Page:United States Statutes at Large Volume 83.djvu/532

 504

PUBLIC LAW 91-172-DEC. 30, 1969 "(f)

26 USC n' ^ ^^'

[83 STAT.

ADJUSTED N E T INCOME.—

"(1) DEFINED.—For purposes of subsection (d), the term 'adjusted net income' means the excess (if any) of— " (A) the gross income for the taxable year (determined with the income modifications provided by paragraph (2)), over " (B) the sum of the deductions (determined with the deduction modifications provided by paragraph (3) ^ which would be allowed to a corporation subject to the tax imposed ^7 section 11 for the taxable year. " (2) INCOME MODIFICATIONS.—The income modifications re-

Post, p. 656.

Ts^stlt^'se ^^''

ferred to in p a r a ^ a p h (1)(A) are as follows: " (A) section 103 (relating to interest on certain governmental obligations) shall not apply, " (B) capital gains and losses from the sale or other disposition oi property shall be taken into account only in an amount equal to any net short-term capital gain for the taxable year; and " (C) there shall be taken into account— " (i) amounts received or accrued as repayments of amounts which were taken into account as a qualifying distribution within the meaning of subsection (g)(1)(A) for any taxable year; "(ii) notwithstanding subparagraph (B), amounts received or accrued from the sale or other disposition of property to the extent that the acquisition of such property was taken into account as a qualifying distribution (within the meaning of subsection (g)(1)(B)) for any taxable year; and " (iii) any amount set aside under subsection (g)(2) to the extent it is determined that such amount is not necessary for the purposes for which it was set aside. "(3) DEDUCTION MODIFICATIONS.—The deduction modifications referred to in paragraph (1)(B) are as follows: " (A) no deduction shall be allowed other than all the ordinary and necessary expenses paid or incurred for the production or collection of gross income or for the management, conservation, or maintenance of property held for the production of such income and the allowances for depreciation and depletion determined under section 4940(c)(3)(B), and " (B) section 265 (relating to expenses and interest relating to tax-exempt interest) shall not apply. "(4) TRANSITIONAL RULE.—Forpurposesof paragraph (2)(B), the basis (for purposes of determining gain) of property held by a private foundation on December 31, 1969, and continuously thereafter to the date of its disposition, shall be deemed to be not less than the fair market value of such property on December 31, 1969. "(g)

Post,

p. 553.

QUALIFYING DISTRIBUTIONS DEFINED.—

" (1) IN GENERAL.—For purposes of this section, the term 'qualifying distribution' means— " (A) any amount (including administrative expenses) paid to accomplish one or more purposes described in section 170(c)(2)(B), other than any contribution to (i) an organization controlled (directly or indirectly) by the foundation or one or more disqualified persons (as defined in section 4946) with respect to the foundation, except as provided in paragraph (3), or (ii) a private foundation which is not an operating foundation (as defined in subsection (j)(3)), except as provided in paragraph (3), or

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