Page:United States Statutes at Large Volume 68A.djvu/273

 C H. 1—NORMAL TAXES AND SURTAXES

233

poration controlled by any such creator or person through the ownership, directly or indirectly, of 50 percent or more of the total combined voting power of all classes of stock entitled to vote or 50 percent or more of the total value of shares of all classes of stock of the corporation. (3) TAXABLE YEARS AFFECTED.—The amount otherwise allowable under section 642(c) as a deduction shall be limited as provided in paragraph (1) only for taxable years after the taxable year during which the trust is notified by the Secretary that it has engaged in such transaction, unless such trust entered into such prohibited transaction with the purpose of diverting such corpus or income from the purposes described in section 642(c), and such transaction involved a substantial part of such corpus or income. (4) F U T U R E CHARITABLE, ETC., DEDUCTIONS OF TRUSTS DENIED

DEDUCTION UNDER PARAGRAPH (d).—If the deduction of any trust under section 642(c) has been limited as provided in this subsection, such trust, with respect to any taxable year following the taxable year in which notice is received of limitation of deduction under section 642(c), may, under regulations prescribed by the Secretary or his delegate, file claim for the allowance of the unlimited deduction under section 642(c), and if the Secretary, pursuant to such regulations, is satisfied that such trust will not knowingly again engage in a prohibited transaction, the limitation provided in paragraph (1) shall not apply with respect to taxable years after the year in which such claim is filed. (5) DISALLOWANCE OF CERTAIN CHARITABLE, ETC., DEDUCTIONS.—

No gift or bequest for religious, charitable, scientific, literary, or educational purposes (including the encouragement of a r t and the prevention of cruelty to children or animals), otherwise allowable as a deduction under section 170, 545 (b)(2), 642 (c), 2055, 2106 (a)(2), or 2522, shall be allowed as a deduction if made in trust and, in the taxable year of the trust in which the gift or bequest is made, the deduction allowed the trust under section 642(c) is limited by paragraph (1). With respect to any taxable year of a trust in which such deduction has been so limited by reason of entering into a prohibited transaction with the purpose of diverting such corpus or income from the purposes described in section 642 (c), and such transaction involved a substantial part of such income or corpus, and which taxable year is the same, or before the, taxable year of the trust in which such prohibited transaction occurred, such deduction shall be disallowed the donor only if such donor or (if such donor is an individual) any member of his family (as defined in section 267(c)(4)) was a party to such prohibited transaction. (6) DEFINITION.—For purposes of this subsection, the term "gift or bequest" means any gift, contribution, bequest, devise, or legacy, or any transfer without adequate consideration. (c) ACCUMULATED

INCOME.—If

the

amounts

permanently

set

aside, or to be used exclusively for the charitable and other purposes described in section 642(c) during the taxable year or any prior taxable year and not actually paid out by the end of the taxable year— (1) are unreasonable in amount or dm-ation in order to carry out such purposes of the trust; § 681(c)(1) 49012"'—54

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