Taxable Years Taxable Years Taxable Years donees described in section 23 (o) donees described in section 23 (o) donees described in section 23 (0) for the purposes therein specified, for the purposes therein specified, for the purposes therein specified. to the extent such liability of the to the extent such liability of the to the extent such liability of the decedent existed prior to January decedent existed prior to January decedent existed prior to January 1, 1934. No deduction shall be 1, 1934. No deduction shall be 1, 1934. No deduction shall be allowed under paragraph (2) of allowed under paragraph (2) of allowed under paragraph (2) of this subsection for a taxable year this subsection for a taxable year this subsection for a taxable year for which a deduction is allowed for which a deduction is allowed for which a deduction is allowed under this paragraph. under this paragraph. under this paragraph. Sec. 505, (b) Deductions not Sec. 505. (b) Deductions not Sec. 505. (b) Deductions not allowed. The aggregate of the de- allowed.-The aggregate of the de- allowed. The aggregate of the deductions allowed under section 23 ductions allowed under section 23 ductions allowed under section 23 (a), relating to expenses, and sec- (a), relating to expenses, and sec- (a), relating to expenses, and seetion 23 (1), relating to deprecia- tion 23 (1), relating to deprecia- tion 23 (1), relating to depreciation, which are allocable to the tion, which are allocable to the tion, which are allocable to the operation and maintenance of operation and maintenance of operation and maintenance of property owned or operated by property owned or operated by property owned or operated by the corporation, shall be allowed the corporation, shall be allowed the corporation, shall be allowed only in an amount equal to the only in an amount equal to the only in an amount equal to the rent or other compensation re- rent or other compensation re- rent or other compensation received for the use of, or the right ceived for the use of, or the right ceived for the use of, or the right to use, the property, unless it is to use, the property, unless it is to use, the property, unless it is established (under regulations pre-established (under regulations pre-established (under regulations prescribed by the Commissioner with scribed by the Commissioner with scribed by the Commissioner with the approval of the Secretary) to the approval of the Secretary) to the approval of the Secretary) to the satisfaction of the Commis- the satisfaction of the Commis- the satisfaction of the Commissioner: sioner: sioner: or Sec. 505. (b) (1) That the rent Sec. 505. (b) (1) That the rent Sec. 505. (b) (1) That the rent other compensation received was the highest obtainable, or, if none was received, that none was obtainable; other compensation received or was the highest obtainable, or, if none was received, that none was obtainable; Sec. 505. (b) (2) That the property was held in the course of a business carried on bona fide for profit; and Sec. 505. (b) (3) Either that there was reasonable expectation that the operation of the property would result in a profit, or that the property was necessary to the con duct of the business. Sec. 505. (b) (2) That the property was held in the course of a business carried on bona fide for profit; and Sec. 505. (b) (3) Either that there was reasonable expectation that the operation of the property would result in a profit, or that the property was necessary to the conduct of the business. Sec. 505. (c) Net loss carrySec. 505. (c) Net loss carryover disallowed. The deduction over disallowed.-The deduction for net operating losses provided for net operating losses provided in section 23 (s) shall not be al- in section 23 (s) shall not be allowed. Sec. 505, I. R. C., amended by Sec. 211 (i), R. A. of 1939, approved June 29, 1939, by adding subdivision (c). Sec. 505. (d) 1941 capital loss carry-over denied.-The net income shall be computed without regard to section 117 (e) (2). Sec. 505, I. R. C., amended by Sec. 150 (i), R. A. of 1942, lowed. Sec. 505, I. R. C., amended by Sec. 211 (1), R. A. of 1939, approved June 29, 1939, by adding subdivision (c). Sec. 505. (d) Capital losses 1941 capital loss carry-over denied.The net income shall be computed without regard to section 117 (e) (2) (d) and (e), and losses from sales or exchanges of capital as or other compensation received was the highest obtainable, or, if none was received, that none was obtainable; Sec. 505. (b) (2) That the property was held in the course of a business carried on bona fide for profit; and donees described in section 23 (o) donees described in section 23 (0) Sec. 505. (b) Deductions not Sec. 505. (b) Deductions not allowed. The aggregate of the de- allowed.-The aggregate of the deductions allowed under section 23 ductions allowed under section 23 (a), relating to expenses, and sec- (a), relating to expenses, and section 23 (1), relating to deprecia- tion 23 (1), relating to depreciation, which are allocable to the tion, which are allocable to the operation and maintenance of operation and maintenance of property owned or operated by property owned or operated by the corporation, shall be allowed the corporation, shall be allowed only in an amount equal to the only in an amount equal to the rent or other compensation re- rent or other compensation received for the use of, or the right ceived for the use of, or the right to use, the property, unless it is to use, the property, unless it is established (under regulations pre-established (under regulations prescribed by the Commissioner with scribed by the Commissioner with the approval of the Secretary) to the approval of the Secretary) to the satisfaction of the Commis- the satisfaction of the Commissioner: sioner: Sec. 505. (b) (1) That the rent Sec. 505. (b) (1) That the rent or other compensation received or other compensation received was the highest obtainable, or, if was the highest obtainable, or, if none was received, that none was none was received, that none was obtainable; obtainable; Sec. 505. (b) (2) That the property was held in the course of a business carried on bona fide for profit; and Sec. 505. (b) (3) Either that there was reasonable expectation that the operation of the property would result in a profit, or that the property was necessary to the conduct of the business. Sec. 505. (b) (2) That the property was held in the course of a business carried on bona fide for profit; and Sec. 505. (b) (3) Either that there was reasonable expectation that the operation of the property would result in a profit, or that the property was necessary to the conduct of the business. Sec. 505. (c) Net loss carry- Sec. 505. (c) Net loss carryover disallowed.-The deduction over disallowed.-The deduction for net operating losses provided for net operating losses provided in section 23 (s) shall not be al- in section 23 (s) shall not be allowed. lowed. Taxable Years Beginning before 1939 Sec. 406. (b) Deductions not allowed. See p. 438, Eighth Edition. sets shall be allowed only to the ex plus the gains from such sales or Sec. 505, I. R. C., amended by Sec. 150 (i), R. A. of 1942, by omitting language in stricken through type, by adding language in underlined bold face type, and by adding language in italics. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. Sec. 505. (e) Income not placed on annual basis.-The net income shall be computed without regard to section 47 (c). Sec. 505, I. R. C., supra, amended by Sec. 135 (b) (4), R. A. of 1942, by adding subsection (e). Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. Sec. 505, I. R. C., amended by Sec. 212 (d), R. A. of 1939, by adding subdivision (d), supra. Sec. 229 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1939. Sec. 506. Deficiency dividendsCredits and refunds. Sec. 506. (a) Credit against unpaid deficiency. If the amount of a deficiency with respect to the tax imposed by this subchapter for any taxable year has been established Sec. 506. (a) (1) by a decision of the Board of Tax Appeals which has become final; or Sec. 506. (a) (2) by a closing agreement made under section 3760; or Sec. 506. (a) (3) by a final judgment in a suit to which the United States is a party; Sec. 506. Deficiency dividends— a Sec. 506. Deficiency dividendsCredits and refunds. Sec. 506. (a) Credit against un- Sec. 506. (a) Credit against unpaid deficiency.-If the amount of paid deficiency.-If the amount of deficiency with respect to the a deficiency with respect to the tax imposed by this subchapter for tax imposed by this subchapter for any taxable year has been estab- any taxable year has been establishedlished Sec. 506. (a) (1) by a decision of the Board of Tax Appeals which has become final; or Sec. 506. (a) (2) by a closing agreement made under section 3760; or Sec. 506. (a) (3) by a final judgment in a suit to which the United States is a party; Sec. 506. (a) (1) by a decision of the Board of Tax Appeals which has become final; or Sec. 506. (a) (2) by a closing agreement made under section 3760; or Sec. 506. (a) (3) by a final judgment in a suit to which the United States is a party; then a deficiency dividend credit then a deficiency dividend credit then a deficiency dividend credit shall be allowed against the shall be allowed against the shall be allowed against the amount of the deficiency so estab- amount of the deficiency so estab- amount of the deficiency so established and all interest, additional lished and all interest, additional lished and all interest, additional amounts, and additions to the tax amounts, and additions to the tax amounts, and additions to the tax provided by law not paid on or provided by law not paid on or provided by law not paid on or before the date when claim for a before the date when claim for a before the date when claim for a deficiency dividend credit is filed deficiency dividend credit is filed deficiency dividend credit is filed under subsection (d). The amount under subsection (d). The amount under subsection (d). The amount of such credit shall be 65 per cen- of such credit shall be 65 per cen- of such credit shall be 65 per centum of the amount of deficiency tum of the amount of deficiency tum of the amount of deficiency dividends, as defined in subsection dividends, as defined in subsection dividends, as defined in subsection (c), not in excess of $2,000, plus (c), not in excess of $2,000, plus (c), not in excess of $2,000, plus 75 per centum of the amount of 75 per centum of the amount of 75 per centum of the amount of such dividends in excess of $2,000; such dividends in excess of $2,000; such dividends in excess of $2,000; but such credit shall not exceed but such credit shall not exceed but such credit shall not exceed the portion of the deficiency so the portion of the deficiency so the portion of the deficiency so established which is not paid on established which is not paid on established which is not paid on or before the date of the closing or before the date of the closing or before the date of the closing agreement, or the date the decision agreement, or the date the decision agreement, or the date the decision then a deficiency dividend credit then a deficiency dividend credit shall be allowed against the shall be allowed against the amount of the deficiency so estab- amount of the deficiency so established and all interest, additional lished and all interest, additional amounts, and additions to the tax amounts, and additions to the tax provided by law not paid on or provided by law not paid on or before the date when claim for a before the date when claim for a deficiency dividend credit is filed deficiency dividend credit is filed under subsection (d). The amount under subsection (d). The amount of such credit shall be 65 per cen- of such credit shall be 65 per centum of the amount of deficiency tum of the amount of deficiency dividends, as defined in subsection dividends, as defined in subsection (c), not in excess of $2,000, plus (c), not in excess of $2,000, plus 75 per centum of the amount of 75 per centum of the amount of such dividends in excess of $2,000; such dividends in excess of $2,000; but such credit shall not exceed but such credit shall not exceed the portion of the deficiency so the portion of the deficiency so established which is not paid on established which is not paid on or before the date of the closing or before the date of the closing agreement, or the date the decision agreement, or the date the decision Sec. 407. Deficiency dividendsCredits and refunds. See p. 440, Eighth Edition. Sec. 407. (a) Credit against unpaid deficiency. See p. 440, Eighth Edition. Taxable Years of the Board or the judgment becomes final, as the case may be. Such credit shall be allowed as of the date the claim for deficiency dividend credit is filed. of the Board or the judgment be- of the Board or the judgment be- Sec. 506. (b) Credit or refund Sec. 506. (b) Credit or refund Sec. 506. (b) Credit or refund of deficiency paid.-When the of deficiency paid.-When the of deficiency paid.-When the Commissioner has determined that Commissioner has determined that Commissioner has determined that there is a deficiency with respect there is a deficiency with respect there is a deficiency with respect to the tax imposed by this sub- to the tax imposed by this sub- to the tax imposed by this subchapter and the corporation has chapter and the corporation has chapter and the corporation has paid any portion of such asserted paid any portion of such asserted paid any portion of such asserted deficiency and it has been estab- deficiency and it has been estab- deficiency and it has been estab an lished (1) by a decision of the Board of Tax Appeals which has become final; or (2) by a closing agreement made under section 3760; or (3) by a final judgment in a suit against the United States for refund (A) if such suit is brought within six months after the corporation became entitled to bring suit, and (B) if claim for refund was filed within six months after the payment of such amount; lished (1) by a decision of the Board of Tax Appeals which has become final; or (2) by a closing agreement made under section 3760; or (3) by a final judgment in a suit against the United States for refund (A) if such suit is brought within six months after the corporation became entitled to bring suit, and (B) if claim for refund was filed within six months after the payment of such amount; re that any portion of the amount so that any portion of the amount so that any portion of the amount so paid was the whole or a part of a paid was the whole or a part of a paid was the whole or a part of a deficiency at the time when paid, deficiency at the time when paid, deficiency at the time when paid. then there shall be credited or re- then there shall be credited or re- then there shall be credited or refunded to the corporation funded to the corporation to an funded the corporation an amount equal to 65 per centum of amount equal to 65 per centum of amount equal to 65 per centum of the amount of deficiency dividends the amount of deficiency dividends the amount of deficiency dividends not in excess of $2,000, plus 75 not in excess of $2,000, plus 75 not in excess of $2,000, plus 75 per centum of the amount of such per centum of the amount of such per centum of the amount of such dividends in excess of $2,000, but dividends in excess of $2,000, but dividends in excess of $2,000, but such credit or refund shall not ex- such credit or refund shall not ex- such credit or refund shall not exceed the portion so paid by the ceed the portion so paid by the ceed the portion so paid by the Such credit or Such credit or re- corporation. re- corporation. Such credit or corporation. fund shall be made as provided in fund shall be made as provided in fund shall be made as provided in section 322 but without regard to section 322 but without regard to section 322 but without regard to subsection (b) or subsection (c) subsection (b) or subsection (c) subsection (b) or subsection (e) thereof. No interest shall be al- thereof. No interest shall be al- thereof. No interest shall be allowed on such credit or refund. lowed on such credit or refund. lowed on such credit or refund. No credit or refund shall be made No credit or refund shall be made No credit or refund shall be made under this subsection with respect under this subsection with respect under this subsection with respect to any amount of tax paid after to any amount of tax paid after to any amount of tax paid after the date of the closing agreement, the date of the closing agreement, the date of the closing agreement, or the date the decision of the or the date the decision of the or the date the decision of the Board or the judgment becomes Board or the judgment becomes Board or the judgment becomes final, as the case may be. final, as the case may be. final, as the case may be. Sec. 506. (c) Deficiency dividends. Sec. 506. (c) Deficiency dividends. Sec. 506. (c) Deficiency dividends. Sec. 506. (c) (1) Definition.— Sec. 506. (c) (1) Definition.— Sec. 506. (c) (1) Definition.— For the purposes, of this subchap- For the purposes, of this subchap- For the purposes of this subchapter, the term "deficiency divi- ter, the term "deficiency divi- ter, the term "deficiency dividends" means the amount of the dends" means the amount of the dends" means the amount of the dividends paid, on or after the dividends paid, on or after the dividends paid, on or after the date of the closing agreement or date of the closing agreement or date of the closing agreement or |