paid is refunded in whole or in paid is refunded in whole or in amount of tax found due upon any Sec. 131. (d) Year in which Sec. 131. (d) Year in which credit taken. The credits provided credit taken.-The credits provided for in this section may, at the op- for in this section may, at the option of the taxpayer and irrespec- tion of the taxpayer and irrespective of the method of accounting tive of the method of accounting employed in keeping his books, be employed in keeping his books, be taken in the year in which the taken in the year in which the taxes of the foreign country or the taxes of the foreign country or the possession of the United States possession of the United States accrued, subject, however, to the accrued, subject, however, to the conditions prescribed in subsection conditions prescribed in subsection (e) of this section. If the tax- (c) of this section. If the taxpayer elects to take such credits payer elects to take such credits in the year in which the taxes of in the year in which the taxes of the foreign country or the posses- the foreign country or the possession of the United States accrued, sion of the United States accrued, the credits for all subsequent years shall be taken upon the same basis, and no portion of any such taxes shall be allowed as a deduction in the same or any succeeding year. the credits for all subsequent years Sec. 131. (e) Proof of credits.- Sec. 131. (e) Proof of credits.The credits provided in this sec- The credits provided in this section shall be allowed only if the tion shall be allowed only if the taxpayer establishes to the satis- taxpayer establishes to the satisfaction of the Commissioner (1) faction of the Commissioner (1) the total amount of income derived the total amount of income derived from sources without the United from sources without the United States, determined as provided in States, determined as provided in section 119, (2) the amount of in- section 119, (2) the amount of income derived from each country, come derived from each country, the tax paid or accrued to which the tax paid or accrued to which is claimed as a credit under this is claimed as a credit under this section, such amount to be deter-section, such amount to be deter Taxable Years Sec. 131. (d) Year in which credit taken. See p. 234, Eighth Edition. Sec. 131. (e) Proof of credits. See p. 234, Eighth Edition. Taxable Years Taxable Years Taxable Years mined under rules and regulations mined under rules and regulations mined 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, and (3) all other information nec- and (3) all other information nec- and (3) all other information necessary for the verification and essary for the verification and essary for the verification and computation of such credits. computation of such credits. computation of such credits. Sec. 131. (f) Taxes of foreign subsidiary. Sec. 131. (f) Taxes of foreign subsidiary.— Sec. 131. (f) (1) Foreign subsidiary of domestic corporation. For the purposes of this section, a do a Sec. 131. (f) Taxes of foreign subsidiary. For the purposes of this section a domestic corporation which owns a majority of the vot ing stock of a foreign corporation from which it receives dividends Sec. 131. (f) (1) Foreign subsidiary of domestic corporation.-For the purposes of this section, a domestic corporation which owns amestic corporation which owns in any taxable year shall be deemed majority of the voting stock of a majority of the voting stock of a to have paid the same proportion foreign corporation from which it foreign corporation from which it of any income, war-profits, or receives dividends in any taxable receives dividends in any taxable excess-profits taxes paid by such year shall be deemed to have paid year shall be deemed to have paid foreign corporation to any foreign the same proportion of any income, the same proportion of any income, country or to any possession of the war-profits, or excess-profits taxes war-profits, or excess-profits taxes United States, upon or with re paid or deemed to be paid by such paid or deemed to be paid by such spect to the accumulated profits of foreign corporation to any foreign foreign corporation to any foreign such foreign corporation from country or to any possession of the country or to any possession of the which such dividends were paid, United States, upon or with respect United States, upon or with respect which the amount of such divito the accumulated profits of such to the accumulated profits of such dends bears to the amount of such foreign corporation from which foreign corporation from which accumulated profits: Provided, That such dividends were paid, which the such dividends were paid, which the the amount of tax deemed to amount of such dividends bears to amount of such dividends bears to have been paid under this subsecthe amount of such accumulated the amount of such accumulated tion shall in no profits: Provided, That the amount profits: Provided, That the amount same proportion of the tax against case exceed the of tax deemed to have been paid by of tax deemed to have been paid by which credit is taken which the such domestic corporation under such domestic corporation under amount of such dividends bears to this subsection shall in no case ex- this subsection shall in no case ex- the amount of the normal tax net ceed the same proportion of the tax ceed the same proportion of the tax income of the domestic corporation against which credit is taken which against which credit is taken which in which such dividends are inthe amount of such dividends bears the amount of such dividends bears cluded. The term "accumulated to the amount of the normal-tax net to the amount of the normal-tax net profits" when used in this subsecincome of the domestic corporation income of the domestic corporation tion in reference to a foreign corin which such dividends are in- in which such dividends are in- poration, means the amount of its cluded. The term "accumulated cluded. The term "accumulated gains, profits, or income in excess profits" when used in this subsec-profits" when used in this subsec- of the income, war-profits, and tion in reference to a foreign cor- tion in reference to a foreign cor- excess-profits taxes imposed upon poration, means the amount of its poration, means the amount of its or with respect to such profits or gains, profits, or income in excess of gains, profits, or income in excess of income; and the Commissioner the income, war-profits, and excess- the income, war-profits, and excess- with the approval of the Secretary profits taxes imposed upon or with profits taxes imposed upon or with shall have full power to determine respect to such profits or income; respect to such profits or income; from the accumulated profits of and the Commissioner with the ap- and the Commissioner with the ap- what year or years such dividends proval of the Secretary shall have proval of the Secretary shall have were paid; treating dividends paid full power to determine from the full power to determine from the in the first sixty days of any year accumulated profits of what year or accumulated profits of what year or as having been paid from the acyears such dividends were paid; years such dividends were paid; cumulated profits of the preceding treating dividends paid in the first treating dividends paid in the first year or years (unless to his satissixty days of any year as having sixty days of any year as having faction shown otherwise), and in been paid from the accumulated been paid from the accumulated other respects treating dividends profits of the preceding year or profits of the preceding year or as having been paid from the most years (unless to his satisfaction years (unless to his satisfaction recently accumulated gains, profits, shown otherwise), and in other re- shown otherwise), and in other re- or earnings. In the case of a forspects treating dividends as having spects treating dividends as having eign corporation, the income, warbeen paid from the most recently been paid from the most recently profits, and excess-profits taxes of accumulated gains, profits, or earn- accumulated gains, profits, or earn- which are determined on the basis ings. In the case of a foreign cor- ings. In the case of a foreign cor- of an accounting period of less poration, the income, war-profits poration, the income, war-profits, than one year, the word "year" as and excess-profits taxes of which and excess-profits taxes of which used in this subsection shall be con mined under rules and regulations mined under rules and regulations prescribed by the Commissioner prescribed by the Commissioner with the approval of the Secretary, with the approval of the Secretary, and (3) all other information nec- and (3) all other information necessary for the verification and essary for the verification and computation of such credits. computation of such credits. Sec. 131. (f) Taxes of foreign Sec. 131. (f) Taxes of foreign subsidiary. For the purposes of subsidiary.-For the purposes of this section a domestic corporation this section a domestic corporation which owns a majority of the vot- which owns a majority of the voting stock of a foreign corporation ing stock of a foreign corporation from which it receives dividends from which it receives dividends in any taxable year shall be deemed in any taxable year shall be deemed to have paid the same proportion to have paid the same proportion of any income, war-profits, or of any income, war-profits, or excess-profits taxes paid by such excess-profits taxes paid by such foreign corporation to any foreign foreign corporation to any foreign country or to any possession of the country or to any possession of the United States, upon or with re- United States, upon or with respect to the accumulated profits of spect to the accumulated profits of such foreign corporation from such foreign corporation from which such dividends were paid, which such dividends were paid, which the amount of such divi- which the amount of such dividends bears to the amount of such dends bears to the amount of such accumulated profits: Provided, accumulated profits: Provided, That the amount of tax deemed to That the amount of tax deemed to have been paid under this subsec- have been paid under this subsection shall in no case exceed the tion shall in no case exceed the same proportion of the tax against same proportion of the tax against which credit is taken which the which credit is taken which the amount of such dividends bears to amount of such dividends bears to the amount of the normal tax net the amount of the entire net inincome of the domestic corporation come of the domestic corporation in which such dividends are in- in which such dividends are included. The term "accumulated cluded. The term "accumulated profits" when used in this subsec-profits" when used in this subsection in reference to a foreign cor- tion in reference to a foreign corporation, means the amount of its poration, means the amount of its gains, profits, or income in excess gains, profits, or income in excess of the income, war-profits, and of the income, war-profits, and excess-profits taxes imposed upon excess-profits taxes imposed upon or with respect to such profits or or with respect to such profits or income; and the Commissioner income; and the Commissioner with the approval of the Secretary with the approval of the Secretary shall have full power to determine shall have full power to determine from the accumulated profits of from the accumulated profits of what year or years such dividends what year or years such dividends were paid; treating dividends paid were paid; treating dividends paid in the first sixty days of any year in the first sixty days of any year as having been paid from the ac- as having been paid from the accumulated profits of the preceding cumulated profits of the preceding year or years (unless to his satis- year or years (unless to his satisfaction shown otherwise), and in other respects treating dividends as having been paid from the most recently accumulated gains, profits, or earnings. In the case of a foreign corporation, the income, warprofits, and excess-profits taxes of which are determined on the basis of an accounting period of less than one year, the word "year" as used in this subsection shall be con faction shown otherwise), and in Taxable Years Sec. 131. (f) Taxes of foreign subsidiary. See p. 234, Eighth Edition. Taxable Years Beginning in 1943 Taxable Years Taxable Years are determined on the basis of an are determined on the basis of an strued to Sec. 131. (f) (2) Foreign subsid- Sec. 131. (f) (2) Foreign subsidiary of foreign corporation.—If iary of foreign corporation.—If such foreign corporation owns all such foreign corporation owns all the voting stock (except qualifying the voting stock (except qualifying shares) of another foreign corpora- shares) of another foreign corporation from which it receives divi- tion from which it receives dividends in any taxable year it shall dends in any taxable year it shall be deemed to have paid the same be deemed to have paid the same proportion of any income, war- proportion of any income, warprofits, or excess-profits taxes paid profits, or excess-profits taxes paid by such other foreign corporation by such other foreign corporation to any foreign country or to any to any foreign country or to any possession of the United States, possession of the United States, upon or with respect to the accumu- upon or with respect to the accumulated profits of the corporation lated profits of the corporation from which such dividends were from which such dividends were paid, which the amount of such divi- paid, which the amount of such dividends bears to the amount of such dends bears to the amount of such accumulated profits. accumulated profits. Sec. 131 (f), I. R. C., supra, amended by Sec. 158 (e), 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. 131 (f), I. R. C., before amendment, see 1942 column. Sec. 131. (g) Corporations Sec. 131 (f), I. R. C., supra, amended by Sec. 158 (e), R. A. of 1942, by adding language shown in underlined bold face type and by adding language shown in italics in subdivision (f) (1), and also by adding subdivision (f) (2). Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. mean such accounting Sec. 131 (f), I. R. C., supra, amended by Sec. 216 (c), R. A. of 1939, to read as above. Sec. 228 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1939. For Sec. 131 (f), I. R. C., before amendment, see 1939 col umn. Sec. 131. (g) Corporations Sec. 131. (g) Corporations treated as foreign. For the pur-treated as foreign. For the pur- treated as foreign. For the purposes of this section the following poses of this section the following poses of this section the following corporations shall be treated as corporations shall be treated as corporations shall be treated as foreign corporations: foreign corporations: foreign corporations: Sec. 131. (g) (1) A corporation Sec. 131. (g) (1) A corporation entitled to the benefits of section entitled to the benefits of section 251, by reason of receiving a large 251, by reason of receiving a large percentage of its gross income percentage of its gross income from sources within a possession from sources within a possession of the United States: of the United States: Sec. 131. (g) (2) A corporation organized under the China Trade Act, 1922, 42 Stat. 849 (U. S. C., Title 15, c. 4), and entitled to the credit provided for in section 262. Sec. 131. (g) (2) A corporation organized under the China Trade Act, 1922, 42 Stat. 849 (U. S. C., Title 15, c. 4), and entitled to the credit provided for in section 262. Sec. 131. (h) Credit for taxes in Sec. 131. (h) Credit for taxes in lieu of income, etc., taxes. For lieu of income, etc., taxes.-For the purposes of this section and sec- the purposes of this section and section 23 (c) (1), the term "income, tion 23 (c) (1), the term “income, war-profits, and excess-profits war-profits, and excess-profits taxes" shall include a tax paid in taxes" shall include a tax paid in lieu of a tax upon income, war- lieu of a tax upon income, warprofits, or excess profits otherwise profits, or excess-profits otherwise generally imposed by any foreign generally imposed by any foreign Sec. 131. (g) (1) A corporation entitled to the benefits of section 251, by reason of receiving a large percentage of its gross income from sources within a possession of the United States; Sec. 131. (g) (2) A corporation organized under the China Trade Act, 1922, 42 Stat. 849 (U. S. C., Title 15, c. 4), and entitled to the credit provided for in section 262. Taxable Years Taxable Years strued to mean such accounting strued to mean such accounting Sec. 131 (f), I. R. C., supra, amended by Sec. 216 (c), R. A. of 1939, to read as above. Sec. 228 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1939. For Sec. 131 (f), I. R. C., before amendment see 1939 column. Taxable Years Beginning before 1939 Sec. 131. (g) Corporations Sec. 131. (g) Corporations treated as foreign. For the pur- treated as foreign. For the purposes of this section the following poses of this section the following corporations shall be treated as corporations shall be treated as foreign corporations: foreign corporations: Sec. 131. (g) (1) A corporation entitled to the benefits of section 251, by reason of receiving a large percentage of its gross income from sources within a possession of the United States; Sec. 131. (g) (2) A corporation organized under the China Trade Act, 1922, 42 Stat. 849 (U. S. C., Title 15, c. 4), and entitled to the credit provided for in section 262. Sec. 131. (g) (1) A corporation entitled to the benefits of section 251, by reason of receiving a large percentage of its gross income from sources within a possession of the United States; Sec. 131. (g) (2) A corporation organized under the China Trade Act, 1922, 42 Stat. 849 (U. S. C., Title 15, c. 4), and entitled to the credit provided for in section 262. Sec. 131. (g) Corporations treated as foreign. See p. 236, Eighth Edition. |