shall be allowed in respect of any emergency facility for any taxable year (C) unless a certificate in respect thereof under paragraph (1) shall have been made (i) prior to the filing of the taxpayer's return for such taxable year, or prior to the making of an election pursuant to subsection (d) (3) or subsection (d) (6) of this section to take the amortization deduction, or (ii) before December 1, 1941, whichever is later; or (D) in the case of an emergency facility completed or acquired by a corporation after December 31, 1939, and before June 11, 1940, unless a certificate in respect thereof under paragraph (1) shall have been made prior to the expiration of twelve months after the date of enactment of the Revenue Act of 1942; or (E) in the case of an emergency facility completed or acquired after December 31, 1939, and before January 1, 1943, by a person other than a corporation, unless a certificate in respect thereof under paragraph (1) shall have been made (i) prior to the expiration of nine months after the last date upon which an application for such certificate may be filed, or (ii) prior to the expiration of twelve months after the date of enactment of the Revenue Act of 1942, whichever is later. Sec. 124 (f) (3), I. R. C., supra, is shown as it was amended to read by Sec. 155 (e) (2), R. A. of 1942. Sec. 155 (i) of said Act makes amendment effective as of Oct. 8, 1940. For Sec. 124 (f) (3), I. R. C., as originally enacted by Sec. 302, Second R. A. of 1940, and subsequent amendments prior to above amendment made by Sec. 155 (e) (1), R. A. of 1942, see fn. 20, P. 354. Sec. 124. (g) Depreciation deduction. If the adjusted basis of the emergency facility computed without regard to subsection (f) of this section is in excess of the adjusted basis computed under such subsection, the deduction provided by section 23 (1) shall, despite the provisions of subsection (a) of this section, be allowed with respect to such emergency facility as if its adjusted basis were amount equal to the amount of such excess. an the Sec. 124. (h) (1) The amortiza- Sec. 124. (h) (1) The amortiza- Sec. 124. (h) (1) The amortization deduction for the month in tion deduction for the month in tion deduction for the month in which such amount is so includible which such amount is so includible which such amount is so includible shall (in lieu of the amount of the shall (in lieu of the amount of the shall (in lieu of the amount of the deduction for such month computed deduction for such month computed deduction for such month computed under subsection (a)) be the under subsection (a)) be the under subsection (a)) be amount so includible, but such de- amount so includible, but such de-amount so includible, but such deduction shall not be in excess of the duction shall not be in excess of the duction shall not be in excess of the adjusted basis of the emergency fa- adjusted basis of the emergency facility as of the end of such month cility as of the end of such month (computed without regard to any (computed without regard to any amortization deduction for such amortization deduction for such month). Payments referred to in month). Payments referred to in this paragraph shall be payments this paragraph shall be payments the amounts of which are certified, the amounts of which are certified, under such regulations as the President may prescribe, by either the Secretary of War or the Secretary of the Navy as compensation to the taxpayer for the unamortized cost of the emergency facility made be cause (A) A contract with the United States involving the use of the facility has been terminated by its terms or by cancellation, or under such regulations as the Pres- cause (A) A contract with the United States involving the use of the facility has been terminated by its terms or by cancellation, or (B) the taxpayer had reasonable (B) the taxpayer had reasonable grounds (either from provisions of grounds (either from provisions of a contract with the United States a contract with the United States involving the use of the facility, or involving the use of the facility, or from written or oral representa- from written or oral representations made under authority of the tions made under authority of the United for anticipating United States) for anticipating future contracts involving the use of the facility, which future contracts have not been made. future contracts involving the use of the facility, which future contracts have not been made. adjusted basis of the emergency facility as of the end of such month (computed without regard to any amortization deduction for such month). Payments referred to in this paragraph shall be payments the amounts of which are certified, under such regulations as the President may prescribe, by either the Secretary of War or the Secretary of the Navy as compensation to the taxpayer for the unamortized cost of the emergency facility made be cause (A) A contract with the United States involving the use of the facility has been terminated by its terms or by cancellation, or (B) the taxpayer had reasonable grounds (either from provisions of a contract with the United States involving the use of the facility, or from written or oral representations made under authority of the United States) for anticipating future contracts involving the use of the facility, which future contracts have not been made. Sec. 124. (h) (2) In case the taxpayer is not entitled to any amortization deduction with respect to the emergency facility the deduction allowable under section 23 (1) on account of the month in which such Sec. 124. (h) (2) In case the tax- Sec. 124. (h) (2) In case the taxpayer is not entitled to any amorti- payer is not entitled to any amortization deduction with respect to zation deduction with respect to the emergency facility the deduction the emergency facility the deduction allowable under section 23 (1) on allowable under section 23 (1) on account of the month in which such account of the month in which such amount is so includible shall be in- amount is so includible shall be in-amount is so includible shall be increased by such amount, but such creased by such amount, but such deduction on account of such month deduction on account of such month shall not be in excess of the adjusted shall not be in excess of the adjusted basis of the emergency facility as basis of the emergency facility as of the end of such month (com- of the end of such month (computed without regard to any amount puted without regard to any amount allowable, on account of such allowable, on account of such (Continued middle of fifth column.)|(Continued middle of sixth column.) creased by such amount, but such deduction on account of such month shall not be in excess of the adjusted basis of the emergency facility as of the end of such month (computed without regard to any amount allowable, on account of such (Continued top of fifth column.) Taxable Years Taxable Years Taxable Years 23 (1) or this paragraph). Sec. 124. (h) Payment by United month, under section 23 (1) or count of such month, under section States of unamortized cost of this paragraph). facility. If an amount is properly includible in the gross income of the taxpayer on account of a payment with respect to an emergency facility and such payment is cer Sec. 124 (g) and (h), I. R. C., supra, added to I. R. C. by Sec. 302, Second R. A. of 1940, approved Oct. 8, 1940. Sec. 124. (i) Life tenant and re Sec. 124 (g) and (h), I. R. C., supra, added to I. R. C. by Sec. 302, Second R. A. of 1940, approved Oct. 8, 1940. Sec. 124. (i) Life tenant and re tified as provided in this para-mainderman.-In the case of prop-mainderman.—In the case of propgraph, then, at the election of the erty held by one person for life erty held by one person for life taxpayer in its return for the with remainder to another person, with remainder to another person, taxable year in which such amount the deduction shall be computed as the deduction shall be computed as is so includibleif the life tenant were the absolute if the life tenant were the absolute owner of the property and shall be owner of the property and shall be allowable to the life tenant. allowable to the life tenant. the ment For Sec. 124 (i), I. R. C., as originally enacted by Sec. 302, Second R. A. of 1942, and subsequent amendments thereof and repeal thereof, see fn. 20, p. 354. Sec. 124. (h) (1) The amortization deduction for the month in which such amount is so includible shall (in lieu of the amount of the deduction for such month computed under subsection (a)) be amount so includible, but such deduction shall not be in excess of the adjusted basis of the emergency facility as of the end of such month (computed without regard to any amortization deduction for such month). Payments referred to in this paragraph shall be payments the amounts of which are eertified, under such regulations as the President may prescribe, by either the Secretary of War or the month, under section 23 (1) Secretary of the Navy as compensa- this paragraph). tion to the taxpayer for the unamortized cost of the emergency facility made because (A) A contract with the United States involving the use of the facility has been terminated by its terms or by cancellation, or (Continued on page 366.) Taxable Years Sec. 124 (g) and (h), I. R. Sec. 124 (i), I. R. C., supra, added to I. R. C. by Sec. 155 (f), R. A. of 1942. Sec. 155 (i) of said Act makes amendment effective 1940. Sec. 124. (i) Life tenant and re- Sec. 124. (i) Life tenant and remainderman.-In the case of prop-mainderman.-In the case of prop(B) the taxpayer had reasonable erty held by one person for life erty held by one person for life grounds (either from provisions of with remainder to another person, with remainder to another person, a contract with the United States the deduction shall be computed as the deduction shall be computed as involving the use of the facility, or if the life tenant were the absolute if the life tenant were the absolute from written or oral representa- owner of the property and shall be owner of the property and shall be tions made under authority of the allowable to the life tenant. allowable to the life tenant. United States) for anticipating future contracts involving the use of the facility, which future contracts have not been made. Sec. 124 (i), I. R. C., supra, added to I. R. C. by Sec. 155 (f), R. A. of 1942. Sec. 155 (i) of said Act makes amendment effective as of Act. 8, 1940. For Sec. 124 (i), I. R. C., as originally enacted by Sec. 302, Second R. A. of 1942, and subsequent amendments thereof and repeal thereof, see fn. 20, p. 354. Sec. 125. Amortizable bond pre Sec. 124. (h) (2) In case the taxpayer is not entitled to any amortization deduction with respect to the emergency facility the deduction allowable under section 23 (1) on account of the month in which such amount is so includible mium. shall be increased by such amount, but such deduction on account of Sec. 125. (a) General rule.-In such month shall not be in excess the case of any bond, as defined in of the adjusted basis of the emer- subsection (d), the following rules gency facility as of the end of such shall apply to the amortizable bond month (computed without regard premium (determined under subsecto any amount allowable, on ac- tion (b)) on the bond for any tax(Continued top of sixth column.) (Continued on page 362.) Sec. 124 (i), I. R. C., supra, added to I. R. C. by Sec. 155 (f), R. A. of 1942. Sec. 155 (i) of said Act makes amendment effective as of Oct. 8, 1940. For Sec. 124 (i), I. R. C., as originally enacted by Sec. 302, Second R. A. of 1942, and subsequent amendments thereof and repeal thereof, see fn. 20, p. 354. Sec. 125. Amortizable bond premium. Sec. 125. (a) General rule.-In the case of any bond, as defined in subsection (d), the following rules shall apply to the amortizable bond premium (determined under subsection (b)) on the bond for any tax(Continued on page 362.) able year beginning after Decem- able year beginning after December 31, 1941: Sec. 125. (a) (1) Interest wholly or partially taxable.-In the case of a bond (other than a bond the interest on which is excludible from gross income), the amount of the amortizable bond premium for the taxable year shall be allowed as a deduction. Sec. 125. (a) (2) Interest wholly tax-exempt. In the case of any bond the interest on which is excludible from gross income, no deduction shall be allowed for the amortizable bond premium for the taxable year. Sec. 125. (a) (3) Adjustment of credit in case of interest partially tax-exempt. In the case of any bond the interest on which is allowable as a credit against net income, the credit provided in section 25 (a) (1) or (2), or section 26 (a), as the case may be, shall be reduced by the amount of the amortizable bond premium for the taxable year. (For adjustment to basis on account of amortizable bond premium, see section 113 (b) (1) (H)). Sec. 125. (b) Amortizable bond premium.— ber 31, 1941: Taxable Years Sec. 125. (b) (3) Method of determination.-The determinations required under paragraphs (1) and (2) shall be made Sec. 125. (a) (1) Interest wholly or partially taxable.—In the case of (A) in accordance with the a bond (other than a bond the inter-method of amortizing bond preest on which is excludible from mium regularly employed by the gross income), the amount of the holder of the bond, if such method amortizable bond premium for the is reasonable; taxable year shall be allowed as a deduction. Sec. 125. (a) (2) Interest wholly tax-exempt.-In the case of any bond the interest on which is excludible from gross income, no deduction shall be allowed for the amortizable bond premium for the taxable year. Sec. 125. (a) (3) Adjustment of credit in case of interest partially tax-exempt.-In the case of any bond the interest on which is allowable as a credit against net income, the credit provided in section 25 (a) (1) or (2), or section 26 (a), as the case may be, shall be reduced by the amount of the amortizable bond premium for the taxable year. (For adjustment to basis on account (B) in all other cases, in accordance with regulations prescribing bond premium, prescribed by the reasonable methods of amortizing Commissioner with the approval of the Secretary. Sec. 125. (c) Election on taxable and partially taxable bonds. Sec. 125. (c) (1) Eligibility to elect and bonds with respect to which election permitted. This section shall apply with respect to the following classes of taxpayers with respect to the following classes of bonds only if the taxpayer has elected to have this section apply. (A) Partially Tax-Exempt.-In the case of a taxpayer other than a corporation, bonds with respect to the interest on which the credit provided in section 25 (a) (1) or (2) is allowable; and (B) Wholly Taxable.-In the case of any taxpayer, bonds the interest on which is not excludible Sec. 125. (b) Amortizable bond from gross income but with respect premium.— Sec. 125. (b) (1) Amount of Sec. 125. (b) (1) Amount of bond premium.-For the purposes bond premium.-For the purposes of paragraph (2), the amount of of paragraph (2), the amount of bond premium, in the case of the bond premium, in the case of the holder of any bond, shall be deter- holder of any bond, shall be determined with reference to the amount mined with reference to the amount of the basis (for determining loss of the basis (for determining loss on sale or exchange) of such bond, on sale or exchange) of such bond, and with reference to the amount and with reference to the amount payable on maturity or on earlier payable on maturity or on earlier call date, with adjustments proper call date, with adjustments proper to reflect unamortized bond pre- to reflect unamortized bond premium mium with respect to the bond, for the period prior to the date as of which subsection (a) becomes applicable with respect to the taxpayer with respect to such bond. Sec. 125. (b) (2) Amount amortizable. The amortizable bond premium of the taxable year shall be the amount of the bond premium attributable to such year. (Continued in third column.) with respect to the bond, for the pe- Sec. 125. (b) (2) Amount amortizable.-The amortizable bond premium of the taxable year shall be the amount of the bond premium attributable to such year. (Continued in fourth column.) to which the credit provided in section 25 (a) (1) or (2), or section 26 (a), as the case may be, is not allowable. Sec. 125. (c) (2) Manner and effect of election.-The election authorized under this subsection shall be made in accordance with such regulations as the Commissioner with the approval of the Secretary shall prescribe. If such election is made with respect to any bond (described in paragraph (1)) of the taxpayer, it shall also apply to all such bonds held by the taxpayer at the beginning of the first taxable year to which the election applies and to all such bonds thereafter acquired by him and shall be binding for all subsequent taxable years with respect to all such bonds of the taxpayer, unless, upon application by the taxpayer, the Commissioner permits him, subject to such (Continued in fifth column.) Taxable Years Beginning in 1942 (A) in accordance with the method of amortizing bond premium regularly employed by the holder of the bond, if such method is reasonable; Sec. 125. (b) (3) Method of de- conditions as the Commissioner necessary, to revoke such election. termination.-The determinations deems necessary, to revoke such The election authorized under this required under paragraphs (1) and election. The election authorized subsection in the case of a member (2) shall be madeunder this subsection in the case of a partnership shall be exercisable of a member of a partnership shall with respect to bonds of the partbe exercisable with respect to bonds nership only by the partnership. of the partnership only by the In the case of bonds held by a partnership. In the case of bonds common trust fund, as defined in held by a common trust fund, as section 169, or by a foreign perdefined in section 169, or by a sonal holding company, as defined foreign personal holding company, in section 331, the election authoras defined in section 331, the elec-ized under this subsection shall be tion authorized under this subsec- exercisable with respect to such tion shall be exercisable with re-bonds only by the common trust spect to such bonds only by the fund or foreign personal holding common trust fund or foreign per- company. sonal holding company. (B) in all other cases, in accordance with regulations prescribing reasonable methods of amortizing bond premium, prescribed by the Commissioner with the approval of the Secretary. Sec. 125. (c) Election on Taxable and partially taxable bonds. Sec. 125. (c) (1) Eligibility to elect and bonds with respect to which election permitted.-This section shall apply with respect to the following classes of taxpayers with respect to the following classes of bonds only if the taxpayer has elected to have this section apply. (A) Partially Tax-Exempt.-In the case of a taxpayer other than a corporation, bonds with respect to the interest on which the credit pro Sec. 125. (d) Definition of bond. Sec. 125. (d) Definition of bond. -As used in this section, the term-As used in this section, the term "bond" means any bond, debenture, "bond" means any bond, debenture, note, or certificate or other evidence note, or certificate or other evidence of indebtedness, issued by any cor- of indebtedness, issued by any corporation and bearing interest (in-poration and bearing interest (including any like obligation issued by cluding any like obligation issued by a government or political subdivi- a government or political subdivision thereof), with interest coupons sion thereof), with interest coupons or in registered form, but does not or in registered form, but does not include any such obligation which include any such obligation which constitutes stock in trade of the constitutes stock in trade of the taxpayer or any such obligation of taxpayer or any such obligation of a kind which would properly be in- a kind which would properly be included in the inventory of the tax- cluded in the inventory of the tax(B) Wholly Taxable.-In the case of any taxpayer, bonds the in-payer if on hand at the close of the payer if on hand at the close of the taxable year, or any such obligation held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business. rided in section 25 (a) (1) or (2) is allowable; and terest on which is not excludible from gross income but with respect to which the credit provided in section 25 (a) (1) or (2), or section 26 (a), as the case may be, is not allowable. taxable year, or any such obligation Sec. 125, I. R. C., supra, Sec. 126. Income in respect of decedents. Sec. 126. (a) Inclusion in gross income. Sec. 125. (c) (2) Manner and effect of election.-The election authorized under this subsection shall be made in accordance with such regulations as the Commissioner with the approval of the Secretary shall prescribe. If such election is made with respect to any bond (described in paragraph (1)) of the taxpayer, it shall also apply to all such bonds held by the taxpayer at Sec. 126. (a) (1) General rule. the beginning of the first taxable -The amount of all items of gross year to which the election applies income in respect of a decedent and to all such bonds thereafter ac- which are not properly includible quired by him and shall be binding in respect of the taxable period in for all subsequent taxable years which falls the date of his death with respect to all such bonds of the or a prior period shall be included taxpayer, unless, upon application in the gross income, for the taxable by the taxpayer, the Commissioner year when received, of: permits him, subject to such condi- (A) the estate of the decedent, if tions as the Commissioner deems the right to receive the amount is (Continued in sixth column.) (Continued on page 364.) Sec. 125, I. R. C., supra, added to I. R. C. by Sec. 126 (b), R. A. of 1942. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. Sec. 126. Income in respect of decedents. See Sec. 126 in 1943 column, which is applicable to taxable years ending after Dec. 31, 1942. (Continued on page 366.) |