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TITLE 26-INTERNAL REVENUE CODE (A) as part of its gains and losses from sales or exchanges of capital assets held for not more than 9 months, its proportionate share of the gains and losses of the common trust fund from sales or exchanges of cap- ital assets held for not more than 9 months; (B) as part of Its gains and losses from sales or exchanges of capital assets held for more than 9 months, its proportionate share of the gains and losses of the common trust fund from sales or exchanges of cap- ital assets held for more than 9 months; (C) its proportionate share of the ordi- nary taxable income or the ordinary net loss of the common trust fund, computed as provided in subsection (d). (2) Dividends received The proportionate share of each participant in the amount of dividends received by the common trust fund and to which section 116 applies shall be considered for purposes of such section as having been received by such participant. (d) Computation of common trust fund income The taxable income of a 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 gains and losses from sales or exchanges of capital assets; (2) after excluding all items of gain and loss from sales or exchanges of capital assets, there shall be computed- (A) an ordinary taxable income which shall consist of the excess of the gross income over deductions; or (B) an ordinary net loss which shall con- sist of the excess of the deductions over the gross income; (3) the deduction pro, Ided by section 170 (relating to charitable, eic., contributions and gifts) shall not be allowed; and (4) the standard deduction provided in sec- tion 141 shall not be allowed. (e) Admission and withdrawal No gain or loss shall be realized by the common trust fund by the admission or with- drawal of a participant. The admission of a par- ticipant shall be treated with respect to the participant as the purchase of, or an exchange for, the participating interest, The withdrawal of any participating interest by a participant shall be treated as a sale or exchange of such interest by the participant. (f) Different taxable years of common trust fund and participant If the taxable year of the common trust fund is different from that of a participant, the in- clusions with respect to the taxable income of the common trust fund, in computing the tax- able income of the participant for its taxable year, shall be based upon the taxable income of the common trust fund for any taxable year of the common trust fund ending within or with the taxable year of the participant. (g) Net operating loss deduction The benefit of the deduction for net operat- ing losses provided by section 172 shall not be allowed to a common trust fund, but shall be al- lowed to the participants in the common trust fund under regulations prescribed by the Secre- tary. (Aug. 16, 1954, ch. 736, 68A Stat. 203; Sept. 28, 1962, Pub. L. 87-722, § 4, 76 Stat. 670; Feb. 26, 1964, Pub. L. 88-272, title II, § 201(d)(5), 78 Stat. 32; Sept. 17, 1976, Pub. L. 94-414, § 1, 90 Stat. 1273; Oct. 4, 1976, Pub. L. 94-455, title XIV, § 1402(b)(1)(H), title XIX, §§ 1901(b)(1)(G), 1960(b)(13)(A), title XXI, §§ 2131(d), 2138, 90 Stat. 1732, 1790, 1834, 1924, 1932.) TAXABLE YEARS AFTER 1977 Subsecs. (c)(1)(A), (B) of this section amended by Pub. L. 94-455, title XIV, § 1402(b)(2), Oct. 4, 1976, 90 Stat. 1732, effec- tive for taxable years beginning after Dec. 31, 1977, by substituting "1 year" for "9 months". AMENDMENTS 1976-Subsec. (a). Pub. L. 94-414 added provision re- lating to treatment of two or more bank members of the same affiliated group. Subsec. (a)(1). Pub. L. 94-455, § 2138, designated ex- isting provisions relating to trustee, executor, adminis- trator and guardian as subpar. (A), and added subpar. (B). Subsec. (c)(1)(A), (B). Pub. L. 94-455, § 1402 (b)(1)(H), provided that "6 months" would be changed to "9 months" for taxable years beginning in 1977. Subsec. (c)(2). Pub. L. 94-455, § 1901(b)(1)(G), struck out provisions relating to partially tax exempt interest and the election of a common trust fund to amortize premiums on bonds and other obligations. Subsec. (e). Pub. L. 94-455, § 2131(d), added "The ad- mission of a participant shall be treated with respect to the participant as the purchase of, or exchange for, the participating interest" following "withdrawal of a participant". Subsec. (g). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". 1964-Subsec. (c)(2). Pub. L. 88-272 deleted "section 34 or" preceding "section 116 applies". 1962-Subsec. (a)(2). Pub. L. 87-722 inserted "or the Comptroller of the Currency" after "the Board of Governors of the Federal Reserve System". EFFECTIVE DATE OF 1976 AMENDMENT Section 2131(f)(6) of Pub. L. 94-455 provided that: "The amendments made by subsections (d) and (e) [amending this section and section 683 of this title] shall take effect on April 8, 1976, in taxable years ending on or after such date." Section 1402(b)(1), (2) of Pub. L. 94-455 provided in part that the substitution of "9 months" for "6 months" in subsec. (c)(1)(A), (B) of this section by sec- tion 1402(b)(1)(H) of Pub. L. 94-455 is effective with respect to taxable years beginning in 1977. Amendment of subsec. (c)(2) by section 1901(b)(1)(G) of Pub. L. 94-455 applicable with respect to taxable years beginning after Dec. 31, 1976, see sec- tion 1901(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 2 of this title. Section 2 of Pub. L. 94-414 provided that: "The amendment made by the first section of this Act [amending subsec. (a) of this section] shall apply to taxable years beginning after December 31, 1975." EFFECTxVE DATE OF 1964 AMENDMENT Amendment by Pub. L. 88-272 applicable with re- spect to dividends received after Dec. 31, 1964, in tax- able years ending after such date, ec section 201(e) of Pub. L. 88-272, set out as an Effective Date of 1964 Amendment note under section 37 of this title. Page 432 § 584