Page:United States Statutes at Large Volume 83.djvu/566

 538

Post. p. 554. Post, p. 541.

PUBLIC LAW 91-172-DEC. 30, 1969

[83 STAT.

organization computed as if the organization were subject to paragraph (1)), which is set aside— «(i) fQj. a purpose specified in section 170(c)(4), or "(ii) in the case of an organization described in sec^JQjj 501(c)(9), to provide for the payment of life, sick, accident, or other benefits, including; reasonable costs of administration directly connected with a purpose described in clause (i) or (ii). If during the taxable year, an amount which is attributable to income so set aside is used for a purpose other than that described in clause (i) or (ii), such amount shall be included, under subparagraph (A), in unrelated business taxable income for the taxable year. " (C) APPLICABILITY TO CERTAIN CORPORATIONS DESCRIBED IN SECTION 5 0 1 (C)(2).—In the case of a corporation described

26 USC°*" ^1^'

^^ section 501(c)(2), the income of which is payable to an organization described in section 501(c)(7) or (9), subparagraph (A) shall apply as if such corporation were the organization to which the income is pa;7able. For purposes of the preceding sentence, such corporation shall be treated as having exempt function income for a taxable year only if it files a consolidated return with such organization for such year. " (D) NONRECOGNITION or GAIN.—If property used directly in the performance of the exempt function of an organization described in section 501(c)(7) or (9) is sold by such organization, and within a period beginning 1 year before the date of such sale, and ending 3 years after such date, other property is purchased and used by such organization directly in the performance of its exempt function, gain (if any) from such sale shall be recognized only to the extent that such organization's sales price of the old property exceeds the organization's cost of purchasing the other property. For purposes of this subparagraph, the destruction in whole or in part, theft, seizure, requisition, or condemnation of property, shall be treated as the sale of such property, and rules similar to the rules provided by subsections (b), (c), (e), and (j) of section 1034 shall apply." (2) MODIFICATIONS.— (A) RENTS AND DEBT-FINANCED PROPERTY,—Section 512

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(b)(3) (relating to modifications with respect to rents from real property) and section 512(b)(4) (relating to modifications with respect to business leases) are amended to read as follows: " (3) I n the case of rents— " (A) Except as provided in subparagraph (B), there shall be excluded— " (i) all rents from real property (including property described in section 1245(a)(3)(C)), and "(ii) all rents from personal property (including for purposes of this paragraph as personal property any property described in section 1 2 4 5 (a)(3)(B)) leased with such real property, if the rents attributable to such personal property are an incidental amount of the total rents received or accrued under the lease, determined at the time the personal property is placed in service. " (B) Subparagraph (A) shall not apply—

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