§ 1381. Organizations to which part applies

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1962

   Revenue Act of 1962

   Pub. L. 87–834 § 17(a) · 76 Stat. 960

   Enacted · 26 U.S.C. § 1381

   Added Pub. L. 87–834, § 17(a), Oct. 16, 1962, 76 Stat. 1045

   Source evidence

   Code source credit
   Added Pub. L. 87–834, § 17(a), Oct. 16, 1962, 76 Stat. 1045

   Enacted provision · exact public law section
   (a) In General.— Chapter 1 (relating to normal taxes and surtaxes) is amended by adding at the end thereof the following new subchapter: “Subchapter T— Cooperatives and Their Patrons “Part I. Tax treatment of cooperatives. “Part II. Tax treatment by patrons of patronage dividends. “Part III. Definitions; special rules. “PART I— TAX TREATMENT OF COOPERATIVES “Sec. 1381. Organizations to which part applies. “Sec. 1382. Taxable income of cooperatives. “Sec. 1383. Computation of tax where cooperative redeems nonqualified written notices of allocation. “SEC. 1381. ORGANIZATIONS TO WHICH PART APPLIES. “(a) In General.— This part shall apply to— “(1) any organization exempt from tax under section 521 26 USC 521. (relating to exemption of farmers’ cooperatives from tax), and “(2) any corporation operating on a cooperative basis other than an organization— “(A) which is exempt from tax under this chapter, “(B) which is subject to the provisions of— “(i) part II of subchapter H (relating to mutual savings 26 USC 591–595. banks, etc.), or “(ii) subchapter L (relating to insurance companies), or “(C) which is engaged in furnishing electric energy, or providing telephone service, to persons in rural areas. “(b) Tax on Certain Farmers’ Cooperatives.— An organization described in subsection (a)(1) shall be subject to the taxes imposed 26 USC 11, 1201. by section 11 or 1201. “SEC. 1382. TAXABLE INCOME OF COOPERATIVES. “(a) Gross Income.— Except as provided in subsection (b), the gross income of any organization to which this part applies shall be determined without any adjustment (as a reduction in gross receipts, an increase in cost of goods sold, or otherwise) by reason of any allocation or distribution to a patron out of the net earnings of such organization. “(b) Patronage Dividends.— In determining the taxable income of an organization to which this part applies, there shall not be taken into account amounts paid during the payment period for the taxable year— “(1) as patronage dividends (as defined in section 1388(a)), to the extent paid m money, qualified written notices of allocation (as defined in section 1388(c)), or other property (except nonqualified written notices of allocation (as defined in section Poet, p. 1051. 1388(d))) with respect to patronage occurring during such taxable year; or “(2) in money or other property (except written notices of allocation) in redemption of a nonqualified written notice of allocation which was paid as a patronage dividend during the payment period for the taxable year during which the patronage occurred. For purposes of this title, any amount not taken into account under the preceding sentence shall be treated in the same manner as an item of gross income and as a deduction therefrom. “(c) Deduction for Nonpatronage Distributions, etc.— In determining the taxable income of an organization described in section Ante, p. 1045. 1381(a)(1), there shall be allowed as a deduction (in addition to other deductions allowable under this chapter)— “(1) amounts paid during the taxable year as dividends on its capital stock; and “(2) amounts paid during the payment period for the taxable year— “(A) in money, qualified written notices of allocation, or other property (except nonqualified written notices of allocation) on a patronage basis to patrons with respect to its earnings during such taxable year which are derived from business done for the United States or any of its agencies or from sources other than patronage, or “(B) in money or other property (except written notices of allocation) in redemption of a nonqualined written notice of allocation which was paid, during the payment period for the taxable year during which the earnings were derived, on a patronage basis to a patron with respect to earnings derived from business or sources described in subparagraph (A). “(d) Payment Period for Each Taxable Year.— For purposes of subsections (b) and (c)(2), the payment period for any taxable year is the period beginning with the first day of such taxable year and ending with the fifteenth day of the ninth month following the close of such year. For purposes of subsections (b)(1) and (c)(2)(A), a qualified check issued during the payment period shall be treated as an amount paid in money during such period if endorsed and cashed on or before the 90th day after the close of such period. “(e) Products Marketed Under Pooling Arrangements.— For purposes of subsection (b), in the case of a pooling arrangement for the marketing of products, the patronage shall (to the extent provided in regulations prescribed by the Secretary or his delegate) be treated as patronage occurring during the taxable year in which the pool closes. “(f) Treatment of Earnings Received After Patronage Occurred.— If any portion of the earnings from business done with or for patrons is includible in the organization’s gross income for a taxable year after the taxable year during which the patronage occurred, then for purposes of applying subsection (b) to such portion the patronage shall, to the extent provided in regulations prescribed by the Secretary or his delegate, be considered to have occurred during the taxable year of the organization during which such earnings are includible in gross income. “SEC. 1383. COMPUTATION OF TAX WHERE COOPERATIVE REDEEMS NONQUALIFIED WRITTEN NOTICES OF ALLOCATION. “(a) General Rule.— If, under section 1382(b)(2) or (c)(2)(B), Ante, p. 1046. a deduction is allowable to an organization for the taxable year for amounts paid in redemption of nonqualified written notices of allocation, then the tax imposed by this chapter on such organization for the taxable year shall be the lesser of the following: “(1) the tax for the taxable year computed with such deduction; or “(2) an amount equal to— “(A) the tax for the taxable year computed without such deduction, minus “(B) the decrease in tax under this chapter for any prior taxable year (or years) which would result solely from treating such nonqualified written notices of allocation as qualified written notices of allocation. “(b) Special Rules.— “(1) If the decrease in tax ascertained under subsection (a)(2)(B) exceeds the tax for the taxable year (computed without the deduction described in subsection (a)) such excess shall be considered to be a payment of tax on the last day prescribed by law for the payment of tax for the taxable year, and shall be refunded or credited in the same manner as if it were an overpayment for such taxable year. “(2) For purposes of determining the decrease in tax under subsection (a)(2)(B), the stated dollar amount of any nonqualified written notice of allocation which is to be treated under such subsection as a qualified written notice of allocation shall be the amount paid in redemption of such written notice of allocation which is allowable as a deduction under section 1382(b)(2) or (c)(2)(B) for the taxable year. “(3) If the tax imposed by this chapter for the taxable year is the amount determined under subsection (a)(2), then the deduction described in subsection (a) shall not be taken into account for any purpose of this subtitle other than for purposes of this section. “PART II— TAX TREATMENT BY PATRONS OF PATRONAGE DIVIDENDS “Sec. 1385. Amounts includible in patron’s gross income. “SEC. 1385. AMOUNTS INCLUDIBLE IN PATRON’S GROSS INCOME. “(a) General Rule.— Except as otherwise provided in subsection (b), each person shall include tn gross income— “(1) the amount of any patronage dividend which is paid in money, a qualified written notice of allocation, or other property (except a nonqualified written notice of allocation), and which is received by him during the taxable year from an organization Ante, p. 1045. Ante, p. 1046. described in section 1381(a), and “(2) any amount, described in section 1382(c)(2)(A) (relating to certain nonpatronage distributions by tax-exempt farmers’ cooperatives), which is paid in money, a qualified written notice of allocation, or other property (except a nonqualified written notice of allocation), and which is received by him during the taxable year from an organization described in section 1381(a)(1). “(b) Exclusion From Gross Income.— Under regulations prescribed by the Secretary or his delegate, the amount of any patronage dividend, and any amount received on the redemption, sale, or other disposition of a nonqualified written notice of allocation which was paid as a patronage dividend, shall not be included in gross income to the extent that such amount— “(1) is properly taken into account as an adjustment to basis of property, or “(2) is attributable to personal, living, or family items. “(c) Treatment of Certain Nonqualified Written Notices of Allocation.— “(1) Application of subsection.— This subsection shall apply to any nonqualified written notice of allocation which— “(A) was paid as a patronage dividend, or “(B) was paid by an organization described in section 1381(a)(1) on a patronage basis with respect to earnings derived from business or sources described in section 1382(c)(2)(A). “(2) Basis; amount of gain.— In the case of any nonqualified written notice of allocation to which this subsection applies, for purposes of this chapter— “(A) the basis of such written notice of allocation in the hands of the patron to whom such written notice of allocation was paid shall be zero, “(B) the basis of such written notice of allocation which was acquired from a decedent shall be its basis in the hands of the decedent, and “(C) gain on the redemption, sale, or other disposition of such written notice of allocation by any person shall, to the extent that the stated dollar amount of such written notice of allocation exceeds its basis, be considered as gain from the sale or exchange of property which is not a capital asset. “PART III— DEFINITIONS; SPECIAL RULES “Sec. 1388. Definitions; special rules. “SEC. 1388. DEFINITIONS; SPECIAL RULES. “(a) Patronage Dividend.— For purposes of this subchapter, the term “patronage dividend’ means an amount paid to a patron by an organization to which part I of this subchapter applies— “(1) on the basis of quantity or value of business done with or for such patron, “(2) under an obligation of such organization to pay such amount, which obligation existed before the organization received the amount so paid, and “(3) which is determined by reference to the net earnings of the organization from business done with or for its patrons. Such term does not include any amount paid to a patron to the extent that (A) such amount is out of earnings other than from business done with or for patrons, or (B) such amount is out of earnings from business done with or for other patrons to whom no amounts are paid, or to whom smaller amounts are paid, with respect to substantially identical transactions. “(b) Written Notice of Allocation.— For purposes of this subchapter, the term ‘written notice of allocation’ means any capital stock, revolving fund certificate, retain certificate, certificate or indebtedness, letter of advice, or other written notice, which discloses to the recipient the stated dollar amount allocated to him by the organization and the portion thereof, if any, which constitutes a patronage dividend. “(c) Qualified Written Notice of Allocation.— “(1) Defined.— For purposes of this subchapter, the term ‘qualified written notice of allocation’ means— “(A) a written notice of allocation which may be redeemed in cash at its stated dollar amount at any time within a period beginning on the date such written notice of allocation is paid and ending not earlier than 90 days from such date, but only if the distributee receives written notice of the right of redemption at the time he receives such written notice of allocation; and “(B) a written notice of allocation which the distributee has consented, in the manner provided in paragraph (2), to take into account at its stated dollar amount as provided in section 1385(a). Ante, p. 1048. Such term does not include any written notice of allocation which is paid as part of a patronage dividend or as part of a payment described in section 1382(c)(2)(A), unless 20 percent or more Ante, p. 1046. of the amount of such patronage dividend, or such payment, is paid in money or by qualified check. “(2) Manner of obtaining consent.— A distributee shall consent to take a written notice of allocation into account as provided in paragraph (1)(B) only by— “(A) making such consent in writing, “(B) obtaining or retaining membership in the organization after— “(i) such organization has adopted (after the date of the enactment of the Revenue Act of 1962) a bylaw providing that membership in the organization constitutes such consent, and “(ii) he has received a written notification and copy of such bylaw, or “(C) if neither subparagraph (A) nor (B) applies, endorsing and cashing a qualified check, paid as a part of the patronage dividend or payment of which such written notice of allocation is also a part, on or before the 90th day after the close of the payment period for the taxable year of the organization for which such patronage dividend or payment is paid. “(3) Period for which consent is effective.— “(A) General rule.— Except as provided in subparagraph (B)— “(i) a consent described in paragraph (2)(A) shall be a consent with respect to all patronage of the distributee with the organization occurring (determined Ante, p. 1047. with the application of section 1382(e)) during the taxable year of the organization during which such consent is made and all subsequent taxable years of the organization; and “(ii) a consent described in paragraph (2)(B) shall be a consent with respect to all patronage of the distributee with the organization occurring (determined without the application of section 1382(e)) after he received the notification and copy described in paragraph (2)(B)(ii). “(B) Revocation,etc.— “(i) Any consent described in paragraph (2)(A) may be revoked (in writing) by the distributee at any time. Any such revocation shall be effective with respect to patronage occurring on or after the first day of the first taxable year of the organization beginning after the revocation is filed with such organization; except that in the case of a pooling arrangement described in section 1382(e), a revocation made by a distributee shall not be effective as to any pool with respect to which the distributee has been a patron before such revocation. “(ii) Any consent described in paragraph (2)(B) shall not be effective with respect to any patronage occurring (determined without the application of section 1382(e)) after the distributee ceases to be a member of the organization or after the bylaws of the organization cease to contain the provision described in paragraph (2)(B)(i). “(4) Qualified check.— For purposes of this subchapter, the term ‘qualified check’ means only a check (or other instrument which is redeemable in money) which is paid as a part of a patronage dividend, or as a part of a payment described in section Ante, p. 1046. 1382(c)(2)(A), to a distrioutee who has not given consent as provided in paragraph (2)(A) or (B) with respect to such patronage dividend or payment, and on which there is clearly imprinted a statement that the endorsement and cashing of the check (or other instrument) constitutes the consent of the payee to include in his gross income, as provided in the Federal income tax laws, the stated dollar amount of the written notice of allocation which is a part of the patronage dividend or payment of which such qualified check is also a part. Such term does not include any check (or other instrument) which is paid as part of a patronage dividend or payment which does not include a written notice of allocation (other than a written notice of allocation described in paragraph (1)(A)). “(d) Nonqualified Written Notice of Allocation.— For purposes of this subchapter, the term ‘nonqualified written notice of allocation’ means a written notice of allocation which is not described in subsection (c) or a qualified check which is not cashed on or before the 90th day after the close of the payment period for the taxable year for which the distribution of which it is a part is paid. “(e) Determination of Amount Paid or Received.— For purposes of this subchapter, in determining amounts paid or received— “(1) property (other than a written notice of allocation) shall be taken into account at its fair market value, and “(2) a qualified written notice of allocation shall be taken into account at its stated dollar amount.” (b) Technical Amendments.— (1) Section 521 (a) (relating to exemption of farmers’cooperatives 26 USC 521. from tax) is amended by striking out “section 522” each place it appears therein and inserting in lieu thereof “part I of subchapter T (sec. 1381 and following)”. Ante, p. 1045. Repeal. 26 USC 522. 26 USC 6072. (2) Section 522 (relating to tax on farmers’ cooperatives) is hereby repealed. (3) Section 6072(d) (relating to time for filing income tax returns of exempt cooperative associations) is amended to read as follows: “(d) Returns of Cooperative Associations.— In the case of an income tax return of— “(1) an exempt cooperative association described in section 1381(a)(1), or Ante, p. 1045. “(2) an organization described in section 1381(a)(2) which is under an obligation to pay patronage dividends (as defined in section 1388(a)) in an amount equal to at least 50 percent of its Ante, p. 1049. net earnings from business done with or for its patrons, or which paid patronage dividends in such an amount out of the net earnings from business done with or for patrons during the most recent taxable year for which it had such net earnings, a return made on the basis of a calendar year shall be filed on or before the 15th day of September following the close of the calendar year, and a return made on the basis of a fiscal year shall be filed on or before the 15th day of the 9th month following the close of the fiscal year.” (4) The table of subchapters for chapter 1 is amended by adding at the end thereof the following: “Subchapter T. Cooperativesand their patrons.” (5) The table of sections for part III of subchapter F of chapter 1 is amended by striking out the last line thereof. (c) Effective Dates.— (1) For the cooperatives.— Except as provided in paragraph (3), the amendments made by subsections (a) and (b) shall apply to taxable years of organizations described in section 1381(a) of the Internal Revenue Code of 1954 (as added by subsection (a)) beginning after December 31, 1962. (2) For the patrons.— Except as provided in paragraph (3), section 1385 of the Internal Revenue Code of 1954 (as added by Ante, p. 1048. subsection (a)) shall apply with respect to any amount received from any organization described in section 1381(a) of such Code, to the extent that such amount is paid by such organization in a taxable year of such organization beginning after December 31, 1962. (3) Application of existing law.— In the case of any money, written notice of allocation, or other property paid by any organization described in section 1381(a)— (A) before the first day of the first taxable year of such organization beginning after December 31, 1962, or (B) on or after such first day with respect to patronage occurring before such first day, the tax treatment of such money, written notice of allocation, or other property (including the tax treatment of gain or loss on the redemption, sale, or other disposition of such written notice of allocation) by any person shall be made under the Internal Revenue Code of 1954 without regard to subchapter T Ante, p. 1045. of chapter 1 of such Code. SEC. 18. INCLUSION OF FOREIGN REAL PROPERTY IN GROSS ESTATE. (a) Amendments To Include Foreign Real Property.— (1) Section 2031(a) (relating to definition of gross estate) is amended by striking out “, except real property situated outside of the United States”. (2) The following provisions of chapter 11 (imposing an estate tax) are amended by striking out “(except real property situated outside of the United States) ”: (A) section 2033 (relating to property in which the decedent had an interest), (B) section 2034 (relating to dower or curtesy interests), (C) section 2035(a) (relating to transactions in contemplation of death), (D) section 2036(a) (relating to transfers with retained life estate), (E) section 2037(a) (relating to transfers taking effect at death), (F) section 2038(a) (relating to revocable transfers), (G) section 2040 (relating to joint interests), and (H) section 2041(a) (relating to powers of appointment). (b) Effective Date.— (1) Except as provided in paragraph (2), the amendments made by subsection (a) shall apply to the estates of decedents dying after the date of the enactment of this Act. (2) In the case of a decedent dying after the date of the enactment of this Act and before July 1, 1964, the value of real property situated outside of the United States shall not be included in the gross estate (as defined in section 2031(a)) of the decedent— (A) under section 2033, 2034, 2035(a), 2036(a), 2037(a), 26 USC 2033–2038. or 2038(a) to the extent the real property, or the decedent’s interest in it, was acquired by the decedent before February 1, 1962; (B) under section 2040 to the extent such property or interest was acquired by the decedent before February 1, 1962, or was held by the decedent and the survivor in a joint tenancy or tenancy by the entirety before February 1, 1962; or (C) under section 2041(a) to the extent that before February 1, 1962, such property or interest was subject to a general ’power of appointment (as defined in section 2041) possessed by the decedent. In the case of real property, or an interest therein, situated outside of the United States (including a general power of appointment in respect of such property or interest, and including property held by the decedent and the survivor in a joint tenancy or tenancy by the entirety) which was acquired by the decedent after 26 USC 2511. January 31, 1962, by gift within the meaning of section 2511, or from a prior decedent by devise or inheritance, or by reason of death, form of ownership, or other conditions (including the exer-cise or nonexercise of a power of appointment), for purposes of this paragraph such property or interest therein shall be deemed to have been acquired by the decedent before February 1, 1962, if before that date the donor or prior decedent had acquired the property or his interest therein or had possessed a power of appointment in respect of the property or interest. SEC. 19. REPORTING OF INTEREST, DIVIDEND, AND PATRONAGE DIVIDEND PAYMENTS OF $10 OR MORE DURING A YEAR. “(a) Returns Regarding Payment of Dividends.— Section 6042 26 USC 6042. (relating to returns regarding corporate dividends, earnings, and profits) is amended to read as follows: “SEC. 6042. RETURNS REGARDING PAYMENTS OF DIVIDENDS AND CORPORATE EARNINGS AND PROFITS. “(a) Requirement of Reporting.— “(1) In general.— Every person— “(A) who makes payments of dividends aggregating $10 or more to any other person during any calendar year, or “(B) who receives payments of dividends as a nominee and who makes payments aggregating $10 or more during any calendar year to any other person with respect to the dividends so received, shall make a return according to the forms or regulations prescribed by the Secretary or his delegate, setting forth the aggregate amount of such payments and the name and address of the person to whom paid. “(2) Returns required by the secretary.— Every person who makes payments of dividends aggregating less than $10 to any other person during any calendar year shall, when required by the Secretary or his delegate, make a return setting forth the aggregate amount of such payments, and the name and address of the person to whom paid. “(b) Dividend Defined.— “(1) General rule.— For purposes of this section, the term ‘dividend’ means— “(A) any distribution by a corporation which is a dividend (as defined in section 316); and 26 USC 316. “(B) any payment made by a stockbroker to any person as a substitute for a dividend (as so defined). “(2) Exceptions.— For purposes of this section, the term ‘dividend’ does not include— “(A) to the extent provided in regulations prescribed by the Secretary or his delegate, any distribution or payment— “(i) by a foreign corporation, or “(ii) to a foreign corporation, a nonresident alien, or a partnership not engaged in trade or business in the United States and composed in whole or in part of nonresident aliens; and “(B) any amount described in section 1373 (relating to 26 USC 1373. undistributed taxable income of electing small business corporations). “(3) Special rule.— If the person making any payment described in subsection (a)(1)(A) or (B) is unable to determine the portion of such payment which is a dividend or is paid with respect to a dividend, he shall, for purposes of subsection (a)(1), treat the entire amount of such payment as a dividend or as an amount paid with respect to a dividend. “(c) Statements To Be Furnished to Persons With Respect to Whom Information Is Furnished.— Every person making a return under subsection (a)(1) shall furnish to each person whose name is set forth in such return a written statement showing— “(1) the name and address of the person making such return, and “(2) the aggregate amount of payments to the person as shown on such return. The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return. under subsection (a)(1) was made. No statement shall be required to be furnished to any person under this subsection if the aggregate amount of payments to such person as shown on the return made under subsection (a)(1) is less than $10. “(d) Statements To Be Furnished by Corporations to Secretary.— Every corporation shall, when required by the Secretary or his delegate— “(1) furnish to the Secretary or his delegate a statement stating the name and address of each shareholder, and the number of shares owned by each shareholder; “(2) furnish to the Secretary or his delegate a statement of such facts as will enable him to determine the portion of the earnings and profits of the corporation (including gains, profits, and income not taxed) accumulated during such periods as the Secretary or his delegate may specify, which have been distributed or ordered to be distributed, respectively, to its shareholders during such taxable years as the Secretary or his delegate may specify; and “(3) furnish to the Secretary or his delegate a statement of its accumulated earnings and profits and the names and addresses of the individuals or shareholders who would be entitled to such accumulated earnings and profits if divided or distributed, and of the amounts that would be payable to each.” (b) Returns Regarding Payment of Patronage Dividends.— 26 USC 6044. Section 6044 (relating to returns regarding patronage dividends) is amended to read as follows: “SEC. 6044. RETURNS REGARDING PAYMENTS OF PATRONAGE DIVIDENDS. “(a) Requirement of Retorting.— “(1) In general.— Except as otherwise provided in this section, every cooperative to which part I of subchapter T of chapter Ante, p. 1045. 1 applies, which makes payments of amounts described in subsection (b) aggregating $10 or more to any person during any calendar year, shall make a return according to the forms or regulations prescribed by the Secretary or his delegate, setting forth the aggregate amount of such payments and the name and address of the person to whom paid. “(2) Returns required by the secretary.— Every such cooperative which makes payments of amounts described in subsection (b) aggregating less than $10 to any person during any calendar year shall, when required by the Secretary or his delegate, make a return setting forth the aggregate amount of such payments and the name and address of the person to whom paid. “(b) Amounts Subject to Retorting.— “(1) General rule.— Except as otherwise provided in this section, the amounts subject to reporting under subsection (a) are— “(A) the amount of any patronage dividend (as defined in section 1388(a)) which is paid in money, qualified written Ante, p. 1049. notices of allocation (as defined in section 1388(c)), or other property (except nonqualified written notices of allocation as defined in section 1388(d)), “(B) any amount described in section 1382(c)(2)(A) Ante, p. 1046. (relating to certain nonpatronage distributions) which is paid in money, qualified written notices of allocation, or other property (except nonqualified written notices of allocation) by an organization exempt from tax under section 521 (relating to exemption of farmers’ cooperatives from 26 USC 521. tax), and “(C) any amount described in section 1382(b)(2) (relating to redemption of nonqualified written notices of allocation) and, in the case of an organization described in section 1381(a)(1), any amount described in section 1382(c)(2)(B) Ante, p. 1045. (relating to redemption of nonqualified written notices of allocation paid with respect to earnings derived from sources other than patronage). “(2) Exceptions.— The provisions of subsection (a) shall not apply, to the extent provided in regulations prescribed by the Secretary or his delegate, to any payment— “(A) by a foreign corporation, or “(B) to a foreign corporation, a nonresident alien, or a partnership not engaged in trade or business in the United States and composed in whole or in part of nonresident aliens. “(c) Exemption for Certain Consumer Cooperatives.— A cooperative which the Secretary or his delegate determines is primarily engaged in selling at retail goods or services of a type that are generally for personal, living, or family use shall, upon application to the Secretary or his delegate, be granted exemption from the reporting requirements imposed by subsection (a). Application for exemption under this subsection shall be made in accordance with regulations prescribed by the Secretary or his delegate. “(d) Determination of Amount Paid.— For purposes of this section, in determining the amount of any payment— “(1) property (other than a qualified written notice of allocation) shall be taken into account at its fair market value, and “(2) a qualified written notice of allocation shall be taken into account at its stated dollar amount. “(e) Statements To Be Furnished to Persons With Respect to Whom Information Is Furnished.— Every cooperative making a return under subsection (a)(1) shall furnish to each person whose name is set forth in such return a written statement showing— “(1) the name and address of the cooperative making such return, and “(2) the aggregate amount of payments to the person as shown on such return. The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a)(1) was made. No statement shall be required to be furnished to any person under this subsection if the aggregate amount of payments to such person as shown on the return made under subsection (a)(1) is less than $10.” (c) Returns Regarding Payment of Interest.— Subpart B of part III of subchapter A of chapter 61 (relating to information returns) is amended by adding after section 6048 (as added by section 7(f) of this Act) the following new section: Ante, p. 988. “SEC. 6049. RETURNS REGARDING PAYMENTS OF INTEREST. “(a) Requirement of Reporting.— “(1) In general.— Every person— “(A) who makes payments of interest (as defined in subsection (b)) aggregating $10 or more to any other person during any calendar year, or “(B) who receives payments of interest as a nominee and who makes payments aggregating $10 or more during any calendar year to any other person with respect to the interest so received, shall make a return according to the forms or regulations prescribed by the Secretary or his delegate, setting forth the aggregate amount of such payments and the name and address of the person to whom paid. “(2) Returns required by the secretary.— Every person who makes payments of interest (as defined in subsection (b)) aggregating less than $10 to any other person during any calendar year shall, when required by the Secretary or his delegate, make a return setting forth the aggregate amount of such payments and the name and address of the person to whom paid. “(3) Other returns required by secretary.— Every corporation making payments, regardless of amounts, of interest other than interest as defined in subsection (b) shall, when required by regulations prescribed by the Secretary or his delegate, make a return according to the forms or regulations prescribed by the Secretary or his delegate, setting forth the amount paid and the name and address of the recipient of each such payment. “(b) Interest Defined.— “(1) General rule.— For purposes of subsections (a)(1) and (2), the term ‘interest’ means— “(A) interest on evidences of indebtedness (including bonds, debentures, notes, and certificates) issued by a corporation in registered form, and, to the extent provided in regulations prescribed by the Secretary or his delegate, interest on other evidences of indebtedness issued by a corporation of a type offered by corporations to the public; “(B) interest on deposits with persons carrying on the banking business; “(C) amounts (whether or not designated as interest) paid by a mutual savings bank, savings and loan association, building and loan association, cooperative bank, homestead association, credit union, or similar organization, in respect of deposits, investment certificates, or withdrawable or repurchasable shares; “(D) interest on amounts held by an insurance company under an agreement to pay interest thereon; and “(E) interest on deposits with stockbrokers and dealers in securities. “(2) Exceptions.— For purposes of subsections (a)(1) and (2), the term ‘interest’ does not include— “(A) interest on obligations described in section 103(a)(1) or (3) (relating to interest on certain governmental obligations); “(B) to the extent provided in regulations prescribed by the Secretary or his delegate, any amount paid by or to a foreign corporation, a nonresident alien, or a partnership not engaged in trade or business in the United States and composed in whole or in part of nonresident aliens; and “(C) any amount on which the person making payment is required to deduct and withhold a tax under section 1451 26 USC 1451. (relating to tax-free convenant bonds), or would be so required but for section 1451(d) (relating to benefit of personal exemptions). “(c) Statements To Be Furnished to Persons With Respect to Whom Information Is Furnished.— Every person making a return under subsection (a)(1) shall furnish to each person whose name is set forth in such return a written statement snowing— “(1) the name and address of the person making such return, and “(2) the aggregate amount of payments to the person as shown on such return. The written statement required under the preceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a)(1) was made. No statement shall be required to be furnished to any person under this subsection if the aggregate amount of payments to such person as shown on the return made under subsection (a)(1) is less than $10.” (d) Penalties for Failure to File Information Returns.— Section 6652 (relating to failure to file certain information returns) 26 USC 6652. is amended to read as follows: “SEC. 6652. FAILURE TO FILE CERTAIN INFORMATION RETURNS. “(a) Returns Relating to Payments of Dividends, Interest, and Patronage Dividends.— In the case of each failure to file a statement of the aggregate amount of payments to another person required by section 6042(a)(1) (relating to payments of dividends aggregating Ante, p. 1053. Ante, p. 1054. Ante, p. 1056. $10 or more), section 6044(a)(1) (relating to payments of patronage dividends aggregating $10 or more), or section 6049(a)(1) (relating to payments of interest aggregating $10 or more), on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid (upon notice and demand by the Secretary or his delegate and in the same manner as tax), by the person failing to so file the statement, $10 for each such statement not so filed, but the total amount imposed on the delinquent person for all such failures during any calendar year shall not exceed $25,000. “(b) Other Returns.— In the case of each failure to file a statement of a payment to another person required under authority of section 6041 (relating to certain information at source), section 6042 (a)(2) (relating to payments of dividends aggregating less than $10), section 6044(a)(2) (relating to payments of patronage dividends aggregating less than $10), section 6049(a)(2) (relating to payments of interest aggregating less than $10), section 6049(a)(3) (relating to other payments of interest by corporations), or section 6051(d) (relating to information returns with respect to income tax 26 USC 6051. withheld), on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid (upon notice and demand by the Secretary or his delegate and in the same manner as tax) by the person failing to so file the statement, $1 for each such statement not so filed, but the total amount imposed on the delinquent person for all such failures during the calendar year shall not exceed $1,000. “(c) Alcohol and Tobacco Taxes.— “For penalties for failure to file certain information returns with respect to alcohol and tobacco taxes, see, generally, subtitle E.” (e) Penalties for Failure To Furnish Statements to Persons With Respect to Whom Returns Are Filed.— Subchapter B of chapter 68 (relating to assessable penalties) is amended by adding Ante, p. 988. after section 6677 (as added by section 7(g) of this Act) the following new section: “SEC. 6678. FAILURE TO FURNISH CERTAIN STATEMENTS. “In the case of each failure to furnish a statement under section Ante, pp. 1054–1056. 6042(c), 6044(e), or 6049(c) on the date prescribed therefor to a person with respect to whom a return has been made under section 6042(a)(1), 6044(a)(1), or 6049(a)(1), respectively, unless it is shown that such failure is due to reasonable cause and not to willful neglect, there shall be paid (upon notice and demand by the Secretary or his delegate and in the same manner as tax), by the person failing to so furnish the statement, $10 for each such statement not so furnished, but the total amount imposed on the delinquent person for all such failures during any calendar year shall not exceed $25,000.” (f) Technical Amendments.— Section 6041 (relating to information at source) is amended— (1) by striking out, in subsection (a) thereof, “(other than payments described in section 6042(1) or section 6045)” and inserting in lieu thereof “(other than payments to which section 6042(a)(1), 6044(a)(1), or 6049(a)(1) applies, and other than payments with respect to which a statement is required under the authority of section 6042(a)(2), 6044(a)(2), 6045, 6049 (a)(2), or 6049(a)(3))”; and (2) by striking out subsection (c) thereof. (g) Clerical Amendments.— (1) The table of sections for subpart B of part III of subchapter A of chapter 61 is amended— (A) by striking out “Sec. 6042. Returns regarding corporate dividends, earnings, and profits.” and inserting in lieu thereof “Sec. 6042. Returns regarding payments of dividends and corporate earnings and profits.”; (B) by striking out “Sec. 6044. Returns regarding patronage dividends.” and inserting in lieu thereof “Sec. 6044. Returns regarding payments of patronage dividends.”; and (C) by adding at the end of such table the following: “Sec. 6049. Returns regarding payments of interest.”. (2) The table of sections for subchapter B of chapter 68 is amended by adding at the end thereof the following: “Sec. 6678. Failure to furnish certain statements.” (h) Effective Dates.— (1) Dividends and interest.— The amendments made by this section shall apply to payments of dividends and interest made on or after January 1, 1963. (2) Patronage dividends.— The amendments made by this section shall apply to payments of amounts described in section 6044(b) of the Internal Revenue Code of 1954 made on or after January 1, 1963, with respect to patronage occurring on or after the first day of the first taxable year of the cooperative beginning on or after January 1, 1963. SEC. 20. INFORMATION WITH RESPECT TO CERTAIN FOREIGN ENTITIES. “(a) Information To Be Furnished by Individuals, Domestic Corporations, etc., With Respect to Certain Foreign Corporations.— Section 6038 is amended to read as follows: 74 Stat. 1014. 26 USC 6038. “SEC. 6038. INFORMATION WITH RESPECT TO CERTAIN FOREIGN CORPORATIONS. “(a) Requirement.— “(1) In general.— Every United States person shall furnish, with respect to any foreign corporation which such person controls (within the meaning of subsection (d)(1)), such information as the Secretary or his delegate may prescribe by regulations relating to— “(A) the name, the principal place of business, and the nature of business of such foreign corporation, and the country under whose laws incorporated; “(B) the accumulated profits (as defined in section 902(c)) Ante, p. 1000. of such foreign corporation, including the items of income (whether or not included in gross income under chapter 1), deductions (whether or not allowed in computing taxable income under chapter 1) and any other items taken into account in computing such accumulated profits; “(C) a balance sheet for such foreign corporation listing assets, liabilities, and capital; “(D) transactions between such foreign corporation and— “(i) such person, “(ii) any other corporation which such person controls, and “(lii) any United States person owning, at the time the transaction takes place, 10 percent or more of the value of any class of stock outstanding of such foreign corporation; and “(E) a description of the various classes of stock outstanding, and a list showing the name and address of, and number of shares held by, each United States person who is a shareholder of record owning at any time during the annual accounting period 5 percent or more in value of any class of stock outstanding of such foreign corporation. The Secretary or his delegate may also require the furnishing of any other information which is similar or related in nature to that specified in the preceding sentence. “(2) Period for which information is to be furnished, etc.— The information required under paragraph (1) shall be furnished for the annual accounting period of the foreign corporation ending with or within the United States person’s taxable year. The information so required shall be furnished at such time and in such manner as the Secretary or his delegate shall by regulations prescribe. “(3) Limitation.— No information shall be required to be furnished under this subsection with respect to any foreign corporation for any annual accounting period unless such information was required to be furnished under regulations in effect on the first day of such annual accounting period. “(b) Effect of Failure To Furnish Information.— “(1) In general.— If a United States person fails to furnish, within the time prescribed under paragraph (2) of subsection (a), any information with respect to any foreign corporation required under paragraph (1) of subsection (a), then— “(A) iii applying section 901 (relating to taxes of foreign countries and possessions of the United States) to such United States person for the taxable year, the amount of taxes (other than taxes reduced under subparagraph (B)) paid or deemed paid (other than those deemed paid under 26 USC 904. section 904(d)) to any foreign country or possession of the United States for the taxable year shall be reduced by 10 percent, and “(B) in applying sections 902 (relating to foreign tax credit for corporate stockholder in foreign corporation) and Ante, p. 1020. 960 (relating to special rules for foreign tax credit) to any such United States person which is a corporation (or to any person who acquires from any other person any portion of the interest of such other person in any such foreign corporation, but only to the extent of such portion) for any taxable year, the amount of taxes paid or deemed paid by each foreign corporation with respect to which such person is required to furnish information during the annual accounting period or periods with respect to which such information is required under paragraph (2) of subsection (a) shall be reduced by 10 percent. If such failure continues 90 days or more after notice by the Secretary or his delegate to the United States person, then the amount of the reduction under this paragraph shall be 10 percent plus an additional 5 percent for each 3-month period, or fraction thereof, during which such failure to furnish information continues after the expiration of such 90-day period. “(2) Limitation.— The amount of the reduction under paragraph (1) for each failure to furnish information with respect to a foreign corporation required under subsection (a)(1) shall not exceed whichever of the following amounts is the greater: “(A) $10,000, or “(B) the income of the foreign corporation for its annual accounting period with respect to which the failure occurs. “(3) Special rules.— “(A) No taxes shall be reduced under this subsection more than once for the same failure. “(B) For purposes of this subsection, the time prescribed under paragraph (2) of subsection (a) to furnish information (and the beginning of the 90-day period after notice by the Secretary) shall be treated as being not earlier than the last day on which (as shown to the satisfaction of the Secretary or his delegate) reasonable cause existed for failure to furnish such information. “(C) In applying subsections (a) and (b) of section 902, and in applying subsection (a) of section 960, the reduction provided by this subsection shall not apply for purposes of determining the amount of accumulated profits in excess of income, war profits, and excess profits taxes. “(c) Two or More Persons Required To Furnish Information With Respect to Same Foreign Corporation.— Where, but for this subsection, two or more United States persons would be required to furnish information under subsection (a) with respect to the same foreign corporation for the same period, the Secretary or his delegate may by regulations provide that such information shall be required only from one person. To the extent practicable, the determination of which person shall furnish the information shall be made on the basis of actual ownership of stock. “(d) Definitions.— For purposes of this section— “(1) Control.— A person is in control of a corporation if such person owns stock possessing more than 50 percent of the total combined voting power of all classes of stock entitled to vote, or more than 50 percent of the total value of shares of all classes of stock, of a corporation. If a person is in control (within the meaning of the preceding sentence) of a corporation which in turn owns more than 50 percent of the total combined voting power of all classes of stock entitled to vote of another corporation, or owns more than 50 percent of the total value of the shares of all classes of stock of another corporation, then such person shall be treated as in control of such other corporation. For purposes of this paragraph, the rules prescribed by section 318(a) for 26 USC 318. determining ownership of stock shall apply; except that— “(A) the second sentence of subparagraphs (A) and (B), and clause (ii) of subparagraph (C), of section 318(a)(2) shall not be applied so as to consider a United States person as owning stock which is owned by a person who is not a United States person, and “(B) in applying clause (i) of subparagraph (C) of section 318(a)(2), the phrase TO percent’ shall be substituted for the phrase ‘50 percent’ used in subparagraph (C). “(2) Annual accounting period.— The annual accounting period of a foreign corporation is the annual period on the basis of which such corporation regularly computes its income in keeping its books. “(e) Cross References.— “(1) For provisions relating to penalties for violations of this section, see section 7203. “(2) For definition of the term United States person’, see section 7701 (a)(30).” (b) Information as to Organization or Reorganization of Foreign Corporations and as to Acquisitions of Their Stock.— Section 6046 (relating to returns as to creation or organization, or reorganization, of foreign corporations) is amended to read as 74 Stat. 1016. 26 USC 6046. follows: “SEC. 6046. RETURNS AS TO ORGANIZATION OR REORGANIZATION OF FOREIGN CORPORATIONS AND AS TO ACQUISITIONS OF THEIR STOCK. “(a) Requirement of Return.— A return complying with the requirements of subsection (b) shall be made by— “(1) each United States citizen or resident who is on January 1, 1963, an officer or director of a foreign corporation, 5 percent or more in value of the stock of which is owned by a United States person (as defined in section 7701(a)(30)), or who becomes such Ante, p. 988. an officer or director at any time after such date, “(2) each United States person who on January 1, 1963, owns 5 percent or more in value of the stock of a foreign corporation, or who, at any time after such date— “(A) acquires stock which, when added to any stock owned on January 1, 1963, has a value equal to 5 percent or more of the value of the stock of a foreign corporation, or “(B) acquires an additional 5 percent or more in value of the stock of a foreign corporation, and “(3) each person who at any time after January 1, 1963, becomes a United States person while owning 5 percent or more in value of the stock of a foreign corporation. “(b) Form and Contents of Returns.— The returns required by subsection (a) shall be in such form and shall set forth, in respect of the foreign corporation, such information as the Secretary or his delegate prescribes by forms or regulations as necessary for carrying out the provisions of the income tax laws, except that in the case of persons described only in subsection (a)(1) the information required shall be limited to the names and addresses of persons described in subsection (a)(2). “(c) Ownership of Stock.— For purposes of subsection (a), stock owned directly or indirectly by a person (including, in the case of an individual, stock owned by members of his family) shall be taken into account. For purposes of the preceding sentence, the family of an individual shall be considered as including only his brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants. “(d) Time for Filing.— Any return required by subsection (a) shall be filed on or before the 90th day after the day on which, under any provision of subsection (a), the United States citizen, resident, or person becomes liable to file such return. “(e) Limitation.— “(1) General rule.— Except as provided in paragraph (2), no information shall be required to be furnished under this section with respect to any foreign corporation unless such information was required to be furnished under regulations which have been in effect for at least 90 days before the date on which the United States citizen, resident, or person becomes liable to file a return required under subsection (a). “(2) Exception.— In the case of liability to file a return under subsection (a) arising on or after January 1, 1963, and before June 1, 1963— “(A) no information shall be required to be furnished under this section w’ith respect to any foreign corporation unless such information was required to be furnished under regulations in effect on or before March 1, 1963, and “(B) if the date on which such regulations become effective is later than the day on which such liability arose, any return required by subsection (a) shall (in lieu of the time prescribed by subsection (d)) be filed on or before the 90th day after such date. “(f) Cross Reference.— “For provisions relating to penalties for violations of this section, see sections 6679 and 7203.” (c) Civil Penalty for Failure To File Return.— Subchapter B of chapter 68 (relating to assessable penalties) is amended by adding Ante, p. 1058. after section 6678 (as added by section 19(e) of this Act) the following new section: “SEC. 6679. FAILURE TO FILE RETURNS AS TO ORGANIZATION OR REORGANIZATION OF FOREIGN CORPORATIONS AND AS TO ACQUISITIONS OF THEIR STOCK. “(a) Civil Penalty.— In addition to any criminal penalty provided Ante, p. 1061. by law, any person required to file a return under section 6046 who fails to file such return at the time provided in such section, or who files a return which does not show the information required pursuant to such section, shall pay a penalty of $1,000, unless it is shown that such failure is due to reasonable cause. “(b) Deficiency Procedures Not To Apply.— Subchapter B of 26 USC 6211–6216. chapter 63 (relating to deficiency procedure for income, estate, and gift taxes) shall not apply in respect of the assessment or collection of any penalty imposed by subsection (a).” (d) Technical Amendments.— (1) Section 318(b) (relating to cross references) is amended by 26 USC 318. striking out “and” at the end of paragraph (5), by striking out the period at the end of paragraph (6) and inserting in lieu thereof and”, and by adding at the end thereof the following: “(7) section 6038(d)(1) (relating to information with respect to certain foreign corporations).” (2) The table of sections for subpart B of part III of subchapter A of chapter 61 is amended by striking out “Sec. 6046. Returns as to creation or organization, or reorganization, of foreign corporations.” and inserting in lieu thereof “Sec. 6046. Returns as to organization or reorganization of foreign corporations and as to acquisitions of their stock.” (3) The table of sections for subchapter B of chapter 68 is amended by adding at the end thereof the following: “Sec. 6679. Failure to file returns as to organization or reorganization of foreign corporations and as to acquisitions of their stock.” (e) Effective Date.— (1) The amendments made by subsection (a) shall apply with respect to annual accounting periods of foreign corporations beginning after December 31, 1962. (2) The amendments made by subsection (b) shall take effect on January 1, 1963. SEC. 21. EXPENDITURES BY FARMERS FOR CLEARING LAND. “(a) Allowance of Deduction.— Part VI of subchapter B of chapter 1 (relating to itemized deductions for individuals and corporations) is amended by adding after section 181 (as added by section Ante, p. 971. 2(c) of this Act) the following new section: “SEC. 182. EXPENDITURES BY FARMERS FOR CLEARING LAND. “(a) In General.— A taxpayer engaged in the business of farming may elect to treat expenditures which are paid or incurred by him during the taxable year in the clearing of land for the purpose of making such land suitable for use in farming as expenses which are not chargeable to capital account. The expenditures so treated shall be allowed as a deduction. “(b) Limitation.— The amount deductible under subsection (a) for any taxable year shall not exceed whichever of the following amounts is the lesser: “(1) $5,000, or “(2) 25 percent of the taxable income derived from farming during the taxable year. For purposes of paragraph (2), the term ‘taxable income derived from farming’ means the gross income derived from farming reduced by the deductions allowed by this chapter (other than by this section) which are attributable to the business of farming. “(c) Definitions.— For purposes of subsection (a)— “(1) The term ‘clearing of land’ includes (but is not limited to) the eradication of trees, stumps, and brush, the treatment or moving of earth, and the diversion of streams and watercourses. “(2) The term ‘land suitable for use in farming’ means land which as a result of the activities described in paragraph (1) is suitable for use by the taxpayer or his tenant tot the production of crops, fruits, or other agricultural products or for the sustenance of livestock. “(d) Exceptions, etc.— “(1) Exceptions.— The expenditures to which subsection (a) applies shall not include— “(A) the purchase, construction, installation, or improvement of structures, appliances, or facilities which are of a character which is subject to the allowance for depreciation 26 USC 167. provided in section 167, or “(B) any amount paid or incurred which is allowable as a deduction without regard to this section. “(2) Certain property used in the clearing of land.— “(A) Allowance for depreciation.— The expenditures to which subsection (a) applies shall include a reasonable allowance for depreciation with respect to property of the taxpayer which is used in the clearing of land for the purpose of making such land suitable for use in farming and which, if used in a trade or business, would be property subject to the allowance for depreciation provided by section 167. “(B) Treatment as depreciation deduction.— For purposes of this chapter, any expenditure described in subparagraph (A) shall, to the extent allowed as a deduction under subsection (a), be treated as an amount allowed under section 167 for exhaustion, wear and tear, or obsolescence of the property which is used in the clearing of land. “(e) Election.— The election under subsection (a) for any taxable year shall be made within the time prescribed by law (including extensions thereof) for filing the return for such taxable year. Such election shall be made in such manner as the Secretary or his delegate may by regulations prescribe. Such election may not be revoked except with the consent of the Secretary or his delegate.” (b) Conforming Amendment.— Section 263(a)(1) (relating to disallowance of deductions for capital expenditures) is amended by striking out “or” at the end of subparagraph (C), by striking out the period at the end of subparagraph (D) and inserting “, or”, and by adding at the end thereof the following new subparagraph: “(E) expenditures by farmers for clearing land deductible under section 182.” (c) Clerical Amendment.— The table of sections for such part VI is amended by adding at the end thereof the following: “Sec. 182. Expenditures by farmers for clearing land.” (d) Effective Date.— The amendments made by this section shall apply with respect to taxable years beginning after December 31, 1962. SEC. 22. CHARITABLE CONTRIBUTIONS MADE FROM INCOME ATTRIBUTABLE TO SEVERAL TAXABLE YEARS. (a) Treatment for Purposes of Part I of Subchapter Q.— Section 26 USC 1307. 1307 (relating to rules applicable to part I of subchapter Q) is amended by adding at the end thereof the following new subsection: “(e) Election With Respect to Charitable Contributions.— In the case of an individual who elects (in such manner and at such time as the Secretary or his delegate prescribes by regulations) to have the provisions of this subsection apply, an amount received or accrued to which this part applies shall be reduced, for purposes of computing the tax liability of the taxpayer under this part with respect to the amount so received or accrued, by an amount equal to that portion of (1) the amount of charitable contributions made by the taxpayer during the taxable year in which the amount is so received or accrued which are allowable as a deduction for such year under section 170 26 USC 170. (determined without regard to this part), as (2) the amount received or accrued to which this part applies is of the adjusted gross income for the taxable year (determined without regard to this part). In any case in which the taxpayer elects to have the provisions of the preceding sentence apply, for purposes of computing the limitation on tax under this part— “(1) only the same proportion of the amount to which this part applies shall be taken into account for purposes of computing the limitations under section 170(b)(1)(A) and (B) for taxable years before the taxable year in which such amount is received or accrued as (A) the excess of the maximum amount which could, if the taxpayer had made additional contributions described in clause (i), (ii), or (iii) of section 170(b)(1)(A), have been described in clause (1) of the preceding sentence over the amount described in such clause (1), bears to (B) such maximum amount, and “(2) the portion of the amount of charitable contributions described in the preceding sentence shall not be taken into account in computing the tax for the taxable year in which the amount to which this part applies is received or accrued.” (b) Effective Date.— The amendment made by subsection (a) shall apply with respect to amounts received or accrued in taxable years beginning after December 31, 1961. SEC 23. EFFECTIVE DATE OF SECTION 1371(e) OF THE INTERNAL REVENUE CODE OF 1954. (a) In General.— Subject to the provisions of subsection (b), section 1371(c) of the Internal Revenue Code of 1954 (as added by 26 USC 1371. section 2(a) of the Act entitled “An Act to amend the Internal Revenue Code of 1951 to provide a personal exemption for children placed for adoption and to clarify certain provisions relating to the election of small business corporations as to taxable status”, approved September 23, 1959 (Public Law 86–376)), shall (notwithstanding the provisions of the first sentence of section 2(d) of such Act) also apply to taxable years beginning after December 31, 1957, and before January 1, 1960. (b) Election and Consent by Corporations: Consents by Shareholders.— Subsection (a) shall apply with respect to any corporation and its shareholders only if, within one year after the date of the enactment of this Act— (1) such corporation (in such manner as the Secretary of the Treasury or his delegate prescribes by regulations) elects to have the provisions of subsection (a) apply and consents to the application of subsection (c); and (2) each person who is a shareholder of such corporation on the date on which such corporation makes such election, and each person who was a shareholder of such corporation during any taxable year of such corporation beginning after December 31, 1957, and ending before the date of such election, consents (in such manner and at such time as the Secretary of the Treasury or his delegate prescribes by regulations) to such election amt to the application of subsection (c). (c) Tolling of Statutes of Limitations.— In any case in which a corporation makes an electiôn under subsection (b)— (1) if the assessment of any deficiency against the corporation making such election, or any shareholder of such corporation who consents to such election, for any taxable year is prevented, at any time on or before the expiration of one year after the date of such election, by the operation of any law or rule of law, assessment of such deficiency may, nevertheless, be made, to the extent such deficiency is attributable to the application of subsection (a), at any time on or before the expiration of such one-year period; and (2) if credit or refund of any overpayment of tax by the corporation making such election, or any shareholder of such corporation who consents to such election, for any taxable year is prevented, at any time on or before the expiration of one year after the date of such election, by the operation of any law or rule of law, credit or refund of such overpayment may, nevertheless, be allowed or made, to the extent such overpayment is attributable to the application of subsection (a), if claim therefor is filed on or before the expiration of such one-year period. SEC. 24. CERTAIN LOSSES SUSTAINED IN CONVERTING FROM STREET RAILWAY TO BUS OPERATIONS. (a) In General.— If a corporation has a net operating loss for the taxable year ending December 31, 1953, or the taxable year ending December 31, 1954, principally as the result of conversion from street railways to bus operations with respect to part or all of the company’s operations, then its unused conversion loss will be subject to the treatment provided in subsection (c). (b) Unused Conversion Loss Defined.— The amount of the unused conversion loss shall be the sum of the part of the net operating loss for each year described in subsection (a) which (without regard to this section) would be carried over to the sixth taxable year following 26 USC 172. the loss year if section 172(b) of the Internal Revenue Code of 1954 (or, where applicable, section 122(b)(2)(B) of the Internal Revenue 64 Stat. 938. Code of 1939) permitted such a carryover. (c) Treatment of Unused Conversion Loss.— If a taxpayer has an unused conversion loss, then in determining the amount of the net operating loss carryover from the taxable year ending December 31, 1959, to each of the 5 taxable years following such taxable year for purposes of section 172 of the Internal Revenue Code of 1954, such unused conversion loss shall be treated as a net operating loss for the taxable year ending December 31, 1959. This subsection shall apply only for years in which the taxpayer is engaged in the furnishing or sale of transportation (as defined in section 1503(c)(1)(A) of the 26 USC 1503. Internal Revenue Code of 1954). (d) Regulations.— The Secretary of the Treasury, or his delegate, may prescribe by regulation such rules as may be necessary to carry out the purposes of this section. SEC. 25. PENSION PLAN OF LOCAL UNION NUMBERED 435, INTERNATIONAL HOD CARRIERS’ BUILDING AND COMMON LABORERS’ UNION OF AMERICA. The pension plan of Local Union Numbered 435 of the International Hod Carriers’ Building and Common Laborers’ Union of America, which was negotiated to take effect May 1, 1980, pursuant to an agreement between such union and the Building Trades Employers Association of Rochester, New York, Incorporated, and which has been held by the Internal Revenue Sen ice to constitute a qualified 26 USC 401. 26 USC 501. trust under section 401(a) of the Internal Revenue Code of 1954, and to be exempt from taxation under section 501 (a) of such Code, shall be held and considered to have been a qualified trust under such sec-tion 401(a), and to have been exempt from taxation under such section 26 USC 401. 26 USC 501. 501(a), for the period beginning May 1, 1960, and ending April 20, 1961, but only if it is shown to the satisfaction of the Secretary of the Treasury or his delegate that the trust has not in this period been operated in a manner which would jeopardize the interests of its beneficiaries. SEC. 26. CONTINUATION OF A PARTNERSHIP YEAR FOR SURVIVING PARTNER IN A TWO-MAN PARTNERSHIP WHERE ONE DIES. (a) Close of Taxable Year of Two-Man Partnership When One Partner Dies.— Section 188 of the Internal Revenue Code of 1939 53 Stat. 71. (relating to different taxable years of partner and partnership) is amended— (1) by striking out “If” and inserting in lieu thereof “(a) General Rule.—If”; and (2) by adding at the end of such section 188 the following new subsection: “(b) Two-Man Partnership.— For the purpose of this chapter, the death of one of the partners of a partnership consisting of two members shall not, if the surviving partner so elects within one year after the date of enactment of this subsection, result in the termination of the partnership or in the closing of the taxable year of the partnership with respect to the surviving partner prior to the time the partnership year would have closed if neither partner had died or disposed of his interest.” (b) Effective Date, etc.— The amendments made by subsection (a) shall apply with respect to taxable years of a partnership beginning after December 31, 1946, to which the Internal Revenue Code of 1939 applies. If refund or credit of any overpayment resulting from the application of the amendments made by subsection (a) of this section (including interest, additions to the tax, and additional amounts), is prevented on the date of enactment of this Act, or within one year from such date, by the operation of any law or rule of law (other than section 3760 of the Internal Revenue Code of 1939 or section 7121 of the Internal Revenue Code of 1954, relating to closing agreements, and other than section 3761 of the Internal Revenue Code of 1939 or 53 Stat. 462. 26 USC 7121. 53 Stat. 462. 26 USC 7122. section 7122 of the Internal Revenue Code of 1954, relating to compromises), such refund or credit of such overpayment, may, nevertheless, be made or allowed if claim therefor is filed within one year after the date of the enactment of this Act. No interest shall be allowed or paid on any overpayment resulting from the enactment of this section. SEC. 27. EXCLUSION FROM GROSS INCOME OF CERTAIN AWARDS MADE PURSUANT TO EVACUATION CLAIMS OF JAPANESE-AMERICAN PERSONS. (a) In General.— No amount received as an award under the Act entitled “An Act to authorize the Attorney General to adjudicate certain claims resulting from evacuation of certain persons of Japanese ancestry under military orders”, approved July 2, 1948, as amended by Public Law 116, Eighty-second Congress, and Public Law 673, Eighty-fourth Congress (50 U.S.C. App., secs. 1981–1987), shall be included in gross income for purposes of chapter 1 of the Internal Revenue Code of 1939 or chapter 1 of the Internal Revenue Code of 53 Stat. 4. 26 USC 1 et seq. 1954. (b) Effective Date, etc.— Subsection (a) shall apply with respect to taxable years ending after July 2, 1948. If refund or credit of any overpayment of Federal income tax resulting from the application of subsection (a)(including interest, additions to the tax, additional amounts, and penalties) is prevented on the date of the enactment of this Act, or within one year from such date, by the operation of any law or rule of law, the refund or credit of such overpayment may nevertheless be made or allowed if claim therefor is filed within one year after the date of enactment of this Act. In the case of a claim to which the preceding sentence applies, the amount to be refunded or credited as an overpayment shall not be diminished by any credit or set-off based upon any item other than the amount of the award referred to in subsection (a). No interest shall be allowed or paid on any overpayment resulting from the application of this section. SEC. 28. DEDUCTION FOR DEPRECIATION BY TENANT-STOCKHOLDER OF COOPERATIVE HOUSING CORPORATION. (a) Alowance of Deduction.— Section 216 (relating to deductions by tenant-stockholders of a cooperative housing corporation) is amended by— (1) amending the heading thereof to read as follows: “SEC. 216. DEDUCTION OF TAXES, INTEREST, AND BUSINESS DEPRECIATION BY COOPERATIVE HOUSING CORPORATION TENANT-STOCKHOLDER.”; and (2) adding at the end of section 216 the following new subsection: “(c) Treatment as Property Subject to Depreciation.— So much of the stock of a tenant-stockholder in a cooperative housing corporation as is allocable, under regulations prescribed by the Secretary or his delegate, to a proprietary lease or right of tenancy in property 26 USC 167. subject to the allowance for depreciation under section 167(a) shall, to the extent such proprietary lease or right of tenancy is used by such tenant-stockholder in a trade or business or for the production of income, be treated as property subject to the allowance for depreciation under section 167(a). (b) Clerical Amendment.— The table of sections for part VII of subchapter B of chapter 1 is amended by striking out the item relating to section 216 and inserting in lieu thereof the following: “Sec. 216. Deduction of taxes, interest, and business depreciation by cooperative housing corporation tenant-stockholder.” (c) Effective Date.— The amendments made by subsection (a) shall be effective with respect to taxable years beginning after December 31, 1961. SEC. 29. DEDUCTION FOR INCOME TAX PURPOSES OF CONTRIBUTIONS TO CERTAIN ORGANIZATIONS FOR JUDICIAL REFORM. 26 USC 170. For purposes of section 170 of the Internal Revenue (’ode of 1954 (relating to deduction for charitable, etc., contributions and gifts), a contribution or gift made after December 31, 1961, with respect to a referendum occurring during the calendar year 1962 to or for the use of any nonprofit organization created and operated exclusively— (1) to consider proposals for the reorganization of the judicial branch of the government of any State of the United States or political subdivision of such State, and (2) to provide information, make recommendations, and seek public support or opposition as to such proposals, shall be treated as a charitable contribution if no part of the net earnings of such organization inures to the benefit of any private shareholder or individual. The provisions of the preceding sentence shall not. apply to any organization which participates in, or intervenes in, any political campaign on behalf of any candidate for public office. SEC. 30. EFFECTIVE DATE OF AMENDMENT TO SECTION 1374(b). The amendment made by section 2(b) of Public Law 86–376 (73 Stat. 699) shall take effect on September 2, 1958. SEC. 31. TREATIES. Section 7852(d) of the Internal Revenue Code of 1954 (relating to 26 USC 7852. treaty obligations) shall not apply in respect of any amendment made by this Act.

2. 2004

   Pub. L. 108–357 title III § 319(d) · 118 Stat. 1418

   Added · 26 U.S.C. § 1381(c)

   Pub. L. 108–357 added subsec. (c)

   Source evidence

   Code amendment note
   Subsec. (c). Pub. L. 108–357 added subsec. (c).

   Enacted provision · exact public law section
   (d) Cross Reference.— Section 1381 is amended by adding at the end the following new subsection: “(c) Cross Reference.—  “For treatment of income from load loss transactions of organizations described in subsection (a)(2)(C), see section 501(c)(12)(H).” .

3. 2017

   Pub. L. 115–97 title I § 13001(b)(2)(O) · 131 Stat. 2054

   Substituted · 26 U.S.C. § 1381(b)

   Pub. L. 115–97 substituted “tax imposed by section 11” for “taxes imposed by section 11 or 1201”

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 115–97 substituted “tax imposed by section 11” for “taxes imposed by section 11 or 1201”.

   Enacted provision · exact public law section
   (O) Section 1381(b) is amended by striking “taxes imposed by section 11 or 1201” and inserting “tax imposed by section 11”.

   Effective date note
   Amendment by Pub. L. 115–97 applicable to taxable years beginning after Dec. 31, 2017, see section 13001(c)(1) of Pub. L. 115–97, set out as a note under section 11 of this title.

3 of 3 references resolved to an enrolled provision