Page:United States Statutes at Large Volume 56 Part 1.djvu/937

 77TH CONG. , 2D SESS.-CH. 619-OCT. 21, 1942 months ending with the close of the short taxable year and dividing by the number of days in the short taxable year. The tax shall be such part of the tax computed on such annual basis as the number of days in the short taxable year is of the number of days in the twelve months ending with the close of the short taxable year. "(B) Exception.- If the taxpayer establishes its adjusted excess profits net income for the period of twelve months beginning with the first day of the short taxable year, com- puted as if such twelve-month period were a taxable year, under the law applicable to the short taxable year, and using the credits applicable in determining the adjusted excess profits net income for such short taxable year, then the tax for the short taxable year shall be reduced to an amount which is such part of the tax computed on such adjusted excess profits net income so established as the excess profits net income for the short taxable year is of the excess profits net income for such twelve-month period. The taxpayer (other than a tax- payer to which the next sentence applies) shall compute the tax and file its return without the application of this sub- paragraph. If, prior to one year from the date of the begin- ning of the short taxable year, the taxpayer has disposed of substantially all its assets, in lieu of the twelve-month period provided in the preceding provisions of this sub- paragraph, the twelve-month period ending with the close of the short taxable year shall be used. For the purposes of this subparagraph, the excess profits net income for the short taxable year shall not be placed on an annual basis as pro- vided in subparagraph (A), and the excess profits net income for the twelve-month period used shall in no case be con- sidered less than the excess profits net income for the short taxable year. The benefits of this subparagraph shall not be allowed unless the taxpayer, at such time as regulations pre- scribed hereunder require, makes application therefor in accordance with such regulations, and such application, in case the return was filed without regard to this subparagraph, shall be considered a claim for credit or refund. The Conm- missioner, with the approval of the Secretary, shall prescribe such regulations as he may deem necessary for the application of this subparagraph." (b) TAXABLE YEARS TO WHICI AMENDMENT APPLT(AICLE.- The amendment made by this section shall be applicable to taxable years beginning after December 31, 1939. SEC. 214. INTEREST ON CERTAIN FEDERAL OBLIGATIONS. (a) COMPUTATION OF INCOME DEIcrr.- Section 713 (c) (relating to definition of deficit) is amended to read as follows: "(c) DEFICIT IN ExCESs PROFITS NET INCOME.- For the purposes of this section the term 'deficit in excess profits net income' with respect to any taxable year means the amount by which the deductions plus the credit for dividends received and the credit provided in section 26 (a) (relating to interest on certain obligations of the United States and its instrumentalities) exceeded the gross income. For the pur- poses of this subsection in determining whether there was such an excess and in determining the amount thereof, the adjustments pro- vided in section 711 (b) (1) shall be made." (b) CRoss REFERENCES.-For amendments to Supplement A on computation of base period income in case of certain reorganizations, see section 228 of this Act. 909 55 Stat. 19. 26 U ..C., Supp. I, § 713 (c). Ante, p. 825. 54 Stat. 977. 26U..C. 711 (b) (1); Supp. I, § 711 (b) (1). Ante, pp. 903, 904. Post, p. 923. 56 STAT.]

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