Page:United States Statutes at Large Volume 42 Part 1.djvu/256

 228 SIXTY-SEVENTH CONGRESS. Sess. I. Ch. 136. 1921. ¤*¤°¥¤ M1- calendar year 1921 or any fiscal year ending during the calendar year 1921; "F*d¤¤*¤¤>'·" (2) The term "Educiary" means a guardian, trustee, executor, administrator, receiver, conservator, or any person acting in any U www ld. iiduciaryx capacity for any person, triist or estate; _ _gm_,,* ¢> ¤¤= (3) T e term withho ding agent means any person required to _ deduct and withhold any tax under the provisions of section 221 or section 237; "P¤*$’·" (4) The term " aid," for the oses of the deductions and cnlieelp id} credits under this Ititle, means "p£§r accrued" or "paid or in- "°d"°°‘“‘s°“°°"‘i"S‘ curred," and the terms " paid or incurred" and " paid or accrued" shall be construed according to the method of accounting upon the basis of which the net income is computed under section 212; and »¥°'"°° (5) The term " personal service corporation" means a corporation whose income is to be ascribed primarily to the activities of the principal owners or stockholders who are themselves _ regularly engaged in the active conduct of the affairs of the corporation and in E,,,.,,,_,,,,,,,_ whic capital (whether invested or borrowed) is not a material income—producing factor; but does not include anfy foreign corporation, nor any corporation 50 per centum or more 0 .whose gross income consists either (1) of gains, profits, or income derived from trading as a prmcipal, or (2) o gains, profits, commissions, or other mcome, derived from a Government contract or contracts made between April 6, 1917, and November 11, 1918, both dates inclusive. Dmdmh DIVIDENDS. p¢i¤)4i;;:;¤b¤`§¤i¤i¤¥i·€¤§:¤gr;s gage lg; smce February 28, 1913, except a distribution made by a personal §°,,pm;_ ’ service corporatwn out of earnings or profits accumulated since Fom_mt,0n_d°mm December 31, 1917, and prior to January 1, 1922. _ _ IB sem reemery za, (b) For the purposes of this Act every distribution IS made out of ’°{£,,,, mmm, 9,,. earnin§s or profits, and from the most recently accumulated earnings ¤¤¤¤*· %r pro ts, tgigthpgepgtexit cgf such earnings or profiitis accumulaied gncc e ruary, ; u any eammgs or pro ts accumu ate or increase in value of property accrued prior to March 1, 1913, may be distributed exempt from the tax, after the earnings and profits _,,,*;*;:;*;;;·3_;,,gg·,,,{,¢,; accumulated since February 28, 1913, have been iembeeed. If u-stances. any such tax-free distribution has been made the distributee shall not be allowed as a deduction from gross income any loss sustained from the sale or other disposition of his stock or shares unless, and then only to the extent that, the basis provided in section 202 exceeds the sum of (1) the amount realized from the sale or other dis osition of such stock or shares, and (2) the aggregate amount of such distri- _ butions received by him thereon. d,;*,¥,{‘,§‘§°,,§,‘,°“°‘;‘?_;‘;f,{ (c) Any distribution (whether in cash or other property) made by ina- a corporation to its shareholders or members otherwise than out of (1) earnings or profits accumulated since February 28, 1913, or (2) earnings or profits accumulated or increase in value of property accru prior to March 1, 1913, shall be applied against an reduce the basis provided in section 202 for the urpose o ascertaining the gain derived or the loss sustained from the sale or other disposition _ of the stock or shares by the distributee. ¤%‘; “"“°"*" "°° _ (d) A stock d1vidend  not be subject to tax but if after the hymcrméem? distribution of ani such dividend the corporation proceeds to cancel °ia°°vm•m. °° ° or redeem its stoc at such time and in such manner as to make the ·