SEC. 7701-Continued (a) (20) (in part) dential real property containing 4 or fewer family units or real property used primarily for church purposes, loans made for the improvement of residential real property containing 4 or fewer family units or real property used primarily for church purposes, or property acquired through the liquidation of defaulted loans described in this clause; "(E) not more than 18 percent of the amount of the total assets of which (as of the close of the taxable year) consists of assets other than those described in clause (i) of subparagraph (D), and not more than 36 percent of the amount of the total assets of which (as of the close of the taxable year) consists of assets other than those described in clause (ii) of subparagraph (D); and "(F) except for property described in subparagraph (C), not more than 3 percent of the assets of which consists of stock of any corporation. The term 'domestic building and loan association' also includes any association which, for the taxable year, would satisfy the requirements of the first sentence of this paragraph if '41 percent' were substituted for '36 percent' in subparagraph (E). Except in the case of the taxpayer's first taxable year beginning after the date of the enactment of the Revenue Act of 1962, the second sentence of this paragraph shall not apply to an association for the taxable year unless such association (i) was a domestic building and loan association within the meaning of the first sentence of this paragraph for the first taxable year preceding the taxable year, or (ii) was a domestic building and loan association solely by reason of the second sentence of this paragraph for the first taxable year preceding the taxable year (but not for the second preceding taxable year). At the election of the taxpayer, the percentages specified in this paragraph shall be applied on the basis of the average assets outstanding during the taxable year, in lieu of the close of the taxable year, computed under regulations prescribed by the Secretary or his delegate." Applicability: Taxable years beginning after October 16, 1962-the date of enact ment. (Id., § 6(g) (3), 76 Stat. 985.) Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 204(a) (3), 78 Stat. 36: "For the purpose of applying the provisions of sections 104" and inserting in lieu thereof-— "For the purpose of applying the provisions of section 79 with respect to group-term life insurance purchased for employees, for the purpose of applying the provisions of sections 104". 895 Paragraph (20) of section 7701(a) originally read as follows (68A Stat. 912): "(20) EMPLOYEE.-For the purpose of applying the provisions of sections 104, 105, and 106 with respect to accident and health insurance or accident and health plans, for the purpose of applying the provisions of section 101(b) with respect to employees' death benefits, and for the purpose of applying the provisions of subtitle A with respect to contributions to or under a stock bonus, pension, profit-sharing, or annuity plan, and with resp ect to distributions under such a plan, or by a trust forming part of such a plan, the term 'employee' shall include a full-time life insurance salesman who is considered an employee for the purpose of chapter 21, or in the case of services performed before January 1, 1951, who would be considered an employee if his services were performed during 1951." SEC. 7701-Continued (a) (20) (amended 1964)-Continued (a) (30) (added) Applicability: With respect to group-term life insurance provided after December 31, 1963, in taxable years ending after such date. (Id., § 204(d), 78 Stat. 37.) See amendment adding new section 79, p. 64 above. Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 7(h), 76 Stat. 988: means "(A) a citizen or resident of the United States, "(C) a domestic corporation, and "(D) any estate or trust (other than a foreign estate or foreign trust, within the meaning of section 7701(a) (31)).” Effective Date: October 16, 1962-the date of enactment. (a)(31)............. Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 7(h), 76 Stat. 988: (added) Amended Sec. 7701(a) by adding at the end thereof, after paragraph (30) (as added by the same amendment), the following new paragraph (31): (a) (32) _ _ (added) "(31) FOREIGN ESTATE OR TRUST.-The terms 'foreign estate' and 'foreign trust' mean an estate or trust, as the case may be, the income of which from sources without the United States is not includible in gross income under subtitle A.” Effective Date: October 16, 1962-the date of enactment. Oct. 23, 1962, H.R. 12599, P.L. 87-870, § 5(a), 76 Stat. 1161: Amended Sec. 7701(a) by adding at the end thereof, after paragraph (31) (as added by P.L. 87-834, §7(h)), the following new paragraph (32): "(32) COOPERATIVE BANK. The term 'cooperative bank' means an institution without capital stock organized and operated for mutual purposes and without profit, which "(A) either "(i) is an insured institution within the meaning of section 401(a) of the National Housing Act (12 U.S.C., sec. 1724 (a)), or "(ii) is subject by law to supervision and examination by State or Federal authority having supervision over such institutions, and "(B) meets the requirements of subparagraphs (B), (C), (D), (E), and (F) of paragraph (19) of this subsection (relating to definition of domestic building and loan association) determined with the application of the second, third, and fourth sentences of paragraph (19). In determining whether an institution meets the requirements referred to in subparagraph (B) of this paragraph, any reference to an association or to a domestic building and loan association contained in paragraph (19) shall be deemed to be a reference to such institution. In the case of an institution which, for the taxable year, is a cooperative bank within the meaning of the first sentence of this paragraph by reason of the application of the second and third sentences of paragraph (19) of this subsection, the deduction otherwise allowable under section 166(c) for a reason SEC. 7701-Continued able addition to the reserve for bad debts shall, under regulations prescribed by the Secretary or his delegate, be reduced in a manner consistent with the reductions provided by the table contained in section 593(b)(5)." Applicability: Taxable years beginning after October 16, 1962-the date of enactment of the Revenue Act of 1962 (P.L. 87-834). (Id., § 5(b), 76 Stat. 1162.) Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 234(b) (3), 78 Stat. 114-115: Amended Sec. 7701 (a) by adding at the end thereof, after paragraph (32) (as added by P.L. 87-870, 85(a)) the following new paragraph (33): "(33) REGULATED PUBLIC UTILITY.-The term 'regulated public utility' means— "(A) A corporation engaged in the furnishing or sale of or "(i) electric energy, gas, water, or sewerage disposal services, "(ii) transportation (not included in subparagraph (C)) on an intrastate, suburban, municipal, or interurban electric railroad, on an intrastate, municipal, or suburban trackless trolley system, or on a municipal or suburban bus system, or "(iii) transportation (not included in clause (ii)) by motor vehicle if the rates for such furnishing or sale, as the case may be, have been established or approved by a State or political subdivision thereof, by an agency or instrumentality of the United States, by a public service or public utility commission or other similar body of the District of Columbia or of any State or political subdivision thereof, or by a foreign country or an agency or instrumentality or political subdivision thereof. "(B) A corporation engaged as a a common carrier in the furnishing or sale of transportation of gas by pipe line, if subject to the jurisdiction of the Federal Power Commission. "(C) A corporation engaged as a common carrier (i) in the furnishing or sale of transportation by railroad, if subject to the jurisdiction of the Interstate Commerce Commission, or (ii) in the furnishing or sale of transportation of oil or other petroleum products (including shale oil) by pipe line, if subject to the jurisdiction of the Interstate Commerce Commission or if the rates for such furnishing or sale are subject to the jurisdiction of a public service or public utility commission or other similar body of the District of Columbia or of any State. "(D) A corporation engaged in the furnishing or sale of telephone or telegraph service, if the rates for such furnishing or sale meet the requirements of subparagraph (A). "(E) A corporation engaged in the furnishing or sale of transportation as a common carrier by air, subject to the jurisdiction of the Civil Aeronautics Board. "(F) A corporation engaged in the furnishing or sale of transportation by common carrier by water, subject to the jurisdiction of the Interstate Commerce Commission under part III of the Interstate Commerce Act, or subject to the jurisdiction of the Federal Maritime Board under the Intercoastal Shipping Act, SEC. 7701-Continued "(G) A railroad corporation subject to part I of the Interstate Commerce Act, if (i) substantially all of its railroad properties have been leased to another such railroad corporation or corporations by an agreement or agreements entered into before January 1, 1954, (ii) each lease is for a term of more than 20 years, and (iii) at least 80 percent or more of its gross income (computed without regard to dividends and capital gains and losses) for the taxable year is derived from such leases and from sources described in subparagraphs (A) through (F), inclusive. For purposes of the preceding sentence, an agreement for lease of railroad properties entered into before January 1, 1954, shall be considered to be a lease including such term as the total number of years of such agreement may, unless sooner terminated, be renewed or continued under the terms of the agreement, and any such renewal or continuance under such agreement shall be considered part of the lease entered into before January 1, 1954. "(H) A common parent corporation which is a common carrier by railroad subject to part I of the Interstate Commerce Act if at least 80 percent of its gross income (computed without regard to capital gains or losses) is derived directly or indirectly from sources described in subparagraphs (A) through (F), inclusive. For purposes of the preceding sentence, dividends and interest, and income from leases described in subparagraph (G), received from a regulated public utility shall be considered as derived from sources described in subparagraphs (A) through (F), inclusive, if the regulated public utility is a member of an affiliated group (as defined in section 1504) which includes the common parent corporation. The term 'regulated public utility' does not (except as provided in subparagraphs (G) and (H)) include a corporation described in subparagraphs (A) through (F), inclusive, unless 80 percent or more of its gross income (computed without regard to dividends and capital gains and losses) for the taxable year is derived from sources described in subparagraphs (A) through (F), inclusive. If the taxpayer establishes to the satisfaction of the Secretary or his delegate that (i) its revenue from regulated rates described in subparagraph (A) or (D) and its revenue derived from unregulated rates are derived from the operation of a single interconnected and coordinated system or from the operation of more than one such system, and (ii) the unregulated rates have been and are substantially as favorable to users and consumers as are the regulated rates, then such revenue from such unregulated rates shall be considered, for purposes of the preceding sentence, as income derived from sources described in subparagraph (A) or (D).” Applicability: Taxable years beginning after December 31, 1963. CHAPTER 80—GENERAL RULES (68A Stat. 915, ff.): NOTE: The table of subchapters for Chapter 80 reads as follows (68A Stat. 915): "SUBCHAPTER A. Application of internal revenue laws. "SUBCHAPTER B. Effective date and related provisions.” This table has not been amended. CH. 80, SUBCHAPTER A-APPLICATION OF INTERNAL REVENUE LAWS (68A Stat. 915, ff.): NOTE: The table of sections for Subchapter A of Chapter 80 reads as follows (68A Stat. 915): "Sec. 7801. Authority of Department of the Treasury. "Sec. 7802. Commissioner of Internal Revenue. "Sec. 7803. Other personnel. "Sec. 7804. Effect of reorganization plans. "Sec. 7805. Rules and regulations. "Sec. 7806. Construction of title. "Sec. 7807. Rules in effect upon enactment of this title. "Sec. 7808. Depositaries for collections. "Sec. 7809. Deposit of collections." This table has not been amended. SEC. 7801. AUTHORITY OF DEPARTMENT OF THE TREASURY (68A Stat. 915): In full. Sept. 22, 1959, H.R. 8685, P.L. 86-368, § 1, 73 Stat. 647: "SEC. 7801. AUTHORITY OF THE DEPARTMENT OF THE TREASURY. "(a) POWERS AND DUTIES OF SECRETARY.-Except as otherwise expressly provided by law, the administration and enforcement of this title shall be performed by or under the supervision of the Secretary of the Treasury. "(b) OFFICE OF GENERAL COUNSEL FOR THE DEPARTMENT. "(1) GENERAL COUNSEL.-There shall be in the Department of the Treasury the office of General Counsel for the Department of the Treasury. The General Counsel shall be appointed by the President, by and with the advice and consent of the Senate. The General Counsel shall be the chief law officer of the Department and shall perform such duties as may be prescribed by the Secretary. "(2) ASSISTANT GENERAL COUNSELS.-The President is authorized to appoint, by and with the advice and consent of the Senate, an Assistant General Counsel who shall be the Chief Counsel for the Internal Revenue Service 897 and shall receive basic compensation at the annual rate of $19,000. The Chief Counsel shall be the chief law officer for the Internal Revenue Service and 896 Section 7801 originally read as follows (68A Stat. 915): "SEC. 7801. AUTHORITY OF DEPARTMENT OF THE TREASURY. "(a) POWERS AND DUTIES OF SECRETARY.-Except as otherwise expressly provided by law, the administration and enforcement of this title shall be performed by or under the supervision of the Secretary of the Treasury. "(b) GENERAL COUNSEL FOR THE DEPARTMENT.-There shall be in the Department of the Treasury the office of General Counsel for the Department of the Treasury. The General Counsel shall be appointed by the President, by and with the advice and consent of the Senate. The General Counsel shall be the chief law officer of the Department and shall perform such duties as may be prescribed by the Secretary. The Secretary may appoint and fix the duties of an Assistant General Counsel who shall serve as Chief Counsel of the Internal Revenue Service and may appoint and fix the duties of not to exceed five other Assistant General Counsels. All Assistant General Counsels shall be appointed without regard to the provisions of the civil service laws. The Secretary may also appoint and fix the duties of such other attorneys as he may deem necessary. (c) FUNCTIONS OF DEPARTMENT OF JUSTICE UNAFFECTED.-Nothing in this section shall be considered to affect the duties, powers, or functions imposed upon or vested in the Department of Justice, or any officer thereof, by law existing on May 10, 1934." 897 Section 4 of P.L. 86-368 provided as follows: "SEC. 4. SAVING PROVISIONS. "(a) The position of the Assistant General Counsel serving as Chief Counsel of the Internal Revenue Service shall continue to exist until such time as the Chief Counsel for the Internal Revenue Service first appointed pursuant to the amendment made by section 1 of this Act [amend[Footnote 897 continued on following page] |