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TITLE 26-INTERNAL REVENUE CODE charitable remainder annuity trust or a charitable remainder unitrust (described in section 664), or a pooled income fund (de- scribed in section 642(c)(5)). (B) Income interests, etc. No deduction shall be allowed under this section for the value of any interest in prop- erty (other than a remainder interest) transferred in trust unless the interest is in the form of a guaranteed annuity or the trust instrument specifies that the interest is a fixed percentage distributed yearly of the fair market value of the trust property (to be determined yearly) and the grantor is treated as the owner of such interest for purposes of applying section 671. If the donor ceases to be treated as the owner of such an interest for purposes of applying section 671, at the time the donor ceases to be so treated, the donor shall for purposes of this chapter be considered as having re- ceived an amount of income equal to the amount of any deduction he received under this section for the contribution reduced by the discounted value of all amounts of income earned by the trust and taxable to him before the time at which he ceases to be treated as the owner of the interest. Such amounts of income shall be discount- ed to the date of the contribution. The Sec- retary shall prescribe such regulations as may be necessary to carry out the purposes of this subparagraph. (C) Denial of deduction in case of payments in certain trusts In any case in which a deduction is al- lowed under this section for the value of an interest in property described in subpara- graph (B), transferred in trust, no deduc- tion shall be allowed under this section to the grantor or any other person for the amount of any contribution made by the trust with respect to such interest. (D) Exception This paragraph shall not apply in a case in which the value of all interests in proper- ty transferred in trust are deductible under subsection (a). (3) Denial of deduction in case of certain contribu- tions of partial interests in property (A) In general In the case of a contribution (not made by a transfer in trust) of an interest in proper- ty which consists of less than the taxpayer's entire interest in such property, a deduction shall be allowed under this section only to the extent that the value of the interest contributed would be allowable as a deduc- tion under this section if such interest had been transferred in trust. For purposes of this subparagraph, a contribution by a tax- payer of the right to use property shall be treated as a contribution of less than the taxpayer's entire interest in such property. (B) Exceptions Subparagraph (A) shall not apply to a contribution of- (I) a remainder interest in a personal residence or farm, (ii) an undivided portion of the taxpay- er's entire interest in property, (iII) a lease on, option to purchase, or easement with respect to real property of not less than 30 years' duration granted to an organization described in subsection (b)(1)(A) exclusively for conservation pur- poses, or (iv) a remainder interest in real proper- ty which is granted to an organization de- scribed in subsection (b)(1)(A) exclusively for conservation purposes. (C) Conservation purposes defined For purposes of subparagraph (B), the term "conservation purposes" means- (I) the preservation of land areas for public outdoor recreation or education, or scenic enjoyment; (ii) the preservation of historically im- portant land areas or structures; or (iII) the protection of natural environ- mental systems. (4) Valuation of remainder interests in real prop- erty For purposes of this section, in determining the value of a remainder interest in real prop- erty, depreciation (computed on the straight line method) and depletion of such property shall be taken into account, and such value shall be discounted at a rate of 6 percent per annum, except that the Secretary may pre- scribe a different rate. (5) Reduction for certain interest If, in connection with any charitable contri- bution, a liability is assumed by the recipient or by any other person, or if a charitable con- tribution is of property which is subject to a liability, then, to the extent necessary to avoid the duplication of amounts, the amount taken into account for purposes of this sec- tion as the amount of the charitable contribu- tion- (A) shall be reduced for interest (I) which has been paid (or is to be paid) by the tax- payer, (ii) which is attributable to the liabil- ity, and (fii) which is attributable to any period after the making of the contribution, and (B) in the case of a bond, shall be further reduced for interest (i) which has been paid (or is to be paid) by the taxpayer on indebt- edness incurred or continued to purchase or carry such bond, and (ii) which is attribut- able to any period before the making of the contribution. The reduction pursuant to subparagraph (B) shall not exceed the interest (including inter- est equivalent) on the bond which is attribut- able to any period before the making of the contribution and which is not (under the tax- payer's method of accounting) includible in the gross income of the taxpayer for any tax- able year. For purposes of this paragraph, the term "bond" means any bond, debenture, note, or certificate or other evidence of in- debtedness. Page 166 § 170