Page:United States Statutes at Large Volume 68A.djvu/139

 CH. 1—NORMAL TAXES AND SURTAXES

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(1) out of its earnings and profits accumulated after February 28, 1913, or (2) out of its earnings and profits of the taxable year (computed as of the close of the taxable year without diminution by reason of any distributions made during the taxable year), without regard to the amount of the earnings and profits at the time the distribution was made. Except as otherwise provided in this subtitle, every distribution is made out of earnings and profits to the extent thereof, and from the most recently accumulated earnings and profits. To the extent that any distribution is, under any provision of this subchapter, treated as a distribution of property to which section 301 applies, such distribution shall be treated as a distribution of property for purposes of this subsection. (b) SPECIAL RULES. — (1) CERTAIN INSURANCE COMPANY DIVIDENDS.—The

definition in subsection (a) shall not apply to the term "dividend'^ as used
 * in sections 803(e), 821 (a)(2), 823 (2), and 832 (c) (11) (where the

• reference is to dividends of insurance companies paid to policy; holders). (2) DISTRIBUTIONS BY PERSONAL HOLDING COMPANIES.—In

the

r case of a corporation which— 1 (A) under the law applicable to the taxable year in which the J distribution is made, is a personal holding company (as defined, in section 542), or •j (B) for the taxable year in respect of which the distribution is made under section 563(b) (relating to dividends paid after the close of the taxable year), or section 547 (relating to deficiency dividends), or the corresponding provisions of prior law, is a per1 sonal holding company under the law applicable to such taxable year, the term "dividend" also means any distribution of property (whether or not a dividend as defined in subsection (a)) made - by the corporation to its shareholders, to the extent of its undisJ tributed personal holding company income (determined under secT tion 545 without regard to distributions under this paragraph) for such year. SEC. 317. OTHER DEFINITIONS.

(a) PROPERTY.—For purposes of this part, the term "property" means money, securities, and any other property; except that such term does not include stock in the corporation making the distribution (or rights to acquire such stock). (b) REDEMPTION OF STOCK.—For purposes of this part, stock shall be treated as redeemed by a corporation if the corporation acquires its stock from a shareholder in exchange for property, whether or not the stock so acquired is cancelled, retired, or held as treasury stock. SEC. 318. CONSTRUCTIVE OWNERSHIP OF STOCK. (a) GENERAL RULE. — For purposes of those provisions of this sub-

chapter to which the rules contained in this section are expressly made applicable—

§ 318(a)

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