(a) RESIDENTS.- In the case of a citizen or resident- (1) SPECIFIC EXEMPTION.- An exemption of $40,000, less the aggregate of the amounts claimed and allowed as specific exemp- tion in the computation of gift taxes for the calendar year 1932 and all calendar years intervening between that calendar year and the calendar year for which the tax is being computed under the laws applicable to such years. This exemption shall be applied in all computations in respect of the calendar year 1939 and previous calendar years for the purpose of computing the tax for the calendar year 1940 or any calendar year thereafter. (2) CHARITABLE, ETC., GIFrs. - The amount of all gifts made dur- ing such year to or for the use of- (A) the United States, any State, Territory, or any political subdivision thereof, or the District of Columbia, for exclusively public purposes; (B) a corporation, or trust, or community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to chil- dren or animals; no part of the net earnings of which inures to the benefit of any private shareholder or individual, and no substantial part of the activities of which is carrying on propa- ganda, or otherwise attempting, to influence legislation; (C) a fraternal society, order, or association, operating under the lodge system, but only if such gifts are to be used exclusively for religious, charitable, scientific, literary, or educational pur- poses, including the encouragement of art and the prevention of cruelty to children or animals; (D) posts or organizations of war veterans, or auxiliary units or societies of any such posts or organizations, if such posts, organizations, units, or societies are organized in the United States or any of its possessions, and if no part of their net earn- ings inures to the benefit of any private shareholder or individual; (E) the special fund for vocational rehabilitation authorized by section 12 of the World War Veterans' Act, 1924, 43 Stat. 611 (U. S. C., title 38 § 440). (b) NONIESIDENTS.-In the case of a nonresident not a citizen of the ITnited States, the amount of all gifts made during such year to or for the use of- (1) the United States, any State, Territory, or any political sub- division thereof, or the District of Columbia, for exclusively public purposes; (2) a domestic corporation organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, including the encouragement of art and the prevention of cruelty to children or animals; no part of the net earnings of which inures to the benefit of any private shareholder or individual, and no sub- stantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation; (3) a trust, or community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes; including the encouragement of art and the prevention of cruelty to children or animals, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation; but only if such gifts are to be used within the United States exclusively for such purposes; (4) a fraternal society, order, or association, operating under the lodge system, but only if such gifts are to be used within the United States exclusively for religious, charitable, scientific, literary, or GIFT TAX 147
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