Sec. 219, RA of 1950, amended the first sentence of Sec. 143 (c), IRC, to read as follows:

"Every person required to deduct and withhold any tax under this section shall, on or before March 15 of each year, make return thereof and pay the tax to the collector desigrated in section 53 (b)."

Sec. 301(c)(4), RA of 1950, amended Sec. 143, IRC, by adding the following

"(h) WITHHOLDING ON CERTAIN FOREIGN TAX-EXEMPT ORGANIZATIONS.-In the case of income of a foreign organization subject to the tax imposed by section 421 (a), the provisions of this section and section 144 shall apply to rents includible under section 422 in computing its unrelated business net income, but only to the extent and subject to such conditions as may be provided under regulations prescribed by the Secretary.'

Sec. 303, RA of 1950, makes amendment
applicable to taxable years beginning
after Dec. 31, 1950, and also provides:
The determination as to whether an
organization is exempt under section 101
of the Internal Revenue Code from taxa-
tion for any taxable year beginning
before January 1, 1951, shall be made
as if section 301 (b) of this Act had
not been enacted and without inferences
drawn from the fact that the amendment
made by such section is not expressly
made applicable with respect to taxable
years beginning before January 1, 1951.

SECTION 145(e) - NEW.

Sec. 1, Pub. Law 907, approved January 2, 1950, amended Sec. 145, IRC, by relettering subsection (e) as subsection (f) and by adding after subsection (d) the following new subsection:

entence

1 any tar

ear, make

in section

"(e) In the case of taxable years beginning prior to October 1, 1950, and ending after September 30, 1950, the penalties prescribed by this section shall not be applicable if the taxpayer failed to meet the requirements of section 294(d)(2) (relating to substantial underestimate of estimated tax), by reason of the increase in normal tax and surtax on individuals imposed by section 101 of the Revenue Act of 1950."

Sec. 341(a), RA of 1950, amended Supplement D of Chapter 1 by adding at the end thereof the following new section:

“SEC. 153. INFORMATION REQUIRED FROM CERTAIN TAX-EXEMPT
ORGANIZATIONS AND CERTAIN TRUSTS.

"(a) CERTAIN TAX-EXEMPT ORGANIZATIONS.-Every organization
described in section 101 (6) which is subject to the requirements of
section 54 (f) shall furnish annually information, at such time and in
such manner as the Secretary may by regulations prescribe, setting
forth-

"(1) its gross income for the year,

"(2) its expenses attributable to such income and incurred within the year,

"(3) its disbursements out of income within the year for the purposes for which it is exempt,

"74) its accumulation of income within the year,

"(5) its aggregate accumulations of income at the beginning of the year,

"(6) its disbursements out of principal in the current and prior years for the purposes for which it is exempt, and

"(7) a balance sheet showing its assets, liabilities and net worth as of the beginning of such year.

"(b) TRUSTS CLAIMING CHARITABLE, ETC., DEDUCTIONS UNDER SECTION 162 (a).-Every trust claiming a charitable, etc., deduction under section 162 (a) for the taxable year shall furnish information with respect to such taxable year, at such time and in such manner as the Secretary may by regulations prescribe, setting forth

"(1) the amount of the charitable, etc., deduction taken under section 162 (a) within such year (showing separately the amount of such deduction which was paid out and the amount which was permanently set aside for charitable, etc., purposes during such year),

"(2) the amount paid out within such year which represents amounts for which charitable, etc., deductions under section 162 (a) have been taken in prior years,

"(3) the amount for which charitable, etc., deductions have been taken in prior years but which has not been paid out at the beginning of such year,

(4) the amount paid out of principal in the current and prior years for charitable, etc., purposes,

"(5) the total income of the trust within such year and the expenses attributable thereto, and

(6) a balance sheet showing the assets, liabilities, and net worth of the trust as of the beginning of such year.

"(c) INFORMATION AVAILABLE TO THE PUBLIC.-The information required to be furnished by subsections (a) and (b), together with the names and addresses of such organizations and trusts, shall be made available to the public at such times and in such places as the Secretary may prescribe.

(d) PENALTIES.-In the case of a willful failure to furnish the information required under this section, the penalties provided in section 145 (a) shall be applicable."

Sec. 341(b), RA of 1950, makes amendment applicable to taxable years beginning after Dec. 31, 1949.

Sec. 208(d)(7), Social Security Act Amendments of 1950, amended Sec. 161(a), IRC, by inserting immediately after the words "The taxes imposed by this chapter" the following:

"(other than the tax imposed by subchapter E, relating to tax on self-employment income)".

Sec. 321(b), RA of 1950, amended Sec. 162(a), IRC,

by striking out

"Subject to the provisions of subsection (g), there shall be allowed as a deduction".

Sec. 321(a), RA of 1950, amended Sec. 162, IRC, by

adding at the end thereof the following:

'AX LAWS

1950 POCKET SUPPLEMENT

51

'(g) RULES FOR APPLICATION OF SUBSECTION (a) IN THE CASE OF TRUSTS.

"(1) TRADE OR BUSINESS INCOME.-In computing the deduction allowable under subsection (a) to a trust for any taxable year beginning after December 31, 1950, no amount otherwise allowable under subsection (a) as a deduction shall be allowed as a deduction with respect to income of the taxable year which is allocable to its Supplement U business income for such year. As used in this paragraph the term 'Supplement U business income' means an amount equal to the amount which, if such trusts were exempt under section 101 (6) from taxation, would be computed as its unrelated business net income under section 422 (relating to income derived from certain business activities and from certain leases).

"(2) OPERATIONS OF TRUSTS.

"(A) LIMITATION ON CHARITABLE, ETC., DEDUCTION.-The amount otherwise allowable under subsection (a) as a deduction shall not exceed 15 per centum of the net income of the trust (computed without the benefit of subsection (a)) if the trust has engaged in a prohibited transaction, as defined in subparagraph (B) of this paragraph.

"(B) PROHIBITED TRANSACTIONS.-For the purposes of this paragraph the term 'prohibited transaction' means any transaction after July 1, 1950, in which any trust while holding income or corpus which has been permanently set aside or is to be used exclusively for charitable or other purposes described in subsection (a)—

"(i) lends any part of such income or corpus, without receipt of adequate security and a reasonable rate of interest, to;

"(ii) pays any compensation from such income or corpus, in excess of a reasonable allowance for salaries or other compensation for personal services actually rendered, to;

"(iii) makes any part of its services available on a preferential basis to;

"(iv) uses such income or corpus to make any substantial purchase of securities or any other property, for more than an adequate consideration in money or money's worth, from;

"(v) sells any substantial part of the securities or other property comprising such income or corpus, for less than an adequate consideration in money or money's worth, to; or

"(vi) engages in any other transaction which results in a substantial diversion of such income or corpus to; the creator of such trust; any person who has made a substantial contribution to such trust; a member of the family (as defined in section 24 (b) (2) (D)) of an individual who is the creator of the trust or who has made a substantial contribution to the trust; or a corporation controlled by any such creator or person through the ownership, directly or indirectly, of 50 per centum or more of the total combined voting

power of all classes of stock entitled to vote or 50 per centum or more of the total value of shares of all classes of stock of the corporation.

"(C) TAXABLE YEARS AFFECTED.-The amount otherwise allowable under subsection (a) as a deduction shall be limited as provided in subparagraph (A) only for taxable years subsequent to the taxable year during which the trust is notified by the Secretary that it has engaged in such transaction, unless such trust entered into such prohibited transaction with the purpose of diverting such corpus or income from the purposes described in subsection (a), and such transaction involved a substantial part of such corpus or income.

"(D) FUTURE CHARITABLE, ETC., DEDUCTIONS OF TRUSTS DENIED DEDUCTION UNDER SUBPARAGRAPH (C).-If the deduction of any trust under subsection (a) has been limited as provided in this paragraph, such trust, with respect to any taxable year following the taxable year in which notice is received of limitation of deduction under subsection (a), may, under regulations prescribed by the Secretary, file claim for the allowance of the unlimited deduction under subsection (a), and if the Secretary, pursuant to such regulations, is satisfied that such trust will not knowingly again engage in a prohibited transaction, the limitation provided in subparagraph (A) shall not be applicable with respect to taxable years subsequent to the year in which such claim is filed.

"(E) DISALLOWANCE OF CERTAIN CHARITABLE, ETC., DEDUCTIONS.-No gift or bequest for religious, charitable, scientific, literary, or educational purposes (including the encouragement of art and the prevention of cruelty to children or animals), otherwise allowable as a deduction under section 23 (o) (2), 23 (q) (2), 162 (a), 505 (a) (2), 812 (d), 861 (a) (3), 1004 (a) (2) (B), or 1004 (b) (2) or (3), shall be allowed as a deduction if made in trust and, in the taxable year of the trust in which the gift or bequest is made, the deduction allowed the trust under subsection (a) is limited by subparagraph (A). With respect to any taxable year of a trust in which such deduction has been so limited by reason of entering into a prohibited transaction with the purpose of diverting such corpus or income from the purposes described in subsection (a), and such transaction involved a substantial part of such income or corpus, and which taxable year is the same, or prior to the, taxable year of the trust in which such prohibited transaction occurred, such deduction shall be disallowed the donor only if such donor or (if such donor is an individual) any member of his family (as defined in section 24 (b) (2) (D)) was a party to such prohibited transaction.

"(F) DEFINITION.-For the purposes of this paragraph the term 'gift or bequest' means any gift, contribution, bequest, devise, legacy, or transfer.