Taxable Years Beginning in 1943 Taxable Years Taxable Years country or by any possession of country or by any possession of the Sec. 131 (h), I. R. C., supra, added to I. R. C. by Sec. 158 (f), R. A. of 1942. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. Sec. 131. (i) Tax withheld at source. For the purposes of this supplement the tax imposed by this. chapter shall be the tax computed without regard to the credit provided in section 32 and section 466 (e). Sec. 131 (i), I. R. C., supra, added to I. R. C. by Sec. 172 (d), R. A. of 1942. Sec. 172 (g) of said Act makes amendment effective on Jan. 1. 1943, and applicable to all wages (as defined in Part II of Subchapter D) paid on or after such date. Supplement D-Returns and Payment of Tax Sec. 141. (a) Privilege to file Sec. 141. (a) Privilege to file Sec. 141. (a) Privilege to file consolidated income and excess- consolidated income and excess- consolidated returns. An affiliprofits-tax returns.-An affiliated profits-tax returns.-An affiliated ated group of corporations shall, group of corporations shall, subject group of corporations shall, subject subject to the provisions of this to the provisions of this section, to the provisions of this section, section, have the privilege of makhave the privilege of making con- have the privilege of making con- ing a consolidated return for the solidated income and excess-profits- solidated income and excess-profits- taxable year in lieu of separate retax returns for the taxable year in tax returns for the taxable year in turns. The making of a consoli lieu of separate returns. The mak- lieu of separate returns. The mak-dated return shall be upon the coning of consolidated returns shall be ing of consolidated returns shall be dition that all the corporations upon the condition that the affili- upon the condition that the affili- which have been members of the ated group shall make both a con- ated group shall make both a con- affiliated group at any time during solidated income-tax return and a solidated income-tax return and a the taxable year for which the reconsolidated excess-profits-tax re- consolidated excess-profits-tax re- turn is made consent to all the regturn for the taxable year, and that turn for the taxable year, and that ulations under subsection (b) (or, all corporations which at any time all corporations which at any time in case such regulations are not during the taxable year have been during the taxable year have been prescribed prior to the making of members of the affiliated group members of the affiliated group the return, then the regulations premaking a consolidated income-tax making a consolidated income-tax scribed under section 141 (b) of return consent to all the consoli- return consent to all the consoli- the Revenue Act of 1936, 49 Stat. dated income- and excess-profits-tax dated income- and excess-profits-tax 1698, insofar as not inconsistent regulations prescribed under sub-regulations prescribed under sub- with this chapter) prescribed prior section (b) prior to the last day section (b) prior to the last day to the making of such return; and prescribed by law for the filing of prescribed by law for the filing of the making of a consolidated return such return. The making of a consol- such return. The making of a consol- shall be considered as such conidated income-tax return shall be idated income-tax return shall be sent. In the case of a corporation considered as such consent. In the considered as such consent. In the which is a member of the affiliated case of a corporation which is a case of a corporation which is a group for a fractional part of the member of the affiliated group for member of the affiliated group for year the consolidated return shall a fractional part of the year, the a fractional part of the year, the include the income of such corpoconsolidated returns shall include consolidated returns shall include ration for such part of the year as the income of such corporation for the income of such corporation for it is a member of the affiliated such part of the year as it is a mem- | such part of the year as it is a mem-group. Sec. 141. (a) Privilege to file See p. 238, Eighth Edition. Sec. 141. (a) Privilege to file Sec. 141. (a) Privilege to file consolidated returns.-An affili- consolidated returns.-An affili- consolidated returns. ated group of corporations shall, ated group of corporations shall, subject to the provisions of this subject to the provisions of this section, have the privilege of mak- section, have the privilege of making a consolidated return for the ing a consolidated return for the taxable year in lieu of separate re- taxable year in lieu of separate returns. The making of a consoli- turns. The making of a consolidated return shall be upon the con- dated return shall be upon the condidition that all the corporations tion that all the corporations which which have been members of the have been members of the affiliated affiliated group at any time during group at any time during the taxthe taxable year for which the re- able year for which the return is turn is made consent to all the reg- made consent to all the regulations ulations under subsection (b) (or, under subsection (b) (or, in case in case such regulations are not such regulations are not prescribed prescribed prior to the making of prior to the making of the return, the return, then the regulations pre- then the regulations prescribed scribed under section 141 (b) of under section 141 (b) of the Revthe Revenue Act of 1936, 49 Stat. enue Act of 1936, 49 Stat. 1698, 1698, insofar as not inconsistent insofar as not inconsistent with with this chapter) prescribed prior this chapter) prescribed prior to to the making of such return; and the making of such return; and the the making of a consolidated return making of a consolidated return shall be considered as such con- shall be considered as such consent. sent. In the case of a corporation In the case of a corporation which which is a member of the affiliated is a member of the affiliated group group for a fractional part of the for a fractional part of the year year the consolidated return shall the consolidated return shall ininclude the income of such corpo- clude the income of such corporaration for such part of the year as tion for such part of the year as it is a member of the affiliated it is a member of the affiliated group. group. Taxable Years ber of the affiliated group. In the case of a corporation which is not a member of the affiliated group after March 31, 1942, of the last taxable year of such group which begins before April 1, 1942, such corporation shall not be considered a member of the affiliated group for consolidated income-tax-return purposes for such year but shall be considered a member of such group for consolidated excess-profits-tax-return purposes for such year, and the consent required in the case of such corporation shall relate only to the consolidated excess-profits-tax regulations. Taxable Years ber of the affiliated group. In the Taxable Years Sec. 141. (b) Regulations.—The Sec. 141. (b) Regulations.-The Sec. 141. (b) Regulations.-The Commissioner, with the approval of Commissioner, with the approval of Commissioner, with the approval the Secretary, shall prescribe such the Secretary, shall prescribe such of the Secretary, shall prescribe regulations as he may deem neces- regulations as he may deem neces- such regulations as he may deem sary in order that the tax liability sary in order that the tax liability necessary in order that the tax liaof any affiliated group of corpora- of any affiliated group of corpora- bility of any affiliated group of tions making consolidated income- tions making consolidated income-corporations making a consoliand excess-profits-tax returns and and excess-profits-tax returns and dated return and of each corporaof each corporation in the group, of each corporation in the group, tion in the group, both during and both during and after the period both during and after the period after the period of affiliation, may of affiliation, may be returned, of affiliation, may be returned, be determined, computed, assessed, determined, computed, assessed, determined, computed, assessed, collected, and adjusted in such collected, and adjusted, in such collected, and adjusted, in such manner as clearly to reflect the inmanner as clearly to reflect the in- manner as clearly to reflect the in- come and to prevent avoidance of come- and excess-profits-tax liabil-come- and excess-profits-tax liabil- tax liability. ity and the various factors necessary ity and the various factors necessary for the determination of such lia- for the determination of such liability, and in order to prevent bility, and in order to prevent avoidance of such tax liability. avoidance of such tax liability. Such regulations shall prescribe Such regulations shall prescribe the amount of the net operating the amount of the net operating loss deduction of each member of loss deduction of each member of the group which is attributable to the group which is attributable to a deduction allowed for a taxable a deduction allowed for a taxable year beginning in 1941 on account year beginning in 1941 on account of property considered as destroyed of property considered as destroyed or seized under section 127 (relating or seized under section 127 (relating to war losses), and the allowance of to war losses), and the allowance of the amount so prescribed as a de- the amount so prescribed as a deduction in computing the net in-duction in computing the net income of the group shall not be come of the group shall not be limited by the amount of the net income of such member. limited by the amount of the net Sec. 141. (c) Computation and Sec. 141. (c) Computation and payment of tax. In any case in payment of tax. In any case in which consolidated income-tax and which consolidated income-tax and excess-profits-tax returns are made excess-profits-tax returns are made or are required to be made, the or are required to be made, the taxes shall be determined, computed, taxes shall be determined, computed, assessed, collected, and adjusted in assessed, collected, and adjusted in accordance with the regulations accordance with the regulations under subsection (b) prescribed under subsection (b) prescribed prior to the last day prescribed by prior to the last day prescribed by law for the filing of such returns; law for the filing of such returns; except that the tax imposed under except that the tax imposed under section 15 or section 204 shall be section 15 or section 204 shall be Sec. 141. (c) Computation and payment of tax. In any case in which a consolidated return is made the tax shall be determined. computed, assessed, collected, and adjusted in accordance with the regulations under subsection (b) (or, in case such regulations are not prescribed prior to the making of the return, then the regulations prescribed under section 141 (b) of the Revenue Act of 1936 insofar as not inconsistent with this chap Taxable Years Taxable Years Taxable Years Beginning before 1939 Sec. 141. (b) Regulations.-The Sec. 141. (b) Regulations.-The Commissioner, with the approval Commissioner, with the approval of the Secretary, shall prescribe of the Secretary, shall prescribe such regulations as he may deem such regulations as he may deem necessary in order that the tax lia- necessary in order that the tax liability of any affiliated group of bility of any affiliated group of corporations making a consoli- corporations making a consolidated return and of each corporadated return and of each corporation in the group, both during and tion in the group, both during and after the period of affiliation, may after the period of affiliation, may be determined, computed, assessed, be determined, computed, assessed, collected, and adjusted in such collected, and adjusted in such manner as clearly to reflect the in- manner as clearly to reflect the income and to prevent avoidance of come and to prevent avoidance of tax liability. tax liability. Sec. 141. (b) Regulations. See p. 240, Eighth Edition. Sec. 141. (c) Computation and Sec. 141. (c) Computation and payment of tax. In any case in payment of tax. In any case in which a consolidated return is which a consolidated return is made the tax shall be determined, made the tax shall be determined, computed, assessed, collected, and computed, assessed, collected, and adjusted in accordance with the adjusted in accordance with the regulations under subsection (b) regulations under subsection (b) (or, in case such regulations are (or, in case such regulations are not prescribed prior to the making not prescribed prior to the making of the return, then the regulations of the return, then the regulations prescribed under section 141 (b) prescribed under section 141 (b) of the Revenue Act of 1936 insofar of the Revenue Act of 1936 insofar as not inconsistent with this chap-as not inconsistent with this chap-| Sec. 141. (c) Computation and payment of tax. See p. 240, Eighth Edition. Taxable Years increased by 2 per centum of the consolidated corporation surtax net income of the affiliated group of includible corporations. Only one specific exemption of $5,000 provided in section 710 (b) (1) shall be allowed for the entire affiliated group of corporations for the purposes of the tax imposed by Subchapter E of Chapter 2. increased by 2 per centum of the ter) prescribed prior to the date Sec. 141. (d) Definition of "af- Sec. 141. (d) Definition of “af- Sec. 141. (d) Definition of "affiliated group."-As used in this filiated group."-As used in this filiated group."—As used in this section, an "affiliated group" means section, an "affiliated group" means section an "affiliated group" means one or more chains of includible one or more chains of includible one or more chains of corporations corporations connected through corporations connected through connected through stock ownership stock ownership with a common stock ownership with a common with a common parent corporation parent corporation which is an in- parent corporation which is an in- if— cludible corporation if— cludible corporation if— Sec. 141. (d) (1) Stock possessing at least 95 per centum of the voting power of all classes of stock and at least 95 per centum of each class of the nonvoting stock of each of the includible corporations (except the common parent corporation) is owned directly by one or more of the other includible corporations; and Sec. 141. (d) (2) The common parent corporation owns directly stock possessing at least 95 per centum of the voting power of all classes of stock and at least 95 per centum of each class of the nonvoting stock of at least one of the other includible corporations. As used in this subsection, the term "stock" does not include nonvoting stock which is limited and preferred as to dividends. Sec. 141. (d) (1) Stock possessing at least 95 per centum of the voting power of all classes of stock and at least 95 per centum of each class of the nonvoting stock of each of the includible corporations (except the common parent corporation) is owned directly by one or more of the other includible corporations; and Sec. 141. (d) (2) The common As used in this subsection, the term Sec. 141. (d) (1) At least 95 per centum of the stock of each of the corporations (except the common parent corporation) is owned directly by one or more of the other corporations; and Sec. 141. (d) (2) The common parent corporation owns directly at least 95 per centum of the stock of at least one of the other corporations; and Sec. 141. (d) (3) Each of the corporations is either (A) a corporation whose principal business is that of a common carrier by railroad or (B) a corporation the assets of which consist principally of stock in such corporations and which does not itself operate a business other than that of a common carrier by railroad. For the purpose of determining whether the principal business of a corporation is that of a common carrier by railroad, if a common earrier by railroad has leased its railroad properties and such properties are operated as such by another common carrier by railroad. the business of receiving rents for such railroad properties shall be |