Page:United States Statutes at Large Volume 49 Part 1.djvu/1701

 1656 Holding company af- filiate, allowance. Vol. 48, p. 162. Post, p. 1664. National mortgage associa tion. Vol. 48, p. 1252. Post, p. 1664. "Undistributed net income ." Post, pp. 1665, 1664. Imposition of tax. Rates. Adjusted net income less than $50,000. Speci fic cr edit a l- lowed. Application of sp e- cific credit. Exempt corporations. Banks. Post, p. 1677. Bankrupt, etc. , cor- porations. Insurance companies. Post, pp. 1710, 1711, 1713. 74TH C ONGRESS. SESS. II. CH. 690 . JU NE 22, 1936 . (C) In the case of a holding company affiliate (as defined in section 2 of the Banking Act of 1933), the amount allowed as a credit under section 26 (d). (D) In the case of a national mortgage association created under Title III of the Na tio nal H ous ing A ct, the amount allowed as a credit under section 26 (e). (2) The term "undistributed net income" means the adjusted net income minus the sum of the dividends paid credit provided in section 27 and the credit provided in section 26 (c), relating t o contra cts rest ricting d ividends. (b) IMPOSITION or TAX .-There shall be levied, collected, and paid for each taxable year upon the net income of every corporation a surtax equal to the sum of the following, subject to the application of the specific credit as provided in subsection (c) 7 per centum of the portion of the undistributed net income which is not in excess of 10 per centum of the adjusted net income. 12 per centum of the portion of the undistributed net income which is in excess of 10 per centum and not in excess of 20 per centum of the adjusted net income. 17 per centum of the portion of the undistributed net income which is in excess of 20 per centum and not in excess of 40 per centum of the adjusted net income. 22 per centum of the portion of the undistributed net inc ome which is in excess of 40 per centum and not in excess of 60 per centuin of the adjusted net income. 27 per centum of the portion of the undistributed net income which is in excess of 60 per centum, of the adjusted net income. (C) ADJUSTED NET INCOME LE SS THA N $50,000 .- (1) SPECIFIC CREDIT. -If the adjusted net income is less than $50,000, there shall be allowed a specific credit equal to the portion of the undistributed net income which is in excess of 10 per centum of the adjusted net income and not in excess of $5,000, such credit to be applied as provided in paragraph (2) . (2) APPL ICAT ION OF SPECIFIC CREDIT.-If the corporation is entitled to a specific credit, the tax shall be equal to the sum of the followin g (A) A tax computed under subsection (b) upon the amount of the undistributed net income reduced by the amount of the specific credit, plus (B) 7 per centum of the amount of the specific credit. (d) EXEMPTION FROM SuRTAx .-The following corporations shall not be subject to the surtax imposed by this section : (1) Banks as defined in section 104. (2) Domestic corporations which for any portion of the taxable year are in bankruptcy under the laws of the United States, or are insolvent and in receivership in any court of the United States or of an y State, Territory, or the D istrict o f Columbi a. (3) Ins uran ce co mpan ies subj ect to the tax imposed under section 201, 204, or 207. (4) Foreign corporations. (5) Corporati ons which, by reas on of der iving a la rge porti on of their gross income from sources within a possession of the United States, are entitled to the benefits of section 251 . (6) Corporations organized under the China Trade Act, 1922 . (7) Joint Stock Land Banks organized under the Federal Farm Loan Act, as amended. (e) EXEMPT CORPORATIONS .-For corporations exempt from taxa- tion under this title, see section 101. (f) TAX ON PERSONA L HOLDING COMPANIES .-For surtax on per- Foreign corporation s. Deriving income from United States posses sion. Post, p. 1718. China Trade Act cor- porati ons. Joint Stock Land Banks. Vol. 48, p. 46. Exempt corpora- tions. Post, p. 1673. Personal holding compani es. Post, p.1732. sonal holding companies, see section 351.