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as may be furnished from stocks under the control of agencies of the Department of Defense; travel expenses (other than mileage) on the same basis as authorized by law for Air National Guard personnel on active Federal duty, of Air National Guard commanders while inspecting units in compliance with National Guard regulations when specifically authorized by the Chief, National Guard Bureau; $330,534,000, of which not less than $2,800,000 shall be available only for the maintenance of real property facilities: Provided, That obligations may be incurred under this appropriation without regard to section 107 of title 32, United States Code.

475

70A Stat. 599.

NATIONAL BOARD FOR THE PROMOTION OF R I F L E PRACTICE, A R M Y

For the necessary expenses of construction, equipment, and maintenance of rifle ranges, the instruction of citizens in marksmanship, and promotion of rifle practice, in accordance with law, including travel of rifle teams, military personnel, and individuals attending regional, national, and international competitions, and not to exceed $10,000 for incidental expenses of the National Board; $52,750: Provided, That travel expenses of civilian members of the National Board shall be paid in accordance with the Standardized Government Travel Regulations, as amended. CLAIMS, DEFENSE

For payment, not otherwise provided for, of claims authorized by law to be paid by the Department of Defense (except for civil functions), including claims for damages arising under training contracts with carriers, and repayment of amounts determined by the Secretary concerned, or officers designated by him, to have been erroneously collected from military and civilian personnel of the Department of Defense, or from States, territories, or the District of Columbia, or members of National Guard units thereof; $39,000,000. CONTINGENCIES, DEFENSE

For emergencies and extraordinary expenses arising in the Department of Defense, to be expended on the approval or authority of the Secretary of Defense and such expenses may be accounted for solely on his certificate that the expenditures were necessary for confidential military purposes; $5,000,000: Provided, That a report of disburse- g^fsT'* *° ^°"' ments under this item of appropriation shall be made quarterly to Congress. COURT OF MILITARY APPEALS, DEFENSE

For salaries and expenses necessary for the United States Court of Military Appeals; $666,000. TITLE IV PROCUREMENT PROCUREMENT OF EQUIPMENT AND MISSILES, A R M Y

For expenses necessary for the procurement, manufacture, and modification of missiles, armament, ammunition, equipment, vehicles, vessels, and aircraft for the Army and the Reserve Officers' Training Corps; purchase of not to exceed five thousand two hundred and seventy-six passenger motor vehicles (including one medium sedan at

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not to exceed $3,000) for replacement only; expenses which in the discretion of the Secretary of the Army are necessary in providing facilities for production of equipment and supplies for national defense purposes, including construction, and the furnishing of Governmentowned facilities and equipment at privately owned plants; and ammunition for military salutes at institutions to which issue of weapons for salutes is authorized; $4,254,400,000, and in addition, $50,000,000 shall be derived by transfer from the Defense stock fund, to remain available until expended. PROCUREMENT OF AIRCRAFT AND MISSILES, NAVY

40 USC 255.

For construction, procurement, production, modification, and modernization of aircraft, missiles, equipment, including ordnance, spare parts, and accessories therefor; specialized equipment; expansion of public and private plants, including the land necessary therefor, and such lands, and interests therein, may be acquired, and construction prosecuted thereon prior to approval of title by the Attorney General as required by section 355, Revised Statutes, as amended; and procurement and installation of equipment, appliances, and machine tools in public or private plants; $2,620,000,000, and in addition, $25,000,000 shall be derived by transfer from the Defense stock fund, to remain available until expended. SHIPBUILDING AND CONVERSION, NAVY

For expenses necessary for the construction, acquisition, or conversion of vessels as authorized by law, including armor and armament ther'eof, plant equipment, appliances, and machine tools and installation thereof in public or private plants; procurement of critical, long leadtime components and designs for vessels to be constructed or converted in the future; and expansion of public and private plants, including land necessary therefor, and such land, and interests therein, may be acquired and construction prosecuted thereon prior to approval of title by the Attorney General as required by section 355, Revised Statutes, as amended; $2,490,300,000 to remain available until expended: Provided, That none of the funds herein provided for the construction or conversion of any naval vessel to be constructed in shipyards in the United States shall be expended in foreign shipyards for the construction of major components of the hull or superstructure of such vessel: Provided further, That none of the funds herein provided shall be used for the construction of any naval vessel in foreign shipyards. OTHER PROCUREMENT, NAVY

For procurement, production, and modernization of support equipment, and materials not otherwise provided for. Navy ordnance and ammunition (except ordnance for new aircraft, new ships, and ships authorized for conversion), purchase of not to exceed one thousand three hundred and thirty-six passenger motor vehicles (including one medium sedan at not to exceed $3,000) for replacement only; alteration of vessels and necessary design therefor; expansion of public and private plants, including the land necessary therefor, and such lands, and interests therein may be acquired, and construction prosecuted thereon prior to approval of title by the Attorney General as required by section 355, Revised Statutes, as amended; and procurement and installation of equipment, appliances, and machine tools in public or private plants; $1,484,600,000, to remain available until expended.

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license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


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477

PROCUREMENT, MARINE CORPS

For expenses necessary for the procurement, manufacture, and modification of missiles, armament, ammunition, military equipment, spare parts, and accessories therefor; plant equipment, appliances, and machine tools, and installation thereof in public or private plants, and vehicles for the M a r n e Corps, including purchase of not to exceed two hundred and eight passenger motor vehicles for replacement only; $500,848,000, to remain available until expended. AIRCRAFT PROCUREMENT, A I R FORCE

For construction, procurement, and modification of aircraft, and equipment, including armor and armament, specialized ground handling equipment, and training devices, spare parts, and accessories therefor; specialized equipment; expansion of public and private plants, Government-owned equipment and installation thereof in such plants, erection of structures, and acquisition of land without regard to section 9774 of title 10, United States Code, for the foregoing purposes, and such land, and interests therein, may be acquired and construction prosecuted thereon prior to the approval of title by the Attorney General as required by section 355, Revised Statutes, as amended; reserve plant and equipment layaway; and other expenses necessary for the foregoing purposes, including rents and transportation of things; $3,405,800,000, and, in addition, $325,000,000, of which $300,000,000 shall be derived by transfer from the Air Force stock fund and $25,000,000 shall be derived by transfer from the Defense stock fund, to remain available until expended: Provided, That funds 'available under this heading shall be available to the extent of $55,000,000 without regard to prior provisions relating to the F-12 aircraft program. MISSILE PROCUREMENT, A I R FORCE

For construction, procurement, and modification of missiles, rockets, and related equipment, including spare parts and accessories therefor, ground handling equipment, and training devices; expansion of public and private plants, Government-owned equipment and installation thereof in such plants, erection of structures, and acquisition of land without regard to section 9774 of title 10, United States Code, for the foregoing purposes, and such land, and interests therein, may be acquired and construction prosecuted thereon prior to the approval of title by the Attorney General as required by section 355, Revised Statutes, as amended; reserve plant and equipment layaway; and other expenses necessary for the foregoing purposes, including rents and transportation of things; $1,448,100,000, to remain available until expended. OTHER PROCUREMENT, A I R FORCE

For procurement and modification of equipment (including ground guidance and electronic control equipment^ and ground electronic and communication equipment), and supplies, materials, and spare parts therefor, not otherwise provided for; the purchase of not to exceed one thousand five hundred and twenty passenger motor vehicles for replacement only; and expansion of public and private plants. Government-owned equipment and installation thereof in such plants, erection of structures, and acquisition of land without regard to section 9774 of title 10, United States Code, for the foregoing purposes, and such land, and interests therein, may be acquired and construction prose-

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40 USC 255.

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PUBLIC LAW 91-171-DEC. 29, 1969

[83 STAT.

cuted thereon prior to the approval of title by the Attorney General as required by section 355, Revised Statutes, as amended; $1,576,200,000, to remain available until expended. PROCUREMENT, DEFENSE AGENCIES

For expenses of activities and agencies of the Department of Defense (other than the military departments and the Office of Civil Defense) necessary for procurement, production, and modification of equipment, supplies, materials, and spare parts therefor, not otherwise provided for; purchase of one hundred and seventy-eight passenger motor vehicles for replacement only; expansion of public and private plants, equipment and installation thereof in such plants, erection of structures, and acquisition of land for the foregoing purposes, and such land and interests therein may be acquired and construction prosecuted thereon prior to the approval of title by the Attorney General as required by section 355, Revised Statutes, as amended; $61,600,000, to remain available until expended. TITLE V RESEARCH, DEVELOPMENT, TEST, AND EVALUATION RESEARCH, DEVELOPMENT, TEST, AND EVALUATION, A R M Y

For expenses necessary for basic and applied scientific research, development, test, and evaluation, including maintenance, rehabilitation, lease, and operation of facilities and equipment, as authorized by law; $1,596,820,000, to remain available until expended. RESEARCH, DEVELOPMENT, TEST, AND EVALUATION, NAVY

For expenses necessary for basic and applied scientific research, development, test, and evaluation, including maintenance, rehabilitation, lease, and operation of facilities and equipment, as authorized by law; $2,186,400,000, to remain available until expended. RESEARCH, DEVELOPMENT, TEST, AND EVALUATION, A I R FORCE

For expenses necessary for basic and applied scientific research, development, test, and evaluation, including maintenance, rehabilitation, lease, and operation of facilities and equipment, as authorized by law; $3,060,600,000, to remain available until expended. RESEARCH, DEVELOPMENT, TEST, AND EVALUATION, DEFENSE AGENCIES

funds"^^^"^ °^

For expenses of activities and agencies of the Department of Defense (other than the military departments and the Office of Civil Defense), necessary for basic and applied scientific research, development, test, and evaluation; advanced research projects as may be designated and determined by the Secretary of Defense, pursuant to law; maintenance, rehabilitation, lease, and operation of facilities and equipment, as authorized by law, to remain available until expended; $450,000,000: Provided, That such amounts as may be determined by the Secretary of Defense to have been made available in other appropriations available to the Department of Defense during the current fiscal year for programs related to advanced research may be transferred to and merged with this appropriation to be available for the same purposes and time period: Provided further, That

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479

such amounts of this appropriation as may be determined by the Secretary of Defense may be transferred to carry out the purposes of advanced research to those appropriations for military functions under the Department of Defense which are being utilized for related programs, to be merged with and to be available for the same time period as the appropriation to which transferred. EMERGENCY F U N D, DEFENSE

For transfer by the Secretary of Defense, with the approval of the Bureau of the Budget, to any appropriation for military functions under the Department of Defense available for research, development, test, and evaluation, or procurement or production related thereto, to be merged with and to be available for the same purposes, and for the same time period, as the appropriation to which transferred; $75,000,000, and, in addition, not to exceed $150,000,000, to be used upon determination by the Secretary of Defense that such funds can be wisely, profitably, and practically used in the interest of national -defense and to be derived by transfer from such appropriations available to the Department of Defense for obligation during the current fiscal year as the Secretary of Defense may designate: Provided, That any appropriations transferred shall not exceed 7 per centum of the appropriation from which transferred. TITLE VI GENERAL PROVISIONS SEC. 601. No part of any appropriation contained in this Act shall a gPublicity or propanda. be used for publicity or propaganda purposes not authorized by the Congress. SEC. 602. During the current fiscal year, the Secretary of Defense s uExperts or conltants. and the Secretaries of the Army, Navy, and Air Force, respectively, if they should deem it advantageous to the national defense, and if in their opinions the existing facilities of the Department of Defense are inadequate, are authorized to procure services in accordance with 5 U.S.C. 3109, under regulations prescribed by the Secretary of Defense, 80 Stat. 4 1 6. and to pay in connection therewith travel expenses of individuals, including actual transportation and per diem in lieu of subsistence while traveling from their homes or places of business to official duty station and return as may be authorized by law": Provided, That such contracts may be renewed annually. SEC. 603. During the current fiscal year, provisions of law prohibit- n oEmployment of ncitizens. ing the payment of compensation to, or employment of, any person not a citizen of the United States shall not apply to personnel of the Department of Defense. SEC. 604. Appropriations contained in this Act shall be available a vAppropriations, ailability. for insurance of official motor vehicles in foreign countries, when required by laws of such countries; payments in advance of expenses determined by the investigating officer to be necessary and in accord with local custom for conducting investigations in foreign countries incident to matters relating to the activities of the department concerned; reimbursement of General Services Administration for security guard services for protection of confidential files; reimbursement of the Federal Bureau of Investigation for expenses in connection with investigation of defense contractor personnel; and all necessary expenses, at the seat of government of the United States of America or elsewhere, in connection with communication and other

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Prisoners of war, e t c.

Land acquisition. 72 Stat. 1459; 76 Stat. 5 1 1. Dependents' schooling. 64 Stat. 1100; 79 Stat. 27; 81 Stat. 783,

70A Stat. 442.

Occupied a r e a s.

Deficiency judgments. Leasing.

56 Stat. 654. To o l s, maintenance. Access roads. 72 Stat. 908. Milk program. 68 Stat. 900; !1 Stat. 464.

75 Stat. 450. 22 USC 2385. Articles for prisoners, etc.

PUBLIC LAW 91-171-DEC. 29, 1969

[83 STAT.

services and supplies as may be necessary to carry out the purposes of this Act. SEC. 605. Any appropriation available to the Army, Navy, or the Air Force may, under such regulations as the Secretary concerned may prescribe, be used for expenses incident to the maintenance, pay, and allowances of prisoners of war, other persons in Army, Navy, or Air Fofee custody whose status is determined by the Secretary concerned to be similar to prisoners of war, and persons detained in such custody pursuant to Presidential proclamation. SEC. 606. Appropriations available to the Department of Defense for the current fiscal year for maintenance or construction shall be available for acquisition of land as authorized by section 2672 of title 10, United States Code. SEC. 607. Appropriations for the Department of Defense for the current fiscal year shall be available, (a) except as authorized by the Act of September 30, 1950 (20 U.S.C. 236-244), for primary and secondary schooling for minor dependents of military and civilian personnel of the Department of Defense residing on military or naval installations or stationed in foreign countries, as authorized for the Navy by section 7204 of title 10, United States Code, in amounts not exceeding $129,900,000, when the Secretary of the Department concerned finds that schools, if any, available in the locality, are unable to provide adequately for the education of such dependents; (b) for expenses in connection with administration of occupied areas; (c) for payment of rewards as authorized for the Navy by section 7209(a) of title 10, United States Code, for information leading to the discovery of missing naval property or the recovery thereof; (d) for payment of deficiency judgments and interests thereon arising out of condemnation proceedings; (e) for leasing of buildings and facilities including payment of rentals for special purpose space at the seat of government, and in the conduct of field exercises and maneuvers or, in administering the provisions of 43 U.S.C. 315q, rentals may be paid in advance; (f) payments under contracts for maintenance of tools and facilities for twelve months beginning at any time during the fiscal year; (g) maintenance of Defense access roads certified as important to national defense in accordance with section 210 of title 23, United States Code; (h) for the purchase of milk for enlisted personnel of the Department of Defense heretofore made available pursuant to section 1446a, title 7, United States Code, and the cost of milk so purchased, as determined by the Secretary of Defense, shall be included in the value of the commuted ration; (i) transporting civilian clothing to the home of record of selective service inductees and recruits on entering the military services; (j) payments under leases for real or personal property for twelve months beginning at any time during the fiscal year; (k) pay and allowances of not to exceed nine persons, including personnel detailed to International Military Headquarters and Organizations, at rates provided for under section 625(d)(1) of the Foreign Assistance Act of 1961, as amended. SEC. 608. Appropriations for the Department of Defense for the current fiscal year shall be available for: (a) donations of not to exceed $25 to each prisoner upon each release from confinement in military or contract prison and to each person discharged for fraudulent enlistment; (b) authorized issues of articles to prisoners, applicants for enlistment and persons in military custody; (c) subsistence of selective service registrants called for induction, applicants for enlistment, prisoners, civilian employees as authorized by law, and supernumeraries when necessitated by emergent military circumstances; (d) reimbursement for subsistence of enlisted personnel

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while sick in hospitals; (e) expenses of prisoners confined in nonmilitary facilities; (f) military courts, boards, and commissions; (g) utility services for buildings erected at private cost, as authorized by law, and buildings on military reservations authorized by regulations to be used for welfare and recreational purposes; (h) exchange fees, and losses in the accounts of disbursing officers or agents in accordance with law; (i) expenses of Latin-American cooperation as authorized for the Navy by law (10 U.S.C. 7208); and (j) expenses of appre- ^OA Stat. 443. hension and delivery of deserters, prisoners, and members absent without leave, including payment of rewards of not to exceed $25 in any one case. SEC. 609. Insofar as practicable, the Secretary of Defense shall assist sn^if tfusrH^sl" American small business to participate equitably in the furnishing of commodities and services financed with funds appropriated under this Act by making available or causing to be made available to suppliers in the United States, and particularly to small independent enterprises, information, as far in advance as possible, with respect to purchases proposed to be financed with funds appropriated under this Act, and by making available or causing to be made available to purchasing and contracting agencies of the Department of Defense information as to commodities and services produced and furnished by small independent enterprises in the United States, and by otherwise helping to give small business an opportunity to participate in the furnishing of commodities and services financed with funds appropriated by this Act. SEC. 610. No appropriation contained in this Act shall be available ^^^^^^ operafor expenses of operation of messes (other tlian organized messes the operating expenses of which are financed principally from nonappropriated funds) at which meals are sold to officers or civilians except under regulations approved by the Secretary of Defense, which shall (except under unusual or extraordinary circumstances) establish rates for such meals sufficient to provide reimbursement of operating expenses and food costs to the appropriations concerned: Provided. That officers and civilians in a travel status receiving a per diem allowance in lieu of subsistence shall be charged at the rate of not less than $2.50 per d a y: Provided, further. That for the purposes of this section payments for meals at the rates established hereunder may be made in cash or by deduction from the pay of civilian employees: Provided further, That members of organized nonprofit youth groups sponsored at either the national or local level, when extended the privilege of visiting a military installation and permitted to eat in the general mess by the commanding officer of the installation, shall pay the commuted ration cost of such meal or meals. SEC. 611. No part of any appropriation contained in this Act shall nmua'tro/^^'^ remain available for obligation beyond the current fiscal year unless expressly so provided herein. SEC. 612. Appropriations of the Department of Defense available Reimbursable for operation and maintenance, may be reimbursed during the current ^PP''°P"^*»°"^* fiscal year for all expenses involved in the preparation for disposal and for the disposal of military supplies, equipment, and materiel, and for all expenses of production of lumber or timber products pursuant to section 2665 of title 10, United States Code, from amounts ''°^ ^*^*- ^•9received as proceeds from the sale of any such property: Provided, That a report of receipts and disbursements under this limitation Report to shall be made quarterly to Congress: Provided further. That no funds °"^'"^®^available to agencies of the Department of Defense shall be used for the operation, acquisition, or construction of new facilities or equipment for new facilities in the continental limits of the United States

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Apportionment of funds, exemption.

31 USC 665. Airborne alert expenses.

I n c r e a s e d military personnel, expenses.

Report to Congress.

Commissary stores.

Free u t i l i t i e s outside U.S. and in A l a s k a.

Proficiency flying.

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STAT.

for metal scrap baling or shearing or for melting or sweating aluminum scrap unless the Secretary of Defense or an Assistant i 5ecretary of Defense designated by him determines, with respect to each facility involved, that the operation of such facility is in the national interest. SEC. 613. (a) During the current fiscal year, the President may exempt appropriations, funds, and contract authorizations, available for military functions under the Department of Defense, from the provisions of subsection (c) of section 3679 of the Revised Statutes, as amended, whenever he deems such action to be necessary in the interests of national defense. (b) Upon determination by the President that such action is necessary, the Secretary of Defense is authorized to provide for the cost of an airborne alert as an excepted expense in accordance with the provisions of Revised Statutes 3732 (41 U.S.C. 11). (c) Upon determination by the President that it is necessary to increase the number of military personnel on active duty beyond the number for which funds are provided in this Act, the Secretary of Defense is authorized to provide for the cost of such increased military personnel, as an excepted expense in accordance with the provisions of Revised Statutes 3732 (41 U.S.C. 11). (d) The Secretary of Defense shall immediately advise Congress of the exercise of any authority granted in this section, and shall report monthly on the estimated obligations incurred pursuant to subsections (b) and (c). SEC. 614. No appropriation contained in this Act shall be available in connection with the operation of commissary stores of the agencies of the Department of Defense for the cost of purchase (including commercial transportation in the United States to the place of sale but excluding all transportation outside the United States) and maintenance of operating equipment and supplies, and for the actual or estimated cost of utilities as may be furnished by the Government and of shrinkage, spoilage, and pilferage of merchandise under the control of such commissary stores, except as authorized under regulations promulgated by the Secretaries of the military departments concerned, with the approval of the Secretary of Defense, which regulations shall provide for reimbursement therefor to the appropriations concerned and, notwithstanding any other provision of law, shall provide for the adjustment of the sales prices in such commissary stores to the extent necessary to furnish sufficient gross revenue from sales of commissary stores to make such reimbursement: Provided, That under such regulations as may be issued pursuant to this section all utilities may be furnished without cost to the commissary stores outside the continental United States and in Alaska: Provided further, That no appropriation contained in this Act shall be available in connection with the operation of commissary stores within the continental United States unless the Secretary of Defense has certified that items normally procured from commissary stores are not otherwise available at a reasonable distance and a reasonable price in satisfactory quality and quantity to the military and civilian employees of the Department of Defense. SEC. 615. Notwithstanding any other provision of law, Executive order, or regulation, no part of the appropriations in this Act shall be available for any expenses of operating aircraft under the jurisdiction of the Armed Forces for the purpose of proficiency flying except in accordance with the regulations issued by the Secretaries of the Departments concerned and approved by the Secretary of Defense which shall establish proficiency standards and maximum and minimum flying hours for this purpose: Provided, That without regard to

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any provision of law or Executive order prescribing minimum flight requirements, such regulations may provide for the payment of flight pay at the rates prescribed in section 301 of title 37, United States Code, to certain members of the Armed Forces otherwise entitled to receive flight pay during the current fiscal year (1) who have held aeronautical ratings or designations for not less than fifteen years, or (2) whose particular assignment outside the United States or in Alaska makes it impractical to participate in regular aerial flights. SEC. 616. No part of any appropriation contained in this Act shall be available for expense of transportation, packing, crating, temporary storage, drayage, and unpacking of household goods and personal effects in any one shipment having a net weight in excess of thirteen thousand five hundred pounds. SEC. 617. Vessels under the jurisdiction of the Department of Commerce, the Department of the Army, Department of the Air Force, or the Department of the Navy may be transferred or otherwise made available without reimbursement to any such agencies upon the request of the head of one agency and the approval of the agency having jurisdiction of the vessels concerned. SEC. 618. None of the funds provided in this Act shall be available for training in any legal profession nor for the payment of tuition for training in such profession: Provided, That this limitation shall not apply to the off-duty training of military personnel as prescribed by section 621 of this Act. SEC. 619. Not more than.20 per centum of the appropriations in this Act which are limited for obligation during the current fiscal year shall be obligated during the last two months of the fiscal year: Provided, That this section shall not apply to obligations for support of active duty training of civilian components or summer-camp training of the Eeserve Officers' Training Corps. SEC. 620. During the current fiscal year the agencies of the Department of Defense may accept the use of real property from foreign countries for the United States in accordance with mutual defense agreements or occupational arrangements and may accept services furnished by foreign countries as reciprocal international courtesies or as services customarily made available without charge; and such agencies may use the same for the support of the United States forces in such areas without specific appropriation therefor. I n addition to the foregoing, agencies of the Department of Defense may accept real property, services, and commodities from foreign countries for the use of the United States in accordance with mutual defense agreements or occupational arrangements and such agencies may use the same for the support of the United States forces in such areas, without specific appropriations therefor: Provided, That within thirty days after the end of each quarter the Secretary of Defense shall render to Congress and to the Bureau of the Budget a full report of such property, supplies, and commodities received during such quarter. SEC. 621. During the current fiscal year, appropriations available to the Department of Defense for research and development may be used for the purposes of section 2353 of title 10, United States Code, and for purposes related to research and development for which expenditures are specifically authorized in other appropriations of the service concerned. SEC. 622. No appropriation contained in this Act shall be available for the payment of more than 75 per centum of charges of educational institutions for tuition or expenses for off-duty training of military personnel, nor for the payment of any part of tuition or expenses

''^ ^'^*' '*^^'

Household goods.

V e s s e l s, transfer.

L e g a l training, restriction.

Obligated funds, 1970, limitation.

Use of foreign r e a l property.

Report to Cong r e s s and Budget Bureau.

R e s e a r c h and development funds. 70A Stat. 134.

Tuition payments, e t c, restriction.

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ROTC, loyalty requirements.

Procurement restrictions.

Bakery, laundry facilities.

Airmail reimbursement.

Furnishings and automobiles, purchase.

Uniforms.

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[83 STAT.

for such training for commissioned personnel who do not agree to remain on active duty for two years after completion of such training. SEC. 623. No part of the funds appropriated herein shall be expended for the support of any formally enrolled student in basic courses of the senior division, Reserve Officers' Training Corps, who has not executed a certificate of loyalty or loyalty oath in such form as shall be prescribed by the Secretary of Defense. SEC. 624. No part of any appropriation contained in this Act shall be available for the procurement of any article of food, clothing, cotton, woven silk or woven silk blends, spun silk yarn for cartridge cloth, synthetic fabric or coated synthetic fabric, or wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles) not grown, reprocessed, reused, or produced in the United States or its possessions, except to the extent that the Secretary of the Department concerned shall determine that a satisfactory quality and sufficient quantity of any articles of food or clothing or any f o rmof cotton, woven silk and woven silk blends, spun silk yarn for cartridge cloth, synthetic fabric or coated synthetic fabric, or wool grown, reprocessed, reused, or produced in the United States or its possessions cannot be procured as and when needed at United States market prices and except procurements outside the United States in support of combat operations, procurements by vessels in foreign waters and emergency procurements or procurements of perishable foods by establishments located outside the United States for the personnel attached thereto: Provided, That nothing herein shall preclude the procurement of foods manufactured or processed in the United States or its possessions: Provided further, That no funds herein appropriated shall be used for the payment of a price differential on contracts hereafter made for the purpose of relieving economic dislocations: Provided further, That none of the funds appropriated in this Act shall be used except that, so far as practicable, all contracts shall be awarded on a formally advertised competitive bid basis to the lowest responsible bidder. SEC. 625. None of the funds appropriated in this Act shall be used for the construction, replacement, or reactivation of any bakery, laundry, or dry-cleaning facility in the United States, its Territories or possessions, as to which the Secretary of Defense does not certify in writing, giving his reasons therefor, that the services to be furnished by such facilities are not obtainable from commercial sources at reasonable rates. SEC. 626. During the current fiscal year, appropriations of the Department of Defense shall be available for reimbursement to the Post Office Department for payment of costs of commercial air transportation of military mail between the United States and foreign countries. SEC. 627. Appropriations contained in this Act shall be available for the purchase of household furnishings, house trailers (for the purpose of relieving unusual- iridividual losses occasioned by the relocation of personnel from installations in France), and automobiles from military and civilian personnel on duty outside the continental United States, for the purpose of resale at cost to incoming personnel, and for providing furnishings, without charge, in other than public quarters occupied by military or civilian personnel of the Department of Defense on duty outside the continental United States or in Alaska, upon a determination^ under regulations approved by the Secretary of Defense, that such action is advantageous to the Government. SEC. 628. During the current fiscal year, appropriations available to the Department of Defense for pay of civilian employees shall be

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available for uniforms, or allowances therefor, as authorized by law (5 U.S.C.5901;80 Stat. 508). si Stat. 206. SEC. 629. During the current fiscal year, the Secretary of Defense j ^ ^ ^ ^ ^ " " ' " " " ' shall, upon requisition of the National Board for the Promotion of Eifle Practice, and without reimbursement, transfer from agencies of the Department of Defense to the Board ammunition from stock or which has been procured for the purpose in such amounts as he may determine. Travel Such appropriations of the Department of Defense available for penses. eX" obligation during the current fiscal year as may be designated by the Secretary of Defense shall be available for the travel expenses of military and naval personnel, including the reserve components, and members of the Reserve Officers' Training Corps attending regional, national, or international rifle matches. SEC. 630. Funds provided in this Act for congressional liaison activ- ,. congressional .

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ities of the Department of the Army, the Department 01 the Navy, the Department of the Air Force, and the Office of the Secretary of Defense shall not exceed $1,150,000: Provided. That this amount shall be available for apportionment to the Department of the Army, the Department of the Navy, the Department of the Air Force, and the Office of the Secretary of Defense as determined by the Secretary of Defense. SEC. 631. Of the funds made available by this Act for the services of the Military Airlift Command, $109,000,000 shall be available only for procurement of commercial transportation service from carriers participating in the civil reserve air. fleet program; and the Secretary of Defense shall utilize the services of such carriers which qualify as small businesses to the fullest extent found practicable: Provided, That the Secretary of Defense shall specify in such procurement, performance characteristics for aircraft to be used based upon modern aircraft operated by the civil air fleet. SEC. 632, Not less than $7,500,000 of the funds made available in this Act for travel expenses m connection with temporary duty and permanent change of station of civilian and military personnel of the Department of Defense shall be available only for the procurement of commercial passenger sea transportation service on American-flag vessels. SEC. 633. During the current fiscal year, appropriations available to the Department of Defense for operation may be used for civilian clothing, not to exceed $40 in cost for enlisted personnel: (1) discharged for misconduct, unfitness, unsuitability, or otherwise than honorably; (2) sentenced by a civil court to confinement in a civil prison or interned or discharged as an alien enemy; (3) discharged prior to completion of recruit training under honorable conditions for dependency, hardship, minority, disability, or for the convenience of the Government. SEC. 634. No part of the funds appropriated herein shall be available for paying the costs of advertising by any defense contractor, except advertising for which payment is made from profits, and such advertising shall not be considered a part of any defense contract cost. The prohibition contained in this section shall not apply with respect to advertising conducted by any such contractor, in compliance with regulations which shall be promulgated by the Secretary of Defense, solely for (1) the recruitment by that contractor of personnel required for the performance by the contractor of obligations under a defense contract, (2) the procurement of scarce items required by the contractor for the performance of a defense contract, or

liaison activities.

.^J[e"t'^^"''^ ^" ^^ *

. s^a transporta-

tion.

Civilian clothing.

triJ:tors'^ advrr' tising costs^ "-estrictions.

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text:
Page:Tom Swift and His Airship.djvu/168

158 the front sheet, under a heading of big, black type caught his eye. He started as he read it:

BANK LOOTERS ESCAPE IN RED AIRSHIP—FIRED AT BUT DISAPPEAR

"Great Jehosophat!" exclaimed Tom, in a low voice. "What on earth can this mean?"

"What?" inquired Mr. Damon. "Has anything happened?"

"Happened? I should say there had," was the answer. "Why, we're accused of having robbed the Shopton Bank of seventy-five thousand dollars the night before we left, and to have taken it away in the Red Cloud. There's a general alarm out for us! Why this is awful!"

"It's preposterous!" burst out Mr. Damon. "I'll have my lawyers sue this paper. Bless my stocks and bonds, I!"

"Hush! Not so loud," cautioned Tom, for the pretty waitress was watching them curiously. "Here, read this, and then we'll decide what to do. But one thing is certain, we must go back to Shopton at once to clear ourselves of this accusation."

title: Page:Tom Swift and His Airship.djvu/168


text:
Page:United States Statutes at Large Volume 83.djvu/514

 486

PUBLIC LAW 91-171-DEC. 29, 1969

[83 STAT.

(3) the disposal of scrap or surplus materials acquired by the contractor in the performance of a defense contract. New f a c i l i t i e s, SEC. 635. Funds appropriated in this Act for maintenance and restriction. repair of facilities and installations shall not be available for acquisition of new facilities, or alteration, expansion, extension, or addition of existing facilities, as defined in Department of Defense Directive 7040.2, dated January 18, 1961, in excess of $25,000: Provided, That the Secretary of Defense may amend or change the said directive during the current fiscal year, consistent with the purpose of this section* Transfer of SEC. 636. During the current fiscal year, the Secretary of Defense funds, authority. may, if he deems it vital to the security of the United States and in the national interest to further improve the readiness of the Armed Forces, including the reserve components, transfer under the authority and terms of the Emergency Fund an additional $200,000,000: Provided, That the transfer authority made available under the terms of the Emergency Fund appropriation contained in this Act is hereby broadened to meet the requirements of this section: Provided further, Report to That the Secretary of Defense shall notify Congress promptly of Congress, all transfers made pursuant to this authority. Contract paySEC. 637. None of the funds appropriated in this Act may be used ments in foreign to make payments under contracts for any program, project, or activity countries. in a foreign country unless the Secretary of Defense or his designee, after consultation with the Secretary of the Treasury or his designee, certifies to the Congress that the use, by purchase from the Treasury, of currencies of such country acquired pursuant to law is not feasible for the purpose, stating the reason therefor. Vietnamese SEC. 638. (a) Appropriations available to the Department of forces, etc., Defense during the current fiscal }^ear shall be available for their support. stated purposes to support: (1) Vietnamese and other free world forces in Vietnam; (2) local forces in Laos and Thailand; and for related costs, on such terms and conditions as the Secretary of Defense may determine. Report to (b) Within thirty days after the end of each quarter, the Secretary Congress. of Defense shall render to Congress a report with respect to the estimated value by purpose, by country, of support furnished from such appropriations. Working c a p i t a l SEC. 639. During the current fiscal year, cash balances in working funds. capital funds of the Department of Defense established pursuant to 76 Stat. 5 2 1. section 2208 of title 10, United States Code, may be maintained in only such amounts as are necessary at any time for cash disbursements to be made from such funds: Provided, That transfers may be made between such funds in such amounts as may be determined by the Secretary of Defeiise, with the approval of the Bureau of the Budget. Payments proSEC. 640. No part of the funds appropriated under this Act shall be hibited to conused to pay salaries of any Federal employee who is convicted in any victed r i o t e r s. Federal, State, or local court of competent jurisdiction, of inciting, promoting, or carrying on a riot, or any group activity resulting in material damage to property or injury to persons, found to be in violation of Federal, State, or local laws designed to protect persons or property in the community concerned. Loans to cam- v' SEC. 641. No part of the funds appropriated under this Act shall pus d i s r u p to r s, be used to provide a loan, guarantee of a loan or a grant to any appliprohibition. cant who has been conv'cted by any court of general jurisdiction of any crime which involves the use of or the assistance to others in the use of force, trespass or the seizure of property under control of an institution of higher education to prevent officials or students at such an institution from engaging in their duties or pursuing their studies.

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text:
Page:United States Statutes at Large Volume 83.djvu/515

 83 STAT. ]

PUBLIC LAW 91-172-DEC. 30, 1969

487

SEC. 642. (a) Amounts, as determined by the Secretary of Defense, Procurement -I

T 1

1

T-v'

< » i T - »

( • i i - n i,

p

funds, rescission.

and approved by the Director o t the Bureau oi the Budget, of any appropriations of the Department of Defense available for procurement (except Shipbuilding and Conversion, Navy) which (1) will remain unobligated as of the close of any fiscal year for which estimates are submitted and (2) which have been available for obligation for three or more fiscal years, shall be proposed for rescission. (b) Amounts, as determined by the Secretary of Defense and ^ ndl'^'^re^cission approved by the Director of the Bureau of the Buaget, of any appro- "" s, rescission, priations of the Department of Defense available for Shipbuilding which (1) will remain unobligated as of the close of any fiscal year for which estimates are submitted and (2) which have been available for obligation for five or more fiscal years, shall be proposed for rescission. (c) Amounts, as determined by the Secretary of Defense and. Research and 1 1

1

-r~v'

< « i i - r - «

i » n T - » T

p

developmenl:

approved by the Director oi the Bureau ot the Budget, o t any funds, rescission. appropriations of the Department of Defense available for research, development, test and evaluation (except Emergency Fund, Defense) which (1) will remain unobligated as of the close of any fiscal year for which estimates are submitted and (2) which have been available for obligation for two or more fiscal years, shall be proposed for rescission. SEC. 643. I n line with the expressed intention of the President of ^^1^^°^ °^ '^'^®'' the United States, none of the funds appropriated by this Act shall introduction of be used to finance the introduction of American ground combat troops combat troops, into Laos or Thailand. prohibition. This Act may be cited as the "Department of Defense Appropria- ^''°'^* ""^' tion Act, 1970." Approved December 29, 1969.

Public Law 91-172 AN ACT

December 30, 1969

To reform the income tax laws.

Be it enacted by the Senate and House of Representatives United States of America in Congress assembled,

— [ H. R. i3270]

of the

SECTION 1. SHORT TITLE, ETC. (a) SHORT TITLE.—This Act may be cited as the "Tax Eeform Act

of 1969". (b) TABLE OF CONTENTS.—

Tax Reform Act of 1969.

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text:
Page:United States Statutes at Large Volume 83.djvu/516

 488

PUBLIC LAW 91-172-DEC. 30, 1969

[83 STAT.

TITLE I—TAX EXEMPT ORGANIZATIONS Subtitle A—Private Foundations Sec. 101. Private foundations. Subtitle B—Other Tax Exempt Organizations Sec. 121. Tax on unrelated business income. TITLE II—INDIVIDUAL DEDUCTIONS Subtitle A—Charitable Contributions Sec. 201. Charitable contributions. Subtitle B—Farm Losses, Etc. Sec. 211. Gain from disposition of property used in farming where farm losses offset nonfarm income. Sec. 212. Livestock. Sec. 213. Deductions attributable to activities not engaged in for profit. Sec. 214. Gain from disposition of farm land. Sec. 215. Crop insurance proceeds. Sec. 216. Capitalization of costs of planting and developing citrus groves. Subtitle C—Interest Sec. 221. Interest. Subtitle D—Moving Expenses Sec. 231. Moving expenses. TITLE III—MINIMUM TAX; ADJUSTMENTS PRIMARILY AFFECTING INDIVIDUALS Subtitle A—Minimum Tax Sec. 301. Minimum tax for tax preferences. Subtitle B—Income Averaging Sec. 311. Income averaging.

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text:
Page:United States Statutes at Large Volume 83.djvu/517

 83 STAT. ]

PUBLIC LAW 91-172-DEC. 30, 1969

489

Subtitle C—Eestricted Property Sec. 321. Eestricted property. Subtitle D—Accumulation Trusts, Multiple Trusts, Etc. Sec. 331. Treatment of excess distributions by trusts. Sec. 332. Trust income for benefit of a spouse. TITLE IV—ADJUSTMENTS PRIMARILY A F F E C T I N G CORPORATIONS Subtitle A—Multiple Corporations Sec. 401. Multiple corporations. Subtitle B—Debt-Financed Corporate Acquisitions and Problems

Related

Sec. 411. Interest on indebtedness incurred by corporation to acquire stock or assets of another corporation. Sec. 412. Installment method. Sec. 413. Bonds and other evidences of indebtedness. Sec. 414. Limitation on deduction of bond premium on repurchase. Sec. 415. Treatment of certain corporate interests as stock or indebtedness. Subtitle C—Stock Dividends Sec. 421. Stock dividends. Subtitle D—Financial Institutions Sec. Sec. Sec. Sec.

431. 432. 433. 434.

Reserve for losses on loans; net operating loss carrybacks. Mutual savings banks, etc. Treatment of bonds, etc., held hj financial institutions. Limitation on deduction for dividends received by mutual savings banks, etc. Sec. 435. Foreign deposits in United States banks. Subtitle E—Depreciation Allowed Regulated Industries; Earnings and Profits Adjustment for Depreciation Sec. 441. Public utility property. Sec. 442. Effect on earnings and profits. TITLE V—ADJUSTMENTS AFFECTING INDIVIDUALS AND CORPORATIONS Subtitle A—Natural Resources Sec. Sec. Sec. Sec. Sec. Sec.

501. 602. 503. 504. 505. 506.

Percentage depletion rates. Treatment processes in the case of oil shale. Mineral production payments. Exploration expenditures. Continental shelf areas. Foreign tax credit with respect to certain foreign mineral income.

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Page:United States Statutes at Large Volume 83.djvu/518

 490

PUBLIC LAW 91-172-DEC. 30, 1969

[83 STAT.

Subtitle B—Capital Gains and Losses Sec. Sec. Sec. Sec. Sec. Sec.

511. Increase in alternative capital gains tax. 512. Capital losses of corporations. 513. Capital losses of individuals. 514. Letters, memorandums, etc. 515. Total distributions from qualified pension, etc., plans. 516. Other changes in capital gains treatment. Subtitle C—Real Estate Depreciation

Sec. 521. Depreciation of real estate. Subtitle D—Subchapter S Corporations Sec. 531. Qualified pension, etc., plans of small business corporations. TITLE VI—STATE AND LOCAL OBLIGATIONS Sec. 601. Arbitrage bonds. TITLE VII—EXTENSION OF TAX SURCHARGE AND EXCISE TAXES; TERMINATION OF INVESTMENT CREDIT Sec. 701. Extension of tax surcharge. Sec. 702. Continuation of excise taxes on conmiunication services and on automobiles. Sec. 703. Termination of investment credit. Sec. 704. Amortization of pollution control facilities. Sec. 705. Amortization of railroad rolling stock and right-of-way improvements. Sec. 706. Expenditures in connection with certain railroad rolling stock. Sec. 707. Amortization of certain coal mine safety equipment. TITLE VIII—ADJUSTMENT OF TAX BURDEN FOR INDIVIDUALS Sec. 801. Personal exemptions. Sec. 802. Low income allowance; increase in standard deduction. Sec. 803. Tax rates for single individuals and heads of household; optional tax. Sec. 804. Fifty-percent maximum rate on earned income. Sec. 805. Collection of income tax at source on wages. TITLE IX—MISCELLANEOUS PROVISIONS Sec. Sec. Sec. Sec. Sec.

Subtitle A—Miscellaneous Income Tax Provisions 901. Exclusion of additional living expenses. 902. Deductibilityof treble damage payments,finesand penalties, etc. 903. Accrued vacation pay. 904. Deduction of recoveries of antitrust damages, etc. 905. Corporations using appreciated property to redeem their own stock.

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Page:United States Statutes at Large Volume 83.djvu/519

 83 STAT. ] Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec.

PUBLIC LAW 91-172-DEC. 30, 1969

491

906. 907. 908. 909. 910. 911. 912. 913. 914. 915.

Keasonable accumulations by corporations. Insurance companies. Certain unit investment trusts. Foreign corporations not availed of to reduce taxes. Sales of certain low-income housing projects. Per-unit retain allocations. Foster children. Cooperative housing corporations. Personal holding company dividends. Eeplacement of property involuntarily converted within a 2-year period. Sec. 916. Change in reporting income on installment basis. Sec. 917. Recognition of gain in certain liquidations. Subtitle B—Miscellaneous Excise Tax Provisions Sec. 931, Concretemixers. Sec. 932. Constructive sale price. Subtitle C—Miscellaneous Administrative Provisions Sec. Sec. Sec. Sec. Sec. Sec.

941. 942. 943. 944. 945. 946.

Filing requirements. Computation of tax by Internal Revenue Service. Failure to make timely payment or deposit of tax. Declarations of estimated tax by farmers. Portion of salary, wages, or other income exempt from levy. Interest and penalties in case of certain taxable years. Subtitle D—United States Tax Court

Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec. Sec.

951. Status of Tax Court. 952. Appointment; term of office. 953. Salary. 954. Retirement. 955. Survivors. 956. Powers. 957. Tax disputes involving $1,000 or less. 958. Commissioners. 959. Notice of appeal. 960. Conforming amendments. 961. Continuation of status. 962. Effective dates.

TITLE X—INCREASE IN SOCIAL SECURITY

BENEFITS

Sec. 1001. Short title. Sec. 1002. Increase in old-age, survivors, and disability insurance benefits. Sec. 1003. Increase in benefits for certain individuals age 72 and over. Sec. 1004. Maximum amount of a wife's or husband's insurance benefit. Sec. 1005. Allocation to disability insurance trust fund. Sec. 1006. Disregarding of retroactive payment of O A S D I benefit increase. Sec. 1007. Disregarding of income of O A S D I recipients in determining need for public assistance, (c) AMENDMENT OF 1954 CODE.—Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1954.

i

of'^rll^*; ^:

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text:
Page:United States Statutes at Large Volume 83.djvu/520

 492

PUBLIC LAW 91-172-DEC. 30, 1969

[83 STAT.

TITLE I—TAX EXEMPT ORGANIZATIONS Subtitle A—Private Foundations

68A Stat. 163. 26 USC 501-

526" " " " " " '

SEC. 101. PRIVATE FOUNDATIONS. (a) IN GENERAL.—Subchapter F of chapter 1 (relating to exempt organizations) is amended by redesignating parts II, III, and IV as parts III, IV, and V, respectively, and by inserting after part I the following new part: "PART II—PRIVATE FOUNDATIONS "Sec. "Sec. "Sec. "SEC.

507. Termination of private foundation status. 508. Special rules with respect to section 501(c)(3) organizations. 509. Private foundation defined. 507. TERMINATION OF PRIVATE FOUNDATION STATUS. " (a) GENERAL RULE.—Except as provided in subsection (b), the

Post, p. 4 9 8.

status of any organization as a private foundation shall be terminated only if— "(1) such organization notifies the Secretary or his delegate (at such time and in such manner as the Secretary or his delegate may by regulations prescribe) of its intent to accomplish such termination, or "(2)(A) with respect to such organization, there have been either willful repeated acts (or failures to act), or a willful and flagrant act (or failure to act), giving rise to liability for tax under chapter 42, and " (B) the Secretary or his delegate notifies such organization that, by reason of subparagraph (A), such organization is liable for the tax imposed by subsection (c), and either such organization pays the tax imposed by subsection (c) (or any portion not abated under subsection (g)) or the entire amount of such tax is abated under subsection (g). " (b) SPECIAL RULES.— "(1) TRANSFER TO, OR OPERATION AS, PUBLIC CHARITY.—The

Post, p. 550.

status as a private foundation of any organization, with respect to which there have not been either willful repeated acts (or failures to act) or a willful and flagrant act (or failure to act) giving rise to liability for tax under chapter 42, shall be terminated if— " (A) such organization distributes all of its net assets to one or more organizations described in section 170(b)(1) ^^^ (other than in clauses (vii) and (viii)) each of which has been in existence and so described for a continuous period of at least 60 calendar months immediately preceding such distribution, or " (B)(i) such organization meets the requirements of paragraph (1), (2), or (3) of section 509(a) by the end of the 12-month period beginning with its first taxable year which begins after December 31, 1969, or for a continuous period of 60 calendar months beginning with the first day of any taxable year which begins after December 31, 1969, "(ii) such organization notifies the Secretary or his delegate (in such manner as the Secretary or his delegate may by regulations prescribe) before the commencement of such 12-month or 60-month period (or before the 90th day after the day on which regulations first prescribed under this subsection become final) that it is terminating its private foundation status, and

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text:
Page:Tom Swift and His Airship.djvu/169

Rh "Ha!" murmured Mr. Damon, as he read the article rapidly. "Now I know why they fired at us. They hoped to bring us down, capture us, and get the five thousand dollars reward!"

title: Page:Tom Swift and His Airship.djvu/169


text:
Page:United States Statutes at Large Volume 83.djvu/521

 83 STAT. ]

PUBLIC LAW 91-172-DEC. 30, 1969

"(iii) such organization establishes to the satisfaction of the Secretary or his delegate (in such manner as the Secretary or his delegate may by regulations prescribe) immediately after the expiration of such 12-month or 60-month period that such organization has complied with clause (i). If an organization gives notice under subparagraph (B) (ii) of the commencement of a 60-month period and such organization fails to meet the requirements of paragraph (1), (2), or (3) of section 509(a) for the entire 60-month period, this part and chapter 42 shall not apply to such organization for any taxable year within such 60-month period for which it does meet such requirements. " (2) TRANSFEREE FOUNDATIONS.—For purposes of this part, in the case of a transfer of assets of any private foundation to another private foundation pursuant to any liquidation, merger, redemption, recapitalization, or other adjustment, organization, or reorganization, the transferee foundation shall not be treated as a newly created organization. "(c) IMPOSITION OF TAX.—There is hereby imposed on each organization which is referred to in subsection (a) a tax equal to the lower of— "(1) the amount which the private foundation substantiates by adequate records or other corroborating evidence as the aggregate tax benefit resulting from the section 501(c)(3) status of such foundation, or " (2) the value of the net assets of such foundation.

493

^°^'' P- '*-'^'

ae'us^c'soi^^'

" (d) AGGREGATE TAX BENEFIT.—

"(1) IN GENERAL.—For purposes of subsection (c), the aggregate tax benefit resulting from the section 501(c)(3) status of any private foundation is the sum of— " (A) the aggregate increases in tax under chapters 1, 11, and 12 (or the corresponding provisions of prior law) which 26 USC i, 2001, would have been imposed with respect to all substantial con- ^^°^' tributors to the foundation if deductions for all contributions made by such contributors to the foundation after February 28, 1913, had been disallowed, and " (B) the aggregate increases in tax under chapter 1 (or the corresponding provisions of prior law) which would have been imposed with respect to the income of the private foundation for taxable years beginning after December 31, 1912, if (i) it had not been exempt from tax under section 501(a) (or the corresponding provisions of prior law), and (ii) in the case of a trust, deductions under section 642(c) (or the Post, p. 558. corresponding provisions of prior law) had been limited to 20 percent of the taxable income of the trust (computed without the benefit of section 642(c) but with the benefit ofsectionl70(b)(l)(A.)),and _ _ Pos^ p. 550. " (C) interest on the increases in tax determined under subparagraphs (A) and (B) from the first date on which each such increase would have been due and payable to the date on which the organization ceases to be a private foundation. " (2) SUBSTANTIAL CONTRIBUTOR.—

" (A) DEFINITION.—For purposes of paragraph (1), the term 'substantial contributor' means any person who contributed or beq^ueathed an aggregate amount of more than $5,000 to the private foundation, if such amount is more than 2 percent of the total contributions and bequests received by the foundation before the close of the taxable year of the

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text:
Page:United States Statutes at Large Volume 83.djvu/522

 494

PUBLIC LAW 91-172-DEC. 30, 1969

[83 STAT.

foundation in which the contribution or bequest is received by the foundation from such person. I n the case of a trust, the term 'substantial contributor' also means the creator of the trust. " (B) SPECIAL RULES.—For purposes of subparagraph "(i) each contribution or bequest shall be valued at fair market value on the date it was received, "(ii) in the case of a foundation which is in existence on October 9, 1969, all contributions and bequests received on or before such date shall be treated (except for purposes of clause (i)) as if received on such date, "(iii) an individual shall be treated as making all contributions and bequests made by his spouse, and "(iv) any person who is a substantial contributor on any date shall remain a substantial contributor for all subsequent periods. "(3) EEGULATIONS.—For purposes of tjiis section, the determination as to whether and to what extent there would have been any increase in tax shall be made in accordance with regulations prescribed by the Secretary or his delegate. "(e) VALUE

OF ASSETS.—For purposes of subsection

(c), the

value of the net assets shall be determined at whichever time such value is higher: (1) the first day on which action is taken by the organization which culminates in its ceasing to be a private foundation, or (2) the date on which it ceases to be a private foundation. "(f)

Post, p. 550.

Post. p. 523.

26 USC r5'oi^^"

LIABILITY I N CASE OF TRANSFERS OF ASSETS FROM PRIVATE

FOUNDATION.—For purposes of determining liability for the tax imposed by subsection (c) in the case of assets transferred by the private foundation, such tax shall be deemed to have been imposed on the first day on which action is taken by the organization which culminates in its ceasing to be a private foundation. " (g) ABATEMENT OF TAXES.—The Secretary or his delegate may abate the unpaid portion of the assessment of any tax imposed by subsection (c), or any liability in respect thereof, if— "(1) the private foundation distributes all of its net assets to one or more organizations described in section 1 7 0 (b)(1)(A) (other than in clauses (vii) and (viii)) each of which has been in existence and so described for a continuous period of at least 60 calendar months, or "(2) following the notification prescribed in section 6104(c) to the appropriate State officer, such State officer within one year notifies the Secretary or his delegate, in such manner as the Secretary or his delegate may by regulations prescribe, that corrective action has been initiated pursuant to State law to insure that the assets of such private foundation are preserved for such charitable ^^ other purposes specified in section 501(c)(3) as may be ordered or approved by a court of competent jurisdiction, and upon completion of the corrective action, the Secretary or his delegate receives certification from the appropriate State officer that such action has resulted in such preservation of assets. "SEC. 508. SPECIAL RULES WITH RESPECT TO SECTION 501(c)(3) ORGANIZATIONS. " (a) N E W ORGANIZATIONS M U S T NOTIFY SECRETARY T H A T THE Y ARE APPLYING FOR EECOGNITION OF SECTION 501(c)(3) STATUS.—

Except as provided in subsection (c), an organization organized after October 9, 1969, shall not be treated as an organization described in section 501(c)(3)—

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Page:United States Statutes at Large Volume 83.djvu/523

 83 STAT. ]

PUBLIC LAW 91-172-DEC.30, 1969

495

"(1) unless it has given notice to the Secretary or his delegate, in such manner as the Secretary or his delegate may by regulations prescribe, that it is applying for recognition of such status, or "(2) for any period before the giving of such notice, if such notice is given after the time prescribed by the Secretary or his delegate by regulations for giving notice under this subsection. For purposes of paragraph (2), the time prescribed for giving notice under this subsection shall not expire before the 90th day after the day on which regulations first prescribed under this subsection become final. "(b)

PRESUMPTION T H A T ORGANIZATIONS ARE PRIVATE FOUNDA-

TIONS.—Except as provided in subsection (c), any organization (including an organization in existence on October 9, 1969) which is described in section 501(c)(3) and which does not notify the Secretary or his delegate, at such time and in such manner as the Secretary or his delegate may by regulations prescribe, that it is not a private foundation shall be presumed to be a private foundation. The time prescribed for giving notice under this subsection shall not expire before the 90th day after the day on which regulations first prescribed under this subsection become final.

68A Stat. 163. 26 USC 501.

" (c) EXCEPTIONS.—

"(1) MANDATORY EXCEPTIONS.—Subsections (a) and (b) shall not apply to— ' ' (A) churches, their integrated auxiliaries, and conventions or associations of churches, or " (B) any organization which is not a private foundation (as denned in section 509(a)) and the gross receipts of which in each taxable year are normally not more than $5,000. "(2) EXCEPTIONS BY REGULATIONS.—The Secretary or his delegate may by regulations exempt (to the extent and subject to such conditions as Taa,y be prescribed in such regulations) from the provisions of subsection (a) or (b) or both— " (A) educational organizations which normally maintain a regular faculty and curriculum and normally have a regularly enrolled body of pupils or students in attendance at the place where their educational activities are regularly carried on; and " (B) any other class of organizations with respect to which the Secretary or his delegate determines that full compliance with the provisions of subsections (a) and (b) is not necessary to the efficient administration of the provisions of this title relating to private foundations. "(d)

DISALLOWANCE or CERTAIN CHARITABLE, ETC.. DEDUCTIONS.— "(1) G I F T OR BEQUEST TO ORGANIZATIONS SUBJECT TO SECTION

507(c) TAX.—No gift or bequest made to an organization upon which the tax provided by section 507(c) has been imposed shall be allowed as a deduction under section 170,545 (b)(2), 556 (b)(2), 642 (c). 2055, 2106 (a)(2), or 2522, if such gift or bequest is made— " (A) by any person after notification is made under section 507(a), or " (B) by a substantial contributor (as defined in section 507(d)(2)) in his taxable year which includes the first day on which action is taken by such organization which culminates in the imposition of tax under section 507(c) and any subsequent taxable year. "(2)

G I F T OR BEQUEST TO TAXABLE PRIVATE FOUNDATION, SECTION TRUST, ETC.—NO gift or bequest made to an organization

4947 shall be allowed as a deduction under section 170, 545(b)(2), 556(b)(2), 642(c), 2055, 2106(aj(2), or 2522, if such gift or bequest is made

^^^^"^^^^^f^ ^ us^^fy^o, 26 545,556. 642! 2055, 2106, 2522.

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Page:United States Statutes at Large Volume 83.djvu/524

 496

PUBLIC LAW 91-172-DEC. 30, 1969 ost,p. 517.

26^sc^'5o\^^* IL

" (A) to a private foundation or a trust described in section 4947 in a taxable year for which it fails to meet the requirements of subsection (e) (determined without regard to subsection (e)(2)(B) and (C)), or " (B) to any organization in a period for which it is not treated as an organization described in section 501(c)(3) by reason of subsection (a). "(3) EXCEPTION.—Paragraph (1) shall not apply if the entire amount of the unpaid portion of the tax imposed by section 507(c) is abated by the Secretary or his delegate under section 507(g). "(e)

Post, p. 502. Post, p. 500. Post,

p. 507.

Post, p. 5 1 1. Post, p. 513.

GOVERNING INSTRUMENTS.— " (1) GENERAL RULE.—A private

foundation shall not be exempt from taxation under section 501(a) unless its governing instrument includes provisions the effects of which are— " (A) to require its income for each taxable year to be distributed at such time and in such manner as not to subject the foundation to tax under section 4942, and " (B) to prohibit the foundation from engaging in any act of self-dealing (as defined in section 4941(d)), from retaining any excess business holdings (as defined in section 4943(c)), from making any investments in such manner as to subject the foundation to tax under section 4944, and from making any taxable expenditures (as defined in section 4945(d)). "(2)

Post, p. 550.

Post. p. 553.

SPECIAL

RULES FOR EXISTING

PRIVATE

FOUNDATIONS.—

I n the case of any organization organized before January 1, 1970, paragraph (1) shall not apply— " (A) to any taxable year beginning before January 1, 1972, '• " (B) to any period after December 31, 1971, during the pendency of any judicial proceeding begun before January 1, 1972, by the private foundation which is necessary to reform, iI or to excuse such foundation from compliance with, its governing instrument or any other instrument in order to meet the requirements of paragraph (1), and " (G) to any period after the termination of any judicial proceeding described in subparagraph (B) during which its governing instrument or any other instrument does not permit it to meet the requirements of paragraph (1). "SEC. 509. PRIVATE FOUNDATION DEFINED. " (a) GENERAL RULE.—For purposes of this title, the term 'private foundation' means a domestic or foreign organization described in section 501(c)(3) other than— ii(^i^ g^j^ organization described in section 170(b)(1)(A) (other than in clauses (vii) and ( v i i i)); " (2) an organization which— ,; " ( ^) normally receives more than one-third of its support in each taxable year from any combination of— "(1) gifts, grants, contributions, or membership fees, '^

54^°^'' ^^' ^'*^'

[83 STAT.

"(ii) gross receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities, in an activity which is not an unrelated trade or business (within the meaning of section 513), not including such receipts from any person, or from any bureau or similar agency of a governmental unit (as described in section 1 7 0 (c)(1)), in any taxable year to the extent such receipts exceed the greater of $5,000 or 1 percent of the organization's support in such taxable year,

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from persons other than disqualified persons (as defined in section 4946) with respect to the organization, from governmental units described m section 170(c)(1), or from organizations described in section 170(b)(1)(A) (other than in clauses (vii) and (viii)), and " (B) normally receives not more than one-third of its support in each taxable year from gross investment income (as defined in subsection (e)); "(3) an organization which— " (A) IS organized, and at all times thereafter is operated, exclusively for the benefit of, to perform the functions of, or to carry out the purposes of one or more specified organizations described in paragraph (1) or (2), " (B) is operated, supervised, or controlled by or in connection with one or more organizations described in paragraph (1) or (2),and " (C) is not controlled directly or indirectly by one or more disqualified persons (as defined in section 4946) other than foundation managers and other than one or more organizations described in paragraph (1) or (2); and "(4) an organization which is organized and operated exclusively for testing for public safety. For purposes of paragraph (3), an organization described in paragraph (2) shall be deemed to include an organization described in section 501(c)(4), (5), or (6) which would be described in paragraph (2) if it were an organization described in section 501(c)(3). "(b) CONTINUATION OF PRIVATE FOUNDATION STATUS.—For purposes of this title, if an organization is a private foundation (within the meaning of subsection (a)) on October 9, 1969, or becomes a private foundation on any subsequent date, such organization shall be treated as a private foundation for all periods after October 9, 1969, or after such subsequent date, unless its status as such is terminated under section 507.

497

Post,

p. 515.

^°s(, p. 550.

26 USC^*5o\^^'

" (c) STATUS or ORGANIZATION AFTER TERMINATION OF PRIVATE FOUNDATION STATUS.—For purposes of this part, an organization the

status of which as a private foundation is terminated under section 507 shall (except as provided in section 507(b)(2)) be treated as an organization created on the day after the date of such termination. " (d) DEFINITION OF SUPPORT.—For purposes of this part and chapter 42, the term 'support' includes (but is not limited to) — ^°^'' P- '^^S. "(1) gifts, grants, contributions, or membership fees, "(2) gross receipts from admissions, sales of merchandise, performance of services, or furnishing of facilities in any activity which is not an unrelated trade or business (within the meaning of section 513), 54^°^''^^ 541, "(3) net income from unrelated business activities, whether or not such activities are carried on regularly as a trade or business, "(4) gross investment income (as defined in subsection (e)), "(5) tax revenues levied for the benefit of an organization and either paid to or expended on behalf of such organization, and "(6) the value of services or facilities (exclusive of services or facilities generally furnished to the public without charge) furnished by a governmental unit referred to in section 170(c)(1) to an organization without charge. Such term does not include any gain from the sale or other disposition of property which would be considered as gain from the sale or exchange of a capital asset, or the value of exemption from any Federal, State, or local tax or any similar benefit.

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[83 STAT.

"(e) DEFINITION or GROSS INVESTMENT INCOME.—For purposes of

Post, p. 536.

26 USC 4001^

4931

subsection (d), the term 'gross investment income' means the gross amount of income from interest, dividends, rents, and royalties, but not including any such income to the extent included in computing the tax imposed by section 511." (b) AMENDMENT OF SUBTITLE D.—Subtitle D (relating to miscellaneous excise taxes) is amended by adding at the end thereof the following new chapter: "CHAPTER 42.—PRIVATE FOUNDATIONS "Sec. "Sec. "Sec. "Sec. "Sec. "Sec. "Sec. "Sec. "Sec.

Excise tax based on investment income. Taxes on self-dealing. Taxes on failure to distribute income. Taxes on excess business holdings. Taxes on investments which jeopardize charitable purpose. Taxes on taxable expenditures. Definitions and special rules. Application of taxes to certain nonexempt trusts. Application of taxes and denial of exemption with respect to certain foreign organizations. "SEC. 4940. EXCISE TAX BASED ON INVESTMENT INCOME. ''(a) TAX-EXEMPT FOUNDATIONS.—There is hereby imposed on each

26^s'c^5o\^^'

26 USC 1-1563.

4940. 4941. 4942. 4943. 4944. 4945. 4946. 4947. 4948.

private foundation which is exempt from taxation under section 501 ^^) ^^^ *^^ taxable year, with respect to the carrying on of its activities, a tax equal to 4 percent of the net investment income of such foundation for the taxable year. "'(b) TAXABLE FOUNDATIONS.—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— "(1) the amount (if any) by which the sum of (A) the tax imposed under subsection (a) (computed as if such subsection applied to such private foundation for the taxable year), plus (B) the amount of the tax which would have been imposed under section 511 for the taxable year if such private foundation had been exempt from taxation under section 501(a), exceeds "(2) the tax imposed under subtitle A on such private foundation for the taxable year. "(c) N E T INVESTMENT INCOME DEFINED.—

"(1) IN GENERAL.—For purposes of subsection (a), the net investment income is the amount by which (A) the sum of the gross investment income and the net capital gain exceeds (B) the deductions allowed by paragraph (3). Except to the extent inconsistent with the provisions of this section, net investment income shall be determined under the principles of subtitle A. " (2) GROSS INVESTMENT INCOME.—For purposes of paragraph

(1), the term 'gross investment income' means the gross amount of income from interest, dividends, rents, and royalties, but not including any such income to the extent included in computing the tax imposed by section 511. "(3)

DEDUCTIONS.—

" (A) IN GENERAL.—For purposes of paragraph (1), there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred for the production or collection of gross investment income or for the management, conservation, or maintenance of property held for the production of such income, determined with the modifications set forth in subparagraph (B).

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" (B) MODIFICATIONS.—For purposes of subparagraph (A)" (i) The deduction provided by section 167 shall be ^J^^°^*' P^' ^^^' allowed, but only on the basis of the straight line method of depreciation. "(ii) The deduction for depletion provided by section 611 shall be allowed, but such deduction shall be deteresA stat, 207. mined without regard to section 613 (relating to percent^^ ^^^ ^'^^' age depletion). Post, p. 629. "(4:) CAPITAL GAINS AND LOSSES.—For purposes of paragraph

(1) in determining net capital gain— " (A) 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 ^osf, p. sse. gain or loss from the sale or other disposition of such property is taken into account for purposes of such tax). " (B) The basis for determining gain in the case of property held by the private foundation on December 31, 1969, and continuously thereafter to the date of its disposition shall be deemed to be not less than the fair market value of such property on December 31, 1969. " (C) Losses from sales or other dispositions of property shall be allowed only to the extent of gams from such sales or other dispositions, and there shall be no capital loss carryovers. "(5) TAX-EXEMPT INCOME.—For purposes of this section, net investment income shall be determined by applying section 103 Post. p. sse. (relating to interest on certain governmental obligations) and section 265 (relating to expenses and interest relating to tax- ^^l^f^l): ^^' 78 Stat. 56. exempt income). "SEC. 4941. TAXES ON SELF-DEALING. " (a) INITIAL TAXES.—

" (1) O N SELF-DEALER.—There is hereby imposed a tax on each act of self-dealing between a disqualified person and a private foundation. The rate of tax shall be equal to 5 percent of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period. The tax imposed by this paragraph shall be paid by any disqualified person (other than a foundation manager acting only as such) who participates in the act of self-dealing. I n the case of a government official (as defined in section 4946(c)), a tax shall be imposed by this paragraph only if such disqualified person participates in the act of self-dealing knowing that it is such an act. "(2) O N FOUNDATION MANAGER.—In any case in which a tax is imposed by paragraph (1), there is hereby imposed on the participation of any foundation manager in an act of self-dealing between a disqualified person and a private foundation, knowing that it is such an act, a tax equal to 21/1 percent of the amount involved with respect to the act of self-dealing for each year (or part thereof) in the taxable period, unless such participation is not willful and is due to reasonable cause. The tax imposed by this paragraph shall be paid by any foundation manager who participated in the act of self-dealing.

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PUBLIC LAW 91-172-DEC. 30, 1969

[83 STAT.

" (b) ADDITIONAL TAXES.—

"(1) O N SELF-DEALER.—In any case in which an initial tax is imposed by subsection (a)(1) on an act of self-dealing by a disqualified person with a private foundation and the act is not corrected within the correction period, there is hereby imposed a tax equal to 200 percent of the amount involved. The tax imposed by this paragraph shall be paid by any disqualified person (other than a foundation manager acting only as such) who participated in the act of self-dealing. "(2) O N FOUNDATION MANAGER.—In any case in which an additional tax is imposed by paragraph (1), if a foundation manager refused to agree to part or all of the correction, there is hereby imposed a tax equal to 50 percent of the amount involved. The tax imposed by this paragraph shall be paid by any foundation manager who refused to agree to part or all of the correction. " (c) SPECIAL RULES.—For purposes of subsections (a) and (b) — "(1) JOINT AND SEVERAL LIABILITY.—If more than one person is liable under any paragraph of subsection (a) or (b) with respect to any one act of self-dealing, all such persons shall be jointly and severally liable under such paragraph with respect to such act. " (2) $10,000 LIMIT FOR MANAGEMENT.—With respect to any one

act of self-dealing, the maximum amount of the tax imposed by subsection (a)(2) shall not exceed $10,000, and the maximum amount of the tax imposed by subsection (b)(2) shall not exceed $10,000. " (d) SELF-DEALING.—

"(1) IN GENERAL.—For purposes of this section, the term 'self-dealing' means any direct or indirect— " (A) sale or exchange, or leasing, of property between a private foundation and a disqualified person; " (B) lending of money or other extension of credit between a private foundation and a disqualified person; " (C) furnishing of goods, services, or facilities between a private foundation and a disqualified person; " (D) payment of compensation (or payment or reimbursement of expenses) by a private foundation to a disqualified person; " (E) transfer to, or use by or for the benefit of, a disqualified person of the income or assets of a private foundation; and " (F) agreement by a private foundation to make any payment of money or other property to a government official (as defined in section 4946(c)), other than an agreement to employ such individual for any period after the termination of his government service if such individual is terminating his government service within a 90-day period. " (2) SPECIAL RULES.—For purposes of paragraph (1) —

"rusc'soK"-

" (A) the transfer of real or personal property by a disqualified person to a private foundation shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien which the foundation assumes or if it is subject to a mortgage or similar lien which a disqualified person placed on the property within the 10-year period ending on the date of the transfer; " (B) the lending of money by a disqualified person to a private foundation shall not be an act of self-dealing if the loan is without interest or other charge and if the proceeds of the loan are used exclusively for purposes specified in section 501(c)(3);

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501

" (C) the furnishing of goods, services, or facilities by a disqualified person to a private foundation shall not be an act of self-dealing if the furnishing is without charge and if the goods, services, or facilities so furnished are used exclusively for purposes specified in section 501(c)(3); 68A Stat. lea. " (D) the furnishing of goods, services, or facilities by a '' ' private foundation to a disqualified person shall not be an act of self-dealing if such furnishing is made on a basis no more favorable than that on which such goods, services, or facilities are made available to the general public; " (E) except in the case of a government official (as defined in section 4946(c)), the payment of compensation (and the payment or reimbursement of expenses) by a private foundation to a disqualified person for personal services which are reasonable and necessary to carrying out the exempt purpose of the private foundation shall not be an act of self-dealing if the compensation (or payment or reimbursement) is not excessive; " (F) any transaction between a private foundation and a corporation which is a disqualified person (as defined in section 4946(a)), pursuant to any liquidation, merger, redemption, recapitalization, or other corporate adjustment, organization, or reorganization, shall not be an act of selfdealing if all of the securities of the same class as that held by the foundation are subject to the same terms and such terms provide for receipt by the foundation of no less than fair market value; and " (G) in the case of a government official (as defined in section 4946(c)), paragraph (1) shall in addition not apply to— "(i) prizes and awards which are subject to the provisions of section 74(b), if the recipients of such prizes and awards are selected from the general public, "(ii) scholarships and fellowship grants which are subject to the provisions of section 117(a) and are to be used for study at an educational institution described in section 151(e)(4), "(iii) any annuity or other payment (forming part of a stock-bonus, pension, or profit-sharing plan) by a trust which is a qualified trust under section 401, "(iv) any annuity or other payment under a plan which meets the requirements of section 404(a)(2), " (v) any contribution or gift (other than a contribution or gift of money) to, or services or facilities made available to, any such individual, if the aggregate value of such contributions, gifts, services, and facilities to, or made available to, such individual during any calendar year does not exceed $25, "(vi) any payment made under chapter 41 of title 5, United States Code, or _ _ fulc'iiot " (vii) any payment or reimbursement of traveling ex- 41 is. penses for travel solely from one point in the United States to another point in the United States, but only if such payment or reimbursement does not exceed the actual cost of the transportation involved plus an amount for all other traveling expenses not in excess of 125 percent of the maximum amount payable under section 5702(a) of title 5, United States Code, for like travel ^"'^' p- '^oby employees of the United States.

31-100 0 - 7 0 - 3 4

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68A Stat. 770. 26 USC 6212.

26 USC 6213.

PUBLIC LAW 91-172-DEC. 30, 1969

[83 STAT.

"(e) OTHER DEFINITIONS.—For purposes of this section— "(1) TAXABLE PERIOD.—The term 'taxable period' means, with respect to any act of self-dealing, the period beginning with the date on which the act of self-dealing occurs and ending on whichever of the following is the earlier: (A) the date of mailing of a notice of deficiency with respect to the tax imposed by subsection (a)(1) under section 6212, or (B) the date on which correction of the act of self-dealing is completed. "(2) AMOUNT INVOLVED.—The term 'amount involved' means, with respect to any act of self-dealing, the greater of the amount of money and the fair market value of the other property given or the amount of money and the fair market value of the other property received; except that, in the case of services described in subsection (d)(2)(E), the amount involved shall be only the excess compensation. For purposes of the preceding sentence, the fair market value— " (A) in the case of the taxes imposed by subsection (a), shall be determined as of the date on which the act of selfdealing occurs; and " (B) in the case of the taxes imposed by subsection (b), shall be the highest fair market value during the correction period. "(3) CORRECTION.—The terms 'correction' and 'correct' mean, with respect to any act of self-dealing, undoing the transaction to the extent possible, but in any case placing the private foundation in a financial position not worse than that in which it would be if the disqualified person were dealing under the highest fiduciary standards. " (4) CORRECTION PERIOD.—The term 'correction period' means, with respect to any act of self-dealing, the period beginning with the date on which the act of self-dealing occurs and ending 90 days after the date of mailing of a notice of deficiency with respect to the tax imposed by subsection (b)(1) under section 6212, extended by— " (A) any period in which a deficiency cannot be assessed under section 6213(a), and " (B) any other period which the Secretary or his delegate determines is reasonable and necessary to bring about correction of the act of self-dealing. "SEC. 4942. TAXES ON FAILURE TO DISTRIBUTE INCOME. " (a) INITIAL TAX.—There is hereby imposed on the undistributed income of a private foundation for any taxable year, which has not been distributed before the first day of the second (or any succeeding) taxable year following such taxable year (if such first day falls within the taxable period), a tax equal to 15 percent of the amount of such income remaining undistributed at the beginning of such second (or succeeding) taxable year. The tax imposed by this subsection shall not apply to the undistributed income of a private foundation— " (1) for any taxable year for which it is an operating foundation (as defined in subsection (j)(3)), o r "(2) to the extent that the foundation failed to distribute any amount solely because of an incorrect valuation of assets under subsection (e), if— " (A) the failure to value the assets properly was not willful and was due to reasonable cause, " (B) such amount is distributed as qualifying distributions (within the meaning of subsection (g)) by the foundation

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503

during the allowable distribution period (as defined in subsection (j)(4)), " (C) the foundation notifies the Secretary or his delegate that such amount has been distributed (within the meaning of subparagraph (B)) to correct such failure, and " (D) such distribution is treated under subsection (h)(2) as made out of the undistributed income for the taxable year for which a tax would (except for this paragraph) have been imposed under this subsection. "(b) ADDiTioisrAL TAX.—In any case in which an initial tax is imposed under subsection (a) on the undistributed income of a private foundation for any taxable year, if any portion of such income remains undistributed at the close of the correction period, there is hereby imposed a tax equal to 100 percent of the amount remaining undistributed ajt such time. "(c) UNDISTRIBUTED INCOME.—For purposes of this section, the Definition. term 'undistributed income' means, with respect to any private foundation for any taxable year as of any time, the amount by which— " (1) the distributable amount for such taxable year, exceeds "(2) the qualifying distributions made before such time out of such distributable amount. " (d) DISTRIBUTABLE A M O U N T. — For purposes of this section, the Definition. term 'distributable amount' means, with respect to any foundation for any taxable year, an amount equal to— " (1) the minimum investment return or the adjusted net income (whichever is higher), reduced by "(2) the sum of the taxes imposed on such private foundation for the taxable year under subtitle A and section 4940. ^^ ^^^ ris63. " (e) MINIMUM INVESTMENT RETURN.—

"(1) IN GENERAL.—For purposes of subsection (d), the minimum investment return for any private foundation for any taxable year is the amount determined by multiplying— " (A) the excess of (i) the aggregate fair market value of all assets of the foundation other than those being used (or held for use) directly in carrying out the foundation's exempt purpose over (ii) the acquisition indebtedness with respect to such assets (determined under section 514(c)(1), but without regard to the taxable year in which the indebtedness was incurred), by " (B) the applicable percentage for such year, determined under paragraph (3). "(2) VALUATION.—For purposes of paragraph (1)(A), the fair market value of securities for which market quotations are readily available shall be determined on a monthly basis. For all other assets, the fair market value shall be determined at such times and in such manner as the Secretary or his delegate shall by regulations prescribe. " (3) APPLICABLE PERCENTAGE.—For purposes of

Post, p.'^45.

paragraph

(1)(B), the applicable percentage for taxable years beginning in 1970 is 6 percent. The applicable percentage for any taxable year beginning after 1970 shall be determined and published by the Secretary or his delegate and shall bear a relationship to 6 percent which the Secretary or his delegate determines to be comparable to the relationship which the money rates and investment yields for the calendar year immediately preceding the beginning of the taxable year bear to the money rates and investment yields for the calendar year 1969. " (4) TRANSITIONAL RULES.—

"For special rules applicable to organizations created before May 27, 1969, see section 101(1)(3) of the Tax Reform Act of 1969.

Post. p. 534.

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PUBLIC LAW 91-172-DEC. 30, 1969 "(f)

26 USC n' ^ ^^'

[83 STAT.

ADJUSTED N E T INCOME.—

"(1) DEFINED.—For purposes of subsection (d), the term 'adjusted net income' means the excess (if any) of— " (A) the gross income for the taxable year (determined with the income modifications provided by paragraph (2)), over " (B) the sum of the deductions (determined with the deduction modifications provided by paragraph (3) ^ which would be allowed to a corporation subject to the tax imposed ^7 section 11 for the taxable year. " (2) INCOME MODIFICATIONS.—The income modifications re-

Post, p. 656.

Ts^stlt^'se ^^''

ferred to in p a r a ^ a p h (1)(A) are as follows: " (A) section 103 (relating to interest on certain governmental obligations) shall not apply, " (B) capital gains and losses from the sale or other disposition oi property shall be taken into account only in an amount equal to any net short-term capital gain for the taxable year; and " (C) there shall be taken into account— " (i) amounts received or accrued as repayments of amounts which were taken into account as a qualifying distribution within the meaning of subsection (g)(1)(A) for any taxable year; "(ii) notwithstanding subparagraph (B), amounts received or accrued from the sale or other disposition of property to the extent that the acquisition of such property was taken into account as a qualifying distribution (within the meaning of subsection (g)(1)(B)) for any taxable year; and " (iii) any amount set aside under subsection (g)(2) to the extent it is determined that such amount is not necessary for the purposes for which it was set aside. "(3) DEDUCTION MODIFICATIONS.—The deduction modifications referred to in paragraph (1)(B) are as follows: " (A) no deduction shall be allowed other than all the ordinary and necessary expenses paid or incurred for the production or collection of gross income or for the management, conservation, or maintenance of property held for the production of such income and the allowances for depreciation and depletion determined under section 4940(c)(3)(B), and " (B) section 265 (relating to expenses and interest relating to tax-exempt interest) shall not apply. "(4) TRANSITIONAL RULE.—Forpurposesof paragraph (2)(B), the basis (for purposes of determining gain) of property held by a private foundation on December 31, 1969, and continuously thereafter to the date of its disposition, shall be deemed to be not less than the fair market value of such property on December 31, 1969. "(g)

Post,

p. 553.

QUALIFYING DISTRIBUTIONS DEFINED.—

" (1) IN GENERAL.—For purposes of this section, the term 'qualifying distribution' means— " (A) any amount (including administrative expenses) paid to accomplish one or more purposes described in section 170(c)(2)(B), other than any contribution to (i) an organization controlled (directly or indirectly) by the foundation or one or more disqualified persons (as defined in section 4946) with respect to the foundation, except as provided in paragraph (3), or (ii) a private foundation which is not an operating foundation (as defined in subsection (j)(3)), except as provided in paragraph (3), or

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