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"(3) CROSS REFERENCE. For disallowance of certain charitable, etc., deductions otherwise allowable under subsection (a), see section 3813.

"(4) ACCUMULATED INCOME.-If the amounts permanently set aside, or to be used exclusively, for the charitable and other purposes described in subsection (a) during the taxable year or any prior taxable year and not actually paid out by the end of the taxable year

"(A) are unreasonable in amount or duration in order to carry out such purposes of the trust; or

"(B) are used to a substantial degree for purposes other than those described in subsection (a); or

"(C) are invested in such a manner as to jeopardize the interests of the religious, charitable, scientific, etc., beneficiaries,

the amount otherwise allowable under subsection (a) as a deduction shall be limited to the amount actually paid out during the taxable year and shall not exceed 15 per centum of the net income of the trust (computed without the benefit of subsection (a))."

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Sec. 121(g) (3), RA of 1950, amended Sec. 201(a)(1), IRC, by striking out

"at the rates provided in section 13 or section 14 (b) and in section 15 (b)"

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"computed as provided in section 13 (b) and in section 15 (b)",

and by making said amendment applicable to taxable years beginning after June 30, 1950, and to taxable years beginning on January 1, 1950 and ending on December 31, 1950.

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Sec. 401(a), RA of 1950, amended the second sentence of Sec. 202(b), IRC, to read as follows:

"This

figure shall be based on such data with respect to life insurance companies for the preceding taxable year as the Secretary considers representative and shall be computed as follows:

"(1) IN GENERAL.-Except as provided in paragraph (2), the figure shall be computed in accordance with the following formula: The ratio which a numerator comprised of the aggregate of the sums of (A) 2 per centum of the reserves for deferred dividends, (B) interest paid, and (C) the product of (i) the mean of the adjusted reserves at the beginning and end of the taxable year and (ii) the reserve earnings rate bears to a denominator comprised of the aggregate of the excess of net incomes computed without any deduction for tax-free interest, over the adjustment for certain reserves provided in subsection (c).

"(2) SPECIAL RULE FOR 1949 AND 1950.-In the case of the taxes imposed for a taxable year beginning in 1949 or 1950, the figure to be used for such year shall be computed as provided in paragraph (1) except that

"(A) in computing the product required under clause (C) of paragraph (1), there shall be used, in lieu of the reserve earnings rate, the average rate of interest assumed in computing life insurance reserves. Such average rate shall be calculated in the manner provided in the second sentence of section 201 (c) (4); and)

"(B) if the Secretary, in computing the ratio, finds that the net effect of including the data with respect to any life insurance company is to increase the numerator more than it increases the denominator, he shall limit the net change in the numerator resulting from such inclusion to the net change in the denominator resulting therefrom."

Sec. 401(c), RA of 1950, makes amendment applicable to taxable years beginning after Dec. 31, 1948, and provides further: The Secretary of the Treasury shall, within sixty days after the date of the enactment of this Act, determine and proclaim in accordance with the provisions of section 202 (b) of the Internal Revenue Code, as amended by this section, the figures to be used by life insurance companies in computing their reserve and other policy liability credits for taxable years beginning in 1949.

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Sec. 401(b), RA of 1950, amended Sec. 203(b), IRC, by striking out "figure" and inserting in lieu thereof "applicable figure".

For effective date, see note following
Sec. 202(b), IRC, supra.

#Sec. 402, RA of 1950, reads as follows:

SEC. 402. FILING OF RETURNS FOR TAXABLE YEAR 1949.

Every life insurance company subject to the taxes imposed by section 201 of the Internal Revenue Code shall, after the date of the Secretary's proclamation required by section 401 (c) of this Act and on or before the 15th day of the third month following the close of the month in which this Act is enacted, make a return for its taxable year beginning in 1949 with respect to the taxes imposed by such section 201 (determined with the amendments made by section 401 of this Act). The return required by this section for such taxable year shall constitute the return for such taxable year for all purposes of the Internal Revenue Code; and no return for such taxable year, with respect to the taxes imposed by section 201 of such code, filed on or before the date of such proclamation shall be considered for any of such purposes as a return for such year. The taxes imposed by section 201 of such code (determined with the amendments made by section 401 of this Act) for such taxable year shall be paid on the 15th day of the third month following the close of the month in which this Act is enacted, in lieu of at the time prescribed in section 56 (a) of such code. All payments with respect to the taxes for such taxable year imposed by section 201 of such code under the law in effect prior to the enactment of this Act, to the extent that such payments have not been credited or refunded, shall be deemed to be payments made at the time of the filing of the return required by this section on account of the taxes for that year determined with the amendments made by section 401 of this Act.

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Sec. 121(g) (4), RA of 1950, amended Sec. 204 (a) (1), IRC, by striking out

"at the rates specified in section 13 or section 14(b) and in section 15(b)"

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"computed as provided in section 13(b) and in section 15(b)",

and by making amendment applicable to taxable years beginning after June 30, 1950, and to taxable years beginning on January 1, 1950 and ending on December 31, 1950.

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Sec. 121(d) (1), RA of 1950, amended Sec. 207(a) (1), IRC, to read as follows:

"(A) Taxable Years Beginning After June 30, 1950.-In the case of taxable years beginning after June 30, 1950—

"(i) Normal Tax.-A normal tax on the normal-tax net income, computed at the rate provided in section 13 (b) (1), or 50 per centum of the amount by which the normal-tax net income exceeds $3,000, whichever is the lesser; plus

"(ii) Surtax.-A surtax on the corporation surtax net income, computed as provided in section 15 (b) (1). "(B) Calendar Year 1950.-In the case of a taxable year beginning on January 1, 1950, and ending on December 31, 1950

"(i) Normal Tax.-A normal tax on the normal-tax net income, computed at the rate provided in section 13 (b) (2), or 46 per centum of the amount by which the normal-tax net income exceeds $3,000, whichever is the lesser; plus

"(ii) Surtax.-A surtax on the corporation surtax net income, computed as provided in section 15 (b) (2).”

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"(A) Taxable Years Beginning After June 30, 1950.-In the case of taxable years beginning after June 30, 1950

"(i) Normal tax.-A normal tax on the normal-tax net income, computed at the rate provided in section 13 (b) (1), or 50 per centum of the amount by which the normaltax net income exceeds $50,000, whichever is the lesser; plus

"(ii) Surtax.-A surtax on the corporation surtax net income, computed as provided in section 15 (b) (1), or 30 per centum of the amount by which the corporation surtax net income exceeds $50,000, whichever is the lesser. "(B) Calendar Year 1950.-In the case of a taxable year beginning on January 1, 1950, and ending on December 31,

1950

"(i) Normal tax.-A normal tax on the normal-tax net income, computed at the rate provided in section 13 (b) (2), or 46 per centum of the amount by which the normal-tax net income exceeds $50,000, whichever is the lesser; plus

"(ii) Surtax.-A surtax on the corporation surtax net income, in an amount computed as provided in section 15 (b) (2), or in an amount equal to one and one-half times the surtax which would be computed under section 15 (b) (2) if the corporation surtax net income were reduced by $25,000, whichever amount is the lesser."

Sec. 121(d) (3), RA of 1950, makes amendment applicable to taxable years beginning after June 30, 1950 and to taxable years beginning on January 1, 1950 and ending on December 31, 1950.

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