105 STAT. 1062 PUBLIC LAW 102-164—NOV. 15, 1991 (1) by striking "1995" in paragraph (1) and inserting "1996", and (2) by striking "1996" in paragraph (2) and inserting "1997". SEC. 403. MODIFICATION TO INDIVIDUAL ESTIMATED TAX REQUIRE- MENTS. (a) GENERAL RULE. —Paragraph (1) of section 6654(d) of the Internal Revenue Code of 1986 (relating to amount of required install- 26 USC 6654. ments) is amended by adding at the end thereof the following new subparagraphs: " (C) LIMITATION ON USE OF PRECEDING YEAR'S TAX.— "(i) IN GENERAL. — In any case to which this subparagraph applies, clause (ii) of subparagraph (B) shall be applied as if it read as follows: " '(ii) the greater of— " '(I) 100 percent of the tax shown on the return of the individual for the preceding taxable year, or " '(II) 90 percent of the tax shown on the return for the current year, determined by taking into account the adjustments set forth in subparagraph (D).' "(ii) CASES TO WHICH SUBPARAGRAPH APPLIES.—T his subparagraph shall apply if— "(I) the modified adjusted gross income for the current year exceeds the amount of the adjusted gross income shown on the return of the individual for the preceding taxable year by more than $40,000 ($20,000 in the case of a separate return for the current year by a married individual), "(II) the adjusted gross income shown on the return for the current year exceeds $75,000 ($37,500 in the case of a married individual filing a separate return), and "(III) the taxpayer has made a payment of estimated tax (determined without regard to subsection (g) and section 6402(b)) with respect to any of the preceding 3 taxable years (or a penalty has been previously assessed under this section for a failure to pay estimated tax with respect to any of such 3 preceding taxable years). This subparagraph shall not apply to any taxable year beginning after December 31, 1996. (iii) MAY USE PRECEDING YEAR'S TAX FOR FIRST INSTALLMENT.— Th is Subparagraph shall not apply for purposes of determining the amount of the 1st required installment for any taxable year. Any reduction in an installment by reason of the preceding sentence shall be recaptured by increasing the amount of the 1st succeeding required installment (with respect to which the requirements of clause (iv) are not met) by the amount of such reduction. "(iv) ANNUALIZATION EXCEPTION. —This subparagraph shall not apply to any required installment if the individual establishes that the requirements of subclauses (I) and (II) of clause (ii) would not have been satisfied if such subclauses were applied on the basis of—
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