Taxable Years year shall not be more than the amount, if any, by which (i) the sum of the equity invested capital (computed without regard to this paragraph) and the borrowed capital (as defined in section 719 (a)) of the taxpayer as of such day, reduced by the amount of money or property paid in which is excluded by reason of the limitation of subparagraph (A) or (B) of this paragraph, exceeds (ii) the sum of such equity invested capital and borrowed capital as of the beginning of the first day of such taxpayer's first taxable year beginning after December 31, 1940, reduced by the amount, if any, by which the accumulated earnings and profits as of such first day of such first taxable year exceed the accumulated earnings and profits (computed without regard to distributions made in taxable years beginning after December 31, 1940) as of the beginning of the first day of the taxable year for which the tax under this subchapter is being computed. Sec. 718. (a) (6) (F) Reduction on account of distributions out of pre-1941 accumulated earnings and profits. The new capital for any day of the taxable year, computed without the application of subparagraph (E), shall be reduced by the amount which, after the beginning of the first taxable year which begins after December 31, 1940, has been distributed out of earnings and profits accumulated prior to the beginning of such first taxable year. Sec. 718 (a) (6), I. R. C., added to I. R. C. by Sec. 203, R. A. of 1941. Sec. 205 of said Act makes amendments applicable to taxable years beginning after Dec. 31, 1940. Sec. 718. (a) (7) Deficit in earnings and profits of another corporation. In the case of a transferee, as defined in subsection (c) (5), an amount, determined under such paragraph, equal to the portion of the deficit in earnings and profits of a transferor attributable to property received previously to such day. Sec. 718 (a) (7), I. R. C, supra, added to I. R. C. by Sec. 219 (a), R. A. of 1942. Sec. 219 (d) of said Act makes amendment applicable to tax Taxable Years year shall not be more than the (i) the sum of the equity invested Taxable Years year shall not be more than the amount, if any, by which— (i) the sum of the equity invested capital (computed without regard to this paragraph) and the borrowed capital (as defined in section 719 (a)) of the taxpayer as of such day, reduced by the amount of money or property paid in which is excluded by reason of the limitation of subparagraph (A) or (B) of this paragraph, exceeds (ii) the sum of such equity in- (ii) the sum of such equity invested capital and borrowed capital vested capital and borrowed capita! as of the beginning of the first day as of the beginning of the first day of such taxpayer's first taxable year of such taxpayer's first taxable year beginning after December 31, 1940, beginning after December 31, 1910. reduced by the amount, if any, by reduced by the amount, if any, bị which the accumulated earnings which the accumulated earnings and profits as of such first day of and profits as of such first day of such first taxable year exceed the such first taxable year exceed the accumulated earnings and profits accumulated earnings and profts (computed without regard to distri- (computed without regard to distributions made in taxable years butions made in taxable years be beginning after December 31, 1940) ginning after December 13, 194, as of the beginning of the first day as of the beginning of the first day of the taxable year for which the of the taxable year for which the tax under this subchapter is being tax under this subchapter is being computed. computed. Sec. 718. (a) (6) (F) Reduction Sec. 718. (a) (6) (F) Reduction on account of distributions out of on account of distributions out of pre-1941 accumulated earnings and pre-1941 accumulated earnings and profits.-The new capital for any profits.-The new capital for any day of the taxable year, computed without the application of subparagraph (E), shall be reduced by the amount which, after the beginning of the first taxable year which begins after December 31, 1940, has been distributed out of earnings and profits accumulated prior to the beginning of such first taxable year. Sec. 718 (a) (6), I. R. C., added to I. R. C. by Sec. 203, R. A. of 1941. Sec. 205 of said Act makes amendments applicable to taxable years beginning after Dec. 31, 1940. day of the taxable year, computri without the application of subparsgraph (E), shall be reduced by the amount which, after the beginning of the first taxable year which be gins after December 31, 1940, kabeen distributed out of earnings and profits accumulated prior to the beginning of such first taxable year. Sec. 718 (a) (6), I. R. C.. added to I. R. C. by Sec. 203. R. A. of 1941. Sec. 203 of said Act also struck out the word "and" at the end of paragraph (4) and added the word "and" at the end of paragraph (5). Sec. 205 of said Act makes amendments applicable to taxable years beginning after Dec. 31, 1940. Sec. 718. (a) (7) Deficit in earn- Sec. 718. (a) (7) Deficit in earnings and profits of another corpo-ings and profits of another corporation.-In the case of a transferee, ration.-In the case of a transferee, as defined in subsection (c) (5), an as defined in subsection (e) (5), as amount, determined under such amount, determined under suck paragraph, equal to the portion of the deficit in earnings and profits of paragraph, equal to the portion of a transferor attributable to prop- the deficit in earnings and profits of erty received previously to such a transferor attributable to propday. erty received previously_to_such day. Sec. 718 (a) (7), I. R. C., supra, added to I. R. C. by Sec. 219 (a), R. A. of 1942. Sec. 219 (d) of said Act makes amendment applicable to tax Sec. 718 (a) (7), L R. C.. supra, shown in underlined Taxable Years Beginning in 1940 Taxable Years Beginning in 1939 Taxable Years Beginning before 1939 Sec. 718. (a) (7) Deficit in earnings and profits of another corporation. In the case of a transferee, as defined in subsection (c) (5), an amount, determined under such paragraph, equal to the portion of the deficit in earnings and profits of a transferor attributable to property received previously to such day. Sec. 718 (a) (7), I. R. C., supra, shown in underlined Sec. 718. (b) (1) Distributions Sec. 718. (b) (1) Distributions Sec. 718. (b) (1) Distributions in previous years.-Distributions in previous years.-Distributions in previous years.-Distributions made prior to such taxable year made prior to such taxable year made prior to such taxable year which were not out of accumulated which were not out of accumulated which were not out of accumulated earnings and profits; earnings and profits; earnings and profits; Sec. 718. (b) (2) Distributions Sec. 718. (b) (2) Distributions Sec. 718. (b) (2) Distributions during the year.-Distributions during the year.-Distributions during the year.-Distributions previously made during such tax- previously made during such tax- previously made during such taxable year which are not out of the able year which are not out of the able year which are not out of the earnings and profits of such taxable earnings and profits of such taxable earnings and profits of such taxable year; year; year; Sec. 718. (b) (3) Earnings and Sec. 718. (b) (3) Earnings and Sec. 718. (b) (3) Earnings and profits of another corporation.-profits of another corporation.-profits of another corporation.— The earnings and profits of another The earnings and profits of another The earnings and profits of another corporation which previously at any corporation which previously at any corporation which previously at any time were included in accumulated earnings and profits by reason of a transaction described in section 112 (b) to (e), both inclusive, or in the corresponding provision of a prior revenue law, or by reason of the transfer by such other corporation to the taxpayer of property the basis of which in the hands of the taxpayer is or was determined with reference to its basis in the hands of such other corporation, or would have been so determined if the property had been other than money; and See. 718. (b) (4) Reduction on account of loss on tax free liquida tion time were included in accumulated time were included in accumulated See. 718. (b) (4) Reduction on account of loss on tax free liquida tion. In the case of the previous receipt of property (other than property described in the last sen tence of section 113 (a) (15)) by the taxpayer in complete liquida tion of another corporation under section 112 (b) (6), or the corre sponding provision of a prior reve nue law, an amount, with respect to each such liquidation, equal to the amount by which the sum of (A) The aggregate of the adjusted basis of each share of steek with respect to which such property was received; such adjusted basis of each share to be determined im mediately prior to the receipt of Sec. 718. (b) (4) Reduction on account of loss on tax-free liquidation.-In the case of the previous receipt of property (other than property described in the last sentence of section 113 (a) (15)) by the taxpayer in complete liquidation of another corporation under section 112 (b) (6), or the corre sponding provision of a prior revenue law, an amount, with respect to each such liquidation, equal to the amount by which the sum of (A) The aggregate of the adjusted basis of each share of stock with respect to which such property was received; such adjusted basis of each share to be determined immediately prior to the receipt of Sec. 718. (b) (1) Distributions in previous years.-Distributions made prior to such taxable year which were not out of accumulated earnings and profits; Sec. 718. (b) (2) Distributions during the year.-Distributions previously made during such taxable year which are not out of the earnings and profits of such taxable year; Sec. 718. (b) (3) Earnings and profits of another corporation.The earnings and profits of another corporation which previously at any time were included in accumulated earnings and profits by reason of a transaction described in section 112 (b) to (e), both inclusive, or in the corresponding provision of a prior revenue law, or by reason of the transfer by such other corporation to the taxpayer of property the basis of which in the hands of the taxpayer is or was determined with reference to its basis in the hands of such other corporation, or would have been so determined if the property had been other than money; and Sec. 718. (b) (4) Reduction on account of loss on tax-free liquidation. In the case of the previous receipt of property (other than property described in the last sentence of section 113 (a) (15)) by the taxpayer in complete liquidation of another corporation under section 112 (b) (6), or the corresponding provision of a prior revenue law, an amount, with respect to each such liquidation, equal to the amount by which the sum of (A) The aggregate of the adjusted basis of each share of stock with respect to which such property was received; such adjusted basis of each share to be determined immediately prior to the receipt of Taxable Years Beginning in 1943 ! Taxable Years Beginning in 1942 Taxable Years Beginning in 1941 Sec. 718. (b) (5) Deficit in earnings and profits transferred to another corporation.-In the case of a transferor, as defined in subsection (c) (5), an amount, determined under such paragraph, equal to the portion of the deficit in earnings and profits of the transferor attributable to property transferred previously to such day. Sec. 718 (b) I. R. C., supra, except paragraph (5), added to I. R. C. by Sec. 201, Excess Profits Tax Act of 1940. Sec. 710 (a), I. R. C., makes amendment applicable to taxable years beginning after Dec. 31, 1939. Sec. 718 (b) (4), I. R. C., For Sec. 718 (b) (4), I. R. umn. Sec. 718 (b) (5) I. R. C., supra, added to I. R. C. by Sec. 219 (b), R. A. of 1942. Sec. 219 (d) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1939. Sec. 718. (c) Rules for application of subsections (a) and (b).— For the purposes of subsections (a) and (b) any property in such liquidation any property in such liquidation with respect to such share, and with respect to such share, and (B) The aggregate of the liabil ities of such other corporation as sumed by the taxpayer in connee tion with the receipt of such property, of the liabilities (not as sumed by the taxpayer) to which such property so received was sub jeet, and of any other consideration (other than the stock with respect to which such property was re eeived) given by the taxpayer for such property so received, exceeds the aggregate of the amount of the money so received and of the adjusted basis, at the time of receipt, of all property (other than money) so received. The amount of the reduction under this paragraph shall not exceed the accumulated earnings and profits as of the beginning of such taxable year. (B) The aggregate of the liabilities of such other corporation assumed by the taxpayer in connection with the receipt of such property, of the liabilities (not assumed by the taxpayer) to which such property so received was subject, and of any other consideration (other than the stock with respect to which such property was received) given by the taxpayer for such property so received, exceeds the aggregate of the amount of the money so received and of the adjusted basis, at the time of receipt, of all property (other than money) so received. The amount of the reduction under this paragraph shall not exceed the accumulated earnings and profits as of the beginning of such taxable year. Sec. 718. (b) (5) Deficit in earn- Sec. 718. (b) (5) Deficit in earnings and profits transferred to an- ings and profits transferred to another corporation.-In the case of other corporation. In the case of a transferor, as defined in subsec-a transferor, as defined in subsection (c) (5), an amount, determined tion (c) (5), an amount, determined under such paragraph, equal to under such paragraph, equal to the portion of the deficit in earn- the portion of the deficit in earnings and profits of the transferor ings and profits of the transferor attributable to property transferred attributable to property transferred previously to such day. previously to such day. Sec. 718 (b) I. R. C., supra, except paragraph (5), added to I. R. C. by Sec. 201, Excess Profits Tax Act of 1940. Sec. 710 (a), I. R. C., makes amendment applicable to taxable years beginning after Dec. 31, 1939. Sec. 718 (b) (4), I. R. C., supra, repealed by Sec. 230 (c), R. A. of 1942, which provides that Sec. 718 (b) (4) shall not apply with respect to any taxable year beginning after Dec. 31, 1941. Sec. 718 (b) (5), I. R. C., supra, shown in italics, added to I. R. C. by Sec. 219 (b), R. A. of 1942. Sec. 219 (d) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1939. Sec. 718. (c) Rules for application of subsections (a) and (b).— For the purposes of subsections (a) and (b)— Sec. 718. (c) (1) Distributions Sec. 718 (b), I. R. C., supra, except paragraph (5), added to I. R. C. by Sec. 201, Excess Profits Tax Act of 1940. Sec. 710 (a), I. R. C., makes amendment applicable to taxable years beginning after Dec. 31, 1939. Sec. 718 (b) (5), I. R. C., supra, shown in italics, added to I. R. C. by Sec. 219 (b), R. A. of 1942. Sec. 219 (d) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1939. Sec. 718. (c) Rules for application of subsections (a) and (b).— For the purposes of subsections (a) and (b)— Sec. 718. (c) (1) Distributions Sec. 718. (c) (1) Distributions to shareholders.-The term "dis- to shareholders. The term "dis- to shareholders.-The term "distribution" means a distribution by tribution" means a distribution by tribution" means a distribution by a corporation to its shareholders, a corporation to its shareholders, a corporation to its shareholders, and the term "distribution in stock" and the term "distribution in stock" and the term "distribution in stock” |