Page:United States Statutes at Large Volume 53 Part 1.djvu/35

 INCOME TAX 23 (4) Unless in each consent made by a shareholder who is tax- able with respect to a dividend only if received from sources within the United States, such shareholder agrees that the specific amount stated in the consent shall be considered as a dividend received by him from sources within the United States; and (5) Unless each consent filed is accompanied by cash, or such other medium of payment as the Commissioner may by regula- tions authorize, in an amount equal to the amount that would be required by section 143 (b) or 144 to be deducted and withheld by the corporation if the amount specified in the consent had been, on the last day of the taxable year of the corporation, paid to the shareholder in cash as a dividend. The amount accompanying the consent shall be credited against the tax imposed by section 211 (a) or 231 (a) upon the shareholder. (e) CONSENT DISTRIBUTION AS PART OF ENTIRE DISTRIBUTION.-If during the last month of the taxable year with respect to which shareholders' consents are filed by the corporation under subsection (d) there is made a partial distribution, then, for the purposes of this chapter, such partial distribution and the consent distribution shall be considered as having been made in connection with each other and each shall be considered together with the other as one entire distribution. (f) TAXABILITY OF AMOUNTS SPECIFIED IN CONSENTS.- The total amount specified in a consent filed under subsection (d) shall be included as a taxable dividend in the gross income of the share- holder making such consent, and, if the shareholder is taxable with respect to a dividend only if received from sources within the United States, shall be included in the computation of his tax as a dividend received from sources within the United States, regardless of- 1) Whether he actually so includes it in fis return; and (2) Whether the distribution by the corporation of an amount equal to the total sum included in all the consents filed, had actual distribution been made, would have been in whole or in part a taxable dividend- and (3) Whether the corporation is entitled to any consent dividends credit by reason of the filing of such consents, or to a credit less than the total sum included in all the consents filed. (g) CORPORATE SHAREHOLDERS.- If the shareholder who makes the consent is a corporation, the amount specified in the consent shall be considered as part of its earnings or profits for the taxable year, and shall be included in the computation of its accumulated earnings and profits. (h) BASIS OF STOCK IN HANDS OF SHAREHOLDERS. - The amount specified in a consent made under subsection (d) shall, for the pur- pose of adjusting the basis of the consent stock with respect to which the consent was given, be treated as having been reinvested by the shareholder as a contribution to the capital of the corporation; but only in an amount which bears the same ratio to the consent divi- dends credit of the corporation as the amount of such shareholder's consent stock bears to the total amount of consent stock with respect to which consents are made. (i) EFFECT ON CAPITAL ACCOUNT OF CORPORATION. - The amount of the consent dividends credit allowed under subsection (c) shall be considered as paid in surplus or as a contribution to the capital of the corporation, and the accumulated earnings and profits as of the close of the taxable year shall be correspondingly reduced. (j) AMIOUNTS NOT INCLUDED IN SHAREHOLDER'S RETURN.- - T he failure of a shareholder of consent stock to include in his gross in- come for the proper taxable year the amount specified in the consent made by him and filed by the corporation, shall have the same effect, with respect to the deficiency resulting therefrom as is provided in section 272 (f) withrespect to a deficiency resulting from a mathe- matical error appearing on the face of the return.

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