Taxable Years would be allowable if reference to without reference to gross computed would be allowable if computed would be allowable if computed to reference discovery discovery without discovery without value or to percentage depletion value or to percentage depletion value or to percentage depletion under section 114 (b) (2), (3), under section 114 (b) (2), (3), under section 114 (b) (2), (3), or (4); or (4); or (4); (B) There shall be included in (B) There shall be included in (B) There shall be included in income income the computing gross the the computing computing income gross amount of interest received which amount of interest received which amount of interest received which is wholly exempt from the taxes is wholly exempt from the taxes is wholly exempt from the taxes imposed by this chapter, decreased imposed by this chapter section, imposed by this chapter section, by the amount of interest paid or decreased by the amount of inter- decreased by the amount of interaccrued which is not allowed as a est paid or accrued which is not est paid or accrued which is not deduction by section 23 (b), relat- allowed as a deduction by section allowed as a deduction by section ing to interest on indebtedness in- 23 (b), relating to interest on in- 23 (b), relating to interest on incurred or continued to purchase or debtedness incurred or continued to debtedness incurred or continued to carry certain tax- purchase or carry certain taxcarry certain tax-exempt obliga- purchase or exempt obligations. tions. (C) For the purposes of this paragraph, the net operating loss deduction provided in section 122 shall not be allowed. exempt obligations. (C) For the purposes of this paragraph, the net operating loss deduction provided in section 122 shall not be allowed. In the case of a taxable year be- In the case of a taxable year be- Sec. 26 (c) (2), I. R. C., 132 supra, amended by Sec. (a) (2) and (3), R. A. of 1942, as above. Sec. 132 to read (e) of said Act makes amendto taxable ments applicable years beginning after Dec. 31, 1939, but also applicable in the computations in respect to previous taxable years for the of ascertaining purpose the amount of any dividend from such precarry-over vious taxable years. For Sec. 26 (c) (2), I. R. C.. before amendment, see 1942 column. Sec. 26. (d) Bank affiliates.-In Sec. Sec. 26 (c) (2), I. R. C., of For prior amendments (C) For the purposes of this paragraph, the net operating loss deduction provided in section 122 shall not be allowed. In the case of a taxable year beginning after December 31, 1937, and before January 1, 1939, the term "net operating loss" means net operating loss as defined in section 26 (c) of the Revenue Act of 1938, 52 Stat. 467. Sec. 26 (c) (2), I. R. C., 132 supra, amended by Sec. (a) (2) and (3), R. A. of 1942, by adding language in italics and omitting language in Sec. stricken through type. makes 132 (e) of said Act amendments applicable to taxable years beginning after Dec. 31, 1939, but also applicable in the computations in respect to previous taxable years for the purpose of ascertaining the amount of any dividend carry-over from such previous taxable years. of For prior amendments Sec. 26 (c) (2), supra, see Sec. 26 (c) (2) in 1939 column. Sec. 26. (d) Bank affiliates.-In Sec. 26. (d) Bank affiliates.-In the case of a holding company af- the case of a holding company af- the case of a holding company affiliate (as defined in section 2 of filiate (as defined in section 2 of filiate (as defined in section 2 of the Banking Act of 1933), the the Banking Act of 1933), the the Banking Act of 1933), the amount of the earnings or profits amount of the earnings or profits amount of the earnings or profits which the Board of Governors of which the Board of Governors of which the Board of Governors of the Federal Reserve System cer- the Federal Reserve System cer- the Federal Reserve System certifies to the Commissioner has been tifies to the Commissioner has been tifies to the Commissioner has been devoted by such affiliate during the devoted by such affiliate during the devoted by such affiliate during the taxable year to the acquisition of taxable year to the acquisition of taxable year to the acquisition of assets assets readily marketable other readily, marketable other readily marketable assets other than bank stock in compliance than bank stock in compliance than bank stock in compliance with section 5144 of the Revised with section 5144 of the Revised with section 5144 of the Revised Statutes. The aggregate of the The aggregate of the Statutes. The aggregate of the Statutes. credits allowable under this sub- credits allowable under this sub-credits allowable under this subsection for all taxable years begin- section for all taxable years begin- section for all taxable years beginning after December 31, 1935, ning after December 31, 1935, ning after December 31, 1935, shall not exceed the amount re- shall not exceed the amount re- shall not exceed the amount required to be devoted under such quired to be devoted under such quired to be devoted under such section 5144 to such purposes, and section 5144 to such purposes, and section 5144 to such purposes, and the amount of the credit for any the amount of the credit for any the amount of the credit for any would be allowable if computed which would be allowable if com- (C) For the purposes of this paragraph, the net operating loss deduction provided in section 122 shall not be allowed. In the case of a taxable year beginning after December 31, 1937, and before January 1, 1939, the term "net operating loss" means net operating loss as defined in section 26 (c) of the Revenue Act of 1938, 52 Stat. 467. Sec. 26 (c) (2), I. R. C., supra, amended by Sec. 132 (a) (2) and (3), R. A. of 1942, by adding language in italics and omitting language in stricken through type. Sec. 132 (e) of said Act makes amendments applicable to taxable years beginning after Dec. 31, 1939, but also applicable in the computations in respect to previous taxable years for the purpose of ascertaining the amount of any dividend carry-over from such previous taxable years. For prior amendments of Sec. 26 (c) (2), supra, see explanation under Sec. 26 (c) (2) in 1939 column. (B) There shall be included in computing gross income the amount of interest received which is wholly exempt from the taxes imposed by this chapter section, decreased by the amount of interest paid or accrued which is not allowed as a deduction by section 23 (b), relating to interest on indebtedness incurred or continued to purchase or carry certain tax-exempt obligations. In the case of a taxable year be- Sec. 26 (c) (2), I. R. C., Sec. 26. (d) Bank affiliates.-In Sec. 26. (d) Bank affiliates.-In the case of a holding company af- the case of a holding company affiliate (as defined in section 2 of filiate (as defined in section 2 of the Banking Act of 1933), the the Banking Act of 1933), the amount of the earnings or profits amount of the earnings or profits which the Board of Governors of which the Board of Governors of the Federal Reserve System cer- the Federal Reserve System certifies to the Commissioner has been tifies to the Commissioner has been devoted by such affiliate during the devoted by such affiliate during taxable year to the acquisition of the taxable year to the acquisition readily marketable assets other of readily marketable assets other than bank stock in compliance than bank stock in compliance with section 5144 of the Revised with section 5144 of the Revised Statutes. The aggregate of the Statutes. The aggregate of the credits allowable under this sub- credits allowable under this subsection for all taxable years begin- section for all taxable years beginning after December 31, 1935, ning after December 31, 1935, shall not exceed the amount re- shall not exceed the amount required to be devoted under such quired to be devoted under such section 5144 to such purposes, and section 5144 to such purposes, and the amount of the credit for any the amount of the credit for any Taxable Years Beginning before 1939 Sec. 26. (d) Bank affiliates. See p. 74, Eighth Edition. Taxable Years Taxable Years Taxable Years taxable year shall not exceed the taxable year shall not exceed the taxable year shall not exceed the adjusted net income for such year. adjusted net income for such year. adjusted net income for such year. Sec. 26. (e) Income subject to Sec. 26. (e) Income subject to excess-profits tax. In the case of excess-profits tax. In the case of any corporation subject to the tax any corporation subject to the tax imposed by Subchapter E of Chap-imposed by Subchapter E of Chapter 2, an amount equal to its ad- ter 2, an amount equal to its adjusted excess-profits net income (as justed excess-profits net income (as defined in section 710 (b)). In the defined in section 710 (b)). In the case of any corporation computing case of any corporation computing such tax under section 721 (relating such tax under section 721 (relating to abnormalities in income in the to abnormalities in income in the taxable period), section 726 (relat- tarable period), section 726 (relating to corporations completing con- ing to corporations completing contracts under the Merchant Marine tracts under the Merchant Marine Act of 1936), section 731 (relating Act of 1936), section 731 (relating to corporations engaged in mining to corporations engaged in mining strategic minerals), or section 736 strategic minerals), or section 736 (b) (relating to corporations with (b) (relating to corporations with income from long-term contracts), income from long-term contracts), the credit shall be the amount of the credit shall be the amount of which the tax imposed by such sub- which the tax imposed by such subchapter is 90 per centum. For the chapter is 90 per centum. For the purpose of the preceding sentence purpose of the preceding sentence the term "tax imposed by Subchap- the term "tax imposed by Subchapter E of Chapter 2" means the tax ter E of Chapter 2" means the tax computed without regard to the computed without regard to the limitation provided in section 710 limitation provided in section 710 (a) (1) (B) (the 80 per centum (a) (1) (B) (the 80 per centum limitation), without regard to the limitation), without regard to the credit provided in section 729 (c) credit provided in section 729 (c) and (d) for foreign taxes paid, and and (d) for foreign taxes paid, and without regard to the adjustments without regard to the adjustments provided in section 734. This sub-provided in section 734. section shall not apply to any cor- section shall not apply to any corporation exempt from such tax un-poration exempt from such tax under section 725 or section 727. Sec. 26 (e), I. R. C., supra, added to I. R. C. by Sec. 105 (d), R. A. of 1942. Sec. 105 (d), R. A. of 1942, also struck out "(e)" and "(f)" and substituted in lieu thereof "(f)" and "(g)", respectively. Sec. 101, R. Á. of 1942, makes amendments applicable to taxable years beginning after Dec. 31, 1941. Sec. 26. (f) Dividends paid credit. For corporation dividends paid credit, see section 27. Sec. 26. (g) Consent dividends credit. For corporation consent dividends credit, see section 28. Sec. 26. (h) Credit for dividends paid on certain preferred stock. This sub der section 725 or section 727. Sec. 26 (e), I. R. C., supra, shown in italics, added to I. R. C. by Sec. 105 (d), R. A. of 1942. Sec. 105 (d), R. A. of 1942, also struck out "(e)" and "(f)" and substituted in lieu thereof "(f)" and "(g)", respectively. Sec. 101, R. A. of 1942, makes amendments applicable to taxable years beginning after Dec. 31, 1941. Sec. 26. (f) (e) Dividends paid credit. Sec. 26. (h) (1) Amount of Sec. 26. (h) (1) Amount of credit. In the case of a public credit.-In the case of a public utility, the amount of dividends utility, the amount of dividends taxable year shall not exceed the taxable year shall not exceed the adjusted net income for such year. adjusted net income for such year. Taxable Years Beginning before 1939 Taxable Years Beginning in 1943 paid during the taxable year on its preferred stock. The credit provided in this subsection shall be subtracted from the basic surtax credit provided in section 27. Sec. 26. (h) (2) Definitions.-As used in this subsection and section 15 (a) (A) Public Utility. The term "public utility" means a corporation engaged in the furnishing of telephone service or in the sale of electric energy, gas, or water, if the rates for such furnishing or sale, as the case may be, have been established or approved by a State or political subdivision thereof or by an agency or instrumentality of the United States or by a public utility or public service commission or other similar body of the District of Columbia or of any State or political subdivision thereof. Taxable Years Beginning in 1942 paid during the taxable year on its preferred stock. The credit provided in this subsection shall be subtracted from the basic surtax credit provided in section 27. Sec. 26. (h) (2) Definitions.-As used in this subsection and section 15 (a)— (A) Public Utility.-The term "public utility” means a corporation engaged in the furnishing of telephone service or in the sale of electric energy, gas, or water, if the rates for such furnishing or sale, as the case may be, have been established or approved by a State or political subdivision thereof or by an agency or instrumentality of the United States or by a public utility or public service commission or other similar body of the District of Columbia or of any State or political subdivision thereof. (B) Preferred Stock.-The term (B) Preferred Stock.-The term "preferred stock" means stock is- "preferred stock" means stock issued sued prior to October 1, 1942, which prior to October 1, 1942, which durduring the whole of the taxable yearing the whole of the taxable year (or the part of the taxable year af- (or the part of the taxable year after its issue) was stock the divi- ter its issue) was stock the dividends dends in respect of which were in respect of which were cumulative, cumulative, limited to the same limited to the same amount, and amount, and payable in preference payable in preference to the payto the payment of dividends on ment of dividends on other stock. other stock. Sec. 26 (h), I. R. C., added to I. R. C. by Sec. 133, R. A. of 1942. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. Sec. 27. Corporation dividends paid credit. Sec. 27. (a) Definition in general. As used in this chapter with respect to any taxable year the term 'dividends paid credit" means the sum of: Sec. 27. (a) (1) The basic surtax credit for such year, computed as provided in subsection (b); Sec. 27. (a) (2) The dividend carry-over to such year, computed as provided in subsection (c); Sec. 26 (h), I. R. C., added to I. R. C. by Sec. 133, R. A. of 1942. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. Sec. 27. Corporation dividends paid credit. Sec. 27. (a) Definition in general.-As used in this chapter with respect to any taxable year the term "dividends paid credit" means the sum of: Sec. 27. (a) (1) The basic surtax credit for such year, computed as provided in subsection (b); Sec. 27. (a) (2) The dividend carry-over to such year, computed as provided in subsection (c); Taxable Years Beginning in 1941 Sec. 27. Corporation dividends paid credit. Sec. 27. (a) Definition in general. As used in this chapter with respect to any taxable year the term "dividends paid credit" means the sum of: Sec. 27. (a) (1) The basic surtax credit for such year, computed as provided in subsection (b); Sec. 27. (a) (2) The dividend carry-over to such year, computed as provided in subsection (c); Sec. 27. (a) (3) The amount, if Sec. 27. (a) (3) The amount, if Sec. 27. (a) (3) The amount, if any, by which any deficit in the any, by which any deficit in the any, by which any deficit in the accumulated earnings and profits, accumulated earnings and profits, accumulated earnings and profits, as of the close of the preceding as of the close of the preceding as of the close of the preceding taxable year (whether beginning taxable year (whether Beginning taxable year (whether beginning on, before, or after January 1, on, before, or after January 1, on, before, or after January 1, 1939), exceeds the amount of the 1939), exceeds the amount of the 1939), exceeds the amount of the |