Taxable Years Taxable Years Taxable Years Sec. 713. (f) (2) By computing for each half of the base period the aggregate of the excess profits net income for each of the taxable years in such half, reduced, if for one or more of such years there was a deficit in excess profits net income, by the sum of such deficits. For the purposes of such computation, if any taxable year is partly within each half of the base period there shall be allocated to the first half an amount of the excess profits net income or deficit in excess prof-net income or deficit in excess profits net income, as the case may be, its net income, as the case may be, for such taxable year, which bears for such taxable year, which bears the same ratio thereto as the num- the same ratio thereto as the num- the same ratio thereto as the num ber of months falling 'within such half bears to the entire number of months in such taxable year; and the remainder shall be allocated to the second half; Sec. 713. (f) (3) If the amount ascertained under paragraph (2) for the second half is greater than the amount ascertained for the first half, by dividing the difference by two; Sec. 713. (f) (4) By adding the amount ascertained under paragraph (3) to the amount ascertained under paragraph (2) for the second half of the base period; Sec. 713. (f) (5) By dividing the amount found under paragraph (4) by the number of months in the second half of the base period and by multiplying the result by twelve; Sec. 713. (f) (2) By computing Sec. 713. (f) (2) By computing for each half of the base period for each half of the base period the aggregate of the excess profits the aggregate of the excess profits net income for each of the taxable net income for each of the taxable years in such half, reduced, if for years in such half, reduced, if for one or more of such years there one or more of such years there was a deficit in excess profits net was a deficit in excess profits net income, by the sum of such deficits. income, by the sum of such deficits. For the purposes of such computa- For the purposes of such computation, if any taxable year is partly tion, if any taxable year is partly within each half of the base period within each half of the base period there shall be allocated to the first there shall be allocated to the first half an amount of the excess profits half an amount of the excess profits net income or deficit in excess profits net income, as the case may be, for such taxable year, which bears ber of months falling within such half bears to the entire number of months in such taxable year; and the remainder shall be allocated to the second half; ber of months falling within such Sec. 713. (f) (3) If the amount Sec. 713. (f) (3) If the amount ascertained under paragraph (2) for the second half is greater than the amount ascertained for the first half, by dividing the difference by two; Sec. 713. (f) (4) By adding the Sec. 713. (f) (4) By adding the amount ascertained under para- | amount ascertained under paragraph (3) to the amount ascer-graph (3) to the amount ascertained under paragraph (2) for the second half of the base period; Sec. 713. (f) (5) By dividing the amount found under paragraph (4) by the number of months in the second half of the base period and by multiplying the result by twelve; tained under paragraph (2) for the second half of the base period; Sec. 713. (f) (5) By dividing the amount found under paragraph (4) by the number of months in the second half of the base period and by multiplying the result by twelve; Sec. 713. (f) (6) The amount as- Sec. 713. (f) (6) The amount as- Sec. 713. (f) (6) The amount ascertained under paragraph (5) shall certained under paragraph (5) shall certained under paragraph (5) shall be the average base period net in- be the average base period net in- be the average base period net income determined under this sub- come determined under this sub-come determined under this subsection, except that the average base section, except that the average base section, except that the average period net income determined under period net income determined under base period net income determined this subsection shall in no case be this subsection shall in no case be under this subsection shall in no greater than the highest excess prof-greater than the highest excess prof- case be greater than the highest exits net income for any taxable year its net income for any taxable year cess profits net income for any taxin the base period. For the pur- in the base period. For the pur-able year in the base period. For pose of such limitation if any tax-pose of such limitation if any tax- the purpose of such limitation if able year is of less than twelve able year is of less than twelve any taxable year is of less than months, the excess profits net in- months, the excess profits net in- twelve months, the excess profits net come for such taxable year shall be come for such taxable year shall be income for such taxable year shall placed on an annual basis by multi- placed on an annual basis by multi-be placed on an annual basis by plying by twelve and dividing by plying by twelve and dividing by multiplying by twelve and dividing the number of months included in the number of months included in by the number of months included such taxable year. such taxable year. in such taxable year. Sec. 713. (f) (7) For the purposes of this subsection, the excess profits net income for any taxable year ending after May 31, 1940, Sec. 713. (f) (7) For the pur- Sec. 713. (f) (7) For the purposes of this subsection, the excess poses of this subsection, the exceSS profits net income for any taxable profits net income for any taxable year ending after May 31, 1940, year ending after May 31, 1940, Ει Taxable Years Beginning in 1940 Sec. 713. (f) (2) By computing for each half of the base period the aggregate of the excess profits net income for each of the taxable years in such half, reduced, if for one or more of such years there was a deficit in excess profits net income, by the sum of such deficits. For the purposes of such computation, if any taxable year is partly within each half of the base period there shall be allocated to the first half an amount of the excess profits net income or deficit in excess profits net income, as the case may be, for such taxable year, which bears the same ratio thereto as the number of months falling within such half bears to the entire number of months in such taxable year; and the remainder shall be allocated to the second half; Sec. 713. (f) (3) If the amount ascertained under paragraph (2) for the second half is greater than the amount ascertained for the first half, by dividing the difference by two; Sec. 713. (f) (4) By adding the amount ascertained under paragraph (3) to the amount ascertained under paragraph (2) for the second half of the base period; Sec. 713. (f) (5) By dividing the amount found under paragraph (4) by the number of months in the second half of the base period and by multiplying the result by twelve; Sec. 713. (f) (6) The amount ascertained under paragraph (5) shall be the average base period net income determined under this subsection, except that the average base period net income determined under this subsection shall in no case be greater than the highest excess profits net income for any taxable year in the base period. For the purpose of such limitation if any taxable year is of less than twelve months, the excess profits net income for such taxable year shall be placed on an annual basis by multiplying by twelve and dividing by the number of months included in such taxable year. Sec. 713. (f) (7) For the purposes of this subsection, the excess profits net income for any taxable year ending after May 31, 1940, Taxable Years Beginning in 1943 shall not be greater than an amount computed as follows: (A) By reducing the excess profits net income by an amount which bears the same ratio thereto as the number of months after May 31, 1940, bears to the total number of months in such taxable year; and (B) By adding to the amount ascertained under subparagraph (A) an amount which bears the same ratio to the excess profits net income for the last preceding taxable year as such number of months after May 31, 1940, bears to the number of months in such preceding year. The amount added under this subparagraph shall not exceed the amount of the excess profits net income for such last preceding taxable year. (C) If the number of months in such preceding taxable year is less than such number of months after May 31, 1940, by adding to the amount ascertained under subparagraph (B) an amount which bears the same ratio to the excess profits net income for the second preceding taxable year as the excess of such number of months after May 31, 1940, over the number of months in such preceding taxable year bears to the number of months in such second preceding taxable year. Sec. 713 (b), I. R. C., amended by Sec. 4 (b), Excess Profits Tax Amendments of 1941, to read as above. For Sec. 713 (b), I. R. C., before amendment, see fn. 25, below. Sec. 713 (c), (d), (e) and (f), I. R. C., supra, added to I. R. C. by Sec. 4 (b) of said Act. Sec. 17 of said Act makes amendment effective as of Oct. 8, 1940, the date of enactment of Excess Profits Tax Act of 1940. Sec. 713 (c), I. R. C., amended by Sec. 214 (a), R. A. of 1942, to read as above. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. Taxable Years Beginning in 1942 shall not be greater than an amount computed as follows: (A) By reducing the excess profits net income by an amount which bears the same ratio thereto as the number of months after May 31, 1940, bears to the total number of months in such taxable year; and (B) By adding to the amount ascertained under subparagraph (A) an amount which bears the same ratio to the excess profits net income for the last preceding taxable year as such number of months after May 31, 1940, bears to the number of months in such preceding year. The amount added under this subparagraph shall not exceed the amount of the excess profits net income for such last preceding taxable year. (C) If the number of months in such preceding taxable year is less than such number of months after May 31, 1940, by adding to the amount ascertained under subparagraph (B) an amount which bears the same ratio to the excess profits net income for the second preceding taxable year as the excess of such number of months after May 31, 1940, over the number of months in such preceding taxable year bears to the number of months in such second preceding taxable year. Sec. 713 (b), I. R. C., amended by Sec. 4 (b), Excess Profits Tax Amendments of 1941, to read as above. For Sec. 713 (b), I. R. C., before amendment, see fn. 25, below. Sec. 713 (c), (d), (e) and (f), I. R. C., supra, added to I. R. C. by Sec. 4 (b) of said Act. Sec. 17 of said Act makes amendment effective as of Oct. 8, 1940, the date of enactment of Excess Profits Tax Act of 1940. Sec. 713 (c), I. R. C., amended by Sec. 214 (a), R. A. of 1942, by adding language in italics. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. 25 Sec. 713 (b), I. R. C., as enacted by Sec. 201, Excess Profits Tax Act of 1940, and before amendment by Sec. 4 (b), Excess Profits Tax Amendments of 1941, reads as follows: Sec. 713. (b) Average base period net income.-For the purposes of this section the average base period net income of the taxpayer shall be determined as follows: (1) By computing the aggregate of the excess profits net income for each of the taxable years of the taxpayer beginning after December 31, 1935, and before January 1, 1940, reduced, in the case of each such taxable year in which the deductions plus the credit for dividends received exceeded the gross income, by the amount attributable to such excess under paragraph (4); Taxable Years Beginning in 1941 shall not be greater than an amount computed as follows: (A) By reducing the excess profits net income by an amount which bears the same ratio thereto as the number of months after May 31, 1940, bears to the total number of months in such taxable year; and (B) By adding to the amount ascertained under subparagraph (A) an amount which bears the same ratio to the excess profits net income for the last preceding taxable year as such number of months after May 31, 1940, bears to the number of months in such preceding year. The amount added under this subparagraph shall not exceed the amount of the excess profits net income for such last preceding taxable year. (C) If the number of months in such preceding taxable year is less than such number of months after May 31, 1940, by adding to the amount ascertained under subparagraph (B) an amount which bears the same ratio to the excess profits net income for the second preceding taxable year as the excess of such number of months after May 31. 1940, over the number of months in such preceding taxable year bears to the number of months in suci second preceding taxable year. Sec. 713 (b), I. R. C., amended by Sec. 4 (b), Excess Profits Tax Amendments of 1941, to read as above. For Sec. 713 (b), I. R. C., before amendment, see fn. 25, below. Sec. 713 (c), (d), (e) and (f), I. R. C., supra, added to I. R. C. by Sec. 4 (b) of said Act. Sec. 17 of said Act makes amendment effective as of Oct. 8, 1940, the date of enactment of Excess Profits Tax Act of 1940. (2) By dividing the amount ascertained under paragraph (1) by the total number of months in all such taxable years; and (3) By multiplying the amount ascertained under paragraph (2) by twelve. (4) For the purposes of paragraph (1)— (A) In determining whether, for any taxable year, the deductions plus the credit for dividends received exceeded the gross income, and in determining the amount of such excess, the adjustments provided in section 711 (b) (1) shall be made; and (B) The amount attributable to any taxable year in which there is such an excess shall be the amount of such excess, except that such amount shall be zero if there is only one such year, or, if more than one, shall Taxable Years Beginning in 1940 shall not be greater than an amount computed as follows: (A) By reducing the excess profits net income by an amount which bears the same ratio thereto as the number of months after May 31, 1940, bears to the total number of months in such taxable year; and (B) By adding to the amount ascertained under subparagraph (A) an amount which bears the same ratio to the excess profits net income for the last preceding taxable year as such number of months after May 31, 1940, bears to the number of months in such preceding year. The amount added under this subparagraph shall not exceed the amount of the excess profits net income for such last preceding taxable year. (C) If the number of months in such preceding taxable year is less than such number of months after May 31, 1940, by adding to the amount ascertained under subparagraph (B) an amount which bears the same ratio to the excess profits net income for the second preceding taxable year as the excess of such number of months after May 31, 1940, over the number of months in such preceding taxable year bears to the number of months in such second preceding taxable year. Sec. 713 (b), I. R. C. supra, 1941 to read as above and by 713 Taxable Years Beginning in 1939 Beginning before 1939 787 be zero for the year in which such excess is the greatest. (5) For the purposes of paragraph (1), if the taxpayer was in existence during only part of the 48 months preceding the beginning of its first taxable year under this subchapter (hereinafter in this paragraph called 'base period'), its excess profits net income (A) for each taxable year of twelve months (beginning with the beginning of such base period) during which it was not in existence, shall be an amount equal to 8 per centum of the excess of (i) the daily invested capital for the first day of the taxpayer's first taxable year beginning after December 31, 1939, over (ii) an amount equal to the same percentage of such daily invested capital as is applicable under section 720 in reduction of the average invested capital of the preceding taxable year; (B) for the taxable year of less than twelve months consisting of that part of the remainder of the base period during which it was not in existence, shall be the amount ascertained for a full year under subparagraph (A), multiplied by the number of days in such taxable year of less than twelve months and divided by the number of days in the twelve months ending with the close of such taxable year. (6) In no case shall the average base period net income be less than zero. (7) For computation of average base period net income in case of certain reorganizations, see section 742. of this section shall Taxable Years Sec. 713. (e) (g) (1) The net Sec. 713. (g) (1) The net capital Sec. 713. (g) (1) The net capital addition for the taxable year shall addition for the taxable year be the excess, divided by the num- be the excess, divided by the number capital addition for the taxable ber of days in the taxable year, of of days in the taxable year, of the year shall be the excess, divided by the aggregate of the daily capital aggregate of the daily capital ad- the number of days in the taxable addition for each day of the tax-dition for each day of the taxable year, of the aggregate of the daily taxable able year over the aggregate of the year over the aggregate of the daily capital addition for each day of the year over the aggregate of daily capital reduction for each day capital reduction for each day of the daily capital reduction for each the taxable year. of the taxable year. day of the taxable year. Sec. 713. (g) (2) The net capital Sec. 713. (g) (2) The net capital Sec. 713. (e) (g) (2) The net reduction for the taxable year shall reduction for the taxable year shall capital reduction for the taxable be the excess, divided by the num- be the excess, divided by the numyear shall be the excess, divided by ber of days in the taxable year, of ber of days in the taxable year, of the number of days in the taxable the aggregate of the daily capital the aggregate of the daily capital reduction for each day of the tax-reduction for each day of the tax-year, of the aggregate of the daily able year over the aggregate of the daily capital addition for each day of the taxable year. able year over the aggregate of the capital reduction for each day of the taxable year over the aggregate of the daily capital addition for each day of the taxable year. Sec. 713. (g) (3) The daily capiSec. 713. (g) (3) The daily capiSec. 713. (e) (g) (3) The daily tal addition for any day of the tax- tal addition for any day of the tax- capital addition for any day of the able year shall be the aggregate of able year shall be the aggregate of taxable year shall be the aggregate the amounts of money and prop- the amounts of money and prop-of the amounts of money and property paid in for stock, or as paid-in erty paid in for stock, or as paid-in erty paid in for stock, or as paid-in surplus, or as a contribution to cap- surplus, or as a contribution to cap- surplus, or as a contribution to capital, after the beginning of the tax- ital, after the beginning of the tax-ital, after the beginning of the taxpayer's first taxable year under payer's first taxable year under payer's first taxable year under this subchapter and prior to such this subchapter and prior to such this subchapter and prior to such day. In determining the amount of day. In determining the amount of any property paid in, such prop- any property paid in, such property erty shall be included in an amount shall be included in an amount dedetermined in the manner provided termined in the manner provided in in section 718 (a) (2). A distribu- section 718 (a) (2). A distribution tion by the taxpayer to its share-by the taxpayer to its shareholders holders in its stock or rights to ac- in its stock or rights to acquire its quire its stock shall not be regarded stock shall not be regarded as money as money or property paid in for or property paid in for stock, or as stock, or as paid-in surplus, or as paid-in surplus, or as a contribution contribution to capital. The to capital. The amount ascertained ascertained under this under this paragraph shall be reparagraph shall be reduced by the duced by the excess, if any, of the excess, if any, of the excluded excluded capital for such day over capital for such day over the ex- the excluded capital for the first cluded capital for the first day of day of the taxpayer's first taxable the taxpayer's first taxable year year under this subchapter. For the under this subchapter. For the purposes of this paragraph the expurposes of this paragraph the ex- cluded capital for any day shall cluded capital for any day shall be an amount equal to the sum of be an amount equal to the sum of the following: the following: a amount (A) The aggregate of the ad (A) The aggregate of the ad day. In determining the amount of any property paid in, such property shall be included in an amount determined in the manner provided in section 718 (a) (2). A distribution by the taxpayer to its shareholders in its stock or rights to acquire its stock shall not be regarded as money or property paid in for stock, or as paid-in surplus, or as a contribution to capital. The amount ascertained under this paragraph shall be reduced by the excess, if any, of the excluded capital for such day over the excluded capital for the first day of the taxpayer's first taxable year under this subchapter. For the purposes of this paragraph the excluded capital for any day shall be an amount equal to the sum of the following: (A) The aggregate of the adjusted basis (for determining loss justed basis (for determining loss justed basis (for determining loss |