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TITLE 26-INTERNAL REVENUE CODE EFFECTIVE DATE OF 1976 AMENDMENT Enactment of subsec. (c) by Pub. L. 94-455 applica- ble to transfers in trust made after May 21, 1976, see section 701(h) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 667 of this title. EFFECTxVE DATE OF 1969 AMENDMENT Amendment by Pub. L. 91-172 applicable to taxable years beginning after Dec. 31, 1970, see section 803(f) of Pub. L. 91-172, set out as an Effective Date of 1976 Amendment note under section 1 of this title. CROSS REFERENCES Charitable trusts subject to tax, see section 511 of this title. Income from an interest In an estate or trust as gross income, see section 61 of this title. Rates of tax on individuals, see section 1 of this title. Returns- Estates and trusts, see section 6012 of this title. Joint fiduciaries, see section 6012 of this title. Taxable income defined, see section 63 of this title. § 642. Special rules for credits and deductions (a) Credits against tax (1) Foreign taxes An estate or trust shall be allowed the credit against tax for taxes imposed by for- eign countries and possessions of the United States, to the extent allowed by section 901, only in respect of so much of the taxes de- scribed in such section as is not properly allo- cable under such section to the beneficiaries. (2) Political contributions An estate or trust shall not be allowed the credit against tax for political contributions provided by section 41. (b) Deduction for personal exemption An estate shall be allowed a deduction of $600. A trust which, under its governing instru- ment, is required to distribute all of its income currently shall be allowed a deduction of $300. All other trusts shall be allowed a deduction of $100. The deductions allowed by this subsection shall be in lieu of the deductions allowed under section 151 (relating to deduction for personal exemption). (c) Deduction for amounts paid or permanently set aside for a charitable purpose (1) General rule In the case of an estate or trust (other then' a trust meeting the specifications of subpart B), there shall be allowed as a deduc- tion in computing its taxable income (in lieu of the deduction allowed by section 170(a), re- lating to deduction for charitable, etc., contri- butions and gifts) any amount of the gross income, without limitation, which pursuant to the terms of the governing instrument is, during the taxable year, paid for a purpose specified in section 170(c) (determined with- out regard to section 170(c)(2)(A)). If a chari- table contribution is paid after the close of such taxable year and on or before the last day of the year following the close of such taxable year, then the trustee or administra- tor may elect to treat such contribution as ISo in original. Probably should read "than". paid during such taxable year. The election shall be made at such time and in such manner as the Secretary prescribes by regula- tions. (2) Amounts permanently set aside In the case of an estate, and in the case of a trust (other than a trust meeting the specifi- cations of subpart B) required by the terms of its governing instrument to set aside amounts which was- (A) created on o: before October 9, 1969, if- (I) an irrevocable remainder interest is transferred to or for the use of an organi- zation described in section 170(c), or (i) the grantor is at all times after Oc- tober 9, 1969, under a mental disability to change the terms of the trust; or (B) established by a will executed on or before October 9, 1969, if- (i) the testator dies before October 9, 1972, without having republished the will after October 9, 1969, by codicil or other- wise, (ii) the testator at no time after October 9, 1969, had the right to change the por- tions of the will which pertain to the trust, or (iII) the will is not republished by codicil or otherwise before October 9, 1972, and the testator is on such date and at all times thereafter under a mental disability to republish the will by codicil or other- wise, there shall also be allowed as a deduction in computing its taxable income any amount of the gross income, without limitation, which pursuant to the terms of the governing in- strument is, during the taxable year, perma- nently set aside for a purpose specified in sec- tion 170(c). or is to be used exclusively for re- ligious, charitable, scientific, literary, or edu- cational purposes, or for the prevention of cruelty to children or animals, or for the es- tablishment, acquisition, maintenance, or op- eration of a public cemetery not operated for profit. In the case of a trust, the preceding sentence shall apply only to gross income earned with respect to amounts transferred to the trust before October 9, 1969, or trans- ferred under a will to which subparagraph (B) applies. (3) Pooled income funds In the case of a pooled income fund (as de- fined in paragraph (5)), there shall also be al- lowed as a deduction in computing its taxable income any amount of the gross income at- tributable to gain from the sale of a capital asset held for more than 9 months, without limitation, which pursuant to the terms of the governing instrument is, during the tax- able year, permanently set aside for a purpose specified in section 170(c). (4) Adjustments To the extent that the amount otherwise allowable as a deduction under this subsec- tion consists of gain from the sale or ex- change of capital assets held for more than 9 months, proper adjustment shall be made for any deduction allowable to the estate or trust under section 1202 (relating to deduction for Page 459 § 642