Page:United States Statutes at Large Volume 45 Part 1.djvu/901

 850' SEVENTIETH CONGRESS. Snss. I. Cx. 852. 1928. INCOME TAX SEC. 238 . AFFILIATION. Affiliation. Not app licable to A foreign corporation shall not be deemed to be affiliated with any foreign corporations. other corporation within the meaning of section 141 or 142. Po sses sions of the United States . Supplement J-Possessions of the United States Income from sources SEC. 251. INC OME FROM SOU RCES WIT HIN POSS ESSI ONS OF within . UNITED STATES. Gross income of citi- zens,etc.,deemed a General rule .-In the case of citizens of the United States sources within United or domes tic co rporat ions, satisf ying t he foll owing condit ions, gross starts. income means only gross income from sources within the United States- (1) If 80 per centum or more of the gross income of such citizen or domestic corporation (computed without the benefit of this section), for the three-year period immediately preceding the close of the taxable year (or for such part of such period immediately preceding the close of such taxable year as may be applicable) was derived from sources within a possession of the United States ; and (2) If, in the case of such corporation, 50 per centum or more of its gross income (computed without the benefit of this section) for such period or such part thereof was derived from the active conduct of a trade or business within a possession of the United States ; or (3) If, in case of such citizen, 50 per centum or more of his gross income (computed without the benefit of this section) for such period or such part thereof was derived from the active conduct of a trade or business within a possession of the United States either on his own account or as an employee or agent of another. (b) Amounts received in United States .-Nothwithstanding the prov isions of su bsecti on (a) there shall be inc luded in gro ss inc ome all amounts received by such citizens or corporations within the United States, whether derived from sources within or without the United States. (c) Definition .-As used in this section the term " pos sessio n of the United States" does not include the Virgin Islands of the United States. (d) Deductions .- (1) Citiz ens of the U nited States entit led to the be nefits of this section shall have the same deductions as are allowed by Supplement H in the case of a nonresident alien individual. (2) Domestic corporations entitled to the benefits of this sec- tion shall have the same deductions as are allowed by Supple- ment I in the case of a foreign corporation. (e) Credits against net income .- (1) CITIZENS .-A citizen of the United States entitled to the benefits of this section shall be allowed a personal exemption of only $1,500 and shall not be allowed the credit for dependents provided in section 25(d). The personal exemption shall be determined by the status of the taxpayer on the last day of the taxable year, except that in case of death the rule provided in section 25(e)(3) shall be applied. (2) A domestic corporation entitled to the benefits of this secti on shall not be al lowed the specific credit of $3,000 provided in section 26. (f) Allowance of deductions and credits .-Citizens of the United States and domestic corporations entitled to the benefits of this section shall receive the benefit of the deductions and credits If SO per cent derived from United States pos- sessions sources. If corporation de- rived 50 per cent from busi ness ther ein. If citizen derived 50 per cent from active busi ness ther ein. All amounts received in Unite d States in- cluded in gross income. Virgin Islands not included . Deductions. Cit iz ens a llo wed same benefits as non. resident aliens. Ante, p. 847. Dom est ic corpora- tion. Ante, p. 849. Credits against net income. Pers onal exem ptio n to citizens limited. Ante, p. 803. Domestic corpora- tions not allowed spe- cific credit. Ante, p. 803. Allowance of deduc- tions by filing return of tot al inc ome .

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