Page:United States Statutes at Large Volume 55 Part 1.djvu/50

 77TH CONG., 1ST SESS.-CH. 10-MAR. 7, 1941 "(2) mails a notice of deficiency (A) without having pre- viously issued a preliminary notice thereof or (B) within ninety days after the date of such preliminary notice, such taxpayer may claim the benefits of this section in its petition to the Board or in an amended petition in accordance with the rules of the Board. If the application is not filed within six months after the date pre- scribed by law for the filing of the return, the application of this section shall not reduce the tax otherwise determined under this subchapter by an amount in excess of the amount of the deficiency finally determined under this subchapter without the application of this section. If the average base period net income has been deter- mined under subsection (a) for any taxable year, the Commissioner may, by regulations approved by the Secretary, prescribe the extent to which the limitations prescribed by this subsection may be waived for the purpose of determining the tax under this subchapter for a subsequent taxable year." SEC. 7. CONSOLIDATED RETURNS OF INSURANCE COMPANIES OTHER THAN LIFE OR MUTUAL Section 730 (e) (6) of the Internal Revenue Code is amended to read as follows: "(6) Insurance companies subject to taxation under section 201 or 207." SEC. 8. INCORPORATION OF PARTNERSHIP OR SOLE PROPRIETOR- SHIP. (a) Section 740 (a) (1) (C) of the Internal Revenue Code is amended by striking out "owned by such other corporation." and inserting in lieu thereof: "owned by such other corporation, or "(D) Substantially all the properties of a partnership in an exchange to which section 112 (b) (5), or so much of sec- tion 112 (c) or (e) as refers to section 112 (b) (5), or to which a corresponding provision of a prior revenue law, is or was applicable." (b) Section 740 (b) (4) of the Internal Revenue Code is amended by striking out the period at the end thereof and inserting in lieu thereof a semicolon and the following: "or "(5) In the case of a transaction specified in subsection (a) (1) (D), the partnership whose properties were acquired." (c) Section 740 of the Internal Revenue Code is amended by insert- ing at the end thereof the following new subsection: "(h) SOLE PROPRIETroRHIP.-For the purposes of sections 740 (a) (1) (D), 740 (b) (5), and 742 (g), a business owned by a sole pro- prietorship shall be considered a partnership." (d) Section 742 of the Internal Revenue Code is amended by inserting at the end thereof the following new subsection: "(g) In the case of a partnership which is a component corpora- tion by virtue of section 740 (b) (5), the computations required by this Supplement shall be made, under rules and regulations prescribed by the Commissioner with the approval of the Secretary, as if such partnership had been a corporation. For the purpose of such com- putations, in making the adjustment for income taxes required by section 711 (b) (1) (A), the partnership so regarded as a corporation shall be considered as having distributed all its net income as a dividend." 64 Stat. 990. 26 . .C.§730(e) (6). 53 Stat. 71, 74. 26U.S.c.. 201, 207. 54 Stat. 991. 26U.S.C.§740(a) (1) (C). 53 Stat. 37, 39. 26 U.S. C. §§ 112(b) (5), 112 (c) or (e). 54 Stat. 991. 26U.S. C. §740 (b) (4). 54 Stat. 991. 26U.S.C. 740. 54 Stat. 992. 26 U.S. . 742. Supra. 54 Stat. 977. 26U.S.C.§711(b) (1) (A). Post, p. 701. 25 55 STAT.]

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