Page:United States Statutes at Large Volume 49 Part 1.djvu/1714

 74 TII C ONGRESS. SESS. II. CH. 690. JUNE 22, 1936. 1 669 SEC. 48. DEFINITIONS. Defin itio ns. When used in this title- (a) TAXABLE YEAR .-"Taxable year" means the calendar year, or "Taxable year." the fiscal year ending during such calendar year, upon the basis of which the net income is computed under this Part. "Taxable year" includes, in the case of a return made for a fractional part of a year u nder the pr ovisi ons of this title or u nder r egula tions presc ribed by the Commissioner with the approval of the Secretary, the period for which such return is made. (b) FISCAL YEAR ."Fiscal year" means an accounting period of "Fisc al y ear- " twelve months end ing on the last day of any mon th oth er than De cember. (c) PA ID, INCURRED, ACCRUED .-The terms "paid or incurred" "Paid or i ncurr ed" ; and "paid or accrued" shall be construed according to the method "pai d or accrued ." of accounting upon the basis of which the net income is computed under this Part. (d) TR ADE OR BUSINESS .-The term "trade or business" includes "Trade or business." the performance of the functions of a public office. (e) MUTUAL IN VES TME NT COMPANIES.- Mutual investment (1) GE NERAL DEFINI TION. -T he te rm "mutual investment co m- compa nies . General definition . pany" means any corporation (whether chartered or created as an investment trust, or otherwise), other than a personal holding Post, p. 1732. company as defined in section 351, if- (A) It is organized for the purpose of, and substantially all its business consists of, holding, investing, or reinvesting in stock or securities ; and (B) At least 95 per centum of its gross income is derived from dividends, interest, and gains from sales or other disposition of stock or securities ; and (C ) Less than 30 per cent uin of its g ross income is de rived from the sale or other disposition of stock or securities held for less than six months ; and (D) An amount not less than 90 per centum of its net income is d istrib uted to its shar ehold ers as taxa ble di viden ds dur ing t he taxable year ; and (E) Its shareholders are, upon reasonable notice, entitled to redemption of their stock for their proportionate interests in the corporation's properties, or the cash equivalent thereof less a discount not in excess of 3 per centum thereof. (2) LIMITATIoNs.-Despite the provisions of paragraph (1) a Limitations. corporation shall not be considered as a mutual investment com- pany if, subsequent to a date thirty days after the date of the enact- ment of this Act, at any time during the taxable year- (A) More than 5 per centum of the gross assets of the cor- poration, taken at cost, was invested in stock or securities, or both, of any one corporation, government, or political subdivi- sion thereof, but this limitation shall not apply to investments in obligations of the United States or in obligations of any cor- poration organized under gen er al Act of Congress if su ch corporation is an instrumentality of the United States ; or (B) It owned more than 10 per centum of th e outs tandin g stock or securities, or both, of any one corporation ; or (C) It had any outstanding bonds or indebtedness in excess of 10 per centum of its gross assets taken at cost ; or (D) It fails to comply with any rule or regulation prescribed by the Commissioner, with the approval of the Secretary, for the purpose of ascertaining the actual ownership of its outstanding stock.