Page:United States Statutes at Large Volume 56 Part 1.djvu/857

 56 STAT.] 77TH CONG., 2D SESS.-CH. 619-OCT. 21, 1942 taxable year (if beginning after December 31, 1937) but not in excess of (A) the section 102 net income for the taxable year, in the case of the tax imposed by section 102; (B) the Supplement P net income for the taxable year, in the case of the computations required under Supplement P; or (C) the Subchapter A net income for the taxable year, in the case of the tax imposed under Subchapter A." (2) NET OPERATING LOSS DEDUCTION.-Section 26 (c) (2) is amended by inserting after subparagraph (B) the following new subparagraph: "(C) For the purposes of this paragraph, the net operating loss deduction provided in section 122 shall not be allowed." (3) CLERICL AMENDMENT. -Section 26 (c) (2) is amended by striking out "section" where it appears the second and fourth times and inserting in lieu thereof "chapter". (b) BASIC SURTAX CREDrr.- The last sentence of section 27 (b) (relating to definition of basic surtax credit) is amended to read as follows: "The aggregate of the amounts under paragraphs (2) and (3) shall not exceed (A) the section 102 net income for the taxable year, in the case of the tax imposed by section 102; (B) the Supple- ment P net income for the taxable year, in the case of the computa- tions required under Supplement P; or (C) the Subchapter A net income for the taxable year, in the case of the tax imposed under Subchapter A." (c) DIVIDEND CABRY-OVER.-Section 27 (c) (relating to dividend carry-over) is amended to read as follows: "(c) DIVIDEND CARRY-OVER. -There shall be computed with respect to each taxable year of a corporation a dividend carry-over to such year from the two preceding taxable years, which shall consist of the sum of- "(1) The amount of the basic surtax credit for the second pre- ceding taxable year, reduced by the Subchapter A net income for such year, and further reduced by the amount, if any, by which the Subchapter A net income for the first preceding taxable year exceeds the sum of- (A) The basic surtax credit for such year; and "(B) The excess, if any, of the basic surtax credit for the third preceding taxable year over the Subchapter A net in- come for such year; and "(2) The amount, if any, by which the basic surtax credit for the first preceding taxable year exceeds the Subchapter A net income for such year. In the case of a preceding taxable year referred to in this subsection, the Subchapter A pet income shall be determined as if the corporation was, under the law applicable to such taxable year, a personal holding company." (d) TECHNICAL AMENDENT. -Section 504 (a) (relating to defi- nition of undistributed Subchapter A net income) is amended by striking out ", and, in the computation of the dividend carry-over for the purposes of this subchapter, the term 'adjusted net income' as used in section 27 (c) means the adjusted net income minus the deduction allowed for Federal taxes under section 505 (a) (1)". (e) YEARS TO WHICH AIENDMENTS APPLICABLE. -The amendments made by this section shall be applicable only with respect to taxable years beginning after December 31, 1939, but shall be applicable in the computations with respect to previous taxable years for the pur- pose of ascertaining the amount of any dividend carry-over from such previous taxable years. 829 53 Stat. 35 . 26U.S.C.§102; Supp. I, i 102. Ante, p. 807; post, pp. 835 ,836. 53 Stat. 95, 108. 26 U.. C. §. 336, 505. Post, pp. 835, 845, 846. 53 Stat. 19. 26U. .C. S26(c) (2). 53 Stat. 867. 26U. S.C.§122. Ante, p. 807; post, pp. 844 ,847,848. 53 Stat. 19. 26U.S.C.§26(c) (2). 53 Stat. 20 . 26U.S.C. 27(b). 53 Stat. 35 . 26U.S.C.§102; Supp. I, § 102. Ante, p. 807; post, pp. 835 ,836. 53 Stat. 95,108 . 26 U. . c.C. 336, 505. Post, pp. 835, 845, 84& 53 Stat. 20 . 26U.S. C ., Supp.I, 27 (c). 53 Stat. 108. 26 U.S .C. 9 505. Post, pp. 835,846. 53 8tat. 881. 26 U. 8.C., Supp. I, i504(a). Suprs. 53 Stat. 108 . 26U.S.C.1505(a) (1).

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