B. Examples of Tax on Taxable Private Foundations

(1) Assume that the tax liability under subtitle A for private foundation X, which is not

exempt from taxation under Section 501(a) for 1970, is $10,000. Had X been exempt under Section 501(a) for 1970, the tax imposed under Section 4940(a) would have been $4,000 and the tax imposed under Section 511 would have been $7,000. The excess of the sum of the taxes which would have been imposed under Sections 4940(a) and 511 ($11,000) over the tax that was imposed under subtitle A ($10,000) is $1,000, the amount of the tax imposed on such organization under Section 4940(b). See Treas. Reg. 53.4940-1(b)(2) Example 1.

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(2) Assume the facts stated in Example (1), except that the tax liability under subtitle

A is $15,000 rather than $10,000. Because the sum of the taxes which would have been imposed under Sections 4940(a) and 511 ($11,000) does not exceed the tax that was imposed under subtitle A ($15,000), there is no tax imposed under Section 4940(b) with respect to such foundation. See Treas. Reg. 53.49401(b)(2) Example 2.

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