allowance for depletion under sec- allowance for depletion under sec-
tion 23 (m) shall be 272 per cen- tion 23 (m) shall be 272 per cen-
tum of the gross income from the tum of the gross income from the
property during the taxable year, property during the taxable year,
excluding from such gross income excluding from such gross income
an amount equal to any rents or an amount equal to any rents or
royalties paid or incurred by the royalties paid or incurred by the
taxpayer in respect of the prop- taxpayer in respect of the prop-
erty. Such allowance shall not ex- erty. Such allowance shall not ex-
ceed 50 per centum of the net in- ceed 50 per centum of the net in-
come of the taxpayer (computed come of the taxpayer (computed
without allowance for depletion) without allowance for depletion)
from the property, except that in from the property, except that in
no case shall the depletion allow- no case shall the depletion allow-
ance under section 23 (m) be less ance under section 23 (m) be less
than it would be if computed with- than it would be if computed with-
out reference to this paragraph.
out reference to this paragraph.

Sec. 114. (b) (4) Percentage de- Sec. 114. (b) (4) Percentage depletion for coal and metal mines pletion for coal and metal mines and sulphur.-The allowance for and sulphur.-The allowance for depletion under section 23 (m) depletion under section 23 (m) shall be, in the case of coal mines, shall be, in the case of coal mines, 5 per centum, in the case of metal 5 per centum, in the case of metal mines, 15 per centum, and, in the mines, 15 per centum, and, in the case of sulphur mines or deposits, case of sulphur mines or deposits, 23 per centum, of the gross income 23 per centum, of the gross income from the property during the tax- from the property during the taxable year, excluding from such able year, excluding from such gross income an amount equal to gross income an amount equal to any rents or royalties paid or in- any rents or royalties paid or incurred by the taxpayer in respect curred by the taxpayer in respect of the property. Such allowance of the property. Such allowance shall not exceed 50 per centum of shall not exceed 50 per centum of the net income of the taxpayer the net income of the taxpayer (computed without allowance for (computed without allowance for depletion) from the property. A depletion) from the property. A taxpayer making his first return taxpayer making his first return under this chapter in respect of a under this chapter in respect of a property shall state whether he property shall state whether he elects to have the depletion allow-elects to have the depletion allowance for such property for the tax- ance for such property for the taxable year for which the return is able year for which the return is made computed with or without made computed with or without regard to percentage depletion, regard to percentage depletion, and the depletion allowance in re- and the depletion allowance in respect of such property for such spect of such property for such year shall be computed according year shall be computed according to the election thus made. If the to the election thus made. If the taxpayer fails to make such state-taxpayer fails to make such statement in the return, the depletion ment in the return, the depletion allowance for such property for allowance for such property for such year shall be computed with- such year shall be computed without reference to percentage deple-out reference to percentage depletion. The method, determined as tion. The method, determined as above, of computing the depletion above, of computing the depletion. allowance shall be applied in the allowance shall be applied in the case of the property for all taxable case of the property for all taxable years in which it is in the hands years in which it is in the hands of such taxpayer, or of any other of such taxpayer, or of any other person if the basis of the prop- person if the basis of the property (for determining gain) in his erty (for determining gain) in his hands is, under section 113, de- hands is, under section 113, determined by reference to the basis termined by reference to the basis in the hands of such taxpayer, in the hands of such taxpayer,

Taxable Years Beginning before 1939

Sec. 114. (b) (4) Percentage depletion for coal and metal mines and sulphur.

See p. 178, Eighth Edition.

Taxable Years
Beginning in 1943

Sec. 115. Distributions by corporations.

years in which it is in the hands either directly or through one or
of such taxpayer, or of any other more substituted bases, as defined
person if the basis of the prop in that section. The above right
erty (for determining gain) in hie of election shall be subject to the
hands is, under section 113, de qualification that this paragraph
termined by reference to the basis shall, for the purpose of determin-
in the hands of such taxpayer, ing whether the method of com-
either directly or through one or puting the depletion allowance
more substituted bases, as defined follows the property, be considered
in that section. The above right a continuation of section 114 (b)
of election shall be subject to the (4) of the Revenue Act of 1934,
qualification that this paragraph 48 Stat. 710, and the Revenue Act
shall, for the purpose of determin of 1936, 49 Stat. 1686, and the
ing whether the method of com- Revenue Act of 1938, 52 Stat. 494,
puting the depletion allowance and as giving no new election in
follows the property, be considered cases where either of such sections
a continuation of section 114 (b) would, if applied, give no
(4) of the Revenue Act of 1934, election.
48 Stat. 710, and the Revenue Aet
of 1936, 40 Stat. 1686, and the
Revenue Act of 1938, 52 Stat. 494,
and as giving no new election in
eases where either of such sections
would, if applied, give no new-elee-
tion.

new

Sec. 115. Distributions by corporations.

Sec. 115. (a) Definition of dividend.-The term "dividend" when used in this chapter (except in section 203 (a) (3) and section 207 (c) (1), relating to insurance companies)

means

Sec. 115. (a) Definition of diviSec. 115. (a) Definition of dividend. The term "dividend" when dend.-The term "dividend" when used in this chapter (except in sec- used in this chapter (except in section 201 (c) (5), section 204 (c) tion 203 (a) (3) and section 207 (11) and section 207 (a) (2) and (e) (1), relating to insurance com (b) (3) (where the reference is to panies 201 (c) (5), section 204 (c) any distribution dividends of insurance companies (11) and section 207 (a) (2) and (b) made by a corporation to its sharepaid to policy holders)) means any (3) (where the reference is to divi- holders, whether in money or in distribution made by a corporation dends of insurance companies paid other property, (1) out of its earnto its shareholders, whether in to policy holders)) means any dis- ings or profits accumulated after money or in other property, (1) tribution made by a corporation to February 28, 1913, or (2) out of out of its earnings or profits ac- its shareholders, whether in money the earnings or profits of the taxcumulated after February 28, 1913, or in other property, (1) out of its able year (computed as of the close or (2) out of the earnings or earnings or profits accumulated after of the taxable year without diminuprofits of the taxable year (com- February 28, 1913, or (2) out of tion by reason of any distributions puted as of the close of the taxable the earnings or profits of the tax-made during the taxable year), year without diminution by reason year (computed as of the close without regard to the amount of of any distributions made during of the taxable year without diminu- the earnings and profits at the the taxable year), without regard tion by reason of any distributions time the distribution was made. to the amount of the earnings and made during the taxable year), Such term also means any distriprofits at the time the distribution without regard to the amount of bution to its shareholders, whether was made. Such term also means the earnings and profits at the in money or in other property, any distribution to its shareholders, time the distribution was made. made by a corporation which, unwhether in money or in other prop- Such term also means any distri- der the law applicable to the taxerty, made by a corporation which, bution to its shareholders, whether able year in which the distribution under the law applicable to the tax-in money or in other property, is made, is a personal holding comable year in which the distribution made by a corporation which, un-pany, or which, for the taxable is made, is a personal holding com-der the law applicable to the tax-year in respect of which the dis

able

either directly or through one or either directly or through one or
more substituted bases, as defined more substituted bases, as defined
in that section. The above right in that section. The above right
of election shall be subject to the of election shall be subject to the
qualification that this paragraph qualification that this paragraph
shall, for the purpose of determin- shall, for the purpose of determin-
ing whether the method of com- ing whether the method of com-
puting the depletion allowance puting the depletion allowance
follows the property, be considered follows the property, be considered
a continuation of section 114 (b) a continuation of section 114 (b)
(4) of the Revenue Act of 1934, (4) of the Revenue Act of 1934,
48 Stat. 710, and the Revenue Act 48 Stat. 710, and the Revenue Act
of 1936, 49 Stat. 1686, and the of 1936, 49 Stat. 1686, and the
Revenue Act of 1938, 52 Stat. 494, Revenue Act of 1938, 52 Stat. 494,
and as giving no new election in and as giving no new election in
cases where either of such sections cases where either of such sections
would, if applied, give no new would, if applied, give no new
election.
election.

Taxable Years

Beginning before 1939

Sec. 115. Distributions by corporations.

Sec. 115. Distributions by corporations.

Sec. 115. Distributions by corporations.

See p. 180, Eighth Edition.

Sec. 115. (a) Definition of divi- Sec. 115. (a) Definition of divi- Sec. 115. (a) Definition of dend. The term "dividend" when dend. The term "dividend" when dividend. used in this chapter (except in sec- used in this chapter (except in section 203 (a) (3) and section 207 tion 203 (a) (3) and section 207 (e) (1), relating to insurance com- (c) (1), relating to insurance companies) means any distribution panies) means any distribution made by a corporation to its share- made by a corporation to its shareholders, whether in money or in holders, whether in money or in other property, (1) out of its earn- other property, (1) out of its earnings or profits accumulated after ings or profits accumulated after February 28, 1913, or (2) out of February 28, 1913, or (2) out of the earnings or profits of the tax- the earnings or profits of the taxable year (computed as of the close able year (computed as of the close of the taxable year without diminu- of the taxable year without diminution by reason of any distributions tion by reason of any distributions made during the taxable year), made during the taxable year), withwithout regard to the amount of out regard to the amount of the the earnings and profits at the earnings and profits at the time the time the distribution was made. distribution was made. Such term Such term also means any distri- also means any distribution to its bution to its shareholders, whether shareholders, whether in money or in money or in other property, in other property, made by a corpomade by a corporation which, un-ration which, under the law applider the law applicable to the tax- cable to the taxable year in which able year in which the distribution the distribution is made, is a peris made, is a personal holding com-sonal holding company, or which, pany, or which, for the taxable for the taxable year in respect of year in respect of which the dis- which the distribution is made un

Taxable Years
Beginning in 1943

Taxable Years
Beginning in 1942

Taxable Years
Beginning in 1941

pany, or which, for the taxable able year in which the distribution tribution is made under section 504 year in respect of which the dis- is made, is a personal holding com- (c) or section 506 or a correspondtribution is made under section 504 pany, or which, for the taxable ing provision of a prior income (c) or section 506 or a correspond-year in respect of which the dis- tax law, is a personal holding_coming provision of a prior income tribution is made under section 504 pany under the law applicable to tax law, is a personal holding com- (c) or section 506 or a correspond-such taxable year. pany under the law applicable to ing provision of a prior income such taxable year. tax law, is a personal holding company under the law applicable to such taxable year.

Sec. 115 (a), I. R. C., amended by Sec. 166 and by Sec. 186 (a) (1), R. A. of 1942, to read as above.

For Sec. 115 (a), I. R. C., before amendments and for taxable years in respect of which amendments are applicable, see 1942 column.

Sec. 115 (a), I. R. C., amended by Sec. 166, R. A. of 1942, by omitting language in stricken through type and adding first language in italics. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941.

Sec. 115 (a), I. R. C., again amended by Sec. 186 (a) (1), R. A. of 1942, by adding second language in italics. Sec. 186 (f) of said Act makes amendment effective as of Feb. 10, 1939, date of enactment of I. R. C. But see Sec. 186 (g) of R. A. of 1942 prescribing limitation on retroactive application of amendment. See fn. 16.

"Such term also means any distribution to its shareholders, whether in money or in other property, made by a corporation which, under the law applicable to the taxable year in which the distribution is made, is a personal holding company, or which, for the taxable year in respect of which the distribution is made under section 405 (c) or section 407 is a personal holding company under the law applicable to such taxable year."

(3) AMENDMENT TO REVENUE ACT OF 1936.-Section 115 (a) of the Revenue Act of 1936 (relating to definition of dividend) is amended by inserting at the end thereof the following new sentence:

"Such term also means any distribution to its shareholders, whether in money or in other property, made by a corporation in a taxable year of the corporation beginning after December 31, 1936, which, for such year, is a personal holding company."

Sec. 115 (a), I. R. C.. amended by Sec. 186 (a) (1), R. A. of 1942, by adding language in italics. Sec. 186 (f) of said Act makes amendment effective as of Feb. 10, 1939, date of enactment of I. R. C. But see Sec. 186 (g) of R. A. of 1942 prescribing limitation on retroactive application of amendment. See fn. 16.

(b) PERSONAL HOLDING COMPANY DIVIDENDS NOT APPLIED IN REDUCTION OF BASIS.-Section 115 (b) (relating to source of distributions) of the Internal Revenue Code, the Revenue Act of 1938, and the Revenue Act of 1936, are amended by inserting at the end of such subsection the following new sentence:

"The preceding sentence shall not apply to a distribution which is a dividend within the meaning of the last sentence of subsection (a).”

(c) DIVIDENDS PAID AFTER CLOSE OF TAXABLE YEAR. -Section 504 (c) of the Internal Revenue Code and section 405 (c) of the Revenue Act of 1938 (relating to credit for dividends paid after close of taxable year) are amended as follows:

(1) By amending subsection (c) (1) and (2) to read as follows:

"(c) Dividends paid after the close of the taxable year and before the 15th day of the third month following the close of the taxable year, if claimed under this subsection in the return, but only to the extent to which such dividends would have been includible in the computation of the basic surtax credit for the taxable year if distributed during such taxable year; but the amount allowed under this subsection shall not exceed either:

tribution is made under section 504 der section 504 (c) or section 506 or (c) or section 506 or a correspond- a corresponding provision of a ing provision of a prior income tax law, is a personal holding company under the law applicable to such taxable year.

prior income tax law, is a personal holding company under the law applicable to such taxable year.”

Sec. 115 (a), I. R. C., amended by Sec. 186 (a) (1), R. A. of 1942, by adding lanSec. 186 (f) guage in italics. of said Act makes amendment effective as of Feb. 10, 1939, date of enactment of I. R. C. But see Sec. 186 (g) of R. A. of 1942 prescribing limitation on retroactive appliof amendment.