Page:United States Statutes at Large Volume 68A.djvu/233

 CH.

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NORMAL TAXES AND SURTAXES

193

fraud with intent to evade tax, or to wilful failure to file an income tax return within the time prescribed by law or prescribed by the Secretary or his delegate in pursuance of law. (h) EFFKCTIVE DATE.—Subsections (a) through (f), inclusive, shall apply only with respect to determinations made more than 90 days after the date of enactment of this title. If the taxable year with respect to which the deficiency is asserted began before January 1, 1954, the term "deficiency dividend" includes only amounts which would have been includible in the computation under the Internal Revenue Code of 1939 of the basic surtax credit for such taxable year. Subsection (g) shall apply only if the taxable year with respect to which the deficiency is asserted begins after December 31, 1953. PART III—FOREIGN PERSONAL HOLDING COMPANIES Sec. 551. Foreign personal holding company income taxed to United States shareholders. Sec. 552. Definition of foreign personal holding company. Sec. 653. Foreign personal holding company income. Sec. 554. Stock ownership. Sec. 555. Gross income of foreign personal holding companies. Sec. 556. Undistributed foreign personal holding company income. Sec. 557. Income not placed on annual basis. SEC. 551. FOREIGN PERSONAL HOLDING COMPANY INCOME TAXED TO UNITED STATES SHAREHOLDERS. (a) GENERAL RULE. — The undistributed foreign personal holding

company income of a foreign personal holding company shall be included in the gross income of the citizens or residents of the United States, domestic corporations, domestic partnerships, and estates or trusts (other than estates or trusts the gross income of which under this subtitle includes only income from sources within the United States), who are shareholders in such foreign personal holding company (hereinafter called "United States shareholders") in the manner and to the extent set forth in this part. (b) AMOUNT INCLUDED IN GROSS INCOME.—Each United States shareholder, who was a shareholder on the day in the taxable year of the company which was the last day on which a United States group (as defined in section 552(a)(2)) existed with respect to the company, shall include in his gross income, as a dividend, for the taxable year in which or with which the taxable year of the company ends, the amount he would have received as a dividend if on such last day there had been distributed by the company, and received by the shareholders, an amount which bears the same ratio to the undistributed foreign personal holding company income of the company for the taxable year as the portion of such taxable year up to and including such last day bears to the entire taxable year. (c) DEDUCTION FOR OBLIGATIONS OF UNITED STATES AND I T S

INSTRUMENTALITIES.—Each United States shareholder shall take into account in determining his income tax his proportionate share of partially tax-exempt interest on obligations described in section 35 or 242 which is included in the gross income of the company otherwise than by the application of the provisions of section 555(b) (relating to the inclusion in the gross income of a foreign personal holding § 551(c)

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