Page:United States Statutes at Large Volume 78.djvu/123

 78 STAT. ]

PUBLIC LAW 88-272-FEB. 26, 1964

81

"(ii) making loans evidenced by, or purchasing, certificates of indebtedness issued w a series, under a trust indenture, and in registered form or with interest coupons attached. For purposes of clause (i), the remaining maturity shall be treated as including any period for which there may be a renewal or extension under the terms of an option exercisable by the borrower. "(2) BUSINESS DEDUCTIONS.—For purposes of subsection (c) (6)(C), the deductions which may be taken into account shall include only— " (A) deductions which are allowable only by reason of section 162 or section 404, except there shall not be included any such deduction in respect of compensation for personal services rendered by shareholders (including members of the shareholder's family as described in section 544(a)(2)), and " (B) deductions allowable under section 167, and deductions allowable under section 164 for real property taxes, but in either case only to the extent that the property with respect to which such deductions are allowable is used directly in the active and regular conduct of the lending or finance business. "(3)

INCOME

RECEIVED FROM

CERTAIN

AFFILIATED

26 USC 544. 26 USC 167. ^g USCIM*

CORPORA-

TIONS.—For purposes of subsection (c)(6)(B), in the case of a lending or finance company which meets the requirements of subsection (c)(6)(A), there shall not be treated as personal holding company income the lawful income received from a corporation which meets the requirements of subsection (c)(6) and which is a member of the same affiliated group (as defined in section 1504) of which such company is a member." (d)

68A Stat. 45. 26 USC 162, 404.

PERSONAL HOLDING COMPANY INCOME.—Subsections (a)

26 USC 1504.

and

(b) of section 543 (relating to personal holding company income) are ^^ ^^^ ^'*^' amended to read as follows: " (a) GENERAL RULE.—For purposes of this subtitle, the term 'personal holding company income' means the portion of the adjusted ordinary gross income which consists of: "(1) DIVIDENDS, ETC.—Dividends, interest, royalties (other than mineral, oil, or gas royalties or copyright royalties), and annuities. This paragraph shall not apply to— " (A) interest constituting rent (as defined in subsection (b)(3)),, " (B) interest on amounts set aside in a reserve fund under section 511 or 607 of the Merchant Marine Act, 1936, and 49^stftr2oo5?' " (C) a dividend distribution of divested stock (as defined 46 USC uei, in subsection (e) of section 1111), but only if the stock with ^^yQ^Q^^^ 4 respect to which the distribution is made was owned by the 26 USC 1111. distributee on September 6, 1961, or was owned by the distributee for at least 2 years before the date on which the antitrust order (as defined in subsection (d) of section 1111) was entered. "(2) RENTS.—The adjusted income from rents; except that such adjusted income shall not be included if— " (A) such adjusted income constitutes 50 percent or more of the adjusted ordinary gross income, and " (B) the sum of— " (i) the dividends paid during the taxable year (determined under section 562), ^^ "^^ ^^2. "(ii) the dividends considered as paid on the last dajof the taxable year under section 563(c) (as limited by ^^ ^^^ ^^^' the second sentence of section 563(b)), and

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