181
an organization described in the same clause of sec-
tion 101(b)(1)(A).
‘‘(c) CHARITY.—For purposes of determining the de-
ductibility of a philanthropic transfer, ‘charitable contribu-
tion’ means a contribution or gift for the use of—
‘‘(1) A State, a possession of the United States,
or any political subdivision of any of the foregoing,
or the United States or the District of Columbia,
but only if the contribution or gift is made for exclu-
sively public purposes.
‘‘(2) A corporation, trust, or community chest,
fund, or foundation—
‘‘(A) created or organized in the United
States or in any possession thereof, or under
the law of the United States, any State, the
District of Columbia, or any possession of the
United States;
‘‘(B) organized and operated exclusively
for religious, charitable, scientific, literary, or
educational purposes (but only if no part of its
activities involve the provision of athletic facili-
ties or equipment) or for the prevention of cru-
elty to children or animals,
182
‘‘(C) no part of the net earnings of which
inures to the benefit of any private shareholder
or individual, and
‘‘(D) which qualifies for exemption from
the business tax under section 253(c) and is not
disqualified for tax exemption by reason of at-
tempting to influence legislation, and which
does not participate in, or intervene in (includ-
ing the publishing or distributing of state-
ments), any political campaign on behalf of (or
in opposition to) any candidate for public office.
‘‘(3) [intentionally deleted]
‘‘(4) In the case of a contribution or gift by an
individual, a domestic fraternal society, order, or as-
sociation, operating under the lodge system, but only
if such contribution or gift is to be used exclusively
for religious, charitable, scientific, literary, or edu-
cational purposes, or for the prevention of cruelty to
children or animals.
‘‘(5) A cemetery company owned and operated
exclusively for the benefit of its members, or any
corporation chartered solely for burial purposes as a
cemetery corporation and not permitted by its char-
ter to engage in any business not necessarily inci-
dent to that purpose, if such company or corporation
183
is not operated for profit and no part of the net
earnings of such company or corporation inures to
the benefit of any private shareholder or individual.
‘‘(d) RULES FOR SUBSECTION (c).—
‘‘(1) LIMITATIONS.—A contribution or gift by a
corporation to a trust, chest, fund, or foundation
shall be deductible by reason of subsection (c)(2)(B)
only if it is to be used within the United States or
any of its possessions exclusively for purposes speci-
fied in subparagraph (B).
‘‘(2) REFERENCES.—Any reference in other law
or in legal documents to an organization described
in a paragraph of section 170(c) of the Internal Rev-
enue Code of 1986 shall constitute a reference to an
organization described in the same paragraph num-
ber of section 101(c) if an organization is described
in such paragraph.
‘‘(e) QUALIFIED CONSERVATION CONTRIBUTION.—
‘‘(1) IN GENERAL.—‘Qualified conservation con-
tribution’ means a contribution—
‘‘(A) of a qualified real property interest,
‘‘(B) to a qualified organization,
‘‘(C) exclusively for conservation purposes.
184
‘‘(2) QUALIFIED REAL PROPERTY INTEREST.—
‘Qualified real property interest’ means any of the
following interests in real property:
‘‘(A) the entire interest of the donor other
than a qualified mineral interest,
‘‘(B) a remainder interest, and
‘‘(C) a restriction (granted in perpetuity)
on the use which may be made of the real prop-
erty.
‘‘(3) QUALIFIED ORGANIZATION.—For purposes
of paragraph (1), the term ‘qualified organization’
means an organization which—
‘‘(A) is described in clause (v) or (vi) of
subsection (b)(1)(A), or
‘‘(B) is described in section 253(c)(3)
and—
‘‘(i) meets the requirements of section
102(a)(2), or
‘‘(ii) meets the requirements of sec-
tion 102(a)(3) and is controlled by an or-
ganization described in subparagraph (A)
or in clause (i) of this subparagraph.
‘‘(4) CONSERVATION PURPOSE DEFINED.—
185
‘‘(A) IN GENERAL.—For purposes of this
subsection, the term ‘conservation purpose’
means—
‘‘(i) the preservation of land areas for
outdoor recreation by, or the education of,
the general public,
‘‘(ii) the protection of a relatively nat-
ural habitat of fish, wildlife, or plants, or
similar ecosystem,
‘‘(iii) the preservation of open space
(including farmland and forest land) where
such preservation is—
‘‘(I) for the scenic enjoyment of
the general public, or
‘‘(II) pursuant to a clearly delin-
eated Federal, State, or local govern-
mental conservation policy, and will
yield a significant public benefit, or
‘‘(iv) the preservation of an histori-
cally important land area or a certified his-
toric structure.
‘‘(B) CERTIFIED HISTORIC STRUCTURE.—
For purposes of subparagraph (A)(iv), the term
‘certified historic structure’ means any building,
structure, or land area which—
186
‘‘(i) is listed in the National Register,
or
‘‘(ii) is located in a registered historic
district and is certified by the Secretary of
the Interior to the Secretary as being of
historic significance to the district.
A building, structure, or land area satisfies the
preceding sentence if it satisfies such sentence
either at the time of the transfer or on the due
date (including extensions) for filing the trans-
feror’s return under this chapter for the taxable
year in which the transfer is made.
‘‘(5) EXCLUSIVELY
FOR
CONSERVATION
PUR-
POSES.—For purposes of this subsection—
‘‘(A) CONSERVATION
PURPOSE
MUST
BE
PROTECTED.—A contribution shall not be treat-
ed as exclusively for conservation purposes un-
less the conservation purpose is protected in
perpetuity.
‘‘(B) NO SURFACE MINING PERMITTED.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), in the case of a con-
tribution of any interest where there is a
retention of a qualified mineral interest,
subparagraph (A) shall not be treated as
187
met if at any time there may be extraction
or removal of minerals by any surface min-
ing method.
‘‘(ii) SPECIAL RULE.—With respect to
any contribution of property in which the
ownership of the surface estate and min-
eral interests were separated before June
13, 1976, and remain so separated, sub-
paragraph (A) shall be treated as met if
the probability of surface mining occurring
on such property is so remote as to be neg-
ligible.
‘‘(6) QUALIFIED
MINERAL
INTEREST.—For
purposes of this subsection, the term ‘qualified min-
eral interest’ means—
‘‘(A) subsurface oil, gas, or other minerals,
and
‘‘(B) the right to access to such minerals.
‘‘(f) DENIAL OF DEDUCTION FOR CERTAIN TRAVEL
EXPENSES.—No deduction shall be allowed under section
211 for traveling expenses (including amounts expended
for meals and lodging) while away from home, whether
paid directly or by reimbursement, unless there is no sig-
nificant element of personal pleasure, recreation, or vaca-
tion in such travel.
188
‘‘(g) TREATMENT OF CERTAIN AMOUNTS PAID TO OR
FOR THE BENEFIT OF INSTITUTIONS OF HIGHER EDU-
CATION.—For purposes of section 11, if as the result of
a contribution to or for the benefit of an educational
organization—
‘‘(1) 
which 
is 
described 
in 
subsection
(b)(1)(A)(ii), and
‘‘(2) which is an institution of higher education
(as defined in section 3304(f))
the taxpayer receives (directly or indirectly) as a result
of paying such amount the right to purchase tickets for
seating at an athletic event in an athletic stadium of such
institution, 80 percent of such contribution shall be treat-
ed as a charitable contribution (but only if such amount
would be allowable as a deduction but for the fact that
the taxpayer received the right to purchase tickets). If any
portion of a payment is for the purchase of such tickets,
such portion and the remaining portion (if any) of such
payment shall be treated as separate amounts for purposes
of this subsection.
‘‘Subchapter F—Special Business Activities
‘‘Sec. 111. Rules for rental of real estate.
‘‘SEC. 111. RULES FOR RENTAL OF REAL ESTATE.
‘‘(a) IN GENERAL.—Except as provided in subsection
(b)—
189
‘‘(1) the activity of rental of real estate is a
business activity to which the Simplified USA Tax
for businesses under chapter 2 applies,
‘‘(2) a taxpayer shall not be entitled to any de-
ductions under this chapter with respect to rental
property, and
‘‘(3) a taxpayer shall recognize gross income
only with respect to distributions from the rental ac-
tivity.
‘‘(b) INSUBSTANTIAL RENTAL ACTIVITY.—
‘‘(1) NOT RENTAL PROPERTY.—If an individual
or individuals own property, such individual or indi-
viduals and their families use the property on more
than 14 days during the taxable year for nonbusi-
ness purposes, the property is rented for no more
than 14 days during the taxable year, and the total
rental received by the individuals with respect to
such property does not exceed $10,000, the property
shall not be considered rental property or used in
the activity of rental of real estate during the tax-
able year for purposes of subsection (a) and the
Simplified USA Tax for businesses under chapter 2.
‘‘(2) RENTS
FROM
NONRENTAL
PROPERTY.—
Any rent from property described in paragraph (1)
190
shall be included in gross income for purposes of the
Simplified USA Income Tax.
‘‘(c) USE FOR A NONBUSINESS PURPOSE.—For pur-
poses of this section, ‘use for a nonbusiness purpose’
means use other than—
‘‘(1) use for which fair rent is paid,
‘‘(2) use in connection with the preparation of
the property for rental, or
‘‘(3) use that serves a clear business purpose.
Use during any part of a day shall constitute use for that
day.
‘‘Subchapter G—Accounting Methods and
Periods
‘‘Sec. 121. Taxable year.
‘‘Sec. 122. Cash method of accounting; installment sales.
‘‘SEC. 121. TAXABLE YEAR.
‘‘(a) IN GENERAL.—The taxable year for all individ-
uals subject to tax under this chapter shall be the calendar
year except as provided in subsection (b).
‘‘(b) SHORT TAXABLE YEARS.—
‘‘(1) BIRTH.—An individual’s taxable year in
year of his birth shall begin on the date of his birth.
‘‘(2) DEATH.—An individual’s taxable year in
the year of his death shall end on the date of his
death.
191
‘‘SEC. 122. CASH METHOD OF ACCOUNTING; INSTALLMENT
SALES.
‘‘(a) IN GENERAL.—All individuals shall determine
their income and deductions using the cash receipts and
disbursement method.
‘‘(b) OID RULES.—
‘‘(1) IN
GENERAL.—Original issue discount
shall not be included in gross income until received.
‘‘(2) PREVIOUSLY RECOGNIZED OID.—Original
issue discount included in income under the Internal
Revenue Code of 1986 shall increase the adjusted
basis of the instrument to which the original issue
discount related and shall not again be included in
income when received.
‘‘(c) INSTALLMENT SALES.—
‘‘(1) IN GENERAL.—Taxpayers shall take into
account income from installment sales when re-
ceived.
‘‘(2) REGULATIONS.—The Secretary shall pro-
mulgate regulations implementing paragraph (1).
Such regulations shall generally follow the principles
of sections 453, 453A and 453B of the Internal Rev-
enue Code of 1986, except to the extent such prin-
ciples are inconsistent with other provisions of this
chapter.
192
‘‘(d) CONSTRUCTIVE
RECEIPT.—Income shall be
treated as received when constructively received.
‘‘(e) EFFECT OF CHANGE OF ACCOUNTING METH-
OD.—Rules similar to those under section 226 shall apply
to ensure that a taxpayer does not deduct the same ex-
pense twice or include the same item in income twice.
‘‘Subchapter H—Nonresident Aliens
‘‘Sec.
131.
Tax on nonresident alien individuals.
‘‘Sec.
132.
Tax treatment of certain community income of nonresident aliens.
‘‘SEC. 131. TAX ON NONRESIDENT ALIEN INDIVIDUALS.
‘‘(a) NONBUSINESS INCOME.—
‘‘(1) INCOME OTHER THAN CERTAIN GAINS.—
There is hereby imposed for each taxable year a tax
of 30 percent of the amount received from sources
within the United States by a nonresident alien indi-
vidual as—
‘‘(A) interest (other than portfolio interest
(as defined in subsection (b)(2)), deposit inter-
est (as defined in subsection (b)(3)) and origi-
nal issue discount, dividends, rents, salaries,
wages, premiums, annuities, compensations, re-
munerations, emoluments, and other fixed or
determinable annual periodical gains, profits
and income,
193
‘‘(B) gains from the disposal of timber,
coal, or iron ore with a retained economic inter-
est,
‘‘(C) in the case of the sale of an original
discount obligation or payment on an original
issue discount obligation, the interest accrued
while the individual was a nonresident alien,
and
‘‘(D) includible social security benefits (as
defined in section 3(b)(2)).
‘‘(2) CAPITAL GAINS OF CERTAIN ALIENS.—In
the case of a nonresident alien individual present in
the United States for a period or periods aggre-
gating 183 days or more during the taxable year,
there is hereby imposed a tax of 30 percent of the
amount by which the gains, derived from sources
within the United States, from the sale or exchange
at any time during such year exceeds his losses, allo-
cable to sources within the United States, from the
sale or exchange at any time during such year of
capital assets.
‘‘(3) TAX DOES NOT APPLY TO BUSINESS IN-
COME.—The taxes imposed by this section shall not
apply to the income of any business entity, except to
194
the extent such income is distributed as compensa-
tion, dividends, or interest.
‘‘(b) SPECIAL RULES AND DEFINITIONS.—
‘‘(1) CERTAIN ANNUITIES.—The taxes imposed
by subsection (a) shall not apply to any amount re-
ceived as an annuity under a qualified annuity plan
described in section 403(a)(1), or from a qualified
trust described in section 401(a) and exempt under
section 253(a) if—
‘‘(A) all of the personal services by reason
of which the annuity is payable were either—
‘‘(i) personal services performed out-
side the United States by an individual
who, at the time of performance of such
personal services, was a nonresident alien,
or
‘‘(ii) personal services by a non-
resident alien temporarily present in the
United States for a period or periods not
exceeding 90 days during a taxable year,
whose compensation for such services did
not exceed $3,000, and who performed
such services for—
‘‘(I) a nonresident alien indi-
vidual, foreign partnership, or foreign
195
corporation, not engaged in a trade or
business within the United States, or
‘‘(II) for an office or place of
business maintained in a foreign coun-
try or in a possession of the United
States by an individual who is a cit-
izen or resident of the United States
or by a domestic partnership or a do-
mestic corporation, and
‘‘(B) at the time the first amount is paid
as annuity under the annuity plan or by the
trust, 90 percent or more of the employees for
whom contributions or benefits are provided
under such plan are citizens or residents of the
United States.
‘‘(2) PORTFOLIO INTEREST.—
‘‘(A) IN
GENERAL.—‘Portfolio interest’
means—
‘‘(i) interest on obligations in reg-
istered form if the United States person
who would otherwise be required to with-
hold tax on such interest under section
1441(a) receives a statement that the ben-
eficial owner of the obligation is not a
United States person, and
196
‘‘(ii) interest on obligations in nonreg-
istered form if appropriate precautions are
taken to ensure that such obligations will
be sold only to persons who are not United
States persons and such interest is paid
outside the United States.
‘‘(B) EXCEPTIONS.—Under rules to be
prescribed by the Secretary, portfolio interest
does not include—
‘‘(i) interest received by a 10-percent
equity owner, or
‘‘(ii) contingent interest.
‘‘(3) DEPOSIT
INTEREST.—‘Deposit interest’
means interest on deposits which are—
‘‘(A) deposits with persons carrying on a
banking business (including savings and loans),
and
‘‘(B) amounts held by an insurance com-
pany under an agreement to pay interest there-
on.
‘‘(4) OTHER EXCEPTIONS.—The taxes imposed
by subsection (a) shall not apply to—
‘‘(A) a percentage of any dividend paid by
a business entity, 80 percent of whose gross re-
ceipts are not taken into account under chapter
197
1 because they are from outside the United
States, equal to the percentage of gross receipts
not so taken into account,
‘‘(B) gambling winnings (except to the ex-
tent that the Secretary determines by regula-
tion that the collection of the tax is administra-
tively feasible),
‘‘(C) compensation paid by a foreign em-
ployer to a nonresident alien individual for the
period he is temporarily present in the United
States as a nonimmigrant under subparagraph
(F) or (J) of section 101(a)(15) of the Immi-
gration and Nationality Act, as amended,
‘‘(D) interest from a series E or series H
savings bond if the individual acquired the bond
while a resident of the Ryuku Islands or the
Trust Territory of the Pacific Islands, or
‘‘(E) amounts earned or payable to any
person who is a bona fide resident of Puerto
Rico, Guam, American Samoa, or the Northern
Mariana Islands (and, therefore, is subject to
the tax imposed by subchapter A).
‘‘(c) EXPATRIATION TO AVOID TAX.—
‘‘(1) IN GENERAL.—A nonresident alien indi-
vidual who at any time within the 10-year period im-
198
mediately preceding the close of the taxable year lost
United States citizenship shall be taxable in the
manner described in paragraph (2) unless none of
the principal purposes of losing citizenship was
avoidance of tax under subchapter A or subtitle B.
‘‘(2) ALTERNATIVE TAX.—A nonresident alien
individual described in paragraph (1) shall be sub-
ject to tax on the items taxable under subsection (a)
as determined without regard to exceptions listed or
based on definitions contained in subsection (b)
using the rate schedule for single individuals under
section 215. If the taxes determined under sub-
section (a) are greater than the tax determined
under this subsection, the greater tax shall apply.
‘‘SEC. 132. TAX TREATMENT OF CERTAIN COMMUNITY IN-
COME OF NONRESIDENT ALIENS.
‘‘(a) GENERAL RULE.—In the case of a married cou-
ple one or both of whom are nonresident alien individuals
and who have community income for the taxable year,
such community income shall be treated as follows:
‘‘(1) Compensation income shall be treated as
income of the spouse who rendered the services,
‘‘(2) Partnership distributions shall be treated
as the related distributive shares of partnership in-
come would be treated under section 1402(a)(5),
199
‘‘(3) Community income which is derived from
the separate property of a spouse shall be treated as
income of that spouse, and
‘‘(4) All other such community income shall be
treated as provided in the applicable community
property law.
‘‘(b) EXCEPTION WHERE ELECTION UNDER SEC-
TION 6013(g) IS IN EFFECT.—Subsection (a) shall not
apply if an election under subsection (g) or (h) of section
6013 (relating to election to treat nonresident alien indi-
viduals as residents of the United States) is in effect.
‘‘SEC. 133. RELATIONSHIP WITH TREATIES.
‘‘(a) STATEMENT OF POLICY.—It is the intention of
the USA Tax Code to promote a worldwide tax system
in which each nation taxes—
‘‘(1) under an individual tax, only the income of
individuals who are residents or citizens of that na-
tion, and
‘‘(2) under a business tax only the business ac-
tivity in such nation.
‘‘(b) EFFECT OF TREATIES.—No tax shall be im-
posed under section 131(a) on income that is exempt from
tax by reason of a treaty between the nation of which the
nonresident alien is a citizen or resident and the United
States. If any such treaty requires that a lower rate of
200
tax be imposed on some or all of the items of income sub-
ject to tax under section 331(a), such lower rate shall
apply to such items in the case of persons to whom such
treaty applies.
‘‘(c) EFFECT OF UNILATERAL ACTION BY FOREIGN
NATION.—No tax shall be imposed under section 331(a)
on nonresident aliens who are citizens or residents of an-
other nation if—
‘‘(1) such nation exempts from its income and
withholding taxes nonresident alien individuals who
are residents or citizens of the United States,
‘‘(2) such nation has entered into a tax infor-
mation sharing agreement with the United States,
and
‘‘(3) the Secretary certifies that the preceding
two requirements have been satisfied.
‘‘Subchapter I—Trusts and Estates
‘‘Sec. 140. Prepayment of tax by trusts and estates.
‘‘Sec. 141. Application of tax.
‘‘Sec. 142. Special rules for credits and deductions.
‘‘Sec. 143. Definitions and rules applicable to subchapter I.
‘‘Sec. 144. Deduction for trusts distributing current income only.
‘‘Sec. 145. Inclusion of amounts in gross income of beneficiaries of trusts dis-
tributing current income only.
‘‘Sec. 146. Deduction for estates and trusts accumulating income or distrib-
uting corpus.
‘‘Sec. 147. Inclusion of amounts in gross income of beneficiaries of estates and
trusts accumulating income or distributing corpus.
‘‘Sec. 148. Special rules applicable to sections 146 and 147.
‘‘Sec. 149. Charitable remainder trusts.
‘‘Sec. 150. Definitions applicable to excess distribution rules.
‘‘Sec. 151. Accumulation distribution allocated to preceding years.
‘‘Sec. 152. Treatment of amounts deemed distributed by trust in preceding
years.
201
‘‘Sec. 153. Trust income, deductions, and credits attributable to grantors and
others as substantial owners.
‘‘Sec. 154. Definitions and rules.
‘‘Sec. 155. Reversionary interests.
‘‘Sec. 156. Power to control beneficial enjoyment.
‘‘Sec. 157. Administrative powers.
‘‘Sec. 158. Power to revoke.
‘‘Sec. 159. Income for benefit of grantor.
‘‘Sec. 160. Person other than grantor treated as substantial owner.
‘‘Sec. 161. Foreign trusts having one or more United States beneficiaries.
‘‘Sec. 162. Limitation on charitable deduction.
‘‘Sec. 163. Income of an estate or trust in case of divorce, etc.
‘‘Sec. 164. Recognition of gain on certain transfers to certain foreign persons
and estates.
‘‘Sec. 165. Treatment of funeral trusts.
‘‘Sec. 166. Income in respect of a decedent.
‘‘SEC. 140. PREPAYMENT OF TAX BY TRUSTS AND ESTATES.
‘‘(a) PREPAYMENT OF TAX.—A trust or estate shall
prepay the Simplified USA Tax for individuals in accord-
ance with the provisions of this subchapter.
‘‘(b) IMPOSITION OF TAX.—There is hereby imposed
a tax on the taxable income of trusts and estates (as deter-
mined in accordance with this subchapter) a tax deter-
mined as follows:
‘‘If taxable income is:
The tax is:
Not over $1,600 ............................
15% of taxable income.
Over $1,600, but not over $3,800
$240, plus 25% of the excess over
$1,600.
Over $3,800 ...................................
$790, plus 30% of the excess over
$3,800.
‘‘(c) INFLATION ADJUSTMENT.—The schedule in
subsection (b) shall be adjusted for inflation in accordance
with section 23.
‘‘(d) BUSINESS ACTIVITIES.—
‘‘(1) TAX ON BUSINESS ACTIVITY DETERMINED
AT BUSINESS LEVEL.—If a trust engages in business
activity (as defined in section 206(b)), it shall be
202
considered a business entity with respect to such ac-
tivities for purposes of the business tax under chap-
ter 2. The business entity shall be considered an
asset of the trust.
‘‘(2) 
BUSINESS
ENTITY
AS
SOLE
BENE-
FICIARY.—If the only beneficiaries of a trust are
business entities, no tax shall be imposed on such
trust under this subchapter.
‘‘SEC. 141. APPLICATION OF TAX.
‘‘(a) IN GENERAL.—The tax imposed by section 140
shall apply to the taxable income of estates or of any kind
of property held in trust, including—
‘‘(1) income accumulated in trust for the ben-
efit of unborn or unascertained persons or persons
with contingent interests, and income accumulated
or held for future distribution under the terms of
the will or trust;
‘‘(2) income which is to be distributed currently
by the fiduciary to the beneficiaries, and income col-
lected by a guardian of an infant which is to be held
or distributed as the court may direct;
‘‘(3) income received by estates of deceased per-
sons during the period of administration or settle-
ment of the estate; and
203
‘‘(4) income which, in the discretion of the fidu-
ciary, may be either distributed to the beneficiaries
or accumulated.
‘‘(b) COMPUTATION AND PAYMENT.—The taxable in-
come of an estate or trust shall be computed in the same
manner as in the case of an individual, except as otherwise
provided in this subchapter. The tax shall be computed
on such taxable income and shall be paid by the fiduciary.
For purposes of this subsection, a foreign trust or foreign
estate shall be treated as a nonresident alien individual
who is not present in the United States at any time.
‘‘(c) EXCLUSION OF INCLUDIBLE GAIN FROM TAX-
ABLE INCOME.—The taxable income of a trust does not
include the amount of any includible gain as defined in
section 144(b) reduced by any deductions properly allo-
cable thereto.
‘‘SEC. 142. SPECIAL RULES FOR CREDITS AND DEDUCTIONS.
‘‘(a) USA DEDUCTION AND FAMILY LIVING ALLOW-
ANCE.—
‘‘(1) NO DEDUCTION OR ALLOWANCE.—A trust
or estate shall not be allowed any USA Deductions
or a Family Living Allowance.
‘‘(2) SPECIAL
DEDUCTION.—For purposes of
determining taxable income, trusts and estates shall
204
be entitled to the following deductions from gross
income—
‘‘(A) ESTATE.—An estate shall be allowed
a deduction of $600.
‘‘(B) 
DISTRIBUTING
TRUST.—A 
trust
which, under its governing instrument, is re-
quired to distribute all of its income currently
shall be allowed a deduction of $300.
‘‘(C) OTHER
TRUSTS.—Trusts not de-
scribed in subparagraph (B) shall be allowed a
deduction of $100.
‘‘(b) DEDUCTION FOR AMOUNTS PAID OR PERMA-
NENTLY SET ASIDE FOR A CHARITABLE PURPOSE.—
‘‘(1) GENERAL RULE.—In the case of an estate
or trust, there shall be allowed as a deduction in
computing its taxable income (in lieu of the philan-
thropic transfer deduction) any amount of the gross
income, without limitation, which pursuant to the
terms of the governing instrument is, during the
taxable year, paid for a purpose specified in section
101(c) (determined without regard to section
101(c)(2)(A)). If a charitable contribution is paid
after the close of such taxable year and on or before
the last day of the year following the close of such
taxable year, then the trustee or administrator may
205
elect to treat such contribution as paid during such
taxable year. The election shall be made at such
time and in such manner as the Secretary prescribes
by regulations.
‘‘(2) POOLED INCOME FUNDS.—In the case of
a pooled income fund (as defined in paragraph (3)),
there shall also be allowed as a deduction in com-
puting its taxable income any amount of the gross
income attributable to gain from the sale of a capital
asset held for more than 1 year, without limitation,
which pursuant to the terms of the governing instru-
ment is, during the taxable year, permanently set
aside for a purpose specified in section 101(c).
‘‘(3) DEFINITION OF POOLED INCOME FUND.—
For purposes of paragraph (2), a pooled income
fund is a trust—
‘‘(A) to which each donor transfers prop-
erty, contributing an irrevocable remainder in-
terest in such property to or for the use of an
organization described in section 101(b)(1)(A)
(other than in clauses (vii) or (viii)), and retain-
ing an income interest for the life of one or
more beneficiaries (living at the time of such
transfer),