Page:United States Statutes at Large Volume 49 Part 1.djvu/1741

 16 96 74TH CONGRESS. SESS. II. CH. 690. JU NE 22, 1936 . Pre ferr ed s tock of SEC. 121. DEDUCT ION OF DIVIDE NDS PA ID ON CERTAIN PREFERRED certa in corporations. STOCK OF CERTAIN CORPORATIONS. Deduction of divi- dends paid on certain, in computing net in- come. Dividends paid to United States. Ante, p. 1665 . In computing the net income of any national bankin g association, or of any bank or trust company organized under the laws of any State, Territory, possession of the United States, or the Canal Zone, or of any other banking corporation engaged in the business of industrial banking and under the supervision of a State banking department or of the Comptroller of the Curr ency, or of any incor- porated domestic insurance company, there shall be allowed asa deduction from gross income, in addition to deductions otherwise provided for in this title, any dividend (not including any distribu- tion in liquid ation) paid, within such taxab le year, to the United States or to any instrumentality thereof exempt from Federal income taxes, on the preferred stock of the corporation owned by the United States or such instrumentality. The amount allowable as a deduc- tion under this section shall be deducted from the dividends paid credit otherwi se computed under section 27. Credits against tax. Supplement C-Credits Against Tax [Supplementary to Subtitle B, Part III] Taxes of foreign coun- SEC. 131. TAXES OF FOREIGN COUNTRIES AND P OSS ESS IONS OF tries and U.S.posses- sions. UNITED STATES. Allo wances . (a) ALLOWANCE OF CREDIT .-If the taxpayer signifies in his return his de sire to have the benefit s of this section, the t ax imposed by this title shall be credited with Ci tizen s and dome s- (1) CITIZEN AND DOMESTIC CORPORATION .-In the case of a citizen tic corporations ; taxes to foreign countries, etc. of the United States and of a domestic corporation, the amount of any income, war-profits, and excess-profits taxes paid or accrued during the taxable year to any foreign country or to any possession of the United States ; and Residents ; to United (2) RESIDENT OF UNITED STATES.-In the case of a resident of States possessions. the United States, the amount of any such taxes paid or accrued during the taxable year to any possession of the United States ; and Alien resident to for- (3) ALIEN RESIDENT OF UNITED STATES .-In the case of an alien eign country allowing similar credit . residen t of the United States, the am ount of any such taxes p aid or accrued during the taxable year to any foreign country, if the fo reign count ry of which such alie n resi dent is a c itize n or s ubjec t, in imposing such taxes, allows a similar credit to citizens of the United States residing in such country ; and Partnerships a n d (4) P ARTNER SHIPS AND ESTATES.-In the ca se of any such mdi- estates ; to foreign coun- tries, etc. vidual who is a. member of a partnership or a beneficiary of an estate or trust, his proportionate share of such taxes of the part- nership or the estate or trust paid or accrued during the taxable year to a foreign country or to any possession of the United States, as the case may be. Lim it on credit. (b) LIMIT ON CREDIT .-The amount of the credit taken under this section shall be subject to each of the following limitations : Proportionate credit (1) The amount of the credit in respect of the tax paid or for taxes paid to foreign countr y. accrued to any country shall not exceed the same. proportion of the tax ag ainst which such credit is ta ken, w hich the ta xpayer 's ne t income from sources within such country bears to his entire net income for the same taxable year ; and Limitation on total (2) The total amount of the credit shall not exceed the same amount. proportion of the tax against which such credit is taken, which the ta xpayer 's net inco me fro m sour ces wi thout the U nited State s bears to his entire net income for the same taxable year.