Page:United States Statutes at Large Volume 48 Part 1.djvu/778

 752 73d C ONGRESS. SESS. II. CH. 277. MAY 10, 1934 . ADDIT IONALSN- more than 50 per centum in value of the outstanding stock ; and Fami ly. (E) the family of an individual shall include only his brothers and sisters (whether by the whole or half blood), spouse, ances- tors, and lineal descendants. (2) The term "undistributed adjusted net income" means the adjusted net income minus the sum of (A) 20 per centum of the excess of the adjusted net income over the amount of dividends received from personal holding companies which are allowable as a deduction for the purposes of the tax imposed by section 13 or 204 ; (B) Amoun ts use d or s et asi de to retire indebt edness incur red prior to January 1, 1934, if such amounts are reasonable with reference to the size and terms of such indebtedness ; and (C) Dividends paid during the taxable year. (3) The term "adjusted net income" means the net income computed without the allowance of the dividend deduction other- wise allowable, but minus the sum of (A) Federal income, war-profits, and excess-profits taxes paid or accrued, but not including the tax imposed by this section ; (B) Contri bution s or g ifts, not ot herwise allow ed as a dedu c- tion, to or for the use of donees described in section 23(o) for the purposes therein specified ; and (C) Losses from sales or exchanges of capital assets which are disal lowed as a d educti on by sectio n 117(d ). (4 ) The terms used i n this sect- ion sh all hav e the same m eaning as when used in Title I. (c) ADbIINISTRATIVE PRovIsroNs .-All provisions of law ( includ ing penalties) applicable in respect of the taxes imposed by Title I of this Act, shall i nsofar as not inco nsistent with thi s section , be appl i- cable in respect of the tax imposed by this section, except that the provisions of section 131 of that title shall not be applicable. (d) PAYMENT OF SURTAX ON PRO RATA SHARES .--The tax imposed by this section shall not apply if all the shareholders of the corpo- ration include (at the time of filing their returns) in their gross income their entire pro rata shares, whether distributed or not, of the " adjusted net income " o„ the corporation for such year. Any amount so included in the gross income of a shareholder shall be tr eat ed as a d ivi de nd re ce iv ed. Any subsequent distribution made by the corporation out of earnings or profits for such taxable year shall, if distributed to any shareholder who has so included in his gross income his pro rata ushare, be exempt from tax in the amount of the share so included. (e) IMPROPER ACCUMULATION OF SuRrrus .--For surtax on corpo- rations which accumulate surplus to avoid surtax on stockholders, see secti on 102. "Undistributed ad- justed not i ncome". Computation . "Adjusted net in- come". Computation of. Ante, p. 714. Synon ymous terms, Ante, p. 6S3. Administrative pro- visions. Ante, p. 718. Paymen t of surta x on pro rata shares. Treatment of ad- justed net income in gross income of share- holders. Imp rop er acc umu la- tion of surplus Post p.702. ESTATE T_1x AMENDMENTS. TITLE II-AMENDMENTS TO ESTATE TAX Revocable trusts. Vol.44,p.71,amend- ed. Gross estate of de- cedent, determination of Exception. SEC. 401. REVOCABLE TRUSTS. Section 302 (d) of the Revenue Act of 1926 is amended to read as foll ows "(d) (1) To the extent of any interest therein of which the dece- dent has at any time made a transfer, by trust or otherwise, where the enjoyment thereof was subject at the date of his death to any change throug h the exerci se of a powe r, eith er by the de cedent alone or in conjunction with any person, to alter, amend, or revoke, or where the decedent relinquished any such power in contemplation of his death, except in case of a bona fide sale for an adequate and full co nsider ation in mon ey or money' s worth.