Page:United States Statutes at Large Volume 48 Part 1.djvu/747

 73d C ONGRESS. SESS. II. C H. 277. MAY 10, 1934 . 721 hav e been member s of the affi liated group at any time during the INCOM E S TAR D taxable year for which the return is made consent to all the regula- PAYMENTS-Contd. tions under subsection b or, in case such regulati ons are not m in e t ax Regul ation s liability. ) ( y. prescribed prior to the making of the return, then the regulations prescribed under section 141(b) of the Revenue Act of 1932 insofar Vol.47,p. 213 as not inconsistent with this Act) prescribed prior to the making of such return ; and the making of a consolidated return shall be con- sidered as such consent . In the case of a corporation which is a year . part of member of the affiliated group for a fractional part of the year the consolidated return shall include the income of such corporation for su ch art of the year as it is a member of the affiliated group . (b) - REGULATIoNs .-The Commissioner, with the approval of the Regulations to liability . deter- mine tax Secretary, shall prescribe such regulations as he may deem necessary in orde r that the tax liabi lity of any af filiat ed grou p of co rporat ions making a consolidated return and of each corporation in the group, both dur ing and afte r th e pe riod of affi liat ion, may be dete rmin ed, computed, assessed, collected, and adjusted in such manner as clearly to reflect the income and to prevent avoidance of tax liability. (C) C OM PUTATION AND PAYMENT OF TAx.-In any case in which Comput ation and a consolidated return is made the tax shall be determined, com- payment of tax. puted, assessed, collected, and adjusted in accordance with the regulations under subsection (b) (or, in case such regulations are Returns filed prior not prescribed prior to the making of the return, then the regula- to making regulations . tions prescrib ed under sect ion 141(b) of the Revenue A ct of 19 32 Vol. 47, p. 213 . insofar as not inconsistent with this Act) prescribed prior to the date on which such return is made ; except that there shall be added to the rate of tax pr escrib ed by s ection 13 (a) a rate of 2 per centum, but the tax at such increased rate shall be considered as imposed by section 13(a). (d) DEFI NITIO N of "AFFI LIATE D GRO UP ".-As used in thi s sect ion def in ed "Affiliated group - an " affiliated group " means one o r more chai ns of corpor ations connected through stock ownership with a common parent corpora- tion i f- Stock least 95 per centum of the stock of each of the corpora- members . ownership of tio ns (except th e common pare nt corporation ) is owned di rectly Stock . by one or more of the other corporations ; and (2) The common parent corporation owns directly at least 95 ti of parent corpora- per centum of the stock of at least one of the other corporations ; and Corporation defined (3) Each of the corporations is either (A) a corporation whose for purposes of para- principal business is that of a common carrier by railroad or (B) graph . a cor pora tion the ass ets of w hich con sist pri ncip ally of stoc k in such corporations and which does not itself operate a business other than that of a common carrier by railroad. For the purpose of det ermi ning whe ther the pri ncip al b usin ess of a cor pora tion is that of a common carrier by railroad, if a common carrier by rail- road has leased its railroad properties and such properties are op- erated as such by another common carrier by railroad, the business of receiving rents for such railroad properties shall be considered as the business of a common carrier by railroad. As used in this subsection (except in paragraph (3)) the tern, "Stock" defined. " stock " does not include nonvoting stock which is limited and pre- ferred as to dividends. (e) FOREIGN CORPORATIONS .--A foreign corporation shall not be Foreigneorporations. deemed to be affiliated with any other corporation within the meaning of this section. (f) CHINA TRADE ACT CoRroRATIoNs .-A corporati on organized China Trade Act corporations d eemed under the China Trade Act, 1922, shall not be deemed to be affiliated not affiliated . with any other corporation within the meaning of this section. 80617•-34 16