Page:United States Statutes at Large Volume 68A.djvu/313

 CH. 1

NORMAL TAXES AND SURTAXES

273

sents income derived from sources within foreign countries or possessions of the United States. (c) NOTICE TO SHAREHOLDERS.—The amounts to be treated by the

shareholder, for purposes of subsection (b)(2), as his proportionate share of— (1) taxes paid to any foreign country or possession of the United States, and (2) gross income derived from sources within any foreign country or possession of the United States, shall not exceed the amounts so designated by the company in a written notice mailed to its shareholders not later than 30 days after the close of its taxable year. (d) M A N N E R

OF MAKING

ELECTION

AND NOTIFYING

SHARE-

HOLDERS.—The election provided in subsection (a) and the notice to shareholders required by subsection (c) shall be made in such manner as the Secretary or his delegate may prescribe by regulations. (e) CROSS R E F E R E N C E S. — (1) For treatment by shareholders of taxes paid to foreign countries and possessions of the United States, see section 164(a) and section 901. (2) For definition of foreign corporation, see section 7701(a)(5). SEC. 854. LIMITATIONS APPLICABLE TO DIVIDENDS RECEIVED FROM REGULATED INVESTMENT COMPANY. (a) CAPITAL G A I N DIVIDEND.—For purposes of section 34(a)

(relating to credit for dividends received by individuals), section 116 (relating to an exclusion for dividends received by individuals), and section 243 (relating to deductions for dividends received by corporations), a capital gain dividend (as defined in section 852(b)(3)) received from a regulated investment company shall not be considered as a dividend. (b) OTHER DIVIDENDS.— (1) GENERAL RULE.—In the case of a dividend received from a

regulated investment company (other than a dividend to which subsection (a) applies)— (A) if such investment company meets the requirements of section 852(a) for the taxable year during which it paid such dividend; and (B) the aggregate dividends received by such company during such taxable year are less than 75 percent of its gross income, then, in computing the credit under section 34(a), the exclusion under section 116, and the deduction under section 243, there shall be taken into account only that portion of the dividend which bears the same ratio to the amount of such dividend as the aggregate dividends received by such company during such taxable year bear to its gross income for such taxable year. (2) NOTICE TO SHAREHOLDERS.—The amount of any distribution by a regulated investment company which may be taken into account as a dividend for purposes of the credit under section 34, the exclusion under section 116, and the deduction under-section 243 shall not exceed the amount so designated by the company in a written notice to its shareholders mailed not later than 30 days after the close of its taxable year.

§ 854(b)(2)

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