An act to amend the Internal Revenue Code of 1954 with respect to net operating loss carryovers of taxpayers who cease to be real estate investment trusts, to increase interest rates on certain United States retirement bonds, and for other purposes.
PL 96-595 (H.R.4968), enacted 12/24/1980

94 STAT. 3464 
PUBLIC LAW 96-595—DEC. 24, 1980 
Public Law 96-595 
96th Congress 
Dec. 24, 1980 
[H.R. 4968] 
Internal 
Revenue 
Code of 1954, 
amendment. 
26 u s e 172. 
"REIT year." 
26 u s e 172 note. 
26 u s e 172. 
26 u s e 856. 
An Act 
To amend the Internal Revenue Code of 1954 with respect to net operating loss 
carryovers of taxpayers who cease to be real estate investment trusts, to increase 
interest rates on certain United States retirement bonds, and for other purposes. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SECTION 1. NET OPERATING LOSS CARRYOVER FOR CERTAIN REITS. 
(a) IN GENERAL.—Subparagraph (E) of section 172(b)(1) of the 
Internal Revenue Code of 1954 (relating to net operating loss deduc-
tion) is amended to read as follows: 
"(E)(i) A net operating loss for a REIT year— 
"(I) shall not be a net operating loss carryback to any 
taxable year preceding the taxable year of such loss, and 
"(II) shall be a net operating loss carryover to each of 
the 8 taxable years following the taxable year of such 
loss. 
"(ii) In the case of any net operating loss for a taxable year 
which is not a REIT year— 
"(I) such loss shall not be carried back to any taxable 
year which is a REIT year, and 
"(II) the number of taxable years to which such loss 
may be a net operating loss carryover under subpara-
graph (B) shall be increased (to a number not greater 
than 8) by the number of taxable years to which such 
loss may not be a net operating loss carryback by reason 
of subclause (I), 
"(iii) For purposes of this subparagraph, the term 'REIT 
year' means any taxable year for which the provisions of 
part II of subchapter M (relating to real estate investment 
trusts) apply to the taxpayer.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall 
apply to the determination of the net operating loss deduction for 
taxable years ending after October 4, 1976. For purposes of applying 
the preceding sentence to any net operating loss for a taxable year 
which is not a REIT year and which ends on or before October 4,1976, 
subclause (II) of section 172(b)(l)(E)(ii) of the Internal Revenue Code of 
1954 shall be applied by substituting "the number of REIT years to 
which such loss was a net operating loss carryback" for "the number 
of taxable years to which such loss may not be a net operating loss 
carryback by reason of subclause (I)". In the case of a net operating 
loss for a taxable year described in the preceding sentence, subclause 
(II) of section 172(b)(l)(E)(ii) of such Code shall not apply to any 
taxpayer which acted so as to cause it to cease to qualify as a "real 
estate investment trust" within the meaning of section 856 of such 
Code if the principal purpose for such action was to secure the benefit 
of the allowance of a net operating loss carryover under section 
172(b)(1)(B) of such Code. 
PUBLIC LAW 96-595—DEC. 24, 1980 
94 STAT. 3465 
SEC. 2. INCREASES IN INTEREST RATES PAYABLE ON UNITED STATES 
RETIREMENT PLAN AND INDIVIDUAL RETIREMENT BONDS. 
(a) IN GENERAL.—The first section of the Second Liberty Bond Act 
(31 U.S.C, 752) is amended by adding at the end thereof the following 
new paragraph: 
"The Secretary of the Treasury, with the approval of the President, 
may provide by regulations that the investment yield on any offer-
ings of bonds issued under this Act which are described in section 
405(b) or 409(a) of the Internal Revenue Code of 1954 (relating to 
26 USC 405,409. 
retirement plan bonds and individual retirement bonds, respectively) 
be increased for the interest accrual periods specified in such regula-
tions so that the investment yield on such bonds for such periods is 
consistent with the investment yield on new offerings of such bonds.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall 
31 USC 752 note, 
apply with respect to the investment yield on bonds issued before, on, 
or after the date of the enactment of this Act, but only for purposes of 
increasing the investment yield on such bonds for interest accrual 
periods beginning after the date of enactment of this Act. 
SEC. 3. GENERAL STOCK OWNERSHIP CORPORATIONS. 
(a) IN GENERAL.—Subchapter U of the Internal Revenue Code of 
1954 (relating to general stock ownership corporations) is amended— 
26 USC 1391. 
(1) by inserting "or the estate of a deceased shareholder" after 
"State" in section 1391(a)(4)(D)(ii); 
(2) by striking out "Individuals" in the caption of section 
1391(c) and inserting in lieu thereof "Individual"; 
(3) by striking out "1393" in section 1392(a) and inserting in 
lieu thereof "1396(b)"; 
(4) by striking out "and all succeeding years" in section 
1392(b)(1); 
(5) by striking out "section, the term 'taxable income"' in 
section 1393(a)(2) and inserting in lieu thereof "subchapter, the 
taxable income"; 
(6) by striking out "a GSOC" in sections 1393(a)(2), 1393(b)(3), 
1394(c), and 1396(b) and inserting in lieu thereof "an electing 
GSOC"; 
(7) by striking out "GSOC's" in the heading for section 1394 
and inserting in lieu thereof "GSOC"; 
(8) by striking out "the GSOC" in sections 1393(b)(3) and 
1394(d) and inserting in lieu thereof "an electing GSOC"; 
(9) by striking out "A GSOC" in section 1396(a) and inserting in 
lieu thereof "An electing GSOC"; 
(10) by adding at the end of section 1396(b) the following: "Such 
tax shall be deductible as an ordinary and necessary expense of 
the corporation under section 162."; and 
(11) by amending the table of sections for such subchapter to 
read as follows: 
"Subchapter U—General Stock Ownership Corporations 
"Sec. 1391 Definitions. 
"Sec. 1392. Election by GSOC. 
"Sec. 1393. GSOC taxable income taxed to shareholders. 
"Sec. 1394. Rules applicable to distributions of an electing GSOC. 
"Sec. 1395. Adjustment to basis of stock of shareholders. 
"Sec. 1396. Minimum distributions. 
"Sec. 1397. Special rules applicable to an electing GSOC". 
94 STAT. 3466 
PUBLIC LAW 96-595—DEC. 24, 1980 
(b) CONFORMING AMENDMENT.—The last sentence of section 6039B 
26 use 6039B. 
of such Code (relating to return of general stock ownership corpora-
tions) is amended by inserting "electing" after "Every". 
26 use 1391 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
^°^- 
apply with respect to corporations chartered after December 31,1978, 
and before January 1,1984. 
SEC. 4. CHARITABLE SERVICES PERFORMED ABROAD. 
(a) IN GENERAL.—Subsection (a) of section 911 of the Internal 
26 use 911. 
Revenue Code of 1954 (relating to income earned by individuals in 
certain camps) is amended by inserting "or who performs qualified 
charitable services in a lesser developed country," after "hardship 
area,". 
(b) DOLLAR LIMITATIONS.— 
(1) IN GENERAL.—Subparagraph (A) of subsection (c)(1) of such 
section 911 of such Code is amended to read as follows: 
"(A) DOLLAR LIMITATIONS.— 
"(i) CAMP RESIDENTS.—In the case of an individual who 
resides in a camp located in a hardship area, the amount 
excluded from the gross income of the individual under 
subsection (a) for any taxable year shall not exceed an 
amount which shall be computed on a daily basis at an 
annual rate of $20,000 for days during which he resides 
in a camp. 
"(ii) EMPLOYEES OF CHARITABLE ORGANIZATIONS.—If 
any individual performs qualified charitable services in 
a lesser developed country during any taxable year, the 
amount of the earned income attributable to such serv-
ices excluded from the gross income of the individual 
under subsection (a) for the taxable year shall not 
exceed an amount which shall be computed on a daily 
basis at an annual rate of $20,000. 
"(iii) SPECIAL RULE.—If any individual performs quali-
fied charitable services in a lesser developed country 
and performs other services while residing in a camp 
located in a hardship area during any taxable year, the 
amount of the earned income attributable to such other 
services excluded from the gross income of the 
individual under subsection (a) for the taxable year shall 
not (after the application of clause (i) with respect to 
such earned income) exceed $20,000 reduced by the 
amount of the earned income attributable to qualified 
charitable services excluded from gross income under 
subsection (a) for the taxable year.". 
(2) DEFINITIONS.—Subsection (c)(1) of such section 911 of such 
Code is amended by adding at the end thereof the following: 
"(D) QUAUFIED CHARITABLE SERVICES.—For purposes of 
this subsection, the term 'qualified charitable services' 
means services performed by an employee for an employer 
which— 
"(i) meets the requirements of section 501(c)(3), and 
"(ii) is not a private foundation (within the meaning of 
section 509(a)). 
"(E) LESSER DEVELOPED COUNTRY.—The term 'lesser devel-
oped country' means any foreign country other than— 
"(i) a country listed in the first sentence of section 
502(b) of the Trade Act of 1974 (19 U.S.C. 2462), or 
PUBLIC LAW 96-595—DEC. 24, 1980 
94 STAT. 3467 
"(ii) a country designated by the President as not 
being a lesser developed country.". 
(c) TECHNICAL AMENDMENTS.— 
(1) The heading for such section 911 of such Code is amended by 26 USC 911. 
inserting "OR FROM CHARITABLE SERVICES" after "CAMPS". 
(2) The item relating to section 911 in the table of sections for 
subpart B of part III of subchapter N of chapter 1 of such Code is 
amended by inserting "or from charitable services" after 
"camps". 
(d) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 911 note, 
apply to taxable years beginning after December 31,1978. 
SEC. 5. ARBITRAGE REQUIREMENTS FOR MORTGAGE SUBSIDY BONDS. 
(a) GENERAL RULE.—Paragraph (4) of section 103A(i) of the Internal 
Revenue Code of 1954 (relating to requirements related to arbi- ^"^^' P- 2660. 
trage) is amended by adding at the end thereof the following new 
subparagraphs: 
"(C) REDUCTION WHERE ISSUER DOES NOT USE FULL i PER-
CENTAGE POINT UNDER PARAGRAPH (2).— 
"(i) IN GENERAL.—The amount required to be paid or 
credited to mortgagors under subparagraph (A) (deter-
mined under this paragraph without regard to this 
subparagraph) shall be reduced by the unused para-
graph (2) amount. 
"(ii) UNUSED PARAGRAPH (2) AMOUNT.—For purposes of 
clause (i), the unused paragraph (2) amount is the 
amount which (if it were treated as an interest payment 
made by mortgagors) would result in the excess referred 
to in paragraph (2)(A) being equal to 1 percentage point. 
Such amount shall be fixed and determined as of the 
yield determination date. 
"(D) ELECTION TO PAY UNITED STATES.—Subparagraph (A) 
shall be satisfied with respect to any issue if the issuer elects 
before issuing the obligations to pay over to the United 
States— 
"(i) not less frequently than once each 5 years after 
the date of issue, an amount equal to 90 percent of the 
aggregate amount which would be required to be paid or 
credited to mortgagors under subparagraph (A) (and not 
theretofore paid to the United States), and 
"(ii) not later than 30 days after the redemption of the 
last obligation, 100 percent of such aggregate amount 
not theretofore paid to the United States. 
"(E) SIMPLIFIED ACCOUNTING.—The Secretary shall permit 
any simplified system of accounting for purposes of this 
paragraph which the issuer establishes to the satisfaction of 
the Secretary will assure that the purposes of this paragraph 
are carried out.". 
(b) TECHNICAL AMENDMENT.—Paragraph (8) of section 103A(1) of 
such Code is amended by inserting "or paid to the United States" 
after "credited to mortgagors". 
94 STAT. 3468 
PUBLIC LAW 96-595—DEC. 24, 1980 
26 use 103A 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
"°^- 
take effect as if included in the amendments made by section 1102 of 
Ante, p. 2660. 
the Mortgage Subsidy Bond Tax Act of 1980. 
Approved December 24, 1980. 
LEGISLATIVE HISTORY: 
HOUSE REPORT No. 96-1045 (Comm. on Ways and Means). 
SENATE REPORT No. 96-1037 (Comm. on Finance). 
CONGRESSIONAL RECORD, Vol. 126 (1980): 
June 17, considered and failed of passage. 
Nov. 17, considered and passed House. 
Dec. 13, considered and passed Senate, amended; House agreed to Senate 
amendments.