It says "
(1) 500 feet below the cloud; and (2) 2,000 feet horizontally from the cloud.
If you are under a cloud that is 1000 feet above and covers your state it's hard to get 2000 feet away from the cloud horizontally. I just ignore the rule...
The rule is you have to be 500feet or more below a cloud and 2000 feet from the side. Would that mean you can never fly when it's overcast at 20,000 feet? Do people in Seattle only fly 3 days a year?