§ 681. Limitation on charitable deduction

Statutory text

Trade or business income

In computing the deduction allowable under section 642(c) to a trust, no amount otherwise allowable under section 642(c) as a deduction shall be allowed as a deduction with respect to income of the taxable year which is allocable to its unrelated business income for such year. For purposes of the preceding sentence, the term “unrelated business income” means an amount equal to the amount which, if such trust were exempt from tax under section 501(a) by reason of section 501(c)(3), would be computed as its unrelated business taxable income under section 512 (relating to income derived from certain business activities and from certain property acquired with borrowed funds).

Cross reference

For disallowance of certain charitable, etc., deductions otherwise allowable under section 642(c), see sections 508(d) and 4948(c)(4).

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.

1954
Aug. 16, 1954, ch. 736, 68A Stat. 232 · 68A Stat. 232
Enacted · 26 U.S.C. § 681
Aug. 16, 1954, ch. 736, 68A Stat. 232
Source evidence
Code source credit
Aug. 16, 1954, ch. 736, 68A Stat. 232
1968
Pub. L. 90–630 § 6(b) · 82 Stat. 1328
Inserted · 26 U.S.C. § 681(c)
Pub. L. 90–630 inserted provision that par. (1) does not apply to income attributable to property transferred to a trust before January 1, 1951, by the creator thereof if the trust was irrevocable on such date and if the income is required to be accumulated pursuant to the mandatory terms of the instrument creating the trust
Source evidence
Code amendment note
Subsec. (c). Pub. L. 90–630 inserted provision that par. (1) does not apply to income attributable to property transferred to a trust before January 1, 1951, by the creator thereof if the trust was irrevocable on such date and if the income is required to be accumulated pursuant to the mandatory terms of the instrument creating the trust.
Enacted provision · exact public law section
(b) Section 681(c) of such Code (relating to limitation on charitable deduction of trusts by reason of accumulated income) is amended by inserting after the second sentence thereof the following new sentence: “Paragraph (1) shall not apply to income attributable to property transferred to a trust before January 1, 1951, by the creator of such trust, if such trust was irrevocable on such date and if such income is required to be accumulated pursuant to the mandatory terms (as in effect on such date and at all times thereafter) of the instrument creating such trust.”
1969
Tax Reform Act of 1969
Pub. L. 91–172 § 121(d)(2)(B) · 83 Stat. 487
Substituted · 26 U.S.C. § 681(a)
Pub. L. 91–172, § 121(d)(2)(B), substituted reference to certain property acquired with borrowed funds for reference to certain leases
Source evidence
Code amendment note
Subsec. (a). Pub. L. 91–172, § 121(d)(2)(B), substituted reference to certain property acquired with borrowed funds for reference to certain leases.
Enacted provision · exact public law section
(B) The second sentence of section 681(a) (relating to 68A Stat. 232. limitation on charitable deduction of taxable trusts) is amended by striking out the words “certain leases” and inserting in lieu thereof “certain property acquired with borrowed funds”.
Effective date note
Amendment by section 101(j)(18), (19) of Pub. L. 91–172 effective Jan. 1, 1970, see section 101(k)(1) of Pub. L. 91–172, set out as an Effective Date note under section 4940 of this title. Amendment by section 121(d)(2)(B) of Pub. L. 91–172 applicable to taxable years beginning after Dec. 31, 1969, see section 121(g) of Pub. L. 91–172, set out as a note under section 511 of this title.
1969
Tax Reform Act of 1969
Pub. L. 91–172 § 101(j)(18) · 83 Stat. 487
1. Redesignated · 26 U.S.C. § 681(b)
  Pub. L. 91–172, § 101(j)(18), (19), redesignated subsec. (d) as (b)
2. Substituted · 26 U.S.C. § 681(b)
  Pub. L. 91–172, § 101(j)(18), (19), substituted “sections 518(d) and 4948(c)(4)” for “section 503(e)”. Former subsec. (b), dealing generally with the operation of trusts, was struck out
Source evidence
Code amendment note
Subsec. (b). Pub. L. 91–172, § 101(j)(18), (19), redesignated subsec. (d) as (b) and substituted “sections 518(d) and 4948(c)(4)” for “section 503(e)”. Former subsec. (b), dealing generally with the operation of trusts, was struck out.
Enacted provision · exact public law section
(18) Section 681(b) and (c) (relating to operations of trusts and accumulated income) is repealed.
Effective date note
Amendment by section 101(j)(18), (19) of Pub. L. 91–172 effective Jan. 1, 1970, see section 101(k)(1) of Pub. L. 91–172, set out as an Effective Date note under section 4940 of this title. Amendment by section 121(d)(2)(B) of Pub. L. 91–172 applicable to taxable years beginning after Dec. 31, 1969, see section 121(g) of Pub. L. 91–172, set out as a note under section 511 of this title.
1969
Tax Reform Act of 1969
Pub. L. 91–172 § 101(j)(18) · 83 Stat. 487
Struck · 26 U.S.C. § 681(c)
Pub. L. 91–172, § 101(j)(18), struck out subsec. (c) dealing with accumulated income
Source evidence
Code amendment note
Subsec. (c). Pub. L. 91–172, § 101(j)(18), struck out subsec. (c) dealing with accumulated income.
Enacted provision · exact public law section
(18) Section 681(b) and (c) (relating to operations of trusts and accumulated income) is repealed.
Effective date note
Amendment by section 101(j)(18), (19) of Pub. L. 91–172 effective Jan. 1, 1970, see section 101(k)(1) of Pub. L. 91–172, set out as an Effective Date note under section 4940 of this title. Amendment by section 121(d)(2)(B) of Pub. L. 91–172 applicable to taxable years beginning after Dec. 31, 1969, see section 121(g) of Pub. L. 91–172, set out as a note under section 511 of this title.
1969
Tax Reform Act of 1969
Pub. L. 91–172 § 101(j)(19) · 83 Stat. 487
Redesignated · 26 U.S.C. § 681(d)
Pub. L. 91–172, § 101(j)(19), redesignated subsec. (d) as (b)
Source evidence
Code amendment note
Subsec. (d). Pub. L. 91–172, § 101(j)(19), redesignated subsec. (d) as (b).
Enacted provision · exact public law section
(19) Section 681(d) (relating to cross reference) is redesignated as subsection (b), and as so redesignated is amended by striking out “section 503(e)” and inserting in lieu thereof “sections 508(d) and 4948(c)(4)”.
Effective date note
Amendment by section 101(j)(18), (19) of Pub. L. 91–172 effective Jan. 1, 1970, see section 101(k)(1) of Pub. L. 91–172, set out as an Effective Date note under section 4940 of this title. Amendment by section 121(d)(2)(B) of Pub. L. 91–172 applicable to taxable years beginning after Dec. 31, 1969, see section 121(g) of Pub. L. 91–172, set out as a note under section 511 of this title.

6 of 7 references resolved to an enrolled provision · 1 partial

Editorial Notes

Amendments1968–1969 · 2 rounds

1969

Subsec. (a). Pub. L. 91–172, § 121(d)(2)(B), substituted reference to certain property acquired with borrowed funds for reference to certain leases.

Subsec. (b). Pub. L. 91–172, § 101(j)(18), (19), redesignated subsec. (d) as (b) and substituted “sections 518(d) and 4948(c)(4)” for “section 503(e)”. Former subsec. (b), dealing generally with the operation of trusts, was struck out.

Subsec. (c). Pub. L. 91–172, § 101(j)(18), struck out subsec. (c) dealing with accumulated income.

Subsec. (d). Pub. L. 91–172, § 101(j)(19), redesignated subsec. (d) as (b).

1968

Subsec. (c). Pub. L. 90–630 inserted provision that par. (1) does not apply to income attributable to property transferred to a trust before January 1, 1951, by the creator thereof if the trust was irrevocable on such date and if the income is required to be accumulated pursuant to the mandatory terms of the instrument creating the trust.

Statutory Notes and Related Subsidiaries

Effective Date of 1969 Amendment

Amendment by section 101(j)(18), (19) of Pub. L. 91–172 effective Jan. 1, 1970, see section 101(k)(1) of Pub. L. 91–172, set out as an Effective Date note under section 4940 of this title.

Amendment by section 121(d)(2)(B) of Pub. L. 91–172 applicable to taxable years beginning after Dec. 31, 1969, see section 121(g) of Pub. L. 91–172, set out as a note under section 511 of this title.

Effective Date of 1968 Amendment

Pub. L. 90–630, § 6(c), Oct. 22, 1968, 82 Stat. 1330, provided that: “The amendments made by subsection (a) [amending section 504 of this title] and (b) [amending this section] shall apply with respect to taxable years beginning after December 31, 1953, and ending after August 16, 1954. For purposes of sections 3814 and 162(g)(4) of the Internal Revenue Code of 1939, provisions having the same effect as such amendments shall be treated as included in such sections effective with respect to taxable years beginning after December 31, 1950.”

Credits

1954–1969 · 3 acts

1954Aug. 16, 1954, ch. 736, 68A Stat. 232
1968Pub. L. 90–630, § 6(b), Oct. 22, 1968, 82 Stat. 1330
1969Pub. L. 91–172, title I, §§ 101(j)(18), (19), 121(d)(2)(B), Dec. 30, 1969, 83 Stat. 528, 547.

Show as published

(Aug. 16, 1954, ch. 736, 68A Stat. 232; Pub. L. 90–630, § 6(b), Oct. 22, 1968, 82 Stat. 1330; Pub. L. 91–172, title I, §§ 101(j)(18), (19), 121(d)(2)(B), Dec. 30, 1969, 83 Stat. 528, 547.)