Page:United States Statutes at Large Volume 73.djvu/162

 124 26 USC 166.

PUBLIC LAW 86-69-JUNE 26, 1959

[73 S T A T.

«^2) BAD DEBTS.—Section 166(c) (relating to reserve for bad debts) shall not apply. " (3) CHARITABLE, ETC., CONTRIBUTIONS AND GIFTS.—In applying

26 USC 170.

26 USC 170. 26 USC 171.

section 170— " (A) the limit on the total deductions under such section provided by the first sentence of section 170(b)(2) shall be 5 percent of the gain from operations computed without regard to— "(i) the deduction provided by section 170, "(ii) thedeductionsprovidedby paragraphs (3), (5), (6^, and (8) of subsection (d), and "(iii) any operations loss carryback to the taxable year under section 812; and " (B) under regulations prescribed by the Secretary or his delegate, a rule similar to the rule contained in section 170 (b)(3) shall be applied. a ^4 J AMORTIZABLE BOND PREMIUM.—Section 171 shall not apply. " (5) N E T OPERATING LOSS DEDUCTION.—The deduction for net

26 USC 172.

operating losses provided in section 172 shall not be allowed. " (6) PARTIALLY TAX-EXEMPT INTEREST.—The deduction

26 USC 242. 26 USC 243-245.

for

partially tax-exempt interest provided by section 242 shall not be allowed. "(7) DIVIDENDS RECEIVED.—The deductions for dividends received provided by sections 243, 244, and 245 shall not be allowed. "(f)

LIMITATION ON CERTAIN DEDUCTIONS.—

"(1) IN GENERAL.—The amount of the deductions under paragraphs (3), (5), and (6) of subsection (d) shall not exceed $250,000 plus the amount (if any) by which— " (A) the gain from operations for the taxable year, computed without regard to such deductions, exceeds " (B) the taxable investment income for the taxable year. "(2) APPLICATION OF LIMITATION.—The limitation provided by paragraph (1) shall apply first to the amount of the deduction under subsection (d)(6), then to the amount of the deduction under sui3section (d)(5), and finally to the amount of the deduction under subsection (d)(3). " (g) LIMITATIONS ON DEDUCTION FOR CERTAIN MUTUALIZATION DISTRIBUTIONS.— " (1) DEDUCTION NOT TO REDUCE TAXABLE INVESTMENT INCOME.—

The amount of the deduction under subsection (d) (11) shall not exceed the amount (if any) by which— " (A) the gain from operations for the taxable year, computed without regard to such deduction (but after the application of subsection (f)), exceeds " (B) the taxable investment income for the taxable year. " (2) DEDUCTION NOT TO REDUCE TAX BELOW 1957 LAW.—The

deduction under subsection (d) (11) for the taxable year shall be allowed only to the extent that such deduction (after the application of all other deductions provided by subsection (d)) does not reduce the amount of the tax imposed by section 802(a)(1) for such taxable year below the amount of tax which would have been imposed by section 802(a) as in effect for 1957, if this part, as in effect for 1957, applied for such taxable year. "(3) APPLICATION OF SECTION 815.—That portion of any distribution with respect to which a deduction is allowed under subsection (^d) (11) shall not be treated as a distribution to shareholders tor purposes of section 815; except that in the case of any distribution made in 1959, such portion shall be treated as a dis-

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