Page:United States Statutes at Large Volume 49 Part 1.djvu/1709

 1664 74TH CONGRESS. SESS. II. CH. 690. JUNE 22, 1936. Credits allowed cor- SEC. 26. CREDITS OF CORPORATIONS. porat ions. In the case of a corporation the following credits shall be allowed to the extent provided in the various sections imposing tax- interests on Federal (a) INTEREST ON OBLIGATIONS OF T .Wdd UNITED STATE S AND ITS oblig ation. INSTRUMENTALITIES .-The amount received as interest upon obliga- tions of the United States or of corporations organized under Act Ante, p. 1662. of Congress which is allowed to an individual as a credit for pur- poses of normal tax by section 25 (a) (1) or (2). Dividends received. (b) DIVIDENDS RECEIVED .-85 per centum of the amount received as dividends from a domestic corporation which is subject to taxa- tion under this title. The credit allowed by this subsection shall not be allowed in resp ect of dividends received from a corporation Post, p. 1718. organized under the China Trade Act, 1922, or from a corporation which under section 251 is taxable only on its gross income from sources within the United States by reason of its receiving a large percentage of its g ross inco me from s ources wi thin a po ssession o f the United States. Contracts restricting (c) CONTRACTS RES TRI CTI NG PAYMENT OF DIVIDENDS.- payment of dividends. (1) PROHIBITI ON ON PAYM ENT OF DIVI DENDS .-An a mount equal to the excess of the adjusted net income over the aggregate of the amounts which can be distributed wit hin the taxa ble y ear as dividends without violating a provision of a written contract executed by the corporation prior to May 1, 1936, which provision Credit allowed. expressly deals with the payment of dividends. If a corporation would be entitled to a credit under this paragraph because of a contract provision and also to. one or more credits because of other contract provisions, only the largest of such credits shall be allowed, and for such purpose if two or more credits are equal in amount only one shall be taken into account. Disposition of profits of taxabl e yea r. (2) DISPOSITION OF PROFITS OF TAXABLE YEAR .-An amount equal . to the portion of the earnings and profits of the taxable year which is required (by a provision of a written contract executed by the corporation prior to May 1, 1936, which provision expressly deals with the disposition of earnings and profits of the taxable year) to be paid within the taxable year in discharge of a debt, or to be Amount set aside for irrevocably set aside within the taxable year for the discharge of a discharge of a debt. debt ; to the extent that such amount has been so paid or set aside. construed . emRequirement to pay For the purposes of this paragraph, a requirement to pay or set aside an amount equal to a percentage of earnings and profits shall be considered a requirement to pay or set aside such percentage Debt construes. of ear nings and profits. A s used in this paragraph, the w ord "debt" does not include a debt incurred after April 30, 1936 . Double credit not allowed. (3) DOUBLE CREDIT NOT ALLowED .-If both paragraph (1) and . paragraph (2) apply, the one of such paragraphs which allows the greater credit shall be applied ; and, if the credit allowable under each paragraph is the same, only one of such paragraphs shall be applied. Bank affiliates. Vol. 43, p. 163. (d) BA NK AFFILIATES.-In the case of a holding company affiliate . (as defined in section 2 of the Banking Act of 1933), the amount of the earnings or profits which the Board of Governors of the Federal Reserve System certifies to the Commissioner has been devoted by such affiliate during the taxable year to the acquisition of readily 994Vol.43,. 614,p . marketable assets other than bank stock in compliance with section U.S. C.,p.357. 5144 of the Revised Statutes. The aggregate of the credits allow- able under this subsection for all taxable years shall not exceed the amount required to be devoted under such section 5144 to such purposes. National mortgage (e) NATIONAL MORTGAGE ASSOCIATIONS .-In the case of a national iol. 4s p. 1252.