Page:United States Statutes at Large Volume 53 Part 1.djvu/81

This page needs to be proofread.


INCOME TAX 69 (B) As a part of its long-term capital gains or losses, its proportionate share of the net long-term capital gain or loss of the common trust fund; (C) Its proportionate share of the ordinary net income or the ordinary net loss of the common trust fund, computed as provided in subsection (d). (2) CREDIT FOR PARTIALLY EXEMPT INTEREST.-The proportion- ate share of each participant in the amount of interest specified in section 25 (a) received by the common trust fund shall for the purposes of this Supplement be considered as having been received by such participant as such interest. (d) COMPUTATION OF COMMON TRUST FUND INcoME. -The net income of the common trust fund shall be computed in the same manner and on the same basis as in the case of an individual, except that- (1) There shall be segregated the short-term capital gains and losses and the long-term capital gains and losses, and the net short-term capital gain or loss and the net long-term capital gain or loss shall be computed; (2) After excluding all items of either short-term or long- term capital gain or loss, there shall be computed- (A) An ordinary net income which shall consist of the excess of the gross income over the deductions; or (B) An ordinary net loss which shall consist of the excess of the deductions over the gross income; (3) The so-called "charitable contribution" deduction allowed by section 23 (o) shall not be allowed. (e) ADMISSION AND WITHDRAWAL-NO gain or loss shall be realized by the common trust fund by the admission or withdrawal of a participant. The withdrawal of any participating interest by a par- ticipant shall be treated as a sale or exchange of such interest by the participant. (f) RETURNS BY BANK. -Every bank (as defined in section 104) maintaining a common trust fund shall make a return under oath for each taxable year, stating specifically, with respect to such fund, the items of gross income and the deductions allowed by this chapter, and shall include in the return the names and addresses of the participants who would be entitled to share in the net income if distributed and the amount of the proportionate share of each participant. The return shall be sworn to as in the case of a return filed by the bank under section 52. (g) DIFFERENT TAXABLE YEARS OF COMMON TRUST FUND AND PARTICIPANT.-If the taxable year of the common trust fund is differ- ent from that of a participant, the inclusions with respect to the net income of the common trust fund, in computing the net income of the participant for its taxable year shall be based upon the net income of the common trust fund for any taxable year of the common trust fund (whether beginning on, before, or after January 1, 1939) ending within or with the taxable year of the participant. Supplement F-Partnerships SEC. 181. PARTNERSHIP NOT TAXABLE. Individuals carrying on business in partnership shall be liable for income tax only in their individual capacity. SEC. 182 . TAX OF PARTNERS. In computing the net income of each partner, he shall include, whether or not distribution is made to him- (a) As a part of his short-term capital gains or losses, his dis- tributive share of the net short-term capital gain or loss of the partnership.