Accumulation limits for charitable trusts: excess uninvested income becomes taxable unless fully invested in prescribed government securities. A trust may retain a limited portion of its income tax-exemptly, but if it accumulates beyond that limit it must invest the entire unspent balance, including the otherwise exempt portion, in prescribed Government securities and comply with notice and filing requirements; failure to meet these protective-investment conditions renders the whole accumulated amount taxable when the accumulation ceases to satisfy those conditions. Trust 'income' for these rules is the trust's commercial/book income as shown in accounts adjusted for relevant appropriations and capital debits, while capital donations are excluded from the accumulation limit except contributions from other trusts treated as income.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Accumulation limits for charitable trusts: excess uninvested income becomes taxable unless fully invested in prescribed government securities.
A trust may retain a limited portion of its income tax-exemptly, but if it accumulates beyond that limit it must invest the entire unspent balance, including the otherwise exempt portion, in prescribed Government securities and comply with notice and filing requirements; failure to meet these protective-investment conditions renders the whole accumulated amount taxable when the accumulation ceases to satisfy those conditions. Trust "income" for these rules is the trust's commercial/book income as shown in accounts adjusted for relevant appropriations and capital debits, while capital donations are excluded from the accumulation limit except contributions from other trusts treated as income.
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