Page:United States Statutes at Large Volume 49 Part 1.djvu/1753

 1708 '14TH CONGRESS. SESS. II. CH. 690. JUNE 22, 1936. of the income may be, held or accumulated for future distribution to the grantor ; or when distributed to (2) may, in the disc retion of the grantor or of any person no t grantor. having a sub stantial adverse int erest in the disposi tion of such part of the income, be distributed to the grantor ; or Application to life (3) is, or in the discretion of the grantor or of any person not insurance premiums. having a sub stantial adverse int erest in the disposi tion of such part of the income may be, applied to the payment of premiums upon policies of insurance on the life of the grantor (except poli- cies of insurance irrevocably payable for the purposes and in the Ante, p. 1660. manner specified in section 23 (o), relating to the so-called "chari- table contribution" deduction) then such part of the income of the trust shall be included in com- puting the net income of the grantor. In the dis cretio n of (b) As used in this section, the term "in the discretion of the th e,' grantor" defined. grantor" means "in the discretion of the grantor, either alone or in conjunc tion with any person. no t h avin g a su bsta nti al adve rse in tere st in the disposition of the part of the income in question" . Taxes of foreign coun- SEC. 168. TAXES OF FOREIGN COUNTRIES AND POSSESSIONS OF tries, etc . UNITED STATES . Credit fo r . An te, p . 1696. Common tr ust funds. De fini tion . An te, p. 1677. Taxation of common t rust funds. Ante, p . 1017. Income of partici- pants in fund. Basis of computa- tion . An te, p . 1662. Admission and with- d rawal . Sworn returns by banks . Ante, p.1677. The amount of income, war-profits, and excess-profits taxes imposed by foreign countries or possessions of the United States shall be allowed as credit against the tax of the beneficiary of an estate or trust to the extent provided in section 131 . SEC. 169. COMMON TRUST FUNDS . (a) DEFINITIOxs .-The term "common trust fund" means a fund maintained by a bank (as defined in section 104)- (1) e xclusively for the c ollective investment and reinvestment of moneys contributed thereto by the bank in its capacity as a trustee, executor, administrator, or guardian ; and (2) in conformity with the rules and regulations, prevailing from time to time, of the Board of G over nors of the Fede ral Reserve System pertaining to the collective investment of trust funds by national banks . (b) TAXATION OF COMMON TRUST FUNDS.-A common trust fund shal l not b e subje ct to taxatio n under this title, Title I A, or section 105 or 106 of the Revenue Act of 1935, and for the purp oses of such titles and sections shall not be considered a corporation . (C) INCOME OF PARTICIPANTS IN FUND.-Each participant in the common trust fund shall include in computing its net income its pr oport ionat e sha re, w hethe r or not d istri buted and wheth er or not distributable, of the net income of the common trust fund. The net income of the common trust fund shall be computed in the same manner and o n the same basis as in the case of an in dividual. The proportionate share of each participant in the amount of interest specified in section 25 (a) received by the common trust fund shall for the purposes of this Supplement be considered as having been received by such participant as such interest. (d) ADMISSION AND WITHDRAWAL .-N o g ain or loss shall be realized by the common trust fund by the admission or withdrawal of a participant. The withdrawal of any participating interest by a p artici pant sh all be treate d as a sale or excha nge of such in terest by the participant. (e) RETURNS BY BANK.-Every bank (as defined in section 104) ma intai ning a com mon t rust fund shall make a re turn under oath for eac h taxa ble yea r, stat ing sp ecifica lly, wi th res pect to such f und, t he items of gross income and the deductions allowed by this title, and