skipping transfer tax exemption under § 2631, which is allowed in
determining the "inclusion ratio" defined in § 2642, is $1,030,000.
.19 Luxury Automobile Excise Tax
. For calendar year 2000, the excise tax under
§§ 4001 and 4003 is imposed on the first retail sale of a passenger vehicle (including
certain parts or accessories installed within six months of the date after the vehicle was
first placed in service), to the extent the price exceeds $38,000.
.20 Passenger Air Transportation Excise Tax. For calendar year 2000, the tax
under § 4261(c) on any amount paid (whether within or without the United States) for
any transportation of any person by air, if such transportation begins or ends in the
United States, generally is $12.40. However, in the case of a domestic segment
beginning or ending in Alaska or Hawaii as described in § 4261(c)(3), the tax only
applies to departures and is at the rate of $6.20.

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.21 Reporting Exception for Certain Exempt Organizations with Nondeductible
Lobbying Expenditures. For tax years beginning in 2000, the annual per person,
family, or entity dues limitation to qualify for the reporting exception under § 6033(e)(3)
(and section 5.05 of Rev. Proc. 98-19, 1998-7 I.R.B. 30), regarding certain exempt
organizations with nondeductible lobbying expenditures, is $78 or less.
.22 Notice of Large Gifts Received from Foreign Persons
. For tax years beginning
in 2000, recipients of gifts from certain foreign persons may have to report these gifts
under § 6039F if the aggregate value of gifts received in a taxable year exceeds
$10,931.
.23 Persons against Which a Federal Tax Lien is Not Valid. For calendar year
2000, a federal tax lien is not valid against (1) certain purchasers under § 6323(b)(4)
that purchased personal property in a casual sale for less than $1,060, or (2) a
mechanic’s lienor under § 6323(b)(7) that repaired or improved certain residential
property if the contract price with the owner is not more than $5,320.
.24 Property Exempt from Levy
. For calendar year 2000, the value of property
exempt from levy under § 6334(a)(2) (fuel, provisions, furniture, and
other household personal effects, as well as arms for personal use, livestock,
and poultry) may not exceed $6,360. The value of property exempt from levy
under § 6334(a)(3) (books and tools necessary for the trade, business, or
profession of the taxpayer) may not exceed $3,180.
.25 Interest on a Certain Portion of the Estate Tax Payable in Installments
. For an
estate of a decedent dying in calendar year 2000, the dollar amount used to determine

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the "2-percent portion" (for purposes of calculating interest under § 6601(j)) of the
estate tax payable in installments under § 6166 is $1,030,000.
.26 Attorney Fee Awards
. For fees incurred in calendar year 2000, the attorney
fee award limitation under § 7430(c)(1)(B)(iii) is $140 per hour.
.27 Periodic Payments Received under Qualified Long-Term Care Insurance
Contracts or under Certain Life Insurance Contracts. For calendar year 2000, the
stated dollar amount of the per diem limitation under § 7702B(d)(4), regarding periodic
payments received under a qualified long-term care insurance contract or periodic
payments received under a life insurance contract that are treated as paid by reason of
the death of a chronically ill individual, is $190.
SECTION 4. EFFECTIVE DATE
.01 General Rule
. Except as provided in section 4.02, this revenue procedure
applies to tax years beginning in 2000.
.02 Calendar Year Rule
. This revenue procedure applies to transactions or events
occurring in calendar year 2000 for purposes of section 3.14 (funeral trusts), section
3.15 (expatriation to avoid tax), section 3.16 (valuation of qualified real property in
decedent’s gross estate), section 3.17 (annual exclusion for gifts), section 3.18
(generation-skipping transfer tax exemption), section 3.19 (luxury automobile excise
tax), section 3.20 (passenger air transportation excise tax), section 3.23 (persons
against which a federal tax lien is not valid), section 3.24 (property exempt from levy),
section 3.25 (interest on a certain portion of the estate tax payable in installments),

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section 3.26 (attorney fee awards), and section 3.27 (periodic payments received under
qualified long-term care insurance contracts or under certain life insurance contracts).
SECTION 5. DRAFTING INFORMATION
The principal author of this revenue procedure is John Moran of the Office of
Assistant Chief Counsel (Income Tax and Accounting). For further information
regarding this revenue procedure, contact Mr. Moran on (202) 622-4940 (not a toll-free
call).