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Taxable Years
Beginning in 1940

$2,000. If such husband and wife make separate returns, the personal exemption may be taken by either or divided between them.

Sec. 25 (b) (1), I. R. C., supra, amended by Sec. 6 (a), R. A. of 1940, by omitting figures in stricken through type and adding figures in italics. Sec. 9 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1939.

Taxable Years
Beginning in 1939

band and wife make separate re-
turns, the personal exemption may
be taken by either or divided be-
tween them.

Taxable Years Beginning before 1939

Sec. 25. (b) (2) Credit for de- Sec. 25. (b) (2) Credit for dependents.-$400 for each pendents.-$400 for each person person (other than husband or wife) de- (other than husband or wife) dependent upon and receiving his pendent upon and receiving his chief support from the taxpayer if chief support from the taxpayer if such dependent person is under such dependent person is under eighteen years of age or is inca- eighteen years of age or is inpable of self-support because men- capable of self-support because tally or physically defective. mentally or physically defective.

Sec. 25. (b) (2) Credit for dependents.

See p. 68, Eighth Edition.

Taxable Years
Beginning in 1943

first taxable year beginning after December 31, 1941, regardless of the taxable year of the husband in which such day falls.

For Sec. 25 (b) (2) (A), I. R. C., supra, before amendment, see 1942 column.

Taxable Years
Beginning in 1942

gardless of the taxable year
of the husband in which such
day falls.

For Sec. 25 (b) (2) (A),
I. R. C., supra, before amend-
ment, see 1941 column.

Taxable Years
Beginning in 1941

Sec. 25. (b) (3) Change of Sec. 25. (b) (3) Change of Sec. 25. (b) (3) Change of status. If the status of the tax- status.-If the status of the tax- status. If the status of the taxpayer, insofar as it affects the per- payer, insofar as it affects the per- payer, insofar as it affects the personal exemption or credit for sonal exemption or credit for sonal exemption or credit for dependents, changes during the dependents, changes during the dependents, changes during the taxable year, the personal exemp- taxable year, the personal exemp-taxable year, the personal exemption and credit shall be appor- tion and credit shall be appor- tion and credit shall be apportioned, under rules and regulations tioned, under rules and regulations tioned, under rules and regulations prescribed by the Commissioner prescribed by the Commissioner prescribed by the Commissioner with the approval of the Secretary, with the approval of the Secretary, with the approval of the Secretary, in accordance with the number of in accordance with the number of in accordance with the number of months before and after such months before and after such months before and after such change. For the purpose of such change. For the purpose of such change. For the purpose of such apportionment a fractional part of apportionment a fractional part of apportionment a fractional part of a month shall be disregarded un- a month shall be disregarded un- a month shall be disregarded unless it amounts to more than half less it amounts to more than half less it amounts to more than half a month in which case it shall be a month in which case it shall be a month in which case it shall be considered as a month. considered as a month. considered as a month.

Sec. 26. Credits of corporations. In the case of a corporation the following credits shall be allowed to the extent provided in the various sections imposing tax

Sec. 26. Credits of corporations. In the case of a corporation the following credits shall be allowed to the extent provided in the various sections imposing tax

Sec. 26. Credits of corporations. In the case of a corporation the following credits shall be allowed to the extent provided in the various sections imposing tax—

amount

Sec. 26. (a) Interest on obligaSec. 26. (a) Interest on obliga- Sec. 26. (a) Interest on obligations of the United States and its tions of the United States and its tions of the United States and its instrumentalities.-The amount re- instrumentalities.-The amount re-instrumentalities.-The ceived as interest upon obliga- ceived as interest upon obliga- received as interest upon obligations of the United States or of tions of the United States or of tions of the United States or of corporations organized under Act corporations organized under Act corporations organized under Act of Congress which is allowed to an of Congress which is allowed to an of Congress which is allowed to an individual as a credit for purposes individual as a credit for purposes individual as a credit for purposes of normal tax by section 25 (a) of normal tax by section 25 (a) of normal tax by section 25 ̊ (a) (1) or (2). (For reduction of (1) or (2). (For reduction of (1) or (2). credit under this subsection on ac- credit under this subsection on account of amortizable bond premium, count of amortizable bond premium, see section 125). see section 125).

Sec. 26 (a), I. R. C., supra, amended by Sec. 126 (i) (2), R. A. of 1942, by adding language shown in parenthesis. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941.

Sec. 26 (a), I. R. C., supra, amended by Sec. 126 (i) (2), R. A. of 1942, by adding language shown in italics. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941.

Sec. 26. (b) Dividends received.

Sec. 26. (b) Dividends received. Sec. 26. (b) Dividends received. -85 per centum of the amount -85 per centum of the amount-85 per centum of the amount received as dividends from a do- received as dividends from a do- received as dividends from a domestic corporation which is sub-mestic corporation which is sub-mestic corporation which is subject to taxation under this chapter, ject to taxation under this chapter, ject to taxation under this chapter, but not in excess of 85 per centum but not in excess of 85 per centum but not in excess of 85 per centum of the adjusted net income reduced of the adjusted net income reduced of the adjusted net income. The by the credit for income subject to by the credit for income subject to credit allowed by this subsection the tax imposed by Subchapter E the tax imposed by Subchapter E shall not be allowed in respect of of Chapter 2 provided in subsec- of Chapter 2 provided in subsec-dividends received from a corporation (e). The credit allowed by tion (e). The credit allowed by tion organized under the China this subsection shall not be allowed this subsection shall not be allowed Trade Act, 1922, 42 Stat. 849 (U. in respect of dividends received in respect of dividends received S. C., Title 15, c. 4), or from a from a corporation organized under from a corporation organized under corporation which under section

Taxable Years
Beginning in 1940

Taxable Years
Beginning in 1939

Taxable Years Beginning before 1939

See p. 68, Eighth Edition.

Sec. 25. (b) (3) Change of Sec. 25. (b) (3) Change of Sec. 25. (b) (3) Change of status. If the status of the tax- status.-If the status of the tax- status, payer, insofar as it affects the per- payer, insofar as it affects the personal exemption or credit for sonal exemption or credit for dedependents, changes during the pendents, changes during the taxtaxable year, the personal exemp-able year, the personal exemption tion and credit shall be appor- and credit shall be apportioned, tioned, under rules and regulations under rules and regulations preprescribed by the Commissioner scribed by the Commissioner with with the approval of the Secretary, the approval of the Secretary, in in accordance with the number of accordance with the number of months before and after such months before and after such change. For the purpose of such change. For the purpose of such apportionment a fractional part of apportionment a fractional part of a month shall be disregarded un- a month shall be disregarded unless it amounts to more than half less it amounts to more than half a month in which case it shall be a month in which case it shall be considered as a month. considered as a month.

Sec. 26. Credits of corporations. In the case of a corporation the following credits shall be allowed to the extent provided in the various sections imposing tax

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Sec. 26. Credits of corporations. In the case of a corporation the following credits shall be allowed to the extent provided in the various sections imposing tax

Sec. 26. Credits of corporations.
See p. 70, Eighth Edition.

See p. 70, Eighth Edition.

Sec. 26. (a) Interest on obliga- Sec. 26. (a) Interest on obliga- Sec. 26. (a) Interest on obligations of the United States and its tions of the United States and its tions of the United States and its instrumentalities. The amount instrumentalities.-The amount re-instrumentalities. received as interest upon obliga- ceived as interest upon obligations tions of the United States or of of the United States or of corporacorporations organized under Act tions organized under Act of Conof Congress which is allowed to an individual as a credit for purposes of normal tax by section 25 (a) (1) or (2).

gress which is allowed to an indi-
vidual as a credit for purposes of
normal tax by section 25 (a) (1)
or (2).

Sec. 26. (b) Dividends received.

Sec. 26. (b) Dividends received. -85 per centum of the amount -85 per centum of the amount received as dividends from a do- received as dividends from a domestic corporation which is sub-mestic corporation which is subject to taxation under this chapter, ject to taxation under this chapbut not in excess of 85 per centum ter, but not in excess of 85 per of the adjusted net income. The centum of the adjusted net incredit allowed by this subsection come. The credit allowed by this shall not be allowed in respect of subsection shall not be allowed in dividends received from a corpora- respect of dividends received from tion organized under the China a corporation organized under the Trade Act, 1922, 42 Stat. 849 (U. China Trade Act, 1922, 42 Stat. S. C., Title 15, c. 4), or from a 849 (U. S. C., Title 15, c. 4), or corporation which under section from a corporation which under

Sec. 26. (b) Dividends received.

See p. 70, Eighth Edition.

Taxable Years
Beginning in 1943

the China Trade Act, 1922, 42 Stat. 849 (U. S. C., Title 15, c. 4), or from a corporation which under section 251 is taxable only on its gross income from sources within the United States by reason of its receiving a large percentage of its gross income from sources within a possession of the United States.

Sec. 26 (b), I. R. C., supra, amended by Sec. 105 (e) (1), R. A. of 1942, to read as above. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941.

For Sec. 26 (b), I. R. C., before amendment, see 1942 column.

Sec. 26. (c) Net operating loss of preceding year.—

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the China Trade Act, 1922, 42 Stat. 251 is taxable only on its gross in-
849 (U. S. C., Title 15, c. 4), or come from sources within the
from a corporation which under sec- United States by reason of its re-
tion 251 is taxable only on its gross ceiving a large percentage of its
income from sources within the gross income from sources within
United States by reason of its re- a possession of the United States.
ceiving a large percentage of its
gross income from sources within
a possession of the United States.

Sec. 26 (b), I. R. C., supra, amended by Sec. 105 (e) (1), R. A. of 1942, by adding language shown in italics. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941.

Sec. 26. (c) Net operating loss of preceding year.—

Sec. 26. (c) Net operating loss of preceding year.—

Sec. 26. (c) (1) Amount of Sec. 26. (c) (1) Amount of Sec. 26. (c) (1) Amount of credit. The amount of net operat- credit.-The amount of net operat- credit.-The amount of net operating loss (as defined in paragraph ing loss (as defined in paragraph ing loss (as defined in paragraph (2)) of the corporation for the (2)) of the corporation for the (2)) of the corporation for the preceding taxable year (if begin- preceding taxable year (if begin- preceding taxable year (if beginning after December 31, 1937) but ning after December 31, 1937) but ning after December 31, 1937) but not in excess of (A) the section not in excess of the adjusted (A)not in excess of the adjusted` (A) 102 net income for the taxable the section 102 net income for the the section 102 net income for the year, in the case of the tax imposed taxable year, in the case of the tax taxable year, in the case of the tax by section 102; (B) the Supple- imposed by section 102; (B) the imposed by section 102; (B) the ment P net income for the taxable Supplement P net income for the Supplement P net income for the year, in the case of the computa- taxable year, in the case of the taxable year, in the case of the tions required under Supplement computations required under Sup-computations required under SupP; or (C) the Subchapter A net plement P; or (C) the Subchapter plement P; or (C) the Subchapter income for the taxable year, in the A net income for the taxable year, A net income for the taxable year, case of the tax imposed under Sub- in the case of the tax imposed un- in the case of the tax imposed unchapter A. der Subchapter A. der Subchapter A.

Sec. 26 (c) (1), I. R. C., supra, amended by Sec. 132 (a) (1), R. A. of 1942, to read as above. Sec. 132 (e) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1939, but also applicable in the computations with respect to previous taxable years for the purpose of ascertaining the amount of any dividend carryover from such previous taxable years.

For Sec. 26 (c), I. R. C., before amendment, see 1942 column.

Sec. 26 (c) (1), I. R. C., supra, amended by Sec. 132 (a) (1), R. A. of 1942, by omitting language in stricken through type and adding language in italics. Sec. 132 (e) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1939, but also applicable in the computations with respect to previous taxable years for the purpose of ascertaining the amount of any dividend carry-over from such previous taxable years.

Sec. 26. (c) (2) Definition.-As Sec. 26. (c) (2) Definition.-As used in this section the term "net used in this section the term "net operating loss" means the excess operating loss" means the excess of the deductions allowed by this chapter over the gross income, with the following exceptions and limi

tations

(A) The deduction for depletion shall not exceed the amount which

of the deductions allowed by this
chapter section over the gross in-
come, with the following excep-
tions and limitations-

(A) The deduction for depletion
shall not exceed the amount which

Sec. 26 (c) (1), I. R. C.. supra, amended by Sec. 132 (a) (1), R. A. of 1942, by omitting language in stricken through type and adding language in italics. Sec. 132 (e) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1939, but also applicable in the computations with respect to previous taxable years for the purpose of ascertaining the amount of any dividend carry-over from such previous taxable years.

Sec. 26. (c) (2) Definition.-As used in this section the term "net operating loss" means the excess of the deductions allowed by this chapter section over the gross income, with the following exceptions and limitations

(A) The deduction for depletion shall not exceed the amount which

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Sec. 26. (c) (1) Amount of Sec. 26. (c) (1) Amount of credit. The amount of net operat- credit. The amount of the net ing loss (as defined in paragraph operating loss (as defined in para(2)) of the corporation for the graph (2)) of the corporation for preceding taxable year (if begin- the preceding taxable year (if bening after December 31, 1937) but ginning after December 31, 1937), not in excess of the adjusted (4) but not in excess of the adjusted the section 102 net income for the net income for the taxable year. taxable year, in the case of the tax imposed by section 102; (B) the Supplement P net income for the taxable year, in the case of the computations required under Supplement P; or (C) the Subchapter A net income for the taxable year, in the case of the tax imposed under Subchapter A.

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Sec. 26. (c) (2) Definition.-As

Sec. 26. (c) (2) Definition.-As used in this section the term "net used in this chapter section the operating loss" means the excess term "net operating loss" means of the deductions allowed by this the excess of the deductions alchapter section over the gross in- lowed by this chapter section over come, with the following excep- the gross income, with the followtions and limitationsing exceptions and limitations(A) The deduction for depletion (A) The deduction for depleshall not exceed the amount which tion shall not exceed the amount

Sec. 26. (c) Net operating loss of preceding year.

Retroactivity

For retroactive amendment of Sec. 26 (c), R. A. of 1936, by Sec. 501, R. A. of 1942 (1939 column), see fn. 2, p. 20.

Sec. 26. (c) (1) Amount of credit.

See p. 70, Eighth Edition.

Sec. 26. (c) (2) Definition.

See p. 70, Eighth Edition.

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