Source: https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section4940&num=0&edition=prelim
Timestamp: 2020-01-24 08:35:38
Document Index: 184400510

Matched Legal Cases: ['§ 4940', '§101', '§1901', '§2', '§520', '§302', '§1301', '§1832', '§1221', '§3', '§1221', '§1301', '§302', '§302', '§303', '§520', '§101', '§2', '§101', '§4', '§1301', '§703', '§314', '§2', '§314', '§1301', '§1309', '§4', '§6204', '§302']

[USC02] 26 USC 4940: Excise tax based on investment income
<< Previous TITLE 26 / Subtitle D / CHAPTER 42 / Subchapter A / § 4940 Next >>
26 USC 4940: Excise tax based on investment income Text contains those laws in effect on January 23, 2020
Jump To: Source CreditCodificationAmendmentsEffective DateSavings ProvisionTermination DateMiscellaneous
There is hereby imposed on each private foundation which is not exempt from taxation under section 501(a) for the taxable year, with respect to the carrying on of its activities, a tax equal to-
For purposes of paragraph (1) in determining capital gain net income-
For purposes of this subsection, the term "exempt operating foundation" means, with respect to any taxable year, any private foundation if-
(C) at all times during the taxable year, the governing body of such foundation-
The term "disqualified individual" means, with respect to any private foundation, an individual who is-
(ii) an owner of more than 20 percent of-
A private foundation meets the requirements of this paragraph for any taxable year if-
(A) the amount of the qualifying distributions made by the private foundation during such taxable year equals or exceeds the sum of-
The term "percentage payout" means, with respect to any taxable year, the percentage determined by dividing-
(Added Pub. L. 91–172, title I, §101(b), Dec. 30, 1969, 83 Stat. 498 ; amended Pub. L. 94–455, title XIX, §1901(b)(33)(N), Oct. 4, 1976, 90 Stat. 1802 ; Pub. L. 95–345, §2(a)(4), Aug. 15, 1978, 92 Stat. 481 ; Pub. L. 95–600, title V, §520(a), Nov. 6, 1978, 92 Stat. 2884 ; Pub. L. 98–369, div. A, title III, §§302(a), 303(a), July 18, 1984, 98 Stat. 779 , 781; Pub. L. 99–514, title XIII, §1301(j)(6), title XVIII, §1832, Oct. 22, 1986, 100 Stat. 2658 , 2851; Pub. L. 109–280, title XII, §1221(a)(1), (b), Aug. 17, 2006, 120 Stat. 1089 ; Pub. L. 110–172, §3(f), Dec. 29, 2007, 121 Stat. 2475 .)
2007-Subsec. (c)(4)(A). Pub. L. 110–172 amended text generally. Prior to amendment, text read as follows: "There shall be taken into account only gains and losses from the sale or other disposition of property used for the production of interest, dividends, rents, and royalties, and property used for the production of income included in computing the tax imposed by section 511 (except to the extent gain or loss from the sale or other disposition of such property is taken into account for purposes of such tax)."
2006-Subsec. (c)(2). Pub. L. 109–280, §1221(a)(1), inserted at end "Such term shall also include income from sources similar to those in the preceding sentence." See Codification note above.
1986-Subsec. (c)(5). Pub. L. 99–514, §1301(j), substituted "(relating to State and local bonds)" for "(relating to interest on certain governmental obligations)".
In the case of an operating foundation (as defined in section 4942(j)(3)), subparagraph (B) shall be applied by substituting '31/3 percent' for '5 percent'."
1984-Subsec. (d). Pub. L. 98–369, §302(a), added subsec. (d).
1978-Subsec. (a). Pub. L. 95–600 substituted "2 percent" for "4 percent".
1976-Subsec. (c). Pub. L. 94–455 substituted "capital gain net income" for "net capital gain" in par. (1) after "investment income and the", and in par. (4) after "par. (1) in determining".
Pub. L. 98–369, div. A, title III, §302(c)(1), July 18, 1984, 98 Stat. 780 , provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1984."
Pub. L. 98–369, div. A, title III, §303(b), July 18, 1984, 98 Stat. 782 , provided that: "The amendment made by subsection (a) [amending this section] shall apply to taxable years beginning after December 31, 1984."
Pub. L. 95–600, title V, §520(b), Nov. 6, 1978, 92 Stat. 2884 , provided that: "The amendment made by the first section of this Act [probably meaning section 520(a), which amended this section] shall apply to taxable years beginning after September 30, 1977."
Pub. L. 91–172, title I, §101(k), Dec. 30, 1969, 83 Stat. 533 , as amended by Pub. L. 99–514, §2, Oct. 22, 1986, 100 Stat. 2095 , provided:
"(1) In general.-Except as otherwise provided in this subsection and subsection (l) [set out as a note below] the amendments made by this section [enacting this section and sections 507 to 509, 4941 to 4848, 6056, 6684, and 6685 of this title, amending sections 101, 170, 501, 503, 542, 663, 681, 878, 884, 1443, 2039, 2517, 4057, 4221, 4253, 4294, 5214, 6033, 6034, 6043, 6104, 6161, 6201, 6211 to 6214, 6344, 6501, 6503, 6511, 6512, 6601, 6652, 6653, 6659, 6676, 6677, 6679, 6682, 7207, 7422, and 7454 of this title, repealing section 504 of this title, and enacting provisions set out as notes under this section and section 1 of this title] shall take effect on January 1, 1970.
"(2) Provisions effective for taxable years beginning after december 31, 1969.-The following provisions shall apply to taxable years beginning after December 31, 1969:
"(3) Sections 508(a), (b), and (c).-Sections 508 (a),(b), and (c) of the Internal Revenue Code of 1986 (as added by this section) shall take effect on October 9, 1969."
Pub. L. 91–172, title I, §101(l), Dec. 30, 1969, 83 Stat. 533 , as amended by Pub. L. 93–490, §4(a), Oct. 26, 1974, 88 Stat. 1467 ; Pub. L. 94–455, title XIII, §§1301(a), 1309(a), Oct. 4, 1976, 90 Stat. 1713 , 1729; Pub. L. 95–600, title VII, §703(f), Nov. 6, 1978, 92 Stat. 2940 ; Pub. L. 98–369, div. A, title III, §314(b)(1), July 18, 1984, 98 Stat. 787 ; Pub. L. 99–514, §2, Oct. 22, 1986, 100 Stat. 2095 , provided that:
"(1) References to internal revenue code provisions.-Except as otherwise expressly provided, references in the following paragraphs of this subsection are to sections of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] as amended by this section.
"(2) Section 4941.-Section 4941 shall not apply to-
"(F) the sale, exchange, or other disposition (other than by lease) of property which is owned by a private foundation to a disqualified person if-
"(3) Section 4942.-In the case of organizations organized before May 27, 1969, section 4942 shall-
"(4) Section 4943.-
"(A) In the case of a private foundation-
"(iii) which acquired such stock solely by gift, devise, or bequest, section 4943(c)(4)(A)(i) shall be applied with respect to the holdings of such foundation in such incorporated business enterprise as if it did not contain the phrase ', but in no event shall the percentage so substituted be more than 50 percent', and section 4943(c)(4)(D) shall not apply with respect to such holdings. For purposes of the preceding sentence, stock of such enterprise in a trust created before May 27, 1969, of which the foundation is the remainder beneficiary shall be deemed to be held by such foundation on May 26, 1969, if such foundation held (without regard to such trust) more than 20 percent of the stock of such enterprise on May 26, 1969.
"(B) Subparagraph (A) shall apply to a private foundation only if-
"(C) For purposes of section 4943(c)(6), the term 'purchase' does not include an exchange which is described in paragraph (2)(B) of this subsection and which is pursuant to a plan for disposition of excess business holdings.
"(5) Section 4945.-Section 4945(d)(4) and (h) shall not apply to a grant which is described in paragraph (3)(C) of this subsection.
"(6) Section 508(e).-Section 508(e) shall not apply to require inclusion in governing instruments of any provisions inconsistent with this subsection.
"(7) Section 509(a).-In the case of any trust created under the terms of a will or a codicil to a will executed on or before March 30, 1924, by which the testator bequeathed all of the outstanding common stock of a corporation in trust, the income of which trust is to be used principally for the benefit of those from time to time employed by the corporation and their families, the trustees of which trust are elected or selected from among the employees of such corporation, and which trust does not own directly any stock in any other corporation, if the trust makes an irrevocable election under this paragraph within one year after the date of the enactment of this Act [Dec. 30, 1969], such trust shall be treated as not being a private foundation for purposes of the Internal Revenue Code of 1986 but shall be treated for purposes of such Code as if it were not exempt from tax under section 501(a) for any taxable year beginning after the date of the enactment of this Act [Dec. 30, 1969] and before the date (if any) on which such trust has complied with the requirements of section 507 for termination of the status of an organization as a private foundation.
"(8) Certain redemptions.-For purposes of applying section 302(b)(1) to the determination of the amount of gross investment income under sections 4940 and 4948(a), any distribution made to a private foundation in redemption of stock held by such private foundation in a business enterprise shall be treated as not essentially equivalent to a dividend, if such redemption is described in paragraph (2)(B) of this subsection."
[ Pub. L. 98–369, div. A, title III, §314(b)(2), July 18, 1984, 98 Stat. 787 , provided that: "The amendment made by paragraph (1) [amending section 101(4)(A)(iii) of Pub. L. 91–172, set out above] shall apply as if included in section 101(l)(4) of the Tax Reform Act of 1969 [Pub. L. 91–172]."]
[ Pub. L. 94–455, title XIII, §1301(b), Oct. 4, 1976, 90 Stat. 1713 , provided that: "The amendments made by subsection (a) [enacting subpar. (F) of section 101(2) of Pub. L. 91–172, set out above] shall apply to dispositions after the date of the enactment of this Act [Oct. 4, 1976] in taxable years ending after such date."]
[ Pub. L. 94–455, title XIII, §1309(b), Oct. 4, 1976, 90 Stat. 1729 , provided that: "The amendment made by this section [amending section 101(2)(B) of Pub. L. 91–172, set out above] shall apply to dispositions made after the date of enactment of this Act [Oct. 4, 1976]."]
[ Pub. L. 93–490, §4(b), Oct. 26, 1974, 88 Stat. 1467 , provided that: "The amendment made by this section [enacting subpar. (F) of section 101(3) of Pub. L. 91–172, set out above] shall apply to taxable years beginning after December 31, 1971."]
Pub. L. 100–647, title VI, §6204, Nov. 10, 1988, 102 Stat. 3730 , provided that: "For purposes of section 302(c)(3) of the Deficit Reduction Act of 1984 [Pub. L. 98–369, set out below], a private foundation which constituted an operating foundation (as defined in section 4942(j)(3) of the Internal Revenue Code of 1986) for its last taxable year ending before January 1, 1983, shall be treated as constituting an operating foundation as of January 1, 1983."
Pub. L. 98–369, div. A, title III, §302(c)(3), July 18, 1984, 98 Stat. 781 , provided that: "A foundation which was an operating foundation (as defined in section 4942(j)(3) of the Internal Revenue Code of 1954) as of January 1, 1983, shall be treated as meeting the requirements of section 4940(d)(2)(B) of such Code (as added by subsection (a))."