Taxable Years Taxable Years Taxable Years Sec. 116. (e) (1) If by the terms Sec. 116. (e) (1) If by the terms Sec. 116. (e) (1) If by the terms of such contract the tax imposed of such contract the tax imposed of such contract the tax imposed by this chapter is to be paid out of by this chapter is to be paid out of by this chapter is to be paid out of the proceeds from the operation of the proceeds from the operation of the proceeds from the operation of such bridge prior to any division such bridge prior to any division such bridge prior to any division of such proceeds, and if, but for of such proceeds, and if, but for of such proceeds, and if, but for the imposition of the tax imposed the imposition of the tax imposed the imposition of the tax imposed by this chapter, a part of such pro- by this chapter, a part of such pro- by this chapter, a part of such proceeds for the taxable year would ceeds for the taxable year would ceeds for the taxable year would accrue directly to or for the use accrue directly to or for the use accrue directly to or for the use of or would be applied for the of or would be applied for the of or would be applied for the benefit of such State or political benefit of such State or political benefit of such State or political subdivision, then a tax upon the subdivision, then a tax upon the subdivision, then a tax upon the net income from the operation of net income from the operation of net income from the operation of such bridge shall be levied, as- such bridge shall be levied, as such bridge shall be levied, assessed, collected, and paid in the sessed, collected, and paid in the sessed, collected, and paid in the manner and at the rates prescribed manner and at the rates prescribed manner and at the rates prescribed in this chapter, but there shall be in this chapter, but there shall be in this chapter, but there shall be refunded to such State or politi- refunded to such State or politi- refunded to such State or political subdivision (under rules and cal subdivision (under rules and cal subdivision (under rules and regulations to be prescribed by the regulations to be prescribed by the regulations to be prescribed by the Commissioner with the approval of Commissioner with the approval of Commissioner with the approval of the Secretary) an amount which the Secretary) an amount which the Secretary) an amount which bears the relation to the bears the same relation to the bears the same relation to the amount of the tax as the amount amount of the tax as the amount amount of the tax as the amount which (but for the imposition of which (but for the imposition of which (but for the imposition of the tax imposed by this chapter) the tax imposed by this chapter) the tax imposed by this chapter) would have accrued directly to or would have accrued directly to or would have accrued directly to or for the use of or would be applied for the use of or would be applied for the use of or would be applied for the benefit of such State or for the benefit of such State or for the benefit of such State or political subdivision, bears to the political subdivision, bears to the political subdivision, bears to the amount of the net income from the amount of the net income from the amount of the net income from the operation of such bridge for such operation of such bridge for such operation of such bridge for such No such refund taxable year. No such refund taxable year. No such refund shall be made unless the entire shall be made unless the entire shall be made unless the entire amount of the refund is to be ap- amount of the refund is to be ap- amount of the refund is to be applied in part payment for the ac- plied in part payment for the ac-plied in part payment for the acquisition of such bridge. quisition of such bridge. quisition of such bridge. taxable same year. Sec. 116. (e) (2) If by the terms Sec. 116. (e) (2) If by the terms of such contract no part of the of such contract no part of the proceeds from the operation of the proceeds from the operation of the bridge for the taxable year would, bridge for the taxable year would, irrespective of the tax imposed by irrespective of the tax imposed by this chapter, accrue directly to or this chapter, accrue directly to or for the use of or be applied for the for the use of or be applied for the benefit of such State or political benefit of such State or political subdivision, then the tax upon the subdivision, then the tax upon the net income from the operation of such bridge shall be levied, assessed, collected, and paid in the manner and at the rates prescribed in this chapter. net income from the operation of Sec. 116. (e) (2) If by the terms of such contract no part of the proceeds from the operation of the bridge for the taxable year would, irrespective of the tax imposed by this chapter, accrue directly to or for the use of or be applied for the benefit of such State or political subdivision, then the tax upon the net income from the operation of such bridge shall be levied, assessed, collected, and paid in the manner and at the rates prescribed in this chapter. Sec. 116. (f) Dividend from Sec. 116. (f) Dividend from Sec. 116. (f) Dividend from "China Trade Act" corporation. "China Trade Act" corporation. "China Trade Act" corporation. -In the case of a person, amounts In the case of a person, amounts-In the case of a person, amounts distributed as dividends to or for distributed as dividends to or for distributed as dividends to or for his benefit by a corporation organ- his benefit by a corporation organ- his benefit by a corporation_organized under the China Trade Act, ized under the China Trade Act, ized under the China Trade Act, 1922, 42 Stat. 849 (U. S. C., Title 1922, 42 Stat. 849 (U. S. C., Title 1922, 42 Stat. 849 (U. S. C., Title 15, c. 4), if, at the time of such 15, c. 4), if, at the time of such 15, c. 4), if, at the time of such distribution, he is a resident of distribution, he is a resident of distribution, he is a resident of China, and the equitable right to China, and the equitable right to China, and the equitable right to the income of the shares of stock the income of the shares of stock the income of the shares of stock Sec. 116. (e) (1) If by the terms Sec. 116. (e) (1) If by the terms of such contract the tax imposed of such contract the tax imposed by this chapter is to be paid out of by this chapter is to be paid out of the proceeds from the operation of the proceeds from the operation of such bridge prior to any division such bridge prior to any division of such proceeds, and if, but for of such proceeds, and if, but for the imposition of the tax imposed the imposition of the tax imposed by this chapter, a part of such pro- by this chapter, a part of such proceeds for the taxable year would ceeds for the taxable year would accrue directly to or for the use accrue directly to or for the use of or would be applied for the of or would be applied for the benefit of such State or political benefit of such State or political subdivision, then a tax upon the subdivision, then a tax upon the net income from the operation of net income from the operation of such bridge shall be levied, as- such bridge shall be levied, assessed, collected, and paid in the sessed, collected, and paid in the manner and at the rates prescribed manner and at the rates prescribed in this chapter, but there shall be in this chapter, but there shall be refunded to such State or politi- refunded to such State or political subdivision (under rules and cal subdivision (under rules and regulations to be prescribed by the regulations to be prescribed by the Commissioner with the approval of Commissioner with the approval of the Secretary) an amount which the Secretary) an amount which bears the same relation to the bears the same relation to the amount of the tax as the amount amount of the tax as the amount which (but for the imposition of which (but for the imposition of the tax imposed by this chapter) the tax imposed by this chapter) would have accrued directly to or would have accrued directly to or for the use of or would be applied for the use of or would be applied for the benefit of such State or for the benefit of such State or political subdivision, bears to the political subdivision, bears to the amount of the net income from the amount of the net income from the operation of such bridge for such operation of such bridge for such taxable year. No such refund taxable year. No such refund shall be made unless the entire shall be made unless the entire amount of the refund is to be ap- amount of the refund is to be applied in part payment for the ac- plied in part payment for the acquisition of such bridge. quisition of such bridge. Sec. 116. (e) (2) If by the terms of such contract no part of the proceeds from the operation of the bridge for the taxable year would, irrespective of the tax imposed by this chapter, accrue directly to or for the use of or be applied for the benefit of such State or political subdivision, then the tax upon the net income from the operation of such bridge shall be levied, assessed, collected, and paid in the manner and at the rates prescribed in this chapter. Sec. 116. (e) (2) If by the terms of such contract no part of the proceeds from the operation of the bridge for the taxable year would, irrespective of the tax imposed by this chapter, accrue directly to or for the use of or be applied for the benefit of such State or political subdivision, then the tax upon the net income from the operation of such bridge shall be levied, assessed, collected, and paid in the manner and at the rates prescribed in this chapter. Sec. 116. (f) Dividend from Sec. 116. (f) Dividend from "China Trade Act" corporation. "China Trade Act" corporation. -In the case of a person, amounts-In the case of a person, amounts distributed as dividends to or for distributed as dividends to or for his benefit by a corporation organ- his benefit by a corporation organized under the China Trade Act, ized under the China Trade Act, 1922, 42 Stat. 849 (U. S. C., Title 1922, 42 Stat. 849 (U. S. C., Title 15, c. 4), if, at the time of such 15, c. 4), if, at the time of such distribution, he is a resident of distribution, he is a resident of China, and the equitable right to China, and the equitable right to the income of the shares of stock the income of the shares of stock Taxable Years Sec. 116. (f) Dividend from "China Trade Act" corporation. See p. 196, Eighth Edition. Taxable Years Beginning in 1943 Taxable Years Taxable Years of the corporation is in good faith of the corporation is in good faith of the corporation is in good faith vested in him. vested in him. vested in him. Sec. 116. (g) Shipowners' pro- Sec. 116. (g) Shipowners' pro- Sec. 116. (g) Shipowners' protection and indemnity associa- tection and indemnity associa- tection and indemnity associations. The receipts of shipowners' tions.-The receipts of shipowners' tions.-The receipts of shipowners' mutual protection and indemnity mutual protection and indemnity mutual protection and indemnity associations not organized for associations not organized for associations not organized for profit, and no part of the net earn-profit, and no part of the net earn-profit, and no part of the net earnings of which inures to the benefit ings of which inures to the benefit ings of which inures to the benefit of any private shareholder; but of any private shareholder; but of any private shareholder; but such corporations shall be subject such corporations shall be subject such corporations shall be subject as other persons to the tax upon as other persons to the tax upon as other persons to the tax upon their net income from interest, their net income from interest, their net income from interest, dividends, and rents. dividends, and rents. dividends, and rents. Sec. 116. (h) Compensation of Sec. 116. (h) Compensation of employees of foreign governments employees of foreign governments or of the Commonwealth of the or of the Commonwealth of the Philippines. Philippines. Sec. 116. (h) Compensation of employees of foreign governments or of the Commonwealth of the Philippines. Sec. 116. (h) (1) Rule for exclu- Sec. 116. (h) (1) Rule for exclu- Sec. 116. (h) (1) Rule for exclusion.-Wages, fees, or salary of an sion.-Wages, fees, or salary of an sion.-Wages, fees, or salary of an employee of a foreign government employee of a foreign government employee of a foreign government or of the Commonwealth of the or of the Commonwealth of the or of the Commonwealth of the Philippines (including a consular Philippines (including a consular Philippines (including a consular or other officer, or a nondiplomatic or other officer, or a nondiplomatic or other officer, or a nondiplomatie representative) received as com-representative) received as com-representative) received as compensation for official services to pensation for official services to pensation for official services to such government or such Common- such government or such Common- such government or such Commonwealthwealthwealth as the case may be; and or (A) If such employee is not a (A) If such employee is not a (A) If such employee is not a citizen of the United States, or is citizen of the United States, or is citizen of the United States, or is a citizen of the Commonwealth of a citizen of the Commonwealth of a citizen of the Commonwealth of the Philippines (whether or not a the Philippines (whether or not a the Philippines (whether or not a citizen of the United States); and citizen of the United States); and citizen of the United States); and (B) If the services are of a (B) If the services are of a (B) If the services are of a character similar to those per- character similar to those per- character similar to those performed by employees of the Gov- formed by employees of the Gov-formed by employees of the Government of the United States in ernment of the United States in ernment of the United States in foreign countries or in the Com- foreign countries or in the Com- foreign countries or in the Commonwealth of the Philippines, monwealth of the Philippines, monwealth of the Philippines, as the case may be; and as the case may be; and (C) If the foreign government, (C) If the foreign government, (C) If the foreign government, the Commonwealth of the the or Commonwealth of the or the Commonwealth of the Philippines, whose employee is Philippines, whose employee is Philippines, whose employee is claiming exemption grants an claiming exemption grants an equiv- claiming exemption grants an equivequivalent exemption to employees alent exemption to employees of alent exemption to employees of the Government of the United the Government of the United of the Government of the United States performing similar services States performing similar services States performing similar services in such foreign country or such in such foreign country or such in such foreign country or such Commonwealth, as the case may be. Commonwealth, as the case may be. Commonwealth, as the case may be. Sec. 116. (h) (2) Certificate by Sec. 116. (h) (2) Certificate by Sec. 116. (h) (2) Certificate by Secretary of State. The Secretary Secretary of State. The Secretary Secretary of State.-The Secretary of State shall certify to the Secre- of State shall certify to the Secre- of State shall certify to the Secre tary of the Treasury the names of tary of the Treasury the names of tary of the Treasury the names of the foreign countries which grant the foreign countries which grant the foreign countries which grant an equivalent exemption to the em- an equivalent exemption to the em- an equivalent exemption to the employees of the Government of the ployees of the Government of the ployees of the Government of the United States performing services United States performing services United States performing services in such foreign countries, and the in such foreign countries, and the in such foreign countries, and the character of the services performed character of the services performed character of the services performed by employees of the Government of by employees of the Government by employees of the Government the United States in foreign coun- of the United States in foreign of the United States in foreign of the corporation is in good faith of the corporation is in good faith. Taxable Years See p. 196, Eighth Edition. Sec. 116. (g) Shipowners' pro- Sec. 116. (g) Shipowners' pro- Sec. 116. (g) Shipowners' protection and indemnity associa- tection and indemnity associa-tection and indemnity associations. The receipts of shipowners' tions. The receipts of shipowners' tions. mutual protection and indemnity mutual protection and indemnity associations not organized for associations not organized for profit, and no part of the net earn-profit, and no part of the net earnings of which inures to the benefit ings of which inures to the benefit of any private shareholder; but of any private shareholder; but such corporations shall be subject such corporations shall be subject as other persons to the tax upon as other persons to the tax upon their net income from interest, their net income from interest, dividends, and rents. dividends, and rents. Sec. 116. (h) Compensation of Sec. 116. (h) Compensation of employees of foreign governments employees of foreign governor of the Commonwealth of the ments.Philippines. Sec. 116. (h) Compensation of employees of foreign governments. Sec. 116. (h) (1) Rule for ex See p. 196, Eighth Edition. Sec. 116. (h) (1) Rule for exclu- Sec. 116. (h) (1) Rule for exsion.-Wages, fees, or salary of an clusion.-Wages, fees, or salary of clusion. employee of a foreign government an employee of a foreign governor of the Commonwealth of the ment (including a consular or Philippines (including a consular other officer, or a nondiplomatic or other officer, or a nondiplomatic representative) received as comrepresentative) received as com-pensation for official services to pensation for official services to such governmentsuch government or such Common wealth (A) If such employee is not a (A) If such employee is not a citizen of the United States, or is citizen of the United States; and a citizen of the Commonwealth of the Philippines (whether or not a citizen of the United States); and (B) If the services are of a (B) If the services are of a character similar to those percharacter similar to those performed by employees of the Gov- formed by employees of the Government of the United States in ernment of the United States in foreign countries or in the Com- foreign countries; and monwealth of the Philippines, as the case may be; and (C) If the foreign government, (C) If the foreign government or the Commonwealth of of the whose employee is claiming exempPhilippines, whose employee is tion grants an equivalent elaiming exemption grants an equi- exemption to employees of the valent exemption to employees Government of the United States of the Government of the United performing similar services in such States performing similar services foreign country. in such foreign country or such Commonwealth, as the case may be. Sec. 116. (h) (2) Certificate by Sec. 116. (h) (2) Certificate by Secretary of State. The Secretary Secretary of State.-The Secretary of State shall certify to the Secre- of State shall certify to the Secretary of the Treasury the names of tary of the Treasury the names of the foreign countries which grant the foreign countries which grant an equivalent exemption to the employees of the Government of the an equivalent exemption to the emUnited States performing services ployees of the Government of the in such foreign countries, and the United States performing services character of the services performed in such foreign countries, and the by employees of the Government character of the services performed of the United States in foreign by employees of the Government of Sec. 116. (h) (2) Certificate by Secretary of State. See p. 198, Eighth Edition. If the Commonwealth countries. Taxable Years tries. If the Commonwealth of the countries. If the Commonwealth Philippines grants an equivalent of the Philippines grants an equiv of the Philippines grants an equiv exemption to the employees of the alent exemption to the employees alent exemption to the employees United States performing services of the United States performing of the United States performing in such Commonwealth the Secre- services in such Commonwealth the services in such Commonwealth the tary of State shall certify such Secretary of State shall certify Secretary of State shall certify fact to the Secretary of the Treas- such fact to the Secretary of the such fact to the Secretary of the ury and the character of the serv- Treasury and the character of the Treasury and the character of the ices performed by employees of the services performed by employees services performed by employees Government of the United States of the Government of the United of the Government of the United in such Commonwealth. States in such Commonwealth. States in such Commonwealth. Sec. 117. (a) (1) Capital assets. Sec. 117. (a) (1) Capital assets. Sec. 117. (a) (1) Capital assets. -The term "capital assets" means -The term "capital assets" means-The term "capital assets" means property held by the taxpayer property held by the taxpayer property held by the taxpayer (whether or not connected with his (whether or not connected with his (whether or not connected with his trade or business), but does not in- trade or business), but does not in trade or business), but does not include stock in trade of the tax- clude stock in trade of the tax- clude stock in trade of the taxpayer or other property of a kind payer or other property of a kind payer or other property of a kind which would properly be included which would properly be included which would properly be included in the inventory of the taxpayer if in the inventory of the taxpayer if in the inventory of the taxpayer if on hand at the close of the taxable on hand at the close of the taxable on hand at the close of the taxable year, or property held by the tax-year, or property held by the tax-year, or property held by the taxpayer primarily for sale to cus- payer primarily for sale to cus- payer primarily for sale to customers in the ordinary course of tomers in the ordinary course of tomers in the ordinary course of his trade or business, or property, his trade or business, or property, his trade or business, or property, used in the trade or business, of a used in the trade or business, of a used in the trade or business, of a character which is subject to the character which is subject to the character which is subject to the allowance for depreciation provided allowance for depreciation provided allowance for depreciation provided in section 23 (1), or an obligation in section 23 (1), or an obligation in section 23 (1), or an obligation of the United States or any of its of the United States or any of its of the United States or any of its possessions, or of a State or Terri- possessions, or of a State or Terri- possessions, or of a State or Tertory, or any political subdivision tory, or any political subdivision ritory, or any political subdivision thereof, or of the District of Col- thereof, or of the District of Col- thereof, or of the District of Columbia, issued on or after March 1, umbia, issued on or after March 1, umbia, issued on or after March 1, 1941, on a discount basis and pay- 1941, on a discount basis and pay- 1941, on a discount basis and payable without interest at a fixed able without interest at a fixed able without interest at a fixed maturity date not exceeding one maturity date not exceeding one year maturity date not exceeding one year from the date of issue, or real from the date of issue, or real prop-year from the date of issue; property used in the trade or busi-erty used in the trade or business ness of the taxpayer; of the taxpayer; |