Page:United States Statutes at Large Volume 76.djvu/1086

 1038

Ante, p. 1036.

PUBLIC LAW 87-834-OCT. 16, 1962

[76 STAT.

in regulations prescribed by the Secretary or his delegate) on or before December 31, 1962, with respect to each taxable year beginning after December 31, 1962, to— " (A) distribute to its shareholders 90 percent or more of w h a t its taxable income would be if it were a domestic corporation; " (B) designate in a written notice mailed to its shareholders at any time before the expiration of 45 days after the close of its taxable year the pro rata amount of the excess (determined as if such corporation were a domestic corporation) of the net long-term capital gain over the net shortterm capital loss of the taxable year; and the portion thereof which is being distributed; and " (C) provide such information as the Secretary or his delegate deems necessary to carry out the purposes of this section^ then section 1246 shall not a^ply with respect to the qualified shareholders of such company during any taxable year to which such election applies. " (2) SPECIAL RULES.— " (A) COMPUTATION OF TAXABLE INCOME.—For purposes

26 USC 172.

26 USC 248.

of paragraph (1)(A), the taxable income of the company shall be computed without regard to— " (i) the excess of the net long-term capital gain over the net short-term capital loss referred to in paragraph (1)(B), " ( i i) section 172 (relating to net operating losses), and "(iii) any deduction provided by part VIII of subchapter B (other than the deduction provided by section 248, relating to organizational expenditures). " (B) DISTRIBUTIONS AFTER THE CLOSK OF THE TAXABLE

YEAR.—For purposes of paragraph (1)(A), a distribution made after the close of the taxable year and on or before the 15th day of the third month of the next taxable year shall be treated as distributed during the taxable year to the extent elected by the company (in accordance with regulations prescribed by the Secretary or his delegate) on or before the 15th day of such third month. " (C) CARRYOVER OF CAPITAL LOSSES FROM NONELECTION

26 USC 1212.

YEARS DENIED.—In Computing the excess of the net long-term capital gain over the net short-term capital loss referred to in paragraph (1)(B), section 1212 shall not apply to losses incurred in or with respect to taxable years before the first taxable year to which the election applies. " (b) YEARS TO W H I C H ELECTION APPLIES.—The election of any

foreign investment company under this section shall terminate as of the close of the taxable year preceding its first taxable year in which any of the following occurs: "(1) the company fails to comply with the provisions of subparagraph (A), (B), or (C) of subsection (a)(1), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, "(2) the company is a foreign personal holding company, or "(3) the company is not a foreign investment company which is described in section 1246(b)(1). -Mipiofai)

�