Page:United States Statutes at Large Volume 56 Part 1.djvu/887

 77TH CONG. , 2D SESS.-CH. 619-OCT. 21, 1942 such return. The making of a consolidated income-tax return shall be considered as such consent. In the case of a corporation which is a member of the affiliated group for a fractional part of the year, the consolidated returns shall include the income of such corporation for such part of the year as it is a member of the affiliated group. In the case of a corporation which is not a member of the affiliated group after March 31, 1942, of the last taxable year of such group which begins before April 1, 1942, such corporation shall not be con- sidered a member of the affiliated group for consolidated income-tax- return purposes for such year but shall be considered a member of such group for consolidated excess-profits-tax-return purposes for such year, and the consent required in the case of such corporation shall relate only to the consolidated excess-profits-tax regulations. "(b) REGULATIONS. -The Commissioner, with the approval of the Secretary, shall prescribe such regulations as he may deem necessary in order that the tax liability of any affiliated group of corporations making consolidated income- and excess-profits-tax returns and of each corporation in the group, both 'during and after the period of affiliation, may be returned, determined, computed, assessed, collected, and adjusted, in such manner as clearly to reflect the income- and excess-profits-tax liability and the various factors necessary for the determination of such liability, and in order to prevent avoidance of such tax liability. Such regulations shall prescribe the amount of the net operating loss deduction of each member of the group which is attributable to a deduction allowed for a taxable year beginning in 1941 on account of property considered as destroyed or seized under section 127 (relating to war losses), and the allowance of the amount so prescribed as a deduction in computing the net income of the group shall not be limited by the amount of the net income of such member. "(c) COMPUTATION AND PAYMENT OF TAX.-In any case in which consolidated income-tax and excess-profits-tax returns are made or are required to be made, the taxes shall be determined, computed, assessed, collected, and adjusted in accordance with the regulations under subsection (b) prescribed prior to the last day prescribed by law for the filing of such returns; except that the tax imposed under section 15 or section 204 shall be increased by 2 per centum of the consoli- dated corporation surtax net income of the affiliated group of includ- ible corporations. Only one specific exemption of $5,000 provided in section 710 (b) (1) shall be allowed for the entire affiliated group of corporations for the purposes of the tax imposed by Subchapter E of Chapter 2. "(d) DEFINITION OF 'AFFILIATED GROUP'. -As used in this section, an 'affiliated group' means one or more chains of includible corpora- tions connected through stock ownership with a common parent corporation which is an includible corporation if- "(1) Stock possessing at least 95 per centum of the voting power of all classes of stock and at least 95 per centum of each class of the nonvoting stock of each of the includible corpora- tions (except the common parent corporation) is owned directly by one or more of the other includible corporations; and "(2) The common parent corporation owns directly stock pos- sessing at least 95 per centum of the voting power of all classes of stock and at least 95 per centum of each class of the nonvot- ing stock of at least one of the other includible corporations. As used in this subsection, the term 'stock' does not include nonvot- ing stock which is limited and preferred as to dividends. Fractional part of year. Net operating loss deduction. Ante, p. 852. Ante, p. 806. 53 Stat. 72. 26U.S.C. 204. Ante, p. 821; post, pp. 61, 87(-872 .i 54 Stat. 075 . 26U .C.§(710- 752. 710(b)(1); Supp. I , §§ 710-743. Post, pp. 902, 89. " Stock." 56 STAT.] 859

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