Page:United States Statutes at Large Volume 83.djvu/564

 536 Ante. p. 496.

68A Stat. 163.

Anee. pp.498,

PUBLIC LAW 91-172-DEC. 30, 1969

[83 STAT.

^'j'^ SECTiOiSr 509 (a).—III the case of any trust created under the terms of a will or a codicil to a will executed on or before March 30, 1924, by which the testator bequeathed all of the outstanding common stock of a corporation in trust, the income of which trust is to be used principally for the benefit of those from time to time employed by the corporation and their families, the trustees of which trust are elected or selected from among the employees of such corporation, and which trust does not own directly any stock in any other corporation, if the trust makes an irrevocable election under this paragraph within one year after the date of the enactment of this Act, such trust shall be treated as not being a private foundation for purposes of the Internal Revenue Code of 1954 but shall be treated for purposes of such Code as if it were not exempt from tax under section 501(a) for any taxable year beginning after the date of the enactment of this Act and before the date (if any) on which such trust has complied with the requirements of section 507 for termination of the status of an organization as a private foundation. (8) CERTAIN" REDEMPTIONS.—For purposes of applying section 302(b)(1) to the determination of the amount of gross investment incomc under sections 4940 and 4948(a), any distribution made to a private foundation in redemption of stock held by such private foundation in a business enterprise shall be treated as not essentially equivalent to a dividend, if such redemption is described in paragraph (2)(B) of this subsection. Subtitle B—Other Tax Exempt Organizations SEC. 121. TAX ON UNRELATED BUSINESS INCOME. (a) ORGANIZATIONS SUBJECT TO T A X. —

^68A Stat. 169; °26'us'c 511.

(1) CORPORATE RATES.—Section 511(a)(2)(A) (relating to certain organizations subject to tax on unrelated business income at corporate rates) is amended to read as follows: " (A) ORGANIZATIONS DESCRIBED I N SECTIONS 401(a) AND 501(c).—The taxes imposed by paragraph (1) shall apply in the case of any organization (other than a trust described in subsection (b) or an 9rganization described in section 501 (c)(1)) which is exempt, except as provided in this part or part II (relating to private foundations), from taxation under this subtitle by reason of section 501(a)." (2) INDIVIDUAL RATES.—Section 511(b)(2) (relating to charitable, etc., trusts subject to tax on unrelated business income) is amended to read as follows: "(2)

CHARITABLE, ETC., TRUSTS SUBJECT TO TAX.—The

tax

imposed by paragraph (1) shall apply in the case of any trust which is exempt, except as provided in this part or part II (relating to private foundations), from taxation under this subtitle by reason of section 501(a) and which, if it were not for such exemption, would be subject to subchapter J (sec. 641 and following, relating to estates, trusts, beneficiaries, and decedents)." (3) SECTION" 501(c)(2) CORPORATIONS.—Section 511 (relating

to tax on unrelated business income) is amended by striking out subsection (c) and inserting in lieu thereof the following new subsection: "(c)

SPECIAL RULE FOR SECTION 5 0 1 (C)(2)

CORPORATIONS.—If a

corporation described in section 501(c)(2) — "(1) pays any amount of its net income for a taxable year to an organization exempt from taxation under section 501(a) (or

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