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@Shark wrote:

Spoke with Sen. Wyden's office and they indicated that the 10.2k is deducted from total agi and if the amount of the remaining agi is less than 150k, you will qualify.  If 150k or over, not eligible.  So to answer your question, if 10k in UI is deducted from AGI and that number if below 150k, you are eligible for the tax break.

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With Bob's original caveat still in play here (so this is based solely on the copy/paste above which may or may not be the actual legislation when/if it's signed):

Section 85(c)(2)(B) reads:

"(B) without regard to this section"

A "section" is a reference to the entire IRC 85, including 85(a) which states:

"(a) In the case of an individual, gross income includes unemployment compensation."

So I'll disagree with whomever you spoke to at Wyden's office.  The entire amount of UI would be subtracted from AGI when making the determination of whether or not you fall off of the $150K cliff.  If they had only wanted the excluded UI to count (up to $10.2K) they would have referenced sub-section (c) instead of the entirety of section 85.  Maybe there's a Committee report that has a clarifying example buried in a footnote that will give us the "sense of Congress" on this.

That said, SCOTUS has a recent history of ignoring the things that Congress actually writes into the laws and instead using its own interpretation of what Congress meant to write (or at least what they think Congress probably meant to write . . . )

Just my random ramblings on the subject.