Page:United States Statutes at Large Volume 49 Part 1.djvu/1710

 74TH C ONGRESS. SESS. II. CH. 690. J UNE 22, 1936 . 1665 Act, the amount of the earnings or profits which the Federal Hous- ing Administrator certifies to the Commissioner has been devoted by such association during the taxable year to the acquisition of such reserves as the Administrator may require under the provisions of section 303 of that Act. Ac quisi tion of re- serves . V01.48,p.1254. SEC. 27. C ORPORATION C REDIT FOR DI VIDENDS PAID. Corporation credit for divide nds paid . (a) DIVI DEND S PA ID C REDIT IN GENERAL .-For the pur poses of Di viden ds pa id this title, the dividends paid credit shall be the amount of dividends credit in general. paid during the taxable year. (b) DIVIDEND CARRY-OvEM-In computing the dividends paid Dividend carry-over. credit for any taxable year, if the dividends paid during the taxable year are less than the adjusted net income, there shall be allowed as part of the dividends paid credit, and in the following order (1) Dividends paid during the second preceding taxable year in excess of the adjusted net income for such year, to the extent not needed as a dividends paid credit for the taxable year pre- ceding the taxable year the tax for which is being computed ; and ( 2) Divide nds paid during the first pr eceding t axable ye ar in excess of the adjusted net income for such year. No credit shall be allowed for dividends paid by a corporation prior Dividends pa id prior to its first taxable year under this title. to first taxable year . (C) DIV IDENDS IN KIND .--If a dividend is paid in property other Dividends in kind. than money (including stock of the corporation if held by the cor- poration as an investment) the dividends paid credit with respect thereto shall be the adjusted basis of the property in the hands of the corporation at the time of the payment, or the fair market value of the property at the time of the payment, whichever is the lower. (d) DIVI DEND S IN OBL IGATI ONS OF THE CORPORATION.-If a dlvi- Dividends paid in obligation s of corp ora- dend is paid in obligations of the corporation, the amount of the tion. dividends paid credit with respect thereto shall be the face value of the obli gations, or thei r fair m arket va lue at t he time o f the pa yment, whichever is the lower. If the fair market value is lower than the face value, then when the obligation is redeemed by the corporation, the excess of the amount for which redeemed over the fair market value at the time of the dividend payment (to the extent not allow- ab le as a d eduction in comput ing net i ncome for any taxab le year) shall be treated as a dividend paid in the taxable year in which the redem ption occ urs. (e) TAXA BLE STOCK DIVIDENDS .-In case of a stock dividend or Taxable stock divi- stock right which is a taxable dividend in the hands of shareholders dends. under section 115 (f), the dividends paid credit with respect thereto Post, p. 1688. shall be the fair market value of the stock or the stock right at the time of the pa yment. (f) DISTRIBUTIONS IN LIQUIDATION .-In the case of amounts dis- uiddo bution s in liq- tributed in liquidation the part of such distribution which is prop- erly chargeable to the earnings or profits accumulated after February 28, 1913, shall, for the purposes of computing the dividends paid credit under this section, be treated as a taxable dividend paid. (g) PREFERENTIAL DIVIDENDS .-No dividends paid credit shall be Preferential divi- allowed with respect to any distribution unless the distribution is dends, pro rata, equal in amount, and with no preference to any share of stock as compared with other shares of the salve class. (h) NONTAXABLE DISrntriuTioNs .-If any part of a distribution ti onontaxabl e distrib u- (including stock dividends and stock rights) is not a taxable divi- dend in the hands of such of the shareholders as are subject to taxa- t ion under this ti tle for the peri od in wh ich the distribut ion is m ade, no dividends paid credit shall be allowed with respect to such part. 104019-36-105