Page:United States Statutes at Large Volume 49 Part 1.djvu/1743

 1698 Ac count ing p eriod for foreign corporation. "Yea r" cons trued. Corporations tr ea ted as foreign. Corporations receiv- ing inc ome f rom U.S. possessions. Post, p. 1718 . Ch ina Tr ade Act corporations. Post, p. 1720 . Returns and pay- ment of tax. Consolidated returns of railroad cor pora- tions. By affiliated group in lieu of sepa rate re- turns. Co ndition. Vol. 48, p. 721 . Fractional part of year. Regulations. Co mpu tat ion and payment of tax. R eturns filed prior to making regulations. Vol.48,p.721 . "Affiliated group" defi ned. Stock ownership of memb ers. 74Tx C ONGRESS. SESS. II. CH. 690. JUNE 22, 1936. the accumulated profits of the preceding year or years (unless to his satisfaction shown otherwise), and in other respects treating dividends as having been paid from the most recently accumulated gains, profits, or earnings. In the case of a foreign corporation, the income, war-profits, and excess-profits taxes of which are deter- mined on the basis of an accounting period of less than one year, the word "year" as used in this subsection shall be construed to mean such accounting period. (g) CORPORATIONS TREATED AS FOREIGN .-For the purposes o f this section the following corporations shall be treated as foreign corporations (1) A corpor ation en titled to the benefits of sec tion 251, by reason of receiving a large percentage of its gross income from sources within a possession of the United States (2) A corporation organized under the China Trade Act, 1922, and entitled to the credit provided for in section 262. S upplemen t D-Retur ns and P ayment of Tax [Supplementary to Subtitle B, Part V] SEC. 141. CONSOLIDATED RETURNS OF RAILROAD CORPORATIONS. (a) PRIv ILEGE TO F ILE C ONSO LIDAT ED RETURNS .-An affiliated group of corpora tions shall, subject t o the provi sions of thi s section, hav e the pr ivilege of maki ng a co nsolidat ed retu rn for the taxa ble year in lieu of separate returns. The mak ing of a con sol ida ted return shall be upon the condition that all the corporations which have been members of the affiliated group at any time during the taxable year for which the return is made consent to all the regu. lat ions und er subs ection ( b) (or, in case such r egulati ons are not p rescribe d prior to the making of the r eturn, then the regula tions prescribed under section 141 (b) of the Revenue Act of 1934 insofar as not inconsistent with this Act) prescribed prior to the making of such return ; and the making of a consolidated return shall be considered as such consent. In the case of a corporation which is a member of the affiliated group for a fractional part of the year the consolidated return shall include the income of such corp orat ion for such part of the year as it is a member of the affiliated group. (b) RE GULA TIO NS .-The Commissioner, w ith the approval of the Secretary, shall prescribe such regulations as he may deem necessary in order that the tax li ability of a ny affiliat ed group of corporatio ns m aking a consoli dated re turn an d of eac h corpo ration i n the g roup, both during and after the period of affiliation, may be determined, computed, assessed, collected, and adjusted in such manner as clearly to reflect the income and to prevent avoidance of tax liability. (C) COMPUTATION AND PAYMENT or TA x .-In any case in which a consolidated return is made the tax shall be determined, computed, assessed, collected and adjusted in accordance with the regulations under subsection ?b) (or, in case such regulations are not prescribed p rior to the mak ing of t he retu rn, then the re gulation s rescribed under section 1410) of the Revenue Act of 1934 insof ar as not inconsistent with this Act) prescribed prior to the date on which such return is made. (d) DE FIN ITI ON OF "AFFILIATED GROUP " .-As used in this sec- tion an "affiliated group" means one or more chains of corporations connected through stock ownership with a common parent cor- poration if- (1) At least 95 per centum of the stock of each of the corpora- tions (except the common parent corporation) is owned directly by one or more of the other corporations ; and