Page:United States Statutes at Large Volume 50 Part 1.djvu/839

 814 "Pers onal holding company" defined. 'Gross income re- , quir ement . Stock ownership re- quir ement. Exceptions. Perso nal h oldin g company income. Dividends, interest, et c. Stock and securities tr ans act io ns. Commodities trans- actions. Estates and trusts. Pers onal servi ce contracts . 75TH CONGRESS, 1sT SESSION-CH : 815- AUGUS T 26, 1937 "SEC . 352. DEFINITION OF PERSONAL HOLDING COMPANY. " (a) GENERAL RULE .-For the purposes of this title and of Title I the term personal holding company' means any corporation if- "( 1) GROSS INCOME REQUIREMENT .- At l east 80 per cen tum of its gross income for the taxable year is personal holding company income as defined in section 353 ; but if the corporation is a per- sonal holding company with respect to any taxable year, then, for each subsequent taxable year, the minimum percentage shall be 70 per centum in lieu of 80 per centum, until a taxable year during the whole of the last half of which the stock ownership required by paragraph (2) does not exist, or until the expiration of three consecutive taxable years in each of which less than 70 per centum of the gro ss income is persona l holding company income ; and "( 2) STOCK OWNERSHIP REQUIREMENT .-At any time during the last half of the taxable year more than 50 per centum in value of its outstanding stock is owned, directly or indirectly, b or for not more than five individuals. "(b) ExcEPTIONS .-The term personal hold ing company' does not include a corporation exempt from taxation under section 101, a bank as defined in section 104, a life insurance company, a surety company, or, except with respect to a taxable year ending on or before the date of the enactment of the Revenue Act of 1937, a foreign per- sonal holding company as defined in section 331 . "SEC. 353. PERS ONA L HO LDIN G C OMPA NY INCO ME. For the purposes of this title the term personal holding company income' means the portion of the gross income which consists of r "(a) Divide nds, inter est, royalt ies ( other than miner al, o il, o r gas oy alties), annuities. (b) STOCK AND SECURITIES TRANSACTIONS .-Except in the case of re gular deale rs in stoc k or s ecuri ties, gain s from the sale or ex chang e of stock or securities . "(c) COMMODITIES TRANSACTIONS .-Gains from futures transac- tions in any commodity on or subject to the rules of a board of trade or commodity exchange. This subsection shall not apply to gains by a producer, processor, merchant, or handler of the commodity wh ich arise out of bona fide hed ging tran sact ions reas onab ly ne ces- sary to the conduct of its business in the manner in which such business is customarily and usually conducted by others. "(d) ESTATES AND TnusTS .-Amounts includible in computing the net income of the corporation under Supplement E of Title I ; and gains from the sale or other disposition of any interest in an estate or trust . "(e) PERSONAL SERVICE CONT RACTS. -(1 ) A moun ts rec eiv ed u nde r a contract under which the corporation is to furnish personal serv- ices ; if some person other than the corporation has the right to designate (by name or by description) the individual who is to per- form the services, or if the individual who is to perform the services is designated (by name or by description) in the contract ; and (2) amounts received from the sale or other disposition of such a con- tract. This subsection shall apply with respect to amounts received for services under a particular contract only if at some time during the taxable year 25 per centum or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for the individual who has performed, is to perform, or may be desig- nated (b y name or by descrip tion) as the one to perform, such services.