Page:United States Statutes at Large Volume 68A.djvu/54

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INTERNAL REVENUE CODE OF 1954 (c) N o

C R E D I T ALLOWED FOR DIVIDENDS FROM CERTAIN C O R -

PORATIONS.—Subsection (a) shall not apply to any dividend from— (1) an insurance company subject to a tax imposed by part I or II of subchapter L (sec. 801 and following); (2) a corporation organized under the China Trade Act, 1922 (see sec. 941); or (3) a corporation which, for the taxable year of the corporation in which the distribution is made, or for the next preceding taxable year of the corporation, is— (A) a corporation exempt from tax under section 501 (relating to certain charitable, etc., organizations) or section 521 (relating to farmers' cooperative associations); or (B) a corporation to which section 931 (relating to income from sources within possessions of the United States) applies. (d) SPECIAL RULES FOR CERTAIN DISTRIBUTIONS.—For purposes

of subsection (a)— (1) Any amount allowed as a deduction under section 591 (relating to deduction for dividends paid by mutual savings banks, etc.) shall not be treated as a dividend. (2) A dividend received from a regulated investment company shall be subject to the limitations prescribed in section 854. (e) CERTAIN NONRESIDENT A L I E N S INELIGIBLE FOR C R E D I T. — N o

credit shall be allowed under subsection (a) to a nonresident alien individual with respect to whom a tax is imposed for the taxable year under section 87i (a). (f) CROSS R E F E R E N C E S. —

(1) For exclusion of certain dividends from gross income, see section 116. (2) For special rules relating to the credit provided by subsection (a), see sections 642 (trusts and estates), 702 (partnerships), and 584 (common trust funds). (3) For disallowance of credit where tax is computed by Secretary or his delegate, see section 6014. SEC. 35. PARTIALLY TAX-EXEMPT INTEREST RECEIVED BY INDIVIDUALS. (a) IN GENERAL.—There shall be allowed to an individual, as a credit against the tax imposed by this subtitle for the taxable year, an amount equal to 3 percent of the amount received as interest on obligations of the United States or on obligations of corporations organized under Act of Congress which are instrumentalities of the United States, b u t only if— (1) such interest is included in gross income; and (2) such interest is exempt from normal tax under the Act authorizing the issuance of such obligations. (b) LIMITATION ON AMOUNT OF C R E D I T. — The credit allowed by

subsection (a) shall not exceed whichever of the following is the lesser: (1) the amount of the tax imposed by this chapter for the taxable year, reduced by the sum of the credits allowable under sections 33 and 34; or (2) 3 percent of the taxable income for the taxable year. (c) C R O S S R E F E R E N C E. —

For reduction of credit under this section on account of amortizable bond premium, see section 171. § 34(c)

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