Sec. 718. (d) For special rules Sec. 718. (d) For special rules affecting computation of property affecting computation of property paid in for stock in connection with paid in for stock in connection with certain exchanges and liquidations, certain exchanges and liquidations, see Supplement C section 751 (a). see section 751 (a).

Sec. 719. (a) Borrowed capital. Sec. 719. (a) Borrowed capital. Sec. 719. (a) Borrowed capital. -The borrowed capital for any day-The borrowed capital for any day-The borrowed capital for any day of any taxable year shall be deter- of any taxable year shall be deter- of any taxable year shall be determined as of the beginning of such mined as of the beginning of such mined as of the beginning of such day and shall be the sum of the day and shall be the sum of the day and shall be the sum of the following: following: following:

Sec. 719. (a) (1) The amount of Sec. 719. (a) (1) The amount of Sec. 719. (a) (1) The amount of the outstanding indebtedness (not the outstanding indebtedness (not the outstanding indebtedness (not including interest) of the taxpayer including interest, and not inelud- including interest, and not includ

Taxable Years
Beginning in 1943

which is evidenced by a bond, note, bill of exchange, debenture, certificate of indebtedness, mortgage, or deed of trust, plus,

Taxable Years
Beginning in 1942

Taxable Years
Beginning in 1941

ing indebtedness described in seeing indebtedness described in see-
tion 751 (b) relating to certain ex- tion 751 (b) relating to certain ex-
changes) of the taxpayer which is changes) of the taxpayer which is
evidenced by a bond, note, bill of evidenced by a bond, note, bill of
exchange, debenture, certificate of exchange, debenture, certificate of
indebtedness, mortgage, or deed indebtedness, mortgage, or deed
of trust, plus,
of trust, plus,

Sec. 719. (a) (2) In the case of a Sec. 719. (a) (2) In the case of a Sec. 719. (a) (2) In the case of a taxpayer having a contract (made taxpayer having a contract (made taxpayer having a contract (made before the expiration of 30 days before the expiration of 30 days before the expiration of 30 days after the date of the enactment of after the date of the enactment of after the date of the enactment of the Second Revenue Act of 1940)| the Second Revenue Act of 1940) the Second Revenue Act of 1940) with a foreign government to fur- with a foreign government to fur- with a foreign government to furnish articles, materials, or supplies nish articles, materials, or supplies nish articles, materials, or supplies to such foreign government, if such to such foreign government, if such to such foreign government, if such contract provides for advance pay-contract provides for advance pay- contract provides for advance pay ment and for repayment by the ment and for repayment by the ment and for repayment by the vendor of any part of such advance vendor of any part of such advance vendor of any part of such advance payment upon cancellation of the payment upon cancellation of the payment upon cancellation of the contract by such foreign govern- contract by such foreign govern- contract by such foreign govern ment, the amount which would be ment, the amount which would be ment, the amount which would be required to be so repaid if cancel- required to be so repaid if cancel- required to be so repaid if cancel lation occurred at the beginning of lation occurred at the beginning of lation occurred at the beginning of such day, but no amount shall be such day, but no amount shall be such day, but no amount shall be considered as borrowed capital un- considered as borrowed capital un- considered as borrowed capital under this paragraph which has been der this paragraph which has been der this paragraph which has been includible in gross income; plus, includible in gross income; plus, includible in gross income.

Sec. 719. (a) (3) In the case of an insurance company, the mean of the amount of the pro rata unearned premiums determined at the beginning and end of the taxable year, plus,

Sec. 719. (a) (4) In the case of a life insurance company, the mean of the amount of the adjusted reserves, and the mean of the amount of the reserves on insurance or annuity contracts (or contracts arising out of insurance or annuity contracts) which do not involve, at the time with reference to which the computation was made, life, health, or accident contingencies, determined at the beginning and end of the taxable year.

Sec. 719 (a) (1), I. R. C. supra, amended by Sec. 230 (b) (2), 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. 719 (a) (1), I. R. C., before amendment, see 1942 column.

Sec. 719 (a), I. R. C., supra, amended by Sec. 205 (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. 719 (a), I. R. C., before amendment, see 1942 column.

Sec. 719. (a) (3) In the case of an insurance company, the mean of the amount of the pro rata unearned premiums determined at the beginning and end of the taxable year, plus,

Sec. 719. (a) (4) In the case of a life insurance company, the mean of the amount of the adjusted reserves, and the mean of the amount of the reserves on insurance or annuity contracts (or contracts arising out of insurance or annuity contracts) which do not involve, at the time with reference to which the computation was made, life, health, or accident contingencies, determined at the beginning and end of the taxable year.

Sec. 719 (a) (1), I. R. C. supra, amended by Sec. 230 (b) (2), R. A. of 1942, by omitting language in stricken through type. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941.

Sec. 719 (a), I. R. C., supra, amended by Sec. 205 (e), R. A. of 1942, by adding word "plus" after paragraph (2) and by adding paragraphs (3) and (4) shown in italics. Sec. 101 of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941.

Taxable Years
Beginning in 1943

Sec. 719. (b) Borrowed invested capital. The borrowed invested capital for any day of any taxable year shall be determined as of the beginning of such day and shall be an amount equal to 50 per centum of the borrowed capital for such day.

Sec. 719, I. R. C., supra, 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. 720. Admissible and inadmissible assets.

Sec. 720. (a) Definitions.-For

Sec. 719. (b) Borrowed invested Sec. 719. (b) Borrowed invested capital. The borrowed invested capital. The borrowed invested capital for any day of any taxable capital for any day of any taxable year shall be determined as of the year shall be determined as of the beginning of such day and shall be beginning of such day and shall be an amount equal to 50 per centum an amount equal to 50 per centum of the borrowed capital for such of the borrowed capital for such day. day.

Sec. 719, I. R. C., supra, 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. 720. Admissible and inadmissible assets.

Sec. 720. (a) Definitions.-For

Sec. 719, I. R. C., supra, 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. 720. Admissible and inadmissible assets.

Sec. 720. (a) Definitions.-For

the purposes of this subchapter- the purposes of this subchapter- the purposes of this subchapter

Sec. 720. (a) (1) The term "inadmissible assets" means

(A) Stock in corporations except stock in a foreign personal-holding company, and except stock which is not a capital asset; and

(B) Except as provided in subsection (d), obligations described in section 22 (b) (4) any part of the interest from which is excludible from gross income or allowable as a credit against net income.

Sec. 720. (a) (2) The term "admissible assets" means all assets other than inadmissible assets.

Sec. 720. (a) (1) The term "inadmissible assets" means

(A) Stock in corporations except stock in a foreign personal-holding company, and except stock which is not a capital asset; and

(B) Except as provided in subsection (d), obligations described in section 22 (b) (4) any part of the interest from which is excludible from gross income or allowable as a credit against net income.

Sec. 720. (a) (2) The term "admissible assets" means all assets other than inadmissible assets.

Sec. 720. (a) (1) The term “inadmissible assets" means

(A) Stock in corporations except stock in a foreign personal-holding company, and except stock which is not a capital asset; and

(B) Except as provided in subsection (d), obligations described in section 22 (b) (4) any part of the interest from which is excludible from gross income or allowable as a credit against net income.

Sec. 720. (a) (2) The term “admissible assets" means all assets other than inadmissible assets.

Sec. 720. (b) Ratio of inadmis- Sec. 720. (b) Ratio of inadmis- Sec. 720. (b) Ratio of inadmissibles to total assets.-The amount sibles to total assets. The amount sibles to total assets.-The amount by which the average invested cap- by which the average invested cap- by which the average invested capital for any taxable year shall be ital for any taxable year shall be ital for any taxable year shall b reduced as provided in section 715 reduced as provided in section 715 reduced as provided in section 715 shall be an amount which is the shall be an amount which is the shall be an amount which is the same percentage of such average in- same percentage of such average in- same percentage of such average invested capital as the percentage vested capital as the percentage vested capital as the percentage which the total of the inadmissible which the total of the inadmissible which the total of the inadmissible assets is of the total of admissible assets is of the total of admissible assets is of the total of admissible and inadmissible assets. For such and inadmissible assets. For such and inadmissible assets. For suct purposes, the amount attributable purposes, the amount attributable purposes, the amount attributable to each asset held at any time dur- to each asset held at any time dur- to each asset held at any time during such taxable year shall be de- ing such taxable year shall be de-ing such taxable year shall be de termined by ascertaining the ad- termined by ascertaining the ad-termined by ascertaining the adjusted basis thereof (or, in the case justed basis thereof (or, in the case justed basis thereof (or, in the ease of money, the amount thereof) for of money, the amount thereof) for of money, the amount thereof) for each day of such taxable year so each day of such taxable year so each day of such taxable year so held and adding such daily held and adding such daily held. and adding such daiy amounts. The determination of amounts. The determination of amounts. The determination of such daily amounts shall be made such daily amounts shall be made such daily amounts shall be made under regulations prescribed by the under regulations prescribed by the under regulations prescribed by the Commissioner with the approval of Commissioner with the approval of Commissioner with the approval of the Secretary. The adjusted basis the Secretary. The adjusted basis the Secretary. The adjusted basis shall be the adjusted basis for de- shall be the adjusted basis for de- shall be the adjusted basis for determining loss upon sale or ex- termining loss upon sale or ex- termining loss upon sale or exchange as determined under section change as determined under section change as determined under section 113. 113. 113.