26 U.S.C. § 4947 — Application of taxes to certain nonexempt

Page 3038 TITLE 26—INTERNAL REVENUE CODE § 4947 Dec. 31, 1977, in and for taxable years beginning after such date, see section 4(f) of Pub. L. 95–227, set out as an Effective Date note under section 192 of this title. § 4947. Application of taxes to certain nonexempt trusts (a) Application of tax (1) Charitable trusts For purposes of part II of subchapter F of chapter 1 (other than section 508(a), (b), and (c)) and for purposes of this chapter, a trust which is not exempt from taxation under sec- tion 501(a), all of the unexpired interests in which are devoted to one or more of the pur- poses described in section 170(c)(2)(B), and for which a deduction was allowed under section 170, 545(b)(2), 642(c), 2055, 2106(a)(2), or 2522 (or the corresponding provisions of prior law), shall be treated as an organization described in section 501(c)(3). For purposes of section 509(a)(3)(A), such a trust shall be treated as if organized on the day on which it first becomes subject to this paragraph. (2) Split-interest trusts In the case of a trust which is not exempt from tax under section 501(a), not all of the unexpired interests in which are devoted to one or more of the purposes described in sec- tion 170(c)(2)(B), and which has amounts in trust for which a deduction was allowed under section 170, 545(b)(2), 642(c), 2055, 2106(a)(2), or 2522, section 507 (relating to termination of private foundation status), section 508(e) (re- lating to governing instruments) to the extent applicable to a trust described in this para- graph, section 4941 (relating to taxes on self- dealing), section 4943 (relating to taxes on ex- cess business holdings) except as provided in subsection (b)(3), section 4944 (relating to in- vestments which jeopardize charitable pur- pose) except as provided in subsection (b)(3), and section 4945 (relating to taxes on taxable expenditures) shall apply as if such trust were a private foundation. This paragraph shall not apply with respect to— (A) any amounts payable under the terms of such trust to income beneficiaries, unless a deduction was allowed under section 170(f)(2)(B), 2055(e)(2)(B), or 2522(c)(2)(B), (B) any amounts in trust other than amounts for which a deduction was allowed under section 170, 545(b)(2), 642(c), 2055, 2106(a)(2), or 2522, if such other amounts are segregated from amounts for which no de- duction was allowable, or (C) any amounts transferred in trust be- fore May 27, 1969. (3) Segregated amounts For purposes of paragraph (2)(B), a trust with respect to which amounts are segregated shall separately account for the various in- come, deduction, and other items properly at- tributable to each of such segregated amounts. (b) Special rules (1) Regulations The Secretary shall prescribe such regula- tions as may be necessary to carry out the purposes of this section. (2) Limit to segregated amounts If any amounts in the trust are segregated within the meaning of subsection (a)(2)(B) of this section, the value of the net assets for purposes of subsections (c)(2) and (g) of section 507 shall be limited to such segregated amounts. (3) Sections 4943 and 4944 Sections 4943 and 4944 shall not apply to a trust which is described in subsection (a)(2) if— (A) all the income interest (and none of the remainder interest) of such trust is de- voted solely to one or more of the purposes described in section 170(c)(2)(B), and all amounts in such trust for which a deduction was allowed under section 170, 545(b)(2), 642(c), 2055, 2106(a)(2), or 2522 have an aggre- gate value not more than 60 percent of the aggregate fair market value of all amounts in such trusts, or (B) a deduction was allowed under section 170, 545(b)(2), 642(c), 2055, 2106(a)(2), or 2522 for amounts payable under the terms of such trust to every remainder beneficiary but not to any income beneficiary. (4) Section 507 The provisions of section 507(a) shall not apply to a trust which is described in sub- section (a)(2) by reason of a distribution of qualified employer securities (as defined in section 664(g)(4)) to an employee stock owner- ship plan (as defined in section 4975(e)(7)) in a qualified gratuitous transfer (as defined by section 664(g)). (Added Pub. L. 91–172, title I, § 101(b), Dec. 30, 1969, 83 Stat. 517; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 105–34, title XV, § 1530(c)(9), Aug. 5, 1997, 111 Stat. 1079; Pub. L. 107–16, title V, § 542(e)(4), June 7, 2001, 115 Stat. 85; Pub. L. 108–357, title IV, § 413(c)(30), Oct. 22, 2004, 118 Stat. 1509; Pub. L. 111–312, title III, § 301(a), Dec. 17, 2010, 124 Stat. 3300.) Editorial Notes AMENDMENTS 2010—Subsec. (a)(2)(A). Pub. L. 111–312 amended sub- sec. (a)(2)(A) to read as if amendment by Pub. L. 107–16, § 542(e)(4), had never been enacted. See 2001 Amendment note below. 2004—Subsecs. (a)(1), (2), (b)(3). Pub. L. 108–357 struck out ‘‘556(b)(2),’’ after ‘‘545(b)(2),’’ wherever appearing. 2001—Subsec. (a)(2)(A). Pub. L. 107–16, § 542(e)(4), in- serted ‘‘642(c),’’ after ‘‘170(f)(2)(B),’’. 1997—Subsec. (b)(4). Pub. L. 105–34 added par. (4). 1976—Subsec. (b)(1). Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–312 applicable to estates of decedents dying, and transfers made after Dec. 31, 2009, except as otherwise provided, see section 301(e) of Pub. L. 111–312, set out as an Effective and Termination Dates of 2010 Amendment note under section 121 of this title. EFFECTIVE DATE OF 2004 AMENDMENT Amendment by Pub. L. 108–357 applicable to taxable years of foreign corporations beginning after Dec. 31, Page 3039 TITLE 26—INTERNAL REVENUE CODE § 4951 2004, and to taxable years of United States shareholders with or within which such taxable years of foreign cor- porations end, see section 413(d)(1) of Pub. L. 108–357, set out as an Effective and Termination Dates of 2004 Amendments note under section 1 of this title. EFFECTIVE DATE OF 2001 AMENDMENT Amendment by Pub. L. 107–16 applicable to deduc- tions for taxable years beginning after Dec. 31, 2009, see section 542(f)(3) of Pub. L. 107–16, set out as a note under section 121 of this title. EFFECTIVE DATE OF 1997 AMENDMENT Amendment by Pub. L. 105–34 applicable to transfers made by trusts to, or for the use of, an employee stock ownership plan after Aug. 5, 1997, see section 1530(d) of Pub. L. 105–34, set out as a note under section 401 of this title. § 4948. Application of taxes and denial of exemp- tion with respect to certain foreign organiza- tions (a) Tax on income of certain foreign organiza- tions In lieu of the tax imposed by section 4940, there is hereby imposed for each taxable year on the gross investment income (within the mean- ing of section 4940(c)(2)) derived from sources within the United States (within the meaning of section 861) by every foreign organization which is a private foundation for the taxable year a tax equal to 4 percent of such income. (b) Certain sections inapplicable Section 507 (relating to termination of private foundation status), section 508 (relating to spe- cial rules with respect to section 501(c)(3) orga- nizations), and this chapter (other than this sec- tion) shall not apply to any foreign organization which has received substantially all of its sup- port (other than gross investment income) from sources outside the United States. (c) Denial of exemption to foreign organizations engaged in prohibited transactions (1) General rule A foreign organization described in sub- section (b) shall not be exempt from taxation under section 501(a) if it has engaged in a pro- hibited transaction after December 31, 1969. (2) Prohibited transactions For purposes of this subsection, the term ‘‘prohibited transaction’’ means any act or failure to act (other than with respect to sec- tion 4942(e)) which would subject a foreign or- ganization described in subsection (b), or a dis- qualified person (as defined in section 4946) with respect thereto, to liability for a penalty under section 6684 or a tax under section 507 if such foreign organization were a domestic or- ganization. (3) Taxable years affected (A) Except as provided in subparagraph (B), a foreign organization described in subsection (b) shall be denied exemption from taxation under section 501(a) by reason of paragraph (1) for all taxable years beginning with the tax- able year during which it is notified by the Secretary that it has engaged in a prohibited transaction. The Secretary shall publish such notice in the Federal Register on the day on which he so notifies such foreign organization. (B) Under regulations prescribed by the Sec- retary, any foreign organization described in subsection (b) which is denied exemption from taxation under section 501(a) by reason of paragraph (1) may, with respect to the second taxable year following the taxable year in which notice is given under subparagraph (A) (or any taxable year thereafter), file claim for exemption from taxation under section 501(a). If the Secretary is satisfied that such organi- zation will not knowingly again engage in a prohibited transaction, such organization shall not, with respect to taxable years begin- ning with the taxable year with respect to which such claim is filed, be denied exemption from taxation under section 501(a) by reason of any prohibited transaction which was engaged in before the date on which such notice was given under subparagraph (A). (4) Disallowance of certain charitable deduc- tions No gift or bequest shall be allowed as a de- duction under section 170, 545(b)(2), 642(c), 2055, 2106(a)(2), or 2522, if made— (A) to a foreign organization described in subsection (b) after the date on which the Secretary publishes notice under paragraph (3)(A) that he has notified such organization that it has engaged in a prohibited trans- action, and (B) in a taxable year of such organization for which it is not exempt from taxation under section 501(a) by reason of paragraph (1). (Added Pub. L. 91–172, title I, § 101(b), Dec. 30, 1969, 83 Stat. 518; amended Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 108–357, title IV, § 413(c)(30), Oct. 22, 2004, 118 Stat. 1509.) Editorial Notes AMENDMENTS 2004—Subsec. (c)(4). Pub. L. 108–357 struck out ‘‘556(b)(2),’’ after ‘‘545(b)(2),’’ in introductory provisions. 1976—Subsec. (c). Pub. L. 94–455 struck out ‘‘or his delegate’’ after ‘‘Secretary’’ wherever appearing. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2004 AMENDMENT Amendment by Pub. L. 108–357 applicable to taxable years of foreign corporations beginning after Dec. 31, 2004, and to taxable years of United States shareholders with or within which such taxable years of foreign cor- porations end, see section 413(d)(1) of Pub. L. 108–357, set out as an Effective and Termination Dates of 2004 Amendments note under section 1 of this title. Subchapter B—Black Lung Benefit Trusts Sec. 4951. Taxes on self-dealing. 4952. Taxes on taxable expenditures. 4953. Tax on excess contributions to black lung benefit trusts. § 4951. Taxes on self-dealing (a) Initial taxes (1) On self-dealer There is hereby imposed a tax on each act of self-dealing between a disqualified person and