Taxable Years
Beginning in 1943

tercorporate liquidation, a basis determined to be a cost basis, the earnings and profits or deficit in earnings and profits of the transferee shall be computed as if on the day following the completion of such intercorporate liquidation the transferee had realized a recognized gain equal to the amount of the plus adjustment in respect of such share, or had sustained a recognized loss equal to the amount of the minus adjustment in respect of such

share;

tercorporate liquidation, a basis solidation, and the properties of
determined to be a cost basis, the such other corporation attributable
earnings and profits or deficit in to such stock to have been received
earnings and profits of the trans- by such resulting corporation as a
feree shall be computed as if on transferee from such other corpora-
the day following the completion of tion as a transferor in an inter-
such intercorporate liquidation the corporate liquidation.
transferee had realized a recognized
gain equal to the amount of the plus
adjustment in respect of such share,
or had sustained a recognized loss
equal to the amount of the minus
adjustment in respect of such share;

Sec. 761. (g) Determinations.—

Sec. 761. (g) (1) Regulations.Any determination which is required to be made under this seetion (including determinations in applying this section in cases where Sec. 761. (d) (2) with respect to Sec. 761. (d) (2) with respect to there is a series of transferees of any share of stock in the transferor any share of stock in the transferor the property and cases where the having in the hands of the trans- having in the hands of the trans-stock of the transferor is acquired feree, immediately prior to the re- feree, immediately prior to the re-by the transferee from another corceipt of any property in such inter-ceipt of any property in such inter-poration, and the determinations of corporate liquidation, a basis de- corporate liquidation, a basis de- the basis and adjusted basis which termined to be a basis other than termined to be a basis other than property or items thereof have or a cost basis, there shall be treated a cost basis, there shall be treated are considered to have) shall be as an amount includible in the sum as an amount includible in the sum made in accordance with regulations specified in section 718 (a) the specified in section 718 (a) the which shall be prescribed by the amount of the plus adjustment with amount of the plus adjustment with Commissioner with the approval of respect to such share, or as an respect to such share, or the Secretary. If the transferor or amount includible in the sum speci- amount includible in the sum speci- the transferee is a foreign corporafied in section 718 (b) the amount fied in section 718 (b) the amount tion, the provisions of this section of the minus adjustment with re- of the minus adjustment with re- shall apply to such extent and unspect to such share.

spect to such share.

as an

any

der such conditions and limitations as may be provided in such regulations.

Sec. 761. (e) Invested capital Sec. 761. (e) Invested capital basis. The adjusted basis which basis.-The adjusted basis which property received by the transferee property received by the transferee Sec. 761. (g) (2) Application in an intercorporate liquidation is in an intercorporate liquidation is to liquidation extending over long considered to have under the provi- considered to have under the provi- period.-The Commissioner is ausions of subsection (c) at the time sions of subsection (c) at the time thorized to prescribe rules similar of its receipt shall be thereafter of its receipt shall be thereafter to those provided in this section treated as the adjusted basis, in treated as the adjusted basis, in with respect to the days within the lieu of the adjusted basis otherwise lieu of the adjusted basis otherwise period beginning with the date on prescribed, in computing any prescribed, in computing amount, determined by reference to the basis of such property in the hands of the transferee, entering into the computation of the invested capital of the transferee, or of any other corporation the computation of the invested capital of which is determined by reference to the basis of such property in the hands of the transferee.

Sec. 761. (f) Statutory mergers and consolidations. If a corporation owns stock in another corporation and such corporations are merged or consolidated in a statutory merger or consolidation, then for the purposes of this section and section 718 such stock shall be considered to have been acquired (in such statutory merger or consolidation) by the corporation resulting from the statutory merger or con(Continued in third column.)

amount, determined by reference to
the basis of such property in the
hands of the transferee, entering
into the computation of the invested
capital of the transferee, or of any
other corporation the computation
of the invested capital of which is
determined by reference to the basis
of such property in the hands of the
transferee.

which the first property is received in the intercorporate liquidation and ending with the day of its completion; and the extent to which. and the conditions and limitations under which, such rules are to be applicable.

Secs. 760 and 761, I. R. C supra, added to I. R. C. by Sec. 230 (a), R. A. of 1942. Sec. 201 of said Act makes amendments applicable to taxable years beginning after Dec. 31, 1941, but see optional retroactivity provided by Sec. 230 (d), R. A. of 1942, in fn. 28, p. 936.

CESS PROFITS TAX

Sec. 761. (f) Statutory mergers and consolidations.—If a corporation owns stock in another corporation and such corporations are PART III-POST-WAR REFUND OF EXmerged or consolidated in a statutory merger or consolidation, then for the purposes of this section and section 718 such stock shall be considered to have been acquired (in such statutory merger or consolidation) by the corporation resulting from the statutory merger or con(Continued in fourth column.)

Sec. 780. Post-war refund of excess profits tax.

Sec. 780. (a) In general.—The Secretary of the Treasury is authorized and directed to establish a (Continued in fifth column.)

solidation, and the properties of credit to the account of each tax-
such other corporation attributable payer subject to the tax imposed
to such stock to have been received under this subchapter, for each tax-
by such resulting corporation as a able year ending after December 31,
transferee from such other corpora- 1941 (except in the case of a tax-
a transferor in an inter- able year beginning in 1941 and
corporate liquidation.
ending before July 1, 1942), and
not beginning after the date of ces-

tion as

Sec. 761. (g) Determinations.-sation of hostilities in the present war, of an amount equal to 10 per Sec. 761. (g) (1) Regulations.- centum of the tax imposed under Any determination which is re- this subchapter for each such taxquired to be made under this sec-able year. For the purposes of this tion (including determinations in part, in the case of a taxpayer applying this section in cases where whose tax is determined under secthere is a series of transferees of tion 710 (a) (3), the term "tax imthe property and cases where the posed under this subchapter" means stock of the transferor is acquired the excess of the tax imposed by by the transferee from another cor- such section 710 (a) (3) over the poration, and the determinations of tax that would be imposed if such the basis and adjusted basis which section 710 (a) (3) were not approperty or items thereof have or plicable. are considered to have) shall be made in accordance with regulations Sec. 780. (b) Application of which shall be prescribed by the credit to purchase of bonds. Commissioner with the approval of Within three months after the paythe Secretary. If the transferor or ment of the amount of the excess the transferee is a foreign corpora- profits tax shown on the return for tion, the provisions of this section a taxable year to which subsection shall apply to such extent and under (a) applies (or, if such taxable such conditions and limitations as year begins or ends in 1942, within may be provided in such regulations. one year after payment of the excess profits tax shown on the return for such year) if the payment is Sec. 761. (g) (2) Application made before three months before to liquidation extending over long the date of maturity of bonds for period. The Commissioner is au- such year under subsection (c), thorized to prescribe rules similar there shall be issued to and in the to those provided in this section name of the taxpayer bonds of the with respect to the days within the United States in an aggregate period beginning with the date on which the first property is received in the intercorporate liquidation and ending with the day of its completion; and the extent to which, and the conditions and limitations under which, such rules are to be applicable.

Secs. 760 and 761, I. R. C., supra, added to I. R. C. by Sec. 230 (a), R. A. of 1942. Sec. 201 of said Act makes amendments applicable to taxable years beginning after Dec. 31, 1941, but see optional retroactivity provided by Sec. 230 (d), R. A. of 1942, in fn. 28, p. 936.

amount equal to 10 per centum of
the tax paid in respect of which a
credit is provided under subsection
(a), and the credit established un-
der subsection (a) for such taxable
year is hereby made available for
the purchase of such bonds.

Sec. 780 (b), I. R. C., supra,
amended by H. J. R. 100, ap-
proved March 31, 1943,
by
adding language in italics.

Sec. 780. (c) Terms and maturity of bonds.—The bonds provided for in subsection (a) shall be isPART III-POST-WAR REFUND OF EX- sued under the authority and sub

CESS PROFITS TAX

ject to the provisions of the Second Liberty Bond Act, as amended, and Sec. 780. Post-war refund of ex- the purposes for which bonds may cess profits tax.

Sec. 780. (a) In general. The Secretary of the Treasury is authorized and directed to establish a (Continued in sixth column.)

Taxable Years
Beginning in 1942

credit to the account of each taxpayer subject to the tax imposed under this subchapter, for each taxable year ending after December 31, 1941 (except in the case of a taxable year beginning in 1941 and ending before July 1, 1942), and not beginning after the date of cessation of hostilities in the present war, of an amount equal to 10 per centum of the tax imposed under this subchapter for each such taxable year. For the purposes of this part, in the case of a taxpayer whose tax is determined under section 710 (a) (3), the term "tax imposed under this subchapter" means the excess of the tax imposed by such section 710 (a) (3) over the tax that would be imposed if such section 710 (a) (3) were not applicable.

Sec. 780. (b) Application of credit to purchase of bonds.Within three months after the payment of the amount of the excess profits tax shown on the return for a taxable year to which subsection (a) applies (or, if such taxable year begins or ends in 1942, within one year after payment of the excess profits tax shown on the return for such year) if the payment is made before three months before the date of maturity of bonds for such year under subsection (c), there shall be issued to and in the name of the taxpayer bonds of the United States in an aggregate amount equal to 10 per centum of the tax paid in respect of which a credit is provided under subsection (a), and the credit established under subsection (a) for such taxable year is hereby made available for the purchase of such bonds.

Sec. 780 (b), I. R. C., supra, amended by H. J. R. 100, approved March 31, 1943, by adding language in underlined italics.

Sec. 780. (c) Terms and maturity of bonds.-The bonds provided for in subsection (a) shall be issued under the authority and subject to the provisions of the Second Liberty Bond Act, as amended, and the purposes for which bonds may be isbe issued under such Act are ex-sued under such Act are extended tended to include the purposes for which bonds are required to be issued under this section. Such bonds shall bear no interest, shall be non(Continued on page 946.)

to include the purposes for which bonds are required to be issued under this section. Such bonds shall bear no interest, shall be nonnegoti(Continued on page 946.)

Taxable Years
Beginning in 1943

ment, pledge, hypothecation, or otherwise, on or before the date of cessation of hostilities in the present war, but after said date, such bonds shall be negotiable, and may be sold, exchanged, pledged, as signed, hypothecated, or otherwise transferred, without restriction, and shall be redeemable (at the option of the United States) in whole or in part upon three months' notice. Such bonds for any taxable year to which this section applies shall mature on the last day of that calendar year, beginning after the date of cessation of hostilities in the present war, which is shown in the following table to be applicable to such bonds for such year:

Sec. 781. Special rules for appli

negotiable, and shall not be trans- able, and shall not be transferable ferable by sale, exchange, assign- by sale, exchange, assignment, cation of section 780. pledge, hypothecation, or otherwise, on or before the date of cessation. Sec. 781. (a) Effect of deficienof hostilities in the present war, but cies.-If a deficiency in respect of after said date, such bonds shall be the excess profits tax for any taxnegotiable, and may be sold, ex- able year for which a credit is prochanged, pledged, assigned, hypoth- vided in section 780 (a) is paid by ecated, or otherwise transferred, the taxpayer before three months without restriction, and shall be re- before the date of maturity of the deemable (at the option of the bonds for such year, an amount of United States) in whole or in part such credit equal to 10 per centum upon three months' notice. Such of the excess of the tax imposed by bonds for any taxable year to which this subchapter on the basis of this section applies shall mature on which the deficiency was determined. the last day of that calendar year, over the tax imposed by this subbeginning after the date of cessa- chapter as previously computed and tion of hostilities in the present war, paid shall be available, as provided which is shown in the following in section 780 (b), for the purchase table to be applicable to such bonds of bonds as provided under such for such year: section, and there shall be issued to the taxpayer bonds under such seetion in an amount equal to such excess and with the same maturity as in the case of bonds issued with respect to the taxable year with respect to which the deficiency is determined.

Bonds purchased with the credit for any taxable year

beginning

Within the calendar year 1941 or 1942..

Within the calendar

Calendar year (beginning after cessation of hostilities) on last day of which bonds ma

ture

Bonds purchased
with the credit for
taxable
any

beginning

year

Within the calendar

..2nd

year 1941 or 1942.

Within the calendar

year 1943..

Within the calendar

Within the calendar
year 1944....
After December 31,
1944

.5th

Sec. 780. (d) Exemption of proceeds from tax. The proceeds of any such bond upon redemption shall not be included in gross in

come.

Sec. 780. (e) Date of cessation of hostilities in the present war.As used in this section, the term "date of cessation of hostilities in the present war" means the date on which hostilities in the present war between the United States and the governments of Germany, Japan, and Italy cease, as fixed by proclamation of the President or by concurrent resolution of the two Houses of Congress, whichever date is earlier, or in case the hostilities between the United States and such governments do not cease at the same time, such date as may be so fixed as an appropriate date for the purposes of this section.

See note following Sec. 783, I. R. C., infra. (Continued in third column.)

Calendar

year (beginning after ces sation of hostilities) on Last day of which bonds mature

.5th

Sec. 780. (d) Exemption of proceeds from tax.-The proceeds of any such bond upon redemption shall not be included in gross in

come.

Sec. 781. (b) Effect of refunds.If an overpayment of the tax im..2nd posed by this subchapter for any taxable year for which a credit is .3rd provided in section 780 (a) is refunded or credited to the taxpayer .4th under the internal revenue laws, the credit, if any, provided in such seetion then existing in favor of the taxpayer shall be reduced by ar amount equal to 10 per centum of the excess of the tax imposed by this subchapter on the basis of which such tax (in respect of which the internal revenue refund or credit was made) was previously comSec. 780. (e) Date of cessation of puted and paid, over the tax imhostilities in the present war.-As posed by this subchapter as used in this section, the term "date determined in connection with the of cessation of hostilities in the pres- determination of the amount of the ent war" means the date on which overpayment. In such a case, if hostilities in the present war be- such credit provided in section 780 tween the United States and the (a) is less than the amount by which governments of Germany, Japan, it is required to be reduced, or if and Italy cease, as fixed by procla- there is no such credit then existing mation of the President or by con- in favor of the taxpayer, the excess current resolution of the two Houses of such amount over the amount of of Congress, whichever date is such credit, if any, shall be carried earlier, or in case the hostilities be- forward as a charge against the tween the United States and such taxpayer to be applied in reduction governments do not cease at the of a subsequent credit under section same time, such date as may be so 780 (a); and if no such subsequent fixed as an appropriate date for the credit is made in favor of the taxpurposes of this section. payer, the amount of such charge (without interest) shall be paid by the taxpayer to the United States or (Continued in fifth column.)

See note following Sec. 783,
I. R. C., infra.
(Continued in fourth column.)

Sec. 781. Special rules for appli- the amount of bonds previously iscation of section 780. sued to the taxpayer under section 780 (b) shall be adjusted on account of such charge.

Sec. 781. (a) Effect of deficiencies.-If a deficiency in respect of the excess profits tax for any taxable year for which a credit is provided in section 780 (a) is paid by the taxpayer before three months before the date of maturity of the bonds for such year, an amount of such credit equal to 10 per centum of the excess of the tax imposed by this subchapter on the basis of which the deficiency was determined, over the tax imposed by this subchapter as previously computed and paid shall be available, as provided in section 780 (b), for the purchase of bonds as provided under such section, and there shall be issued to the taxpayer bonds under such section in an amount equal to such excess and with the same maturity as in the case of bonds issued with respect to the taxable year with respect to which the deficiency is determined.

Taxable Years
Beginning in 1942

the amount of bonds previously issued to the taxpayer under section 780 (b) shall be adjusted on account of such charge.

Sec. 781. (c) Tax payments af- Sec. 781. (c) Tax payments after cut-off date.-In the case of a ter cut-off date.-In the case of a payment of the tax imposed by this payment of the tax imposed by this subchapter shown on the return for subchapter shown on the return for any taxable year for which a credit any taxable year for which a credit is provided in section 780 (a), or is provided in section 780 (a), or the payment of a deficiency in re- the payment of a deficiency in respect of such tax for any such tax-spect of such tax for any such taxable year, after the date prescribed able year, after the date prescribed in section 780 (b) or 781 (a) but in section 780 (b) or 781 (a) but before the date of maturity of the before the date of maturity of the bonds with respect to such taxable bonds with respect to such taxable year under section 780 (c), the year under section 780 (c), the amount of the credit under section amount of the credit under section 780 (a) for such taxable year at- 780 (a) for such taxable year attributable to such payment shall, so tributable to such payment shall, so far as practicable, be available, as far as practicable, be available, as provided in section 780 (b), for the provided in section 780 (b), for the purchase of bonds as provided un- purchase of bonds as provided under such section, and, so far as der such section, and, so far as practicable, there shall be issued to practicable, there shall be issued to the taxpayer bonds under such sec- the taxpayer bonds under such section with the same maturity as tion with the same maturity as bonds issued with respect to such bonds issued with respect to such Sec. 781. (b) Effect of refunds.- taxable year. To the extent that it taxable year. To the extent that it If an overpayment of the tax im- is not practicable to issue bonds is not practicable to issue bonds posed by this subchapter for any against such amount of the credit, against such amount of the credit, taxable year for which a credit is the taxpayer shall be paid in cash. the taxpayer shall be paid in cash. provided in section 780 (a) is re- In case after the date of maturity In case after the date of maturity funded or credited to the taxpayer of the bonds of any taxable year of the bonds of any taxable year under the internal revenue laws, the under section 780 (c) there is any under section 780 (c) there is any credit, if any, provided in such sec- credit under section 780 (a) re- credit under section 780 (a) retion then existing in favor of the maining in favor of the taxpayer, maining in favor of the taxpayer, taxpayer shall be reduced by an attributable to such year, such re- attributable to such year, such reamount equal to 10 per centum of mainder shall be paid to the tax-mainder shall be paid to the taxthe excess of the tax imposed by payer in cash. No amount of any payer in cash. No amount of any this subchapter on the basis of payment made under this subsec- payment made under this subsection which such tax (in respect of which tion to a taxpayer shall be included to a taxpayer shall be included in the internal revenue refund or cred-in gross income. gross income. it was made) was previously computed and paid, over the tax imSec. 781. (d) Limitation.-The Sec. 781. (d) Limitation.-The posed by this subchapter as credit under section 780 (a) for any credit under section 780 (a) for any determined in connection with the taxable year shall not be greater taxable year shall not be greater determination of the amount of the than the excess of the amount of than the excess of the amount of the overpayment. In such a case, if the tax paid under this subchapter tax paid under this subchapter to such credit provided in section 780 to the United States (and not cred- the United States (and not credited (a) is less than the amount by which ited or refunded under the internal or refunded under the internal revit is required to be reduced, or if revenue laws) in respect of such enue laws) in respect of such year there is no such credit then existing year over the amount of tax which over the amount of tax which would in favor of the taxpayer, the excess would be payable to the United be payable to the United States if of such amount over the amount of States if the excess profits tax rate the excess profits tax rate were 81 such credit, if any, shall be carried were 81 per centum, or if the limit- per centum, or if the limitation of forward as a charge against the ation of section 710 is applicable section 710 is applicable if the taxpayer to be applied in reduction if the amount determined under amount determined under such secsuch section were reduced by 10 tion were reduced by 10 per centum.

of a subsequent credit under section
780 (a); and if no such subsequent per centum.
credit is made in favor of the tax-
payer, the amount of such charge
(without interest) shall be paid by
the taxpayer to the United States or
(Continued in sixth column.)

See note following Sec. 783,
I. R. C., infra.
(Continued on page 948.)

See note following Sec. 783, I. R. C., infra. (Continued on page 948.)

Sec. 783. (c) Reduction of credit The Secretary of the Treasury is The Secretary of the Treasury is and of bonds outstanding under authorized to prescribe, from time authorized to prescribe, from time section 780.-If a credit is allowed to time, such rules and regulations to time, such rules and regulations for debt repayment in a taxable as may be necessary to carry out as may be necessary to carry out year pursuant to this section, the the preceding provisions of this the preceding provisions of this amount of such credit or refund shall be deducted from the credit under section 780 (a) and the amount of bonds issued under section 780 shall, to the extent neces