Page:United States Statutes at Large Volume 56 Part 1.djvu/907

 56 STAT.] 77TH CONG., 2 D SESS.-CH. 619-OCT. 21, 1942 value of its total assets is invested in the securities (other than Government securities or the securities of other regulated invest- ment companies) of any one issuer, or of two or more issuers which the taxpayer controls and which are determined, under regulations prescribed by the Commissioner with the approval of the Secretary, to be engaged in the same or similar trades or businesses or related trades or businesses. For the purposes of TnaiIyer',tnvest- clause (B), in ascertaining the value of the taxpayer's invest- issuer. ment in the securities of an issuer, there shall be included its proper proportion of the investment of any other corporation, a member of a controlled group, in the securities of such issuer, as determined under regulations prescribed by the Commissioner and approved by the Secretary. The term 'controls', as used in "Contro" this paragraph, means the ownership in a corporation of 20 per centum or more of the total combined voting power of all classes of stock entitled to vote. The term 'controlled group', as used in "Controlled group." this paragraph, means one or more chains of corporations con- nected through stock ownership with the taxpayer if (i) 20 per centum or more of the total combined voting power of all classes of stock entitled to vote of each of the corporations (except the taxpayer) is owned directly by one or more of the other cor- porations, and (ii) the taxpayer owns directly 20 per centum or more of the total combined voting power of all classes of stock entitled to vote, of at least one of the other corporations. The "alue. term 'value' as used in this paragraph means, with respect to securities (other than those of majority-owned subsidiaries) for which market quotations are readily available, the market value of such securities; and with respect to other securities and assets, fair value as determined in good faith by the board of directors, except that in the case of securities of majority-owned subsidiaries which are investment companies such fair value shall not exceed market value or asset value, whichever is higher. All other Otherterm terms used in the preceding provisions of this paragraph shall have the same meaning as when used in the Investment Company' 4 Sutatc.7s.l 15U S.C. II 80a-I- Act of 1940, or that Act as amended. A corporation which meets 80 a-52. the foregoing requirements of this paragraph at the close of any quarter shall not lose its status as a regulated investment com- pany because of a discrepancy during a subsequent quarter between the value of its various investments and such require- ments unless such discrepancy exists immediately after the acquisition of any security or other property and is wholly or partly the result of such acquisition. A corporation which does not meet such requirements at the close of any quarter by reason of a discrepancy existing immediately after the acquisition of any security or other property which is wholly or partly the result of such acquisition during such quarter shall not lose its status for such quarter as a regulated investment company if such discrepancy is eliminated within thirty days after the close of such quarter and in such cases it shall be considered to have met such requirements at the close of such quarter for the purposes of applying the preceding sentence. A corporation which meets iCorrPuain tsme"t such requirements at the close of its first full quarter after the date of the enactment of the Revenue Act of 1942, or eliminates any discrepancy between the value of its investments and such requirements existing at the close of such quarter within thirty days thereafter, shall be deemed to have met such requirements at all previous times; and "(4) It files with its return for the taxable year an election to be a regulated investment company or has made such election for a previous taxable year which began after December 31, 1941. 879

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