Page:United States Statutes at Large Volume 52.djvu/561

 PUBLIC LAWS-CH. 289-MAY 28, 1938 Income of partici- pants in fund. Inclusions in net in- come. Credit for partially exempt interest. Ante, p. 466. Computation of common trust fund income. Ante, p. 463. Admission and withdrawal. Returns by bank. Ante, p. 484. Ante, p. 476. Different taxable years ofcommon trust fund and participant. General rule. (c) INCOME OF PARTICIPANTS IN FUND.- (1) INCLUSIONS IN NET INCOME.-Each participant in the com- mon trust fund in computing its net income shall include, whether or not distributed and whether or not distributable- (A) As a part of its short-term capital gains or losses, its proportionate share of the net short-term capital gain or loss of the common trust fund; (B) As a part of its long-term capital gains or losses, its proportionate share of the net long-term capital gain or loss of the common trust fund; (C) Its proportionate share of the ordinary net income or the ordinary net loss of the common trust fund, computed. as provided in subsection (d). (2) CREDIT FOR PARTIALLY EXEMPT INTEREST.-The proportion- ate 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) COMPUTATION OF COMMON TRUST FUND INCOME. -The net income of the common trust fund shall be computed in the same manner and on the same basis as in the case of an individual, except that- (1) There shall be segregated the short-term capital gains and losses and the long-term capital gains and losses, and the net short-term capital gain or loss and the net long-term capital gain or loss shall be computed; (2) After excluding all items of either short-term or long- term capital gain or loss, there shall be computed- (A) An ordinary net income which shall consist of the excess of the gross income over the deductions; or (B) An ordinary net loss which shall consist of the excess of the deductions over the gross income; (3) The so-called "charitable contribution" deduction allowed by section 23 (o) shall not be allowed. (e) ADMISSION AND WITHDRAWAL.- NO gain 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 par- ticipant shall be treated as a sale or exchange of such interest by the participant. (f) RrunRNS IY BANK.- Every bank (as defined in Section 104) maintaining a common trust fund shall make a return under oath for each taxable year, stating specifically, with respect to such fund, the items of gross income and the deductions allowed by this title, and shall include in the return the names and addresses of the participants who would be entitled to share in the net income if distributed and the amount of the proportionate share of each participant. The return shall be sworn to as in the case of a return filed by the bank under section 52. (g) DIFERENT TAXABLE YEARS OF COMMON TRUST FUND AND PARTICIPANT.- (1) GENERAL RULE-If the taxable year of the common trust fund is different from that of a participant, the inclusions with respect to the net income of the common trust fund, in computing the net income of the participant for its taxable year shall be based upon the net income of the common trust fund for any taxable year of the common trust fund (whether beginning on, before, or after January 1, 1938) ending within or with the taxable year of the participant. 520 [52 STAT.

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