Navy, Including Marine Corps: * 30 years service regardless of age (section 6326). 30 years service (section 1305) or age 62 with 20 years service whichever is earlier (section 1263). Warrant Officers, Female: 30 years service (section 1305) or age 55 with 20 years service whichever is earlier (section 1255). Commissioned Officers, Male: 40 years service (section 6321) or age 62,5 whichever is earlier (section 6390). Commissioned Officers, Nurses: 30 years service or age 55, whichever is earlier, for Lieutenant Commanders and above at time of retirement for disability (section 6377 (d) and section 6396 as amended by Public Law 85-155, 71 Stat. 384, 385). Commissioned Officers, Nurses: 20 years service or age 50, whichever is later, for below Lieutenant Commander at time of retirement for disability (section 6396 (b) as amended by P. L. 85-155, 71 Stat. 384, 385). Commissioned Officers, Others, Female: 30 years service or age 55, whichever is earlier, for Commanders and above, at time of retirement for disability (section 6398); age 50 for below Commander (section 6399). United States Coast Guard: Enlisted: Age 62 (section 353, Title 14, U.S.C.). Warrant Officers, Male: 30 years service (section 1305, Title 10, U.S.C.) or age 62 with 20 years service, whichever is earlier (section 1263, Title 10, U.S.C., and section 303, Title 14, U.S.C.). Warrant Officers, Female: 30 years service (section 1305, Title 10, U.S.C.) or age 55 with 20 years service, whichever is earlier (section 1255, Title 10, U.S.C.). Commissioned Officers: Age 62 (section 230, Title 14, U.S.C.). United States Coast and Geodetic Survey: Commissioned Officers: Age 60 below rank of Rear Admiral (section 853 (k) (a), Title 33, U.S.C.). Age 62, Rear Admiral and above (section 853 (k) (b), Title 33, U.S.C.). United States Public Health Service: Commissioned Officers: 30 years service or age 64, whichever is earlier (section 212 (a), Title 42, U.S.C.). All statutory references to Navy, including Marine Corps are to Title 10, United States Code, 70 A. Stat. Except that for Naval officers below the rank of Fleet Admiral who are retired for physical disability after the first day of the month following the month in which they have reached age 62, the age factor is 64 (section (390). Revenue Rulings 57-76 and 58-43, supra, are amplified for the purpose of determining the retirement ages for various ranks of members in the uniformed services. SECTION 170.-CHARITABLE, ETC., CONTRIBUTIONS AND GIFTS 26 CFR 1.170-2: Charitable deductions by individuals; limitations. Rev. Rul. 59-27 An organization, whose purposes and functions are raising funds needed by hospitals and public agencies for the care of crippled children and operating a medical treatment center does not constitute a hospital within the meaning of section 170(b) (1) (A) (iii) of the Internal Revenue Code of 1954. Contributions to such organization do not qualify for the additional deduction of ten percent of adjusted gross income provided by section 170(b) (1) (A) of the Code. Advice has been requested whether an organization, whose purposes and functions are raising funds needed by public agencies and hospitals for the care of crippled children, and which, as a secondary activity, operates a medical treatment center, constitutes a hospital within the meaning of section 170 (b) (1) (A) (iii) of the Internal Revenue Code of 1954 for purposes of the special deduction for contributions provided by that section. The instant organization was incorporated under state law for the purpose of providing funds for the care of crippled children who otherwise could not receive medical attention, and to aid the department of health of the state in the problems of crippled children. The organization's principal activities consist of raising funds needed by the department of health to obtain matching Federal funds for the care of crippled children and hospitals for the care of such children, as a secondary activity, it operates a diagnostic and treatment center. All of its income, after operating expenses, is turned over to the department of health, various hospitals, and other organizations for use in carrying on the programs of aiding and assisting crippled children. The Internal Revenue Service has held that the organization is exempt from Federal income tax under section 501 (c) (3) of the Code, and that under section 170 (b) (1) (B) of the Code contributions by individuals to the organization are deductible by the donors subject to the limitation of 20 percent of adjusted gross income computed without regard to any net operating loss carryback to the taxable year under Section 172 of the Code. Section 170 (b) (1) (A) of the Code provides, among other things, for an additional deduction for individuals under a special rule, whereby any charitable contribution to a hospital referred to in section 503(b) (5) of the Code shall be allowed to the extent that the aggregate of such additional contributions does not exceed ten percent of the taxpayer's adjusted gross income computed without regard to any net operating loss carryback to the taxable year under section 172 of the Code. 490548-59-2 Section 503 (b) (5) of the Code refers to an organization the principal purposes or functions of which are the providing of medical or hospital care. Section 1.170-2(b) (4) of the Income Tax Regulations provides that the term "hospital," as used in section 170(b) (1) (A) (iii) of the Code, means an organization the principal purposes or functions of which are providing hospital or medical care. In the instant case, the principal purposes and functions of the organization are raising funds for the care of crippled children, as distinguised from providing hospital or medical care as required by section 1.170-2(b) (4) of the Income Tax Regulations. See Rev. Rul. 56-262, C. B. 1956-1, 131. Accordingly, it is held that the organization does not constitute a hospital within the meaning of section 170(b)(1)(A)(iii) of the Code. Therefore, contributions to the organization do not qualify for the additional deduction of ten percent of adjusted gross income provided by section 170 (b) (1) (A) of the Code. SECTION 401.-QUALIFIED PENSION, PROFIT-SHARING, AND STOCK BONUS PLANS. 26 CFR 1.401-1: Qualified pension, profitsharing and stock bonus plans. Funds of an exempt employees' trust deposited in a checking account with the employer-grantor bank. See Rev. Rul. 59-29, page 11. SECTION 501.-EXEMPTION FROM TAX ON CORPORATIONS, CERTAIN TRUSTS, ETC. Rev. Rul. 59-28 An association created under a declaration of trust which provides for the payment of life, sick, accident, or other benefits to persons other than employees and their dependents (such as individual proprietors, partners, self-employed persons or trustees designated to administer the fund from which such benefits are to be paid) does not qualify for exemption from Federal income tax as a voluntary employees' beneficiary association under the provisions of section 501 (c) (9) of the Internal Revenue Code of 1954. Advice has been requested whether an association is, under the circumstances set forth below, entitled to exemption from Federal income tax as a voluntary employees' beneficiary association under the provisions of section 501 (c) (9) of the Internal Revenue Code of 1954. The association in the instant case was created under a declaration of trust which provides for the payment of life, sick, accident, or other benefits to the employees of any person, firm, or corporation participating in the plan. In addition to covering the employees of organizations participating in the plan, the trust instrument provides that full-time owners and partners, as well as the members of the board of trustees (who are not employees of participating employers) ad ministering the fund from which such benefits are to be paid, may qualify for the receipt of similar benefits under the plan. Section 501(c) of the Code describes certain organizations exempt from Federal income tax under section 501 (a) and reads, in part, as follows: (9) Voluntary employees' beneficiary associations providing for the payment of life, sick, accident, or other benefits to the members of such association or their dependents, if— (A) no part of their net earnings inures (other than through such payments) to the benefit of any private shareholder or individual, and (B) 85 percent or more of the income consists of amounts collected from members and amounts contributed to the association by the employer of the members for the sole purpose of making such payments and meeting expenses. It is the position of the Internal Revenue Service that an organization which includes employers or individuals other than employees, among its membership, or otherwise provides for the payment of life, sick, accident, or other benefits to such individuals and their dependents, is not a voluntary employees' beneficiary association within the intendment of section 501 (c) (9) of the Code. The trustees designated by the trust instrument to administer the trust perform their duties in a fiduciary capacity and, as such, are not subject to the supervision or control of any employer. Since the trustees are not employees of either an employer or the trust, they do not qualify as beneficial members of the trust. Consequently, the inclusion of a provision in the trust instrument entitling the nonemployee trustees of the trust to the same benefits as those granted employees would not be within the scope of the basic requirements for exemption contained in section 501 (c) (9) of the Code. In view of the foregoing, it is held that an association created under a declaration of trust which provides for the payment of life, sick, accident, or other benefits to persons other than employees and their dependents (such as individual proprietors, partners, self-employed persons or trustees designated to administer the fund from which such benefits are to be paid) does not qualify for exemption from Federal income tax as a voluntary employees' beneficiary association under the provisions of section 501 (c) (9) of the Internal Revenue Code of 1954. SECTION 503.-REQUIREMENTS FOR EXEMPTION 26 CFR 1.503 (c)-1: Prohibited transactions. (Also Section 401; 1.401-1.) Rev. Rul. 59-29 The deposit of funds of an exempt employees' trust, in a checking account with the employer-grantor bank, will not constitute a "prohibited transaction" within the purview of section 503 (c) (1) of the Internal Revenue Code of 1954. Nor will the interim deposit of surplus funds in an ordinary checking account, even where such an account is maintained with the employer-grantor bank, be held to violate the provisions of section 401 (a) or section 503 (c) (6) of the Code. Advice has been requested whether deposits of trust funds of a bank's employees' profit-sharing trust, in a checking account with the employer-grantor, will constitute a "prohibited transaction" within the meaning of section 503 (c) of the Internal Revenue Code of 1954. A bank established a profit-sharing trust for the benefit of its employees which has been held to meet the requirements of section 401(a) of the Code for exemption from Federal income tax under section 501 (a). Funds of the trust have been placed on deposit, in an amount in excess of the amount for which insurance is provided by the Federal Deposit Insurance Corporation, in a checking account with the employer-grantor bank. 501(a). Under the provisions of section 503 (a) (1) of the Code, a trust described in section 401 (a) shall not be exempt from taxation under section 501 (a) "if it has engaged in a prohibited transaction after March 1, 1954." "Prohibited transation" is defined, in subparagraphs (1) and (6), respectively, of sections 503 (c) of the Code, as a transaction in which such a trust lends any part of its income or corpus to its creator without the receipt of adequate security and a reasonable rate of interest, or which results in a substantial diversion of its income or corpus to the creator of the trust. In addition, an employees' trust is not exempt under section 401 (a) unless "it is impossible *** for any part of the corpus or income to be *** used for, or diverted to, purposes other than for the exclusive benefit of his [the employer's] employees or their beneficiaries." However, section 503, as made applicable to pension, profit-sharing, and stock bonus trusts which are qualified under section 401(a), was not directed against the maintenance of funds on deposit in an ordinary checking account, in the bank creating the trust, during the interim period period to reasonably prompt disbursement for investment or other purposes which are themselves consistent with exemption of the trust concerned. Accordingly, it is held that the deposit of funds of an exempt employees' trust, in a checking account with the employer-grantor bank, will not constitute a "prohibited transaction" within the purview of section 503 (c)(1) of the Code. Nor will the deposit of funds in such a checking account, during the interim described above, be held to violate the provisions of section 401(a) or section 503 (c) (6) of the Code. SECTION 641.-IMPOSITION OF TAX [ESTATES, TRUSTS, BENEFICIARIES, AND DECEDENTS] 26 CFR 1.641 (b)-1 Computation and payment of tax; deductions and credits of estates and trusts. Rev. Rul. 59-30 Where a contract is entered into between a cemetery corporation and a local bank, designating the bank as trustee, to provided for perpetual care of cemetery lots through the creation of a perpetual care fund, the agreement is considered a trust instrument within the meaning of section 641 of the Internal Revenue Code of 1954. Since the income of the trust is used for the general care of all of the lots and the general care of the cemetery, the trust is taxable as a single trust. |