Page:United States Statutes at Large Volume 83.djvu/546

 518

PUBLIC LAW 91-172-DEC. 30, 1969

[83 STAT.

"(3) SEGREGATED AMOUNTS.—For purposes of paragraph (2)

(B), a trust with respect to which amounts are segregated shall separately account for the various income, deduction, and other items properly attributable to each of such segregated amounts. " (b) SPECIAL RULES.—

"(1) REGULATIONS.—The Secretary or his delegate shall prescribe such regulations as may be necessary to carry out the purposes of this section. " (2) L I M I T TO SEGREGATED AMOUNTS.—If any amounts in the

trust are se^egated within the meaning of subsection (a)(2)(B) of this section, the value of the net assets for purposes of subAnte, p. 492. sections (c)(2) and (g) of section 507 shall be limited to such segregated amounts. "(3) SECTIONS 4943 AND 4944.—Sections 4943 and 4944 shall not apply to a trust which is described in subsection (a)(2) if— " (A) all the income interest (and none of the remainder interest) of such trust is devoted solely to one or more of the Post, p. 553. purposes described in section 170(c)(2)(B), and all amounts in such trust for which a deduction was allowed under section 170, 545(b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), Post, pp. 549, or 2522 have an aggregate value not more than 60 percent of 558, 560-562. ^j^^ aggregate fair market value of all amounts in such trusts, or " (B) a deduction was allowed under section 170,545 (b)(2), 556(b)(2), 642(c), 2055, 2106(a)(2), or 2522 for amounts payable under the terms of such trust to every remainder beneficiary but not to any income beneficiary. "SEC. 4948. APPLICATION OF TAXES AND DENIAL OF EXEMPTION WITH RESPECT TO CERTAIN FOREIGN ORGANIZATIONS. " (a) TAX ON INCOME OF CERTAIN FOREIGN ORGANIZATIONS.—In

Post, p. 625.

lieu of the tax imposed by section 4940, there is hereby imposed for each taxable year on the gross investment income (within the meaning of section 4940(c)(2)) derived from sources within the United States (within the meaning of section 861) by every foreign organization which is a private foundation for the taxable year a tax equal to 4 percent of such income. " (b) CERTAIN SECTIONS INAPPLICABLE.—Section 507 (relating to

68A Stat. 163. 26 USC 501.

termination of private foundation status), section 508 (relating to special rules with respect to section 501(c)(3) organizations), and this chapter (other than this section) shall not apply to any foreign organization which has received substantially all 01 its support (other than gross investment income) from sources outside the United States. " (c) DENIAL OF EXEMPTION TO FOREIGN ORGANIZATIONS ENGAGED I N PROHIBITED TRANSACTIONS.— " (1) GENERAL RULE.—^A foreign organization described in sub-

Post,

p. 519.

section (b) shall not be exempt from taxation under section 501(a) if it has engaged in a prohibited transaction after December 31, 1969. "(2) PROHIBITED TRANSACTIONS.—For purposes of this subsection, the term 'prohibited transaction' means any act or failure to act (other than with respect to section 4942(e)) which would subject a foreign organization described in subsection (b), or a disqualified person (as defined in section 4946) with respect thereto, to liability for a penalty under section 6684 or a tax under section 507 if such foreign organization were a domestic organization.

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