Page:United States Statutes at Large Volume 49 Part 1.djvu/1777

 1732 74Tu CONGRESS. SESS. II. CH. 690. JUNE 22, 1936. Time Taxes. Additional TITLE IA-ADDITIONAL INCOME TAXES Income Surtax on personal SEC. 351. SURTAX ON PERSONAL HOLDING COMPANIES. holding companies. Rates imposed. (a) IivIPOSITION of TAX.-There shall be levied, collected, and paid, for each taxable year (in addition to the taxes imposed by Title I), upon the undistributed adjusted net income of every personal holding company a surtax equal to the sum of the following (1) 8 per centum of the amount thereof not in excess of $2,000 ; plu s (2) 18 per centum of the amount thereof in excess of $2,000 and not in excess of $100,000 ; plus (3) 28 per centum of the amount thereof in excess of $100,000 and not in excess of $500,000 ; plus (4) 38 per centum of t he amount there of in excess of $500,000 and not in excess of $1,000,000 ; plus (5) 48 per centum of the amount thereof in excess of $1,000,000. Def initio ns. (b) DEFINITIONS .-As used in this title- "Personal holding (1) The term "personal holding company" means any corpora- Ptp co Ap .1673, 1677 . tion (other than a corporation exempt from taxation under section 101, and other than a bank, as defined in section 104, and other than a life-insurance company or surety company) if-(A) at least 80 per centum of its gross income for the taxable year is derived from roya lties, divid ends, interes t, ann uities , and (excep t in th e case of regular dealers in stock or securities) gains from the sale of stock or securities, and (B) at any time during the last half of the tax- able year more than 50 per centum in value of its outstanding stock is owned, directly or indirectly, by or for not more than five indi- Determining stock viduals . For the purpose of determining the ownership of stock ownership . Corporation, etc. in a personal holding company-(C) stock owned, directly or indi rectly , by a corpo ration, partn ership , esta te, or trust shall be considered as being owned proportionately by its shareholders, Individual. partners, or beneficiaries ; (D) an individual shall be considered as owning, to the exclusion of any other individual, the stock owned, directly or indirectly, by his family, and this rule shall be applied in such manner as to produce the smallest possible number of individuals owning, directly or indirectly, more than 50 per centum Family of individual. in value of the outstanding stock ; and (E) the family of an indi- vidual shall include only his brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants. "Undistributed ad- (2) The term "undistributed adjusted net income" means the justed net income." adjusted net income minus the sum of computation. Ante, pp. 1655,1711 . (A) 20 per centum of the excess of the adjusted net income over the amount of dividends received from personal holding companies which are allowable as a credit for the purposes of the tax imposed by section 13 or 204 ; (B) Amounts used or set aside to retire indebtedness incurred prior to January 1, 1934, if such amounts are reasonable with reference to the size and terms of such indebtedness ; and (C) The amount of the dividends paid credit provided in sec- tion 27, computed without the benefit of subsection (b) thereof relating to the dividend carry-over) . "Adju sted not in . 3) T he term "adjust ed net income" means the net income minus come ." the sum of Computation. (A) Federal income, war-profits, and excess-profits taxes paid or accrued during the taxable year to the extent not allowed as Ante, p. 1658. a deduction by section 23, but not including the tax imposed by this section or a corresponding section of a prior income-tax law ;