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H.R. 4473 (82nd): An Act to provide revenue, and for other purposes

The text of the bill below is as of Oct 20, 1951 (Passed Congress).


452                                       PUBLIC LAW 183—OCT. 20, 1951                      [65 STAT.

                    Public Law 183                                                   CHAPTER    521
                                                        AN ACT
  October 20,1951
    [H. R. 4473]                       To provide revenue, and for other purposes.

                    Be it eTiacted hy the Senate and House of Representatives of the
^^Revenue Act of jj^fg^ States of AmeHca in Congress assem^led^ That (a) SHORT
                 TITLE.—This Act, divided into titles and sections according to the
                 following table of contents, may be cited as the "Revenue Act of 1951":
                                                TABLE OF CONTENTS

                                       TITLE I—INCREASE IN INCOME TAX RATES
 Poa, p. 459.                               PABT I—^INDIVIDUAL INCOME TAXES
                    Sec. 101. Increase in surtax for 1951,1952, and 1953.
                         (a) Rates of surtax.
                         (b) Limitation on tax.
                    Sec. 102. Individuals with adjusted gross income of less than $5,000.
                    Sec. 103. Inapplicability of certain penalties and additions to tax.
                         (a) Penalties for failure to file return.
                         (b) Additions to tax.
                    Sec. 104. Computation of tax in case of certain joint returns.
                    Sec. 105. Effective date of Part I.

 Post, p. 465.                            PABT n—CORPORATION INCOME TAXES

                    Sec. 121. Increase in rate of corporation normal tax.
                         (a) Amendment of section 13.
                         (b) Maximum tax.
                         (c) Mutual insurance companies other than life or marine.
                         (d) Regulated investment companies.
                         (e) Business income of certain section 101 organizations.
                         (f) Amendment of section 15.
                         (g) Technical amendment.
                    Sec. 122. Credits of corporations.
                         (a) Dividends received credit.
                         (b) Credit for dividends paid on certain preferred stock.
                         (c) Western hemisphere trade corporations.
                    Sec. 123. Computation of alternative capital gains tax.
                    Sec. 124. Filing of corporation returns for taxable years ending after March 13,
                                1951, and before October 1,1951.
                    Sec. 125. Effective date.
 Post, p. 471.                              PART III—FISCAL TEAR TAXPAYERS

                    Sec. 131. Fiscal year taxpayers.
                         (a) Amendment of section 108.
                         (b) Computation of excess profits tax.
                         (c) Technical amendments.
 Post, p. 474.                         TITLE II—WITHHOLDING OF TAX AT SOURCE

                    Sec. 201. Percentage method of withholding.
                    Sec. 202. Wage bracket withholding.
                    Sec. 203. Additional withholding of tax on wages upon agreement by employer
                                and employee.
                    Sec. 204. Effective date.
 Post, p. 480.                    TITLE III—MISCELLANEOUS INCOME TAX AMENDMENTS

                    Sec. 301. Tax treatment in case of head of household.
                         (a) Surtax in case of head of household.
                         (b) Computation of tax by collector.
                         (c) Effective date.
                    Sec. 302. Payments to beneficiaries of deceased employees.
                         (a) Amendment of section 22 (b) (1).
                         (b) Effective date.

65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 453 TABLE OF CONTENTS—Continued TITLE III—iliscELLANEOus INC»ME TAX AMENDMENTS—Continued Post, p. 483. Sec. 303. Joint and survivor annuities. (a) Amendment of section 22 (b) (2). (b) Amendment of section 113 (a) (5). (c) Effective dates. Sec. 304. Income from discharge of indebtedness. (a) Amendment of section 22 (b) (9). ;b) Amendment of section 22 (b) (10). Sec. 305. Compensation of certain members of the armed forces. [a) Amendment of section 22 (b) (13). (b) Definition of service in combat zone. fc) Withholding on wages. (d) Effective dates. Sec. 306. Involuntary liquidation and replacement of inventory. [a) Amendment of section 22 (d) (6) (F) (iii). (b) Effective date. Sec. 307. Medical expenses. [a) Amendment of section 23 (x). (b) Effective date. Sec. 308. Standard deduction. (a) Method of election. (b) Change of election. (c) Effective date. Sec. 309. Expenditures in the development of mines. [a) Deduction of expenditures. ;b) Adjusted basis for determining gain or loss upon sale or exchange. (c) Technical amendment. [d) Effective date. Sec. 310. Gross income of dependent of taxpayer. [ a) Increase in amount of gross income permitted. (b) Effective date. Sec. 311. Credit for dividends received. (a) Dividends from foreign corporation engaged in trade or business in the United States. (b) Technical amendment. (c) Effective date. Sec. 312. Joint return after filing separate return. L) Change of election, (b) Effective date. Sec. 313. Mutual savings banks, building and loan associations, cooperative banks. (a) Mutual savings banks. (b) Building and loan associations and cooperative banks. (c) Exemptions from excess profits tax. (d) Federal savings and loan associations. (e) Bad debt reserves. (f) Dividends paid to depositors. (g) Deduction for repayment of certain loans. (h) Definition of bank. [i) Definition of domestic building and loan association. (j) Effective date. Sec. 314. Income tax treatment of exempt cooperatives. (a) Amendment of section 101 (12). (b) Technical amendments. (c) Information returns. (d) Effective date. Sec. 315. Surtax on corporations improperly accumulating surplus. (a) Long-term capital gains. [b) Effective date. Sec. 316. Election as to recognition of gain in certain corporate liquidations. (a) Amendment of section 112 (b) (7). (b) Basis of property. (c) Effective date. Sec. 317. Certain distributions of stock on reorganization. (a) Distributions not in liquidation. (b) Basis of stock. (c) Effective date. Sec. 318. Gain from sale or exchange of taxpayer's residence. (a) Nonrecognition of gain in certain cases. (b) Technical amendments. (c) Effective date.
454 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. TABLE OF CONTENTS—Ck)ntlnned Post, p. 497. TITLE III—MISCEX^LANEOUS INCOME TAX AMENDMENTS—Ck>ntintied See. 319. Percentage depletion, (a) Allowance of percentage depletion. (b) Technical amendment (c) Effective date. Sec. 320. Redemption of stock to pay death taxes. (a) Amendment of section 115 (g) (3). (b) Effective date. Sec. 321. Earned income from sources without the United States. (a) Exclusion from gross income. (b) Withholding of tax on wages. (c) Effective dates. Sec. 322. Capital gains and losses. (a) Treatment of long-term capital gains and losses. (b) Alternative tax. (c) Technical amendments. (d) Effective date. Sec. 323. Sale of land with unharvested crop. (a) Treatment of gain or loss. (b) Treatment of deductions. (c) Effective date. Sec. 324. Sales of livestock. Sec. 325. Tax treatment of coal royalties. (a) Definition of property used in the trade or business. (b) Gain or loss upon certain disposals of timber or coal. (c) Clerical amendment. (d) Technical amendment. (e) Conforming amendments. (f) Effective date. Sec. 326. Collapsible corporations. (a) Definitions with respect to collapsible corporations. (b) Limitations on application of section 117 (m). (c) Effective date. Sec. 327. Dealers in securities—capital gains and ordinary losses. Sec. 328. Treatment of gain on sales of certain property between spouses and between an individual and a controlled corporation. (a) Disallowance of capital gain treatment. (b) Effective date. Sec. 329. Receipts of certain termination payments by employee. (a) Taxability to employee as capital gain. (b) Effective date. Sec. 330. Net operating loss carry-over. (a) Loss for taxable year beginning before 1948. (b) Allowance of three-year loss carry-over from taxable years 1948-1949. (c) Effective date. Sec. 331. Stock options. (a) Option subject to stockholder approval. (b) Effective date. Sec. 332. Credit for taxes of foreign corjwrations. (a) Foreign subsidiary of a domestic corporation. (b) Foreign subsidiary of a foreign corporation. (c) Clerical amendment. Sec. 333. Information at source on imyments of interest. Sec. 334. Abatement of income tax for certain members of armed forces upon death. Sec. 335. Employees' trusts. (a) Amendment of section 165 (b). (b) Effective date. Sec. 336. Life insurance companies. (a) Tax for 1951. (b) Adjusted normal-tax net income for 1951. (e) Technical amendments. (d) Effective date. Sec. 337. Tax treatment of certain investment companies. (a) Inclusion of certain registered management companies in the defini- tion of regulated investment company. (b) Technical amendment. (c) Effective date.
65 STAT.] P U B L I C L A W 183—OCT. 20, 1951 455 T A B L E O F CONTENTS—Continued T I T L E I I I — M I S C E L L A N E O U S INCOME T A X AMENDMENTS—Continued Post, p. 5io. Sec, 338. E x c h a n g e s a n d distributions in obedience to orders of Securities and Exchange Conunission. ( a ) Definition of system group. (b) Effective d a t e . Sec. 339. T a x a t i o n of business income of S t a t e colleges and universities. ( a ) Amendment of section 421 ( b ) . (b) Unrelated t r a d e or business. (c) Effective d a t e . Sec. 340. F a m i l y p a r t n e r s h i p s . ( a ) Definition of p a r t n e r . (b) Allocation of p a r t n e r s h i p income. (c) Effective d a t e . Sec. 341. W a r losses. ( a ) T a x upon w a r loss recovery. (b) Basis of recovered property. (c) Credit for foreign taxes. (d) Effective dates. Sec. 342. Deduction of expenditures for mine exploration. ( a ) Deduction of mine exploration exi)enditures. (b) Adjusted basis for determining gain or loss upon sale or exchange. (c) Effective d a t e . Sec. 343. Definition of employee. ( a ) Amendment of section 3797 ( a ) . (b) Effective date. Sec. 344. Nonbusiness casualty losses. ( a ) Removal of limitation. (b) Effective date. Sec. 345. Abatement of t a x on certain t r u s t s for members of armed forces dying in service. Sec. 346. Life insurance d e p a r t m e n t s of m u t u a l savings banks. ( a ) Computation of t a x . (b) Technical amendment. (c) Effective d a t e . Sec. 347. Publishing business carried on by tax-exempt organization. ( a ) T r e a t m e n t as related t r a d e or business. (b) Effective d a t e . Sec. 348. Deduction with respect to certain unrelated business net income. ( a ) Unrelated business net income. (b) Effective date. Sec. 349. Nondistributable income of personal holding companies. TITLE IV—EXCISE TAXES PAET I—TAX ON ADMISSIONS AND CABARETS Post, p. 519. Sec. 401. Removal of t a x on free admissions. Sec. 402. Exemptions from admissions t a x . ( a ) R e i n s t a t e m e n t of p r e w a r exemptions. (b) Amendment of section 1701 ( a ) and ( b ) . (c) Admissions to municipal swimming pools, etc. Sec. 403. Effective d a t e of amendments relating to admissions. Sec. 404. T a x on cabarets, roof gardens, etc, ( a ) Ballrooms a n d dance halls. (b) Effective date, PART II—^TAX ON CIGARETTES Post, p. 521. Sec. 421. T a x on cigarettes. ( a ) Increase in r a t e . (b) Effective d a t e . Sec. 422. Floor stocks t a x and floor stocks refund on cigarettes. Sec. 423. Reduction of t a x on tobacco and snuff. ( a ) Reduction in r a t e . (b) Effective d a t e .
456 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. TABLE OF CONTENTS—Continued TITLE IV—EXCISE TAXES—Continued Post, p. 523. PABT m—^BETAli:.EaiS' EXCISE TAXBS Sec. 431. Retailers' excise tax on toilet preparations. (a) Baby oils, etc. (b) Sales to barber shops, etc. Sec. 432. Effective date of Part III. Post, p. 623. PART IV—^DIESH^L FUEL Sec. 441. Diesel fuel used in highway vehicles. (a) Imposition of tax. (b) Effective date. Post, p. 624. PAKT V—LIQtrOB Sec. 451. Increase in tax on distilled spirits from $9 to $10.50 per gallon. (a) Distilled spirits generally. (b) Imported perfumes containing distilled spirits. (c) Floor stocks tax. Sec. 452. Wines. (a) Increase in rate of tax. (b) Floor stocks. Sec. 453. Fermented malt liquor. (a) Increase in tax on fermented malt liquors from $8 to $9 per barrel. (b) Floor stocks tax. Sec. 454. Floor stocks refunds. (a) Amendment of section 1656 ( a ) . (b) Amendment of section 1656 (b). Sec. 455. Clerical amendment. Sec. 456. Effective date of Part V. Post, p. 528. PABT VI—OCCUPATIONAL TAXES Sec. 461. Dealers in liquors. (a) Wholesale dealers in liquors. (b) Retail dealers in liquors. (c) Wholesale dealers in malt liquors. Sec. 462. Drawback in the case of distilled spirits used in the manufacture of certain nonbeverage products. (a) Drawback. (b) Effective date. Sec. 463. Tax on coin-operated gaming devices. Sec. 464, Effective date of Part VI. Post, p. 529. PABT VH—WAGEBINO Sec. 471. Wagering taxes. (a) Imposition of taxes. (b) Technical amendment. Sec. 472. Effective date of Part VII. Post, p. 532. PART Vin—MANUEACTUBEES' EKOISB TAXBS Sec. 481. Automobiles, trucks, and parts or accessories. (a) Increase in tax on trucks. (b) Increase in tax on passenger automobiles and motorcycles. (c) Increase in tax on parts or accessories. (d) Rebuilt parts or accessories. (e) Technical amendment. (f) Parts or accessories for farm equipment. (g) Effective date of subsection (f). (h) Removal of tax on tires for toys, etc. Sec. 482. Navigation receivers sold to the United States. (a) Exemption on sales to United States of certain radio sets. (b) Tax-free sales of radio parts. (c) Refund in case of use of parts. (d) Refund in case of resale to United States. (e) Use by manufacturer of tazable parts. (f) Effective dates.
65 STAT.] P U B L I C L A W 183—OCT. 20, 1951 457 T A B L E O F CONTENTS—Continued T I T L E IV—EXCISE TAXES—Continued PAET vm—MANUTACTUBERS' EXCISE TAXES—Continued Post, p. 534. Sec. 483. Tax-free sales of refrigerator components to wholesalers for resale to m a n u f a c t u r e r s . Sec. 484. Sporting goods. Sec. 485. Electric, gas, a n d oil appliances. Sec. 486. Adjustments of t a x r a t e s on photographic a p p a r a t u s a n d film; repeal of t a x on c e r t a i n items. ( a ) I t e m s subject to t a x . (b) Floor stocks refund on bulbs. Sec. 487. Imposition of t a x on mechanical pencils, fountain a n d ball point pens, and mechanical lighters for cigarettes, cigars, a n d pipes. Sec. 488. Repeal of t a x on electrical energy. ( a ) Repeal of t a x . ( b ) Effective date. Sec. 489. T a x on gasoline. ( a ) Increase in r a t e . ( b ) Floor stocks t a x a n d refund. Sec. 490. Effective d a t e of P a r t V I I I . PART I X M I S C E L L A N E O U S EXCISE TAX A M E N D M E N T S Post, p . 538. Sec. 491. Reduction of t a x on telegraph dispatches. ( a ) Reduction of t a x . (b) Effective d a t e . (c) Amounts paid p u r s u a n t to bills rendered. ( d ) R a t e reduction d a t e . Sec. 492. Exemption of certain overseas telephone calls from t h e t a x on telephone facilities. ( a ) Telephone calls from members of armed forces in combat zojies. ( b ) Effective d a t e . Sec. 493. Exemption of fishing trips from t a x on transportation. ( a ) Exemption. (b) Effective d a t e . Sec. 494. T a x on t r a n s p o r t a t i o n of persons. ( a ) Exemption of certain foreign travel. (b) Effective d a t e . Sec. 495. T r a n s p o r t a t i o n of m a t e r i a l excavated in t h e course of construction work. ( a ) Amendment of section 3475. (b) Effective d a t e . Sec. 496. Articles from foreign t r a d e zones. ( a ) Imported articles. (b) Previously tax-paid articles. Sec. 497. Refunds on articles from foreign t r a d e zones. ( a ) Imported articles. (b) Previously tax-paid articles. Sec. 498. T a x refunds on spirits lost in floods of 1951. ( a ) Authorization. ( b ) Destruction of spirits. (c) Credit. ( d ) Regulations. T I T L E V — E X C E S S PROFITS T A X Post, p. 54i. Sec. 501. Maximum t a x for new corporations. Sec, 502. P a y m e n t s from foreign sources for technical assistance, etc. ( a ) Amendment of section 433 ( a ) ( 1 ) . ( b ) A m e n d m e n t of section 433 ( b ) . Sec. 503. Average base period net income in case of certain fiscal year taxpayers. Sec. 504. Average base period net income—alternative based on growth in case of n e w corporations. ( a ) General rule. ( b ) Amendment of P a r t I I . Sec. 505. Average base period net income—alternative based on growth. Sec. 506. Adjustments for changes in inadmissible assets in case of banks. ( a ) Amendment of section 435 ( g ) . ( b ) Amendment of section 438. (c) Amendment of section 435 ( f ) . ( d ) Effective d a t e of subsection (c) ( 3 ) .
458 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. TABLE OF CONTENTS—Ck)ntinuecl Post, p. 547. TITLE V—^EXCESS PEOFITS TAX—Continued Sec. 507. Decrease in inadmissible assets. See. 508. Election with respect to certain inadmissible assets. (a) Amendment of section 440. (b) Amendment of section 433 (a) (1). (c) Amendment of section 433 (b). Sec. 509. Alternative average base period net income. (a) Amendment of section 442. (b) Technical amendments. Sec. 510. Definition of total assets for purposes of sections 442-446. Sec. 511. Average base period net income—change in products or services. Sec. 512. Average base period net income—new corporation. Sec. 513. Excess profits credit—regulated public utilities. Sec. 514. Consolidated returns of regulated public utilities. Sec. 515. Nontaxable income from certain mining properties. Sec. 516. Transition from war production and increase in peacetime capacity. (a) In general. (b) Technical amendments. Sec. 517. Base period catastrophe. Sec. 518. Consolidation of newspapers. Sec. 519. Television broadcasting companies. Sec. 520. Increase in capacity for production or operation. Sec. 521. Excess profits credit based on income in connection with certain tax- able acquisitions. (a) General rule. (b) Technical amendments. Sec. 522. Strategic minerals. Sec. 523. Effective date of title V. Post, p. 662. TITM: VI—^MISCELLANEOUS PROVISIONS AND AMENDMENTS Sec, 601. Exemption of certain organizations from income tax for prior taxable years. Sec. 602. Excess profits credit based on income. (a) Percentage of average base period net income taken into account. (b) Effective date. Sec. 603. Foreign estate tax credit. (a) Credit against basic estate tax. (b) Credit against additional estate tax. (c) Reversionary or remainder interest. (d) Extension of period of limitations, etc., in case of recovery of taxes claimed as credit. (e) Effective date. Sec. 604. Estate and gift tax treatment of United States bonds held by certain nonresident aliens. (a) Estate tax. (b) Gift tax. Sec. 605. Estate tax exemption for works of art loaned by nonresident aliens. (a) Amendment of section 863 (c). (b) Effective date. Sec. 606. Exemption from additional estate tax of members of armed forces upon death. Sec. 607. Transfers conditioned upon survivorship. Sec. 608. Transfers with income reserved. Sec. 609. Transfers taking effect at death. Sec. 610. Reversionary interests in case of life insurance. Sec. 611. Income pursuant to award of Interstate Commerce Commission. Sec. 612. Credit in prior taxable years for dividends received on preferred stock of a public utility. Sec. 613. Consolidated returns—-includible corporations. Sec. 614. Time for performing certain acts postponed in case of China Trade Act corporations. Sec. 615. Treaty obligations. Sec. 616. Reorganization Plan Numbered 26 of 1950. Sec. 617. Claims under the Renegotiation Act. Sec. 618. Prohibition upon denial of Social Security Act funds. Sec. 619. Removal of tax exemption from expense allowances of the President, the Vice President, the Speaker and Members of Congress. (a) Expense allowance of the President. (b) Expense allowance of the Vice President. (c) Expense allowance of the Speaker of the House of Representatives. (d) Expense allowances of Members of Congress. (e) Effective dates.
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 459 (b) A C T AMENDATORY OF INTERNAL REVENUE CODE.—Except as otherwise expressly provided, wherever in this Act an amendment or repeal is expressed in terms of an amendment to or repeal of a chapter, subchapter, title, supplement, section, subsection, subdivision, para- graph, subparagraph, or clause, the reference shall be considered to be made to a provision of the Internal Revenue Code. (c) MEANING or TERMS USED.—Except as otherwise expressly pro- vided, terms used in this Act shall have the same meaning as when used in the Internal Revenue Code. TITLE I—INCREASE IN INCOME TAX RATES P A R T I—INDIVIDUAL INCOME TAXES SEC. 101. INCREASE IN SURTAX FOR 1951,1952, AND 1953. (a) Rates of Surtax.—Section 12 (b) (relating to rates of surtax) 63 Stat. 5. 26 U. 8. C. S 12 (b). is hereby amended to read as follows: "(b) RATES OF SURTAX.— " ( 1 ) CALENDAR YEAR 1951.—In the case of a taxable year beginning on J a n u a r y 1, 1951, and ending on December 31, 1951, there shall be levied, collected, and paid for such taxable year upon the surtax net income of every individual the surtax shown in the following table: "If the surtax net income is: The surtax shall be: Not over $2,000 17.4% of the surtax net income. Over $2,000 but not over $4,000 $348, plus 19.4% of excess over $2,000. Over $4,000 but not over $6,000 $736, plus 24% of excess over $4,000. Over $6,000 but not over $8,000 $1,216, plus 27% of excess over $6,000. Over $8,000 but not over $10,000 $1,756, plus 32% of excess over $8,000. Over $10,000 but not over $12,000 $2,396, plus 36% of excess over $10,000. Over $12,000 but not over $14,000 $3,116, plus 40% of excess over $12,000. Over $14,000 but not over $16,000 $3,916, plus 45% of excess over $14,000. Over $16,000 but not over $18,000 $4,816, plus 48% of excess over $16,000. Over $18,000 but not over $20,000 $5,776, plus 51% of excess over $18,000. Over $20,000 but not over $22,000 $6,796, plus 54% of excess over $20,000. Over $22,000 but not over $26,000 $7,876, plus 57% of excess over $22,000. Over $26,000 but not over $32,000 $10,156, plus 60% of excess over $26,000. Over $32,000 but not over $38,000 $13,756, plus 63% of excess over $32 000. Over $38,000 but not over $44,000 $17,536, plus 66% of excess over $38,000. Over $44,000 but not over $50,000 $21,496, plus 70% of excess over $44,000. Over $50,000 but not over $60,000 $25,696, plus 72% of excess over $50,000. Over $60,000 but not over $70,000 $32,896, plus 75% of excess over $60,000. Over $70,000 but not over $80,000 $40,396, plus 79% of excess over $70,000. Over $80,000 but not over $90,000 $48,296, plus 8 1 % of excess over $80 000 Over $90,000 but not over $100,000__ $56,3^, plus 84% of excess over $90 000 Over $100,000 but not over $150,000__ $64,796, plus 86% of excess over $100,000. Over $150,000 but not over $200,000— $107,796, plus 87% of excess over $150,000. Over $200,000 $151,296, plus 88% of excess over $200,000.
460 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. "(2) TAXABLE YEARS BEGINNING AFTER OCTOBER 3 1 , 1 9 5 1 , AND BEFORE JANUARY 1, 1954.—In the case of taxable years beginning after October 31, 1951, and before January 1, 1954, there shall be levied, collected, and paid for each taxable year upon the sur- tax net income of every individual (other than a head of a house- Post, p. 480. hold to whom subsection (c) applies) the surtax shown in the following table: "If t h e s u r t a x n e t income i s : T h e s u r t a x shall b e : Not over $2,000 19.2% of the s u r t a x net income. Over $2,000 but not over $4,000 $384, plus 21.6% of excess over $2,000. Over $4,000 but not over $6,000 $816, i)lus 26% of excess over $4,000. Over $6,000 but not over $8,000 $1,336, plus 3 1 % of excess over $6,000., Over $8,000 but not over $10,000 $1,956, plus 3.j% of excess over $8,000. Over $10,000 but not over $12,000 $2,6.")6, plus 3 9 % of excess over $10,000. Over $12,000 but not over $14,000 $3,436, plus 4 5 % of excess over $12,000. Over $14,000 but not over $16,000 $4,336, plus 50% of excess over $14,000. Over $16,000 but not over $18,000 $5,336, plus 5 3 % of excess over $16,000. Over $18,000 but not over $20,000 $6,396, plus 56% of excess over $18,000. Over $20,000 but not over $22,000 $7,516, plus 59% of excess over $20,000. Over $22,000 but not over $26,000 $8,696, plus 6 3 % of excess over $22,000. Over $26,000 but not over $32,000 $11,216, plus 64% ol' excess over $26,000. Over $32,000 but not over $38,000 $15,056, plus 6 5 % of excess over $32,000. Over $38,000 but not over $44,000 $18,956, plus 69% of excess over $38,000. Over $44,000 but not over $50,000 $23,096, plus 72% of excess over $44,000. Over $50,000 but not over $60,000 $27^416, plus 74% of excess over $50,000. Over $60,000 but not over $70,000 $34,816, plus 77% of excess over $60,000. Over $70,000 but not over $80,000 $42,516, plus 80% of excess over $70,000. Over $80,000 but not over $90,000 $50,516, plus 82% of excess over $80,000. Over $90,000 but not over $100,000___ $.58,710, plus 85% of excess o\ er $90,000. Over $100,000 but not over $150,000__ $67,216, plus 87% of excess over $100,000. Over $150,000 but not over $200,000__ .$110,716, plus 88% of excess over $150,000. Over $200,000 $154,716, plus 89% of excess oA-er $200,000. "(3) T A X A B L E YEARS B E G I N N I N G AFTER DECEMBER 3 I , 1953.—In the case of taxable years beginning after December 31,1953, there shall be levied, collected, and paid for each taxable year upon the surtax net income of every individual (other than a head of a household to whom subsection (c) applies) the surtax shown in the following table: "If t h e s u r t a x net income i s : T h e s u r t a x shall b e : Not over $2,000 17% of the s u r t a x n e t income. Over $2,000 but not over $4,000 $340, plus 19%, of excess over $2,000. Over $4,000 but not over $6,000 $720, plus 2 3 % of excess over $4,000. Over $6,000 but not over $8,000 $1,180, plus 2 7 % of excess over $6,000. Over $8,000 b u t not over $10,000 $1,720, plus 8 1 % of excess over $8,000. Over $10,000 but not over $12,000 $2,340, plus 3 5 % of excess over $10,000. Over $12,000 but not over $14,000___ $3,040, plus 40% of excess over $12,000.
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 461 '*If the surtax net income i s : The surtax shall b e : $3,840, plus 44% of excess over Over $14,000 but not over $16,000— $14,000. $4,720, plus 47% of excess over Over $16,000 but not over $18,000___ $16,000. $5,660, plus 50% of excess over Over $18,000 but not over $20,000_— $18,000. $6,660, plus 53% of excess over Over $20,000 but not over $22,000— $20,000. $7,720, plus 56% of excess over Over $22,000 but not over $26,000— $22,000. $9,960, plus 59% of excess over Over $26,000 but not over $32,000— $26,000. $13,500, plus 62% of excess over Over $32,000 but not over $38,000— $32,000. $17,220, plus 66% of excess over Over $38,000 but not over $44,000— $38,000. $21,180, plus 69% of excess over Over $44,000 but not over $50,000— $44,000. Over $50,000 but not over $60,000— $25,320, plus 72% of excess over $50,000. Over $60,000 but not over $70,000— $32,520, plus 75% of excess over $60,000. Over $70,000 but not over $80,000— $40,020, plus 78% of excess over $70,000. Over $80,000 but not over $90,000— $47,820, plus 81% of excess over $80,000. Over $90,000 but not over $100,000— $55,920, plus 84% of excess over $90,000. Over $100,000 but not over $150,000.._ $64,320, plus 86% of excess over $100,000. Over $150,000 but not over $200,000— $107,320, plus 87% of excess over $150,000. Over $200,000 $150,820, plus 88% of excess over $200,000." ( b ) L i m i t a t i o n O n T a x . — S e c t i o n 12 ( f ) ( r e l a t i n g t o l i m i t a t i o n on 53 Stat. 7. 26 U. S. C. § 12 (f). t a x ) is hereby a m e n d e d t o r e a d as follows: "(f) L I M I T A T I O N ON T A X . — "(1) CALENDAR TEAR I 9 5 1 . — I n t h e case of a t a x a b l e year b e g i n n i n g on J a n u a r y 1, 1951, a n d e n d i n g December 3 1 , 1951, t h e combined n o r m a l t a x a n d s u r t a x shall in n o event exceed 87.2 p e r c e n t u m of t h e net income for t h e t a x a b l e year. "(2) TAXABLE YEARS B E G I N N I N G AFTER OCTOBER 3 1 , 1951, A N D BEFORE JANUARY 1, 19 54.—III t h e case of t a x a b l e y e a r s b e g i n n i n g a f t e r October 3 1 , 1951, a n d before J a n u a r y 1, 1954, t h e combined n o r m a l t a x a n d s u r t a x shall i n n o event exceed 88 p e r c e n t u m of t h e n e t income of t h e t a x a b l e year. "(3) T A X A B L E TEARS BEGINNING AFTER DECEMBER 3 1 , 1953.—In the case of t a x a b l e y e a r s b e g i n n i n g after December 3 1 , 1953, t h e combined n o r m a l t a x a n d s u r t a x shall i n n o event exceed 87 p e r c e n t u m of t h e n e t income for t h e taxable y e a r . " SEC. 102. INDIVIDUALS WITH ADJUSTED GROSS INCOME OF LESS THAN $5,000. Section 400 ( r e l a t i n g t o o p t i o n a l t a x on i n d i v i d u a l s w i t h adjusted 56 Stat. 689; 64 Stat, 911. gross incomes of less t h a n $5,000) is hereby a m e n d e d b y s t r i k i n g o u t 26U. S. C. §400. t h e tables c o n t a i n e d t h e r e i n a n d i n s e r t i n g i n lieu thereof t h e f o l l o w i n g :
462 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. "Table I 'Taxable year beginning January 1,1951, and ending December 31,1951 If adjusted And the number If a d j u s t e d g r o s s in- of e x e m p t i o n s gross in- A n d t h e n u m b e r of e x e m p t i o n s is come IS— IS— come IS— — 2 3 And tax- And And tax- And 1 2 3 4 or 1 payer is a payer is a 4 5 6 7 8 or At But more At But single or j o i n t single or joint more least less least less married re- married re- than than filing turn filing turn sepa- is sepa- is rately filed rately filed T h e tax shall be— T h e tax shall b e — $0 $675 $0 $0 $0 $0 $2,325 $2,350 $307 $184 $184 $62 $62 $0 $0 $0 $0 $0 675 700 4 0 0 0 2,350 2,375 311 189 189 67 67 0 0 0 0 0 700 725 8 0 0 0 2,375 2,400 316 194 194 71 71 0 0 0 0 0 725 750 13 0 0 0 2,400 2,425 321 193 198 76 76 0 0 0 0 0 750 775 18 0 0 0 2,426 2,450 326 203 203 80 80 0 0 0 0 0 775 800 22 0 0 0 2,450 2,475 330 207 207 86 85 0 0 0 0 0 800 825 27 0 0 0 2,476 2,500 334 212 212 90 90 0 0 0 0 0 825 850 31 0 0 0 2,500 2,625 339 216 216 94 94 0 0 0 0 0 850 875 36 0 0 0 2,525 2,550 343 221 221 99 99 0 0 0 0 0 875 900 41 0 0 0 2,550 2,575 348 226 226 103 103 0 0 0 0 0 900 925 45 0 0 0 2,575 2,600 353 230 230 lOS 108 0 0 0 0 0 925 950 50 0 0 0 2,600 2,626 357 236 235 112 112 0 0 0 0 0 960 975 64 0 0 0 2,625 2,650 362 239 239 117 117 0 0 0 0 0 975 1,000 69 0 0 0 2,660 2,675 366 244 244 122 122 0 0 0 0 0 1,000 1,025 63 0 0 0 2,675 2 700 371 249 249 126 126 4 0 0 0 0 1,025 1,050 68 0 0 0 2,700 2,726 376 253 263 131 131 8 0 0 0 0 1,050 1,075 73 0 0 0 2,726 2.750 380 258 268 135 135 13 0 0 0 0 1,075 1,100 77 0 0 0 2,750 2,775 385 262 262 140 140 18 0 0 0 0 1.100 1,125 82 0 0 0 2,775 2,800 389 267 267 145 145 22 0 0 0 0 1,125 1,150 86 0 0 0 2,800 2,825 394 272 272 149 149 27 0 0 0 0 1,150 1,175 91 0 0 0 2,825 2,850 399 276 276 154 154 31 0 0 0 0 1,175 1,200 96 0 0 0 2,850 2,875 403 281 281 168 158 36 0 0 0 0 1,200 1,225 100 0 0 0 2,875 2,900 408 285 285 163 163 41 0 0 0 0 1,225 1,250 105 0 0 0 2,900 2,925 413 290 290 168 168 45 0 0 0 0 1,250 1,275 109 0 0 0 2,925 2,950 418 295 295 172 172 50 0 0 0 0 1,275 1,300 114 0 0 0 2,950 2,975 423 299 299 177 177 54 0 0 0 0 1,300 1,325 119 0 0 0 2,975 3,000 428 304 304 181 181 69 0 0 0 0 1,325 1,350 123 1 0 0 3,000 3,050 435 311 311 188 188 66 0 0 0 0 1,350 1,375 128 6 0 0 3,050 3,100 446 320 320 197 197 75 0 0 0 0 1,375 1.400 132 10 0 0 3,100 3,150 456 329 329 207 207 84 0 0 0 0 1,400 1,425 137 16 0 0 3,150 3,200 466 338 338 216 216 93 0 0 0 0 1,425 1,450 142 19 0 0 3,200 3,250 476 347 347 225 225 103 0 0 0 0 1,450 1,475 146 24 0 0 3,250 3,300 486 356 356 234 234 112 0 0 0 0 1,475 1,500 151 28 0 0 3,300 3,350 496 366 366 243 243 121 0 0 0 0 1,500 1,525 155 33 0 0 3,350 3,400 506 375 375 262 252 130 8 0 0 0 1,525 1,550 160 37 0 0 3,400 3,450 516 384 384 262 262 139 17 0 0 0 1,550 1, 675 164 42 0 0 3,450 3,500 526 393 393 271 271 148 26 0 0 0 1,575 1,600 169 47 0 0 3,600 3,5.50 636 402 402 280 280 158 36 0 0 0 1,600 1.625 174 51 0 0 3,650 3.600 546 412 412 289 289 167 44 0 0 0 1,625 1,650 178 66 0 0 3,600 3,650 556 422 421 298 298 176 54 0 0 0 1,650 1,675 183 60 0 0 3,650 3,700 666 432 430 308 308 185 63 0 0 0 1,675 1,700 187 65 0 0 3,700 3,760 677 442 439 317 317 194 72 0 0 0 1,700 1.725 192 70 0 0 3,750 3,800 687 452 448 326 326 203 81 0 0 0 1,725 1,750 197 74 0 0 3,800 3,850 597 462 457 335 335 213 90 0 0 0 1,750 1,775 201 79 0 0 3,850 3,900 607 472 467 344 344 222 99 0 0 0 1,775 1,800 206 83 0 0 3,900 3,960 617 482 476 353 353 231 109 0 0 0 1,800 1,826 210 88 0 0 3,950 4,000 627 493 486 363 363 240 118 0 0 0 1,825 1,850 215 93 0 0 4,000 4,060 637 503 494 372 372 249 127 5 0 0 1,850 1,875 220 97 0 0 4,050 4,100 647 513 503 381 381 259 136 14 0 0 1,875 1,900 224 102 0 0 4,100 4,150 657 523 613 390 390 268 146 23 0 0 1,900 1,925 229 106 0 0 4,150 4,200 667 533 622 399 399 277 165 32 0 0 1,925 1,960 233 111 0 0 4,200 4,250 677 543 531 409 409 286 164 41 0 0 1,950 1,975 238 116 0 0 4,250 4,300 687 553 540 419 418 295 173 50 0 0 1,975 2,000 243 120 0 0 4,300 4,350 698 663 549 429 427 304 182 60 0 0 2,000 2,025 247 125 2 0 4,350 4,400 708 673 558 439 436 314 191 69 0 0 2,025 2,050 252 129 7 0 4,400 4,450 718 583 568 449 445 323 200 78 0 0 2,050 2,075 256 134 11 0 4,450 4,500 728 593 677 459 454 332 210 87 0 0 2,075 2,100 261 138 16 0 4,500 4,560 738 603 586 469 464 341 219 96 0 0 2,100 2.126 265 143 21 0 4,550 4,600 748 614 595 479 473 350 228 106 0 0 2,125 2.150 270 148 25 0 4,600 4,650 758 624 604 489 482 360 237 116 0 0 2,150 2,175 275 162 30 0 4,650 4.700 768 634 614 499 491 369 246 124 2 0 2,175 2,200 279 157 34 0 4,700 4,750 778 644 623 609 500 378 256 133 11 0 2,200 2,225 284 161 39 0 4,750 4,800 788 654 632 519 609 387 266 142 20 0 2,225 2,250 288 166 44 0 4,800 4,850 798 664 641 530 519 396 274 151 29 0 2,250 2,275 293 171 48 0 4,850 4,900 808 674 660 540 528 405 283 161 38 0 2,275 2,300 298 175 53 0 4,900 4,950 818 684 659 660 637 415 292 170 47 0 2,300 2,325 302 180 57 0 4,950 5,000 829 694 669 560 646 424 301 179 57 0
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 463 *Table II ^Taxable years begrinning after October 31,1951, and before January 1,1954 Ifa4Juted And the nnm- If a d j u s t e d groM i n - b e r of e x e m p - gross In- And t h e number of e x e m p t i o n s is— come is— i i o n s i i 9— c o m e is— 1 2 a A n d tax- And A n d tax- And And And tax- And And 1 4 or payer is tax- payer is tax- a payer is tax- a 4 5 6 7 8 or 2 3 But more B u t single or payer single or payer joint single or payer joint mora At less At less mfiling arried shead married IS h e a d re- married shead re- least t h a n least of filing of turn filing of turn than sepa- house- sepa- house- is sepa- house- is rately hold rately hold filed rately hold filed T h e tax shall T h e tax shall b e — be- $0 $675 so $0 $0 $0 $2, 325 $2,350 $334 $334 $201 $201 $201 $67 $67 $67 $0 $0 $0 $0 $0 675 700 4 0 0 0 2,350 2,375 339 339 206 206 206 72 72 72 0 0 0 0 0 700 725 9 0 0 0 2,376 2,400 344 344 211 211 211 77 77 77 0 0 0 0 0 725 750 14 0 0 0 2,400 2,425 349 349 216 216 216 82 82 82 0 0 0 0 0 750 775 19 0 0 0 2,425 2,450 354 364 221 221 221 87 87 87 0 0 0 0 0 775 800 24 0 0 0 2,450 2,475 369 359 226 226 226 92 92 92 0 0 0 0 0 800 825 29 0 0 0 2,475 2,500 364 364 231 231 231 97 97 97 0 0 0 0 0 825 850 34 0 0 0 2,500 2,626 369 369 236 236 236 102 102 102 0 0 0 0 0 850 875 39 0 0 0 2,526 2,550 374 374 241 241 241 107 107 107 0 0 0 0 0 875 900 44 0 0 0 2,550 2,575 379 379 246 246 246 112 112 112 0 0 0 0 0 900 925 49 0 0 0 2,575 2,600 384 384 251 251 251 117 117 117 0 0 0 0 0 925 950 54 0 0 0 2,600 2,626 389 389 256 266 256 122 122 122 0 0 0 0 0 950 975 59 0 0 0 2,625 2,650 394 394 261 261 261 127 127 127 0 0 0 0 0 975 1,000 64 0 0 0 2,650 2,675 399 399 266 266 266 132 132 132 0 0 0 0 0 1,000 1,025 69 0 0 0 2,675 2,700 404 404 271 271 271 137 137 137 4 0 0 0 0 1,025 1,050 74 0 0 0 2,700 2,725 409 409 276 276 276 142 142 142 0 0 0 0 0 1,050 1,075 79 0 0 0 2,725 2,750 414 414 281 281 281 147 147 147 14 0 0 0 0 1,075 1,100 84 0 0 0 2,750 2,775 419 419 286 286 286 152 152 152 19 0 0 0 0 1,100 1,125 89 0 0 0 2,775 2,800 424 424 291 291 291 167 157 157 24 0 0 0 0 1,125 1,150 94 0 0 0 2,800 2,826 429 429 296 296 296 162 162 162 29 0 0 0 0 1,150 1,175 99 0 0 0 2,826 2,850 434 434 301 301 301 167 167 167 34 0 0 0 0 1,175 1,200 104 0 0 0 2,850 2,876 439 439 306 306 306 172 172 172 39 0 0 0 0 1,200 1,225 109 0 0 0 2,876 2,900 444 444 311 311 311 177 177 177 44 0 0 0 0 1,225 1,250 114 0 0 0 2,900 2,925 449 449 316 316 316 182 182 182 49 0 0 0 0 1,250 1,275 119 0 0 0 2,926 2,960 465 454 321 321 321 187 187 187 54 0 0 0 0 1,275 1,300 124 0 0 0 2,960 2,975 460 459 326 326 326 192 192 192 59 0 0 0 0 1,300 1,325 129 0 0 0 2,975 3,000 466 466 331 331 331 197 197 197 64 0 0 0 0 1,325 1,350 134 1 0 0 3,000 3,050 474 473 338 338 338 205 205 205 72 0 0 0 0 1,350 1,375 139 6 0 0 3,060 3,100 485 483 348 348 348 215 216 215 82 0 0 0 0 1,375 1,400 144 11 0 0 3,100 3,150 496 494 358 368 358 225 225 225 92 0 0 0 0 1,400 1,425 149 16 0 0 3,150 3,200 507 604 368 368 368 235 235 235 102 0 0 0 0 1,425 1,450 154 21 0 0 3,200 3,260 618 615 378 378 378 246 245 245 112 0 0 0 0 1,460 1,475 159 26 0 0 3,250 3,300 529 626 388 388 388 265 256 266 122 0 0 0 0 1,475 1,500 164 31 0 0 3,300 3,350 641 636 398 398 398 266 265 266 132 0 0 0 0 1,500 1,525 169 36 0 0 3,350 3,400 552 646 408 408 408 275 275 276 142 8 0 0 0 1,525 1,550 174 41 0 0 3,400 3,460 563 657 418 418 418 285 286 285 152 18 0 0 0 1,550 1,575 179 46 0 0 3,460 3,500 574 667 428 428 428 296 295 296 162 28 0 0 0 1,675 1,600 184 61 0 0 3,500 3,550 586 578 438 438 438 306 305 305 171 38 0 0 0 1,600 1,625 189 66 0 0 3,560 3,600 5% 588 448 448 448 316 316 315 181 48 0 0 0 1,625 1,650 194 61 0 0 3,600 3,650 607 699 469 469 468 325 326 325 191 58 0 0 0 1,650 1,675 199 66 0 0 3,660 3,700 618 610 470 469 468 335 335 335 201 68 0 0 0 1,675 1,700 204 71 0 0 3,700 3,750 629 620 482 480 478 345 345 345 211 78 0 0 0 1,700 1,725 209 76 0 0 3,760 3,800 640 631 493 490 488 356 355 356 221 88 0 0 0 1,725 1,750 214 81 0 0 3,800 3,850 651 641 504 601 498 366 365 366 231 98 0 0 0 1,750 1,775 219 86 0 0 3,860 3,900 662 652 616 611 608 375 375 376 241 108 0 0 0 1,776 1,800 224 91 0 0 3,900 3,950 673 662 626 522 518 385 385 386 251 118 0 0 0 1,800 1,825 229 96 0 0 3,950 4,000 684 673 637 532 528 395 395 395 261 128 0 0 0 1,826 1,850 234 101 0 0 4,000 4,050 696 683 648 543 538 405 405 405 271 138 6 0 0 1,850 1,875 239 106 0 0 4,050 4,100 707 694 669 653 548 415 415 415 281 148 15 0 0 1,875 1,900 244 111 0 0 4,100 4,150 718 704 570 564 568 425 426 425 291 158 26 0 0 1,900 1,925 249 116 0 0 4,150 4,200 729 716 581 574 568 436 436 435 301 168 36 0 0 1,925 1,950 254 121 0 0 4,200 4,250 740 725 692 585 578 445 445 446 311 178 45 0 0 1,950 1,975 259 126 0 0 4,250 4,300 751 736 603 596 588 456 455 465 321 188 55 0 0 1,975 2,000 264 131 0 0 4,300 4,350 762 746 614 606 598 467 466 465 331 198 65 0 0 2,000 2,025 269 136 2 0 4,360 4,400 773 757 625 617 608 478 476 475 341 208 75 0 0 2,025 2,050 274 141 7 0 4,400 4,45C 784 768 636 627 618 489 487 485 351 218 86 0 0 2,050 2,075 279 146 12 0 4,460 4,50C 795 778 648 638 628 600 497 495 361 228 95 0 0 2,075 2,100 284 151 17 0 4,500 4,65C 806 789 669 648 638 611 608 504 371 238 105 0 0 2,100 2,125 289 156 22 0 4,550 4,60C 817 799 670 658 648 622 518 514 381 248 116 0 0 2,125 2,150 294 161 27 0 4,600 4,65C 828 810 681 669 658 533 629 524 391 268 125 0 0 2,150 2,175 299 166 32 0 4,650 4, 70C 839 820 692 68C 668 544 539 534 401 268 135 2 0 2,175 2,200 304 171 37 0 4,700 4, 75C 851 831 703 690 678 565 650 544 411 278 146 12 0 2,200 2,226 309 176 42 0 4,750 4,80C 862 841 714 701 688 566 560 564 421 288 165 22 0 2,225 2,250 314 181 47 0 4,800 4,85C 873 852 725 711 698 677 571 664 431 298 165 32 0 2,250 2,275 319 186 52 0 4,860 4,90C 884 862 736 722 708 589 581 674 441 308 176 42 0 2,275 2,300 324 191 57 0 4,900 4,95C 896 873 747 732 718 600 592 684 461 318 186 52 0 2,300 2,325 329 196 62 0 4,950 5,00C 006 883 758 743 728 611 603 594 461 328 196 62 0 76100 O - 52 (PT. I) - 32
464 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. "Table III "Taxable years beginning after December 31, 1953 If a d j u s t e d And t h e n u m - If a d j u s t e d gross i a b e r of exemp- gross in- And t h e n u m b e r of e x e m p t i o n s i s - come i s - tions is— come is— 1 2 3 A n d tax- And A n d tax- And And And tax- And And 6 7 8or 4 or payer IS tax- payer IS tax- a payer IS tax- a 4 5 But more But single or payer single or payer joint single or payer joint more At At married is h e a d married is h e a d re- married is h e a d re- less least less of least t h a n than filing filing of turn filing of turn sepa- house- sepa- house- IS sepa- house- is rately hold rately hold filed rately hold filed T h e tax shall be— The tax shall be— $675 $0 $0 $2,325 $301 $301 $181 $181 $181 $61 $61 $61 $0 $0 $0 $0 675 700 0 0 2,350 305 305 185 185 185 65 65 65 0 0 0 0 700 725 0 0 2,375 310 310 190 190 190 70 70 70 0 0 0 0 725 750 0 0 2,400 314 314 194 194 194 74 74 74 0 0 0 0 750 775 0 0 2,425 319 319 199 199 199 79 79 79 0 0 0 0 775 800 0 0 2,450 323 323 203 203 203 83 83 83 0 0 0 0 800 825 0 0 2,475 328 328 208 208 208 88 88 88 0 0 0 0 825 850 0 0 2 500 332 332 212 212 212 92 92 92 0 0 0 0 850 875 0 0 2,525 337 337 217 217 217 97 97 97 0 0 0 0 875 900 0 0 2,650 341 341 221 221 221 101 101 101 0 0 0 0 900 925 0 0 2,575 346 346 226 226 226 106 106 106 0 0 0 0 925 950 0 0 2,600 350 350 230 230 230 110 110 110 0 0 0 0 950 975 0 0 2,625 355 355 235 235 235 115 115 116 0 0 0 0 975 1,000 0 0 2,650 359 359 239 239 239 119 119 119 0 0 0 0 1,000 1,025 0 0 2,675 364 364 244 244 244 124 124 124 4 0 0 0 1,025 1,050 0 0 2,700 368 368 248 248 248 128 128 128 8 0 0 0 1,050 1,075 0 0 2,725 373 373 253 253 253 133 133 133 13 0 0 0 1,075 1,100 0 0 2,750 377 377 257 257 257 137 137 137 17 0 0 0 1,100 1,125 0 0 2,775 382 382 262 262 262 142 142 142 22 0 0 0 1.125 1,150 0 0 2,800 386 386 266 266 266 146 146 146 26 0 0 0 1,150 1,175 0 0 2,825 391 391 271 271 271 151 151 151 31 0 0 0 1,175 1,200 0 0 2,850 395 395 275 275 275 155 155 155 35 0 0 0 1,200 1,225 0 0 2,875 400 400 280 280 280 160 160 160 40 0 0 0 1,225 1,250 0 2,900 405 404 284 284 284 164 164 164 44 0 0 0 1,250 275 a 0 0 2,925 410 409 289 289 289 169 169 169 49 0 0 0 1,275 1,300 0 0 2,950 415 414 293 293 293 173 173 173 53 0 0 0 1,300 1,325 0 0 2,975 420 419 298 298 298 178 178 178 58 0 0 0 1, 325 1,350 1 0 3,000 427 426 305 305 305 185 185 186 65 0 0 0 1,350 1,375 5 0 3,050 437 435 314 314 314 194 194 194 74 0 0 0 1,375 1,400 10 0 3,100 447 445 323 323 323 203 203 203 83 0 0 0 1,400 1,425 14 0 3,150 457 454 332 332 332 212 212 212 92 0 0 0 1,425 1,450 19 0 3,200 467 464 341 341 341 221 221 221 101 0 0 0 1,450 1,475 23 0 3,250 476 473 350 350 350 230 230 230 110 0 0 0 1,475 1,500 28 0 3,300 486 482 359 359 359 239 239 239 119 0 0 0 1,500 1,525 32 0 3,350 496 492 368 368 368 248 248 248 128 8 0 0 1,525 1,550 3,400 506 501 377 377 377 257 257 257 137 17 0 0 37 0 3,450 1,550 1.575 41 0 516 511 386 386 386 266 266 266 146 26 0 0 1,575 1,600 .3,500 526 520 395 395 395 275 275 275 156 35 0 0 46 0 3,550 1,600 1,625 50 0 .536 530 404 404 404 284 284 284 164 44 0 0 1,625 1,650 3,600 546 539 414 413 413 293 293 293 173 53 0 0 .55 0 3,650 1,650 1,675 59 0 556 519 424 423 422 302 302 302 182 62 0 0 1,675 1,700 3,700 566 558 434 432 431 311 311 311 191 71 0 0 64 0 3,750 1,700 1,725 68 0 575 567 443 441 440 320 320 320 200 80 0 0 1,725 50 3,800 577 453 451 449 329 329 329 209 89 0 0 73 0 3,850 .585 1,750 1,775 77 0 595 586 463 460 458 338 338 338 218 98 0 0 1,775 1,800 3,900 596 473 470 467 347 347 347 227 107 0 0 82 0 3,950 605 1,800 1,825 86 0 615 605 483 479 476 356 356 356 236 116 0 0 1,825 1,850 4,000 489 365 365 246 125 5 0 91 0 4,050 625 615 493 485 365 1,850 1,875 635 624 503 498 494 374 374 374 254 134 14 0 1,875 1,900 95 0 4,100 M) 0 4,150 645 634 513 508 503 383 383 383 263 143 23 0 1,900 1, 925 655 643 523 517 512 392 392 392 272 152 32 0 104 1,925 1,950 1,950 1,975 109 Oj »; 4,200 4,250 665 653 533 527 521 401 401 401 281 161 41 0 113 674 662 542 536 530 410 410 410 290 170 50 0 1,975 2,000 118 " 4,300 684 671 552 545 539 420 419 419 299 179 59 0 2,000 2,025 2,025 2,050 122 2' " 4,350 4,400 694 681 562 555 548 430 429 428 308 188 68 0 127 I 4,450 704 690 572 564 557 440 438 437 317 197 77 0 2,050 2,075 714 700 582 574 566 450 448 446 326 206 86 0 2.075 2,100 131 11 4,500 136 16 4,550 724 709 592 583 575 460 457 456 335 216 95 0 2,100 2,125 734 719 602 593 584 470 467 464 344 224 104 0 2,125 2,150 140 20 4,600 145 25 4,650 744 728 612 602 593 480 476 473 353 233 113 0 2,150 2,175 622 612 602 490 486 482 362 242 122 2 2,175 2,200 149 29 4,700 754 738 1.54 34 4,750 764 747 632 621 611 500 495 491 371 261 131 11 2,200 2,225 773 756 641 630 620 509 504 500 380 260 140 20 2,225 2,250 l.-iS 38l 4,800 16;^ 431 4,850 783 766 651 640 629 519 514 509 389 269 149 29 2,250 2,275 793 775 661 649 638 529 523 518 398 278 168 38 2,275 2,300 167 47! 4,900 172 ,52i 4,950 803 785 671 659 647 539 533 527 407 287 167 47 2,300 2,325 813 794 681 668 656 549 542 536 416 296 176 66 176 56!
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 465 SEC. 103. INAPPLICABILITY OF CERTAIN PENALTIES AND ADDITIONS TO TAX. (a) PENALTIES FOR FAILURE T O F I L E RETURN.—Section 145 (relat- ing to penalties with respect to failure to file returns, pay tax, etc.) is hereby amended by relettering subsection (f) as subsection (g) and ^u^s c^V45 by adding after subsection (e) a new subsection (f) as follows: "(f) In the case of taxable years beginning prior to November 1, 1951, and ending after October 31, 1951, the penalties prescribed by this section for willful failure to make declarations of, or pay, esti- mated tax shall not be applicable to a failure to take into account the increase in rates of tax imposed on individuals by the Revenue Act of 1951." (b) ADDITIONS TO TAX.—Section 294 (d) (2) (relating to additions leu^s ^c'§ 294 (d) to tax for substantial under-estimates of estimated tax) is hereby (2). amended by adding at the end thereof a new sentence as follows: "In the case of taxable years beginning prior to November 1, 1951, and ending after October 31, 1951, the additions to tax prescribed by this subsection shall not be applicable if the taxpayer failed to meet the requirements of this paragraph by reason of the increase in rates of tax on individuals imposed by the Revenue Act of 1951." SEC. 104. COMPUTATION OF TAX IN CASE OF CERTAIN JOINT RETURNS. If a joint return of a husband and wife is filed under the provisions of section 51 (b) (3) of the Internal Revenue Code in a case where 26 u^s ^cf'§ 51 (b) the husband and wife have different taxable years because of the death (3). of either spouse, and the taxable year of the surviving spouse covered by such joint return began before November 1, 1951, and ended after October 31, 1951, the amendments made by this part and section 131 Post, p. 471. shall be applicable in respect of such joint return as if the taxable years of both spouses covered by the joint return ended on the date of the closing of the surviving spouse's taxable year. SEC. 105. EFFECTIVE DATE OF PART I. Except as provided in section 104, the amendments made by this part shall be applicable only with respect to taxable years beginning after October 31, 1951, and to taxable years beginning on January 1, 1951, and ending on December 31, 1951. For treatment of taxable years (other than the calendar year 1951) beginning before November 1,1951, and ending after October 31,1951, see section 131. P"'*' P- "^L PART II—CORPORATION INCOME TAXES SEC. 121. INCREASE IN RATE OF CORPORATION NORMAL TAX. (a) AMENDMENT OF SECTION 13.—Subsections (a) and (b) of sec- tion 13 (relating to normal tax on corporations) are hereby amended ^u^g c 513 to read as follows: Post', p'. 518. " (a) DEFINITIONS.—For the purposes of this chapter— "(1) ADJUSTED NET INCX)ME.—The term 'adjusted net income' means the net income minus the credit provided in section 26 (a), ^u^g c" 526 relating to interest on certain obligations of the United States and Government corporations. "(2) NORMAL-TAX NET INCOME.—The term 'normal-tax net in- come' means the adjusted net income minus the sum of the follow- ing credits: " ( A ) The credit for dividends received provided in section 26(b); " ( B ) In the case of a public utility, the credit for dividends paid on its preferred stock provided in section 26 (h) ; and ^ ff**|- ^ j gg (i,) Post, p.m.
466 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. " ( C ) I n the case of a western hemisphere trade corpora- ^^6 Stat. 838; 64 Stat. ^ion (as defined in section 109), the credit provided in section 26 U. S. C. §§ 109, 26 ( i ) . ^ ^'^' " ( b ) IMPOSITION OF TAX.—There shall be levied, collected, and paid for each taxable year upon the normal-tax net income of every cor- poration (except a corporation subject to a tax imposed by section i u**sV^'sfisi 2^^ ( ^ ) ' Supplement G, or Supplement Q ) — (a), 201 eiseg'., 361 et " (1) CAIENDAR YEAR 1951.—In the case of a taxable year begin- **'• ning on J a n u a r y 1, 1951, and ending on December 31, 1951, a tax of 28% per centum of the normal-tax net income. "(2) T A X A B L E YEARS B E G I N N I N G AFTER M A R C H 3 1 , 1951, A N D BEFORE APRIL 1,1954.—^In the case of taxable years beginning after March 31, 1951, and before April 1, 1954, a tax of 30 per centum of the normal-tax income. "(3) TAXABLE YEARS BEGINNING AFTER MARCH 31, 1954.—^In the case of taxable years beginning after March 31, 1954, a tax of 25 per centum of the normal-tax net income." 26u?s. c^^§43o(a) (b) MAXIMUM TAX.—Section 430 (a) (2) (relating to the limita- (2). tion on the rate of the excess profits tax) is hereby amended as follows: (1) By inserting after " ( 2 ) " the following: " ( A ) in the case of taxable years ending before April 1,1951, . (2) By striking out the period at the end of paragraph (2) and inserting ", or" and by adding after paragraph (2) the follow- ing: " ( B ) in the case of taxable years beginning on January 1,1951, and ending on December 31, 1951, an amount equal to 17^4 P®r centum of the excess profits net income for the taxable year, except that in the case of an affiliated group of includible corporations making or required to make a consolidated return for the taxable 26 u^s ^' § 141 y^^^ under section 141, such amount shall be reduced by an amount which bears the same ratio (but not in excess of 100 per centum) to the increase of 2 per centum in the surtax imposed by reason of section 141 (c) as the amount of the consolidated excess profits net income bears to the amount of the consolidated corpo- ration surtax net income, or " ( C ) in the case of taxable years beginning after March 31, 1951, an amount equal to 18 per centum of the excess profits net income for the taxable year, except that in the case of an affiliated group of includible corporations making or required to make a consolidated return for the taxable year under section 141, such amount shall be reduced by an amount which bears the same ratio (but not in excess of 100 per centum) to the increase of 2 per centum in the surtax imposed by reason of section 141 (c) as the amount of the consolidated excess profits net income bears to the amount of the consolidated corporation surtax net income, or", (c) MUTUAL INSURANCE COMPANIES OTHER T H A N L I F E OR MARINE.— 26uf8.c!|207(a) (1) Sectiou 207 (a) (1) (relating to normal tax and surtax on (1). mutual insurance companies, other than life or marine) is hereby amended by striking out subparagraphs (A) and (B) and insert- ing in lieu thereof the following: " ( A ) Taxable Years Beginning After December 31, 1960, and Before April 1,1951.—In the case of taxable years begin- ning after December 31, 1950, and before April 1,1951, and ending after March 31,1951— " (i) Normal tax.—^A normal tax of 28% per centum of the normal-tax net income, or 57^^ per centum of the
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 467 amount by which the normal-tax net income exceeds $3,000, whichever is the lesser; plus "(ii) Surtax.—A surtax of 22 per centum of the cor- poration surtax net income in excess of $25,000. " (B) Taxable Years Beginning After March 31,1951, and Before April 1,1954.—In the case of taxable years beginning after March 31,1951, and before April 1,1954— " ( i ) Normal tax.—A normal tax of 30 per centum of the normal-tax net income, or 60 per centum of the amount by which the normal-tax net income exceeds $3,000, whichever is the lesser; plus "(ii) Surtax.—A surtax of 22 per centum of the cor- poration surtax net income in excess of $25,000. " ( C ) Taxable Years Beginning After March 31, 1954.— I n the case of a taxable year beginning after March 31,1954— " ( i ) Normal tax.—A normal tax of 25 per centum of the normal-tax net income, or 50 per centum of the amount by which the normal-tax net income exceeds $3,000, wliichever is the lesser; plus "(ii) Surtax.—A surtax of 22 per centum of the cor- poration surtax net income in excess of $25,000." (2) Section 207 (a) (3) (relating to a normal tax and surtax on se stat. 872, 26 U. S. C. § 207 (a) interinsurers and reciprocal underwriters) is hereby amended by (3). striking out subparagraphs (A) and (B) and inserting in lieu thereof the following: " ( A ) Taxable Years Beginning After December 31, 1950, and before April 1,1951.—^In the case of taxable years begin- ning after December 31, 1950, and before April 1, 1951, and endmg after March 31, 1951— " ( i ) Normal tax.—A normal tax of 28% per centum of the normal-tax net income, or 571^ per centum of the amount by which the normal-tax net income exceeds $50,000, whichever is the lesser; plus " (ii) Surtax.—A surtax of 22 per centum of the corpo- ration surtax net income in excess of $25,000, or 33 per centum of the amount by which the corporation surtax net income exceeds $50,000, whichever is the lesser. " ( B ) Taxable Years Beginning After March 31,1951, and Before April 1,1954.—In the case of taxable years beginning after March 31,1951, and before April 1,1954— "(i) Normal tax.—A normal tax of 30 per centum of the normal-tax net income, or 60 per centum of the amount by which the normal-tax net income exceeds $50,000, whichever is the lesser; plus " (ii) Surtax.—A surtax of 22 per centum of the corpo- ration surtax net income in excess of $25,000, or 33 per centum of the amount by which the corporation surtax net income exceeds $50,000, whichever is the lesser. " ( C ) Taxable Years Beginning After March 31,1954.—In the case of a taxable year beginning after March 31, 1954— " ( i ) Normal tax.—A normal tax of 25 per centum of the normal-tax net income, or 50 per centum of the amount by which the normal-tax net income exceeds $50,000, whichever is the lesser; plus "(ii) Surtax.—A surtax of 22 per centum of the cor- poration surtax iiet income in excess of $25,000, or 33 per centum of the amount by which the corporation surtax net income exceeds $50,000, whichever is the lesser."
468 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. 66 ^tat m ^^^ ^^^ ((J) EEGULATED INVESTMENT COMPANIES.—Section 362 (b) (relating to tax on regulated investment companies) is hereby amended by striking out paragraphs (3) and (4) and inserting in lieu thereof the following: " (3) I n the case of taxable years beginning after December 31, 1950, and before April 1, 1951, and ending after March 31, 1951, there shall be levied, collected, and paid for each taxable year upon 26 u^s.^c. § 361 et ^^^ Supplement Q net income a tax equal to 28% per centum of the seq. amount thereof. I n the case of taxable years beginning after March 31, 1951, and before April 1, 1954, there shall be levied, collected, and paid for each taxable year upon its Supplement Q net income a tax equal to 30 per centum of the amount thereof. I n the case of taxable years beginning after March 31,1954, there shall be levied, collected, and paid for each taxable year upon its Supplement Q net income a tax equal to 25 per centum of the amount thereof. "(4) I n the case of taxable years beginning after December 31, 1950, there shall be levied, collected, and paid for each taxable year upon its Supplement Q surtax net income a tax equal to 22 per centum of the amount thereof in excess of $25,000." (e) BUSINESS INCOME OF CERTAIN SECTION 101 ORGANIZATIONS.— 26 u*.^s. ^^•§ 421 (a) Section 421 (a) (1) (relating to imposition of tax on business income of (!)• certain section 101 organizations) is hereby amended by inserting 26 u.V. c! § 101. before the period at the end thereof the following: " ; except that ( A ) in the case of taxable years beginning before April 1,1951, and ending after March 31, 1951, the normal tax shall be 28% per centum of the 26 u^s ^c' § 421 et Supplement U net income, and ( B ) in the case of taxable years begin- ««?. ning after March 31, 1951, and before April 1, 1954, the normal tax shall be 30 per centum of the Supplement U net income". 26 u*s c°§i5 (^) -A-MENDMENT OF SECHON 15.-—Section 15 (relating to surtax on corporations) is hereby amended to read as follows: "SEC. 15. SURTAX ON CORPORATIONS. " ( a ) CORPORATION SURTAX N E T INCOME.—For the purposes of this chapter, the term 'corporation surtax net income' means the net income minus the sum of the following credits: "(1) The credit for dividends received provided in section 63 Stat. 18. Oft (h\ ' 26 U. S. 0 . § 26 (b). -^"^^O;, <. , . . . , "(2) I n the case of a public utility, the credit for dividends 56 Stat, m^ ^^ ^^^ paid on its preferred stock provided in section 26 ( h ) ; "(3) I n the case of a western hemisphere trade corporation (as ^^6 Stat. 838; 64 Stat. defined in section 109), the credit provided in section 26 ( i ) . 26 u. s. c. §§ 109, " ( b ) IMPOSITION OF TAX.—There shall be levied, collected, and paid for each taxable year upon the corporation surtax net income of every corporation (except a corporation subject to a tax imposed by section 53s^at^78^7i^98^^ 231 ( a ) , Supplement G, or Supplement Q) a surtax of 22 per centum (a), 201 eiseq'., 361 et of the amouiit of the corporation surtax net income in excess of $25,000. seq " ( c ) DISALLOWANCE OF SURTAX EXEMPTION AND M I N I M U M EXCESS PROFITS CREDIT.—If any corporation transfers, on or after J a n u a r y 1, 1951, all or part of its property (other than money) to another corporation which was created for the purpose of acquiring such property or which was not actively engaged in business at the time of such acquisition, and if after such transfer the transferor corpora- tion or its stockholders, or both, are in control of such transferee corporation during any part of the taxable year of such transferee corporation, then such transferee corporation shall not for such tax-
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 469 able year (except as may be otherwise determined under section 129 ( b ) ) be allowed either the $25,000 exemption from surtax provided in 26u!Ua§i29(b). subsection (b) or the $25,000 minimum excess profits credit provided in the last sentence of section 431, unless such transferee corporation ^ |^^|- c^*§43i shall establish by the clear preponderance of the evidence that the securing of such exemption or credit was not a major purpose of such transfer. F o r the purposes of this subsection, control means the own- ership of stock possessing at least 80 per centum of the total combined voting power of all classes of stock entitled to vote or at least 80 per centum of the total value of shares of all classes of stock of the corpora- tion. I n determining the ownership of stock for the purpose of this subsection, the ownership of stock shall be determined in accordance with the provisions of section 503, except that constructive ownership ^ u.*s. c^§ sos. under section 503 (a) (2) shall be determined only with respect to the individual's spouse and minor children. The provisions of section 129 (b), and the authority of the Secretary under such section, shall, to the extent not inconsistent with the provisions of this subsection, be applicable to this subsection. This subsection shall not apply to any taxable year with respect to which the tax imposed by subchapter D of this chapter is not in effect." ^ u.^s.^c.^§ 430 et (g) TECHNICAL AMENDMENT.—Section 14 (relating to normal tax «««• on special classes of corporations in the case of taxable years beginning before July 1,1950) is hereby repealed. SEC. 122. CREDITS OF CORPORATIONS. (a) DIVIDENDS RECEIVED CREDIT.—Paragraphs (1) and (2) of section 26 (b) (relating to credit for dividends received; are hereby 26 u.*s.c% 26(b). amended to read as follows: ^o*^- P- ^87. "(1) I N GENERAL.—85 j)er centum of the amount received as dividends (other than dividends described in paragraph (2) on the preferred stock of a public utility) from a domestic corpo- ration which is subject to taxation under this chapter. "(2) CERTAIN PREFERRED STOCK.— " ( A ) Calendar Year 1951.—In the case of a taxable year beginning on January 1, 1951, and ending on December 31, 1951, 61 per centum of the amount received as dividends on the preferred stock of a public utility which is subject to taxation under this chapter and with respect to which the credit provided in section 26 (h) for dividends paid is ^''^'^"• allowable. " ( B ) Taxable Years Beginning After March 31, 1951, and Before April 1, 1954.—^In the case of taxable years begin- ning after March 31, 1951, and before April 1, 1954, 62 per centum of the amount received as dividends on the pre- ferred stock of a public utility which is subject to taxation under this chapter and with respect to which the credit pro- vided in section 26 (h) for dividends paid is allowable. " ( C ) Taxable Years Beginning After March 31, 1954.— I n the case of taxable years beginning after March 31, 1954, 59 per centum of the amount received as dividends on the preferred stock of a public utility which is subject to taxation under this chapter and with respect to which the credit pro- vided in section 26 (h) for dividends paid is allowable." (b) CREDIT FOR DivmENDs PAID ON CERTAIN PREFERRED STOCK.— The first sentence of section 26 (h) (1) (relating to amount of credit 26 u*^s 0% 26 oi) for dividends paid on certain preferred stock) is hereby amended
470 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. to read as follows: "In the case of a public utility, (A) for a taxable year beginning on January 1,1951, and ending on December 31,1951, an amount equal to 28 per centum of the lesser of (i) the amount oi dividends paid during the taxable year on its preferred stock or (ii) the adjusted net income for such taxable year minus the credit for dividends received provided in subsection (b) for such year, (B) for a taxable year beginning after March 31, 1951, and before April 1, 1954, an amount equal to 27 per centum of the lesser of (i) the amount of dividends paid during the taxable year on its preferred stock or (ii) the adjusted net income for such taxable year minus PMt'^'m' ^^^® credit for dividends received provided in subsection (b) for such year, and (C) for a taxable year beginning after March 31, 1954, an amount equal to 30 per centum of the lower of (i) the amount of dividends paid during the taxable year on its preferred stock or (ii) the adjusted net income for such taxable year minus the credit for dividends received provided in subsection (b) for such year." 26ufs.^c!§26 (i), (^) WESTERN HEMISPHERE TRADE CORPORATIONS.—Section 26 (i) (relating to credit of a western hemisphere trade corporation) is hereby amended to read as follows: " ( i ) WESTERN HEMISPHERE TRADE CORPORATIONS.—In the case of a 66 Stat, m.^ ^^ western hemisphere trade corporation (as defined in section 109)— "(1) CALENDAR TEAR 1951.—^In the case of a taxable year begin- ning on January 1, 1951, and ending on December 31, 1951, an amount equal to 28 per centum of its normal-tax net income computed without regard to the credit provided in this subsection. "(2) TAXABLE YEARS BEGINNING AFTER MARCH 31, 1951, AND BEFORE APRIL 1, 1954.—In the case of a taxable year beginning after March 31,1951, and before April 1,1954, an amount equal to 27 per centum of its normal-tax net income computed without regard to the credit provided in this subsection. "(3) TAXABLE YEARS BEGINNING AFTER MARCH 31, 1954.—^In the case of a taxable year beginning after March 31,1954, an amount ec^ual to 30 per centum of its normal-tax net income computed without regard to the credit provided in this subsection." SEC. 123. COMPUTATION OF ALTERNATIVE CAPITAL GAINS TAX. iu!^s.c'. § 117(c) Section 117 (c) (1) (relating to alternative tax on corporations) (1). is hereby amended by striking out the second paragraph and inserting in lieu thereof the following: " (A) A partial tax shall first be computed upon the net income reduced by the amount of such excess, at the rates and in the manner as if this subsection had not been enacted. " ( B ) There shall then be ascertained an amount equal to 25 per centum of such excess, except that in the case of any taxable year beginning after March 31, 1951, and before April 1, 1954, there shall be ascertained an amount equal to 26 per centum of such excess. " ( C ) The total tax shall be the partial tax computed under subparagraph (A) plus the amount computed under subpara- graph ( B ) . "
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 471 SEC. 124. PILING OF CORPORATION RETURNS FOR TAXABLE YEARS ENDING AFTER MARCH 31, 1951, AND BEFORE OCTOBER 1, 1951. In the case of a corporation subject to a tax imposed by chapter 1 53 Stat. 5. of the Internal Revenue Code for a taxable year ending after March 26 U. S. C. § 1 et aei'. 31,1951, but prior to October 1,1951, such corporation shall after the date of the enactment of this Act and on or before January 15, 1952, make a return for such taxable year with respect to the tax imposed by chapter 1 of the Internal Revenue Code for such taxable year. The return required by this section for such taxable year shall constitute the return for such taxable year for all purposes of the Internal Revenue Code; and no return for such taxable year, with respect to any tax imposed by chapter 1 of such code, filed on or before the date of the enactment of this Act shall be considered for any of such purposes as a return for such year. The taxes imposed by chapter 1 of such code (determined with the amendments made by this Act) for such taxable year shall be paid on January 15,1952, in lieu of the time prescribed in section 56 (a) of such code. All payments with 53 Stat. 31. 26 U . S . C. §66 (a). respect to any tax for such taxable year imposed by chapter 1 of such code under the law in effect prior to the enactment of this Act, to the extent that such payments have not been credited or refunded, shall be deemed payments made at the time of the filing of the return required by this section on account of the tax for such taxable year under chapter 1 determined with the amendments made by this Act. SEC. 125. EFFECTIVE DATE. The amendments made by this part shall be applicable only with respect to taxable years beginning after March 31,1951, and to taxable years beginning on January 1, 1951, and ending on December 31, 1951, except that the amendments made to sections 207, 362, and 421 ArOe, pp. 466-468. Post, p. 510. of the Internal Revenue Code shall be applicable to taxable years beginning after December 31, 1950, and ending after March 31, 1951. In the case of an insurance company subject to the tax imposed by section 207, the provisions of section 26 (D) of such code applicable Ante, p. 469. Post, p. 487. to the calendar year 1951 shall be applicable to a taxable year begin- ning after December 31, 1950, and before April 1, 1951, and ending after March 31, 1951. For treatment of taxable years (other than the calendar year 1951) beginning before April 1, 1951, and ending after March 31,1951, see section 131. PART III—FISCAL YEAR TAXPAYERS SEC 131. FISCAL YEAR TAXPAYERS. (a) AMENDMENT or SEOTION 108.—Section 108 is hereby amended ^ u^1"^c°§los. by striking out paragraph (2) of subsection (f) and inserting in lieu Postip!m. thereof the following: " (2) that portion of a tentative tax consisting of— "(A) a tentative normal tax of 25 per centum of the normal-tax net income, plus "(B) a tentative surtax of 20 per centum of the surtax net income in excess of $25,000, which the number of days in such taxable year after June 30, 1950, and before April 1, 1951, bears to the total number of days in such taxable year, plus (if the taxable year ends after March 31, 1951)
472 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. " (3) that portion of a tentative tax consisting of— " ( A ) a tentative normal tax of 30 per centum of the normal-tax net income, plus "^B) a tentative surtax of 20 per centum of the surtax net income in excess of $26,000, which the number of days in such taxable year after March 31, 1951, bears to the total number of days in such taxable year. I n computing for the purposes of paragraph (2) the normal-tax net income and the corporation surtax net income, the credits provided Ante, pp. 469, 470. in section 26 applicable to taxable years beginning on July 1, 1950, Post, p. 487. shall be allowed in the manner and to the extent provided in sections Ante, pp. 466, 468. 13 and 15 applicable to years beginning on such date, except that such Post, p. 518. credits shall be applied without regard to the amendments made to 64 Stat. 1216. section 26 by title I I of the Excess Profits Tax Act of 1950. I n com- 26U. S. C. §26. puting for the purposes of paragraph (3) the normal-tax net income and the corporation surtax net income, the credits provided in section 26 applicable to taxable years beginning on April 1, 1951, shall be allowed in the manner and to the extent provided in sections 13 and 15 applicable to years beginning on such date. "(g) CERTAIN TAXABLE YEARS OF CORPORATIONS BEGINNING AFTER JUNE 30, 1950, AND BEFORE A P R I L 1, 1951.—^In the case of a taxable year (other than one beginning on January 1, 1951, and ending on December 31, 1951) of a corporation beginning after J u n e 30, 1950, and before April 1, 1951, and ending after March 31, 1951, tne tax imposed by sections 13 and 15 shall be an amount equal to the sum of— "(1) that portion of a tentative tax, computed under the pro- visions of sections 13 and 15 applicable to such taxable year, which the number of days in such taxable year prior to April 1, 1951, bears to the total number of days in such taxable year, plus "(2) that portion of a tentative tax, computed under the pro- visions of sections 13 and 15 applicable to years beginning on April 1,1951, as if such provisions were applicable to such taxable year, which the number of days in such taxable year after March 31,1951, bears to the total number of days in such taxable year. " ( h ) CERTAIN TAXABLE YEARS OF iNDivmuALs BEGINNING BEFORE NOVEMBER 1, 1951, AND ENDING AFTER OCTOBER 31, 1951.—In the case of a taxable year (other than one beginning on January 1, 1951, and ending on December 31,1951) of a taxpayer, other than a corporation, beginning before November 1, 1951, and ending after October 31, 53 Stat. 5; 64 Stat. 1951, the tax imposed by sections 11 and 12, section 400, or section 421 948 26 U. S. C. §§ 11, (a) (2), shall be an amount equal to the sum of— 421 (a) (2). Ante, pp. 459, 461. "(1) that portion of a tentative tax, computed under the provi- Post, p. 480. sions of sections 11 and 12, section 400, or section 421 (a) (2), applicable to such year, which the number of calendar months in such taxable year prior to November 1, 1951, bears to the total number of calendar months in such taxable year, plus "(2) that portion of a tentative tax, computed under the pro- visions of sections 11 and 12, section 400, or section 421 (-a) (2), applicable to years beginning on November 1,1951, as if such pro- visions (other than the provisions relating to head of household) were applicable to such taxable year, which the number of calen- dar months in such taxable year after October 31,1951, bears to the total number of calendar months in such taxable year. This subsection shall not apply in the case of a trust described in sec- 64 Stat. 948. 26 U. S. C. § 421 (b) tion 421 (b) (2) if the taxable year of such trust began before January (2). 1, 1951.
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 473 " ( i ) DEFINITION OF CALENDAR M O N T H . — F o r the purposes of this section, a calendar month only part of which falls within a taxable year (1) shall be disregarded if less than 15 days of such month are included in such taxable year, and (2) shall be included as a calendar month within the taxable year if more than 14 days of such month fall within the taxable year. " (j) TAXABLE YEARS OF INDIVIDUALS BEGINNING I N 195S AND ENDING IN 1954.—In the case of a taxable year of a taxpayer, other than a cor- poration, beginning before January 1,1954, and ending after Decem- ber 31,1953, the tax imposed by sections 11 and 12, section 400, or sec- tion 421 (a) (2), shall be an amount equal to the sum of— ^f stat. 5; 64 stat. "(1) that portion of a tentative tax, computed under the pro- 26 u. s. c. §§ n, 4:JI visions of sections 11 and 12, section 400, or section 421 (a) (2), ^^liSe,pp.459,m. applicable to years beginning on January 1,1953, which the num- Post,'p. m. ' ber of calendar months in such taxable year prior to January 1, 1954, bears to the total number of calendar months in such taxable year, plus " ( 2 ) that portion of a tentative tax, computed under the pro- visions of sections 11 and 12, section 400, or section 421 (a) (2), applicable to years beginning on January 1, 1954, as if such pro- visions were applicable to such taxable year, which the number of calendar months in such taxable year after December 31, 1953, bears to the total number of calendar months in such taxable year, " ( k ) TAXABLE YEARS OF CORPORATIONS BEGINNING BEFORE APRIL 1, 1954, AND ENDING AFTER MARCH 31, 1954.—In the case of a taxable year of a corporation beginning before April 1,1954, and ending after March 31, 1954, the tax imposed by sections 13 and 15, or section 421 (a) (1), shall be an amount equal to the sum of— PM/'P^618^' *^' (1) that portion of a tentative tax, computed under the pro- visions of sections 13 and 15, or section 421 (a) (1), applicable to years beginning on January 1, 1953, which the number of days in such taxable year prior to April 1,1954, bears to the total number of days in such taxable year, plus "(2) that portion of a tentative tax, computed under the pro- visions of sections 13 and 15, or section 421 (a) (1), applicable to years beginning on April 1, 1954, as if such provisions were applicable to such taxable year, which the number of days in such taxable year after March 31, 1954, bears to the total number of days in such taxable year." (b) COMPUTATION OF EXCESS PROFITS TAX.—Subsection (b) of sec- tion 430 (relating to computation of excess profits tax in the case of ^26 U. ^**| ^^^^T^. B.C. §430. certain taxable years) is hereby amended to read as follows: " ( b ) CERTAIN TAXABLE YEARS BEGINNING BEFORE 1951.— "(1) TAXABLE YEARS ENDING BEFORE APRIL 1, 1951.—In the case of a taxable year beginning before July 1, 1950, and ending after June 30, 1950, and before April 1, 1951, the tax imposed by subsection (a) shall be an amount equal to that portion of a tentative tax, computed under the provisions of subsection (a) applicable to taxable years ending on December 31, 1950, which the number of days in such taxable year after J u n e 30,1950, bears to the total number of days in such taxable year. " (2) TAXABLE YEARS ENDING AFTER MARCH 31,1951.—^In the case of a taxable year (other than a taxable year beginning on January 1, 1951, and ending on December 31, 1951) beginning before
474 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. April 1, 1951, and ending after March 31, 1951, the tax imposed by subsection (a) shall he an amount equal to the sum of— " ( A ) that portion of a tentative tax, computed under the provisions of subsection (a) applicable to taxable years ending on December 31, 1950, which the number of days in such taxable year after June 30, 1950, and before April 1, 1951, bears to the total number of days in such taxable year, plus " ( B ) that portion of a tentative tax, computed under the rovisions of subsection (a) applicable to taxable years Peginning on April 1, 1951, which the number of days in such taxable year after March 31, 1951, bears to the total number of days in such taxable year." (c) TECHNICAL AMENDMENTS.— 26u.^s.*a§io8. ^1) Section 108 (e) (2) is hereby amended by inserting after Ante,p.471. "sectiou 400," the following: "applicable to years beginnmg on October 1, 1950,". (2) Section 108 (g) is hereby amended by striking out " ( g ) " and inserting in lieu thereof "(1)". TITLE II—WITHHOLDING OF TAX AT SOURCE SEC. 201. PERCENTAGE METHOD OF WITHHOLDING. 26u!s*.c^§i622(a). Scction 1622 (a) (relating to percentage method of withholding on wages) is hereby amended by inserting before the period at the end thereof the following: ", except that m the case of wages paid on or after November 1, 1951, and before January 1, 1954, the tax shall be equal to 20 per centum of such excess in lieu of 18 per centum". SEC 202. WAGE BRACKET WITHHOLDING. 26 u!*s.' c^§ 1622 (c) So much of section 1622 (c) (1) as precedes the tables in such section (!)• is hereby amended to read as follows: "(1) (A) Wages paid after October 31, 1951, and before January 1, 1954.—^At the election of the employer with re- spect to any employee, the employer shall deduct and with- hold upon the wages paid to such employee after October 31, 1951, and before January 1, 1954, a tax determined in accordance with the following tables, which shall be in lieu of the tax required to be deducted and withheld under subsection ( a ) :
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 475 I f the payroll period with respect to an employee is weekly And t h e wages are— And the number o f withholding exemptions claimed is— 4 6 7 10 or 0 1 2 3 6 8 9 But less At l e a s t than T h e amount o f tax to b e w i t h b d d shall be— ao%of $0 $13 wagM $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $13 $14 .10 0 0 0 0 0 0 0 0 0 $2.70 $14 2.90 .30 0 0 0 0 0 0 0 0 0 $15 $16 3.10 .50 0 0 0 0 0 0 0 0 0 $16 $17 3.30 .70 0 0 0 0 0 0 0 0 0 $17 $18 3.50 .90 0 0 0 0 0 0 0 0 0 $18 $19 3.70 1.10 0 0 0 0 0 0 0 0 0 $19 $20 3.90 1.30 0 0 0 0 0 0 0 0 0 $20 $21 4.10 1.50 0 0 0 0 0 0 0 0 0 $21 $22 4.30 1.70 0 0 0 0 0 0 0 0 0 $22 $23 4.50 1.90 0 0 0 0 0 0 0 0 0 $23 $24 4.70 2.10 0 0 0 0 0 0 0 0 0 $24 $25 4.90 2.30 0 0 0 0 0 0 0 0 0 $25 $26 5.10 2.50 0 0 0 0 0 0 0 0 0 $27 5.30 2.70 .20 0 0 0 0 0 0 0 0 $27 $28 5.50 2.90 .40 0 0 0 0 0 0 0 0 $28 $29 5.70 3.10 .60 0 0 0 0 0 0 0 0 $29- $30 5.90 3.30 .80 0 0 0 0 0 0 0 0 $30- - $31 6.10 3.50 1.00 0 0 0 0 0 0 0 0 $31 $32 6.30 3.70 1.20 0 0 0 0 0 0 0 0 $32 $33 6.50 3.90 1.40 0 0 0 0 0 0 0 0 $33 $34 6.70 4.10 1.60 0 0 0 0 0 0 0 0 $34 $35 6.90 4.30 1.80 0 0 0 0 0 0 0 0 $35 $36 7.10 4.50 2.00 0 0 0 0 0 0 0 t) $36 $37 7.30 4.70 2.20 0 0 0 0 0 0 0 0 $37- $38 7.50 4.90 2.40 0 0 0 0 0 0 0 0 $38 $39 7.70 5.10 2.60 0 0 0 0 0 0 0 0 $39 $40 7.90 5.30 2.80 .20 0 0 0 0 0 0 0 $40_ - $41 8.10 5.50 3.00 .40 0 0 0 0 0 0 0 $41 $42 8.30 5.70 3.20 .60 0 0 0 0 0 0 0 $42 $43 8.50 5.90 3.40 .80 0 0 0 0 0 0 0 $43 - $44 8.70 6.10 3.60 1.00 0 0 0 0 0 0 0 $44-. $45 8.90 6.30 3.80 1.20 0 0 0 0 0 0 0 $45 $46 9.10 6.50 4.00 1.40 0 0 0 0 0 0 0 $46 $47 9.30 6.70 4.20 1.60 0 0 0 0 0 0 0 $47 $48 9.50 6.90 4.40 1.80 0 0 0 0 0 0 0 $48 $49 9.70 7.10 4.60 2.00 0 0 0 0 0 0 0 $49 $50 9.90 7.30 4.80 2.20 0 0 0 0 0 Oi 0 $50 $51 10.10 7.50 6.00 2.40 0 0 0 0 0 0 0 $61 $52 10.30 7.70 6.20 2.60 0 0 0 0 0 0 0 $52 $63 10.50 7.90 6.40 2.80 .20 0 0 0 0 0 0 $53 $54 10.70 8.10 6.60 3.00 .40 0 0 0 0 0 0 $54 $55 10.90 8.30 6.80 3.20 .60 0 0 0 0 0 0 $55 $56 11.10 8.60 6.00 3.40 .80 0 0 0 0 0 0 $56 $57 11.30 8.70 6.20 3.60 1.00 0 0 0 0 0 0 $57... $58 11.60 8.90 6.40 3.80 1.20 0 0 0 0 0 0 $58. $59 11.70 9.10 6.60 4.00 1.40 0 0 0 0 0 0 $59 $60 11.90 9.30 6.80 4.20 1.60 0 0 0 0 0 0 $60. $62 12.20 9.60 7.10 4.50 1.90 0 0 0 0 0 0 $62 $64 12.60 10.00 7.60 4.90 2.30 0 0 0 0 0 0 $64 $66 13.00 10.40 7.90 5.30 2.70 .20 0 0 0 0 0 $66 $68 13.40 10.80 8.30 5.70 3.10 .60 0 0 0 0 0 $68 $70 13.80 11.20 8.70 6.10 3.60 1.00 0 0 0 0 0 $70 $72 14.20 11.60 9.10 6.60 3.90 1.40 0 0 0 0 0 $72 $74 14.60 12.00 9.50 6.90 4.30 1.80 0 0 0 0 0 $74 $76 16.00 12.40 9.90 7.30 4.70 2.2Q. 0 0 0 0 0 $76. $78 15.40 12.80 10.30 7.70 5.10 2.60 0 0 0 0 0 $78 $80 15.80 13.20 10.70 8.10 6.60 3.00 .40 0 0 0 0 $80 $82 16.20 13.60 11.10 8.50 6.90 3.40 .80 0 0 0 0 $82 $84 16.60 14.00 11.50 8.90 6.30 3.80 1.20 0 0 0 0 $84 $86 17.00 14.40 11.90 9.30 6.70 4.20 1.60 0 0 0 0 $86 $88. 17.40 14.80 12.30 9.70 7.10 4.60 2.00 0 0 0 0 $88 $90 17.80 16.20 12.70 10.10 7.50 6.00 2.40 0 0 0 0 $90 $92 18.20 15.60 13.10 10.60 7.90 6.40 2.80 .30 0 0 0 $92 $94 18.60 16.00 13.50 10.90 8.30 5.80 3.20 .70 0 0 $94 $96 19.00 16.40 13.90 11.30 8.70 6.20 3.60 1.10 a0 0 0 $96 $98 19.40 16.80 14.30 11.70 9.10 6.60 4.00 1.60 0 0 0 $98 $100 19.80 17.20 14.70 12.10 9.50 7.00 4.40 1.90 0 0 0 $100 $105 20.50 17.90 15.40 12.80 10.20 7.70 5.10 2.60 0 0 0 $110 21.50 18.90 16.40 13.80 11.20 8.70 6.10 3.60 1.00 0 0 $110 $115 22.50 19.90 17.40 14.80 12.20 9.70 7.10 4.60 2.00 0 0 $115 $120 23.50 20.90 18.40 15.80 13.20 10.70 8.10 6.60 3.00 .40 0 $120- $125 24.50 21.90 19.40 16.80 14.20 11.70 9.10 6.60 4.00 1.40 0 $125 $130 25.50 22.90 20.40 17.80 15.20 12.70 10.10 7.60 5.00 2.40 0 $130- $135 26.50 23.90 21.40 18.80 16.20 13.70 11.10 8.60 6.00 3.40 .90 $135 $140 27.50 24.90 22.40 19.80 17.20 14.70 12.10 9.60 7.00 4.40 1.90 $140 28.50 25.90 23.40 20.80 18.20 15.70 13.10 10.60 8.00 5.40 2.90 $145 $150 29.50 26.90 24.40 21.80 19.20 16.70 14.10 11.60 9.00 6.40 3.90 $150 $160 31.00 28.40 25.90 23.30 20.70 18.20 15.60 13.10 10.50 7.90 5.40 $160 $170 33.00 30.40 27.90 25.30 22.70 20.20 17.60 16.10 12.50 9.90 7.40 $170 $180 35.00 32.40 29.90 27.30 24.70 22.20 19.60 17.10 14.50 11.90 9.40 $180 $190 37.00 34.40 31.90 29.30 26.70 24.20 21.60 19.10 16.50 13.90 11.4b $190 $200 39.00 36.40 33.90 31.30 28.70 26.20 23.60 21.10 18.50 16.90 13.40 $200 and 0 ver 20 percent o f tb e e x c e s i ) over $iM0plu» 40.00 37.40 34.90 32.30 29.70 27.20 24.60 22.10 19.50 16.90 14.40
476 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. *'If the payroll period with respect to an employee is biweekly And the wages And the number o f withholding exemptions claimed is— 1 2 3 4 5 6 7 10 or 8 9 But less more At least than T h e amount o f tax to b e withheld shall be— 20% of $0... $26. wagM $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $26- $28. $5.40 .30 0 0 0 0 0 0 0 0 0 $28. $30. 5.80 .70 0 0 0 0 0 0 0 0 0 $30. $32. 6.20 1.10 0 0 0 0 0 0 0 0 0 $32. $34. 6.60 1.50 0 0 0 0 0 0 0 0 0 $34. $36. 7.00 1.90 0 0 0 0 0 0 0 0 0 $36. $38. 7.40 2.30 0 0 0 0 0 0 0 0 0 $38. $40. 7.80 2.70 0 0 0 0 0 0 0 0 0 $40. $42. 8.20 3.10 0 0 0 0 0 0 0 0 0 $42. $44. 8.60 3.50 0 0 0 0 0 0 0 0 0 $14. $46. 9.00 3.90 0 0 0 0 0 0 0 0 0 $46. $48. 9.40 4.30 0 0 0 0 0 0 0 0 0 $48. $50- 9.80 4.70 0 0 0 0 0 0 0 0 0 $50. $52. 10.20 6.10 0 0 0 0 0 0 0 0 0 $52. $54. 10.60 5.50 .30 0 0 0 0 0 0 0 0 $54. $56. 11.00 5.90 .70 0 0 0 0 0 0 0 0 $56. $58. 11.40 6.30 1.10 0 0 0 0 0 0 0 0 $58. $60. 11.80 6.70 1.50 0 0 0 0 0 0 0 0 $60. $62. 12.20 7.10 1.90 0 0 0 0 0 0 0 0 $62. $64. 12.60 7.60 2.30 0 0 0 0 0 0 0 0 $64. $66- 13.00 7.90 2.70 0 0 0 0 0 0 0 0 $66. $68- 13.40 8.30 3.10 0 0 0 0 0 0 0 0 $68. $70- 13.80 8.70 3.50 0 0 0 0 0 0 0 0 $70. $72- 14.20 9.10 3.90 0 0 0 0 0 0 0 0 $72., $74. 14.60 9.50 4.30 0 0 0 0 0 0 0 0 $74. $76. 15.00 9.90 4.70 0 0 0 0 0 0 0 0 $76. $78- 15.40 10.30 6.10 0 0 0 0 0 0 0 0 $78.. $80. 15.80 10.70 6.50 .40 0 0 0 0 0 0 0 $80. $82. 16.20 11.10 6.90 .80 0 0 0 0 0 0 0 $82- $84- 16.60 11.50 6.30 1.20 0 0 0 0 0 0 0 $84.. $86. 17.00 11.90 6.70 1.60 0 0 0 0 0 0 0 $86.. $88. 17.40 12.30 7.10 2.00 0 0 0 0 0 $90. 0 0 $88.. 17.80 12.70 7.50 2.40 0 0 0 0 0 0 0 $90. $92. 18.20 13.10 7.90 2.80 0 0 0 0 $94. 0 0 0 $92.. 18.60 13.50 3.20 0 0 0 0 0 0 0 $94.. $96. 19.00 13.90 aso 8.70 3.60 0 0 0 0 0 0 0 19.40 14.30 9.10 4.00 0 0 0 0 0 0 0 $98 $100. 19.80 14.70 9.60 4.40 0 0 0 0 0 0 0 $100 $102. 20.20 16.10 9.90 4.80 0 0 0 0 0 0 0 $102 $104. 20.60 15.50 10.30 5.20 .10 0 0 0 0 0 0 $104.. $106. 21.00 15.90 10.70 6.60 .60 0 0 0 0 0 0 $106 $108. 21.40 16.30 11.10 6.00 .90 0 0 0 0 0 0 $108 $110. 21.80 16.70 11.50 6.40 1.30 0 0 0 0 0 0 $110 $112. 22.20 17.10 11.90 6.80 1.70 0 0 0 0 0 0 $112 $114. 22.60 17.60 12.30 7.20 2.10 0 0 0 0 0 0 $114 $116- 23.00 17.90 12.70 7.60 2.50 0 0 0 0 0 0 $116 $118. 23.40 ia30 13.10 8.00 2.90 0 0 0 0 0 0 $118 $120. 23.80 ia70 13.50 8.40 3.30 0 0 0 0 0 0 $120 $124. 24.40 19.30 14.10 9.00 3.90 0 0 0 0 0 0 $124 $128. 25.20 20.10 14.90 9.80 4.70 0 0 0 0 0 0 $128 $132- 26.00 20.90 15.70 10.60 5.50 .40 0 0 0 0 0 $132 $136- 26.80 21.70 16.60 11.40 6.30 1.20 0 0 0 0 0 $136 $140- 27.60 22.50 17.30 12.20 7.10 2.00 0 0 0 0 0 $140 $144. 28.40 23.30 18.10 13.00 7.90 2.80 0 0 0 0 0 $144 $148. 29.20 24.10 18.90 13.80 8.70 3.60 0 0 0 0 0 $152. 30.00 24.90 19.70 14.60 9.60 4.40 0 0 0 0 0 $148 $156- $152 30.80 25.70 20.50 16.40 10.30 5.20 0 0 0 0 0 $160- 31.60 26.50 21.30 16.20 11.10 6.00 .80 0 0 0 0 $156 $164- $160 32.40 27.30 22.10 17.00 11.90 6.80 1.60 0 0 0 0 $168- $164 $172. 33.20 28.10 22.90 17.80 12.70 7.60 2.40 0 0 0 0 $168 $176. 34.00 28.90 23.70 18.60 13.60 8.40 3.20 0 0 0 0 $172 $180. 34.80 29.70 24.50 19.40 14.30 9.20 4.00 0 0 0 0 $176 $184. 35.60 30.50 25.30 20.20 15.10 10.00 4.80 0 0 0 0 $180 $188. 36.40 31.30 26.10 21.00 15.90 10.80 6.60 .60 0 0 0 $184 $192. 37.20 32.10 26.90 21.80 16.70 11.60 6.40 1.30 0 0 0 $188 $196. 38.00 32.90 27.70 22.60 17.50 12.40 7.20 2.10 0 0 0 $192 $200. 38.80 33.70 28.50 23.40 18.30 13.20 8.00 2.90 0 0 0 $196 $210. 39.60 34.50 29.30 24.20 19.10 14.00 8.80 3.70 0 0 0 $200 $220. 41.00 35.90 30.70 26.60 20.50 15.40 10.20 5.10 0 0 0 $210 $230. 43.00 37.90 32.70 27.60 22.60 17.40 12.20 7.10 2.00 0 0 $220 $240- 45.00 39.90 34.70 29.60 24.60 19.40 14.20 9.10 4.00 0 0 $230 $250. 47.00 41.90 3470 31.60 26.60 21.40 16.20 11.10 6.00 .80 0 $240 $260. 49.00 43.90 38.70 33.60 28.50 23.40 18.20 13.10 8.00 2.80 0 $250 $270. 61.00 45.90 40.70 35.60 30.50 26.40 20.20 16.10 10.00 4.80 0 $260 $280- 53.00 47.90 42.70 37.60 32.60 27.40 22.20 17.10 12.00 6.80 1.70 $270 $290. 55.00 49.90 44.70 39.60 34.60 29.40 24.20 19.10 14.00 8.80 3.70 $280 $300- 57.00 61.90 46.70 41.60 36.50 31.40 26.20 21.10 16.00 10.80 6.70 $290 $320- 59.00 53.90 48.70 43.60 38.50 33.40 28.20 23.10 18.00 12.80 7.70 $300 $340. 62.00 56.90 61.70 46.60 41.50 36.40 31.20 26.10 21.00 16.80 10.70 $320 $360. 66.00 60.90 65.70 50.60 45.50 40.40 35.20 30.10 25.00 19.80 14.70 $340 $380. 70.00 64.90 59.70 64.60 49.50 44.40 39.20 34.10 29.00 23.80 18.70 $360 $400. 74.00 68.90 63.70 58.60 53.60 48.40 43.20 38.10 33.00 27.80 22.70 $380 78.00 72.90 67.70 62.60 57.60 52.40 47.20 42.10 37.00 31.80 26.70 $400 and over. 20 percent of the excess OTCT $400 plus— 80.00 69.70 64.60 59.50 64.40 49.20 44.10 39.00 28.70
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 477 "If the payroll period with respect to an employee is semimonthly And the wages are— And the number of withholding exemptions claimed is— 10 or 1 2 3 4 5 6 7 8 9 more But less than T h e amount of tax to be withheld shall be— 20% of $0 $0 $0 $0 .$0 $0 $0 $0 $0 $0 $30- 5.80 .20 0 0 0 0 0 0 0 0 0 $30, $32. 6.20 .60 0 0 0 0 0 0 0 0 0 $32_ $34. 6.60 1.00 0 0 0 0 0 0 0 0 0 $34. $36. 7.00 1.40 0 0 0 0 0 0 0 0 0 $36- $38- 7.40 1.80 0 0 0 0 0 0 0 0 0 $38. $40- 7.80 2.20 0 0 0 0 0 0 0 0 0 $40_ $42- 8.20 2.60 0 0 0 0 0 0 0 0 0 $42. $44- 8.60 3.00 0 0 0 0 0 0 0 0 0 $44_ 9.00 3.40 0 0 0 0 0 0 0 0 0 9.40 3.80 0 0 0 0 0 0 0 0 0 $50- 9.80 4.20 0 0 0 0 0 0 0 0 0 $50. $52- 10.20 4.60 0 0 0 0 0 0 0 0 0 $52. $54- 10.60 5.00 0 0 0 0 0 0 0 0 0 $54. $56- 11.00 5.40 0 0 0 0 0 0 0 0 0 $56. 11.40 5.80 .30 0 0 0 0 0 0 0 0 11.80 6.20 .70 0 0 0 0 0 0 0 0 $62- 12.20 6.60 1.10 0 0 0 0 0 0 0 0 12.60 7.00 1.50 0 0 0 0 0 0 0 0 $64. 13.00 7.40 1.90 0 0 0 0 0 0 0 0 13.40 7.80 2.30 0 0 0 0 0 0 0 0 $70- 13.80 8.20 2.70 0 0 0 0 0 0 0 0 $70... $72. 14.20 8.60 3.10 0 0 0 0 0 0 0 0 $72— 14.60 9.00 3.50 0 0 0 0 0 0 0 0 $74.- $76- 15.00 9.40 3.90 0 0 0 0 0 0 0 0 $76— 15.40 9.80 4.30 0 0 0 0 0 0 0 0 10.20 4.70 0 0 0 0 0 0 0 0 15.80 0 16.20 10.60 6.10 0 0 0 0 0 0 0 0 $82. 16.60 11.00 5.50 0 0 0 0 0 0 0 0 $84. 17.00 11.40 5.90 .30 0 0 0 0 0 0 0 17.40 11.80 6.30 .70 0 0 0 0 0 0 0 17.80 12.20 6.70 1.10 0 0 0 0 0 0 0 $90- 18.20 12.60 7.10 1.50 0 0 0 0 0 0 $92- $94- 18.60 13. 00 7.50 1.90 0 0 0 0 0 0 $94. 19.00 13.40 7.90 2.30 0 0 0 0 0 0 0 19.40 13.80 8.30 2.70 0 0 0 0 0 0 0 $100- 19.80 14.20 8.70 3.10 0 0 0 0 0 0 0 $100- $102. 20.20 14.60 9.10 3.50 0 0 0 0 0 0 0 $102- $104. 20.60 15.00 9.50 3.90 0 0 0 0 0 0 0 $104- $106. 21.00 15.40 9.90 4.30 0 0 0 0 0 0 0 $106- $108- 21.40 15.80 10.30 4.70 0 0 0 0 0 0 0 $108- $110. 21.80 16.20 10.70 5.10 0 0 0 0 0 0 0 $110- $112- 22.20 16.60 11.10 6. 50 0 0 0 0 0 0 0 $112- $114. 22.60 17.00 11. 50 6.90 .40 0 0 0 0 0 0 $114- $116- 23.00 17.40 11.90 6.30 .80 0 0 0 0 0 0 $116- $118- 23.40 17.80 12.30 6.70 1.20 0 0 0 0 0 0 $118.. $120- 23.80 18.20 12.70 7.10 1.60 0 0 0 0 0 0 $120- $124- 24.40 18.80 13.30 7.70 2.20 0 0 0 0 0 0 $124-. $128- 25.20 19.60 14.10 8.50 3.00 0 0 0 0 0 0 $128- $132- 26.00 20.40 14.90 9.30 3.80 0 0 0 0 0 0 $132- $136- 26.80 21.20 16.70 10.10 4.60 0 0 0 0 0 0 $136. $140- 27.60 22.00 16. 50 10.90 5.40 0 0 0 0 0 0 $140- $144. 28.40 22.80 17.30 11.70 6.20 .60 0 0 0 0 0 $144-. $148- 29.20 23.60 18.10 12.50 7.00 1.40 0 0 0 0 0 $148- $162- 30.00 24.40 18.90 13.30 7.80 2.20 0 0 0 0 0 $152- $156- 30.80 25.20 . 19. 70 14.10 8.60 3.00 0 0 0 0 0 $156. $160- 31.60 26.00 20.50 14.90 9.40 3.80 0 0 0 0 0 $160- $164- 32.40 26.80 21.30 15.70 10.20 4.60 0 0 0 0 0 $164- $168- 33.20 27.60 22.10 16.50 11.00 5.40 0 0 0 0 0 $168- $172. 34.00 28.40 22.90 17.30 11.80 6.20 .70 0 0 0 0 $172-. $176- 34.80 29.20 23.70 18.10 12.60 7.00 1.50 0 0 0 0 $176. 35.60 30.00 24.50 18.90 13.40 7.80 2.30 0 0 0 0 $180.. 36.40 30.80 25.30 19.70 14.20 8.60 3.10 0 0 0 0 $184- $188. 37.20 31.60 26.10 20.50 15.00 9.40 3.90 0 0 0 0 $188- $192- 38.00 32.40 26.90 21.30 15.80 10.20 4.70 0 0 0 0 $192. $196- 38.80 33.20 27.70 22.10 16.60 11.00 5.60 0 0 0 0 $196- $200. 39.60 34.00 28.50 22.90 17.40 11.80 6.30 .70 0 0 0 $200. $210. 41.00 35.40 29.90 24.30 18.80 13.20 7.70 2.10 0 0 0 $210- $220. 43.00 37.40 31.90 26.30 20.80 16.20 9.70 4.10 0 0 0 $220. $230- 45.00 39.40 33.90 28.30 22.80 17.29 11.70 6.10 .60 0 0 $230- $240. 47.00 41.40 35.90 30.30 24.80 19.20 13.70 8.10 2.60 0 0 $240- $250.' 49.00 43.40 37.90 32.30 26.80 21.20 15.70 10.10 4.60 0 0 $250. $260. 45.40 39.90 34.30 28.80 23.20 17.70 12.10 6.60 1.00 0 $260- 51.00 $270. 53.00 47.40 41.90 36.30 30.80 25.20 19.70 14.10 8.60 3.00 0 $270. $280. 0 $280. 55.00 49.40 43.90 38.30 32.80 27.20 21.70 16.10 10.60 5.00 $290. 57.00 51.40 45.90 40.30 34.80 29.20 23.70 18.10 12.60 7.00 1.40 $290. $300. $300- 59.00 53.40 47.90 42.30 36.80 31.20 25.70 20.10 14.60 9.00 3.40 $320. 62.00 56.40 50.90 45.30 39.80 34.20 28.70 23.10 17.60 12.00 6.40 $320- $340. $340. 66.00 60.40 64.90 49.30 43.80 38.20 32.70 27.10 21.60 16.00 10.40 $360- 70.00 64.40 58.90 53.30 47.80 42.20 36.70 31.10 25.60 20.00 14.40 $360. $380. $380. 74.00 68.40 62.90 57.30 61.80 46.20 40.70 35.10 29.60 24.00 18.40 $400. 78.00 72.40 66.90 61.30 65.80 50.20 44.70 39.10 33.60 28.00 22.40 $400. $420. $420.. 82.00 76.40 70.90 65.30 69.80 64.20 48.70 43.10 37.60 32.00 26.40 $440- 86.00 80.40 74.90 69.30 63.80 68.20 52.70 47.10 41.60 36.00 30.40 $440.. $460- $460.. 90.00 84.40 78.90 73.30 67.80 62.20 56.70 51.10 45.60 40.00 34.40 $480- 94.00 88.40 82.90 77.30 71.80 66.20 60.70 55.10 49.60 44.00 38.40 $480- $500. 98.00 92.40 86.90 81.30 75.80 70.20 64.70 59.10 63.60 4S.0O 42.40 $500 and o v e r . 20 percent o f the excess oyer $500 plus— 100.00 94.40 88.90 83.30 77.80 72.20 66.70 61.10 56.60 50.00 44.40
478 PUBLIC LAW ISa—OCT. 20, 1951 [65 STAT. "If the payroll period with respect to an employee is monthly And the wages are— And t h e number o f withholding exemptions claimed is— 0 1 2 3 4 5 6 7 1 8 9 10 or But l e s s more At least than 1 1 T h e amount o f tax to b e withheld slwll be— 30% of $0 $56 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $56 $60 $11.60 .50 0 0 0 0 0 0 0 0 0 $60 $64. 12.40 1.30 0 0 0 0 0 0 0 0 0 $64 $68 13.20 2.10 0 0 0 0 0 0 0 0 0 $68 $72. 14.00 2.90 0 0 0 0 0 0 0 0 0 $72 $76 14.80 3.70 0 0 0 0 0 0 0 0 0 $76 .- $80 15.60 4.50 0 0 0 0 0 0 0 0 •0 $80 $84 16.40 5.30 0 0 0 0 0 0 0 0 0 $84 $88. 17.20 6.10 0 0 0 0 0 0 0 0 0 $88 - $92 18.00 6.90 0 0 0 0 0 0 0 0 0 $92.. $96 18.80 7.70 0 0 0 0 0 0 0 0 0 $96 $100 19.60 8.50 0 0 0 0 0 0 0 0 0 $100. $104 20.40 9.30 0 0 0 0 0 0 0 0 0 $104.. $108 21.20 10.10 0 0 0 0 0 0 0 0 0 $108 $112 22.00 10.90 0 0 0 0 0 0 0 0 0 $112 $116 22.80 11.70 .60 0 0 0 0 0 0 0 0 $116 $120 23.60 12.50 1.40 0 0 0 0 0 0 0 0 $120 $124 24.40 13.30 2.20 0 0 0 0 0 0 0 0 $124 $128 25.20 14.10 3.00 0 0 0 0 0 0 0 0 $128 $132 26.00 14.90 3.80 0 0 0 0 0 0 0 0 $132 $136 26.80 15.70 4.60 0 0 0 0 0 0 0 0 $136 $140 27.60 16.50 5.40 0 0 0 0 0 0 0 0 $140...,-. $144 28.40 17.30 6.20 0 0 0 0 0 0 0 0 $144 $148 29.20 18.10 7.00 0 0 0 0 0 0 0 $148 $152 30.00 18.90 7.80 0 0 0 0 e 0 0 0 0 $152 $156 30.80 19.70 8.60 0 0 0 0 0 0 0 0 $156 $160 31.60 20.50 9.40 0 0 0 0 0 0 0 0 $160. $164 32.40 21.30 10.20 0 0 0 0 0 0 0 0 $164 $168 33.20 22.10 11.00 0 0 0 0 0 0 0 0 $168 $172 34.00 22.90 11.80 .70 0 0 0 0 0 0 0 $172 $176 34.80 23.70 12.60 1.50 0 0 0 0 0 0 0 $176 $180 35.60 24.60 13.40 2.30 0 0 0 0 0 0 0 $180 $184 36.40 25.30 14.20 3.10 0 0 0 0 0 0 0 $184 $188 37.20 26.10 15.00 3.90 0 0 0 0 0 0 0 $188 $192 38.00 26.90 15.80 4.70 0 0 0 0 0 0 0 $192 $196 38.80 27.70 16.60 5.50 0 0 0 0 0 0 0 $196 $200 39.60 28.50 17.40 6.30 0 0 0 0 0 0 0 $200.. $204 40.40 29.30 18.20 7.10 0 0 0 0 0 0 0 $204.. $208 41.20 30.10 19.00 7.90 0 0 0 0 0 0 0 $208 $212 42.00 30.90 19.80 8.70 0 0 0 0 0 0 0 $212 $216 42.80 31.70 20.60 9.50 0 0 0 0 0 0 0 $216 $220 43.60 32.50 21.40 10.30 0 0 0 0 0 0 0 $220 $224 44.40 33.30 22.20 11.10 0 0 0 0 0 0 0 $224 $228 45.20 34.10 23.00 11.90 .80 0 0 0 0 0 0 $228 $232 46.00 34.90 23.80 12.70 1.60 0 0 0 0 0 0 $232 $236 46.80 35.70 24.60 13.50 2.40 0 0 0 0 0 0 $236 $240 47.60 36.50 25.40 14.30 3.20 0 0 0 0 0 0 $240 $248 48.80 37.70 26.60 15.50 4.40 0 0 0 0 0 0 $248 $256 50.40 39.30 28.20 17.10 6.00 0 0 0 0 0 0 $256 $264 52.00 40.90 29.80 18.70 7.60 0 0 0 0 0 0 $264 $272 53.60 42.50 31.40 20.30 9.20 0 0 0 0 0 0 $272 $280 55.20 44.10 33.00 21.90 10.80 0 0 0 0 0 0 $280 $288 56.80 45.70 34.60 23.50 12.40 1.20 0 0 0 0 0 $288 $296 58.40 47.30 36.20 25.10 14.00 2.80 0 0 0 0 0 $296 $304 60.00 48.90 37.80 26.70 15.60 4.40 0 0 0 0 0 $304 $312 61.60 50.50 39.40 28.30 17.20 6.00 0 0 0 0 0 $312 $320 63.20 52.10 41.00 29.90 18; 80 7.60 0 0 0 0 0 $320 $328 64.80 53.70 42.60 31. 50 20.40 9.20 0 0 0 0 0 $328 $336 66.40 55.30 44.20 33.10 22.00 10.80 0 0 0 0 0 $336 $344 68. 00 56.90 45.80 34.70 23.60 12.40 1.30 0 0 0 0 $344__ $352 69.60 58.50 47.40 36.30 25.20 14.00 2.90 0 0 0 0 $352 $360 71.20 60.10 49.00 37.90 26.80 15.60 4.60 0 0 0 0 $360 $368--.-- 72.80 61.70 50.60 39.50 28.40 17.20 6.10 0 0 0 0 $368 $376 74.40 63.30 52.20 41.10 30.00 18.80 7.70 0 0 0 0 $376 $384 76.00 64.90 53.80 42.70 31.60 20.40 9.30 0 0 0 0 $384__ $392 77.60 66.50 55.40 44.30 33.20 22.00 10.90 0 0 0 0 $392._ $400 79.20 68.10 57.00 45.90 34.80 23.60 12.50 1.40 0 0 0 $400 $420 82.00 70.90 59.80 48.70 37.60 26.40 15.30 4.20 0 0 0 $420 $440 86.00 74.90 63.80 52.70 41.60 30.40 19.30 8.20 0 0 0 $440 $460 90.00 78.90 67.80 66.70 45.60 34.40 23.30 12.20 1.10 0 0 $460 $480 94.00 82.90 71.80 60.70 49.60 38.40 27.30 16.20 6.10 0 0 $480 $500 98.00 86.90 75.80 64.70 53.60 42.40 31.30 20.20 9.10 0 0 $500 $520 102.00 90.90 79.80 68.70 57.60 46.40 35.30 24.20 13.10 2.00 0 $520 $540 106.00 94.90 83.80 72.70 61.60 50.40 39.30 28.20 17.10 6.00 0 $540 $560 110.00 98.90 87.80 76.70 65.60 54.40 43.30 32.20 21.10 10.00 0 $560 $580 114.00 102.90 91.80 80.70 69.60 58.40 47.30 36.20 25.10 14.00 2.90 $580 $600 118.00 106.90 95.80 84.70 73.60 62.40 51.30 40.20 29.10 18.00 6.90 $600 $640 124.00 112.90 101.80 90.70 79.60 68.40 57.30 46.20 35.10 24.00 12.90 $640 $680 132.00 120.90 109.80 98.70 87.60 76.40 65.30 54.20 43.10 32.00 20.90 $680 $720 140.00 128.90 117.80 106.70 95.60 84.40 73.30 62.20 51.10 40.00 28.90 $720 $760 148.00 136.90 125.80 114.70 103.60 92.40 81.30 70.20 59.10 48.00 36.90 $760 $800 156.00 144.90 133. 80 122. 70 111.60 100.40 89.30 78.20 67.10 56.00 44.90 $800 $840 164.00 152.90 141. 80 130.70 119.60 108.40 97.30 86.20 75.10 64.00 52.90 $840 $880 172.00 160.90 149. 80 138. 70 127.60 116.40 105.30 94.20 83.10 72.00 60.90 $880.. $920 180.00 168.90 157.80 146. 70 135.60 124.40 113.30 102.20 91.10 80.00 68.90 $920 $960 188.00 176.90 165.80 154.70 143.60 132.40 121.30 110.20 99.10 88.00 76.90 $960 $1,000-.. 196.00 184.90 173.80 162. 70 151.60 140.40 129.30 118.20 107.10 06.00 84.90 $1,000 and j v e r 2 ) percen t of the excess over $1, 1)00 pins— 200.00 188.90 177.80 166. 70 155.60 144.40 133.30 122.20 111. 10 100.00 88.00
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 479 "If the payroll period with respect to an employee is a daily payroll period or a miscellaneous payroll period And the wages And the number of withholding exemptions claimed is— dirided by the nnm- ber of days in such 10 or period) more Butless The amount of tax to l>e withheld shall be the following amount multiplied by At least- than— the numl>er of days in such period— 30% of $0 $2.00-- WMCM $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2.00.— $2.26-. $0.40 .05 0 0 0 0 0 0 0 0 0 $2.25.— $2.50.. .45 .10 0 0 0 0 0 0 0 0 0 $2.50—. $2.75.. .50 .15 0 0 0 0 0 0 0 0 0 $2.75.-- $3.00.. .65 .20 0 0 0 0 0 0 0 0 0 $3.00-... $3.25.. .60 .26 0 0 0 0 0 0 0 0 0 $3.26..- $3.60.. .65 .30 0 0 0 0 0 0 0 0 0 $3.50--- $3.75.. .70 .36 0 0 0 0 0 0 0 0 0 $3.75-- $4.00-- .76 .40 .05 0 0 0 0 0 0 0 0 $4.00— $4.26.. .80 .45 .10 0 0 0 0 0 0 0 0 $4.25..-- $4.50.- .86 .50 .15 0 0 0 0 0 0 0 0 $4.50—- $4.75-- .90 .65 .20 0 0 0 0 0 0 0 0 $4.75-.- $5.00-- .95 .60 .26 0 0 0 0 0 0 0 0 $5.00--- $6.26.- 1.00 .66 .30 0 0 0 0 0 0 0 0 $5.25---- $5.50.- 1.05 .70 .35 0 0 0 0 0 0 0 0 $5.50--- $5.76.- 1.10 .75 .40 .05 0 0 0 0 0 0 0 $5.75.-- $6.00.. 1.15 .80 .46 .10 0 0 0 0 0 0 0 $6.00--- $6.25.. 1.20 .85 .50 .15 0 0 0 0 0 0 0 $6.25-- $6.50.. 1.25 .90 .55 .20 0 0 0 0 0 0 0 $6.50-.- $6.76-. 1.30 .95 .60 .26 0 0 0 0 0 0 0 $6.75-- $7.00.. 1.36 1.00 .65 .30 0 0 0 0 0 0 0 $7.00..-- $7.26- 1.40 1.05 .70 .35 0 0 0 0 0 0 0 $7.26.-.. $7.60.. 1.46 1.10 .75 .40 0 0 0 0 0 0 0 $7.50..- $7.76.. 1.50 1.16 .80 .46 .06 0 0 0 0 0 0 $7.76.... $8.00.. 1.65 1.20 .85 .50 .10 0 0 0 0 0 0 $8.00- — $8.25-- 1.60 1.25 .90 .56 .15 0 0 0 0 0 0 $8.25-.- $8.50-- 1.65 1.30 .95 .60 .20 0 0 0 0 0 0 $8.50-.- $8.75-- 1.70 1.35 1.00 .66 .26 0 0 0 0 0 0 $8.76.-.- $9.00-. 1.75 1.40 1.06 .70 .30 0 0 0 0 0 0 $9.00 $9.25-. 1.80 1.46 1.10 .76 .36 0 0 0 0 0 0 $9.25-. $9.50-. 1.86 1.50 1.16 .80 .40 .06 0 0 0 0 0 $9.60... $9.76.- 1.90 1.66 1.20 .85 .46 .10 0 0 0 0 0 $9.75--- $10.00. 1.95 1.60 1.26 .90 .50 .16 0 0 0 0 0 $10.00-. $10.50. 2.06 1.70 1.30 .95 .60 .20 0 0 0 0 0 $10.50.. $11.00. 0 $11.60. 2.16 1.80 1.40 1.05 .70 .30 0 0 0 0 $11.00.- 2.25 1.90 1.50 1.15 .80 .40 .06 0 0 0 0 $11.50- $12.00. 0 $12.50. 2.35 2.00 1.60 1.25 .90 .60 .16 0 0 0 $12.00.- 2.46 2.10 1.70 1.35 1.00 .60 .26 0 0 0 0 $12.60- $13.00. 0 $13.50. 2.55 2.20 1.80 1.45 1.10 .70 .36 0 0 0 $13.00.. 2.65 2.30 1.90 1.65 1.20 .80 .46 .10 0 0 0 $13.50.- $14.00. 0 $14.60. 2.75 2.40 2.00 1.65 1.30 .90 .66 .20 0 0 $14.00- 2.85 2.50 2.10 1.75 1.40 1.00 .65 .30 0 0 0 $14.50- $16.00. $15.60. 2.96 2.60 2.20 1.85 1.50 1.10 .75 .40 .06 0 0 $16.00- 3.05 2.70 2.30 1.95 1.60 1.20 .86 .60 .15 0 0 $15.60.. $16.00. $16.50. 3.15 2.80 2,40 2.06 1.70 1.30 .95 .60 .25 0 0 $16.00- 3.25 2.90 2.50 2.16 1.80 1.40 1.05 .70 .35 0 0 $16.60- $17.00- $17.50- 3.35 3.00 2.60 2.25 1.90 1.50 1.16 .80 .45 .06 0 $17.00- 3.45 3.10 2.70 2.35 2.00 1.60 1.25 .90 .55 .16 0 $17.60- $18.00. $18.50- 3.65 3.20 2.80 2.45 2.10 1.70 1.35 1.00 .65 .25 0 $18.00.. 3.66 3.30 2.90 2.66 2.20 1.80 1.45 1.10 .76 .35 0 $18.50.- $19.00- $19.50. 3.76 3.40 3.00 2.65 2.30 1.90 1.55 1.20 .85 .45 .10 $19.00.. 3.85 3.50 3.10 2.76 2.40 2.00 1.65 1.30 .95 .56 .20 $19.50- $20.00. $21.00. 3.95 3.60 3.20 2.85 2.60 2.10 1.76 1.40 1.05 .65 .30 $20.00- 4.10 3.76 3.35 3.00 2.65 2.25 1.90 1.56 1.20 .80 .46 $21.00.. $22.00. $23.00. 4.30 3.95 3.56 3.20 2.85 2.45 2.10 1.76 1.40 1.00 .66 $22.00-- 4.50 4.15 3.75 3.40 3.06 2.66 2.30 1.95 1.60 1.20 .85 $23.00- $24.00. $25.00- 4.70 4.35 3.95 3.60 3.25 2.85 2.50 2.15 1.80 1.40 1.05 $24.00.. 4.90 4.55 4.15 ?.80 3.45 3.05 2.70 2.35 2.00 1.60 1.25 $26.00-. $26.00. $27.00. 6.10 4.76 4.36 4.00 3.65 3.25 2.90 2.56 2.20 1.80 1.46 $26.00.. 5.30 4.95 4.66 4.20 3.85 3.46 3.10 2.76 2.40 2.00 1.65 $27.00- $28.00. $28.00-- $29.00. 6.50 5.15 4.75 4.40 4.06 3.66 3.30 2.95 2.60 2.20 1.86 $29.00- $30.00. 6.70 5.36 4.95 4.60 4.26 3.85 3.50 3.15 2.80 2.40 2.06 5.90 6.55 5.15 4.80 4.45 4.06 3.70 3.35 3.00 2.60 2.26 $30 and over. 20 percent of the excess oy«' $30 plus— 6.00 5.66 5.25 4.90 4.56 4.15 3.80 3.45 3.10 2.70 2.36 76100 O - 52 (PT. I) - 33
480 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. " ( B ) Wages paid after December 31,1953.—^At the election of the employer with respect to any employee, the employer shall deduct and withhold upon the wages paid to such employee after December 31, 1953, a tax determined in accordance with the following tables, which shall be in lieu of the tax required to be deducted and withheld under Ante.p.m. subsection (a) :". SEC. 203. ADDITIONAL WITHHOLDING OF TAX ON WAGES UPON AGREE- MENT BY EMPLOYER AND EMPLOYEE. 26U^s c^U622 Scctiou 1622 (relating to income tax collected at source on wages) Ante,p.m. is hereby amended by adding at the end thereof the following new subsection: " ( k ) ADDITIONAL WITHHOLDING.—The Secretary is authorized by regulations to provide, under such conditions and to such extent as he deems proper, for withholding in addition to that otherwise required under this section in cases in which the employer and the employee agree (in such form as the Secretary may by regulations prescribe) to such additional withholding. Such additional withholding shall for all purposes be considered tax required to be deducted and withheld under this subchapter." SEC. 204. EFFECTIVE DATE. The amendments made by this title shall be applicable only with respect to wages paid on or after November 1,1951. TITLE III—MISCELLANEOUS INCOME TAX AMENDMENTS SEC. 301. TAX TREATMENT IN CASE OF HEAD OF HOUSEHOLD. §u*k^c.§ 12(c). (a) SURTAX I N CASE OF HEAD OF HOUSEHOLD.—Section 12 (c) is hereby amended to read as follows: "(c) RATES OF SURTAX—HEAD OF HOUSEHOLD.— " ( 1 ) TAXABLE YEARS BEGINNING AFTER OCTOBER 3 1 , 1951, AND BEFORE JANUARY 1, 1954.—In the case of taxable years beginning after October 31,1951, and before January 1,1954, there shall be levied, collected, and paid for each taxable year upon the surtax net income of every individual who is the head of a household the surtax shown in the following table: "If the surtax net income is: The surtax shall be: Not over $2,000 19.2% of the surtax net income. Over $2,000 but not over $4,000 $384, plus 20.4% of excess over $2,000. Over $4,000 but not over $6,000 $792, plus 24% of excess over $4,000. Over $6,000 but not over $8,000 $1,272, plus 26% of excess over $6,000. Over $8,000 but not over $10,000 $1,792, plus 31% of excess over $8,000. Over $10,000 but not over $12,000 $2,412, plus 32% of excess over $10,000. Over $12,000 but not over $14,000 $3,052, plus 88% of excess over $12,000. Over $14,000 but not over $16,000 $3,812, plus 41% of excess over $14,000. Over $16,000 but not over $18,000 $4,632, plus 44% of excess over $16,000. Over $18,000 but not over $20,000 $5,512, plus 45%, of excess over $18,000. Over $20,000 but not over $22,000 $6,412, plus 49% of excess over $20,000. Over $22,000 but not over $24,000 $7,392, plus 51% of excess over $22,000. Over $24,000 but not over $28,000. $8,412, plus 54%, of excess over $24,000.
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 481 "If the surtax net income is: The surtax shall be: Over $28,000 but not over $32,000 $10,572, plus 57% of excess over $28,000. Over $32,000 but not over $38,000 $12,852, plus 60% of excess over $32,000. Over $38,000 but not over $44,000 $16,452, plus 63% of excess over $38,000. Over $44,000 but not over $50,000 $20,282, plus 68% of excess over $44,000. Over $50,000 but not over $60,000 $24,312, plus 69% of excess over $50,000. Over $60,000 but not over $70,000 $31,212, plus 70% of excess over $60,000. Over $70,000 but not over $80,000 $38,212, plus 74% of excess over $70,000. Over $80,000 but not over $90,000 $45,612, plus 76% of excess over $80,000. Over $90,000 but not over $100,000 $.53,212, plus 78% of excess over $90,000. Over $100,000 but not over $150,000__ $61,012, plus 82% of excess over $100,000. Over $150,000 but not over $200,000— $102,012, plus 85% of excess over $150,000. Over $200,000 but not over $300,000— $144,512, plus 88% of excess over $200,000. Over $300,000 $232,512, plus 89% of excess over $300,000. "(2) T A X A B L E YEARS B E G I N N I N G AFTER DECEMBER 3 1 , 1 9 5 3 . — I n the case of taxable years beginning after December 31,1953, there shall be levied, collected, and paid for each taxable year upon the surtax net income of every individual who is the head of a house- hold the surtax shown in the following table: "If the surtax net income is: The surtax shall be: Not over $2,000 17% of the surtax net income. Over $2,000 but not over $4,000 $340, plus 18% of excess over $2,000. Over $4,000 but not over $6,000 $700, plus 21% of excess over $4,000. Over $6,000 but not over $8,000 $1,120, plus 23% of excess over $6,000. Over $8,000 but not over $10,000 $1,580, plus 27% of excess over $8,000. Over $10,000 but not over $12,000 $2,120, plus 29% of excess over $10,000. Over $12,000 but not over $14,000 $2,700, plus 33% of excess over $12,000. Over $14,000 but not over $16,000 $3,360, plus 36% of excess over $14,000. Over $16,000 but not over $18,000 $4,080, plus 39% of excess over $16,000. Over $18,000 but not over $20,000—_ $4,860, plus 40% of excess over $18 000 Over $20,000 but not over $22,000 $5,660, plus 44% of excess over $20,000. Over $22,000 but not over $24,000 $6,540, plus 46% of excess over $22 000 Over $24,000 but not over $28,000 $7,460, plus 49% of excess over $24,000. Over $28,000 but not over $32,000 $9,420, plus 51% of excess over $28 000 Over $32,000 but not over $38,000 $11,460, plus 55% of excess over $32,000. Over $38,000 but not over $44,000 $14,760, plus 59% of excess over $38,000. Over $44,000 but not over $50,000 $18,300, plus 63% of excess over $44,000. Over $50,000 but not over $60,000 $22,080, plus 65% of excess over $50,000. Over $60,000 but not over $70,000 $28,580, plus 68% of excess over $60,000. Over $70,000 but not over $80,000 $35,380, plus 71% of excess over $70,000.
482 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. "If the surtax net income is: The surtax shall be: Over $80,000 but not over $90,000— $42,480, plus 73% of excess over $80,000, Over $90,000 but not over $100,000— $49,780, plus 77% of excess over $90,000, Over $100,000 but not over $150,000— $57,480, plus 80% of excess over $100,000, Over $150,000 but not over $200,000— $97,480, plus 84% of excess over $150,000, Over $200,000 but not over $300,000— $139,480, plus 87% of excess over $200,000, Over $300,000 : $226,480, plus 88% of excess over $300,000. " ( 3 ) DEFINITION OF HEAD OF HOUSEHOLD.—For the purposes of this chapter, an individual shall be considered a head of a household if, and onl}^ if, such individual is not married at the close of his taxable year and maintains as his home a household which constitutes for such taxable year the principal place of abode, as a member of such household, of: " ( A ) A son, stepson, daughter, or stepdaughter of the taxpayer, or a descendant of a son or daughter of the tax- payer, but if such son, stepson, daughter, stepdaughter, or descendant is married at the close of the taxpayer's taxable year, only if the taxpayer is entitled to an exemption for the 26 u.^s.c'. 5 25(b). taxable year for such person under section 25 (b) ; or Post, p. 487. " ( B ) Any other person who is a dependent of the taxpayer, if the taxpayer is entitled to an exemption for the taxable year for such person under section 25 ( b ) . An individual shall be considered as maintaining a household only if over half of the cost of maintaining the household dur- ing the taxable year is furnished by such individual. "(4) DETERMINATION OF STATUS.—For the purposes of this sub- section— " ( A ) a legally adopted child of a person shall be con- sidered a child of such person by blood; " ( B ) an individual who is legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married; " ( C ) a taxpayer shall be considered as not married at the close of his taxable year if at any time during the taxable year his spouse is a nonresident alien; and " ( D ) a taxpayer shall be considered as married at the close of his taxable year if his spouse (other than a spouse described in subparagraph ( C ) ) died during the taxable year. "(5) NONRESIDENT ALIEN.—For the purposes of this chapter a taxpayer shall in no case be considered a head of a household if at any time during the taxable year he is a nonresident alien." (b) COMPUTATION OF TAX BY COLLECTOR.— 26 u ^ s ^ ; 161(f) (^) Section 51 (f) (1) (relating to tax computed by collector (1). ' ' ' in case of wage earners) is hereby amended by adding at the end thereof the following: " I n the case of a head of a household electing the benefits of this subsection, the tax shall be computed by the collector under Supplement T without regard to the tax- payer's status as head of a household." 26 u^s ^c' j§%2, (^) Section 402 (relating to effect of election to pay the tax 400-404'. ' • ' imposed by Supplement T ) is hereby amended by adding at the Ante, p. 461, ^^^ thereof the following: " I n the case of a head of a household electing to have his tax computed by the collector pursuant to the
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 483 provisions of section 51 ( f ) , the tax imposed by section 400 shall ^"'*' PP •*^^' *^'- be computed without regard to the status of the taxpayer as a head of a household." (c) EFFECTIVE DATE.—^The amendments made by this section shall be applicable only with respect to taxable years beginning after October 31,1951. SEC. 302. PAYMENTS TO BENEFICIARIES OF DECEASED EMPLOYEES. (a) AMENDMENT OF SECTION 22 (b) (1) .—Section 22 (b) (1) (relat- g ff^|/^- j ^ (b) ing to exclusion of life insurance proceeds from gross income) is (i)- hereby amended to read as follows: "(1) L I F E INSURANCE, ETC.—Amounts received— " ( A ) under a life insurance contract, paid by reason of the death of the insured; or " ( B ) under a contract of an employer providing for the payment of such amounts to the beneficiaries of an employee, paid by reason of the death of the employee; whether in a single sum or otherwise (but if such amounts are held by the insurer, or the employer, under an agreement to pay interest thereon, the interest payments shall be included in gross income). The aggregate of the amounts excludible under sub- paragraph (B) by all the beneficiaries of the employee under all such contracts of any one employer may not exceed $5,000." (b) EFFECTIVE DATE.—The amendment made by this section shall be applicable with respect to taxable years beginning after December 31, 1950. SEC. 303. JOINT AND SURVIVOR ANNUITIES. (a) AMENDMENT OF SECTION 22 (b) (2).—Section 22 (b) (2) is 1^ u.Vc. § 22 (b) amended by adding at the end thereof the following new subpara- (2)- graph: " ( C ) Joint and Survivor Annuities.—^For purposes of subparagraphs (A) and (B) of this paragraph, where amounts are received by a surviving annuitant under a joint and survivor's annuity contract and the basis of such sur- vivor annuitant's interest is determined under section 113 (a) (5) the consideration paid for such survivor's annuity shall be considered to be an amount equal to such basis." (b) AMENDMENT OF SECTION 113 (a) (5).—Section 113 (a) (5) is gfr*1-.c; §ii3(a) amended by adding at the end thereof the following: " F o r the pur- (s). poses of this paragraph, the survivor's interest in a joint and sur- vivor's annuity shall be considered to be property 'acquired by bequest, devise, or inheritance' from the decedent if the death of the decedent was after December 31, 1950, and if the value of any p a r t of such interest was required to be included in determining the value of the decedent's gross estate under section 811." ^ u.*s. c^'s su. (c) EFFECTIVE DATES.—The amendments made by this section shall be applicable to taxable years ending after December 31,1950. SEC. 304. INCOME FROM DISCHARGE OF INDEBTEDNESS. (a) AMENDMENT OF SECTION 22 (b) (9).—Effective with respect to 53 Stat. 875. discharges of indebtedness occurring within taxable years ending after (»)'26 • U. S. C. § 22 (b) Deceml>er 31, 1950, section 22 (b) (9) (relating to income from dis- charge of indebtedness) is hereby amended (1) by striking out "if the taxpayer makes and files a t the time of filing the return, in such manner as the Commissioner, with the approval of the Secretary, by regulations prescribes, its consent" and inserting in lieu thereof "if the taxpayer, at such time and in such manner as the Secretary by regulations prescribes, makes and files its consent", and (2) by striking out the last sentence thereof.
484 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. 2^ u^s.^c;§ 22 (b) (b) AMENDMENT OF SECTION 22 (b) (10).—Section 22 (b) (10) (10)- (relating to income from discharge of indebtedness of a railroad cor- poration) is hereby amended by striking out "December 31,1951" and inserting in lieu thereof "December 31,1954". SEC. 305. COMPENSATION OF CERTAIN MEMBERS OF THE ARMED FORCES. SiLW.'5 22(b) (a) AMENDMENT OF SECTION 22 (b) (13).—Section 22 (b) (13) (13). ' • * (relating to exclusion from gross income of compensation of certain members of the armed forces) is hereby amended by striking out sub- paragraphs (A) and (B) and inserting in lieu thereof the following: " ( A ) Enlisted Personnel.—Compensation received for active service as a member below the grade of commissioned officer in the armed forces of the United States for any month during any part of which such member— " ( i ) served in a combat zone after June 24, 1950, and prior to January 1,1954, or "(ii) was hospitalized as a result of wounds, disease, or injury incurred while serving in a combat zone prior to January 1, 1954; but this clause shall not apply for any month during any part of which there are no com- batant activities in any combat zone as determined under ^"^'•'- subparagraph (C) (iii) of this paragraph. " ( B ) Commissioned Officers.—So much of the compen- sation as does not exceed $200 received for active service as a commissioned officer in the armed forces of the United States for any month during any part of which such officer— "(i) served in a combat zone after June 24, 1950, and prior to January 1,1954, or " ( i i ) was hospitalized as a result of wounds, disease, or injury incurred while serving in a combat zone prior to January 1, 1954; but this clause shall not apply for any month during any part of which there are no com- batant activities in any combat zone as determined under subparagraph (C) (iii) of this paragraph." (b) DEFINITION OF SERVICE IN COMBAT ZONE.—Clause (iii) of section 26 u^s.^c.'§ 22 (b) ^ (b) (1^) ( ^ ) ^^ hereby amended by striking out "such zone; and" (13) (C). • • and inserting in lieu thereof "such zone, except that J u n e 25, 1950, shall be considered the date of the commencing of combatant activities 26 u. s. G. J 22 note, j ^ t,he combat zone designated in Executive Order 10195; and". 26U^V^ §1621 (^). WITHHOLDING ON WAGES.—Section 1621 (a) (1) (relating to (a) (1).' • ' definition of the term "wages") is hereby amended to read as follows: "(1) for active service as a member of the armed forces of the United States performed prior to January 1, 1954, in a month for which such member is entitled to the benefits of section 22 (b)(13),or". (d) EFFECTIVE DATES.—^The amendments made by subsections (a) and (b) shall be applicable to taxable years ending after J u n e 24, 1950. The amendment made by subsection (c) shall be applicable with respect to wages paid after the tenth day following the date of the enactment of this Act. SEC. 306. INVOLUNTARY UQUIDATION AND REPLACEMENT OF INVEN- TORY. (a) AMENDMENT OF SECTION 22 (d) (6) ( F ) (iii).—Section 22 (d) 26 u*8.^c.*§ 22 (d) (^) (^) (iii) (relating to replacement of inventory involuntarily (6) (F)(iii).• liquidated) is hereby amended by striking out the last sentence and inserting in lieu thereof the following: "If, for any taxable year end- ing after June 30, 1950, and prior to January 1, 1953, subparagraph 26 u*s^o'§ 22 (d) (C) is applicable with respect to involuntary liquidations of goods (6)(C)".
66 STAT.] PUBLIC LAW 183—OCT. 20, 1951 485 of the same class subject to the provisions of both subparagraph (A) and this subparagraph, the involuntary liquidations of such goods sub- ject to the provisions of this subparagraph shall be considered for the purpose of subparagraph (C) as having occurred prior to the involuntary liquidations of such goods subject to the provisions of subparagraph ( A ) . F o r the purpose of this clause, and with respect to the taxable years covered by this subparagraph, the reference in subparagraph ( E ) to section 734 (d) shall be taken as a reference to section 4 5 2 ( d ) . " , ^^^c.^Ucd). (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall be applicable with respect to taxable years ending after June 30, 1950. SEC. 307. MEDICAL EXPENSES. (a) AMENDMENT OF SECTION 23 (x).—Section 23 (x) (relating 26u*s 1!%23(x) to medical, dental, etc., expenses) is hereby amended to read as follows: " ( x ) MEDICAL, DENTAL, ETC., EXPENSES.—Expenses paid during the taxable year, not compensated for by insurance or otherwise, for medical care of the taxpayer, his spouse, or a dependent specified in section 25 (b) ( 3 ) - ' g ?t.^|/«-. ^,, ^.^ " (1) If neither the taxpayer nor his spouse has attained the age (3). of 65 before the close of the taxable year, to the extent that such expenses exceed 5 per centum of the adjusted gross income; or "(2) If either the taxpayer or his spouse has attained the age of 65 before the close of the taxable year, (A) the amount of such expenses for the care of the taxpayer and his spouse, and (B) the amount by which such expenses for the care of such dependents exceed 5 per centum of the adjusted gross income. The deduction under this subsection shall not be in excess of $1,250 multiplied by the number of exemptions allowed under section 25 (b) for the taxable year (exclusive of exemptions allowed under section 25 (b) (1) (B) or ( C ) , with a maximum deduction of $2,500, except |f*^*g23826 U. S. C. § 25 (b) that the maximum deduction shall be $5,000 in the case of a joint (i). return of husband and wife under section 51 (b). The term'medical ^ufs.^c. § 51(b). care', as used in this subsection, shall include amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body (including amounts paid for accident or health insurance). The determination of whether an individual is married at any time during the taxable year shall be made in accordance with the provisions of section 51 (b) (5)." Eeu's'c'Hi (b) (b) EFFECTIVE DATE.—The amendment made by this section shall (5). be applicable with respect to taxable years beginning after December 31, 1950. SEC. 308. STANDARD DEDUCTION. (a) METHOD OF ELECTION.—Subparagraphs (A) and (B) of section 23 (aa) (3) (relating to optional standard deduction for individuals) ^u?s.c.^23(aa). are hereby amended by striking out the word "only"; and subpara- graph (C) of section 23 (aa) (3) is hereby amended to read as follows: " ( C ) If the taxpayer upon making his return fails to signify, in the manner provided by subparagraph (A) or (B), his election to take the standard deduction, such failure shall be considered his election not to take the standard deduction." (b) CHANGE OF ELECTION.—Section 23 (aa) is hereby amended by adding at the end thereof the following new paragraph: "(7) CHANGE OF ELECTION.—Under regulations prescribed by the Secretary, a change of an election to take, or not to take, the
486 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. standard deduction for any taxable year may be made after the filing of the return for such year. I f the spouse of the taxpayer filed a separate return for any taxable year corresponding, for the purposes of paragraph (4), to the taxable year of the tax- payer, the change shall not be allowed unless, in accordance with such regulations— ' ' ( A ) the spouse makes a change of election with respect to the standard deduction for the taxable year covered in such separate return, consistent with the change of election sought by the taxpayer, and " ( B ) the taxpayer and his spouse consent in writing to the assessment, within such period as may be agreed upon with the Secretary, of any deficiency, to the extent attributable to such change of election, even though at the time of the filing of such consent the assessment of such deficiency would other- wise be prevented by the operation of any law or rule of law. This paragraph shall not apply if the tax liability of the tax- payer's spouse, for the taxable year corresponding (for the pur- poses of paragraph ( 4 ) ) to the taxable year of the taxpayer, has fa u.^s.*a'5 3761. "6®^ compromised under the provisions of section 3761." (c) EFFECTIVE DATE.—The amendments made by this section shall be applicable only with respect to taxable years beginning after De- cember 31,1949. SEC. 309. EXPENDITURES IN THE DEVELOPMENT OF MINES. 63 Stat. 1^. (a) DEDUCTION or ExPENDiTUBES.^—Section 23 (relating to deduc- ^W,p'.486. • tions from gross income) is hereby amended by adding at the end 49^616. ^^' *^' ^^^' thereof the following new subsection: "(cc) DEVELOPMENT OF M I N E S . — "(1) I N GENERAL.—Except as provided in paragraph (2), all expenditures paid or incurred during the taxable year for the development of a mine or other natural deposit (other than an oil or gas well) if paid or incurred after December 31, 1950, and after me existence of ores or minerals in commercially market- able quantities has been disclosed. This subsection shall not apply to expenditures for the acc^uisition or improvement of property of a character which is subject to the allowance for depreciation 26U*s c' §23©. provided in section 23 (1), but allowances for depreciation shall be considered, for the purposes of this subsection, as expenditures. " ( 2 ) ELECTION OF TAXPAYER.—^At the election of the taxpayer, made in accordance with regulations prescribed by the Secretary, expenditures described in paragraph (1) paid or incurred during the taxable year shall be treated as deterred expenses and shall be deductible on a ratable basis as the units of produced ores or minerals benefited by such expenditures are sold. I n the case of such expenditures paid or incurred during the development stage of the mine or deposit, the election shall apply only with respect to the excess of such expenditures during the taxable year over the net receipts during the taxable year from the ores or minerals produced from such mine or deposit. T h e election under this paragraph, if made, must be for the total amount of such expendi- tures, or the total amount of such excess, as the case may be, with respect to the mine or deposit, and shall be binding for such taxable year. "(3) ADJUSTED BASIS or MINE OR DEPOSIT.—The amount of expenditures which are treated under paragraph (2) as deferred
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 487 expenses shall be taken into account in computing the adjusted basis of the mine or deposit, except t h a t such amount, and the adjustments to basis provided in section 113 (b) (1) ( J ) , shall ^''^'•" be disregarded in determining the adjusted basis of the property for the purpose of computing a deduction for depletion under section 114." iu^sc%ii4 (b) ADJUSTES) BASIS FOR DETERMINING G A I N OR Loss U P O N SALE Post',p'.m. OR EXCHANGE.—Section 113 (b) (1) (relating to adjusted basis of 26u.^s.a § 113(b) property) is hereby amended by adding at the end thereof the (^)- following subparagraph: " ( J ) for amounts allowed as deductions as deferred ,' expenses under section 23 (cc) (2) (relating to certain Arue,p.486. expenditures in the development of mines) and resulting in a reduction of the taxpayer's taxes under this chapter, but not less than the amounts allowable under such section for the taxable year and prior years." (c) TECHNICAL AMENDMENT.—Section 24 (a) (2) (relating to ^ u.*s.^c. 5 24 (a) items not deductible) is hereby amended by adding after the word (2)- ^'estate" the following: ", except expenditures for the development of mines or deposits deductible under section 23 (cc)". (d) EFFECTIVE DATE.—The amendments made bv this section shall be applicable to taxable years ending after December 31, 1950. SEC. 310. GROSS INCOME OF DEPENDENT OF TAXPAYER. (a) INCREASE I N AMOUNT OF GROSS INCOME PERMITTED.—Section 25 (b) (1) ( D ) (relating to exemptions for dependents of taxpayer) 26 u^s ^a § as (b) is hereby amended by striking out "$500" and inserting in lieu thereof (D (O). "$600". (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall be applicable only with respect to taxable years beginning after December 31, 1950. SEC 311. CREDIT FOR DIVIDENDS RECEIVED. (a) DIVIDENDS FROM FOREIGN CORPORATION ENGAGED I N TRADE OR BUSINESS I N THE UNITED STATES.—Section 26 (b) (relating to divi- 26 u*sc% 26(b) dends received credit) is hereby amended by inserting after paragraph Arue, p. m. (2) the following new paragraph: " (3) DIVIDENDS RECEIVED FROM CERTAIN FOREIGN CORPORATIONS.-^ I n the case of dividends received from a foreign corporation (other than a foreign personal holding company) which is subject to taxation under this chapter, if, for an uninterrupted period of not less than 36 months ending with the close of such foreign corpora- tion's taxable year in which such dividends are paid (or, if the corporation has not been in existence for 36 months at the close of such taxable year, for the period the foreign corporation has been in existence as of the close of such taxable year) such foreign corporation has been engaged in trade or business within the United States and has derived 50 per centum or more of its gross income from sources within the United States— " ( A ) an amount equal to 85 per centum of the dividends received out of its earnings or profits specified in clause (2) of the first sentence of section 115 ( a ) , but such amount shall ^u**|- (?• j jj^ ^^^ not exceed an amount which bears the same ratio to 85 per centum of such dividends received out of such earnings or profits as the gross income of such foreign corporation for the taxable year from sources within the United States bears to its gross income from all sources for such taxable year, and " ( B ) an amount equal to 85 per centum of the dividends received out of that p a r t of its earnings or profits specified in
488 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. clause (1) of the first sentence of section 115 (a) accumulated after the beginning of such uninterrupted period, but such amount shall not exceed an amount which bears the same ratio to 85' per centum of such dividends received out of such accumulated earnings or profits as the gross income of such foreign corporation from sources within the United States for the portion of such uninterrupted period ending at the beginning of such taxable year bears to its gross income from all sources for such portion of such uninterrupted period. F o r determination of earnings or profits distributed in any taxable iu.1:c:§ii5(b). year, see section 115 ( b ) . " ^u^scsuo ^ ^ TECHNICAL AMENDMENT.—Section 119 (a) (2) ( B ) (relating ^^ • • to rules as to source of income in the case of dividends) is hereby amended by inserting before the semicolon at the end thereof the following: "to the extent exceeding the amount which is 100/85ths of Ante, p. 487. ^jjg amouut of the credit allowable under section 26 (b) in respect of such dividends". (c) EFFECTIVE DATE.—The amendments made by this section shall be applicable only with respect to taxable years beginning after December 31,1950. SEC. 312. JOINT RETURN AFTER FIUNG SEPARATE RETURN. 26 u.*s. a § 51. (a) CHANGE OF ELECTION.—Section 51 of the Internal Revenue Code Ante,p.m. (relating to making of individual returns) is hereby amended by adding at the end mereof the following new subsection: " ( g ) J O I N T RETURN AFTER FILING SEPARATE RETURN.— "(1) I N GENERAL.—^If an individual has filed a separate return for a taxable year for which a joint return could have been made by him and his spouse under subsection (b) of this section, and the time prescribed by law for filing the return for such taxable year has expired, such individual and his spouse may nevertheless make a joint return for such taxable year. A joint return filed by the husband and wife in such a case shall constitute the return of the husband and wife for such taxable year, and all payments, credits, refunds, or other repayments made or allowed with respect to the separate return of either spouse for such taxable year shall be taken into account in determining the extent t o which the tax based upon the j oint return has been paid. " (2) PAYMENTS REQUIRED BEFORE JOINT RETURN CAN BE MADE.— A joint return can be made under paragraph (1) only if there is paid in full at or before the time of the filing of the joint return— " ( A ) all amounts previously assessed with respect to either spouse for such taxable year; " ( B ) all amounts shown as the tax by either spouse upon his separate return for such taxable year; and " ( C ) any amount determined, at the time of the filing of the joint return, as a deficiency with respect to either spouse for such taxable year if, prior to such filing, a notice under 53 Stat. 82. section 272 ( a ) of such deficiency h a s been mailed. 26 U. 8. C. §272 (a). «/o\ rr* * • • j. j. i. " ( 3 ) T I M E FOR MAKING JOINT RETURN.—^A joint return cannot be made under paragraph (1)— " ( A ) after the expiration of three years from the last date prescribed by law for filing the return for such taxable year (determined without regard t o any extension of time granted to either spouse); " ( B ) after there has been mailed to either spouse, with respect to such taxable year, a notice of deficiency under section 272 ( a ) , if the spouse, as to such notice, files a petition
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 489 with the Tax Court of the United States within the time prescribed in such section; "(C) after either spouse has commenced a suit in any court for the recovery of any part of the tax for such taxable year; or " ( D ) after either spouse has entered into a closing agree- ment under section 3760 with respect to such taxable year, ^?s.c^§37<io. or after any civil or criminal case arising against either spouse with respect to such taxable year has been com- promised under section 3761. "(4) El^CTTIONS MADE IN SEPARATE RETURN. I f a joiut r e t u m is made under this subsection, any election (other than the elec- tion to file a separate return) made by either spouse in his sepa- rate return for such taxable year with respect to the treatment of any income, deduction, or credit of such spouse shall not be changed in the making of the joint retum where such election would have been irrevocable if the joint return had not been made. "(5) DEATH OF SPOUSE.—If a joint return is made under this subsection after the death of either spouse, such return with respect to the decedent can be made only by his executor or administrator. "(6) ADDITIONS TO THE TAX.—^Where the amount shown as the tax by the husband and wife on a joint return made under this subsection exceeds the aggregate of the amounts shown as the tax upon the separate return of each spouse— " ( A ) Negligence.—If any part of such excess is attribu- table to negligence or intentional disregard of rules and regu- lations (but without intent to defraud) at the time of the making of such separate return, then 5 per centum of the total amount of such excess shall be assessed, collected, and paid in the same manner as if it were a deficiency; " ( B ) Fraud.—If any part of such excess is attributable to fraud with intent to evade tax at the time of the making of such separate return, then 50 per centum of the total amount of such excess shall be so assessed, collected, and paid, in lieu of the 60 per centum addition to the tax pro- vided in section 3612 (d) ( 2 ) . i uU.VS.^ nC. § 3612 26 "(7) K U L E S FOR APPLICATION OF SECTIONS 27 5 AND 291.—^FoF (d)(2), the purposes of section 275 (relating to period of limitations upon assessment and collection), and for the purposes of section 291 ^ u**s^c^§§ 275 (relating to delinquent returns), a joint return made under this 291. " ' subsection shall be deemed to have been filed— " ( A ) where both spouses filed separate returns prior to making the joint return—on the date the last separate re- turn was filed (but not earlier than the last date prescribed by law for filing the return of either spouse); " ( B ) where only one spouse filed a separate return prior to the making of the joint return, and the other spouse had less than $600 of gross income for such taxable year—on the date of the filing of such separate return (but not earlier than the last date prescribed by law for the filing of such separate r e t u r n ) ; or " ( C ) where only one spouse filed a separate return prior to the making of the joint return, and the other spouse had gross income of $600 or more for such taxable year—on the date of the filing of such joint return. "(8) RULE FOR APPLICATION OF SECTION 322.—^For the purposes of section 322 (relating to refunds and credits), a joint return S?**!• *^-.o„. ' ' * 26 U. D. O. 8 ail.
490 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. made under this subsection shall be deemed to have been filed on the last date prescribed by law for filing the return for such tax- able year (determined without regard to any extension of time granted to either spouse). " ( 9 ) ADDITIONAL TIME roR ASSESSMENT.—If a joint return is made under this subsection, the period of limitations provided in 26^u^*s^^c i§ 275, sections 275 and 276 on the making of assessments and the begin- 276. ' ning of distraint or a proceeding in court for collection shall with po«<,p.497. respect to such return include one year immediately after the date of the filing of such joint return (computed without regard to the provisions of paragraph (7) of this subsection). " ( 1 0 ) RULJE FOR APPLICATION OF SECTION 3809 ( a ) . F o r t h e pUT- 26u*s' c^'i3809 (a) poscs of scctiou 3809 (a) (relating to criminal penalties in the case of fraudulent returns) the term 'return' includes a separate re- turn filed by a spouse with respect to a taxable year for which a joint return is made under this subsection after the filing of such separate return." (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall be applicable only with respect to taxable years beginning after December 31,1950. SEC. 313. MUTUAL SAVINGS BANKS, BUILDING AND LOAN ASSOCIA- TIONS, COOPERATIVE BANKS. §u.*s.c.§ioi. (^) MUTUAL SAVINGS BANKS.—Section 101 ^2) (relating to exemp- tion from tax of mutual savings banks) is hereoy repealed. (b) BUILDING AND LOAN ASSOCIATIONS AND COOPERATIVE BANKS.— Section 101 (4) (relating to exemption from tax of building and loan associations and cooperative banks) is hereby amended to read as follows: "(4) Credit unions without capital stock organized and oper- ated for mutual purposes and without profit; and corporations or associations without capital stock organized prior to September 1, 1951, and operated for mutual purposes and without profit for the purpose of providing reserve funds for, and insurance of, shares or deposits in— " (A) domestic building and loan associations, " ( B ) cooperative banks without capital stock organized and operated for mutual purposes and without profit, or " ( C ) mutual savings banks not having capital stock rep- resented by shares;". 26U*s:o*§464. (c) EXEMPTIONS FROM EXCESS PROFITS TAX.—Section 454 (corpora- tions exempt from the excess profits tax) is hereby amended by adding at the end thereof the following: " (h) Any mutual savings bank not having capital stock represented by shares, any domestic building and loan association (as defined in Post, p. 491. section 3797 (a) (19)), and any cooperative bank without capital stock organized and operated for mutual purposes and without profit." (d) FEDERAL SAVINGS AND LOAN ASSOCIATIONS.—Section 5 (h) of the Home Owners' Loan Act of 1933, as amended (12 U. S. C. 1464 48Stat. 132. ( h ) ) , is hereby amended by striking out " d a t e ) " and inserting in lieu thereof the following: "date, and except, in the case of taxable years beginning after December 31, 1951, income, war-profits, and excess- profits taxes)". 26us*c%23(k)(i) (®) BAD DEBT KESERVES.—Section 23 (k) (1) (relating to deduction from gross income of bad debts) is hereby amended by adding at the end thereof the following: "In the case of a mutual savings bank not having capital stock represented by shares, a domestic building and loan association, and a cooperative bank without capital stock organ-
65 STAT.] PUBLIC LAW 183—OCT. 20, 1961 491 ized and operated for mutual purposes and without profit, the reasonable addition to a reserve for bad debts shall be determined with due regard to the amount of the taxpayer's surplus or bad debt reserves existing at the close of December 31,1951. I n the case of a taxpayer described in the preceding sentence, the reasonable addition to a reserve for bad debts for any taxable year shall in no case be less than the amount determined by the taxpayer as the reasonable addi- tion for such year; except that the amount determined by the taxpayer under this sentence shall not be greater than the lesser of (A) the amount of its net income for the taxable year, computed without regard to this subsection, or (B) the amount by which 12 per centum of the total deposits or withdrawable accounts of its depositors at the close of such year exceeds the sum of its surplus, undivided profits, and reserves at the beginning of the taxable year." (f) DIVIDENDS PAID TO DEPosrroRs.—Section 23 (r) (relating to ^?|^|-^A' 26U. S. C. §23 (r). the deduction from gross income of certain dividends paid by banking corporations) is hereby amended to read as follows: " ( r ) DIVIDENDS PAm BY BANKING CORPORATIONS.— t: "(1) I n the case of mutual savings banks, cooperative banks, and domestic building and loan associations, amounts paid to, or credited to the accounts of, depositors or holders of accounts as dividends on their deposits or withdrawable accounts, if such ' amounts paid or credited are withdrawable on demand subject only to customary notice of intention to withdraw. IP "(2) F o r deduction of dividends paid by certain other banking corporations, see section 121." ssstat.se. (g) DEDUCTION FOR REPAYMENT OP CERTAIN LOANS.—Section 23 Mstat.i?.'*'^^ (relating to deductions from gross income) is hereby amended by ^^e,%p'^^' ^^ adding at the end thereof the following: 490. ' ' " ( d d ) REPAYMENT BY MUTUAL SAVINGS BANKS, ETC., OF CERTAIN ^"^'-PP-^^O.SIS. LOANS.—In the case of a mutual savings bank not having capital stock represented by shares, a domestic building and loan association, or a cooperative bank without capital stock organized and operated for mutual purposes and without profit, amounts paid by the taxpayer during the taxable year in repayment of loans made prior to September 1, 1951, by (1) the United States or any agency or instrumentality thereof which is wholly owned by the United States, or (2) any mutual fund established under the authority of the laws of any State." (h) DEFINITION OP BANK.—Section 104 (a) (relating to definition of 53 stat. 36. i U. S. C. § 104 (a). bank) is hereby amended by inserting at the end thereof the following: "Such term also means a domestic building and loan association." (i) DEFINITION OP DOMESTIC BUILDING AND LOAN ASSOCIATION.— Section 3797 (a) (relating to definitions for the purposes of the Inter- 63 stat.469. nal Revenue Code) is hereby amended by adding at the end thereof the ^ ^" ^' ^ ^^^^^ ^*^' following new p a r a g r a p h : "(19) DOMESTIC BUILDING AND LOAN ASSOCIATION.—^The term ^domestic building and loan association' means a domestic build- ing and loan association, a domestic savings and loan association, and a Federal savings and loan association, substantially all the business of \7hicl1 is confined to making loans to members." (j) EFFECTIVL DATE.—The amendments made by this section shall be applicable only with respect to taxable years beginning after December 31,1951. SEC. 314. INCOME TAX TREATMENT OF EXEMPT COOPERATIVES. (a) AMENDMENT OP SECTION 101 (12).--Section 101 (12) is hereby S?T**^-??•.,«,,... 1 f o Ti Jo U, o. C 5101 (12). amended as follows: (1) By inserting after "(12) " t h e folio wing: " ( A ) " .
492 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. ^2) By inserting after such paragraph the following: " ( B ) An organization exempt from taxation under the pro- visions of subparagraph (A) shall be subject to the taxes imposed Ante, pp. 466, 468, by sections 13 and 15, or section 117 (c) ( 1 ) , except that in 470. Poa, p. 518. computing the net income of such an organization there shall be allowed as deductions from gross income (in addition to other 63 Stat. 12. 26U.S. C. §23. deductions allowable under section 23)— Ante, p p . 485, 486, "(i) amounts paid as dividends during the taxable" year 490, 491. Post, pp. 499,515. upon its capital stock, and " (ii) amounts allocated during the taxable year to patrons with respect to its income not derived from patronage (whether or not such income was derived during such taxable year) whether paid in cash, merchandise, capital stock, revolv- ing fund certificates, retain certificates, certificates of indebtedness, letters of advice, or in some other manner that discloses to each patron the dollar amount allocated to him. Allocations made after the close of the taxable year and on or before the fifteenth day of the ninth month following the close of such year shall be considered as made on the last day of such taxable year to the extent the allocations are attribu- table to income derived before the close of such year. Patronage dividends, refunds, and rebates to patrons with respect to their patronage in the same or preceding years (whether paid in cash, merchandise, capital stock, revolving fund certificates, retain certificates, certificates of indebtedness, letters of advice, or in some other manner that discloses to each patron the dollar amount of such dividend, refund, or rebate) shall be taken into account in computing net income in the same manner as in the case of a cooperative organization not exempt under subpara- graph ( A ) . Such dividends, refunds, and rebates made after the close of the taxable year and on or before the 15th day of the ninth month following the close of such year shall be considered as made on the last day of such taxable year to the extent the dividends, refunds, or rebates, are attributable to patronage occurring before the close of such year." (b) TECHNICAL AMENDMENTS.— 53 Stat. 33. (1) Section 101 is hereby amended by striking out "Except as 26U.S.C.§101. .4m«e,pp.490,491. provided in supplement U " and inserting in lieu thereof the fol- Supra. lowing: "Except as provided in paragraph (12) ( B ) and in sup- 57 Stat. 149. plement U " . 26 U. S. 0 . 5§ 421- 424. (2) The last sentence of section 101 is hereby amended by Ante, p. 468. Post, pp. 610,518. striking out "Notwithstanding supplement U " and inserting in lieu thereof "Notwithstanding paragraph (12) (B) and supplement U". 63 Stat. 65. (c) INFORMATION RETURNS.—Section 148 (relating to information 26U.S. O. §148. by corporations) is hereby amended by adding at the end thereof the following: " ( f ) PATRONAGE DIVIDENDS.—Any corporation allocating amounts as patronage dividends, rebates, or refunds (whether in cash, mer- chandise, capital stock, revolving fund certificates, retain certificates, certificates of indebtedness, letters of advice, or in some other manner that discloses to each patron the amount of such dividend, refund, or rebate) shall render a correct return stating (1) the name and address of each patron to whom it has made such allocations amounting to $100 or more during the calendar year, and (2) the amount of such allocations to each patron. If required by the Secretary, any such corporation shall render a correct return of all patronage dividends, rebates, or refunds made during the calendar year to its patrons. This subsection shall not apply in the case of any corporation (includ-
66 STAT.] PUBLIC LAW 183—OCT. 20, 1951 493 ing any cooperative or nonprofit corporation engaged in rural electri- fication) exempt from taxation under section 101 (10) or (11) or in 26U. 63 Stat. 33. S. C. §101. the case of any corporation subject to a tax imposed by supplement G." 53 Stat. 71. 26 U. 8. C. §§ 201- (d) EFFECTIVE DATE.—The amendments made by subsections (a) 210. and (b) of this section shall be applicable only with respect to taxable Ante, pp. 466,467. Post, pp. 507, 508. years beginning after December 31, 1951. The amendment made by subsection (c) shall be applicable to the calendar year 1951 and subsequent calendar years. SEC. 315. SURTAX ON CORPORATIONS IMPROPERLY ACCUMULATING SURPLUS. (a) LONG-TERM CAPITAL GAINS.—Section 102 (d) (1) (relating to 53 Stat. 35. dennition of section 102 net income) is hereby amended by adding at 26U.S.C. §102. the end thereof the following new subparagraph: " ( D ) Long-Term Capital Gains.—The excess of the net long-term capital gain for the taxable year over the net short- term capital loss for such year, minus the taxes imposed by this chapter attributable to such excess. The taxes attribu- table to such excess shall be an amount equal to the difference between (i) the taxes imposed by this chapter (except the tax imposed by this section) for such year and (ii) such taxes computed for such year without including such excess in net income." (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall be applicable only with respect to taxable years beginning after December 31,1950. SEC. 316. ELECTION AS TO RECOGNITION OF GAIN IN CERTAIN COR- PORATE LIQUIDATIONS. (a) AMENDMENT OF SECTION 112 (b) (7).—Section 112 (b) (7) 93158 Stat. 40; 64 Stat. (relating to recognition of gain in certain corporate liquidations) is 26 U. S. C. § 112 (b) hereby amended by striking out in subparagraph ( A ) (ii) "1951" and (7). by inserting in lieu thereof "1951 or 1952". (b) BASIS OF PROPERTY.—Section 113 (a) (18) (relating to basis of 53 Stat. 44. 26 U. S. C. § 113 (a) property received in certain corporate liquidations) is amended by (18). striking out "the Revenue Act of 1950" and by inserting in lieu thereof "any revenue act". (c) EFFECTIVE DATE.—^The amendments made by this section shall be applicable only to taxable years ending after December 31,1951. SEC 317. CERTAIN DISTRIBUTIONS OF STOCK ON REORGANIZATION. (a) DISTRIBUTIONS NOT IN LIQUIDATION.—Section 112 (b) (relating 53 Stat. 37. 2 6 U . S . C . § 112(b). to nonrecognition of gain or loss in the case of certain exchanges) is /Supra. hereby amended by adding at the end thereof the following new paragraph: "(11) DISTRIBUTION OF STOCK NOT I N LIQUIDATION.—^If there is distributed, in pursuance of a plan of reorganization, to a share- holder of a corporation which is a party to the reorganization, stock (other than preferred stock) in another corporation which is a party to the reorganization, without the surrender by such shareholder of stock, no gain to the distributee from the receipt of such stock shall be recognized unless it appears that (A) any corporation which is a party to such reorganization was not intended to continue the active conduct of a trade or business after such reorganization, or ( B ) the corporation whose stock is distributed was used principally as a device for the distribution of earnings and profits to the snareholders of any corporation a party to the reorganization." (b) BASIS OP STOCK.—Section 113 (a) (relating to unadjusted basis 63 Stat. 40. 26U. S. C. §113(a). for determining gain or loss) is hereby amended by adding at the end Ante, p. 483. Post, p. 496. thereof the following new paragraph:
494 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. "(23) TAX-FREE DISTRIBUTIONS.—If the property consists of stock distributed after the date of the enactment of the Revenue Act of 1951 to a taxpayer in connection with a transaction de- Ante,pA9i. scribed in section 112 (b) (11) (hereinafter in this paragraph called 'new stock'), or consists of stock in respect of which such dis- tribution was made (hereinafter in this paragraph called 'old stock'), then the basis of the new stock and of the old stock, respec- tively, shall, in the shareholder's hands, be determined by allocat- ing between the old stock and the new stock the adjusted basis of the old stock; such allocation to be made under regulations pre- scribed by the Secretary." (c) EFFECTIVE DATE.—The amendments made by this section shall be applicable with respect to taxable years ending after the date of the enactment of this Act, but shall apply only with respect t o distribu- tions of stock made after such date. SEC. 318. GAIN FROM SALE OR EXCHANGE OF TAXPAYER'S RESIDENCE. (a) NoNREcoGNinoN OF GAIN I N CERTAIN CASES.—Section 112 (re- 26u*s(J§ii2 lating to recognition of gain or loss) is hereby amended by adding at Ante.p.m. the end thereof the following new subsection: Poj(,p.496. °"" " '"° " ( n ) G A I N FROM SALE OR EXCHANGE OF RESIDENCE.— "(1) NONRECOGNITION OF GAIN.—^If property (hereinafter in this subsection called 'old residence') used by the taxpayer as his principal residence is sold by him and, within a period beginning one year prior to the date of such sale and ending one year after such date, property (hereinafter in this subsection called 'new residence') is purchased and used by the taxpayer as his principal residence, gain (if any) from such sale shall be recognized only to the extent that the taxpayer's selling price of the old residence exceeds the taxpayer's cost of purchasing the new residence. " (2) RULES FOR APPLICATION OF SUBSECTION.—For the purposes of this subsection: " ( A ) A n exchange by the taxpayer of his residence for other property shall be considered as a sale of such residence, and the acquisition of a residence upon the exchange of property shall be considered as a purchase of such residence. " ( B ) I f the taxpayer's residence (as a result of its destruc- tion in whole or in part, theft, or seizure) is compulsorily or involuntarily converted into property or into money, such destruction, theft, or seizure shall be considered as a sale of the residence; and if the residence is so converted into prop- erty which is used by the taxpayer as his residence, such conversion shall be considered as a purchase of such property by the taxpayer. " ( C ) I n the case of an exchange or conversion described in subparagraph (A) or ( B ) , in determining the extent to which the selling price of the old residence exceeds the taxpayer's - :• .^-- cost of purchasing the new residence, the amount realized , by the taxpayer upon such exchange or conversion shall be considered the selling price of the old residence. " ( D ) A residence any part of which was constructed or reconstructed by the taxpayer shall be considered as pur- chased by the taxpayer. I n determining the taxpayer's cost of purchasing a residence, there shall b e included only so much of his cost as is attributable to the acquisition, con- struction, reconstruction, and improvements made which are properly chargeable to capital account, during the period specified in paragraph (1). ^^
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 495 " ( E ) I f a residence is purchased by the taxpayer prior to the date of his sale of the old residence, the purchased resi- dence shall not be treated as his new residence if sold or other- wise disposed of by him prior to the date of the sale of the old residence. " ( F ) I f the taxpayer, during the period described in para- raph (1), purchases more than one residence which is used Ante.p.iOi. f y him as his principal residence at some time within one year after the date of the sale of the old residence, only the last of such residences so used by him after the date of such sale shall constitute the new residence. If within the one year referred to in the preceding sentence property used by the taxpayer as his principal residence is destroyed, stolen, seized, requi- sitioned, or condemned, or is sold or exchanged under threat or imminence thereof, then for the purposes of the preceding sentence such one year shall be considered as ending with the date of such destruction, theft, seizure, requisition, condem- nation, sale, or exchange. " ( G ) I n the case of a new residence the construction of which was commenced by the taxpayer prior to the expira- tion of one year after the date of the sale of the old residence, the period specified in paragraph ( 1 ) , and the one year referred to in subparagraph ( F ) of this paragraph, shall be considered as including a period of 18 months beginning with the date of the sale of the old residence. "(3) LIMITATION.—The provisions of paragraph (1) shall not be applicable with respect to the sale of the taxpayer's residence if within one year prior to the date of such sale the taxpayer sold at a gain other property used by him as his principal residence, and any part of such gain was not recognized by reason of the pro- visions of paragraph (1). For the purposes of this paragraph, the destruction, theft, seizure, requisition, or condemnation of prop- erty or the sale or exchange of property under threat or imminence thereof, shall not be considered as a sale of such property. " ( 4 ) BASIS OF NEW RESIDENCE.—^Where the purchase of a new residence results, under paragraph (1), in the nonrecognition of gain upon the sale of an old residence, in determining the adjusted basis of the new residence as of any time following the sale of the old residence, the adjustments to basis shall include a reduction by an amount equal to the amount of the gain not so recognized upon the sale of the old residence. For this purpose, the amount of the gain not so recognized upon the sale of the old residence includes only so much of such gain as is not recognized by reason of the cost, up to such time, of purchasing the new residence. " ( 5 ) TENANT-STOCKHOLDER I N A COOPERATIVE APARTMENT CORPO- RATION.—^For the purposes of this subsection, section 113 (b) (1) ( K ) , and section 117 (h) (7), references to property used by the ^o»«,p.497. taxpayer as his principal residence, and references to the residence of a taxpayer, shall include stock held by a tenant-stockholder (as defined in section 23 (z) ( 2 ) ) in a cooperative apartment (as ^^fj^g^c' s 23 cz) defined in such section) if— (2). " ' ' " ( A ) in the case of stock sold, the apartment which the taxpayer was entitled to occupy as such stockholder was used by him as his principal residence, and " ( B ) in the case of stock purchased, the taxpayer used as his principal residence the apartment which he was entitled to occupy as such stockholder. " ( 6 ) HUSBAND AND WIFE.—^If the taxpayer and his spouse, in accordance with regulations which shall be prescribed by the Sec- 76100 O - 52 (PT. I) - 34
496 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. retary pursuant to this paragraph, consent to the application of subparagraph (B) of this paragraph, then— " ( A ) for the purposes of this subsection, the words 'tax- payer's selling price of the old residence' shall mean the sell- ing price (of the taxpayer, or of the taxpayer and his spouse) of the old residence, and the words 'taxpayer's cost of purchas- ing the new residence' shall mean the cost (to the taxpayer, his spouse, or both) of purchasing the new residence (whether held by the taxpayer, his spouse, or the taxpayer and his spouse); and " ( B ) so much of the gain upon the sale of the old residence as is not recognized solely by reason of this paragraph, and so much of the adjustment under paragraph (4) to the basis of the new residence as results solely from this paragraph, shall be allocated between the taxpayer and his spouse as provided in such regulations. This paragraph shall apply only if the old residence and the new residence are each used by the taxpayer and his spouse as their principal residence. I n case the taxpayer and his spouse do not consent to the application of subparagraph (B) of this paragraph, then the recognition of gain upon the sale of the old residence shall be determined under this subsection without regard to the rules provided in this paragraph. "(7) STATUTE OF LIMITATIONS.—^If the taxpayer during a taxable year sells at a gain property used by him as his principal residence, then— " ( A ) the statutory period for the assessment of any deficiency attributable to any part of such gain shall not expire prior to the expiration of three years from the date the Secretary is notified by the taxpayer (in such manner as the Secretary may by regulations prescribe) of— "(i) the taxpayer's cost of purchasing the new resi- dence which the taxpayer claims results in nonrecog- nition of any part of such gain, "(ii) the taxpayer's intention not to purchase a new residence within the period specified in paragraph (1), or "(iii) a failure to make such purchase within such period; and " ( B ) such deficiency may be assessed prior to the expira- tion of such three-year period notwithstanding the provisions of any other law or rule of law which would otherwise prevent such assessment." (b) TECHNICAL AMENDMENTS.— 26U*s.^c. jn2(f). (1) Section 112 (f) (relating to involuntary conversions) is hereby amended by adding at the end thereof the following: "This subsection shall not apply, in the case of property used by the taxpayer as his principal residence, if the destruction,'theft, seizure, requisition, or condemnation of the residence, or the sale or exchange of such residence under threat or imminence thereof, occurred after December 31, 1950." 26u*s^c §ii3(a) (^) Section 113 (a) (9) (relatingtobasisof property acquired (9). • • • as a result of involuntary conversions) is hereby amended by adding at the end thereof the following: "This paragraph shall not apply in respect of property acquired as a result of a compul- sory or involuntary conversion of property used by the taxpayer as his principal residence if the destruction, theft, seizure, requi- sition, or condemnation of such residence, or the sale or exchange of such residence under threat or imminence thereof, occurred after December 31,1950."
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 497 (3) Section 113 (b) (1) (relating to adjusted basis of property) 53 Stat. 44. 26 U. S. C. § 113 (b) is hereby amended by adding at the end thereof the following new (1). Ante, p. 487. subparagraph: " ( K ) in the case of a residence the acquisition of which resulted, under the provisions of section 112 ( n ) , in the non- Ante, p. 494. recognition of any part of the gain realized upon the sale, exchange, or involuntary conversion of another residence, to the extent provided in section 112 (n) (4)." 53 Stat. 52. (4) Section 117 (h) (relating to determination of holding 2 6 U . S . C . § 117(h). period) is hereby amended by adding at the end thereof the following new paragraph: "(7) In determining the period for which the taxpayer has held a residence, the acquisition of which resulted under section 112 (n) in the nonrecognition of any part of the gain realized on the sale, exchange, or involuntary conversion of another residence, there shall be included the period for which such other residence had been held as of the date of such sale, exchange, or involuntary conversion." (5) Section 276 (relating to period of limitation upon assess- 53 Stat. 87. 26U.S.C.i 276. ment and collection) is hereby amended by adding at the end thereof the following: "(e) G A I N U P O N SALE OR EXCHANGE OF EESIDENCE.—^In the case of a deficiency described in section 112 (n) (7), such deficiency may be Ante, p. 494. assessed at any time prior to the expiration of the time therein provided." (c) EFFECTIVE DATE.—The amendments made by this section shall be applicable to taxable years ending after December 31,1950, but the provisions of section 112 (n) (1) and (6) of the Internal Revenue Code shall apply only with respect to residences sold (within the meaning of such section) after such date. SEC. 319. PERCENTAGE DEPLETION. (a) ALLOWANCE OF PERCENTAGE DEPLETION.—So much of paragraph (4) of section 114 (b) as precedes the last sentence of subparagraph 58 Stat. 44. 26 U. S. C. § 114 (b) (A) is hereby amended to read as follows: (4). " (4) FERCENTAGE DEPLETION FOR COAL AND METAL MINES AND FOR CERTAIN OTHER MINES AND NATURAL MINERAL DEPOSITS. " ( A ) I N GENERAL.—The allowance for depletion under section 23 (m) in the case of the following mines and other 53 Stat. 14. 26U. S. C. §23(m). natural deposits shall be— " ( i ) in the case of saiid, gravel, slate, stone (including pumice and scoria), brick and tile clay, shale, oyster shell, clam shell, granite, marble, sodium chloride, and, if from brine wells, calcium chloride, magnesium chloride, and bromine, 5 per centum, "(ii) in the case of coal, asbestos, brucite, dolomite, magnesite, perlite, wollastonite, calcium carbonates, and magnesium carbonates, 10 per centum, " (iii) in the case of metal mines, aplite, bauxite, fluor- spar, flake graphite, vermiculite, beryl, garnet, feldspar, mica, talc (including pyrophyllite), lepidolite, spodu- mene, barite, ball clay, sagger clay, china clay, phosphate rock, rock asphalt, trona, bentonite, gilsonite, thenardite, borax, fuller's earth, tripoli, refractory and fire clay, quartzite, diatomaceous earth, metallurgical grade lime- stone, chemical grade limestone, and potash, 15 per centum, and "(iv) in the case of sulfur, 23 per centum,
498 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. of t h e gross income from t h e p r o p e r t y d u r i n g t h e t a x a b l e y e a r , e x c l u d i n g f r o m such gross income a n a m o u n t equal t o a n y r e n t s o r r o y a l t i e s p a i d o r i n c u r r e d by t h e t a x p a y e r i n respect of t h e p r o p e r t y . " (b) T E C H N I C A L A M E N D M E N T . — S o m u c h of p a r a g r a p h (2) of section 53 Stat45. ^^^^^^ 114 ( b ) as precedes "discovered b y t h e t a x p a y e r a f t e r F e b r u a r y 28, (2). ' ' 1913" is h e r e b y a m e n d e d t o r e a d as f o l l o w s : " ( 2 ) DISCOVERY VALUE I N T H E CASE o r M I N E S . — I n t h e case of mines (except m i n e s in respect of w h i c h p e r c e n t a g e d e p l e t i o n i s Ante,pA97. allowable u n d e r p a r a g r a p h ( 4 ) of t h i s s u b s e c t i o n ) " . (c) EFFECTIVE D A T E . — T l i e a m e n d m e n t s m a d e b y t h i s section shall be applicable only w i t h respect t o t a x a b l e v e a r s b e g i n n i n g a f t e r December 3 1 , 1950. SEC. 320. REDEMPTION OF STOCK TO PAY DEATH TAXES. (a) A M E N D M E N T OF S E C T I O N 115 ( g ) ( 3 ) . — S e c t i o n 115 ( g ) (3) 26 u^s ^' § 115 (g) ( r e l a t i n g t o r e d e m p t i o n of stock to p a y d e a t h t a x e s ) is h e r e b y a m e n d e d (3). ' ' ' b y s t r i k i n g o u t "50 p e r c e n t u m of t h e value of t h e n e t e s t a t e " a n d i n s e r t i n g i n lieu thereof "35 p e r c e n t u m of t h e v a l u e of t h e g r o s s estate". ( b ) EFFECTIVE D A T E . — T h e a m e n d m e n t m a d e b y subsection ( a ) shall be a p p l i c a b l e t o t a x a b l e y e a r s e n d i n g on o r a f t e r t h e d a t e of t h e e n a c t m e n t of t h i s A c t , b u t shall a p p l y only t o a m o u n t s d i s t r i b u t e d on o r after such d a t e . SEC. 321. EARNED INCOME FROM SOURCES WITHOUT THE UNITED STATES. (a) E X C L U S I O N F R O M GROSS I N C O M E . — S e c t i o n 116 ( a ) ( r e l a t i n g to ^u.^s'.c!§ii6(a). e a r n e d income from sources w i t h o u t t h e U n i t e d S t a t e s ) is h e r e b y a m e n d e d by s t r i k i n g o u t p a r a g r a p h s (1) a n d (2) a n d i n s e r t i n g in lieu thereof t h e f o l l o w i n g : " ( 1 ) B O N A FIDE RESIDENT OF FOREIGN C O U N T R Y . — I n t h e case of an i n d i v i d u a l citizen of t h e U n i t e d S t a t e s , w h o establishes t o t h e satisfaction of t h e S e c r e t a r y t h a t h e h a s been a b o n a fide r e s i d e n t of a foreign c o u n t r y o r c o u n t r i e s f o r a n u n i n t e r r u p t e d p e r i o d w h i c h includes a n e n t i r e t a x a b l e y e a r , a m o u n t s received from sources w i t h o u t t h e U n i t e d S t a t e s (except a m o u n t s p a i d by t h e U n i t e d S t a t e s o r a n y agency thereof) if such a m o u n t s constitute ^u^s.^c. § 116 (a) e a r n e d income ( a s d e n n e d i n p a r a g r a p h ( 3 ) ) a t t r i b u t a b l e t o (3). such p e r i o d ; b u t such i n d i v i d u a l shall n o t be allowed as a deduc- t i o n from his g r o s s income a n y d e d u c t i o n s p r o p e r l y allocable t o o r c h a r g e a b l e a g a i n s t a m o u n t s excluded from gross income u n d e r this paragraph. " (2) P R E S E N C E I N FOREIGN COUNTRY FOR 17 M O N T H S . — I n t h e case of a n i n d i v i d u a l citizen of t h e U n i t e d S t a t e s , w h o d u r i n g a n y p e r i o d of 18 consecutive m o n t h s is p r e s e n t i n a f o r e i g n c o u n t r y o r countries d u r i n g a t least 510 full d a y s i n such p e r i o d , a m o u n t s received f r o m sources w i t h o u t t h e U n i t e d S t a t e s (except a m o u n t s p a i d b y t h e U n i t e d S t a t e s o r a n y agency t h e r e o f ) if such a m o u n t s constitute e a r n e d income ( a s defined i n p a r a g r a p h ( 3 ) ) a t t r i b u t - able t o such p e r i o d ; b u t such i n d i v i d u a l shall n o t be allowed as a d e d u c t i o n f r o m h i s gross income a n y d e d u c t i o n s p r o p e r l y allocable t o o r c h a r g e a b l e a g a i n s t a m o u n t s excluded from gross income u n d e r t h i s p a r a g r a p h , " 26U.to^.^§i62i(a) ( b ) WITHHOLDING OF T A X ON_WAGES.—Section 1621 ( a ) ( 8 ) ( A ) (8) (A). ( r e l a t i n g t o definition of w a g e s ) is h e r e b y a m e n d e d t o r e a d a s f o l l o w s : " ( A ) f o r services f o r a n e m p l o y e r ( o t h e r t h a n t h e U n i t e d S t a t e s o r a n y agency t h e r e o f ) p e r f o r m e d i n a foreign c o u n t r y by a citizen of t h e U n i t e d S t a t e s , if a t t h e t i m e of t h e p a y - m e n t of such r e m u n e r a t i o n t h e e m p l o y e r i s r e q u i r e d b y t h e l a w of a n y f o r e i g n c o u n t r y t o w i t h h o l d income t a x u p o n such
65 STAT. PUBLIC LAW 183—OCT. 20, 1951 499 remuneration, or it is reasonable to believe that such remuner- ation will be excluded from gross income under the provisions Ante, p. 498. of section 116 (a) (1) or (2), or", (c) EFFECTIVE DATES.—^The amendment made by subsection (a) shall be applicable to taxable years beginning after December 31,1950. The amendment made by subsection (b) shall be applicable with respect to wages paid on or after January 1,1952. SEC. 322. CAPITAL GAINS AND LOSSES. (a) TREATMENT or LONG-TERM CAPITAL GAINS AND LOSSES.— (1) AMENDMENT OF SECTION 23.—Section 23 (relating to deduc- 53 Stat. 12. 26U. S. C. §23. tions from gross income) is hereby amended by adding at the end Ante, pp. 486, 486, 490, 491. thereof the following new subsection: PoH, p. 615. "(ee) LONG-TEKM CAPITAL GAINS.—^In the case of a taxpayer other than a corporation, the deduction for long-term capital gains provided in section 117 ( b ) . " (2) AMENDMENT OF SECTION 117 (b).—Section 117 (b) (relating S3 Stat. 61. 2 6 U . S . C . § 117(b). to treatment of long-term capital gains and losses) is hereby amended to read as follows: " ( b ) DEDUCTION FROM GROSS INCOME.—^In the case of a taxpayer other than a corporation, if for any taxable year the net long-term capital gain exceeds the net short-term capital loss, 50 per centum of the amount of such excess shall be a deduction from gross income. I n the case of an estate or trust, the deduction shall be computed by exclud- ing the portion (if a n y ) , of the ^ i n s for the taxable year from sales or exchanges of capita;l assets, which, under section 162 (b) or (c), is 53 Stat. 66. 22 U. S. G. § 162. includible by the income beneficiaries as gain derived from the sale or exchange of capital assets." 53 Stat. 61. (b) Ai/TERNATivE TAX.—Section 117 (c) (2) (relating to alternative 26 U. S. C. § 117 (c) tax) is hereby amended to read as follows: (2). "(2) OTHER TAXPAYERS.—^If for any taxable year the net long- term capital gain of any taxpayer (other than a corporation) exceeds the net short-term capital loss, there shall be levied, col- lected, and paid, in lieu of the tax imposed by sections 11 and 12 53 Stat. 5. 26U. S. C.§§11, 12. (or, in the case of certain tax-exempt trusts, in lieu of the tax Ante, pp. 459, 461, imposed by section 421), a tax determined as follows, if and only 480. 64 Stat. 948. if such tax is less than the tax imposed by such sections: 26U. S. C.§421. Ante, p. 468. " ( A ) A partial tax shall first be computed upon the net Post, p. 610. income reduced by an amount equal to 50 per centum of such excess, at the rates and in the manner as if this subsection had not been enacted. " ( B ) There shall then be ascertained an amount equal to 25 per centum of the excess of the net long-term capital gain over the net short-term capital loss. In the case of any tax- able year beginning after October 31, 1951, and before November 1, 1953, there shall be ascertained, in lieu of the amount computed under the preceding sentence, an amount equal to 26 per centum of the excess of the net long-term capital gain over the net short-term capital loss. (C) The total tax shall be the partial tax computed under subparagraph (A) plus the amount computed under subpara- graph (B).^' (c) TECHNICAL AMENDMENTS.— (1) AMENDMENT OF SECTION 22 (n).—Section 22 (n) (relating 68 Stat. 236. 26 U. S. C. 5 22 (n). to the definition of adjusted gross income) is hereby amended by striking out the word "and at the end of paragraph (5), by striking out the period at the end of paragraph (6) and inserting in lieu thereof " ; and", and by inserting after paragraph (6) the following new p a r a g r a p h : "(7) IX)NG-TERM CAPITAL GAINS.—^The deduction allowed by sec- tion 23 (ee)." Supra.
500 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. (2) AMENDMENT OP SECTION i i x (a).—^Paragraphs (2) and (4) 26U.^8.c.§n7(a). of section 117 (a) (relating to definitions of shoit-term capital gain and long-term capital gain) are each hereby amended by striking out net income" and inserting in lieu thereof "gross income". (3) AMENDMENT OP SECTION in (j).—Section 117 (j) (2) (A) 26U.^s.^^§ii7(]) (relating to gains and losses from involuntary conversion and (2) (A). from the sale or exchange of certain property used in the trade or business) is hereby amended to read as follows: " ( A ) I n determining under this p a r a ^ a p h whether gains exceed losses, the gains described therein shall be included only if and to the extent taken into account in computing gross income and the losses described therein shall be included only if and to the extent taken into account in computing net 26 u^8c§ 117(d) income, except that subsection (d) shall not apply." 53 Stat.'867 ' (4) AMENDMENT OF SECTION 122 (d) (4).—Scction 122 (d) (4) (4^ • • -51 ( (relating to computation of net operating loss deduction) is liereby amended to read as follows: "(4) The amount deductible on account of losses from sales or exchanges of capital assets shall not exceed the amount includible on account of gains from such sales or exchanges. The deduc- Arue,v.i99. fioii provided in section 23 (ee) shall not be allowed." 26u^s*c• § 162(a) (^) AMENDMENT OF SECTION 162 (a).—Section 162 (a) (relat- ing to computation of net income of estates and trusts) is hereby amended by striking out the semicolon and inserting in lieu thereof a period and the following: "Where any amount of the income so paid or set aside is attributable to gain from the sale or exchange of capital assets held for more than six months, proper adjustment of the deduction otherwise allowable under this subsection shall be made for any deduction allowable to the ^n<e,p.499. tr^gt under section 23 (ee) ;". (d) EFFECTIVE DATE.—The amendments made by this section shall be applicable only with respect to taxable years beginning on or after the date of the enactment of this Act. I n determining under section 26u^s'c" § 117 (e) ^^^ (^) ^^ ^^® Internal Revenue Code the amount of the carryover ' to a taxable year beginning on or after such date, of the capital loss for a taxable year beginning before such date, such amendments shall not affect the computation of the amount of the net capital loss or of the net capital gain for any taxable year beginning before such date. SEC. 323. SALE OF LAND WITH UNHARVESTED CROP. 26U.*s.^a§ii7(i). (^) TREATMENT OF G A I N OR Loss.—Section 117 (j) (relating to sale Supra. or exchange of property used in the trade or business) is hereby amended— (1) By inserting immediately before the period at the end of the second sentence of paragraph (1) thereof the following: "and unharvested crops to which paragraph (3) is applicable"; and (2) By adding at the end thereof a new paragraph to read as follows: " (3) SALE OF LAND WITH UNHARVESTED CROP.—In the case of an \ unharvested crop on land used in the trade or business and held for more than 6 months, if the crop and the land are sold or exchanged (or compulsorily or involuntarily converted as described in paragraph (2)) at the same time and to the same person, the crop shall be considered as 'property used in the trade or business'." (b) TREATMENT OF DEDUCTIONS.— 26U.^s.c" §24. (1) AMENDMENT OF SECTION 24.—Section 24 (relating to items ^n<e, p. 487. not deductible) is hereby amended by adding at the end thereof a new subsection to read as follows:
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 501 "(f) SALE OF LAND W I T H UNHARVESTED CROP.—^Where an unhar- vested crop sold by the taxpayer is considered under the provisions of section 117 (j) (3) as 'property used in the trade or business', in com- Ante,v.50o. puting net income no deduction (whether or not for the taxable year of the sale and whether for expenses, depreciation, or otherwise) attributable to the production of such crop shall be allowed." (2) AMENDMENT OF SECTION 113 (b) (1).—Section 113 (b) (1) gu**|-.t3:§ 113(b) (relating to adjustments to basis) is hereby amended by adding (i). at the end thereof a new subparagraph to read as follows: "*"**' ^^' ^^^' ^®^" " (L) for deductions to the extent disallowed under section 24 ( f ) , notwithstanding the provisions of any other sub- Ante,p. 500. paragraph of this paragraph." (c) EFFECTIVE DATE.—The amendment made by subsection (a) shall be applicable only with respect to sales, exchanges, and con- versions, occurring in taxable years beginning after December 31, 1950. The amendments made by subsection (b) shall be applicable to any taxable year for which a deduction is disallowed by reason of sales, exchanges, or conversions to which subsection (a) is applicable. SEC. 324. SALES OF LIVESTOCK. Section 117 (j) (1) is hereby amended by adding at the end thereof ^«'«. P- soo- the following new sentences: "Such term also includes livestock, regardless of age, held by the taxpayer for draft, breeding, or dairy purposes, and held by him for 12 months or more from the date of acquisition. Such term does not include poultry." The first sentence added to section 117 (j) (1) by the amendment made by this section shall be applicable with respect to taxable years beginning after December 31,1941, except that the extension of the holding period from 6 to 12 months shall be applicable only with respect to taxable years beginning after December 31, 1950. The second sentence added to section 117 (j) (1) by the amendment made by this section shall be applicable only with respect to taxable years beginning after December 31, 1950. SEC. 325. TAX TREATMENT OF COAL ROYALTIES. (a) DEFINITION OF PROPERTY USED IN THE TRADE OR BUSINESS.— Section 117 (j) (1) (relating to the definition of property used in the Ante.p.500. trade or business) is hereby amended by adding after the word "tim- ber" in the second sentence thereof the following: "or coal". (b) G A I N OR Loss UPON CERTAIN DISPOSALS OF TIMBER OR COAL.— Section 117 (k) (2) (relating to the disposal of timber) is hereby 26 u^s *c'§ 117 (k) amended to read as follows: (2). ' ' " "(2) I n the case of the disposal of timber or coal (including lignite), held for more than 6 months prior to such disposal, by the owner thereof under any form or type of contract by virtue of which the owner retains an economic interest in such timber or coal, the difference between the amount received for such timber or coal and the adjusted depletion basis thereof shall be con- sidered as though it were a gain or loss, as the case may be, upon the sale of such timber or coal. Such owner shall not be entitled to the allowance for percentage depletion provided for in section 114 (b) (4) with respect to such coal. This paragraph shall not Ante.p.m. applj^ to income realized by the owner as a co-adventurer, partner, or principal in the mining of such coal. The date of disposal of such coal shall be deemed to be the date such coal is mined. I n determining the gross income, the adjusted gross income, or the net income of the lessee, the deductions allowable with respect to rents and royalties shall be determined without regard to the provisions of this paragraph. This paragraph shall have no application, in the case of coal, for the purposes of applying sec-
502 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. 26 u^*8^^6!^§ 102, tion 102 or subchapter A of chapter 2 (including the computation smetseg.' ' under section 117 (c) (1) of a tax in lieu of the tax imposed by ^"'"•P-*^"- section 500)." 26 u.^s! a § 117 (k). (c) CLERICAL AMENDMENT.—The heading to section 117 (k) (relat- Ante, p. 501. ing to the gain or loss upon the cutting of timber) is hereby amended to read as follows: " ( k ) G A I N OR Loss I N THE CASE OF TIMBER OR COAL.—". 26U*s.c!§48i(a) (^) TECHNICAL AMENDMENT.—Scction 481 (a) f4) is hereby (4). amended by striking out "cutting or disposal of timber" and inserting in lieu thereof "cutting of timber, or the disposal of timber or coal, . (e) CONFORMING AMENDMENTS.— 26U.*s. c^*§433. (1) Section 433 (relating to computation of excess profits net income) is hereby amended by inserting at the end thereof the following new subsection: " ( d ) G A I N OR Loss U P O N CERTAIN DISPOSALS OF COAL I N BASE PERIOD.—For the purpose of subsection ( b ) , the excess profits net income shall be computed as if the provisions of section 117 (j) and Ante, pp. 500,501. (]j) (2) which relate to disposals of coal were a part of the law appli- cable to the taxable year for which excess profits net income is com- puted." 64 Stat, mh^^^ ^^^ (2) Section 440 (a) (1) (relating to definition of "inadmissible (1). * assets") is hereby amended by strikmg out "and" at the end of sub- paragraph ( A ) ; by striking out the period at the end of sub- paragraph (B) and inserting in lieu thereof " ; a n d " ; and by adding at the end thereof the following new subparagraph: " ( C ) The economic interest referred to in the provisions ^n(e, p.601. of scction 117 (k) (2) relating to coal if the taxpayer is subject to such provisions with respect to the income from such coal." (3) The amendments made by this subsection shall be appli- 26 u^s.^c.'^i 430 et cable in computing the tax under subchapter D of chapter 1 for seg. taxable years ending after December 31, 1950. (f) EFFECTIVE DATE.—Except as provided in subsection ( e ) , the amendments made b ^ this section shall be applicable only with respect to taxable years ending after December 31,1950 (whether the contract was made on, before, or after such date), but shall apply only with respect to amounts received or accrued after such date. SEC 326. COLLAPSIBLE CORPORATIONS. (a) Definitions with Eespect to Collapsible Corporations.—Section 26U^scVi7(m) 117 (m) (2) (relating to definitions with respect to collapsible corpo- (2). rations) is hereby amended to read as follows: "(2) DEFINmONS.— " ( A ) F o r the purposes of this subsection, the term 'col- lapsible corporation' means a corporation formed or availed of principally for the manufacture, construction, or produc- tion of property, for the purchase of property which (in the , . hands of the corporation) is property described in subsec- 26u.*s.^a§ 117(a) tion (a) (1) ( A ) , or for the holding of stock in a corpora- CD (A)'. tion so formed or availed of, with a view to— " ( i ) the sale or exchange of stock by its shareholders (whether in liquidation or otherwise), or a distribution to its shareholders, prior to the realization by the cor- poration manufacturing, constructing, producing, or purchasing the property of a substantial p a r t of the net income to be derived from such property, and "(ii) the realization by such shareholders of gain attributable to such property.
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 503 " ( B ) F o r the purposes of subparagraph ( A ) , a corpora- tion shall be deemed to have manufactured, constructed, produced, or purchased property, if— " ( i ) it engaged in the manufacture, construction, or production of such property to any extent, " ( i i ) it holds property having a basis determined, in whole or in part, by reference to the cost of such p r o p e r ^ in the hands of a person who manufactured, constructed, produced, or purchased the property, or "(iii) it holds property havmg a basis determined, in whole or in part, by reference to the cost of property manufactured, constructed, produced, or purchased by the corporation." (b) LIMITATIONS ON APPLICATION or SECTION 117 (m).—Subpara- graphs ( A ) , ( B ) , and (C) of section 117 (m) (3) (relating to the ^6*u.1;c*§ii7(ra) limitations on the application of section 117 ( m ) ) are hereby amended <3)- to read as follows: " ( A ) this subsection shall not apply unless, at any time after the commencement of the manufacture, construction, or production of the property, or a t the time of the purchase of the property described in subsection (a) (1) (A) or a t leu.^s.^a§ 117(a) any time thereafter, such shareholder (i) owned (or was d) (A). considered as owning) more than 10 per centum in value of the outstanding stock of the corporation, or (ii) owned stock which was considered as owned at such time by another shareholder who then owned (or was considered as owning) more than 10 per centum in value of the outstanding stock of the corporation; " ( B ) this subsection shall not apply to the gain recog- nized during a taxable year unless more than 70 per centum of such gain is attributable to the property so manufactured, constructed, produced, or purchased; and " ( C ) this subsection shall not apply to gain realized after the expiration of three years following the completion of such manufacture, construction, production, or purchase." (c) EFFECTIVE DATE.—The amendments made by this section shall be applicable to taxable years ending after August 31, 1951, but shall be applicable only with respect to gains realized after such date. T h e determination of the tax treatment of gains realized prior to Septem- ber 1,1951, shall be made as if this section had not been enacted and without inferences drawn from the fact that the amendments to sec- tion 117 (m) made by this section are not expressly made applicable to gains realized prior to September 1, 1951, and without inferences drawn from the limitations contained in section 117 ( m ) , as amended by this section. SEC. 327. DEALERS IN SECURITIES—CAPITAL GAINS AND ORDINARY LOSSES. Effective with respect to sales or exchanges made after the expira- tion of the thirtieth day after the date of the enactment of this Act, section 117 is hereby amended by adding at the end thereof the follow- H ff*| ^-. ^^ ing new subsection: supra.' " ( n ) DEALERS IN SECDKITIES.— " ( 1 ) CAPITAL GAINS.—Gain by a dealer in securities from the sale or exchange of any security shall in no event be considered as gain from the sale or exchange of a capital asset unless— " ( A ) the security was, prior to the expiration of the thir- tieth day after the date or its acquisition or after the date of the enactment of the Revenue Act of 1951 (whichever is
504 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. the later), clearlj identified in the dealer's records as a security held for investment; and " ( B ) the security was not, at any time after the expiration of such thirtieth day, held by such dealer primarily for sale to customers in the ordinary course of his trade or business. " ( 2 ) ORDINABY LOSSES.—^Loss by a dealer in securities from the sale or exchange of any security shall, except as otherwise 26u.*s.^^§ 117 (i). provided in subsection (i) (relating to bond, etc., losses of banks), in no event be considered as loss from the sale or exchange of property which is not a capital asset if at any time after the thirtieth day following the date of the enactment of the Revenue Act of 1951 the security was clearly identified in the dealer's rec- ords as a security held for investment. "(3) DEFINITION OF SECUKITY.—For the purposes of this sub- section the term 'security' means any share of stock in any cor- poration, certificate of stock or interest in any corporation, note, bond, debenture, or evidence of indebtedness, or any evidence of an interest in or right to subscribe to or purchase any of the fore- going." SEC. 328. TREATMENT OF GAIN ON SALES OF CERTAIN PROPERTY BETWEEN SPOUSES AND BETWEEN AN INDIVIDUAL AND A CONTROLLED CORPORATION. 26U^s.c§ii7 (*) DISALLOWANCE OF CAPITAL G A I N TREATMENT.—Section 117 Ante, p. 503. (relating to capital gains and losses) is hereby amended by adding at the end thereof the following new subsection: " ( o ) G A I N FROM SALE OF CERTAIN PROPERTY BETWEEN SPOUSES OR BETWEEN AN INDIVIDUAL AND A CONTROLLED CORPORATION.— "(1) TREATMENT OF GAIN AS ORDINARY INCOME.—^In the case of a sale or exchange, directly or indirectly, of property described in paragraph (2)— " (A) between a husband and wife; or " ( B ) between an individual and a corporation more than 80 per centum in value of the outstanding stock of which is owned by such individual, his spouse, and his minor children and minor ^ a n d c h i l d r e n ; any gain recognized to the transferor from the sale or exchange of such property shall be considered as gain from the sale or exchange of property which is neither a capital asset nor property described Ante, pp. 500, 501. J^ gubsCCtion ( j ) . " ( 2 ) SUBSECTION APPLICABLE ONLY TO SALES OR EXCHANGES OF DEPRECIABLE PROPERTY.—This subsection shall apply only in the case of a sale or exchange of property by a transferor which in the hands of the transferee is property of a character which is sub- 26 u*s.^c § 23 (J). ^^^ ^^ t^® allowance for depreciation provided in section 23 (1)." (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall be applicable with respect to taxable years ending after April 30, 1951, but shall apply only with respect to sales or exchanges made after May 3,1951. SEC. 329. RECEIPTS OF CERTAIN TERMINATION PAYMENTS BY EM- PLOYEE. (a) TAXABILIIT TO EMPLOYEE AS CAPITAL GAIN.—Section 117 of t h e ^"P*""- Internal Revenue Code is hereby amended by adding at the end thereof the following subsection: " ( p ) TAXABILITY TO EMPLOYEE OP TERMINATION PAYMENTS.— Amounts received from the assignment or release by an employee, after more than twenty years' employment, of all his rights to receive, after termination of his employment and for a period of not less than five years (or for a period ending with his death), a percentage of future profits or receipts of his employer shall be considered an amount
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 505 received from the sale or exchange of a capital asset held for more than six months, if such rights were included in the terms of the employment of such employee for not less than twelve years, and if the total of the amounts received for such assignment or release are received in one taxable year and after the termination of such employment." (b) EFFECTIVE DATE.—The amendment made by this section shall be applicable with respect to taxable years beginning after December 31,1950. SEC. 330. NET OPERATING LOSS CARRY-OVER. (a) Loss FOR TAXABLE YEAR BEGINNING BEFORE 1948.—So much of subparagraph (A) of section 122 (b) (2) (relating to the amount 26u.^s.c!§ 122(b) of carry-overs) as precedes "the taxpayer*' is hereby amended to read (2). as follows: " ( A ) Loss for Taxable Year Beginning Before 1948.— Except as provided in subparagraph ( D ) , if for any taxable ^"^'•'• year beginning before January 1, 1948,". (b) ALLOWANCE OF THREE-YEAR Loss CARRY-OVER FROM TAXABMJ YEARS 1948-1949.—Section 122 (b) (2) (relating to the amount of carry-over) is hereby amended by adding after subparagraph (B) the following new subparagraphs: "(C) Loss for Taxable Year Beginning After December 31,1947, and Before January 1,1950.—If for any taxable year beginning after December 31, 1947, and before Januarj^ 1, 1950, the taxpayer has a net operating loss, such net operating loss shall be a net operating loss carry-over for each of the three succeeding taxable years, except that the carry-over in the case of each such succeeding taxable year (other than the first succeeding taxable year) shall be the excess, if any, of the amount of such net operating loss over the sum of the net income for each of the intervening years computed— "(i) with the exceptions, additions, and limitations provided in subsection (d) (1), (2), (4), and (6), and ^^53stat.867; 56stat. " (ii) by determining the net operating loss deduction 26 u. s. c. § 122 (d). for each intervening taxable year without regard to such net operating loss or to the net operating loss for any succeeding taxable year and without regard to any reduction specified in subsection (c). For the purpose of the preceding sentence, the net operating loss for any taxable year beginning after December 31, 1947, and before January 1, 1950, shall be reduced by the sum of the net income for each of the two preceding taxable years computed— "(iii) with the exceptions, additions, and limitations provided in subsection (d) (1), (2), (4), and (6), and " (iv) by determining the net operating loss deduction without regard to such net operating loss or to the net operating loss for the succeeding taxable year, and with- out regard to any reduction specified in subsection (c). " ( D ) Loss for Taxable Year Beginning After December 31, 1946, and Before January 1, 1948, in the Case of a Cor- poration Which Commenced Business After December 31, 1945.—If for any taxable year beginning after December 31, 1946, and before January 1, 1948, a corporation which com- menced business after December 31,1945, has a net operating loss, such net operating loss shall be a net operating loss carry-over for each of the three succeeding taxable years, except that the carry-over in the case of each such succeeding taxable year (other than the first succeeding taxable year)
506 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. shall be the excess, if any, of the amount of such net operating loss over the sum of the net income for each of the intervening years computed— "(i) with the exceptions, additions, and limitations provided in subsection (d) (1), (2), (4), and (6), and "(ii) by determining the net operating loss deduction • for each intervening taxable year without regard to such net operating loss or to the net operating loss for any succeeding taxable year and without regard to any §u"s (3^§ 122 (c) reduction specified in subsection (c). For the purpose of the preceding sentence, the net operating loss for any taxable year beginning after December 31, 1946, shall be reauced by the sum of the net income for each of the two preceding taxable years computed— "(iii) with the exceptions, additions, and limitations provided in subsection (d) (1), (2), (4), and (6), and " (iv) by determining the net operating loss deduction without regard to such net operating loss or to the net operating loss for the succeeding taxable year, and with- out regard to any reduction specified in subsection ( c ) . " (c) EFFECTIVE DATE.—^The amendments made by this section shall be applicable in computing the net operating loss deduction for taxable years beginning after December 31,1948. SEC. 331. STOCK OPTIONS. 26^u**s^'. § 130A (a-) OPTION SUBJECT TO STOCKHOLDER APPROVAL.—Section 130A (d) (d). (relating to definition of restricted stock option) is hereby amended by striking out "As used in" and inserting "For the purposes of" and by adding at the end thereof the following: "(5) STOCKHOLDER APPROVAL.—^If the grant of an option is sub- ject to approval by stockholders, the date of grant of the option shall be determined as if the option had not been subject to such approval." (b) EFFECTIVE DATE.—rThe amendment made by subsection (a) shall be effective as if it had been enacted as part of section 218 of the l e W c . 5 130A Revenue Act of 1950. and note. ^ ^ ^ ^^^ CREDIT FOR TAXES OF FOREIGN CORPORATIONS. (a) FOREIGN SUBSIDIARY OF A DOMESTIC CORPORATION.—Effective with respect to dividends received by a domestic corporation from a foreign corporation during taxable years beginning after December 31, 56 sta|. 857. ^^ 1950, the first sentence of section 131 (f) (1) is hereby amended by (1). striking out "a majority" and inserting in lieu thereof "at least 10 per centum . (b) FOREIGN SUBSIDIARY OF A FOREIGN CORPORATION.—^Effective with respect to dividends received by a foreign corporation from another foreign corporation in taxable years beginning after December 31,1950, section 131 (f) (2) is hereby amended by striking out "all the voting stock (except qualifying shares)" and inserting in lieu thereof "50 per centum or more of the voting stock". (c) CLERICAL AMENDMENT.—So much of section 131 (f) (1) as precedes the first sentence thereof is hereby amended to read as follows: "(f) TAXES OF FOREIGN CORPORATION.— " (1) TREATMENT OF TAXES PAID BY FOREIGN CORPORATION.—". SEC. 333. INFORMATION AT SOURCE ON PAYMENTS OF INTEREST. Section 147 (a) is hereby amended by striking out "interest," in the 26 u*s c! 1147. first sentence. Section 147 (b) is hereby amended to read as follows: «(b) RETURNS REGARDLESS OF AMOUNT OF PAYMENT.—Such returns may be required, regardless of amounts, (1) in the case of payments of
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 507 interest, and (2) in the case of collections of items (not payable in the United States) of interest upon the bonds of foreign countries and interest upon the bonds of and dividends from foreign corporations by persons undertaking as a matter of business or for profit the collection of foreign payments of such interest or dividends by means of coupons, checks, or bills of exchange." SEC. 334. ABATEMENT OF INCOME TAX FOR CERTAIN MEMBERS OF ARMED FORCES UPON DEATH. Supplement D of chapter 1 of the Internal Revenue Code (relating ^^**g^o j., to returns and payment of tax) is hereby amended by adding at the 153. ' ' end thereof the following new section: ^i^'' PP- ^' ^ • "SEC. 154. INCOME TAXES OF MEMBERS OF ARMED FORCES UPON DEATH. " I n the case of any individual who dies after June 24, 1950, and prior to J a n u a r y 1, 1954, while in active service as a member of the Armed Forces of the United States, if such death occurred while serving in a combat zone (as determined under section 22 (b) (13)) ^»<e,p.484. or as a result of wounds, disease, or injury incurred while so serving— " ( a ) the tax imposed by this chapter shall not apply with respect to the taxable year in which falls the date of his death, or with respect to any prior taxable year ending on or after the first day he so served in a combat zone after June 24, 1950; and "(b) the tax under this chapter and under the corresponding title of each prior revenue law for taxable years preceding those specified in clause (a) which is unpaid at the date of his death (including interest, additions to the tax, and additional amounts) shall not be assessed, and if assessed the assessment shall be abated, and if collected shall be credited or refunded as an overpayment." SEC. 335. EMPLOYEES' TRUSTS. (a) AMENDMENT OF SECTION 165 (b).—Section 165 (b) (relating to 26u^s'cf^5les(b) taxability of beneficiary on distributions from an employees' trust) is hereby amended by adding at the end thereof the following new sentence: "Where such total distributions include securities of t h e employer corporation, there shall be excluded from such excess the net unrealized appreciation attributable to that part of the total dis- tributions which consists of the securities of the employer corporation so distributed. The amount of such net unrealized appreciation and the resulting adjustments to basis of the securities of the employer corporation so distributed shall be determined in accordance with regulations which shall be prescribed by the Secretary. F o r pur- poses of this subsection, the term 'securities' means only shares of stock and bonds or debentures issued by a corporation with interest coupons or in registered form, and the term 'securities of the employer cor- poration' includes securities of a parent or subsidiary corporation (as defined in section 130A (d) (2) and (3)) of the employer corporation." ^4 s^at 94^- ^^^ (b) EFFECTIVE DATE.—The amendment made by this section shall (d). be applicable with respect to distributions made after December 31, 1950. SEC. 336. LIFE INSURANCE COMPANIES. (a) TAX FOR 1951.—Section 201 (a) (1) (relating to imposition of Su^g c' §201 (a) tax on life insurance companies) is hereby amended by adding at the CD- end thereof the following: " I n lieu of the taxes imposed by the pre- ceding sentence, there shall be levied, collected, and paid for taxable years beginning in 1951 upon the 1951 adjusted normal-tax net income (as defined in section 203A) of every life insurance company a t a x POS«,p. 508. equal to the sum of the following:
508 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. " 3 % per centum of the amount thereof not in excess of $200,000, plus " 6 % per centum of the amount thereof in excess of $200,000." (b) ADJUSTED NORMAL-TAX N E T INCOME FOR 1951.—Chapter 1 is 26U.*s. c'. §203. hereby amended by inserting after section 203 the following new sec- tion : "SEC. 203A. 1951 ADJUSTED NORMAL-TAX NET INCOME. " ( a ) 1951 ADJUSTED NORMAL-TAX N E T INCOME.—^For the purposes Ante, p. 507. ^f scctioD 201, the term '1951 adjusted normal-tax net income' means the normal-tax net income plus eight times the amount of the adjust- 26 u*s c°§ 202 (c) i^^iit ^or Certain reserves provided in section 202 (c) and minus the reserve interest credit, if any, provided in subsection (b) of this sec- tion. "(b) RESERVE INTEREST CREDIT.—For the purposes of subsection ( a ) , the reserve interest credit shall be an amount determined as follows: "(1) Divide the amount of the adjusted net income (as defined in subsection (c)^ by the amount of the required interest (as defined in subsection ( d ) ) . "(2) I f the quotient obtained in paragraph (1) is 1.05 or more, the reserve interest credit shall be zero. "(3) I f the quotient obtained in paragraph (1) is 1.00 or less, the reserve interest credit shall be an amount equal to 50 per centum of the normal-tax net income. "(4) I f the quotient obtained in paragraph (1) is more than. 1.00 but less than 1.05, the reserve interest credit shall be the amount obtained by multiplying the normal-tax net income by 10 times the difference between the figures 1.05 and such quotient. " (c) ADJUSTED N E T INCOME.—For the purposes of subsection (b) (1), the term 'adjusted net income' means the net income computed without any deduction for tax-free interest minus 50 per centum of the amount of the adjustment for certain reserves provided in sec- tion 2 0 2 ( c ) . " ( d ) REQUIRED INTEREST.—For the purposes of subsection (b) ( 1 ) , the term 'required interest' means the total of— "(1) The sum of the amounts obtained by multiplying ( A ) each rate of interest assumed in computing the taxpayers life insurance reserves by ( B ) the means of the amounts of the tax- payer's adjusted reserves computed at that rate at the beginning and end of the taxable year, "(2) 2 per centum of the reserve for deferred dividends, and "(3) Interest paid." (c) TECHNICAL AMENDMENTS.— 2^u.t/aH33(a) (1) Section 433 (a) (1) ( H ) (relating to excess profits net (1) (H). income of life insurance companies) is herebj^ amended by chang- ing the semicolon at the end thereof to a period and by inserting thereafter the following: " I n the case of taxable years beginning in 1951, there shall be used, in lieu of the figure referred to in clause (i) of the first sentence of this subparagraph, the figure .87;". 26u^sc^§201(f) (2) Section 201 (f) (relating to disallowance of double deductions) is hereby amended by striking out "or 203" and ^""P'"- inserting in lieu thereof ", 203, or 203A". (d) EFFECTIVE DATE.—The amendments made by this section shall be applicable to taxable years beginning in 1951.
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 509 SEC. 337. TAX TREATMENT OF CERTAIN INVESTMENT COMPANIES. (a) INCLUSION OF CERTAIN REGISTERED MANAGEMENT COMPANIES IN THE DEFINITION OF REGULATED INVESTMENT COMPANY.—Section 361 (relating to definition of regulated investment companies) is ^u^sc§36i hereby amended by adding at the end thereof the following new sub- section: "(c) CERTAIN INVESTMENT COMPANIES.—^If the Securities and Ex- change Commission determines in accordance with regulations issued by it, and certifies to the Secretary not more than 60 days prior to the close of the taxable year of a registered management investment com- pany, that such investment company is principally engaged in the furnishing of capital to other corporations which are principally engaged in the development or exploitation of inventions, techno- logical improvements, new processes, or products not previously gen- erally available, such investment company may, in the computation of 50 per centum of the value of its assets under subparagraph (A) of subsection (b) (3) for any quarter of such taxable year, include the ^"^'•'• value of any securities of an issuer, notwithstanding the fact that such investment company holds more than 10 per centum of the out- standing voting securities of such issuer, but only if the investment company has not continuously held any security of such issuer (or of any predecessor company of such issuer as determined under regula- tions prescribed by the Secretary) for 10 or more years preceding such quarter of such taxable year. The provisions of this subsection shall not apply at the close of any quarter of a taxable year to an invest- ment company if at the close of such quarter more than 25 per centum of the value of its total assets is represented by securities of issuers with respect to each of which the investment company holds more than 10 per centum of the outstanding voting securities of such issuer and in respect of each of which or any predecessor thereof the invest- ment company has continuously held any security for 10 or more years preceding such quarter unless the value of its total assets so represented is reduced to 25 per centum or less within 30 days after the close of such quarter. The terms used in this subsection shall have the same meaning as in subsection (b) (3) of this section. For the pur- poses of this subsection, unless the Securities and Exchange Commis- sion determines otherwise, a corporation shall be considered to be principally engaged in the development or exploitation of inventions, technological improvements, new processes, or products not previ- ously generally available, for at least 10 years after the date of the first acquisition of any security in such corporation or any predecessor thereof by such investment company if at the date of such acquisition the corporation or its predecessor was principally so engaged, and an investment company shall be considered at any date to be fur- nishing capital to any company whose securities it holds if within 10 years prior to such date it has acquired any of such securities, or any securities surrendered in exchange therefor, from such other company or predecessor thereof. For the purposes of the cer- tification hereunder, the Securities and Exchange Commission shall have authority to issue such rules, regulations and orders, and to conduct such investigations and hearings, either public or private, as it may deem appropriate." (b) TECHNICAL AMENDMENT.—Section 361 (b) (3) (A) is hereby i^ u*^|-^,5% gei (b) amended by inserting after "the total assets of the taxpayer and" the (3) (A). following: ", except and to the extent provided in subsection (c),". (c) EFFECTIVE DATE.—^The amendments made by this section shall be applicable only with respect to taxable years beginning after December 31,1950.
510 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. SEC. 338. EXCHANGES AND DISTRIBUTIONS IN OBEDIENCE TO ORDERS OF SECURITIES AND EXCHANGE COMMISSION. i u ^ s c%373((i) (^) DEFINITION OP SYSTEM GROUP.—Section 373 (d) (1) (relating (1). • ' ' to the definition of the term "system gfoup") is hereby amended to read as follows: "(1) A t least 90 per centmn of each class of the stock (other than (A) stock which is preferred as to both dividends and assets, and ( B ) stock which is limited and preferred as to dividends but which is not preferred as to assets but only if the total value of such stock is less than 1 per centum of the aggregate value of all classes of stock which are not preferred as to both dividends and assets) of each of the corporations (except the common parent corporation) is owned directly by one or more of the other corpo- rations; and". (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall be applicable with respect to taxable years affected by an exchange or distribution made after December 31,1947. SEC. 339. TAXATION OF BUSINESS INCOME OF STATE COLLEGES AND UNIVERSITIES. ^u.^s.^% 421(b) (a) AMENDMENTorSECTiON421 (b).—Scctiou 421 (b) (1) (organi- (!)• zations subject to tax under Supplement U ) is hereby amended to read as follows: "(1) ORGANIZATIONS TAXABLE AS CORPORATIONS.— " ( A ) Organizations Exempt Under Section 101 (1), (6), iu.^s.c;'§ioi. (7) and (14).—The taxes imposed hj subsection (a) (1) shall apply in the case of any organization (other than a church, a convention or association of churches, or a trust described in paragraph ( 2 ) ) which is exempt, except as pro- vided in this supplement, from taxation under this chapter by reason of paragraph (1), (6), or (7) of section 101. Such taxes shall also apply in the case of a corporation described in section 101 (14) if the income is payable to an organiza- tion which itself is subject to the tax imposed by subsection (a) or to a church or to a convention or association of churches. " ( B ) State Colleges and Universities.—The taxes imposed by subsection (a) (1) shall apply in the case of any college or university which is an agency or instrumentality of any government or any political subdivision thereof, or which is owned or operated by a government or any political subdi- vision thereof or by any agency or instrumentality of any one or more governments or political subdivisions. Such taxes shall also apply in the case of any corporaticHi wholly owned by one or more such colleges or universities." Post, p. 518. Qy'^ U N R E L A T E D T R A D E OR B U S I N E S S . — S e c t i o n 422 ( b ) (definition of unrelated trade or business) is hereby amended as follows: (1) By inserting after "under section 101" the following: " ( o r , ^"^'•°- in the case of an organization described in section 421 (b) (1) ( B ) , to the exercise or performance of any purpose or function described in section 101 ( 6 ) ) " . (2) By inserting in paragraph (2) thereof after "section 101 ( 6 ) " the following: "or in the case of a college or university described in section 421 (b) (1) ( B ) " . (c) EPFECTTVB DATE.—^The amendments made by this section shall be applicable only with respect to taxable years beginning after December 31,1951.
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 511 SEC. 340. FAMILY PARTNERSHIPS. (a) DEFINITION OF PARTNER.—Section 3797 (a) (2) is hereby I§*^^:cf^53797(a) amended by adding at the end thereof the following: "A person shall (2). be recognized as a partner for income tax purposes if he owns a capital interest in a partnership in which capital is a material income-produc- ing factor, whether or not such interest was derived by purchase or gift from any other person." (b) ALLOCATION OF PARTNERSHIP INCXDME.—Supplement F of chapter 1 is hereby amended by adding at the end thereof the following ^ u^*s.^c. §§ isi- new section: i90- "SEC. 191. FAMILY PARTNERSHIPS. " I n the case of any partnership interest created by gift, the dis- tributive share of the donee under the partnership agreement shall be includible in his gross income, except to the extent that such share is determined without allowance of reasonable compensation for services rendered to the partnership by the donor, and except to the extent that the portion of such share attributable to donated capital is proportionately greater than the share of the donor attributable to the donor's capital. The distributive share of a partner in the earn- ings of the partnership shall not be diminished because of absence due to military service. For the purpose of this section, an interest purchased by one member of a family from another shall be con- sidered to be created by gift from the seller, and the fair market value of the purchased interest shall be considered to be donated capital. The 'family' of any individual shall include only his spouse, ancestors, and lineal descendants, and any trust for the primary benefit of such persons." (c) EFFECTIVE DATE.—The amendments made by this section shall be applicable with respect to taxable years beginning after December 31, 1950. The determination as to whether a person shall be recognized as a partner for income tax purposes for any taxable year beginning before J a n u a r y 1, 1951, shall be made as if this section had not been enacted and without inferences drawn from the fact that this section is not expressly made applicable with respect to taxable years begin- ning before J a n u a r y 1, 1951. I n applying this subsection where the taxable year of any family partner is different from the taxable year of the partnership— (1) if a taxable year of the partnership beginning in 1950 ends within or with, as to all of the family partners, taxable years which begin in 1951, then the amendments made by this section shall be applicable with respect to all distributive shares of income derived by the family partners from such taxable year of the partnership beginning in 1950, and (2) if a taxable year of the partnership ending in 1951 ends within or with a taxable year of any family partner which began in 1950, then the amendments made by this section shall not be applicable with respect to any of the distributive shares of income derived by the family partners from such taxable year of the partnership. SEC. 341. WAR LOSSES. (a) TAX U P O N W A R Loss RECOVERY.—Section 127 (c) (relating to ^fj^^aff 2 6 U . S . C . § 127(c), recoveries included in gross income) is hereby amended to read as follows: "(c) RECOVERIES.— "(1) GENERAL RULE.—Upon the recovery in the taxable year of any money or property in respect of property considered under subsection (a) as destroyed or seized in any prior taxable year, 76100 O - 52 (PT. I) - 35
512 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. the amount of such recovery shall be included in gross income to the extent provided in paragraph (2), unless the provisions of paragraph (3) are applicable to the taxable year pursuant to an election made by the taxpayer under the provisions of paragraph (5). "(2) INCLUSION I N GROSS INCOME.— " ( A ) Amount of Eecovery.—The amount of the recovery of any money or property in respect of property considered 56 Stat. 852. under subsection (a) as destroyed or seized in any prior 26U.S.C. §i27(a). taxable year shall be an amount equal to the aggregate of such money and the fair market value of such property, determined as of the date of the recovery. " ( B ) Amount of Gain Includible.—To the extent that the amount of the recovery plus the aggregate of the amounts of previous such recoveries do not exceed that part of the aggre- gate of the allowable deductions in prior taxable years on account of the destruction or seizure of property described in subsection (a) which did not result in a reduction of any 53 Stat. 104. tax of the taxpayer under this chapter or chapter 2, such ^26 u. s. .5 a amount shall not be includible in gross income and shall not be deemed gain upon the involuntary conversion of property as a result of its destruction or seizure. To the extent that such amount plus the aggregate of the amounts of previous such recoveries exceed that part of the aggregate of such deductions, which did not result in a reduction of any tax of the taxpayer under this chapter or chapter 2 and do not exceed that part of the aggregate of such deductions which did result in a reduction of any tax of the taxpayer under this chapter or chapter 2, such amount shall be included in gross income but shall not be deemed a gain upon the invol- untary conversion of property as a result of its destruction or seizure. To the extent that such amount plus the aggregate of the amounts of previous such recoveries exceed the aggre- gate of the allowable deductions in prior taxable years on account of the destruction or seizure of property described in subsection ( a ) , such amount shall be considered a gain upon the involuntary conversion of property as a result of its destruction or seizure and shall be recognized or not Anu, p. 496. recognized as provided in section 112 (f). If for any previous taxable year the taxpayer chooses under subsection (b) to treat any obligations and liabilities as discharged or satisfied out of the property or interest described in subsection ( a ) , and if such obligations and liabilities were not so discharged or satisfied, the amount of such obligations and liabilities treated as discharged or satisfied under subsection (b) shall be considered for the purposes of this section as a deduction by reason of this section which did not result in a reduction of any tax of the taxpayer under this chapter or chapter 2. For the purposes of this paragraph an allowable deduction for any taxable year on account of the destruction or seizure of property described in subsection (a) shall, to the extent not allowed in computing the tax of the taxpayer for such taxable year, be considered an allowable deduction which did not result in a reduction of any tax for the taxpayer under this chapter or chapter 2. "(3) TAX ADJUSTMENT MEASURED BY PRIOR BENEFITS.—If the provisions of this paragraph are applicable to the taxable year pursuant to an election made by the taxpayer under the provisions Poae, p. 514. of paragraph (5)—
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 513 " ( A ) Amount of Recovery.—The amount of the recovery in the taxable year of any money oi- property in respect of property considered under subsection (a) as destroyed or 26 u^s c^'s 127 (a) seized in any prior taxable year shall be an amount equal to the aggregate of such money and the fair market value of such property, determined as of the date of the recovery. F o r the purpose of this paragraph, in the case of the recovery of the same property or interest considered under subsection (a) as destroyed or seized, the fair market value of such property or interest shall, at the option of the taxpayer, be considered an amount equal to the adjusted basis (for determining loss) of such property or interest in the hands of the taxpayer on the date such property or interest was considered under sub- section (a) as destroyed or seized. The amount of the recovery determined under this subparagraph shall be reduced for the purposes of subparagraphs (B) and (C) by the amount of the obligations or liabilities with respect to the property considered under subsection (a) as destroyed or seized in respect of which the recovery was received, if the taxpayer for any previous taxable year chose under subsection (b) (2) to treat such obligations or liabilities as discharged or satis- fied out of such property, and such obligations or liabilities were not so discharged or satisfied prior to the date of the recovery. " ( B ) Adjustment for Prior Tax Benefits.—That part of the amount of the recovery, in respect of any property con- sidered under subsection (a) as destroyed or seized, which is not in excess of the allowable deductions in prior taxable years on account of such destruction or seizure of the property (the amount of such allowable deductions being first reduced by the aggregate amount of any prior recoveries in respect of the same property) shall be excluded from gross income for the taxable year of the recovery for the purpose of computing the tax under this chapter and chapter 2; but there shall be added to, and assessed and collected as a part of, the tax under this chapter for the taxable year of the recovery the total increase in the tax under this chapter and chapter 2 for all taxable years which would result by decreasing, in an amount equal to such part of the recovery so excluded, such deduc- tions allowable in the prior taxable years with respect to the destruction or seizure of the property. Such increase in the tax for each such year so resulting shall be computed in accordance with regulations prescribed by the Secretary. Such regulations shall give effect to previous recoveries of any kind (including recoveries described in section 22 (b) (12)) with respect to any prior year, and shall provide for 26 u.^s.^a § 22 (b) the case where there was no tax for the prior year, but shall (12). otherwise treat the tax previously determined for any year in accordance with the principles set forth in section 3801 ( d ) . 26U*^s*c'^§"380i (d) All credits allowable against the tax for any year and all carry-overs and carry-backs affected by so decreasing the allowable deductions shall be taken into account in computing the increase in the tax, except that the computation of the excess profits credit under chapter 2 E for any taxable year shall not be affected. " ( C ) Gain Upon Recovery.—The amount of any recovery or part thereof, in respect of property considered under sub- section (a) as destroyed or seized, which is not excluded from gross income under the provisions of subparagraph (B) shall
514 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. be considered for the taxable year of the recovery as gain on the involuntary conversion of property as a result of its destruction or seizure and shall be recognized or not recog- Ante, p. 496. nized as provided in section 112 ( f ) . " ( D ) Recoveries Treated as Gross Income for Certain 53 Stat. 27, 471. 26U. S. C. §§51, 52, Purposes.—For the purposes of sections 51, 52, and 3801 (b) 3801 (b). Ante, pp. 482, 488. the recovery in the taxable year of any money or property in respect of property considered under subsection (a) as destroyed or seized in any prior taxable year shall be deemed to be an item includible in gross income for the taxable year in which the recovery is made. "(4) RESTORATION OP VALUE OF INVESTMENTS REFERABIIE TO DESTROYED OR SEIZED PROPERTY.—For tlic purposc of this subscction the restoration in whole or in part of the value of any interest 56 Stat. 852. described in subsection (a) (3) by reason of any recovery of money 26U. S. C. §127 (a). or property in respect of property to which such interest related and which was considered under subsection (a) (1) or (2) as destroyed or seized shall be deemed a recovery of property in respect of property considered under subsection (a) as destroyed or seized. I n applying paragraph (3) of this subsection such restoration shall be treated as the recovery of the same interest considered under subsection (a) as destroyed or seized. "(5) ELECTION BY TAXPAYER FOR .\PPLICATION OF PARAGIJAPH (3).—If the taxpayer elects to have the provisions of paragraph (3) applicable to any taxable year in which he recovered any money or property in respect oi property considered under sub- section (a) as destroyed or seized, the provisions of paragraph (3) shall be applicable to all taxable years of the taxpayer beginning after December 31, 1941, and such election, once made, shall be irrevocable. The election shall be made in such manner and at such time as the Secretary may by regulations prescribe, except that no election under this paragraph may be made after December 31, 1952, unless the taxpayer recovers money or property (in respect of property considered under subsection (a) as destroyed or seized) during a taxable year ending after the date of the enactment of the Revenue Act of 1951. If pursuant to such election the provisions of paragraph (3) are applicable to any taxable year— " ( A ) the period of limitations provided in sections 275 and 53 Stat. 86. 276 on the making of assessments and the beginning of 26 U. S. C. §§ 275, 276. distraint or a proceeding in court for collection shall not, with Ante, p. 497. respect to— " (i) the amount to be added to the tax for such taxable year under the provisions of paragraph (3), and "(ii) any deficiency for such taxable year or for any other taxable year, to the extent attributable to the basis of the recovered property being determined under the Post, p. 516. provisions of subsection (d) (2), expire prior to the expiration of two years following the date of the making of such election, and such amount and such deficiency may be assessed at any time prior to the expiration of such period notwithstanding any law or rule of law which would otherwise prevent such assessment and collection, and " ( B ) in case refund or credit of any overpayment resulting from the application of the provisions of paragraph (3) to such taxal)le year is prevented on tlie date of the making of such election, or within one year from such date, by the 53 Stat. 462. operation of any law or rule of law (other than section 3761, 26 U. S. C. § 3761. relating to compromises), refund or credit of such overpay-
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 515 ment may, nevertheless, be made or allowed if claim therefor is filed within one year from such date. I n the case of any taxable year ending before the date of the mak- ing by the taxpayer of an election under this paragraph, no interest shall be paid on any overpayment resulting from the application of the provisions of paragraph (3) to such taxable year, and no interest shall be assessed or collected with respect to any amount or any deficiency specified in clause ( A ) , for any period prior to the expiration of six months following the date of the making of such election by the taxpayer." (b) BASIS or RECOVERED PROPERTY.—Section 127 (d) (relating to 26 u.^s:a*§ 127(d). basis of recovered property) is hereby amended to read as follows: "(d) BASIS OF RECOVERED PROPERTY.— " (1) I N GENERAL.—The unadjusted basis of property recovered in respect of property considered as destroyed or seized under subsection (a) shall be determined under this subsection. Such basis shall be an amount equal to the fair market value of such property, determined as of the date of the recovery, reduced by an amount equal to the excess of the aggregate of such fair mar- ket value and the amounts of previous recoveries of money or property in respect of property considered under subsection (a) as destroyed or seized over the aggregate of the allowable deduc- tions in prior taxable years on account of the destruction or seizure of property described in subsection ( a ) , and increased by that portion of the amount of the recovery which under subsec- tion (c) is treated as a recognized gain from the involuntary ^nu.p.sn. conversion of property. Upon application of the taxpayer, the aggregate of the bases (determined under the preceding sentence) of any properties recovered in respect of properties considered under subsection (a) as destroyed or seized may be allocated among the properties so recovered in such manner as the Secre- tary may determine under regulations prescribed by him, and the amounts so allocated to any such property so recovered shall be the unadjusted basis of such property in lieu of the unadjusted basis of such property determined under the preceding sentence. "(2) PROPERTY RECOVERED I N TAXABLE YEAR TO WHICH SUBSEC- TION (c) (3) IS APPLICABLE.—In the case of a taxpayer who has made an election under the provisions of subsection (c) (5), the basis of property recovered shall be an amount equal to the value at which such property is included in the amount of the recovery under subsection (c) (3) (A) (determined without regard to the last sentence thereof), reduced by such p a r t of the gain under subsection (c) (3) (C) which is not recognized as provided in section 1 1 2 ( f ) . " Ante, p.m. (c) CREDIT FOR FOREIGN TAXES.—Section 131 (a) (relating to i u . t ; a § 131(a). allowance of credit for taxes of foreign countries and possessions of the United States ) is hereby amended by inserting after "section 102" the following: "and except the additional tax imposed for the taxable year under the provisions of section 127 (c) (3)". Ante.p.m. (d) EFFECTIVE DATES.—The amendments made by this section shall be applicable to taxable years beginning after December 31,1941. SEC. 342. DEDUCTION OF EXPENDITURES FOR MINE EXPLORATION. (a) DEDUCTION OF M I N E EXPLORATION EXPENDITURES.—Section 23 iu^gc'523 (relating to deductions from gross income) is hereby amended by Ante, pp. 485,'486,, adding at the end thereof the following new subsection: *^' *^^' *^' "(ff) DEDUCTION OF EXPLORATION EXPENDITURES.— "(1) I N GENERAL.—In the case of expenditures paid or incurred during the taxable year for the purpose of ascertaining the exist- ence, location, extent, or quality of any deposit of ore or other
516 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. mineral, and paid or incurred prior to the beginning of the de- velopment stage of the mine or deposit, so much of such expendi- tures as does not exceed $75,000. This subsection shall apply only with respect to the amount of such expenditures which, but for this subsection, would not be allowable as a deduction for the taxable year. This subsection shall not apply to expenditures for the acquisition or improvement of property of a character which is subject to the allowance for depreciation provided in ^ u^s" c § 23 m section 23 (1), but allowances for depreciation shall be considered, for the purposes of this subsection, as expenditures paid or in- curred. I n no case shall this subsection apply with respect t o amounts paid or incurred for the purpose of ascertaining the existence, location, extent, or quality of any deposit of oil or gas. " (2) ELECTION OF TAXPAYER.—If the taxpayer elects, in accord- ance with regulations prescribed by the Secretary, to treat as deferred expenses any portion of the amount deductible for the taxable year under paragraph ( 1 ) , such portion shall not be deductible under paragraph (1) but shall be deductible on a ratable basis as the units oi produced ores or minerals discovered or explored bv reason of such expenditures are sold. An election made under tnis paragraph for any taxable year shall be binding for such year. "(3) LIMITATION.—This subsection shall not apply to any amounts paid or incurred in any taxable year if in any four preceding years the taxpayer, or any individual or corporation who has transferred to the taxpayer any mineral property under circumstances which make the provisions of paragraph ( 7 ) , ( 8 ) , stilS58*°stK' ( l l ) ' (13), (15), (17), (20) or (22^ of section 113 (a) appll- 26U.S.C.J 113(a). Cable to such transfer, has either ( A ) been allowed a deduction under paragraph (1) of this subsection or (B) made the election provided under paragraph (2) of this subsection. "(4) ADJUSTED BASIS OF MINE OR DEPOSIT.—The amount of ex- penditures which are treated under paragraph (2) as deferred expenses shall be taken into account in computing the adjusted basis of the mine or deposit, b u t such amounts, and the adjust- ^'*-^"- ments to basis provided in section 113 (b) (1) (M) shall be disregarded in determining the adjusted basis of the property for the purpose of computing a deduction for depletion under 26u1-c-§ii4 section 114." Ante, pp. 497, 498. ( b ) ADJUSTED B A S I S FOR D E T T E R M I N I N G G A I N OR L o s S IJPON S A L E OR lu^sc§u3(b) EXCHANGE.—Section 113 (b) (1) (relating to adjusted basis of prop- Ante, pp.' 487, 4971 eity) is hereby amended by adding at the end thereof the following: ^^' " ( M ) for amounts allowed as deductions as deferred ex- Ante, p. 515. peuscs uudcr section 23 (ff) (2) (relating to certain explora- tion expenditures) and resulting in a reduction of the tax- payer's taxes under this chapter, but not less than the amounts allowable under such section for the taxable year and prior years." (c) EFFECTIVE DATE.—^The amendments made by this section shall be applicable to taxable years ending after December 31, 1950. SEC. 343. DEFINITION OF EMPLOYEE. 26u*s*a%797 (a). (*) AMENDMENT or SECTION 3797 (a) .—Section 3797 (a) is amended Ante, pp.'49i, 511. by adding at the end thereof the following new paragraph: "(20) EMPLOYEE.—For the purpose of applying the provisions of chapter 1 with respect to contributions to or under a stock bonus, pension, profit-sharing, or annuity plan, and with respect to distributions under such a plan or by a trust forming part of such a plan, the term 'employee' shall include a full-time life insurance salesman who is considered an employee for the purpose
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 517 of subchapter A of chapter 9, or, in the case of services performed ^ u.^s/a§ i400 tt before January 1, 1951, who would be considered an employee if »««• his services were performed during 1951." (b) EFFECTIVE DATE.—The amendment made by this section shall be applicable with respect to taxable years beginning after December 31, 1938. SEC. 344. NONBUSINESS CASUALTY LOSSES. (a) REMOVAL or LIMITATION.—Section 122 (d) (5) (relating to net ^u.^s.c!§i22(di operating loss deduction) is hereby amended by inserting at the end (s)- thereof the following new sentence: "This paragraph shall not apply with respect to deductions allowable for losses sustained after Decem- ber 31,1950, in respect of property, if the losses arise from fire, storm, shipwreck, or other casualty, or from theft." (b) EFFECTIVE DATE,—The amendment made by this section shall be applicable in computing the net operating loss deduction for taxable years ending after December 31,1948. SEC. 345. ABATEMENT OF TAX ON CERTAIN TRUSTS FOR MEMBERS OF ARMED FORCES DYING IN SERVICE. I n the case of a trust which accumulated income for a beneficiary who died on or after December 7,1941, and before January 1,1948, while in active service as a member of the military or naval forces of the United States or of any of the other United Nations, there shall be allowed as a deduction in computing the net income of such trust (in addition to other deductions allowable under sections 23 and 162 of the Internal Revenue Code) income of the trust for any taxable year (before ^u.^s.'a'§T23,i62. diminution for income tax) which was accumulated for such bene- ^"/«. PP; ^SS, t^- c . .» ' 490, 491, 499, 515, 500. riciary it— (1) the income accumulated was for a taxable year of the trust which ended with or within a taxable year (ending on or after December 7,1941) of such beneficiary during any part of which he was a member of such military or naval forces, or, in the case of the taxable year of the trust during which such beneficiary died, the income accumulated was for the period in such taxable year prior to the death of such beneficiary; and (2) the amount of such accumulated income was, without regard to this section, taxable to the trust, and (3) the income for such taxable year accumulated for the bene- ficiary, if not distributed to him prior to his death, was payable by the trust at or after his death only to his estate, spouse, or lineal ancestors or descendants. SEC. 346. LIFE INSURANCE DEPARTMENTS OF MUTUAL SAVINGS BANKS. (a) COMPUTATION OF TAX.—Supplement A of chapter 1 is hereby iu^s.^c. § loi e^ amended by adding at the end thereof the following new section : m- "SEC. 110. MUTUAL SAVINGS BANKS CONDUCTING LIFE INSURANCE BUSINESS. " ( a ) ALTERNATIVE TAX.—In the case of a mutual savings bank not having capital stock represented by shares, authorized under State law to engage in the business of issuing life insurance contracts, and which conducts a life insurance business in a separate department the accounts of which are maintained separately from the other accounts of the mutual savings bank, there shall be levied, collected, and paid, in lieu of the taxes imposed by sections 13 and 15, or section 117 (c) (1), 47^"^'' PP- ^^' *^' a tax consisting of the sum of the partial taxes determined under Po«<,p. 518. paragraphs (1) and (2) :
518 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. "(1) A partial tax computed upon the net income determined without regard to any items of gross income or deductions properly allocable to the business of the life insurance department, at the rates and in the manner as if this section has not been enacted; and "(2) a partial tax computed upon the net income (as defined 26u*s.^c^§201 (c) ^^ section 201 (c) ( 7 ) ) of the life insurance department deter- (7). • • ' mined without regard to any items of gross income or deductions not properly allocable to such department, at the rates and in the 26 u*Vc § 201 e< manner provided in Supplement G with respect to life insurance aeg- ' Companies. " ( b ) LiMrrATiONs OF SECTION,—The provisions of subsection (a) shall be applicable only if the life insurance department would, if it were treated as a separate corporation, qualify as a life insurance i U.1: a § 201 (b). company under section 201 (b)." Ante.p.m. (b) TECHNICAL AMENDMENT.—Section 13 (relating to normal tax on corporations) is hereby amended by adding at the end thereof the following new subsection: "(f) MUTUAL SAVINGS BANKS CONDUCTING LIFE INSURANCE BUSINESS.—For special tax, in lieu of the taxes imposed by this section Ante, p. 468. ^^^ scction 15, in the case of- a mutual savings bank conducting a life Ante, p. 517. insurance business, see section 110." (c) EFFECTIVE DATE.—The amendments made by this section shall be applicable only with respect to taxable years beginning after December 31,1951. SEC. 347. PUBLISHING BUSINESS CARRIED ON BY TAX-EXEMPT OR- GANIZATION. 26u.^s.c^i422(b). (^) TREATMENT AS RELATED TRADE OR BUSINESS.—Section 422 (b) Ante, p. 610. (relating to definition of unrelated trade or business) is hereby amended by adding at the end thereof the following: "If a publishing business carried on by an organization during a taxable year beginning before January 1,1953, is, without regard to this sentence, an unrelated trade or business, but before the beginning of the third succeeding taxable year the business is carried on by it (or by a successor who acquired such business in a liquidation which would constitute a tax- 26u.^s.^a§ 112(b) ^^^^ exchange under section 112 (b) ( 6 ) ) in such manner that the (6). conduct thereof is substantially related to the exercise or performance by such organization (or such successor) of its educational or other 63 Stat. ^. purpose or function described in section 101 ( 6 ) , such publishing business shall not be considered, for the taxable year, as an unrelated trade or business." (b) EFFECTIVE DATE.—The amendment made by this section shall be applicable with respect to taxable years beginning after December 31,1950, and prior to January 1,1953. SEC. 348. DEDUCTION WITH RESPECT TO CERTAIN UNRELATED BUSINESS NET INCOME. 26U.*8.c*'§422(a). (^) UNRELATED BUSINESS NET INCOME.—Scctioii 422 (a) (relating to unrelated business net income) is hereby amended by adding at the end thereof the following: " I n the case of an organization described 64 &tat. 957. ^^^ ^^^ in section 3813 (a) (2) which is a member of a partnership all of whose (2). ' members are organizations described in section 3813 (a) (2), if a trade or business regularly carried on by such partnership is an unrelated trade or business with respect to such organization, such organization shall, for taxable years beginning before January 1,1954, be allowed a deduction in an amount equal to the portion of the gross income of such partnership from such unrelated trade or business which such organi- zation is required (by a provision of a written contract executed by
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 519 such organization prior to January 1,1950, which provision expressly deals with the disposition of the gross income of the partnership) to pay within the taxable year in discharge of indebtedness incurred by such organization in acquiring its share of such trade or business, or to irrevocably set aside within the taxable year for the discharge of such indebtedness (to the extent that such amount has been so paid or set aside) if (i) such partnership was formed prior to January 1, 1950, for the purpose of carrying on such trade or business, and (ii) sub- stantially all the assets used in carrying on such trade or business were acquired by it or by its members prior to such date. As used in the preceding sentence, the word 'indebtedness' does not include indebted- ness incurred after January 1,1950." (b) EFFECTIVE DATE.—The amendment made by this section shall be applicable with respect to taxable years beginning after December 31, 1950, and prior to J a n u a r y 1,1954. SEC. 349. NONDISTRIBUTABLE INCOME OF PERSONAL HOLDING COM- PANIES. Effective for taxable years beginning after December 31, 1939, sec- tion 504 is hereby amended by adding at the end thereof the following ggf^ ®***- ^^^^ ^*^*- new subsection: 26 u. s. c. § 604. "(e) The amount by which the undistributed subchapter A net income determined without reference to this subsection exceeds the amount which could be distributed on the last day of the taxable year as a dividend (1) without violating any action, regulation, rule, order, or proclamation taken, promulgated, made, or issued by, or pursuant to the direction of, the President or any agency that he may designate, under the Trading With the Enemy Act of October 16, 1917, as ^gff.*s. c^app. ji. amended, or the First W a r Powers Act of 1941, and (2) not subject to 56 stat.'sai a lien in favor of the United States." jS^.^- ^- ^- *PP- TITLE IV—EXCISE TAXES P a r t I—^Tax on Admissions and C a b a r e t s SEC. 401. REMOVAL OF TAX ON FREE ADMISSIONS. Section 1700 (a) (1) (relating to tax on single or season tickets) is 26u*s" C.VTOO (a) hereby amended by striking out the second, fourth, and fifth sentences (i). thereof. SEC. 402. EXEMPTIONS FROM ADMISSIONS TAX. (a) REINSTATEMENT or PREWAR EXEMPTIONS.—^Notwithstanding section 541 (b) of the Revenue Act of 1941, the provisions of section 1701 (relating to exemptions from the admissions tax) shall apply to ^^56 stat. 7io; 53 stat. amounts paid on or after the effective date specified in section 403 of 26 u. s. c. § 1701. this Act for admissions on or after such date. ^ °°*^' (b) AMENDMENT OF SECTION 1701 (a) AND (b).—Subsections (a^ and (b) of section 1701 (relating to exemptions from admissions tax) are hereby amended to read as follows: " (a) OERTAIN RELIGIOUS, EDUCATIONAL, OR CHARITABLE ENTERTAIN- MENTS, E T C . — "(1) I N GENERAL.—Except as provided in paragraph (2), any admissions all thcf proceeds of which inure— " (A) exclusively to the benefit of— " ( i ) a church or a convention or association of churches; "(ii) an educational institution which is exempt under section 101 (6) or which is an educational institution of 26u*8 c' §101 (6). , a government or political subdivision thereof, if such organization normally maintains a regular faculty and
520 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. curriculum and normally has a regularly organized body of pupils or students in attendance at the place where its educational activities are regularly carried on; "(iii) a corporation or any community chest, fund, or foundation organized and operated exclusively for 26u.^s.a§ioi(6). charitable purposes, exempt under section 101 ( 6 ) , if such corporation or organization is supported, in whole or in part, by funds contributed by the United States or any State or political subdivision thereof, or is primarily supported by contributions from the general public; "(iv) a society or organization conducted for the sole purpose of maintaining symphony orchestras or operas and receiving substantial support from voluntary con- tributions ; " ( v ) an organization (organized prior to October 1, 1951) which is exempt under section 101 (6) and which is operated for the purpose of conducting an annual chau- tauqua program of educational, cultural, and religious activities at a permanent location— if no part of the net earnings thereof inures to the benefit of any private stockholder or individual; " ( B ) exclusively to the benefit of National Guard organ- izations, Reserve officers' associations or organizations, posts or organizations of war veterans, or auxiliary units or societies of any such posts or organizations, if such posts, organizations, units, or societies are organized in the United States or any of its possessions, and if no part of their net earnings inures to the benefit of any private stockholder or individual; or "(C) exclusively to the benefit of a police or fire depart- ment of any city, town, village, or any municipality or exclusively to a retirement, pension, or disability fund for the sole benefit of members of such a police or fire department or to a fund for the heirs of such members. "(2) NoNEXEMPT ADMISSIONS.—The exemption provided under paragraph (1) shall not apply in the case of admissions to (A) any athletic game or exhibition unless the proceeds inure exclu- sively to the benefit of an elementary or secondary school or unless in the case of an athletic game between two elementary or sec- ondary schools, the entire gross proceeds from such game inure to the benefit of a hospital for crippled children, (B) wrestling matches, prize fights, or boxing, sparring, or other pugilistic matches or exhibitions, (C) carnivals, rodeos, or circuses in which any professional performer or operator participates for compen- sation, or (D) any motion picure exhibition. " ( b ) AGRICULTURAL FAIRS.—Any admissions t o agricultural fairs if no part of the net earnings thereof inures to the benefit of any stock- holders or members of the association conducting the same—if the proceeds therefrom are used exclusively for the improvement, mainte- nance, and operation of such agricultural fairs; or". (c) ADMISSIONS TO MUNICIPAL SWIMMING POOLS, ETC.—Section 26u*8 c^s 1701 ^'^^^ ^® hereby amended by striking out the,period at the end of sub- Ante, p. 619. ' scction (c) and inserting in lieu thereof " ; or" and by adding at the end of such section the following new subsections: " ( d ) MUNICIPAL SWIMMING POOLS, ETC.—Any admissions to swim- ming pools, bathing beaches, skating rinks, or other places providing facilities for physical exercise, operated by any State or political subdivision thereof or by the United States or any agency or instru- mentality thereof—if the proceeds therefrom inure exclusively to
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 521 the benefit of the State, political subdivision, United States, agency, or instrumentality. For the purposes of this subsection the term *State' includes Alaska, Hawaii, and the District of Columbia; or "(e) (1) H O M E AND GARDEN TOURS.—^Any admission to a home or garden which is temporarily opened to the general public as p a r t of a program conducted by a society or organization to permit the inspec- tion of historical homes and gardens—if no part of the net earnings thereof inures to the benefit of any private stockholder or individual. "(2) HISTORIC SITES.—Any admissions to historic sites, houses, and shrines, and museums conducted in connection therewith, main- tained and operated by a society or organization devoted to the preser- vation and maintenance of such historic sites, houses, shrines, and museums—if no part of the net earnings thereof inures to the benefit of any private stockholder or individual.*' SEC. 403. EFFECTIVE DATE OF AMENDMENTS RELATING TO ADMIS- SIONS. The amendments made by sections 401 and 402 shall be applicable '^^'' P- ^^®- with respect to amounts paid on or after the first day of tne first month which begins more than ten days after the date of the enact- ment of this Act for admissions on or after such date. SEC. 404. TAX ON CABARETS, ROOF GARDENS, ETC. (a) BAUJROOMS AND DANCE HAIJ:.S.—Section 1700 (e) (1) (relating i R cfi i7oo (3) to tax on cabarets, roof gardens, etc.) is hereby amended by inserting (i)- after the second sentence thereof the following new sentence: " I n no case shall such term include any ballroom, dance hall, or other similar place where the serving or selling of food, refreshment, or merchandise is merely incidental, unless such place would be considered, without the application of the preceding sentence, as a 'roof garden, cabaret, or other similar place'." (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall be applicable only with respect to periods after 10 antemeridian on the first day of the first month which begins more than ten days after the date of the enactment of this Act. P a r t II—Tax on Cigarettes SEC. 421. TAX ON aOARETTES. (a) INCREASE IN RATE.—Section 2000 (c) (2) (tax on cigarettes) 26 u.^s! c.*§2000 (c) is hereby amended by striking out "$3.50 per thousand" and inserting (2). in lieu thereof "$4 per thousand until April 1, 1954, and $3.50 per thousand on and after April 1,1954". (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall take effect on the first day of the first month which begins more than 10 days after the date of the enactment of this Act. SEC. 422. FLOOR STOCKS TAX AND FLOOR STOCKS REFUND ON CIGARETTES. Section 2000 (relating to tax on tobacco, etc.) is hereby amended by g^f ^***- ^i^; sestat. adding at the end thereof the following new subsections: 26 u. s. c. § 2000. "(f) 1951 FLOOR STOCKS T A X . — "(1) TAX.—Upon cigarettes subject to tax under this section weighing not more than three pounds per thousand, which on the effective date of section 421 of the Revenue Act of 1951 are held by '^'''"'"• any person for sale, there shall be levied, assessed, collected, and paid a floor stocks tax at a rate equal to the increase in rate of tax made applicable to such cigarettes by the Revenue Act of 1951. "(2) RETURNS.—Every person required by this subsection to pay any floor stocks tax shall, on or before the end of the month
522 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. ri3xt ollowing the month in which section 421 (a) of the Revenue AfUe,v>.62i. ^^.^ .yf 5^952^ takes effect, under such regulations as the Secretary shall prescribe, make a return and pay such tax, except that in the case of such cigarettes held by manufacturers and importers, the Secretary may collect the tax with respect to such cigarettes by means of stamps rather than return, and in such case may make an assessment against such manufacturer or importer hav- ing cigarette tax stamps on hand on the effective date of such sec- tion for the difference between the amount paid for such stamps and the increased rate imposed by such section. "(3) LAWS APPLICABLE.—All provisions of law, including pen- Atue, p. 521. alties, applicable in respect of the taxes imposed by section 2000, shall, insofar as applicable and not inconsistent with this sub- section, be applicable with respect to the floor stocks tax imposed by this subsection. "(g) FLOOR STOCKS REFUNDS ON CIGARETTES.— "(1) I N GENERAL.—^With respect to cigarettes, weighing not more than three pounds per thousand, upon \vhich the tax Arue,p.52i. imposed by subsection (c) (2), or upon Avhich floor stocks tax imposed by subsection (f), has been paid, and which, on April 1, 1954, are held by any person and intended for sale, or are in transit from foreign countries or insular possessions of the United States to any person in the United States for sale, there shall be credited or refunded to such person (without interest), subject to such regulations as may be prescribed by the Secre- tary, an amount equal to the difference between the tax paid on such cigarettes and the tax made applicable to such articles on April 1, 1954, if claim for such credit or refund is filed with the Secretary prior to July 1,1954. "(2) LIMITATIONS ON ELIGIBILITY FOR CREDIT OR REFUND.—No person shall be entitled to credit or refund under paragraph (1) unless (A) such person, for such period or periods both before and after April 1, 1954 (but not extending beyond one year thereafter), as the Secretary shall by regulations prescribe, makes and keeps, and files with the Secretary such records of inventories, sales, and purchases as may be prescribed in such regulations; and (B) such person establishes to the satisfaction of the Secretary, with respect to the cigarettes for which credit or refund is claimed by him under this section, that on and after April 1,1954, and until the expiration of three months thereafter, the price at which cigarettes of such class were sold (until a num- ber equal at least to the number on hand on April 1, 1954, were sold) reflected, in such manner as the Secretary may by regula- tions prescribe, the amount of the tax reduction. " (3) PENALTY AND ADMINISTRATIVE PROCEDURES.—All provisions of law, including penalties, applicable in respect of internal rev- enue taxes on cigarettes shall, insofar as applicable and not incon- sistent with this subsection, be applicable in respect of the credits and refunds provided for in this subsection to the same extent as if such credits or refunds constituted credits or refunds of such taxes." SEC. 423. REDUCTION OF TAX ON TOBACCO AND SNUFF. 26U**s.a^§20oo(a). (^) REDUCTION IN RATE.—Scctiou 2000 (a) (relating to tax on tobacco and snuff) is hereby amended by striking out "18 cents per pound", wherever it appears therein, and inserting in lieu thereof "10 cents per pound". (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall take effect on the first day of the first month which begins more than ten days after the date of the enactment of this Act.
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 523 P a r t I I I — R e t a i l e r s ' Excise T a x e s SEC. 431. RETAILERS' EXaSE TAX ON TOILET PREPARATIONS. (a) BABY O I L S , ETC.—Section 2402 (a) is hereby amended by i u.^s/a§ 2402. adding a t the end thereof the following new sentence: "The tax im- posed by this subsection shall not apply to lotion, oil, powder, or other article intended to be used or applied only in the care of babies." (b) SALES TO BARBER SHOPS, ETC.—Section 2402 (b) is hereby amended to read as follows: " ( b ) BEAUTY PARLORS, E T C . — F o r the purposes of subsection ( a ) , the sale of any article described in such subsection to any person operating a barber shop, beauty parlor, or similar establishment for use in the operation thereof, or for resale, and the sale of miniature samples of any such article for demonstration use only to a house-to- house salesman by the manufacturer or distributor, shall not be con- sidered as a sale at retail. The resale of such article at retail by such person, or the resale of such sample at retail by such house-to-house salesman, shall be subject to the provisions of subsection ( a ) . " SEC. 432. EFFECTIVE DATE OF PART IIL The amendments made by this part shall apply only to articles sold on or after the first day of the first month which begins more than ten days after the date of the enactment of this Act. P a r t IV—Diesel F u e l SEC. 441. DIESEL FUEL USED IN HIGHWAY VEHICLES. (a) IMPOSITION OF TAX.—The Internal Revenue Code is hereby amended by adding after chapter 19 the following new chapter: ^ ^t»| '^^•. ^^^ ^^ seg. "CHAPTER 20—DIESEL FUEL "SEC. 2450. TAX ON DIESEL FUEL. "There is hereby imposed a tax of 2 cents a gallon upon any liquid (other than any product taxable under section 3412)— "(1) sold by any person to an owner, lessee, or other operator of a diesel-powered highway vehicle, for use as a fuel in such vehicle, or "(2) used by any person as a fuel in a diesel-powered highway vehicle unless there was a taxable sale of such liquid under clause ( 1 ) . On and after April 1, 1954, the tax imposed by this section shall be 1% cents a gallon in lieu of 2 cents a gallon. "SEC. 2451. RETURNS AND PAYMENT. " (a) REQUIREMENT.—Every person liable for tax under this chapter shall make returns and pay the taxes due to the collector for the district in which is located his principal place of business, or if he has no principal place of business in the United States, then to the collector at Baltimore, Maryland. Such returns shall contain such information and be made at such times and in such manner as the Secretary may by regulations prescribe. " (b) INTEREST.—^The tax shall, without assessment or notice, be due and payable to the collector at the time prescribed for filing the return. If the tax is not paid when due, there shall be added as part of the tax interest at the rate of 6 per centum per annum from the time when the tax became due until paid.
524 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. "SEC. 2452. CREDITS AND REFUNDS. " ( a ) NON-TAXABLE U S E OR SALE BY VENDEE,—A credit against tax under this chapter, or a refund, may be allowed or made to a person in the amount of tax paid by him under this chapter with respect to his sale of any liquid to a vendee for use as fuel in a diesel-powered high- way vehicle, if such person establishes, in accordance with regulations prescribed by the Secretary, that— " (1) the vendee used such liquid otherwise than as fuel in such a vehicle or resold such liquid, and "(2) such person has repaid or agreed to repay the amount of such tax to such vendee, or has obtained the consent of the vendee to the allowance of the credit or refund. No interest shall be allowed with respect to any amount of tax credited or refunded under the provisions of this subsection. " ( b ) PROOF REQUIRED IN CASE OP CERTAIN OVERPAYMENTS.—No overpayment of tax under this chapter shall be credited or refunded (otherwise than under subsection ( a ) ) in pursuance of a court decision or otherwise, unless the person who paid the tax establishes, in accord- ance with regulations prescribed by the Secretary, (1) that he has not included the tax in the price of the article with respect to which it was imposed, or collected the amount of tax from the vendee, or (2) that he has repaid the amount of the tax to the ultimate purchaser of the article, or files with the Secretary written consent of such ultimate purchaser to the allowance of the credit or refund. "SEC. 2453. TAX-FREE SALES. "Under regulations prescribed by the Secretary, no tax under this chapter shall be imposed with respect to the sale of any liquid for the exclusive use of any State, Territory of the United States, or any political subdivision of the foregoing, or the District of Columbia, or with respect to the use by any of the foregoing of any liquid as fuel in a diesel-powered highway vehicle. "SEC. 2454. APPLICABILITY OF ADMINISTRATIVE PROVISIONS. "All provisions of law (including penalties) applicable in respect of 26u*s c*s2700 ^^® taxes imposed by section 2700 shall, insofar as applicable and not inconsistent with tliis chapter, be applicable in respect of the taxes imposed by this chapter. "SEC. 2455. RULES AND REGULATIONS. "The Secretary shall prescribe and publish all needful rules and regulations for the enforcement of this chapter." (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall take effect on the first day of the first month which begins more than ten days after the date of the enactment of this Act. P a r t V—Liquor SEC. 451. INCREASE IN TAX ON DISTILLED SPIRITS FROM $9 TO $10.50 PER GALLON. 56 Stat. 970.^^^^^^ (a) DISTILLED SPIRITS GENERALLY.—Section 2800 (a) (1) is hereby 26U.S.O. §2800(a). ORTT a n Roann o> .^j^^j^^j^^ jj^y striking out "$6" and inserting in lieu thereof "$10.50", and by inserting after the first sentence the following new sentence: "On and after April 1, 1954, the rate of tax imposed by this para- graph shall be $9 in lieu of $10.50.". (b) IMPORTED PERFUMES CONTAINING DISTILLED SPIRITS.—Section 2800 (a) (3) is hereby amended by striking out "$6" and inserting in lieu thereof "$10.50", and by adding at the end thereof the following new sentence: "On and after April 1, 1954, the rate of tax imposed by this paragraph shall be $9 in lieu of $10.50.".
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 525 (c) FLOOR STOCKS TAX.—Section 2800 is amended by inserting at ^^63 stat. 298; 58 stai;. the end thereof the following new subsection: 26 u. s. c. § 2800. «(1) 1951 FLOOR STOCKS T A X . — Aruc.v>.m. " ( 1 ) TAX.—^Upon all distilled spirits upon which the internal revenue tax imposed by law has oeen paid, and which on the effective date of section 451 (a) of the Kevenue Act of 1951, are ^O««,P 528. held and intended for sale or for use in the manufacture or pro- duction of any article intended for sale, there shall be levied, assessed, collected, and paid a floor stocks tax of $1.50 on each proof-gallon, and a proportionate tax at a like rate on all frac- tional parts of such proof-gallon. "(2) RETURNS.—Under such regulations as the Secretary shall prescribe, every person required by paragraph (1) to pay any floor stocks tax snail, on or before the end of the thirtieth day following the effective date of section 451 (a) of the Revenue Act of 1951 make a return and shall, on or before the first day of the third month following such effective date, pav such tax. Pay- ment of the tax shown to be due may be extended to a date not later than the first day of the tenth month following the effective date of such section upon the filing of a bond for payment thereof in such form and amount and with such surety or sureties as the Secretary may prescribe. " ( 3 ) LAWS APPLICABLE.—^AU provisions of law, including pen- alties, applicable in respect of internal revenue taxes on distilled spirits snail, insofar as applicable and not inconsistent with this subsection, be applicable in respect of the floor stocks tax imposed hereunder. For the purposes of this subsection the term 'distilled spirits' shall include products produced in such manner that the person producing them is a rectifier within the meaning of section 3 2 5 4 Cfi-^ " 63 Stat. 391. •^^ Vft7' 26 U. S. C. $ 32M SEC. 452. WINES. ^^^• (a) INCREASE I N RATE OF T A X . — (1) STILL WINES.—SO much of section 3030 (a) (1) (A) (tax ig^lgjjaoaoca) on still wines, etc.) as precedes the second sentence thereof is d) (A). ' hereby amended to read as follows: " ( A ) Imposition.—Upon all still wines, including ver- mouth, and all artificial or imitation wines or compounds sold as still wine, produced in or imported into the United States on or after the effective date of section 452 (a) of the Revenue Act of 1951, or which on such date were on any winery premises or other bonded premises or in transit thereto or at any custom house, there shall be levied, collected, and paid taxes at rates as follows, when sold, or removed for consumption or sale: "On wines containing not more than 14 per centum of absolute alcohol, 17 cents per wine-gallon, the per centum of alcohol under this section to be reckoned by volume and not by weight, except that on and after April 1, 1954, the rate shall be 15 cents per wine-gallon; "On wines containing more than 14 per centum and not exceeding 21 per centum of absolute alcohol, 67 cents per wine-gallon, except that on and after April 1, 1954, the rate shall be 60 cents per wine-gallon; "On wines containing more than 21 per centum and not exceeding 24 per centum of absolute alcohol, $2.25 per wine- gallon, except that on and after April 1,1954, the rate shall be* $2 per wine-gallon;
526 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. "All such wines containing more than 24 per centum of absolute alcohol by volume shall be classed as distilled spirits and shall pay tax accordingly." (2) SPAKKUNG WINES, LIQUEURS, AND CORDIALS.—Section 3030 26U*s.a^§3030{a) (*) i^) (tax on Sparkling wincs, liqueurs. and cordials) is hereby (2). amended as follows: (A) By striking out "after J u n e 30, 1940, or which on J u l y 1, 1940" and inserting in lieu thereof "on or after the effective date of section 452 (a) of the Revenue Act of 1951, or which on such date"; (B) by striking out "10 cents on each one-half pint or fraction thereof" and inserting in lieu thereof "17 cents on each one-half pint or fraction thereof, except that on and after April 1, 1954, the rate shall be 15 cents on each one- h a l f p i n t or fraction thereof"; and (C) by striking out "5 cents on each one-half pint or fraction thereof" each place that it occurs and inserting in lieu thereof "12 cents on each one-half pint or fraction thereof, except that on and after April 1, 1954, the rate shall be 10 cents on each one-half pint or fraction thereof". 64 8^at.^525. ^ ^^^ (I,) FLOOR STOCKS.—Subchapter F of chapter 26 is hereby amended aseq. ' ' ' by inserting at the end thereof the following new section: "SEC. 3195. 1951 FLOOR STOCKS TAX ON WINES. " ( a ) Upon all wines upon which the internal revenue tax imposed by law has been paid, and which on the effective date of section 452 (a) of the Revenue Act of 1951 are held and intended for sale or for use in the manufacture or production of an article intended for sale, there shall be levied, assessed, collected, and paid a floor stocks tax at rates equal to the increases in rates of tax made applicable to such Ante, p. 525. articles by section 452 (a) of the Revenue Act of 1951. "(b) RETURNS.—Under such regulations as the Secretary shall pre- scribe, every person required by subsection (a) to pay any floor stocks tax shall, on or before the end of the thirtieth day following the effec- tive date of section 452 (a) of the Revenue Act of 1951 make a return and shall, on or before the first day of the third month following such effective date, pay such tax. Payment of the tax shown to be due may be extended to a date not later than the first day of the tenth month following the effective date of section 452 (a) of the Revenue Act of 1951, upon the filing of a bond for payment thereof in such form and amount and with such surety or sureties as the Secretary may prescribe. "(c) LAWS APPLICABLE.—^All provisions of law, including penalties, Ante, p. 526. applicable in respect of the taxes imposed by section 3030 (a) shall, insofar as applicable and not inconsistent with this section, be appli- cable with respect to the floor stocks tax imposed by subsection ( a ) . " SEC. 453. FERMENTED MALT LIQUOR. (a) INCREASE I N TAX ON FERMENTED MALT LIQUORS FROM $8 TO $9 53 Stat.365; 56 Stat, pj-jj BARREL.—Section 3150 (a) (tax on fermented malt liquors) is 26U.s.c.§3i60(a). hereby amended (1) by striking out "$7" and inserting in lieu thereof "$9", and (2) by striking out the second sentence and inserting in lieu thereof the following: "On and after April 1, 1954, the tax im- posed by the preceding sentence shall be at the rate of $8 in lieu of $9.". 58 Stat. 67. ^^^ (|3^ FLOOR STOCKS TAX.—Section 3150 is hereby amended by insert- ing at the end thereof the following new subsection: "(g) 1951 FLOOR STOCKS T A X . — "(1) TAX.—^Upon all fermented malt liquors upon which the internal revenue tax imposed by law has been paid, and which
65 STAT.] PUBLIC LAW 183—OCT. 20. 1951 527 on the effective date of section 453 (a) of the Revenue Act of 1951 are held by any person and intended for sale there shall be levied, assessed, collected, and paid a floor stocks tax at a rate of $1 per barrel of 31 gallons. "(2) RETURNS.—^Under such regulations as the Secretary shall g rescribe, every person required by paragraph (1) to pay any oor stocks tax shall, on or before the end of the thirtieth day following the effective date of section 453 (a) of the Revenue Act of 1951 make a return and shall, on or before the first day of the third month following such effective date, pay such tax. Pay- ment of the tax shown to be due may be extended to a date not later than the first day of the tenth month following the effective date of section 453 (a) of the Revenue Act of 1951, upon the filing of a bond for payment thereof in such form and amount and with such surety or sureties as the Secretary may prescribe. "(3) LAWS APPLICABLE.—All provisions of law, including pen- alties, applicable in respect of the taxes imposed by subsection (a) shall, insofar as applicable and not inconsistent with this subsection, be applicable with respect to the floor stocks tax im- posed by this subsection." SEC. 454. FLOOR STOCKS REFUNDS. (a) AMENDMENT OF SECTIGN 1656 (a).—Section 1656 (a) (relating 69 Stat. 576. 26U. S. C. §1660. to floor stocks refunds on distilled spirits, etc.) is amended to read as follows: " ( a ) I N GENERAL.—^With respect to any article upon which tax is imposed under section 2800 ( a ) , 3030 ( a ) , or 3150 ( a ) , upon which -4n<«,pp.524-526 internal revenue tax (including floor stocks tax) at the applicable rate prescribed by such section has been paid, and which, on April 1, 1954, is held by any person and intended for sale or for use in the manu- facture or production of any article intended for sale, there shall be credited or refunded to such person (without interest), subject to such regulations as may be prescribed by the Secretary, an amount equal to the difference between the tax so paid and the rate made applicable to such articles on and after April 1, 1954, by such section, if claim for such credit or refund is filed with the Secretary prior to May 1, 1954." (b) AMENDMENT OF SECTION 1656 (b).—Section 1656 (b) (relating to limitations on eligibility for floor stocks refunds on distilled spirits, etc.) is amended by striking out "the rate reduction date" wherever it appears therein and inserting in lieu thereof "April 1,1954". SEC. 455. CLERICAL AMENDMENT. The table contained in section 1650 (relating to the war tax rates ^^54 stat. 523; 68 si of certain miscellaneous taxes) is hereby amended by striking out the ?§ u. s. c. § i65o. Post, p. 638. following: "2800(a) (1). Distaied Spirits $6 per gallon. $9 per gallon. 2800 (a) (3)... Imported Perfumes Containing $6 per gallon. $0 per gallon. Distilled Spirits. 3030 (a) (1).. Still Wines: (1) Not over 14% of Alcohol... 10 cents per gallon. 16 cents per gallon. (2) Over 14% and not over 40 cents per gallon. 60 cents per gallon. 21% of Alcohol. (3) Over 21% and not over $1 per gallon $2 per gallon. 24% of Alcohol. 3030 (a) (2). Sparkling Wines, Liqueurs, and Cordials: (1) Champagne or Sparkling 10 cents per half-pint 16 cents per half-pint or fraction thereof. or fraction thereof. (2) Artificially Carbonated 6 cents per half-pint 10 cents iier half-pint Wine. or fraction thereof. or fraction thereof. (3) Liqueurs, Cordials, E t c . . . 5 cents per half-pint 10 cents i)er half-pint or fraction thereof. or fraction thereof. 3160. Fermented Malt Liquors $7 per barrel $8 per barrel." 76100 O - 52 (PT. I) - 36
528 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. SEC. 456. EFFECTIVE DATE OF PART V. T h e a m e n d m e n t s m a d e by t h i s p a r t shall t a k e effect on t h e first d a y of t h e first m o n t h which begins m o r e t h a n 10 d a y s a f t e r t h e d a t e of t h e e n a c t m e n t of t h i s A c t . Part VI—Occupational Taxes SEC. 461. DEALERS IN LIQUORS. 26U.*8.c%3250. (^) WHOLESALE DEALERS IN LiQUORS.—Scction 3250 ( a ) ( 1 ) ( r e l a t i n g t o occupational t a x on wholesale dealers in liquors) is hereby a m e n d e d by s t r i k i n g o u t "$110" a n d i n s e r t i n g in lieu thereof "$200 . ( b ) R E T A I L DEALEKS I N L I Q U O R S . — S e c t i o n 3250 ( b ) (1) (relating to occupational t a x on retail dealers i n liquors) is hereby a m e n d e d b y s t r i k i n g o u t "$27.50" a n d i n s e r t i n g in lieu thereof "$50". (c) W H O L E S A L E DEALERS I N M A L T L I Q U O R S . — S e c t i o n 3250 ( d ) (1) ( r e l a t i n g t o t a x on wholesale d e a l e r s i n m a l t liquors) is h e r e b y a m e n d e d by s t r i k i n g o u t " $ 5 5 " a n d i n s e r t i n g i n lieu thereof "$100". SEC. 462. DRAWBACK IN THE CASE OF DISTILLED SPIRITS USED IN THE MANUFACTURE OF CERTAIN NONBEVERAGE PROD- UCTS. 26U^V^c. §3250 (^) DRAWBACK.—Section 3250 (1) (5) ( r e l a t i n g t o m a n u f a c t u r e r s W (5). or p r o d u c e r s of d e s i g n a t e d n o n b e v e r a g e p r o d u c t s ) is a m e n d e d t o r e a d as f o l l o w s : " ( 5 ) D R A W B A C K . — I n t h e case of distilled s p i r i t s t a x - p a i d a n d ^"•'*^°- used as p r o v i d e d in t h i s subsection, a d r a w b a c k shall be allowed— " ( A ) a t t h e r a t e of $6 on each proof gallon u p o n w h i c h t a x is p a i d a t a r a t e of $9 p e r proof gallon p r i o r t o t h e effective d a t e of section 462 of t h e Revenue A c t of 1951, " ( B ) a t t h e r a t e of $9.50 on each proof gallon u p o n w h i c h t a x is p a i d at a r a t e of $10.50 p e r proof gallon on a n d after t h e effective d a t e of section 462 of t h e R e v e n u e A c t of 1951, and " ( C ) a t t h e r a t e of $8 o n each p r o o f g a l l o n u p o n w h i c h t a x is p a i d a t a r a t e of $9 p e r proof gallon after M a r c h 3 1 , 1954. S u c h d r a w b a c k shall be d u e a n d p a y a b l e q u a r t e r l y u p o n filing of a p r o p e r claim w i t h t h e S e c r e t a r y . N o claim u n d e r t h i s subsec- tion shall be allowed unless filed w i t h t h e S e c r e t a r y w i t h i n t h e t h r e e m o n t h s next succeeding t h e q u a r t e r f o r which t h e d r a w b a c k is c l a i m e d . " (b) E F F E C T I V E D A T E . — T h e a m e n d m e n t m a d e b y subsection (a) shall be applicable only w i t h respect t o distilled s p i r i t s used on o r after t h e first d a y of t h e first m o n t h w h i c h begins m o r e t h a n t e n d a y s a f t e r the d a t e of t h e enactment of t h i s Act. SEC. 463. TAX ON COIN-OPERATED GAMING DEVICES. 26u!s*'0^3267(a). Sectiou 3267 ( a ) ( t a x on coin-operated g a m i n g devices) is hereby amended by striking out "$150" wherever appearing therein a n d i n s e r t i n g in lieu thereof "$250". SEC. 464. EFFECTIVE DATE OF PART VI. ^"^'•"- T h e a m e n d m e n t s m a d e b y sections 461 a n d 463 shall take effect on t h e first d a y of t h e first m o n t h which begins m o r e t h a n t e n d a y s a f t e r t h e d a t e of t h e e n a c t m e n t of t h i s A c t . I n t h e case of t h e y e a r begin- n i n g J u l y 1, 1951, w h e r e t h e t r a d e o r business on w h i c h t h e t a x is imposed w a s commenced p r i o r t o t h e first d a y of t h e m o n t h specified in t h e p r e c e d i n g sentence, t h e increase in t a x r e s u l t i n g f r o m such a m e n d m e n t s shall be reckoned p r o p o r t i o n a t e l y from t h e first d a y of such m o n t h t o a n d i n c l u d i n g t h e t l i i r t i e t h d a y of J u n e following a n d s h a l l be d u e on, a n d p a y a b l e on o r before, t h e last d a y of t h e m o n t h specified in t h e p r e c e d i n g sentence.
65 STAT.1 P U B L I C LAW 183—OCT. 20, 1951 529 Part VII—Wagering SEC. 471. WAGERING TAXES. (a) IMPOSITION OF TAXES.—Subtitle B (relating to miscellaneous taxes) is hereby amended by inserting after chapter 27 the following 26 u.^s.^a§ 3270 a new chapter: **^- "CHAPTER 27A—WAGERING T A X E S "Subchapter A—^Tax on Wagers "SEC 3285. TAX. " ( a ) WAGERS.—There shall be imposed on wagers, as defined in sub- section (b), an excise tax equal to 10 per centum of the amount thereof. " ( b ) DEFINITIONS.—For the purposes of this chapter— "(1) The term 'wager' means (A) any wager with respect to a sports event or a contest placed with a person engaged in the business of accepting such wagers, ( B ) any wager placed in a wagering pool with respect to a sports event or a contest, if such pool is conducted for profit, and (C) any wager placed in a lottery conducted for profit. "(2) The term 'lottery' includes the numbers game, policy, and similar types of wagering. The term does not include (A) any game of a type in which usually (i^ the wafers are placed, (ii) the winners are determined, and (iii) the distribution of prizes or other property is made, in the presence of all persons placing wagers in such game, and ( B ) any drawing conducted by an organization exempt from tax under section 101, if no p a r t of the 26U.^s.^a § 101. net proceeds derived from such drawing inures to the benefit of ^"<«. PP- 490-492. any private shareholder or individual. " ( c ) AMOUNT OF WAGER.—In determining the amount of any wager for the purposes of this subchapter, all charges incident to the placing of such wager shall be included; except that if the taxpayer establishes, in accordance with regulations prescribed by the Secretary, that an amount equal to the tax imposed by this subchapter has been collected as a separate charge from the person placing such w^ager, the amount so collected shall be excluded. " ( d ) PERSONS LIABLE FOR TAX.—Each person who is engaged in the business of accepting wagers shall be liable for and s h a l l p a y the t a x under this subchapter on all wagers placed with him. Each person who conducts any wagering pool or lottery shall be liable for and shall pay the tax under this subchapter on all wagers placed in such pool or lottery. "(e) EXCLUSIONS FROM TAX.—No tax shall be imposed by this sub- chapter (1) on any wager placed with, or on any wager placed in a wagering pool conducted by, a parimutuel wagering enterprise licensed mider State law, and (2) on any wager placed in a coin-operated device with respect to which an occupational tax is imposed by section 3267. " ( f ) TERRITORIAL EXTENT.—The tax imposed by this subchapter shall apply only to wagers (1) accepted in the United States, or (2) placed by a person who is in the United States (A) with a person who is a citizen or resident of the United States, or ( B ) in a wagering pool or lottery conducted by a person who is a citizen or resident of the United States. "SEC. 3286. CREDITS AND REFUNDS. " ( a ) No overpayment of tax under this subchapter shall be credited or refunded (otherwise than under subsection ( b ) ) , in pursuance of a court decision or otherwise, unless the person who paid the t a x
530 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. establishes, in accordance with regulations prescribed by the Secretary, (1) that he has not collected (whether as a separate charge or other- wise) the amount of the tax from the person who placed the wager on which the tax was imposed, or (2) that he has repaid the amount of the tax to the person who placed such wager, or unless he files with the Secretary written consent of the person who placed such wager to the allowance of the credit or the making of the refund. I n the case of any laid-off wager, no overpayment of tax under this sub- chapter shall be so credited or refunded to the person with whom such laid-off wager was placed unless he establishes, in accordance with regulations prescribed by the Secretary, that the provisions of the preceding sentence have been complied with both with respect to the person who placed the laid-off wager with him and with respect to the person who placed the original wager. " ( b ) Where any taxpayer lays off part or all of a wager with another person who is liable for tax under this subchapter on the amount so laid off, a credit against the tax imposed by this subchapter shall be allowed, or a refund shall be made to, the taxpayer laying-off such amount. Such credit or refund shall be in an amount which bears the same ratio to the amount of tax which such taxpayer paid under this subchapter on the original wager as the amount so laid off bears to the amount of the original wager. Credit or refund under this sub- section shall be allowed or made only in accordance with regulations prescribed by the Secretary; and no interest shall be allowed with respect to any amount so credited or refunded. "SEC. 3287. CERTAIN PROVISIONS MADE APPLICABLE. "All provisions of law, including penalties, applicable with respect ^u.^8. c^'§27oo. ^^ ^^y t^^ imposed by section 2700 shall, insofar as applicable and not inconsistent with the provisions of this subchapter, be applicable with respect to the tax imposed by this subchapter. In addition to all other Su?s.c?§27oe. records required pursuant to section 2709, each person liable for tax under this subchapter shall keep a daily record showing the gross amount of all wagers on which he is so liable. " S u b c h a p t e r B—Occupational T a x "SEC. 3290. TAX. "A special tax of $50 per year shall be paid by each person who is Anu, p. 52d. liable for tax under subchapter A or who is engaged in receiving wagers for or on behalf of any person so liable. "SEC. 3291. REGISTRATION. " ( a ) Each person required to pay a special tax under this sub- chapter shall register with the collector of the district— " (1) his name and place of residence; "(2) if he is liable for tax under subchapter A, each place of business where the activity which makes him so liable is carried on, and the name and place of residence of each person who is engaged in receiving wagers for him or on his oehalf; and "(3) if he is engaged in receiving wagers for or on behalf of any person liable for tax under subchapter A, the name and place of residence of each such person. " (b) Where subsection (a) requires the name and place of residence of a firm or company to be registered, the names and places of resi- dence of the several persons constituting the firm or company shall be registered. "(c) I n accordance with regulations prescribed by the Secretary, the collector may require from time to time such supplemental informa-
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 531 tion from any person required to register under this section as may be needful to the enforcement of this chapter. "SEC. 3292. CERTAIN PROVISIONS MADE APPLICABLE. "Sections 3271, 3273 ( a ) , 3275, 3276, 3277, 3279, and 3280 shall ^i*^*s.^c: §j 3271, extend to and apply to the special tax imposed by this subchapter 3273, 3276-3277, 3279; and to the persons upon whom it is imposed, and for that purpose any activity which makes a person liable for special tax under this subchapter shall be considered to be a business or occupation described in chapter 27. No other provision of subchapter B of chapter 27 shall f^ u.^s.^a'§^32bo et so extend or apply. «««. "SEC. 3293. POSTING. "Every person liable for specia tax under this subchapter shall place and Keep conspicuously in his principal place of business the stamp denoting the payment of such special t a x ; except that if he has no such place of business, he shall keep such stamp on his person, and exhibit it, upon request, to any officer or employee of the Bureau of Internal Revenue. "SEC. 3294. PENALTIES. " ( a ) FAILURE To P A T TAX.—^Any person who does anv act which makes him liable for special tax under this subchapter, without having paid such tax, shall, besides being liable to the payment of the tax, be fined not less than $1,000 and not more than $5,000. " ( b ) FArLURE TO JPosT OR ExHiBiT STAMP.—Any person who, through negligence, fails to comply with section 3293, shall be liable to a penalty of $50, and the cost of prosecution. Any person who, through willful neglect or refusal, fails to comply with section 3293, shall be liable to a penalty of $100, and the cost of prosecution. "(c) WiLLFDii VIOLATIONS.—^The penalties prescribed by section 2707 ^ stat m. ^^^ with respect to the tax imposed by section 2700 shall apply with respect 2700. to the tax imposed by this subchapter. "Subchapter C—^Miscellaneous Provisions "SEC. 3297. APPLICABILITY OF FEDERAL AND STATE LAWS. "The payment of any tax imposed by this chapter with respect to any activity shall not exempt any person from any penalty provided by a law of the United States or of any State for engaging in the same activity, nor shall the payment of any such tax prohibit any State from placing a tax on the same activity for State or other purposes. "SEC. 3298. INSPECTION OF BOOKS. "Notwithstanding section 3631, the books of account of any person ^||f^|-^^j^^^ liable for tax under this chapter may be examined and inspected as frequently as may be needful to the enforcement of this chapter." (b) TECHNICAL AMENDMENT.—-Section 3310 (f) (relating to discre- gg*^^; ^^53310(0. tion allowed the Commissioner with respect to returns and payment of tax) is hereby amended by inserting after "subchapter A of chapter 25," the following: "subchapter A of chapter 27A,". ^w<«. P- 529. SEC. 472. EFFECTIVE DATE OF PART VIL The tax imposed by subchapter A of chapter 27A, as added by section 471, shall apply only with respect to wagers placed on or after the ^^' P- ^'^• first day of the first month which begins more than 10 days after the date of enactment of this Act. No tax shall be payable under sub- chapter B of chapter 27A, as added by section 471, with respect to any ^"'*' P- ^ • period prior to the first day of the first month which begins more than 10 days after the date of enactment of this Act. I n the case of
532 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. any person who is liable for tax under subchapter A of chapter 27A, Ante, p. 529. ^s added by section 471, or who is engaged in receiving wagers for or on behalf of any person so liable, and who commenced the activity which makes him subject to such tax, or who was engaged in receiving such wagers, prior to the first day of the first month specified in the preceding sentence, the tax under subchapter B of chapter 27A, as added by section 471, shall be reckoned proportionately from the first day of such month to and including the thirtieth day of June fol- lowing and shall be due on, and payable on or before, the last day of the month specified in the preceding sentence. P a r t V I I I — M a n u f a c t u r e r s ' Excise T a x e s SEC. 481. AUTOMOBILES, TRUCKS, AND PARTS OR ACCESSORIES. 7if ^***- *^^'' ^^ ®*^*- (a) INCREASE I N TAX ON TRUCKS.—Section 3403 (a) (tax on trucks, 26u. 8. c. §3403. busses, etc.) is hereby amended by striking out "5 per centum" and inserting in lieu thereof "8 per centum, except that on and after April 1,1954, the rate shall be 5 per centum". (b) INCREASE I N TAX ON PASSENGER AUTOMOBIUI:S AND MOTOR- CYCLES.—Section 3403 (b) (tax on automobile chassis and bodies, etc.) is hereby amended to read as follows: " ( b ) OTHER CHASSIS AND BODIES, ETC.—Other automobile chassis and bodies, chassis and bodies for trailers and semitrailers (other than house trailers) suitable for use in connection with passenger automo- biles, and motorcycles (including in each case parts or accessories there- for sold on or in connection therewith or with the sale thereof), except tractors, 10 per centum, except that on and after April 1, 1954, the rate shall be 7 per centum. A sale of an automobile, trailer, or semi- trailer shall, for the purposes of this subsection, be considered to be a sale of the chassis and of the body." (c) INCREASE I N TAX ON PARTS OR ACCESSORIES.—Section 3403 (c) (tax on parts or accessories for automobiles, etc.) is hereby amended by striking out "5 per centum" and inserting in lieu thereof "8 per centum, except that on and after April 1,1954, the rate shall be 5 per centum". (d) REBUILT PARTS OR ACCESSORIES.—Section 3403 (c) (tax on parts or accessories) is hereby amended by adding at the end thereoi the following: " I n determining the sale price of a rebuilt automobile part or accessory there shall be excluded from the price, in accordance with regulations prescribed by the Secretary, the value of a like part or accessory accepted in exchange." (e) TECHNICAL AMENDMENT.—Section 3403 (e) (relating to certain credits against the tax imposed by section 3403) is hereby amended by striking out "in the case of an article taxable under subsection ( a ) , 6 per centum, and in the case of an article taxable under subsection (b), 7 per centum" and inserting in lieu thereof "in the case of an article taxable under subsection (a) or subsection ( b ) , the applicable percentage rate of tax provided in such subsections". (f) P A R T S OR ACCESSORIES FOR F A R M E Q U I P M E N T . — S e c t i o n 3443 ( a ) ^^63 Stat. 417; 55 Stat, ^gj ^^'^ jg hereby a m e n d e d b y s t r i k i n g o u t t h e p e r i o d a t t h e e n d of 26U.8.c.§3443(a). clausc ( v ) a n d i n s e r t i n g i n lieu thereof a semicolon, a n d b y i n s e r t i n g Post, p. 533. ^^^^ ^j^^g^ ^^^ ^j^g f o l l o w i n g : ^"P''*'- " ( v i ) in the case of articles taxable under section 3403 (c) (other than spark plugs, storage batteries, leaf springs, coils, timers, and tire chains), used or resold for use as repair or replacement parts or accessories for farm equipment (other than equipment taxable under subsec- tion (a) or (b) of section 3403);". (g) EFFECTIVE DATE OF SUBSECTION (f).—^The amendment made by subsection (f) shall be effective with respect to articles purchased (by
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 533 the user thereof) on or after the first day of the first month which begins more than ten days after the date of the enactment of this Act. ( h ) REMOVAL or TAX ON TIRES FOR TOTS, ETC.—^Paragraph (1) of section 3400 (a) (relating to tax on tires) is hereby amended by adding ^^ S*^^- ^^; „.««' ^ 1 1 1 T i i » . i i»-ii • ttrr\i . • -11 .1 • r ^O U. B. O. §d400 W at the end thereof the following: "The tax imposed by this paragraph d). shall not apply to (A) tires which are not more than 20 inches in diam- eter and not more than one and three-fourths inches in cross-section, if such tires are of all-rubber construction (whether hollow center or solid) without fabric or metal reinforcement, or (B) tires of extruded tiring with internal wire fastening agent." SEC. 482. NAVIGATION RECEIVERS SOLD TO THE UNITED STATES. (a^ EXEMPTION ON SALES TO UNITED STATES OF CERTAIN RADIO SETS.— Section 3404 (a) (relating to manufacturers' excise tax on radio receiv- ^s stat. 7^2 ^ ^ ing sets, etc.) is hereby amended by adding a t the end thereof the fol- lowing new sentence: "No tax shall be imposed under this subsection with respect to the sale to the United States for its exclusive use of a communication, detection, or navigation receiver of the type used in commercial, military, or marine installations." (b) TAX-FREE SALES OF RADIO PARTS.—Section 3404 (b) (relating to manufacturers' excise tax on component parts of radio receiving sets, etc.) is hereby amended by adding at the end thereof the follow- ing new sentence: "Under regulations prescribed by the Secretary, no tax shall be imposed under this subsection with respect to the sale of any article for use by the vendee as material in the manufacture or production of, or as a component part of, communication, detection, or navigation receivers of the type used in commercial, military, or marine installations if such receivers are to be sold by the vendee to the Unted States for its exclusive use. If any article sold tax-free to such vendee is not so used by him, or being so used the receiver is not so sold, the vendee shall be considered as the manufacturer or pro- ducer of such article." (c) REFUND IN CASE or U S E or PARTS.—Section 3443 (a) (1) (relat- i u.^s'. o'^§ 3443 (a) ing to credits and refunds) is hereby amended to read as follows: (D- "(1) to a manufacturer or producer, in the amount of any tax under this chapter which has been paid with respect to the sale of— " ( A ) any article (other than a tire, inner tube, or auto- mobile radio or television receiving set taxable under section 3404) purchased by him and used by him as material in the *'"^'^°- manufacture or production of, or as a component part of, an article with respect to which tax under this chapter has been paid, or which has been sold free of tax by virtue of section 3442, relating to tax-free sales; ^ f}^l\ c^j3442. " ( B ) any article described in section,3404 (b) purchased supra.' by him and used by him as material in the manufacture or production of, or as a component part of, communication, detection, or navigation receivers of the type used in com- mercial, military, or marine installations if such receivers have been sold by him to the United States for its exclusive use." (d) REFUND I N CASE OF RESALE TO UNITED STATES.—Section 3443 (a) (3) (A) is hereby amended by adding at the end thereof the Ante,p.si2. following: "(vii) in the case of a communication, detection, or navigation receiver of the type used in commercial, mili- tary, or marine installations, resold to the United States for its exclusive use."
534 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. 26 u*^s.'at 3444(b). i^) .UsE BY MANUFACTURER OF T AX ABLE PARTS.—Section 3444 (b) (relating to tax on use by manufacturer of taxable articles) is hereby amended to read as follows: " ( b ) This section shall not apply with respect to the use by the manufacturer, producer, or importer of articles described in section Arue, p. 533. 3404 (b) if such articles are used by him as material in the manufac- ture or production of, or as a component part of, communication, detection, or navigation receivers of the type used in commercial, military, or marine installations if such receivers are to be sold to the United States for its exclusive use." (f) EFFECTIVE DATES.—The amendments made by subsections (a) Po»t, p. 637. Qj^^ ^]^^ shall t a k e effect as p r o v i d e d in section 490. The amend- ments made by subsections (c) and (e) shall be applicable with respect to articles used in receivers sold to the United States on or after the first day of the first month which begins more than ten days after the date of the enactment of this Act, and the amendment made by subsection (d) shall be applicable with respect to articles resold to the United States on or after such first day. SEC. 483. TAX-FREE SALES OP REFRIGERATOR COMPONENTS TO WHOLESALERS FOR RESALE TO MANUFACTURERS. 26u!8*.c!|3406(b) Section 3405 (b) is hereby amended by inserting "(hereinafter referred to as 'refrigerating equipment')" before the period at the end of the first sentence and by striking out the second and third sentences and inserting in lieu thereof the following: "Under regula- tions prescribed by the Secretary, the tax under this subsection shall not apply in the case of sales of any such refrigerator components by the manufacturer, producer, or importer to (1) a manufacturer or producer of refrigerating equipment, or (2) a vendee for resale to a manufacturer or producer of refrigerating equipment if such com- ponents are in due course so resold. If any such refrigerator com- ponents are resold by the manufacturer or producer to whom sold or resold otherwise than on or in connection with, or with the sale of, complete refrigerating equipment manufactured or produced by him, then for the purposes of this section such manufacturer or producer shall be considered the manufacturer or producer of the refrigerator components so resold by him." SEC. 484. SPORTING GOODS. 65Stat. 716. 26U.S. C. §3406(a) Scctiou 3406 (a) (1) (relating to manufacturers' excise tax on (1). sporting goods) is hereby amended to read as follows: ''(1) SPORTING GOODS.—Badminton nets; badminton rackets (measuring 22 inches over all or more in l e n g t h ) ; badminton racket frames (measuring 22 inches over all or more in length); badminton racket string; badminton shuttlecocks; badminton standards; billiard and pool tables (measuring 45 inches over all or more in l e n g t h ) ; billiard and pool balls and cues for such tables; bowling balls and pins; clay pigeons and traps for throwing clay pigeons; cricket balls; cricket bats; croquet balls and mallets; curling stones; deck tennis rings, nets, and posts; golf bags (meas- uring 26 inches or more in length); golf balls; golf clubs (measur- ing 30 inches or more in l e n g t h ) ; lacrosse balls; lacrosse sticks; polo balls; polo mallets; skis; ski poles; snowshoes; snow toboggans and sleds (measuring more than 60 inches over all in length) ; squash balls; squash rackets (measuring 22 inches over all or more in l e n g t h ) ; squash racket frames (measuring 22 inches over all or more in l e n g t h ) ; squash racket string; table tennis tables, balls, nets, and paddles; tennis balls; tennis nets; tennis rackets (measuring 22 inches over all or more in length) ; tennis
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 535 racket frames (measuring 22 inches over all or more in l e n g t h ) ; tennis racket string; 15 per centum, except that on and after April 1,1954j the rate shall be 10 per centum; fishing rods, creels,' reels, and artificial lures, baits, and flies; 10 per centum." SEC. 485. ELECTRIC, GAS, AND OIL APPLIANCES. Section 3406 (a) (3) (relating to manufacturers'excise tax on elec- 26u.^s.c.^§3406(a) trie, gas, and oil appliances) is hereby amended (1) by striking out (3). "Electric direct motor-driven fans and air circulators;" and inserting in lieu thereof "Electric direct motor-driven fans and air circulators (not of the industrial t y p e ) ; and the following appliances of the household type:", (2) by striking out "electric heating pads and blankets" and inserting in lieu thereof "electric blankets, sheets, and spreads", and (3) by inserting after "juicers;" the following: "electric belt-driven fans; electric exhaust blowers; electric or gas clothes driers; electric door chimes; electric dehumidifiers; electric dishwash- ers; electric floor polishers and waxers; electric food choppers and grinders; electric hedge trimmers; electric ice cream freezers; electric mangles; electric motion or still picture projectors; electric pants pressers; electric garbage disposal units; and power lawn mowers;". SEC. 486. ADJUSTMENTS OF TAX RATES ON PHOTOGRAPHIC APPA- RATUS AND FILM; REPEAL OF TAX ON CERTAIN ITEMS. (a) ITEMS SUBJECT TO TAX.—Section 3406 (a) (4) (relating to the ^^|**^; ^^.^53406 00 manufacturers' excise tax on photographic apparatus) is hereby (4). amended to read as follows: "(4) PHOTOGRAPHIC APPARATUS.—Cameras and camera lenses, and unexposed photographic film in rolls (including motion pic- ture film), 20 per centum. The tax imposed under this paragraph shall not apply to X-ray cameras, to cameras weighing more than four pounds exclusive of lens and accessories, to still camera lenses having a focal length of more than one hundred and twenty mil- limeters, to motion picture camera lenses having a focal length of more than thirty millimeters, to X-ray film, to film more than one hundred and fifty feet in length, or to film more than twenty- five feet in length and more than thirty millimeters in width. Any person who acquires unexposed photographic film not subject to tax under this paragraph and sells such unexposed film in form and dimensions subject to tax hereunder (or in connection with a sale cuts such film to form and dimensions subject to tax here- under) shall for the purposes of this subsection be considered the manufacturer of the film so sold by him." (b) FLOOR STOCKS REFUNDS ON BULBS.— (1) With respect to any photo-flash or other bulb upon which the tax imposed under section 3406 (a) (4) of the Internal Revenue Code has been paid, and which on the effective date specified in section 489 of this Act is held by any person and Post.p.sse. intended for sale, or for use in the manufacture or production of any article intended for sale, there shall be credited or refunded to the manufacturer or producer of such bulb (without interest), subject to such regulations as may be prescribed by the Secretary, an amount equal to so much of the tax so paid as has been paid by such manufacturer or producer to such person as reimburse- ment for tlie elimination on such effective date of the tax on such bulb, if claim for such credit or refund is filed with the Secretary prior to the expiration of three months after such effective date. No credit or refund shall be alloMable under this paragraph for any bulb held by any person for sale which was purchased by such person as a component part of any other article.
536 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. (2) No person shall be entitled to credit or refund under para- graph (1) unless he has in his possession such evidence of the inventories with respect to which he has made the reimbursements described in paragraph (1) as the regulations under paragraph (1) shall prescribe. (3) All provisions of law, including penalties, applicable with 26u^scV406(a) respect to the tax imposed under section 3406 (a) (4) of the (4). Internal Eevenue Code shall, insofar as .applicable and not incon- sistent with this subsection, be applicable in respect of the credits and refunds provided for in this subsection to the same extent as if such credits or refunds constituted credits or refunds of such taxes. SEC. 487. IMPOSITION OF TAX ON MECHANICAL PENCILS, FOUNTAIN AND BALL POINT PENS, AND MECHANICAL UGHTERS FOR aOARETTES, CIGARS, AND PIPES. Chapter 29 (relating to manufacturers' excise and import taxes) is ^u.*s o^§3407. hereby amended by adding after section 3407 the following new section: "SEC 3408. TAX ON MECHANICAL PENCILS, FOUNTAIN AND BALL POINT PENS, AND MECHANICAL LIGHTERS FOR CIGARETTES, CIGARS, AND PIPES. " ( a ) IMPOSITION OP TAX.—There shall be imposed on the following articles, sold by the manufacturer, producer, or importer, a tax equal to 15 per centum of the price for which so sold: Mechanical pencils, fountain pens, and ball point pens; mechanical lighters for cigarettes, cigars, and pipes. " ( b ) EXEMPTION I F ARTICLE TAXABLE AS JEWELRY.—No tax shall be imposed under this section on any article taxable under section 26u^s c^§2400 ^ ^ ^ (relating to jewelry tax)." If any article, on the sale of which tax has been paid under this section, is further manufactured or processed resulting in an article taxable under section 2400, the per- son who sells such article at retail shall, in the computation of the retailers' excise tax due on such sale, be entitled to a credit or refund in an amount equal to the tax paid under this section." SEC. 488. REPEAL OF TAX ON ELECTRICAL ENERGY. (a) REPEAL OF TAX.—Section 3411 (relating to tax on electrical energy for domestic or commercial consumption), and sections 3441 26u*8.*c:?ft4iii (^) ^^^ ^^^ (^) (related provisions), are hereby repealed. 3441(d), 3447(0). ' ( b ) EFFECTIVE D A T E . (1) Except as provided in paragraph (2), the provisions of subsection (a) shall apply to electrical energy sold on or after the first day of the first month which begins more than ten days after the date of the enactment of this Act. (2) I n the case of electrical energy sold which is billed to the customer for a period beginning before the effective date specified in paragraph (1) and ending on or after such date, the provisions of subsection (a) shall apply to that portion of the amount billed for the electrical energjr sold during such period which the num- ber of days in such period on and after such effective date bears to the total number of days in such period. This section shall not apply to electrical energy sold before such effective date for which a bill was rendered prior to such date. SEC. 489. TAX ON GASOLINE. 26u!s*:c%'34i2(a). (a) INCREASE IN RATE.—Section 3412 (a) is hereby amended by striking out " l l ^ cents" and inserting in lieu thereof "2 cents" and by adding at the end thereof the following new sentence: "On and
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 537 after April 1, 1954, the tax imposed by this section shall be 1 ^ cents a gallon in lieu of 2 cents a gallon." (b) FLOOR STOCKS TAX AND REFUND.—Section 3412 is hereby i6u.*s.c^§34i2. amended by adding at the end thereof the following new subsections: ^^f, P- sae- " ( f ) 1951 FLOOR STOCKS TAX.—On gasoline subject to tax under this section which, on the effective date of section 489 (a) of the Revenue Act of 1951, is held and intended for sale, there shall be levied, assessed, collected, and paid a floor stocks tax at the rate of y2 cent per gallon. The tax shall not apply to gasoline in retail stocks held at the place where intended to be sold at retail, nor to gasoline held for sale by a producer or importer of gasoline. The provisions of section 3443 shall be applicable to the floor stocks tax imposed by ^ |f*|- ^^''•^ g ^ this subsection so as to entitle, subject to all the provisions of such ^W, pp. 532,533". section, (1) any manufacturer or producer to a refund or credit of such tax under subsection (a) (1) of such section, and (2) any person Ante,p.m. paying such floor stocks tax to a refund or credit thereof where gaso- line is by such person or any other person used or resold for any of the purposes specified in suoparagraphs ( A ) ( i ) , (ii), and (iii) of subsection (a) (3) of such section. " ( g ) FLOOR STOCKS REFUNDS ON GASOLINE.— "(1) I N GENERAL.—With respect to any gasoline taxable under this section, upon which tax (including floor stocks tax) at the applicable rate has been paid, and which, on April 1, 1954, is held and intended for sale by any person, there shall be credited or refunded (without interest) to the producer or importer who paid the tax, subject to such regulations as may be prescribed by the Secretary, an amount equal to so much of the difference between the tax so paid and the amount of tax made applicable to such gasoline on and after April 1, 1954, as has been paid by such producer or importer to such person as reimbursement for the tax reduction on such gasoline, if claim for such credit or refund is filed with the Secretary prior to July 1,1954. No credit or refund shall be allowable under this subsection with respect to gasoline in retail stocks held at the place where intended to be sold at retail, nor with respect to gasoline held for sale by a pro- ducer or importer of gasoline. "(2) LIMITATION ON ELTGIBILITY FOR CREDIT OR REFUND.—No producer or importer shall be entitled to a credit or refund under paragraph (1) unless he has in his possession satisfactory evi- dence of the inventories with respect to which he has made the reimbursements described in such paragraph, and establishes to the satisfaction of the Secretary with respect to the quantity of gasoline as to which credit or refund is claimed under such para- graph, that on or after April 1, 1954, such quantity of gasoline was sold to the ultimate consumer at a price which reflected the amount of the tax reduction. "(3) PENALTY AND ADMINISTRATIVE PROCEDURES.—All provisions of law, including penalties, applicable in respect of the t a x imposed under this section shall, insofar as applicable and not inconsistent with this subsection, be applicable in respect of the credits and refunds provided for in this subsection to the same extent as if such credits or refunds constituted credits or refunds of such taxes." SEC. 490. EFFECTIVE DATE OF PART VIII. Except as otherwise expressly provided in this part, the amend- ments made by this part shall take effect on the first day of the first month which begins more than 10 days after the date of the enactment of this Act.
538 PUBLIC LAW 183—OCT. 20. 1951 [65 STAT. Part IX—Miscellaneous Excise Tax Amendments SEC. 491. REDUCTION OF TAX ON TELEGRAPH DISPATCHES. 58 Stat. 61. 26U. S. C. §1650 (a) REDUCTION OF TAX.—The table contained in section 1650 (relat- Ante, p. 627. ing to the war tax rates of certain miscellaneous taxes) is hereby amended by striking out the following: "3465 (a) (1) (B) (insofar Domestic Telegraph, Cable, or 16 per centum 25 per centum as it relates to domestic Radio Dispatches. telegraph, cable, and radio dispatches). (b) EFFECTIVE DATE.—Subject to the provisions of subsection (c), the amendments made by this section shall apply with respect to amounts paid on or after the rate reduction date (as defined in sub- section ( d ) ) for services rendered on or after such date. (c) AMOUNTS PAm PURSUANT TO BILLS RENDERED.—^The amend- ments made by this section shall not apply with respect to amounts paid pursuant to bills rendered prior to the rate reduction date. I n the case of amounts paid pursuant to bills rendered on or after the rate reduction date for services for which no previous bill was ren- dered, the amendments made by this section shall apply except with respect to such services as were rendered more than 2 months before such date. I n the case of services rendered more than 2 months before such date the provisions of sections 1650 and 3465 of the Internal Supra. Revenue Code in effect at the time such services were rendered shall be 63 Stat. 422. 26 U. S. C. § 3465. applicable to the amounts paid for such services. (d) RATE REDUCTION DATE.—^For the purposes of this section the term "rate reduction date" means the first day of the first month which begins more than 10 days after the date of the enactment of this Act. SEC. 492. EXEMPTION OF CERTAIN OVERSEAS TELEPHONE CALLS FROM THE TAX ON TELEPHONE FACILITIES. (a) TELEPHONE CALLS FROM MEMBERS OF ARMED FORCES I N COMBAT 55 Stat. 714. ZONES.—Section 3466 is amended by redesignating subsection (c) 26U. S. C. §3466. thereof as subsection " ( d ) " and by inserting after subsection (b) the following new subsection: 65 Stat. 714. "(c) No tax shall be imposed under section 3465 (a) (1) (A) upon 26U.8.C.§3465(a). any payment received for any telephone or radio telephone message which originates within a combat zone, as defined in section 22 (b) ATite, p. 484. (13), from a member of the Armed Forces of the United States per- forming service in such combat zone, as determined under such section, provided a certificate, setting forth such facts as the Secretary may by regulations prescribe, is furnished to the person receiving such payment." (b) EFFECTIVE DATE.—^The amendment made by subsection (a) shall apply to amounts paid on or after the first day of the first month which begins more than 10 days after the date of enactment of this Act for telephone or radio telephone messages made on or after such date. SEC. 493. EXEMPTION OF FISHING TRIPS FROM TAX ON TRANSPOR- TATION. 65 Stat. 721. (a) EXEMPTION.—Section 3469 (b) (relating to exemption of cer- 26U.S.C.§3469(b). tain trips from the tax of transportation of persons) is hereby amended by striking out "or to amounts" and inserting in lieu thereof "to amounts", and by inserting after the words "one month or less" the following ", or to amounts paid for transportation by boat for the purpose of fishing from such boat". (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to amounts paid on or after the first day of the first month which begins more than 10 days after the date of the enactment of this Act for transportation on or after such first day.
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 539 SEC. 494. TAX ON TRANSPORTATION OF PERSONS. (a) EXEMPTION OF CERTAIN FOREIGN TRAVEL,—Section 3469 (a) of the Internal Revenue Code (relating to tax on transportation of 26u*'s"c^\'3469(a) persons) is hereby amended by striking out the third sentence and inserting in lieu of such sentence tlie following: " I n the case of transportation by water on a vessel which makes one or more inter- mediate stops at ports within the United States, Canada, or Mexico on a voyage which begins or ends in the United States and ends or begins outside the northern portion of the Western Hemisphere, no part of such transportation shall be considered for the purposes of the preceding sentence to be from any port within the United States, Canada, or Mexico to any other such port if the vessel in stopping at any such intermediate port is not authorized both to discharge and to take on passengers. A port or station within Newfoundland shall not, for the purposes of the preceding two sentences, be considered as a port or station within Canada." (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to amounts paid on or after the first day of the first month which begins more than ten days after the date of the enact- ment of this Act for transportation on or after such first day. SEC. 495. TRANSPORTATION OF MATERIAL EXCAVATED IN THE COURSE OF CONSTRUCTION WORK. (a) AMENDMENT OF SECTION 3475.—Section 3475 (relating to tax 26 u^s ^a § 3475. on transportation of property) is hereby amended by adding at the end thereof the following: "The tax imposed by this section shall not apply to the transportation of earth, rock, or other material excavated within the boundaries of, and in the course of, a construc- tion project and transported to any place within, or adjacent to, the boundaries of such project." T h e determination as to the applica- bility of the tax imposed by section 3475 in the case of the transporta- tion of any excavated material, other than transportation to which the amendment made by this subsection applies, shall be made as if this subsection had not been enacted and without inferences drawn from the fact that the amendment made by this subsection is not expressly applicable to the transportation of such other excavated material. (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to amounts paid on or after the first day of the first month which begins more than ten days after the date of enactment of this Act for transportation on or after such first day. SEC. 496. ARTICLES FROM FOREIGN TRADE ZONES. (a) IMPORTED ARTICLES.—Upon all articles specified in section 2000 (c) (2), 2800 ( a ) , 3030 ( a ) , or 3150 (a) of the Internal Kevenue Code ^^fj^'^ PP- ^21,524- on which the internal revenue taxes imposed by law have been deter- mined, pursuant to section 3 of the Act of June 18, 1934, as amended (U. S. C , title 19, sec. 81c), prior to the effective date of the rates of ^s stat. m. tax imposed on such articles by this Act, and which on or after such effective date are brought from foreign trade zones into customs terri- tory of the United States, there shall be levied, assessed, collected, and paid on such articles, in addition to the tax so determined, an addi- tional tax at rates equal to the increases in rates of tax made appli- cable to such articles by this Act. The tax imposed by this subsection vshall be collected, paid, and accounted for at the same time and in the same manner as tax on such article is collected, paid, and accounted for when brought from the foreign trade zone into the customs territory, (b) PREVIOUSLY TAXPAID ARTICLES.—Upon all taxpaid articles specified in section 2000 (c) (2), 2800 ( a ) , 3030 ( a ) , or 3150 (a) of the Internal Revenue Code which have been taken into foreign trade
540 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. zones from the customs territory of the United States and placed under the supervision of the collector of customs, pursuant to the second proviso of section 3 of the Act of J u n e 18, 1934, as amended 48 Stat. 999. (XJ. S. C , title 19, sec. 81c), prior to the effective date of the rates of tax imposed on such articles by this Act, and which on or after such effective date are (without loss of identity) returned from foreign trade zones to customs territory of the United States, there shall be levied, assessed, collected, and paid on such articles an additional tax at rates equal to the increases in rates of tax made applicable to such articles by this Act, The tax imposed by this subsection on any article shall be collected, paid, and accounted for at the same time and in the same manner as if such article had been taken into the foreign trade zone free of tax. SEC. 497. REFUNDS ON ARTICLES FROM FOREIGN TRADE ZONES. (a) IMPORTED ARTICLES.—^With respect to any article specified in section 2000 (c) (2), 2800 ( a ) , 3030 ( a ) , or 3150 (a) of the Internal 52^"*'' ^^' ^^^' ^^*" Revenue Code on which internal revenue tax at the applicable rate prescribed in such section has been determined pursuant to section 3 48 Stat. 999. of the Act of June 18, 1934, as amended (U. S. C , title 19, sec. 81c), prior to April 1, 1954, and which on or after such date is brought from a foreign trade zone into customs territory of the United States and the tax so determined thereon paid, there shall be credited or refunded (without interest) to the taxpayer, subject to such regula- tions as may be prescribed by the Secretary, an amount equal to the difference between the tax so paid and the amount of tax made appli- cable to such articles on and after April 1, 1954, if claim for such credit or refund is filed with the Secretary within thirty days after payment of the tax. (b) PREVIOUSLY TAXPAID ARTICLES.—With respect to any article specified in section 2000 (c) (2), 2800 ( a ) , 3030 ( a ) , or 3150 (a) of the Internal Revenue Code, upon which internal revenue tax (including floor stocks tax) at the applicable rate prescribed in such section has been paid, and which was taken into a foreign trade zone from the customs territory of the United States and placed under the super- vision of the collector of customs, pursuant to the second proviso of section 3 of the Act of June 18, 1934, as amended (U. S. C , title 19, sec. 81c), prior to April 1, 1954, and which on or after such date is (without loss of identity) returned from a foreign trade zone t o customs territory of the United States, there shall be credited or refunded (without interest) to the person so returning such article, subject to such regulations as may be prescribed by the Secretary, an amount equal to the difference between the tax so paid and the amount of tax made applicable to such articles on and after April 1, 1954, if claim for such credit or refund is filed with the Secretary within thirty days after the return of the article to customs territory. SEC. 498. TAX REFUNDS ON SPIRITS LOST IN FLOODS OF 1951. (a) AUTHORIZATION.—The Secretary of the Treasury is authorized and directed to make refund, or allow credit in the case of a distiller or rectifier if he so elects, in the amount of the internal-revenue tax and customs duties paid on spirits previously withdrawn, and lost, or rendered unmarketable, by reason of the floods of 1951 wh*ile such spirits were in the possession oi (1) the person originally paying such tax or such tax and duty on such spirits, (2) a rectifier for rectification or for bottling, or which have been used in the process of rectification, under Government supervision as provided by law and regulations, or (3) a wholesale or retail liquor dealer, all hereafter referred to as the possessor or possessors. The refunds and credits authorized by this section may be made to (1) any of the possessors, except a retail liquor
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 541 dealer, or (2) to any distiller, rectifier, importer, or wholesale liquor dealer who replaced for the possessor the full equivalent of the distilled spirits so destroyed or rendered unmarketable, without compensation, remuneration, payment, or credit of any kind in respect of the tax, or tax and duty on such distilled spirits. A claim for the amount of such tax, or such tax and duty, shall be filed with the Secretary of the Treasury within ninety days from the date of enactment of this Act. The claimant shall furnish proof to the Secretary's satisfaction that (1) the internal-revenue tax on such spirits, or the tax and duty if imported, was fully paid, (2) such spirits were lost, or rendered unmarketable, by reason of damage sustained as the result of the aforesaid flood conditions, (3) claimant was not indemnified by any valid claim of insurance or otherwise against loss of the tax (or tax and duty if imported) paid on the spirits, and (4) in those cases where applicable, that the claimant has replaced for the possessor the full equivalent of the distilled spirits so destroyed or rendered unmarket- able, without compensation, remuneration, payment, or credit of any kind in respect of the tax, or tax and duty, on such distilled spirits. (b) DESTRUCTION OF SPIRITS.—^When the Secretary, pursuant to this section, makes refund, or allows credit, in the amount of the tax, or tax and duty, on spirits rendered unmarketable, such spirits shall be destroyed under the supervision of the Secretary. (c) CREDIT.—^Where credit is allowed to a distiller or rectifier for the internal-revenue tax previously paid as aforesaid, the Secretary is authorized and directed to provide for the issuance of stamps to cover the tax on spirits subsequently withdrawn or rectified to the extent of the credit so allowed. (d) REGULATIONS.—^The Secretary is authorized to make such rules and regulations as may be necessary to carry out the provisions of this section. TITLE V—EXCESS PROFITS TAX SEC. 501. MAXIMUM TAX FOR NEW CORPORATIONS. Section 430 (relating to impositon of tax) is hereby amended as 26U.^s/aH30 follows : Ante, p. 473. (1) By adding at the end of subsection (a) thereof, as amended by section 121 of this Act, the following: ^»'«' P- *^*- "(3) in the case of a corporation for which an amount is deter- mined for the taxable year under subsection ( e ) , the amount determined under such subsection." (2) By r e d e s i ^ a t i n g subsection (e) as subsection ( f ) ; and (3) By inserting after subsection (d) the following new sub- section : " ( e ) NEW CORPORATIONS.— "(1) ALTERNATIVE AMOUNT.—In the case of a taxpayer which commenced business after July 1, 1945, and whose fifth taxable year ends after J u n e 30,1950, the amount referred to in subsection (a) (3) shall be— supra. " (A) If the taxable year is the first or second taxable year of the taxpayer, an amount equal to 5 per centum of the excess profits net income for the taxable year, except that if the excess profits net income exceeds $300,000, the amount shall be the sum of $15,000 plus the amount determined under sub- paragraph ( E ) of this paragraph. " ( B ) If the taxable year is the third taxable year of the taxpayer, an amount equal to 8 per centum of the excess profits net income for the taxable year, except that if the excess profits net income exceeds $300,000, the amount shall
542 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. be the sum of $24,000 plus the amount determined under subparagraph ( E ) of this paragraph. " ( C ) If the taxable year is the fourth taxable year of the taxpayer, an amount equal to 11 per centum of the excess profits net income for the taxable year, except that if the excess profits net income exceeds $300,000, the amount shall be the sum of $33,000 plus the amount determined under subparagraph ( E ) of this paragraph. " ( D ) I f the taxable year is the fifth taxable year of the taxpayer, an amount equal to 14 per centum of the excess profits net income for the taxable year, except that if the excess profits net income exceeds $300,000, the amount shall be the sum of $42,000 plus the amount determined under sub- paragraph ( E ) of this paragraph. " ( E ) The amount determined under this subparagraph shall be— " ( i ) if the taxable year ends before April 1, 1951, an amount equal to 15 per centum of the excess of the excess profits net income for the taxable year over $300,000. " (ii) if the taxable year begins on January 1,1951, and ends on December 31,1951, an amount equal to iTi/^ per centum of the excess of the excess profits net income for the taxable year over $300,000. "(iii) if the taxable year (other than a taxable year described in clause ( i i ) ) ends after March 31, 1951, an amount equal to 18 per centum of the excess of the excess profits net income for the taxable year over $300,000. " (2) F I R S T FIVE TAXABLE YEARS.—For the purpose of this sub- section— " ( A ) The taxable year in which the taxpayer commenced business and the first, second, third, and fourth succeeding taxable years shall be considered its first, second, third, fourth, and fifth taxable years, respectively. " ( B ) The taxpayer shall be considered to have been in existence and to have had taxable years for any period during which it or any corporation described in any clause of this subparagraph was in existence, and the taxpayer shall be con- sidered to have commenced business oti the earliest date on which it or any such corporation commenced business: " ( i ) A n y corporation which during or prior to the taxable year was a party with the taxpayer to a trans- ^u.liJ'H45(g). action described in section 445 (g) (2) ( A ) , ( B ) , o r ( C ) , determined as if the date 'July 1, 1945' were substituted for the date 'December 1,1950* in section 445 (g) (2) ( C ) . "(ii) Any corporation if a group of not more than four persons who control the taxpayer at any time during the taxable year also controlled such corporation at any time during the period beginning twelve months preced- ing their acquisition of control of the taxpayer and end- ing with the close of the taxable year; but only if at any time during such period (and while such persons con- trolled such corporation) such corporation was engaged in a trade or business substantially similar to the trade or business of the taxpayer during the taxable year. For the purpose of this clause, the term 'control' means the own- ership of more than 50 per centum of the total combined voting power of all classes of stock entitled to vote, or more than 50 per centum of the total value of shares of all classes of stock. A person shall not be considered a
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 543 member of the group referred to in this clause unless during the period referred to in this clause he owns stock in such corporation at a time when the members of the group control such corporation and he owns stock in the taxpayer at a time when the members of the group con- trol the taxpayer. F o r the purpose of this clause, the ownership of stock shall be determined in accordance with the provisions of section 503, except that construe- leu.^l". c^§soa tive ownership under section 503 (a) (2) shall be deter- mined only with respect to the individual's spouse and minor children. "(iii) I n case the taxpayer during or prior to the tax- able year was a purchasing corporation (as defined in part I V ) , the selling corporation (as defined in such Po«t,p.55&. part) whose properties were acquired in the part I V transaction; but this clause shall not apply unless for the taxable year or for any preceding taxable year the conditions of paragraphs (1), (2), and (3) of section 474 (c) were satisfied with respect to such transaction. Post, p. 5^. "(iv) Any corporation which, under regulations pre- scribed by the Secretary, is determined by one or more additional applications of clauses (i) to (iii) to stand indirectly in the same relation to the taxpayer as though such corporation were described in any such clause. If as of the beginning of December 1,1950, the adjusted basis for determining gain upon sale or exchange of the aggregate assets theretofore acquired by the taxpayer in transactions described in clauses (i) and (iii) (or acquired in the ordinary course of business in replacement of such assets) and held by it at such time constituted less than 20 per centum of the adjusted basis for determining gain upon sale or exchange of its total assets held at such time, then transactions described in such clauses occurring prior to such date shall be disre- garded in determining the date as of which the taxpayer shall be considered to have commenced business. "(3) LIMITATION.—The provisions of paragraph (1) of this subsection shall not apply to a taxpayer which derives more than 50 per centum of its gross income (determined without regard to dividends and without regard to gains from sales or exchanges of capital assets) for the taxable year from contracts and subcon- tracts to which the provisions of title I of the Renegotiation Act of 1951 (or the provisions of any prior renegotiation act) are Ante.p.y. applicable." SEC. 502. PAYMENTS FROM FOREIGN SOURCES FOR TECHNICAL ASSISTANCE, ETC. (a) AMENDMENT OF SECTION 433 (a) (1).—Section 433 (a) (1) ^^^^'g"^^- 433 (relating to excess profits net income for taxable years ending after (a) (i)." J u n e 30, 1950) is hereby amended by adding at the end thereof the PS'P.'549.' following new subparagraph: " ( B ) Payments From Foreign Sources for Technical Assistance, Etc.—^In the case of a domestic corporation which renders to a related foreign corporation technical assistance, engineering services, scientific assistance, or similar services (such services or assistance being related to the production or improvement of products of the type manufactured by such domestic corporation), there shall be excluded the remunera- tion for such services or assistance if such remuneration con- stitutes income derived from sources without the United 76100 O - 52 (PT. I) - 37
544 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. States. Any deductions in connection with or properly alloc- able to the rendering of such services or assistance shall not be allowed. F o r the purpose of this subparagraph, a foreign corporation shall be considered to be a 'related foreign cor- poration' if the domestic corporation at the time it renders such services or assistance owns 10 per centum or more of the outstanding stock of such foreign corporation." 26 u.^s. c.'1'433 (b). (^) AMENDMENT OF SECTION 433 (b).—Section 433 (b) (relating to Post, p. 649. taxable years in base period) is hereby amended by adding at the end thereof the following new paragraph: "(16) PAYMENTS FROM FOREIGN SO' .CES FOR TECHNICAL ASSIST- ANCE, Evc.—In the case of a domestic corporation which rendered to a related foreign corporation technical assistance, engineering services, scientific assistance, or similar services (such services or assistance being related to the production or improvement of products of the type manufactured by such domestic corpora- tion) , there shall be excluded the remuneration for such services or assistance if such remuneration constituted income derived from sources without the United States. Any deductions in connection with or properly allocable to the rendering of such services or assistance shall not be allowed. F o r the purpose of this para- graph, a foreign corporation shall be considered to be a 'related foreign corporation' if the domestic corporation at the time it rendered such services or assistance owned 10 per centum or more of the outstanding stock of such foreign corporation." SEC. 503. AVERAGE BASE PERIOD NET INCOME IN CASE OF CERTAIN FISCAL YEAR TAXPAYERS. 26 u^s o*§'435 (d) Section 435 (d) (relating to the general average method for the computation of average base period net income) is hereby amended by adding at the end thereof the following: "For the purpose of the computations under this subsection in the case of a taxpayer whose first taxable year under this subchapter is a taxable year which either began before January 1, 1950, or was preceded by a taxable year beginning before January 1, 1950, and ending after March 31, 1950, there shall be substituted for the base period of the taxpayer the period of 48 consecutive months ending March 31, 1950, if such substitution produces a lesser tax under this subchapter for the taxable year for which the tax is being computed. I n computing the average base period net income for such substituted period, the excess profits net income for January, February, and March of 1950 shall be computed by use of the 'weighted excess profits net income', as defined in section 435 (e) (2) ( E ) , for the taxable year in which such months fall." SEC. 504. AVERAGE BASE PERIOD NET INCOME—ALTERNATIVE BASED ON GROWTH IN CASE OF NEW CORPORATIONS. 64sm.^n49. ^^^ (aj GENERAL RULE.—Section 435 (e) (1) (relating to the alterna- (e) (1).' • tive Dased on growth) is hereby amended by striking out the phrase "the beginning of its base period" and inserting in lieu thereof the following: "the end of its base period." 26u^s c^M62 (c) ('^) AMENDMENT OF PART II.—Section 462 (c) (relating to the use ' by an acquiring corporation in a P a r t I I transaction of an alterna- tive average base period net income based on growth) is hereby amended as follows: (1) By amending paragraph (1) thereof to read as follows: 26U^s o^§'46i(a). "(1) ^^ the casc of a transaction described in section 461 ( a ) , other than a transaction described in section 461 (a) (1) ( E ) , — " ( A ) The acquiring corporation shall not be denied the right to determine whether it is eligible for the benefits of 26 u% c^5"435 (e) scctiou 435 (e) without reference to the recomputation of its
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 545 excess profits net income provided for in section 462 (b) where ^ ^.^g- c ^§"462 (b) the transaction occurred on or after J u l ^ 1, 1950, but it shall be denied such right where the transaction occurred prior to July 1,1950. " ( B ) Where, immediately prior to the date of the transac- tion, the acquiring corporation and all the component cor- porations (other than a corporation created incident to such transaction) met the requirements of section 435 (e) (1) (A) ( i ) , and, in case the transaction occurred on or after J u l y 1, 26u*^s' c*§"435 (ei 1950, had commenced business prior to the beginning of its base period (determined without reference to section 461 ( d ) ) , the acquiring corporation shall be entitled to compute |^u*^g' c^f^ei (di its average base period net income under section 435 (e) with reference to the recomputation of its excess profits net-income provided for in section 462 (b) if the tests of section 435 (e) are satisfied. For that purpose, the acquiring corporation shall combine with its total payroll and its total gross receipts for that portion of its base period which preceded such trans- action the total payroll and total gross receipts of such com- ponent corporations for that portion of such period and it shall combine with its net sales for that portion of the period prior to J a n u a r y 1,1951, which preceded such transaction the net sales of such component corporations for that portion of such period. The allocation oi payroll and gross receipts amounts of a component corporation to any such portion of such period shall be made in accordance with the rules pro- vided in section 435 (e) (4) and (5). F o r purposes of quali- fying under section 435 (e) (1) (A) (i) (relating to total assets of the taxpayer), such acquiring corporation shall com- bine its total assets on the date specified in section 435 (e) (1) (A) (i) with the total assets of each component corpora- tion on such date. The Secretary shall prescribe by regula- tions such rules as may be necessary to insure that such combined total gross receipts do not reflect a duplication for purposes of this section. " ( C ) Where, immediately prior to the date of the transac- tion, either the acquiring corporation or one or more com- ponent corporations (other than a corporation created inci- dent to such transaction) did not meet the requirements of section 435 (e) (1) (A) ( i ) , or, in case the transaction occurred on or after July 1, 1950, had not commenced busi- ness prior to the beginning of its base period (determined without reference to section 461 ( d ) ) , the acquiring cor- poration shall not be entitled to compute its average base period net income under secti'^n 435 (e) with reference to the recomputation of its excess profits net income provided for in section 462 (b). I n any such case, where the transac- tion occurred on or after July 1, 1950, the monthly excess profits net income of the corporation entitled to the benefits of section 435 (e) for any month of the acquiring corpora- tion's base period shall be, for purposes of the recomputation provided for in section 462 ( b ) , one-twelfth of the average base period net income to which such corporation was entitled under section 435 (e), and such monthly excess profits net income shall be in lieu of the monthly excess profits net income determined under paragraphs (1) and (2) of section 462 ( b ) . " (2) By striking from the second sentence of paragraph (2) ^^u^*g"^; thereof the words: "had commenced business prior to the begin- (c) (2).* ' *^^
546 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. ning of its base period (determined without reference to section ^ v l 0.1-461 (d). 461 ( d ) ) and". (3) By striking from paragraph (3) thereof the words "which had commenced business prior to the beginning of its base period" and by inserting in lieu thereof the following: "which had commenced business prior to the end of its base period". SEC. 505. AVERAGE BASE PERIOD NET INCOME—ALTERNATIVE BASED ON GROWTH. 26U.^s.c*§'435(e). Section 435 (e) (2) (G) (relating to the alternative based on growth) is hereby amended by striking out the word "only'*. SEC. 506. ADJUSTMENTS FOR CHANGES IN INADMISSIBLE ASSETS IN CASE OF BANKS. 26u.*s.c^§'435(g). (^) AMENDMENT OF SECTION 435 (g).—^Section 435 (g) (relating to net capital addition or reduction) is hereby amended by redesignating paragraph (8) as paragraph (11) and by adding after paragraph (7) the following new paragraph: " (8) ADJUSTMENTS FOR CHANGES I N INADMISSIBLE ASSETS I N CASE Ante, p. 491. Q^ BANKS.—^In the case of a bank (as defined in section 104)— " ( A ) If the increase in total assets for the taxable year exceeds the net capital addition computed without regard to the adjustment under paragraph (1) for an increase in inad- missible assets, then tne net capital addition for the taxable year shall not be less than the excess of— " ( i ) the amount determined under the first sentence of paragraph (1) over "(ii) an amount which bears the same ratio to the increase in inadmissible assets for the taxable year, deter- mined under paragraph (6), as the amount computed under such first sentence Dears to the increase in total assets for the taxable year. "(B) If the decrease in total assets for the taxable year exceeds the net capital reduction computed without regard to the adjustment under paragraph (2) for a decrease in inad- missible assets, then the net capital reduction for the taxable year shall not be less than the excess of— " ( i ) the amount determined under the first sentence of paragraph (2) over "(ii) an amount which bears the same ratio to the decrease in inadmissible assets for the taxable year, deter- mined under paragraph (5), as the amount computed under such first sentence bears to the decrease in total assets for the taxable year. F o r the purpose of this paragraph, the increase or decrease in total assets for the taxable year shall be computed in the same manner as the increase or decrease in inadmissible assets for the taxable year is computed under paragraph (5), except that such computa- tions shall be made with respect to all assets, whether admissible 64 sta| mh ^^ oj, inadmissible assets as defined in section 440." ^W.p. 502. • (b) AMENDMENT OF SECTION 438.—Section 438 (relating to new cap- K a t . 1159. ital credit changes) is hereby amended by adding after subsection (f) 26 u. s. c. § 438. (^Q following new subsection: "(g) ADJUSTMENTS FOR INADMISSIBLE ASSETS IN CASE OF BANKS.— Ante, p. 491. jj^ ^j^g ^.g^gg ^f j^ fcank (as defined in section 104), if the increase in total assets for the taxable year (determined in the manner provided in the ^^p^'^- last sentence of section 435 (g) (8)) exceeds the net new capital addi- tion computed without regard to the adjustment under subsection (b)
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 547 for an increase in inadmissible assets, then the net new capital addition for the taxable year shall not be less than the excess of the amount determined under the first sentence of subsection (b) over an amount ^n**Q" n^LQO ,^>,x I ' l l ,-1 • l i t ' • • T ' - l i r 1 ^ U . B . O . j 4d8 ( D ) . which bears the same ratio to the increase m inadmissible assets for the taxable year, determined under section 435 (g) (5), as the amount computed under such first sentence bears to such increase in total assets for the taxable year." (c) AMENDMENT OF SECTION 435 (f).—Section 435 (f) (relating to ^gtat. \\h2. capital additions in base period) is hereby amended as follows : (1) By inserting immediately after the word "reduced" in para- graph (1) thereof the following: "(but not below zero)". (2) By adding at the end of paragraph (1) thereof the follow- " F o r special rule in the case of banks, see paragraph ( 6 ) . " (3) By renumbering paragraph (6) as paragraph (7), and by adding immediately after paragraph (5) the following new para- graph : "(6) YEARLY BASE PERIOD CAPITAL OF BANKS.—In the case of a bank (as defined in section 104), the yearly base period capital for ^"<«' P- *8I- any taxable year shall be determined as follows: " ( A ) A tentative yearly base period capital shall be com- puted under paragraph (1) without regard to paragraph (1) (A). " ( B ) The tentative yearly base period capital so deter- mined shall be reduced hy the amount determined under sec- tion 440 (b) (relating to inadmissible assets). F o r the pur- 26u.*s. ".^§'440(b) pose of this subparagraph, the computation under section 440 (b) shall include only the daily amounts (described in such section) for the first day of such taxable year.** (d) EFFECTIVE DATE OF SUBSECTION (c) (3).—The amendment made by subsection (c) (3) (adding a new paragraph (6) to section 435 ( f ) ) ^"^''"• shall be applicable with respect to taxable years beginning on or after the date of the enactment of this Act, and, at the election of the tax payer made in accordance with regulations prescribed by the Secre- tary, shall be applicable to all taxable years ending after J u n e 30, 1950. SEC. 507. DECREASE IN INADMISSIBLE ASSETS. Section 435 (g) (relating to net capital addition or reduction) is ^u."!. 0.^435(g). hereby amended as follows: Ami, p. 546. (a) By adding at the end of paragraph (1) thereof the following: "For further adjustment with respect to the amount determined under the preceding provisions of this paragraph, see paragraph (9)." Infra. (b) By adding immediately after paragraph (8), as added by sec- tion 506 of this Act, the following new paragraphs: ^'^'' P- ^ • "(9) DECREASE I N INADMISSIBLE ASSETS.— " ( A ) Except as otherwise provided in subparagraph (B) (relating to banks), the excess of the amount computed under paragraph (2) (A) or ( B ) , whichever is applicable to the taxpayer (whether or not any amount is determined under the first sentence of paragraph ( 2 ) ) , over the amount, if any, computed under the first sentence of paragraph (2) shall be considered the net capital addition for the taxable year or shall be added to the net capital addition otherwise deter- mined under paragraph (1), as the case may be. The amount of the excess so determined shall be subject to the exceptions and limitations provided in paragraph (10). Po«<, P.MS.
548 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. Arue,p.i9i. " ( B ) I n the case of a bank (as defined in section 104), the computation under subparagraph (A) shall be made by substituting for the amount computed under paragraph (2) (A) or (B) whichever of the following amounts is the lesser: "(i) An amount which bears the same ratio to the decrease in inadmissible assets as the sum of the equity 26u.*8 c""437(c). Capital (as defined in section 437 (c)) and the daily 64 Stat. 1161. borrowed capital (as defined in section 439 ( b ) ) , each 26U.S.C. 5439(b). determined as of the first day of the first taxable year ending after June 30, 1950, bears to the total assets as of the beginning of such day; "(ii) If paragraph (8) (B) is applicable, the amount Ante, p. 646. computed u u d e r p a r a g r a p h (8) ( B ) ( i i ) . "(10) E X C E P T I O N S AND LIMITATIONS FOR T H E PURPOSE OF PARA- Anu,p.M7. GRAPH (9).—For the purpose of paragraph (9)— " ( A ) The adjustment to the decrease in inadmissible assets 26^u**'s"^'. 5 435 required under subparagraph (B) of paragraph (2) shall not (g)(2)." ' be greater than 25 per centum of the excess of the net capital reduction computed under the first sentence of paragraph (2) (and computed without regard to the percentage limitations in paragraph (4) (C) and ( E ) ) over the net capital reduc- tion computed under such sentence without regard to par- agraph (4) (C) and ( E ) . " ( B ) The amount determined under paragraph (9) shall not be greater than the excess of the increase in operating assets for the taxable year over the net capital addition (determined without regard to paragraph (9) and deter- mined without regard to the limitation to 75 per centum pro- vided in paragraph (3) (C) and paragraph (4) (C) and (E)). For the purpose of the preceding sentence, the increase in operating assets for the taxable year shall be determined in the same manner as the increase in inadmissible assets for the taxable year is determined under paragraph (5), For the purpose of such determination, the term 'operating assets' means— " ( i ) property used in the taxpayer's trade or business Ante, p. BOO. within the meaning of section 117 (j) (1) except that such property need not be held more than six months, and "(ii) stock in trade or other property of a kind which would properly be includible in the inventory of the taxpayer if owned at the close of the taxable year, and property held by the taxpayer primarily for sale to customers in the ordinary course of the taxpayer's trade or business, except any such assets which constitute inadmissible assets, stock, securities, or intangible property (such intangible pro- perty not being limited to the property described in section 64 Stat. 1163. Vii 7 - \ \ '^ 26 U. S. C. J 441 (i). ^^^K^))' _ . , Ante,p.m. " ( C ) The amount determmed under paragraph (9) shall be subject to reduction to the extent that the Secretary deter- mines that the increase in operating assets is a result, directly or indirectly, of an increase in indebtedness of the taxpayer (other than indebtedness which constitutes borrowed capital)."
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 549 SEC 508. ELECTION WITH RESPECT TO CERTAIN INADMISSIBLE ASSETS. (a) AMENDMENT OF SECTION 440.—Section 440 (relating to admis- ^^u^*s"c' § 44o sible and inadmissible assets) is hereby amended by adding at the Arue,'p.m.' end thereof the following new subsection: "(c) TREATMENT OF GOVERNMENT OBLIGATIONS AS ADMISSIBLE ASSETS.—If the taxpayer elects for any taxable year, in accordance with regulations prescribed by the Secretary, to increase its excess profits net income by an amount equal to the amount by which the interest received or accrued during the taxable year on Government obligations exceeds the sum of— "(1) the amount of interest paid or accrued during such year which is not allowed as a deduction under section- 23 ( b ) , and ss ^stat. ^2.^ 26 U. S. C. § 23 (b). "(2) the amount of the adjustments required for the taxable year under section 22 (o) (relating to adjustment for certain ^ufl"."". §22(0). bond premiums), but not in excess of the amount of interest received or accrued during the taxable year on Government obliga- tions to which such section is applicable, then for the taxable year for which the election is made the term 'admissible assets' shall include Government obligations, and the term 'inadmissible assets' shall not include Government obligations. F o r the purpose of applying section 435 to the taxable year for which the ^ u.**s.^c*§ 435. election is made, Government obligations shall not be considered 'inad- Ante,' pjp. 544-548! missible assets' in determining original inadmissible assets or yearly 663.°*'' ^^' ^^^' ^^' base period capital. As used in this subsection the term 'Government obligations' means obligations described in section 22 (b) (4) any 26 IT.*8/C. j 22 (b) part of the interest from which is excludible from gross income or (4). allowable as a credit against net income; but such term shall include only such obligations as in the hands of the taxpayer are property described in section 117 (a) (1) ( A ) . For the purpose of determining ^u.*s.c.^ii7(a). the excess profits credit for a taxable year for which the election is Ante,p.m. made, the excess profits net income under section 433 (b) for any tax- ^u*g-0^5433(b) able year shall include the amount by which the interest received or Ante, p. 544; infra. ' accrued during such taxable year on Government obligations exceeds the amount of interest paid or accrued during such year which is not allowed as a deduction under section 23 (b) and, if the taxable year 26U*s/c. § 23(b) ends after June 30, 1950, the amount with respect to such year described in paragraph (2)." (b) AMENDMENT OF SECTTION 433 (a) (1).—Section 433 (a) (relat- |^*lc.1433(a). ing to adjustments in excess profits net income for the taxable year) Ante, pp.'sos, 543! is hereby amended by adding the following new subparagraph at the end thereof: " ( S ) Interest on Certain Government Obligations.—For adjustment in the case of a taxpayer making an election provided in section 440 (c), relating to dealers in certain *"^''"- Government obligations, see section 440 (c).*' (c) AMENDMENT OF SECTION 433 (b).—Section 433 (b) (relating to ^"'«' P- ^ • adjustments in excess profits net income for taxable years in base period) is hereby amended by adding at the end thereof the follow- ing new paragraph: "(17) INTEREST ON CERTAIN GOVERNMENT OBLIGATIONS.—^For adjustment in the case of a taxpayer making an election pro- vided in section 440 (c), relating to dealers in certain Govern- "^"P™- ment obligations, see section 440 (c)." SEC 509. ALTERNATIVE AVERAGE BASE PERIOD NET INCOME. (a) AMENDMENT OF SECTION 442.—Section 442 (relating to abnorm- ^ ^u**s!^c; § 442. alities during the base period) is hereby amended as follows:
550 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. (1) By inserting at the end of subsection ( a ) thereof the following: "If such taxpayer is also entitled to the benefits of subsection ( h ) , the taxpayer's average base period net income determined under this sec- tion shall be the amount computed under subsection (c) or ( d ) , which- ever is applicable to the taxpayer, or the amount computed under subsection ( h ) , whichever results in the lesser tax under this sub- chapter for the taxable year. I n the case of any other taxpayer entitled to the benefits of subsection ( h ) , the taxpayer's average base period net income determined under this section shall be the amount com- puted under subsection ( h ) . " (2) By striking out "determined under this section" in sub- section^ (c) and (d) thereof each place it occurs and inserting in lieu thereof the following: "computed under this subsection". (3) By inserting after "subsection (c) ( 2 ) " in subsection (e) (1) thereof the following: "and subsection ( h ) " . (4) By redesignating subsections (h) and (i) thereof as (i) and (j), respectively, and by inserting after subsection (g) there- of the following new subsection: "(h) ALTERNATIVE AVERAGE BASE PERIOD N E T INCOME.— "(1) ELIGIBILITY REQUIREMENTS.—^A taxpayer which com- menced business on or before the first day of its base period shall be entitled to the benefits of this subsection if— " ( A ) the aggregate excess profits net income (if any) for the 12 months selected under paragraph (2) (B) is less than 36 per centum of one-half of the aggregate excess profits net income for the 24 months remaining under such paragraph; and " ( B ) normal production, output, or operation was inter- rupted or diminished because of the occurrence, within 12 months preceding (i) the first day of the 12-month period selected under paragraph (2) (B) ( i ) , o r (ii) the first day of any period of 6 or more consecutive months selected under paragraph (2) ( B ) (ii), of events unusual or peculiar in the experience of such taxpayer. This subsection shall have no application unless the taxpayer has an aggregate excess profits net income for the 24 months remaining under paragraph (2) ( B ) . " ( 2 ) COMPUTATION.—If the taxpayer is entitled to the benefits X- of this subsection, its average base period net income computed under this subsection shall be computed as follows: " ( A ) By determining under subsection (b) the period sub- »i,.. . ject to adjustment under this section. F o r the purposes of subparagraph (B) but not for the purposes of paragraph (1) (B) such period shall be considered a period of 36 consecutive months. " ( B ) By selecting from such period whichever of the fol- ,, ;,s lowing 12 months results in the higher remaining aggregate • excess profits net income— "(i) the 12 consecutive months the elimination of which produces the highest remaining aggregate excess profits net income, or " (ii) the 12 months which remain after retaining the 24 consecutive months which produce the highest remain- ing aggregate excess profits net income. " ( C ) By computing for each of the 12 months selected under subparagraph (B) a substitute excess profits net income computed under subsection (e).
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 551 " ( D ) By computing the sum of— " ( i ) the aggregate of the substitute excess profits net income, as determined under subparagraph ( C ) , for the 12 months selected under subparagraph ( B ) , but the amount computed under this clause shall not exceed one- half of the aggregate excess profits net income for the 24 months remaining under subparagraph ( B ) , and " (ii) the aggregate of the excess profits net income for each of the 24 months remaining under subparagraph ( B ) , computed in the manner provided by the second sentence of section 435 (d) ( 1 ) . ^"*«' P- ^• " ( E ) By dividing by three the amount ascertained under subparagraph ( D ) . "(3) AGGREGATE EXCESS PROFITS NET INCOME.—The 'aggregate excess profits net income' for any period shall be computed for the purposes of this subsection in the same manner as under sub- section ( b ) . " (b) TECHNICAL AMENDMENTS.— (1) Section 435 (f) (3) (relating to capital addition in the ^11**1/^^^5435(0 base period) is hereby amended by inserting immediately after (3). the words "under section 442 (c) (1)", wherever appearing there- in, the following: "or under section 442 ( h ) " . 64 ^tf^^ig.^^n^i. (2) Section 461 (relating to definitions for purposes of part (D, 442(h)." I I ) is hereby amended by inserting at the end thereof the follow- ^°*'' P- ^^^' ing new subsection: " ( g ) APPLICATION OF SECTION 442 (h).—For the purpose of this part, the reference to section 442 (c) in any section in this part shall be deemed a reference to section 442 (c) or ( h ) . " SEC. 510. DEFINITION OF TOTAL ASSETS FOR PURPOSES OF SECTIONS 442-446. The first sentence of section 442 (f) (relating to definition of total ^f/^g "^§442(0 assets) is hereby amended to read as follows: "For the purposes of this section, the taxpayer's total assets for any day shall be determined as of the end of such day and shall be an amount equal to the excess of— "(1) the sum of the cash and the property (other than cash, inadmissible assets, and loans to members of a controlled group as defined in section 435 (f) (4)) held by the taxpayer in good ae u^s c^^§435 (O faith for the purposes of the business, over (4). " ' " "(2) the amount of any indebtedness (other than borrowed capital as defined in section 439 (b) (1)^ to a member of a con- trolled group (as defined in section 435 (g) (6)) which includes 26u*s*c"§^§is^fbi the taxpayer." (D, 435 (g)'(6). SEC. 511. AVERAGE BASE PERIOD NET INCOME—CHANGE IN PRODUCTS OR SERVICES. Section 443 (f) (relating to change in products or services) is hereby ^ u*s "^''5 443 (f) amended to read as follows: "(f) RULES FOR APPLICATION OF SECTION.— "(1) The benefits of this section shall not be allowed unless the taxpayer makes application therefor in accordance with sec- tion 447 (e). 64 Stat. 1174. 26 U. S. C. § 447 (e),, "(2) If after the end of the base period of the taxpayer there was a substantial change in the products produced by the tax- ayer, such change shall, for the purpose of subsection (a) ( 1 ) , E e considered to have occurred on the last day of its base period if the taxpayer prior to J u l y 1,1950, commenced the construction of the facilities for the production of such new product, and if
552 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. such construction and the production of such new product is in furtherance of a course of action to which the taxpayer (or a cor- poration with which the taxpayer has the privilege under section 53 Stat. 58. 141 of filing a consolidated return for its first taxable year under 26 U. S. C. § 141. this subchapter) was committed prior to the close of the base period by contract with another person, which contract granted a license, franchise, or similar right essential for the production of such new product." SEC. 512. AVERAGE BASE PERIOD NET INCOME—NEW CORPORATION. 26 u.^s.c^§'445(c). Section 445 (c) (relating to total assets for first three years of new corporation) is hereby amended by adding at the end thereof the following new sentence: "For the purpose of this subsection, the net capital addition or reduction shall be computed without regard to the limitation to 75 per centum provided in section 435 (g) (3) ^Ts'c: 1435. (C) and section 435 (g) (4) (C) ancf ( E ) . " SEC. 513. EXCESS PROFITS CREDIT—REGULATED PUBLIC UTIUTIES. 26 u.^8."!^§ 448 (c) Section 448 (c) (3) (relating to regulated public utilities) is hereby (3). amended to read as follows: "(3) 6 per centum in the case of a corporation engaged as a common carrier (A) in the furnishing or sale of transportation by railroad, if subject to the jurisdiction of the Interstate Com- merce Commission, or (B) in the furnishing or sale of transpor- tation of oil or other petroleum products (including shale oil) by pipe line, if subject to the jurisdiction of the Interstate Commerce Commission or if the rates for such furnishing or sale are subject to the jurisdiction of a public service orpublic utility commission or other similar body of the District of Columbia or of any State." SEC. 514. CONSOLIDATED RETURNS OF REGULATED PUBLIC UTILITIES. 26 u.^s. W.\u» (e). Section 448 (e) (relating to consolidated returns of regulated public utilities) is hereby amended by adding at the end thereof the following new sentence: " F o r purposes of filing a consolidated return with its railroad lessee corporation, a railroad lessor corporation described in 26U.^8 ci'434(d). sectiou 434 (d) (without regard to the requirement of payment of the lessor's taxes b ^ the lessee) shall be considered a corporation described in subsection (c) (3)." SEC. 515. NONTAXABLE INCOME FROM CERTAIN MINING PROPERTIES. 26u^s c^\"453 Section 453 (relating to nontaxable income from exempt excess output) is hereby amended as follows: (a) By amending the first sentence of subsection (a) (13) thereof to read as follows: "The term 'unit net income' means the amount ascertained by dividing the net income (computed with the allowance for depletion) from the coal, ore, sulphur, potash, metallurgical grade limestone, chemical grade limestone, or timber recovered from the mineral property, or timber block, as the case may be, during the taxable year by the number of units of such mineral or timber recov- ered from such property in such year." (b) By inserting immediately after the words "coal mining prop- erty" in subsection (b) (2) thereof the following: ", or of a sulphur, potash, metallurgical grade limestone, or chemical grade limestone mineral property,". (c) By striking out so much of subsection (b) (4) as precedes the second sentence and inserting in lieu thereof the following: "(4) CERTAIN PROPERTIES NOT IN OPERATION DURING NORMAL PERIOD.—For any taxable year, the nontaxable income from exempt excess output of a metal or coal mining property, of a
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 553 sulphur, potash, metallurgical grade limestone, or chemical grade limestone mineral property, of a timber block, or of a natural gas property, which was not in operation during the normal period, shall be an amount equal to one-third of the net income for such taxable year (computed with the allowance for depletion) from such property or timber block, as the case may be." SEC. 516. TRANSITION FROM WAR PRODUCTION AND INCREASE IN PEACETIME CAPACITY. (a) I N GENERAL.—Part I of subchapter D of chapter 1 is hereby %v%^W.'imet amended by adding at the end thereof a new section to read as follows: »«?• "SEC. 459. MISCELLANEOUS PROVISIONS. " ( a ) AVERAGE BASE PERIOD NET INCOME—TRANSITION FROM W A R PRODUCTION AND INCREASE I N PEACETIME CAPACITY.—^In the case of a taxpayer which commenced business before January 1,1940, and since such date has engaged primarily in manufacturing, the taxpayer's average base period net income determined under this subsection shall be the amount computed under section 435 (e) (2) (G) (i) and (ii) |^u.^s. C^HSS (e). if— Ante, p. 546. "(1) The adjusted basis of the taxpayer's total facilities (as defined in section 444 ( d ) ) as of the beginning of its base period ^u*.^s'. c.^§'444 (di. (when added to the total facilities at such time of all corporations with which the taxpayer has the privilege under section 141 of filing a consolidated return for its first taxable year under this subchapter) did not exceed $10,000,000; "(2) The basis (unadjusted) of the taxpayer's total facilities (as defined in section 444 ( d ) ) at the close of its base period was 250 per centum or more of the basis (unadjusted) of its total facilities at the beginning of its base period; "(3) The percentage of the taxpayer's aggregate gross income which was from contracts with the United States and related sub- contracts was (A) at least 70 per centum for the period compris- ing all taxable years beginning after December 31, 1941, and end- ing before January 1, 1946, (B) less than 20 per centum for the period comprising all taxable years ending after December 31, 1945, and before January 1,1950, and (C) less than 20 per centum for the period comprising all taxable years ending after December 31,1949, and beginning before July 1,1950; and "(4) The average monthly excess profits net income of the tax- payer (computed in the manner provided in section 443 (e)) for— ^ ^**|- "^1-443 (g) " ( A ) the period comprising all taxable years ending with or within the last 24 months of its base period, and " ( B ) the last taxable year ending before the first day of its base period, are each 300 per centum or more of the average monthly excess profits net income (so computed) of the taxpayer for the period comprising all taxable years ending with or within the first 24 months of its base period." (b) TECHNICAL AMENDMENTS.—Section 435 (c) (relating to deter- ^ f%- ^c^^^^^ (c) mination of average base period net income) is hereby amended as follows: (1) B y inserting immediately after "445 or 446," the follow- ing : "or any subsection of section 459,". ^^P^"- (2) B y inserting immediately after "or under such section" the following: "or subsection".
554 PUBLIC LAW 183—OCT. 20, 1951 [66 STAT. SEC. 517. BASE PERIOD CATASTROPHE. Ante, p. 653. Section 459, as added by section 516 of this Act, is hereby amended by adding after subsection (a) thereof the following new subsection: "(b) BASE PERIOD CATASTROPHE.— "(1) EuGiBiLiTr REQUIREMENTS.—^A taxpayer shall be entitled to the benefits of this subsection only if it was engaged throughout its base period primarily in manufacturing and it— " ( A ) the taxpayer suffered during the last thirty-six months of its base period a catastrophe by fire, storm, explo- sion, or other casualty which destroyed or rendered inopera- tive a production facility constituting a complete plant or plants having in the hands of the taxpayer immediately prior to the catastrophe an adjusted basis equal to 15 per centum or more of the adjusted basis of all the taxpayer's production facilities at such time; " ( B ) as a result of such catastrophe the taxpayer's normal production or operation was substantially interrupted for a period of more than twelve consecutive months; and " ( C ) the taxpayer, prior to the end of its base period, replaced such production facility with a production facility which at the end of its base period had in its hands an adjusted basis not less than the adjusted basis immediately prior to the catastrophe of the production facility destroyed or rendered inoperative. "(2) COMPUTATION.—^The taxpayer's base period net income determined under this subsection shall be the amount computed under subparagraph (A) or the amount computed under subpara- graph ( B ) , whichever results in the lesser tax under this sub- chapter for the taxable year for which the tax is being computed: Ante, p. 544. « (A) The amouut computed under section 435 (d) by sub- stituting for the excess profits net income for each month in the taxable year in which the catastrophe described in para- graph (1) occurred an amount equal to the aggregate, divided by the number of months in the base period preceding such taxable year, of the excess profits net income for each month 26 u*s c^^s 435 (d) (computed under section 435 (d) ( l ) ) i n the base period pre- (1). • • ceding such taxable year. The average base period net income computed under this subparagraph shall, for the purpose of section 435 (a) (1) ( B ) , b e considered jan average base period net income determined under section 435 ( d ) . " ( B ) The amount computed under section 435 (e) (2) (G) 64Stat. 1151. /;\ strtA (\\\ " 26 U . S . C . § 436(e). \^) * " ^ ^"/* Anu, p. 546. g j , ^ gjg^ CONSOUDATION OF NEWSPAPERS. Ante, p. 553. Sectiou 459, as added by section 516 and 517 of this Act, is hereby amended by adding after subsection (b) thereof the following new subsection: "(c) CONSOLIDATION OP NEWSPAPER OPERATIONS.—In the case of a taxpayer engaged primarily in the newspaper publishing business in its last taxable year ending before July 1,1950, if— "(1) After the close of the first half of the base period of the taxpayer and prior to J u l y 1, 1950, the taxpayer consolidated its mechanical, circulation, advertising, and accounting operations in connection with its newspaper publishing business with such operations of another corporation engaged in the newspaper pub- lishing business in the same area; and " (2) The taxpayer establishes to the satisfaction of the Secre- tary that, during the period beginning with the consolidation
66 STAT.] PUBLIC LAW 183—OCT. 20, 1951 555 and ending with the close of the first taxable year beginning after the consolidation, such consolidation resulted in substantial reductions in the amounts which would otherwise have been paid or incurred as expenses in the conduct of the operations described in paragraph ( 1 ) ; and either "(3) The total deductions of the taxpayer under section 23, computed without regard to section 23 (s) and (bb), for the first stft.S!' ^^' ^''' ^' taxable year beginning after such consolidation were not in excess 26 u. s. c. § 23. of 80 per centum of the average of such deductions for the two taxable years of the taxpayer next preceding the taxable year in which such operations were consolidated; or "(4) The excess profits net income of the taxpayer, computed as provided in section 433 ( b ) , for the first taxable year of the 26U*.*8'. c.*§'433(b). taxpayer beginning after such consolidation was 125 per centum ^«<«. PP- 544, 549. or more of the amount determined under section 435 (d) (4) ; ^ u^l; c*§'435 (d). the taxpayer's average base period net income determined under this subsection shall be an amount computed under section 435 (d) plus an amount equal to the excess of the average of the amounts paid or incurred as expenses in the conduct of the operations described in paragraph (1) during the two taxable years of the taxpayer next preceding the taxable year in which such operations were consolidated over such amounts paid or incurred during the first taxable year of the taxpayer beginning after such consolidation. In determining such excess amount proper adjustment shall be made for increase in labor costs and newsprint following such consolidation. Proper adjust- ment shall also be made for any case in which a taxable year referred to in this subsection is a period of less than twelve months. This sub- section shall not be applicable to any taxable year of the taxpayer unless the consolidation described in paragraph (1) was continued throughout such taxable year." SEC. 519. TELEVISION BROADCASTING COMPANIES. Section 459, as added by sections 516 to 518 of this Act, is hereby ^^^' PP- ^^' ^^^ amended by adding after subsection (c) thereof the following new subsections: "(d) TELEVISION BROADCASTING COMPANIES.— "(1) I N GENERAL.—In the case of a taxpayer engaged in the business of television broadcasting throughout a period beginning before January 1, 1951, and ending with the close of the taxable year, the taxpayer's average base period net income determined under this subsection shall be the amount computed under para- graph (2) or (3), whichever is applicable. "(2) I F ENGAGED I N TELEVISION BROADCASTING AT CLOSE OF BASE PERIOD,—^If the taxpayer was engaged in the business of television broadcasting at the close of its base period, the average base period net income computed under this paragraph shall be com- puted as follows: " ( A ) If the taxpayer was engaged during its base period in any business or businesses other than television broadcast- ing, by computing the average base period net income under section 435 (d) for such other business or businesses (deter- 26u^s" C^HSS(d) mined without regard to income, deductions, losses, or other items attributable to the television broadcasting business). " ( B ) By multiplying such part of its total assets (as defined in section 442 ( f ) ) , for the last day of its base period, ^"''' P- ^5^- as was attributable to the television broadcasting business by—
556 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. " ( i ) the base period rate of return determined under 26 ui^s.c^l447(c). section 447 (c) for the industry classification which includes radio broadcasting, or "(ii) if the taxpayer was engaged during its base period in the business of radio broadcasting, its indi- vidual rate of return computed under paragraph ( 4 ) , whichever rate of return produces the greater average base period net income under this subsection. If the amount com- puted under this subparagraph is computed by the use of the rate of return specified in clause ( i ) , the amount so computed shall be reduced by an amount equal to such portion of the total interest paid or incurred by the taxpayer, for the period of 12 months following the close of its base period, as is attributable to its television broadcasting business. " ( C ) By adding the amount computed under subparagraph (B) to the amount, if any, computed under subparagraph (A). " ( 3 ) C O M M E N C I N G TELEVISION BROADCASTING AFTER BASE PERIOD AND BEFORE 1951.—If the taxpayer acquires its television broad- casting business after the close of its base period and before January 1, 1951, the average base period net income computed under this paragraph shall be computed as provided in paragraph (2), except that— " ( A ) the applicable rate of return under paragraph (2) (B) shall be multiplied by such part of its total assets (as Ante,p.551. defined in section 442 ( f ) ) , for the last day of the calendar month in which it first engaged in such business, as was attributable to such business, and " ( B ) the reduction specified in the last sentence of para- graph (2) (B) shall, if applicable, be equal to such portion of the total interest paid or incurred by the taxpayer, for the period of 12 months following the month in which it first engaged in such business, as is attributable to such business. "(4) INDIVIDUAL RATE OF RETURN.—The individual rate of return shall be computed as follows: " ( A ) By determining the amount of the taxpayer's total assets (as defined in section 442 (f) attributable to the busi- ness of radio broadcasting for the last day of each month in its base period. " ( B ) By computing the aggregate of the amounts ascer- tained under subparagraph (A) and dividing by 48. " ( C ) By computing for each month in the base period the excess profits net income of the radio broadcasting business (determined without regard to income, deductions, losses, or other items attributable to any other business), by adding such amounts for all of the months in the base period, and by dividing by 4. " ( D ) By dividing the amount computed under subpara- graph (C) by the amount computed under subparagraph ( B ) . " (5) KuiiEs FOR APPLICATION OF SUBSECTION.— 26 u 1" ci'435 (a) " ( ^ ) ^ ^ ^ *^^ purpose of section 435 (a) (1) ( B ) , an aver- age base period net income determined under this subsection shall be considered an average base period net income deter- 26u*sci"435(d) mined under section 435 ( d ) ; but, in computing the base Ante,p.5ii. period capital addition under section 435 ( f ) , the computa- Anu, p. 547. tions uuder such section shall be adjusted, under regulations prescribed by the Secretary, so as to exclude therefrom items attributable to the television broadcasting business.
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 557 " ( B ) If any part of the total assets referred to in para- graph (2) (B) or paragraph (3) ( A ) , whichever is appli- cable, were acquired, directly or indirectly, through the use of assets attributable at any time during the base period to a business of the taxpayer other than television broadcasting, the amount determined under paragraph (2) (A) shall be properly adjusted by eliminating from the excess profits net income (computed for the purpose of paragraph (2) ( A ) ) for each month prior to such acquisition such portion thereof as is attributable to the assets used, directly or indirectly, for such acquisition. For the purpose of this subparagraph, the excess profits net income for any month shall be attributed to such assets on the basis of the ratio, as of the beginning of the day of the acquisition, of such assets to total assets (as defined in section 442 (f)) determined without regard to ^«<«. P-SSI- assets attributable to the television broadcasting business. " ( C ) The Secretary shall by regulations prescribe rules for the application of this subsection, including rules for the com- putation of the taxpayer's net capital addition or reduction. "(6) APPLICATION OF PART II.—The Secretary shall prescribe regulations for the application of P a r t I I for the purpose of this ^ |*^*g ^^^-j ^gj ^^ subsection in the case of an acquiring corporation or a component seg. corporation in a transaction described in section 461 (a) which 26 u.^s'. C^HGI (a;. occurred prior to January 1, 1951. "(e) BASIS OF ASSETS.—For the purposes of this section, any refer- ence to the adjusted basis of property or to the basis (unadjusted) of property means the adjusted basis or the basis (unadjusted), as the case may be, for determining gain upon sale or exchange." SEC. 520. INCREASE IN CAPACITY FOR PRODUCTION OR OPERATION. Section 444 (f) (relating to increase in capacity for production or 26u*^sc.^'444(f). operation) is hereby amended to read as follows: "(f) RULES FOR APPLICATION OF SECTION.— "(1) The benefits of this section shall not be allowed unless the taxpayer makes application therefor in accordance with section 447 /p\ 64 Stat. n74. **• \^)' . » 26U.S.C.§ 447(e). " (2) If, during its first taxable year ending after June 30,1950, the taxpayer completed construction of (including the installation of the machinery or equipment for use in) a factory building or other manufacturing establishment, such factory building or other manufacturing establishment and such machinery or equipment shall, for the purpose of determining whether there is an increase in capacity under the provisions of subsection (b), be considered to have been added to its total facilities on the last day of its base period if— " ( A ) the taxpayer, prior to the end of its base period, had completed construction work representing more than 40 per centum of the total cost of construction of such factory build- ing or other manufacturing establishment, and " ( B ) the completion of such factory building or other man- ufacturing establishment was in pursuance of a plan to which the taxpayer was committed prior to the end of its base period. This paragraph shall not apply in determining the amount of the taxpayer's total assets for the purpose of subsection (c)." SEC. 521. EXCESS PROFITS CREDIT BASED ON INCOME IN CONNEC- TION WITH CERTAIN TAXABLE ACQUISITIONS. (a) GENERAL RULE.—Subchapter D (relating to the excess profits tax) of chapter 1 is hereby amended by inserting immediately follow- ing section 472 the following new p a r t : ^ ^u^*s!^c; § 472.
558 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. "Part IV—Excess Profits Credit Based on Income in Connection With Certain Taxable Acquisitions Occurring Prior to December 1, 1950. "SEC. 474. EXCESS PROFITS CREDIT BASED ON INCOME—CERTAIN TAXABLE ACQUISITIONS. " (a) DEFTNITIONS.—^For the purpose of this part— "(1) PURCHASING CORPOBATION.—The term 'purchasing corpo- ration' means a corporation which, before December 1, 1950, acquired— " ( A ) I n a transaction other than a transaction described 64 Stat. 1191. in section 461 ( a ) , substantially all of the properties (other 26U. S. C. §461(a). than cash) of another corporation, of a partnership, or of a business owned by a sole proprietorship; or " ( B ) Properties of another corporation or of a partnership if (i) such properties constituted, immediately prior to the acquisition, substantially all of the properties (other than cash) of one or more separate businesses of such other cor- poration or such partnership, (ii) such other corporation or such partnership was engaged in one or more separate busi- nesses other than those described in clause ( i ) , and (iii) sub- stantially all of the properties (other than cash) of such other corporation or such partnership were acquired, in further- ance of a single plan of complete liquidation for such other corporation or such partnership, by the purchasing corpora- tion, and by one or more other persons, in transactions other than transactions described in section 461 ( a ) . "(2) SEIXING CORPORATION.—The term 'selling corporation' means a corporation, a partnership, or a business owned by a sole proprietorship, as the case may be, properties of which were acquired by a purchasing corporation in a transaction described in paragraph (1). "(3) PART IV TRANSACTION.—^The term 'part I V transaction' means a transaction described in paragraph (1). "(b) AVERAGE BASE PERIOD N E T INCOME OF PURCHASING COR- PORATION.—The average base period net income of a purchasing cor- poration, if computed with reference to this part, shall be determined under section 435 ( d ) . The average base period net income under 26 u^s c*§'435 (d) sectiou 435 (d) of a purchasing corporation shall be determined by Arue, p. 544. ' computing its excess profits net income either with or without refer- ence to this part, whichever produces the lesser tax under this sub- chapter for the taxable year for which the tax is being computed. If computed with reference to this part, the excess profits net income of a purchasing corporation for any month of its base period shall be its excess profits net income (or deficit therein), computed without refer- ence to this part, and increased or decreased, as the case may be, by the addition or reduction resulting from including— "(1) I n the case of a transaction described in subsection (a) (1) ( A ) , the excess profits net income (or deficit therein) for such month of the selling corporation, or "(2) I n the case of a transaction described in subsection (a) (1) ( B ) , the excess profits net income (or deficit therein) for such month of the selling corporation properly attributable to the business or businesses acquired by the purchasing corporation and properly allocable to such purchasing corporation. The excess profits net income of a purchasing corporation for any month, recomputed as provided in the previous sentence, shall not be less than zero.
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 559 " (c) LIMITATIONS.—This part shall apply only if each of the follow- ing conditions is satisfied: "(1) The selling corporation (A) did not, after the part l y transaction (or the last transaction described in subsection ( a ) Ante, p. 558. (1) ( B ) ) , continue any business activities other than those inci- dent to its complete liquidation, and ( B ) within a reasonable time after ceasing business activities, completely liquidated in a trans- action other than a transaction described in section 461 ( a ) , and ^u^s C^M6I OO ceased existence. "(2) During so much of the base period of the purchasing cor- poration and of the period thereafter as preceded the part I V transaction, the properties acquired in the part I V transaction were substantially all of the properties (other than cash) which were used, or which in the ordinary course of business replaced properties used, by the selling corporation (or by a component corporation, as defined in section 461 ( b ) , of such selling corpora- tion) in the production of the excess profits net income (or deficit therein) which under subsection (b) increases or decreases the excess profits net income of the purchasing corporation. For the purpose of this paragraph, if a business in the hands of both the selling corporation and the purchasing corporation was operated under a substantially identical franchise or license, granted by the same person, such franchise or license shall be deemed acquired by the purchasing corporation from the selling corporation. "(3) The business or businesses acquired in the part I V trans- action (including the properties so acquired or properties in replacement thereof) were operated by the purchasing corpora- tion from the date of such transaction to the end of the taxable year or were transferred during the taxable year by the purchasing corporation in a part I I transaction to which the provisions of ^^^^g^Jf^j ^gj ^^ section 462 (b) (4) are applicable. m. "(d) SPECIAL R U L E S . - ^"''P-^^- "(1) For the purpose of subsection (a) ( 1 ) , the properties of a selling corporation shall be considered to have been acquired by a purchasing corporation only if acquired from— " ( A ) such selling corporation, or " ( B ) persons who received the properties upon the liquidation of such selling corporation and who forthwith transferred such properties to the purchasing corporation in a transaction other than a transaction described in section 461 ( a ) . "(2) The computations required by this part in the case of a selling corporation which is a partnership or a business owned by a sole proprietorship shall be made, under regulations pre- scribed by the Secretary, as if such partnership or such business owned by a sole proprietorship had been a corporation. "(3) I n no case shall more than 100 per centum of the excess pronts net income (or deficit therein) for any month of a selling corporation be allocated to the purchasing corporation or, in the case of transactions described in subsection (a) (1) ( B ) , t o the several persons (or to any one or more of such persons) receiving the properties of such selling corporation in such transactions. "(e) SUCCESSIVE T R A N S A C T I O N S . — " ( 1 ) P A R T IV TRANSACTION FOLLOWING PART IV TRANSACTION.— I n the case of a selling corporation which was a purchasing cor- poration in a previous part I V transaction, or which acquired properties of a purchasing corporation in a transaction to which section 462 (b) (4) is applicable, the computations under this part Post, p. 56i. 76100 O - 52 (PT. I) - 38
560 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. with respect to the selling corporation shall be made without regard to the previous part I V transaction. "(2) PART IV TRANSACTION FOLLOWING PART II TRANSACTION.— Subject to the provisions of paragraph (1), in the case of a selling corporation which was an acquiring corporation as defined in 64 Stat. 1191. section 461 (a) in a previous transaction, its excess profits net 26U. S. C. §461(a). income (or deficit therein) which increases or decreases the excess profits net income (or deficit therein) of the purchasing corpora- tion under subsection (b) (1) or (2), and its capital changes which are taken into account under this part in determining the capital changes of the purchasing corporation, shall be determined with the application of the rules of part I I to such selling corporation with respect to the part I I transaction. "(3) PART I I TRANSACTION FOLLOWING PART IV TRANSACTION.— For i-ules applicable in the case of a part I I transaction following a part I V transaction, see sections 462 (b) (4), 463 (c), and Post, pp. 561, 562. 464 (c). "(f) REGULATIONS.—The Secretary shall by regulations prescribe rules for the application of this part. Such regulations shall include the following rules: "(1) BASE PERIOD CAPITAL ADDITION.—^Rules (consistent with 64 Stat. 1208. the principles of section 464) for the determination of the base 26 U. S. C. § 464. Post, p. 562. period capital addition of the purchasing corporation by reference to the capital changes of the selling corporation and of the pur- chasing corporation. "(2) NET CAPITAL ADDITION OR REDUCTION.—Rules (consistent 64 Stat. 1206. 26 U. S. C. § 463. with the principles of section 463) for the determination of the Post, p. 562. net capital addition or reduction of the purchasing corporation by reference to the capital changes of the selling corporation and of the purchasing corporation. "(3) EXCESS PROFITS NET INCOME.—Rules (consistent with the 64 Stat. 1203. principles of section 462 (i)) for the determination of the amount 26 U. 8. C. § 462 (i). Post, p. 561. of excess profits net income (or deficit therein) of the selling cor- poration attributable to the business or businesses acquired by a purchasing corporation in a transaction described in subsection (a) (1) (B) and properly allocable to such purchasing corpo- ration. "(4) DUPLICATION.—Rules for the application under this part 64 Stat. 1204. of the principles of section 462 (j) (1) and the other provisions 26 U. S. C. 0) (1). of part I I relating to the prevention of duplication, "(5) EXCESS PROFITS CREDIT.—In the event that the part I V transaction occurred in a taxable year of the purchasing corpora- tion which ended after June 30, 1950, rules (consistent with the principles of section 462 (j) (2)) for the determination of the excess profits credit of such corporation for the year in which the transaction occurred. 64 Stat. 1192. Such rules shall not include the principles of section 461 (c) (relating 26U. S. C. § 461(c). to the excess profits credit of the component corporation), of section 64 Stat. 1194. 462 (b) (2) (relating to constructive excess profits net income for 2 6 U . S . C . § 462(b). months during which a corporation was not in existence), of section 462 (1) (relating to minimum average base period net income in the case of certain acquiring corporations), or of such other provisions 64 Stat. 1149-1170. 26 U. S. C. §§ 435, of part I I as relate to sections 435 (e), 442, 443, 444, 445, or 446." 442-446. (b) TECHNICAL AMENDMENTS.— 64 Stat. 1149. (1) Section 435 (a) (3) (relating to amount of excess profits 26 U. S. C. §435 (a) (3). credit) is hereby amended by inserting before the period at the end thereof the following: ", and in the case of certain taxable Ante, p. 558. acquisitions, see part IV of this subchapter".
65 STAT.] PUBLIC LAW 183~OCT. 20, 1951 561 (2) Section 461 (relating to definitions under part I I ) is 64 Stat. 1191. 26 U. S. C. § 461. amended by inserting at the end thereof the followir^ new Ante, p. 551. subsections: " ( g ) COMPONENT CORPORATION W H I C H W A S A PURCHASING COR- PORATION IN A PREVIOUS TRANSACTION.—See section 462 (b) (4) for Infra. rules applicable if the component corporation was a purchasing corpo- ration (as defined in part I V ) in a previous part I V transaction, or if Ante, p. 558. (as an acquiring corporation in a previous part I I transaction) it was subject to the provisions of section 462 (b) (4). "(h) DEFINITION OF PART I I TRANSACTION.—For the purpose of this subchapter, the term 'part I I transaction' means a transaction 64 Stat. 1191. described in section 461 ( a ) . " 26U. S. C. §461 (a). (3) Section 462 (b) (relating to the method of recomputing the excess profits net income of an acquiring corporation under part I I ) is hereby amended by adding at the end thereof the following new paragraph: " (4) If the average base period net income of the acquiring cor- poration is determined under section 435 (d) with reference to 64 Stat. 1149. 26U.S.C.§ 435(d). this subsection, and if the provisions of section 474 (b) (relating Ante, p. 544. to the computation of excess profits net income in the case of cer- Ante, p. 558. tain purchasing corporations) were applicable to the component corporation immediately prior to the part I I transaction (or would have been applicable if such part I I transaction had occurred in a taxable year of the component corporation ending after June 30,1950), then the excess profits net income (or deficit therein) of the component corporation shall, for the purpose of this subsection, be determined with the application of the pro- visions of section 474 ( b ) . F o r the purpose of this paragraph, if a component corporation was an acquiring corporation in a pre- vious part I I transaction and, immediately prior to the later part I I transaction, the provisions of this paragraph were applicable to such component corporation, its excess profits net income (or deficit therein) shall be determined with the application of the provisions of the preceding sentence. This paragraph shall be applicable to an acquiring corporation only if— " ( A ) the properties acquired by the acquiring corporation from the component corporation include substantially all of the properties (other than cash), or properties acquired in the ordinary course of business in the replacement of properties, which the component corporation acquired either from the selling corporation in the part I V transaction or from a pre- vious component corporation subject (immediately prior to such acquisition) to the provisions of this paragraph; " ( B ) the business or businesses acquired by the acquiring corporation were operated by the acquiring corporation from the date of such transaction to the end of the taxable year or were transferred during the taxable year by the acquiring corporation in a part I I transaction to which the provisions of this paragraph are applicable; and " ( C ) in the event that the part I I transaction is one de- scribed in section 461 (a) (1) ( E ) , the provisions of section 64 Stat. 1191. 26 U. S. C. § 461 (a) 462 (i) (6) are satisfied." (1) (E). (4) Section 462 (i) (6) (relating to allocation rules in the case 64 Stat. 1203. 26 U. S. C. § 462 (i) of transactions described in section 461 (a) (1) ( E ) ) i s hereby (C amended by adding at the end thereof the following: "Notwith- standing the provisions of paragraph ( 1 ) , if an acquiring cor- poration in a transaction described in section 461 (a) (1) ( E ) determines its average base period net income under section 435
562 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. 64 Stat. 1149. 2 6 U . S . C . § 435(d). (d) by recomputing its excess profits net income under the provi- Ante, p. 561. sions of section 462 (b) (4), the amount of the component cor- poration's excess profits net income for any month which shall be taken into account by the acquiring corporation shall be such portion of the component corporation s excess profits net income for such month as is determined on the basis of the earnings ex- perience of the assets transferred and the assets retained by the component corporation." 64 Stat. 1206. 26 U. S. C. § 463. (5) Section 463 (relating to capital changes) is amended by inserting at the end thereof the following new subsection: "(c) COMPONENT CORPORATION W H I C H W A S A PURCHASING CORPO- RATION IN A PREVIOTJS TRANSACTION.—The Secretary shall provide by regulations for the application of this section in cases to which section Ante, p. 561. 462 (b) (4) is applicable." 64 Stat. 1208. (6) Section 464 (relating to capital changes during the base 26 U. S. C. § 464. period) is amended by inserting at the end thereof the following new subsection: "(c) The Secretary shall provide by regulation for the application of this section in cases to which section 462 (b) (4) is applicable." SEC 522. STRATEGIC MINERALS. 64 Stat. 1177. 26 U. 8. C. § 450 (b) Section 450 (b) (1) (relating to corporations engaged in mining of (1). strategic minerals) is hereby amended by inserting after "chromite," the following: "bauxite,". SEC. 523. EFFECTIVE DATE OF TITLE V. Ante, p. 547. Except as otherwise provided in section 506 ( d ) , the amendments made by this title shall be applicable only with respect to taxable years ending after J u n e 30,1950. TITLE VI—MISCELLANEOUS PROVISIONS AND AMENDMENTS SEC. 60L EXEMPTION OF CERTAIN ORGANIZATIONS FROM INCOME TAX FOR PRIOR TAXABLE YEARS. 64 Stat. 953. Section 302 of the Revenue Act of 1950 (relating to exemption of 26U.S.C. §101note. certain organizations for past years) is amended by adding at the end thereof the following new subsection: " ( d ) PROFITS INURING TO THE BENEirr OF CERTAIN EDUCATIONAL ORGANIZATIONS OR HOSPITALS.—For any taxable year beginning prior to January 1,1951, an organization operated for the primary purpose of carrying on a trade or business for profit, no part of the net earn- ings of which inures to the benefit of any private shareholder or in- dividual and all of the net earnings of which inure to the benefit of an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly organized body of pupils or students in attendance at the place where its educational activities are regularly carried on, or to the benefit of a hospital, or an institution for the rehabilitation of physicalljr handicapped persons, which maintains or is building for proper maintenance a hospital or institution staffed or to be staffed by qualified professional persons for the treatment of the sick and/or the rehabilitation of the physically handicapped, shall not be denied exemption from taxation under sec- 53 Stat. 33. tion 101 of the Internal Revenue Code on the ground that it is carrying 26 U. S. C. § 101. Ante, pp. 490-492. on a trade or business for profit. The determination as to whether an organization other than one described in this subsection is exempt under section 101 of the Internal Revenue Code from taxation for any taxable year beginning before January 1,1951, shall be made as if this
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 503 subsection and section 301 (b) of this Act had not been enacted and ^u.^g c^j JQI without inferences drawn from the fact t h a t this subsection and the amendment made by section 301 (b) are not expressly made applicable with respect to taxable years beginning before J a n u a r y 1,1951." SEC 602. EXCESS PROFITS CREDIT BASED ON INCOME. (a) PERCENTAGE or AVERAGE BASE PERIOD N E T INCOME TAKEN INTO ACCOUNT.— (1) I N GENERAL.—^Paragraph (1) ( A ) , and paragraph (2), of section 435 (a) (relating to excess profits credit based on income) 26u!^s.c!f435(a). are each amended by striking out "85 per centum" and inserting in lieu thereof "83 per centum . (2) TAXABLE YEARS BEGINNING BEFORE JULY i, i951, AND ENDING AFTER JUNE 30, 1951.—Scctiou 435 (a) is hereby amended by Ante,p.m. adding at the end thereof the following new paragraphs: "(4) CALENDAR YEAR 1951.—In the case of a taxable year beginning on January 1, 1951, and ending on December 31, 1951, there shall be used, for the purposes of paragraph (1) (A) and paragraph (2), in lieu of 85 per centum of the average base period net income, an amount equal to 84 per centum of the average base period net income. "(5) T A X A B L E YEARS ( O T H E R T H A N C A L E N D A R Y E A R 1 9 5 1 ) B E G I N - N I N G B E F O R E JULY 1, 1 9 5 1 , AND ENDING AFTER J U N E 30, 1 9 5 1 . — I n the case of any taxable year (other than a taxable year described ih paragraph (4)) beginning before J u l y 1, 1951, and ending after June 30, 1951, there shall be used, for the purposes of para- graph (1) (A) and paragraph (2), in lieu of 85 per centum of the average base period net income, an amount equal to the sum of— " ( A ) that portion of an amount equal to 85 per centum of the average base period net income which the number of days in such taxable year prior to July 1, 1951, bears to the total number of days in such taxable year, plus " ( B ) that portion of an amount equal to 83 per centum of the average base period net income which the number of days in such taxable year after J u n e 30, 1951, bears to the total number of days m such taxable year." (b) EFFECTIVE DATE.—^The amendments made by subsection (a) shall be applicable only with respect to taxable years ending after J u n e 30,1951. SEC. 603. FOREIGN ESTATE TAX CREDIT. (a) ClffiDiT AGAINST BASIC ESTATE TAX.—Section 813 (relating to iu.^s. c^§8i3. credits against estate tax) is hereby amended by adding at the end thereof the following new subsection: "(c) SAME—^PAID TO FOREIGN COUNTRIES.— " ( 1 ) I N GENERAL.—^The tax imposed by section 810 shall be i u ^ s c°§8io credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any foreign country in respect of any property situated within such foreign country and included in the gross estate (not including any such taxes paid with respect to the estate of a person other than the decedent). If the decedent at the time of his death was not a citizen of the United States, credit shall not be allowed under this subsection unless the foreign country of which such decedent was a citizen or subject, in imposing such taxes, allows a similar credit in the case of a citizen of the United States resident in such country. The determination of the country within which property is sit- uated shall be made in accordance with the rules applicable under
564 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. 26 %^^'i^c. § 860 P a r t I I I of this subchapter in determining whether property is «' ««?• situated within or without the United States. "(2) LIMITATIONS ON CREDIT.—The credit provided in this sub- section with respect to such taxes paid to any foreign country— " ( A ) shall not, with respect to any such tax, exceed an amount which bears the same ratio to the amount of such tax actually paid to such foreign country as the value of property which is— "(i) situated within such foreign country, " ^ii) subjected to such tax, and "(iii) included in the gross estate bears to the value of all property subjected to such t a x ; and " ( B ) shall not, with respect to all such taxes, exceed an amount which bears the same ratio to the tax imposed by 26u!^s.c°§8io. section 810 (after deducting from such tax the credits pro- vided by subsections (a) and (b) of this section) as the value of property which is— "(i) situated within such foreign country, "(ii) subjected to the taxes of such foreign country, and "(iii) included in the gross estate bears to the value of the entire gross estate reduced by the aggregate amount of the deductions allowed under subsec- iif Stat. 123; 62 Stat. tions ( c ) , ( d ) , and (e) of section 812. 26 u. s. c. § 812. " (3) V A L U A T I O N OF PROPERTT.— " ( A ) The values referred to in the ratio stated in para- graph (2) (A) are the values determined for the purposes of the tax imposed by such foreign country. " ( B ) The values referred to in the ratio stated in para- graph (2) (B) are the values determined under this chap- ter ; but, in applying such ratio, the value of any property described in clauses ( i ) , ( i i ) , and (iii) thereof shall be reduced by such amount as will properly reflect, in accord- ance with regulations prescribed by the Secretary, the deduc- tions allowed in respect of such property under subsections (c), ( d ) , and (e) of section 812. "(4) PROOF or CREDIT.—The credits provided in this subsection Post, p. 565. aj^(j jj^ section 936 ( c ) s h a l l be allowed only if t h e t a x p a y e r estab- lishes to the satisfaction of the Secretary (A) the amount of taxes actually paid to the foreign country, (B) the amount and date of each pajnnent thereof, (C) the description and value of the prop- erty in respect of which such taxes are imposed, and (D) all other information necessary for the verification and computation of the credits. "(5) PERIOD OF LIMITATION.—The credits provided in this sub- section and in section 936 (c) shall be allowed only for such taxes as were actually paid and credit therefor claimed within four ^u.^s. c^§821. years after the filing of the return required by section 821, except that— " ( A ) If a petition for redetermination of a deficiency has been filed with T h e Tax Court of the United States within i u^s W\871 ^^® ^^"^® prescribed in section 871, then within such four-year period or before the expiration of 60 days after the decision of The Tax Court becomes final. i u^*s.^c'.1§-822. " ( B ) If, under section 822 (a) (2) or section 871 ( h ) , an 871. ' extension of time has been granted for payment of the tax shown on the return, or of a deficiency, then within such four- year period or before the date of the expiration of the period ' of t h e extension.
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 565 Refund based on such credits may (despite the provisions of sec- tions 910 to 912, inclusive) be made if claim therefor is filed within ^ u**s^^c' ^fssio the period above provided. Any such refund shall be made with- 912. out interest." (b) CREDIT AGAINST ADDITIONAL ESTATE TAX.—Section 936 (relat- 26 u.*s c^'§ 936 ing to credits against estate tax) is hereby amended by adding at the end thereof the following new subsection: " ( c ) ESTATE, ETC., TAXES PAID TO FOREIGN COUNTRIES.— " (1) I N GENERAL.—In the case of the estate of a citizen or resi- dent of the United States, the tax imposed by section 935 shall be credited with the amount of any estate, inheritance, legacy, or suc- cession taxes actually paid to any foreign country in respect of any property situated within such foreign country and included in the gross estate (not including any such taxes paid with respect to the estate of a person other than the decedent). If the decedent at the time of his death was not a citizen of the United States, credit shall not be allowed under this subsection unless the foreign country of which such decedent was a citizen or subject, in impos- ing such taxes, allows a similar credit in the case of a citizen of the United States resident in such country. The determina- tion of the country within which property is situated shall be made in accordance with the rules applicable under P a r t I I I of ^l ?^^t; ^??-, o«n , subchapter A m determining whether property is situated within ««?. or without the United States. "(2) LIMITATIONS ON CREDIT.—The credit provided in this sub- section with respect to such taxes paid to any foreign country— " (A) shall not exceed the amount by which such taxes paid to the foreign country exceed the amount of the credit allowed therefor under section 813 (c) ; and ^"'«' P- ^^• " ( B ) shall not exceed an amount which bears the same ratio to the tax imposed by section 935 (after deducting from such tax the credit provided by subsection (b) of this section) as the value of property which is— " ( i ) situated within such foreign country, "(ii) subjected to the taxes of such foreign country, and "(iii) included in the gross estate bears to the value of the entire gross estate reduced by the aggregate amount of the deductions allowed under subsec- tions (c), ( d ) , and (e) of section 812. 53 stat. 123; 62 stat. " (3) SAME—SPECIAL RULES.— ^26 u. s. c. § 812. " ( A ) F o r the purposes of paragraph (2) (A),'such taxes paid to the foreign country' shall, with respect to any tax paid to the foreign country, be the amount computed under section 813 (C) (2) (A). Ante,p.56S. " ( B ) The values referred to in the ratio stated in para- graph (2) (B) are the values determined under this chapter; but, in applying such ratio, the value of any property described in clauses ( i ) , ( i i ) , and (iii) thereof shall be reduced by such amount as will properly reflect, in accord- ance with regulations prescribed by the Secretary, the deduc- tions allowed in respect of such property under subsections (c), ( d ) , a n d (e) of section 812. " ( 4 ) PROOF or CREDIT.— "For provisions relating to proof of credit, see section 813 (c) (4). Ante,p.5U. " (5) PERIOD OF LIMITATION.— "For provisions relating to period of limitation on claiming
566 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. of credit or refund based thereon and nonpayment of interest Ante, p. 564. on refund, see section 813 (c) (5) .'* 53 Stat. 140. 26 U. S. C. § 927. (c) KEVERSIONARY OR REMAINDER INTEREST.—Section 927 (relating to credit for State death taxes) is hereby amended to read as follows: "SEC. 927. CREDIT FOR DEATH TAXES. "Such part of any estate, inheritance, legacy, or succession taxes 53 Stat. 125. 2 6 U . S . C . § 813(b). allowable as a credit under section 813 (b) or (c) against the tax Ante, p. 563. imposed by this subchapter, or under section 936 (c) against the tax Ante, p. 565. imposed by subchapter B, as is attributable to such reversionary or remainder interest may be allowed as a credit against the tax attribut- able to such interest, subject to the limitations on the amount of credit contained in such sections, if such part is paid, and credit therefor claimed, at any time prior to the expiration of 60 days after the termination of the precedent interest or interests in the property." (d) EXTENSION or PERIOD OF LIMITATIONS, ETC., I N CASE OF RECOV- 53 Stat. 135. ERY OF TAXES CLAIMED AS CREDIT.—Section 874 (b) (relating to 2 6 U . S . C . § 874(b). exceptions to general rule as to period of limitation upon assessment and collection of estate tax) is hereby amended by inserting at the end thereof the following new p a r a g r a p h : " (3) RECOVERY OF TAXES CLAIMED AS CREDIT.—If any tax claimed 53 Stat. 125. as a credit under section 813 (b) or (c) or section 936 (c) is 2 6 U . S . C . § 813(b). Ante, pp. 563, 565. recovered from any foreign country, any State, any Territory or possession of the United States, or the District of Columbia, the executor, or any other person or persons recovering such amount, shall give notice of such recovery to the Secretary at such time and in such manner as may be required by regulations prescribed by him, and the Secretary shall redetermine the amount of the tax under this chapter and the amount, if any, of the tax due upon such redetermination, shall be paid by the executor or such person or persons, as the case may be, upon notice and demand." (e) EFFECTIVE DATE.—^The amendments made by this section shall be applicable with respect to estates of decedents dying after the date of the enactment of this Act. SEC. 604. ESTATE AND GIFT TAX TREATMENT OF UNITED STATES BONDS HELD BY CERTAIN NONRESIDENT ALIENS. (a) ESTATE TAX.—Effective with respect to estates of decedents 53 Stat. 129. •26 U . S . C. §861. dying after February 10, 1939, section 861 (relating to the computa- tion of the net estate of a decedent nonresident not a citizen of the United States) is hereby amended by adding at the end thereof the following new subsection: "(c) UNITED STATES BONDS.—For the purposes of subsection ( a ) , the value of the gross estate (determined as provided in section 811) of a decedent who was not engaged in business in the United States at the time of his death— "(1) shall not include obligations issued by the United States prior to March 1, 1941; and "(2) shall include obligations issued by the United States on or after March 1,1941, but only if the decedent died after the date of the enactment of the Revenue Act of 1951." (b) G I F T TAX.—Effective with respect to gifts made aiter the date 53 Stat. 144. of enactment of this Act, section 1000 (b) (relating to application of 26U. 8. 0 . § 1000(b). gift tax) is hereby amended by adding at the end thereof the follow- ing : " I n the case of such a nonresident who is not engaged in business in the United States at the time of a transfer of obligations issued by the United States, the tax shall apply in respect of any such obliga- tions only if issued on or after March 1,1941."
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 567 SEC. 605. ESTATE TAX EXEMPTION FOR WORKS OF ART LOANED BY NONRESIDENT ALIENS. (a) AMENDMENT OF SECTION 863 (c).—Section 863 (c) (relating ^n^|-i^^sa^, to exemption of works of a r t loaned by nonresident aliens) is hereby amended to read as follows: " ( c ) WORKS OF ART ON LOAN FOR EXHIBITION,—Works of a r t owned by a nonresident not a citizen of the United States (1) imported into the United States solely for exhibition purposes, (2) loaned for such purposes to a public gallery or museum, no part of the net earnings of which inures to the benefit of any private stockholder or individual, and (3) at the time of the death of the owner, on exhibition, or en route to or from exhibition, in such a public gallery or museum." (b) EFFECTIVE DATE.—The amendment made by this section shall be applicable only with respect to estates of decedents dying after the date of the enactment of this Act. SEC. 606. EXEMPTION FROM ADDITIONAL ESTATE TAX OF MEMBERS OF ARMED FORCES UPON DEATH. Section 939 (relating to the estate tax treatment of certain members^ ^ f/^*-| ^^\ ggg of the armed forces) is hereby amended as follows: ' Ante,^.4i. (1) By inserting before the first sentence thereof the following: " ( a ) DEATHS A I T E R DECEMBER 6, 1941, AND BEFORE JANUARY 1, (2) By adding at the end thereof the following: " (b) DEATHS AFTER J U N E 24, 1950, AND BEFORE JANUARY 1,1954.— The tax imposed by section 935 shall not apply to the transfer of the ^| |f^|- ^^-j 935 net estate of a citizen or resident of the United States dying after J u n e 24, 1950, and before January 1, 1954, while in active service as a member of the armed forces of the United States, if such decedent— "(1) was killed in action while serving in a combat zone, as determined under section 22 (b) ( 1 3 ) ; or ^«<«. P- ^^• "(2) died as a result of wounds, disease, or injury suffered, while serving in a combat zone (as determined under section 22 (b) (13)) and while in line of duty, by reason of a hazard to which he was subjected as an incident of such service." SEC. 607. TRANSFERS CONDITIONED UPON SURVIVORSHIP. In the case of property transferred by a decedent dying after March 18, 1937, and before February 11, 1939, the determination of whether such property is to be included in his gross estate under section 302 (c) of the Eevenue Act of 1926 (44 Stat. 70) as a transfer intended to take effect in possession or enjoyment at or after his death shall be made in conformity with Treasury Regulations in force at the time of his death. SEC. 608. TRANSFERS WITH INCOME RESERVED. Section 7 (b) of the Act entitled "An Act to amend certain provi- sions of the Internal Revenue Code", approved October 25, 1949 (63 Stat. 895), is hereby amended by striking out "January 1, 1950" and 26U.s.c.§8iinote. inserting in lieu thereof "January 1, 1951". SEC. 609. TRANSFERS TAKING EFFECT AT DEATH. Effective with respect to estates of decedents dying after February 10, 1939, section 7 (b) of the Act entitled "An Act to amend certain provisions of the Internal Revenue Code", approved October 25, 1949 (63 Stat. 895), is hereby amended by striking out the word 26u.s.c.§8iinote. "sentence" and inserting in lieu thereof "two sentences" and by insert- ing immediately preceding the last sentence thereof the following sentence: "The provisions of section 811 (c) (1) (C) of such code shall not apply to a transfer made prior to September 8, 1916." The
568 PUBLIC LAW 183—OCT. 20, 1951 [65 STAT. provisions of section 7 (c) of such Act, as amended, shall not apply to an overpayment resulting from the application of this section. SEC. 610. REVERSIONARY INTERESTS IN CASE OF LIFE INSURANCE. If refund or credit of any overpayment resulting from the applica- 26 u!s*." a §'811 note. ^^^^ ^f section 503 of the Revenue Act of 1950 was prevented on October 25,1950, by the operation of any law or rule of law (other than section 3760 of the Internal Revenue Code, relating to closing agreements, and i u*s.*c?.' §§ 3760, other than section 3761 of such code, relating to compromises), refund 3761. or credit of such overpayment may, nevertheless, be made or allowed if claim therefor was filed after October 25, 1949, and on or before October 25, 1950. SEC. 611. INCOME PURSUANT TO AWARD OF INTERSTATE COMMERCE COMMISSION. 26u.*s.c! §42. (^) Notwithstanding section 42 of the Internal Revenue Code, amounts received, pursuant to an award under the order issued under 39 u^ s.^a § 523 et the Railway Mail P a y Act of 1916 by the Interstate Commerce Com- m- mission on December 4, 1950, as compensation for the transportation of mail during 1950 and prior years shall be deemed to be income which accrued in the taxable years in which the services to which such ^"^''"" compensation relates were rendered. Notwithstanding section 292 of such code, no interest shall be assessed or collected for any period prior to July 1,1951, with respect to that part of any deficiency which the Secretary determines to be attributable to the inclusion of income in a taxable year by reason of the application of this section. Any deficiency attributable to the inclusion of income in any taxable year by reason of the application of this section may be assessed at any time prior to the expiration of the period for assessment with respect to the taxable year of the taxpayer which includes December 4, 1950, 26 u^s.^c. § 275. notwithstanding the provisions of section 275 of the Internal Revenue Code or any other provision of law or rule of law which would other- wise prevent such assessment. 26u.*s.^'. §292. (b) Section 292 (relating to interest on deficiencies) is hereby amended by adding at the end thereof the following new subsection: " ( d ) With respect to any corporation entitled to receive payment for the transportation of United States mail, if an award is retro- actively received for the transportation of United States mail, and if such award is required to be treated as income in the year or years in which the mail was carried, then, notwithstanding the provisions of subsection (a) of this section, no interest shall be due, with respect to any period prior to thirty days after such award is granted, for tax deficiencies resulting from the inclusion of such additional mail payments retroactively. SEC. 612. CREDIT IN PRIOR TAXABLE YEARS FOR DIVIDENDS RECEIVED ON PREFERRED STOCK OF A PUBLIC UTILITY. I n the case of taxable years beginning before April 1, 1951, any Ante, pp. 468, 469, reference in section 15 (a) or 26 (b) of the Internal Revenue Code to 487, dividends received on the preferred stock of a public utility shall be construed as referring only to dividends received on the preferred stock of a public utility with respect to which the credit provided in ^n««,p.469. section 26 (h) of such Code for dividends paid was allowable. SEC. 613. CONSOLIDATED RETURNS—INCLUDIBLE CORPORATION. If an aifiliated group making a consolidated return with respect to the first taxable year of the group ending after June 30,1950, included a corporation described in section 454 (f) of the Internal Revenue Stat M*^*' ^^^' ^ Code pursuant to the consent provided in section 141 (e) (7) of such 26U.S. c. §§ 454, code, such corporation may withdraw such consent at any time within 141 (e) (7). T t- J J
65 STAT.] PUBLIC LAW 183—OCT. 20, 1951 569 ninety days after the enactment of this Act. If such consent is with- drawn under the preceding sentence, the tax liability of the affiliated group and its several members for the taxable year shall be deter- mined, assessed, and collected as if such corporation had never joined in the making of the consolidated return. SEC. 614. TIME FOR PERFORMING CERTAIN ACTS POSTPONED IN CASE OF CHINA TRADE ACT CORPORATIONS. Section 3805 (relating to postponement of income tax due dates in 26 u.^s. ^a'§ asos. the case of China Trade Act corporations) is hereby amended to read 42 stat.'849. A Ti 15 U . S. G. 5 141. as follows: "SEC. 3805. INCOME TAX DUE DATES POSTPONED IN CASE OF CfflNA TRADE ACT CORPORATIONS. " I n the case of any taxable year beginning after December 31, 1948, and ending before October 1, 1953, no Federal income tax return of, or payment of any Federal income tax by, any corporation organized under the China Trade Act of 1922 (42 Stat. 849, U. S. C , Title 15, chapter 4 ) , as amended, shall become due until December 31, 1953, but only with respect to any such corporation and any such taxable year which the Secretary may determine reasonable under the cir- cumstances in China pursuant to such regulations as he may prescribe. Such due date shall be subject to the power of the Secretary to extend the time for filing such return or paying such tax, as in other cases." SEC. 615. TREATY OBLIGATIONS. No amendment made by this Act shall apply in any case where its application would be contrary to any treaty obligation of the United States. SEC. 616. REORGANIZATION PLAN NUMBERED 26 OF 1950. The provisions of Reorganization Plan Numbered 26 of 1950 shall 5^xj*8*cf^'i U. S. C. 5 133Z-15 be applicable to all functions vested by this Act in any officer, note. employee, or agency of the Department of the Treasury. SEC. 617. CLAIMS UNDER THE RENEGOTIATION ACT. Subsection (a) (4) (D) of the Renegotiation Act, as amended by s o ^ u ^ f c app section 201 (c) of the Renegotiation Act of 1951, is hereby amended §1191 (a) (4) (D). by striking out "June 30,1951," and inserting in lieu thereof "October ^"''' ^- ^• 31, 1951,". SEC. 618. PROHIBITION UPON DENIAL OF SOCIAL SECURITY ACT FUNDS. No State or any agency or political subdivision thereof shall be deprived of any grant-in-aid or other payment to which it otherwise is or has become entitled pursuant to title I, TV, X, or X I V of the Social Security Act, as amended, by reason of the enactment or enforce- ^^f stat. 620; 64 stat. ment by such State of any legislation prescribing any conditions under 42 u. s. c. §§ 301- which public access may be had to records of the disbursement of any ^351^35^^' ^201-1206, such funds or payments within such State, if such legislation prohibits the use of any list or names obtained through such access to such records for commercial or political purposes. SEC. 619. REMOVAL OF TAX EXEMPTION FROM EXPENSE ALLOW- ANCES OF THE PRESIDENT, THE VICE PRESIDENT, THE SPEAKER, AND MEMBERS OF CONGRESS. (a) EXPENSE ALLOWANCE OF THE PREsmENT.—Section 102 of title 3 of the United States Code is amended by striking out "no tax liability g^^j stat. 678; es shall accrue and for which no accounting shall be made by him" and inserting in lieu thereof "no accounting, other than for income tax purposes, shall be made by him".
570 PUBLIC LAW 184—OCT. 20, 1951 [65 STAT. (b) EXPENSE AXLOWANCE OF THE VICE PREsroENT.—Section H I of 63 Stat. 4. title 3 of the United States Code is amended by striking out "for which no tax liability shall occur or accounting be made by him" and inserting in lieu thereof "for which no accounting, other than for income tax purposes, shall be made by him". (c) EXPENSE AULOWANCE OF THE SPEAKER OF THE HOUSE OP REPRESENTATFVES.—Subsection (e) of the first section of the Act entitled "An Act to increase rates of compensation of the President, Vice President, and the Speaker of the House of Representatives", 63 Stat. 4. 2U. S. C. §31b. approved January 19,1949 (Public Law 2,81st Congress), is amended by striking out "for which no tax liability shall occur or accounting be made by him" and inserting in lieu thereof "for which no account- ing, other than for income tax purposes, shall be made by him". (d) EXPENSE ALLOWANCES OP MEMBERS OF CONGRESS.—Section 601 60 Stat. 850. 2 U . S. C. §31a. (b) of the Legislative Reorganization Act of 1946 is amended by striking out "for which no tax liability shall incur, or accounting be made" and inserting in lieu thereof "for which no accounting, other than for income tax purposes, shall be made". (e) EFFECTIVE DATES.—^The amendments made by subsections (a) and (b) of this section shall become effective at noon on January 20, 1953, and the amendments made by subsections (c) and (d) shall become effective at noon on January 3,1953. Approved October 20, 1951, 2:07 p. m., E.S.T. Public Law 184 CHAPTER 522 AN ACT October 20,1951 [S. 1450] To provide for the exchange of certain lands owned by the United States of , ,. America for certain privately owned lands. Be it eTiacted hy the Senate and House of Representatives of the intcrfo?*™^"* °^ *^^ C^nxi^efi? States of America in Congress assembled^ That, in order to Exchange of certain adjust the boundary of the Rock Creek and Potomac Parkway in andsm . connection with plans for providing a park-like treatment at the entrance to Georgetown, and in connection with the future widening of Pennsylvania Avenue, the Secretary of the Interior is authorized to accept on behalf of and without cost to the United States of America, from the owner thereof, unencumbered fee-simple title to the following-described parcel of land situated in the District of Columbia and more particularly described as follows: P a r t of lot 14, square 1194, as per plat recorded in the Office of the Surveyor of the District of Columbia in book 29, page 72, described as follows: Beginning for the same at the intersection of the easterly line of Twenty-eighth Street and the south line of M Street, said point of beginning being also the northwest corner of said lot 14; thence along the south line of M Street east seventy and ninety-five one-hundredths feet to the northeast corner of said lot 14; thence in a southwesterly direction along the arc of the circle, the radius of which is two hundred and no tenths feet, deflecting to the right an arc distance of seventy- one and two one-hundredths feet to the northerly line of Pennsylvania Avenue; thence along said northerly line of Pennsylvania Avenue north sixty-five degrees twenty minutes west forty-four and fifty one- hundredths feet to the easterly line of Twenty-eighth Street and the southwest corner of said lot 14; thence along said easterly line of Twenty-eighth Street north no degrees three minutes west forty-five and seventeen one-hundredths feet to the point of beginning, contain-