Taxable Years vided in section 26 (a) (relating to interest on certain obligations of the United States and its instrumentalities) exceeded the gross income, the amount of such excess; Sec. 742. (a) (2) (A) The aggregate of the amounts of excess profits net income ascertained under paragraph (1); (B) the aggregate of the excesses ascertained under paragraph (1); and (C) the difference between the aggregates found under clause (A) and clause (B). If the aggregate ascertained under clause (A) is greater than the aggregate ascertained under clause (B), the difference shall for the purposes of subsection (b) be designated a "plus amount", and if the aggregate ascertained under clause (B) is greater than the aggregate found under clause (A), the difference shall for the purposes of subsection (b) be designated a "minus amount." Sec. 742. (a) (2) (A) The aggreSec. 742. (a) (2) With respect gate of the amounts of excess profits to each of its qualified component net income ascertained under para- corporations, the amount of its exgraph (1); (B) the aggregate of cess profits net income for each of the excesses ascertained under para- its taxable years beginning after graph (1); and (C) the difference December 31, 1935, and ending with between the aggregates found under or within such base period year of clause (A) and clause (B). If the the taxpayer; or, in the case of aggregate ascertained under clause each such taxable year in which the (A) is greater than the aggregate deductions plus the credit for diviascertained under clause (B), the dends received exceeded the gross difference shall for the purposes of income, the amount of such excess; subsection (b) be designated a “plus amount", and if the aggregate asSec. 742. (a) (3) (A) The agcertained under clause (B) is gregate of the amounts of excess greater than the aggregate found profits net income ascertained under under clause (A), the difference paragraphs (1) and (2); (B) the shall for the purposes of subsection aggregate of the excesses aseer(b) be designated a "minus tained under paragraphs (1) and amount." (2); and (C) the difference between the aggregates found under clause If, in the case of the taxpayer or If, in the case of the taxpayer or (A) and clause (B). If the aggreany component corporation of the any component corporation of the gate ascertained under clause (A) taxpayer, one and only one taxable taxpayer, one and only one taxable is greater than the aggregate found year of the taxpayer or such com-year of the taxpayer or such com- under clause (B), the difference ponent corporation, as the case may ponent corporation, as the case may shall for the purposes of subsection be, begins with or within such base be, begins with or within such base (b) be designated a "plus amount," period year and such taxable year period year and such taxable year and if the aggregate ascertained is less than twelve months, the is less than twelve months, the under clause (B) is greater than amount of the excess profits net amount of the excess profits net the aggregate found under clause income, or the amount of such ex-income, or the amount of such ex- (A), the difference shall for the cess of deductions plus the credit cess of deductions plus the credit purposes of subsection (b) be for dividends received and the for dividends received and the credit designated a "minus amount." credit provided in section 26 (a) provided in section 26 (a) (relating (relating to interest on certain ob- to interest on certain obligations of ligations of the United States and the United States and its instruits instrumentalities) over gross in- mentalities) over gross income, as come, as the case may be, for such the case may be, for such taxable taxable year, shall be placed on an year, shall be placed on an annual annual basis in the same manner as basis in the same manner as is prois provided in section 711 (a) (3). vided in section 711 (a) (3). If If more than one taxable year of more than one taxable year of the the taxpayer or such component taxpayer or such component corpocorporation, as the case may be, be- ration, as the case may be, begins gins with or within such base pe- with or within such base period riod year, the aggregate of the year, the aggregate of the amounts amounts of excess profits net in- of excess profits net income minus come minus the aggregate of the the aggregate of the excesses of excesses of deductions plus the deductions plus the credit for divicredit for dividends received and dends received and the credit prothe credit provided in section vided in section 26 (a) (relating to 26 (a) (relating to interest on interest on certain obligations of certain obligations of the United the United States and its instruStates and its instrumentalities) mentalities) over gross income, or over gross income, or the aggregate the aggregate of such excesses minus of such excesses minus the aggre- the aggregate of the amounts of gate of the amounts of excess excess profits net income, as the case profits net income, as the case may be, for such taxable years shall may be, for such taxable years be adjusted to such extent as the Taxable Years Beginning in 1940 Taxable Years Beginning in 1939 Taxable Years Beginning before 1939 Sec. 742. (a) (2) With respect to each of its qualified component corporations, the amount of its excess profits net income for each of its taxable years beginning after December 31, 1935, and ending with or within such base period year of the taxpayer; or, in the case of each such taxable year in which the deductions plus the credit for dividends received exceeded the gross income, the amount of such excess; Sec. 742. (a) (3) (A) The aggregate of the amounts of excess profits net income ascertained under paragraphs (1) and (2); (B) the aggregate of the excesses ascertained under paragraphs (1) and (2); and (C) the difference between the aggregates found under clause (A) and clause (B). If the aggregate ascertained under clause (A) is greater than the aggregate found under clause (B), the difference shall for the purposes of subsection (b) be designated a "plus amount," and if the aggregate ascertained under clause (B) is greater than the aggregate found under clause (A), the difference shall for the purposes of subsection (b) be designated a "minus amount." Taxable Years Beginning in 1943 shall be adjusted to such extent as the Commissioner, under regulations prescribed by him with the approval of the Secretary, prescribes as necessary in order that such base period year shall reflect income for a period of twelve months. For the purposes of this section, a taxable year of a component corporation beginning within the base period which also begins with or within the taxable year of the acquiring corporation in which the acquisition occurred, or which also begins with or within the same base period year with which or within which began such taxable year of the acquiring corporation, shall be considered a taxable year of the acquiring corporation, and such taxable year shall be considered to have begun in the base period year with which or within which such taxable year of the acquiring corporation began. Sec. 742. (b) By adding the plus amounts ascertained under subsection (a) (2) for each year of the base period; and Sec. 742. (b) (1) If the tax under this subchapter is being computed for a taxable year not beginning after December 31, 1941, by subtracting from such sum, if for two or more years of the basis period there was a minus amount, the sum of the minus amounts, excluding the greatest; or Sec. 742. (b) (2) If the tax under this subchapter is being computed for a taxable year beginning after December 31, 1941, by subtracting from such sum the sum of the minus amounts. If the amount used under the preceding sentence for the lowest year is less than 75 per centum of the sum of the plus amounts reduced by the sum of the minus amounts for the other years in the base period divided by three, the amount which shall be used for such lowest year shall be 75 per centum of the amount last ascertained. Sec. 742. (c) By dividing the amount ascertained under subsection (b) by four. Taxable Years Beginning in 1942 Commissioner, under regulations prescribed by him with the approval of the Secretary, prescribes as necessary in order that such base period year shall reflect income for a period of twelve months. For the purposes of this section, a taxable year of a component corporation beginning within the base period which also begins with or within the taxable year of the acquiring corporation in which the acquisition occurred, or which also begins with or within the same base period year with which or within which began such taxable year of the acquiring corporation, shall be considered a taxable year of the acquiring corporation, and such taxable year shall be considered to have begun in the base period year with which or within which such taxable year of the acquiring corporation began. Taxable Years Beginning in 1941 Sec. 742. (b) By adding the plus Sec. 742. (b) By adding the plus amounts ascertained under subsec-amounts ascertained under subsection (a) (2) for each year of the tion (a) (3) for each year of the base period; and base period; and by subtracting from such sum, if for two or more Sec. 742. (b) (1) If the tax under years of the base period there was this subchapter is being computed a minus amount, the sum of such for a taxable year not beginning minus amounts, excluding the greatafter December 31, 1941, by sub-est. tracting from such sum, if for two or more years of the basis period there was a minus amount, the sum of the minus amounts, excluding the greatest; or Sec. 742. (b) (2) If the tax under this subchapter is being computed for a taxable year beginning after December 31, 1941, by subtracting from such sum the sum of the minus amounts. If the amount used under the preceding sentence for the lowest year is less than 75 per centum of the sum of the plus amounts reduced by the sum of the minus amounts for the other years in the base period divided by three, the amount which shall be used for such lowest year shall be 75 per centum of the amount last ascertained. Sec. 742. (c) By dividing the amount ascertained under subsection (b) by four. Sec. 742. (d) In no case shall the Sec. 742. (d) In no case shall the average base period net income be average base period net income be less than zero. In the case of a tax- | less than zero. In the case of a tax Sec. 742. (c) By dividing the amount ascertained under subsection (b) by four. Sec. 742. (d) In no case shall the average base period net income be less than zero. In the case of a Taxable Years Beginning in 1940 Taxable Years Beginning in 1939 Taxable Years Beginning before 1939 Sec. 742. (b) By adding the plus amounts ascertained under subsection (a) (3) for each year of the base period; and by subtracting from such sum, if for two or more years of the base period there was a minus amount, the sum of such minus amounts, excluding the greatest. Sec. 742. (c) By dividing the amount ascertained under subsection (b) by four. Sec. 742. (d) In no case shall the average base period net income be less than zero. In the case of a Taxable Years Taxable Years Taxable Years payer which becomes an acquiring payer which becomes an acquiring taxpayer which becomes an acquircorporation in any taxable year be- corporation in any taxable year be- ing corporation in any taxable year ginning after December 31, 1939, ginning after December 31, 1939, beginning after December 31, 1939, if, on September 11, 1940, and at if, on September 11, 1940, and at if, on September 11, 1940, and at all times until the taxpayer became all times until the taxpayer became all times until the taxpayer became an acquiring corporationan acquiring corporationan acquiring corporation Sec. 742. (d) (1) the taxpayer owned not less than 75 per centum of each class of stock of each of the qualified component corporations involved in the transaction in which the taxpayer became an acquiring corporation; or Sec. 742. (d) (1) the taxpayer Sec. 742. (d) (1) the taxpayer owned not less than 75 per centum owned not less than 75 per centum of each class of stock of each of of each class of stock of each of the qualified component corpora- the qualified component corporations involved in the transaction in tions involved in the transaction in which the taxpayer became an ac- which the taxpayer became an acquiring corporation; or quiring corporation; or Sec. 742. (d) (2) one of the Sec. 742. (d) (2) one of the Sec. 742. (d) (2) one of the qualified component corporations qualified component corporations qualified component corporations involved in the transaction owned involved in the transaction owned involved in the transaction owned not less than 75 per centum of each not less than 75 per centum of each class of stock of the taxpayer, and class of stock of the taxpayer, and of each of the other qualified com- of each of the other qualified component corporations involved in the ponent corporations involved in transaction, the transaction, not less than 75 per centum of each class of stock of the taxpayer, and of each of the other qualified component corporations involved in the transaction, the average base period net income the average base period net income the average base period net income of the taxpayer shall not be less of the taxpayer shall not be less of the taxpayer shall not be less than (A) the average base period than (A) the average base period than (A) the average base period net income of that one of its quali- net income of that one of its quali- net income of that one of its qualified component corporations in-fied component corporations in-fied component corporations involved in the transaction the aver- volved in the transaction the aver-volved in the transaction the average base period net income of which age base period net income of which age base period net income of which is greatest, or (B) the average base is greatest, or (B) the average base is greatest, or (B) the average base period net income of the taxpayer period net income of the taxpayer period net income of the taxpayer computed without regard to the base computed without regard to the base period net income of any of its period net income of any of its qualified component corporations in- qualified component corporations involved in the transaction. As used volved in the transaction. As used in this subsection, the term “quali- in this subsection, the term "qualified component corporation" means fied component corporation" means a component corporation which was a component corporation which was in existence on the date of the be- in existence on the date of the beginning of the taxpayer's base pe- ginning of the taxpayer's base period. riod. Sec. 742. (e) For the purposes of subsection (a) (1) of this section Sec. 742. (e) For the purposes of subsection (a) (1) of this section ac Sec. 742. (e) (1) If neither the Sec. 742. (e) (1) If neither the taxpayer corporation nor any of its taxpayer corporation nor any of its component corporations was ac- component corporations was tually in existence on December 31, tually in existence on December 31, 1936, the excess profits net income 1936, the excess profits net income of each such corporation for each of each such corporation for each base period year at no time during base period year at no time during which any of such corporations was which any of such corporations was actually in existence, shall (except actually in existence, shall (except in the case of a corporation which in the case of a corporation which became a component corporation of became a component corporation of its acquiring corporation before its acquiring corporation before the beginning of the acquiring cor- the beginning of the acquiring corporation's first taxable year which poration's first taxable year which began in 1940) be an amount equal began in 1940) be an amount equal to 8 per centum of the excess of- to 8 per centum of the excess of— computed without regard to the base period net income of any of its qualified component corporations involved in the transaction. |