"(2) RESIDENT OF THE UNITED STATES OR PUERTO RICO.-In the case of a resident of the United States and in the case of an individual who is a bona fide resident of Puerto Rico during the entire taxable year, the amount of any such taxes paid or accrued during the taxable year to any possession of the United States; and "(3) ALIEN RESIDENT OF THE UNITED STATES OR PUERTO RICO.— In the case of an alien resident of the United States and in the case of an alien individual who is a bona fide resident of Puerto Rico during the entire taxable year, the amount of any such taxes paid or accrued during the taxable year to any foreign country, if the foreign country of which such alien resident is a citizen or subject, in imposing such taxes, allows a similar credit to citizens of the United States residing in such country; and". Sec. 221(k), RA of 1950, makes amendment applicable to taxable years beginning after Dec. 31, 1950. SECTION 131(j) - NEW. Sec. 302(b), Excess Profits Tax Act of 1950, amended Sec. 131, IRC, by adding thereto the following new subsection: 66 "(j) TAX IMPOSED BY SUBCHAPTER D.-This section shall be applicable for purposes of the tax imposed by subchapter D, but the tax paid or accrued to any country shall be deemed to be the amount of such tax reduced by the amount of the credit allowed under this section with respect to such tax against the tax imposed by this chapter without regard to subchapter D. The amount of the credit taken under this subsection shall be subject to each of the following conditions: "(1) The amount of the credit in respect of the tax paid or accrued to any country shall not exceed the same proportion of the tax against which such credit is taken, which the taxpayer's excess profits net income from sources within such country bears to its entire excess profits net income for the same taxable year; and "(2) The total amount of the credit shall not exceed the same proportion of the tax against which such credit is taken, which the taxpayer's excess profits net income from sources without the United States bears to its entire excess profits net income for the same taxable year." Sec. 301, Excess Profits Tax Act of 1950, amended Sec. 141, IRC, effective with respect to taxable years ending after June 30, 1950, to read as follows: “SEC. 141. CONSOLIDATED RETURNS. "(a) PRIVILEGE TO FILE CONSOLIDATED RETURNS.-An affiliated group of corporations shall, subject to the provisions of this section, have the privilege of making a consolidated return for the taxable year in lieu of separate returns. The making of a consolidated return shall be upon the condition that all corporations which at any time during the taxable year have been members of the affiliated group consent to all the consolidated return regulations prescribed under subsection (b) prior to the last day prescribed by law for the filing of such return. The making of a consolidated return shall be considered as such consent. In the case of a corporation which is a member of the affiliated group for a fractional part of the year, the consolidated return shall include the income of such corporation for such part of the year as it is a member of the affiliated group. "(b) REGULATIONS.-The Secretary shall prescribe such regulations as he may deem necessary in order that the tax liability of any affiliated group of corporations making a consolidated return and of each corporation in the group, both during and after the period of affiliation, may be returned, determined, computed, assessed, collected, and adjusted, in such manner as clearly to reflect the income- and excessprofits-tax liability and the various factors necessary for the determination of such liability, and in order to prevent avoidance of such tax liability. "(c) COMPUTATION AND PAYMENT OF TAX.-In any case in which a consolidated return is made or is required to be made, the tax shall be determined, computed, assessed, collected, and adjusted in accordance with the regulations under subsection (b) prescribed prior to the last day prescribed by law for the filing of such return; except that the tax imposed under section 15 or section 204 shall be increased by 2 per centum of the consolidated corporation surtax net income of the affiliated group of includible corporations. If the affiliated group includes one or more Western Hemisphere trade corporations (as defined in section 109), the increase of 2 per centum provided in the preceding sentence shall be applied only on the amount by which the consolidated corporation surtax net income of the affiliated group exceeds the portion (if any) of the consolidated corporation surtax net income attributable to the Western Hemisphere trade corporations included in such group. For the purposes of the tax imposed by section 430, the sum of the excess profits credit and the unused excess profits credit adjustment of the affiliated group shall not be increased under the last sentence of section 431 to an amount in excess of $25,000 for the entire group. "(d) DEFINITION OF 'AFFILIATED GROUP'-As used in this section," an 'affiliated group' means one or more chains of includible corporations connected through stock ownership with a common parent corporation which is an includible corporation if T TAX LAWS 1950 POCKET SUPPLEMENT 45 .950, amended -An affiliated f this section. or the taxable lidated retura h at any time filiated group scribed under for the filing shall be coch is a member ir, the consoli ation for suc ip. uch regulation nce of such tax the tax shall ted in accord ibed prior to except that increased by ncome of the liated group v which the tion surtar is section corpors arent cor "(1) Stock possessing at least 95 per centum of the voting power of all classes of stock and at least 95 per centum of each class of the nonvoting stock of each of the includible corporations (except the common parent corporation) is owned directly by one or more of the other includible corporations; and "(2) The common parent corporation owns directly stock possessing at least 95 per centum of the voting power of all classes of stock and at least 95 per centum of each class of the nonvoting stock of at least one of the other includible corporations. As used in this subsection, the term 'stock' does not include nonvoting stock which is limited and preferred as to dividends. "(e) DEFINITION OF 'INCLUDIBLE CORPORATION'.-As used in this section, the term 'includible corporation' means any corporation except"(1) Corporations exempt from taxation under section 101. "(2) Insurance companies subject to taxation under section 201 or 207. "(3) Foreign corporations. 66 (4) Corporations entitled to the benefits of section 251, by reason of receiving a large percentage of their income from sources within possessions of the United States. "(5) Corporations organized under the China Trade Act, 1922. "(6) Regulated investment companies subject to tax under Supplement Q. (7) Any corporation described in section 449, or in section 454 (d), (f), and (g) (without regard to the exception in the initial clause of section 454), but not including such a corporation which has made and filed a consent, for the taxable year or any prior taxable year ending after June 30, 1950, to be treated as an includible corporation. Such consent shall be made and filed at such time and in such manner as may be prescribed by the Secretary. "(8) Regulated public utilities described in section 448 (d) which compute their excess profits credit under section 448 but not including any such regulated public utility which has made and filed a consent, applicable to the taxable year, to compute its excess profits credit without regard to section 448. The consent shall be made and filed at such time and in such manner as may be prescribed by the Secretary. The consent shall be applicable to the taxable year for which filed and to each consecutive subsequent taxable year for which a consolidated return is filed. "(f) INCLUDIBLE INSURANCE COMPANIES.-Despite the provisions of paragraph (2) of subsection (e), two or more domestic insurance companies each of which is subject to taxation under the same section of this chapter shall be considered as includible corporations for the purpose of the application of subsection (d) to such insurance companies alone. "(g) SUBSIDIARY FORMED TO COMPLY WITH FOREIGN LAW.-In the case of a domestic corporation owning or controlling, directly or indirectly, 100 per centum of the capital stock (exclusive of directors' qualifying shares) of a corporation organized under the laws of a contiguous foreign country and maintained solely for the purpose of complying with the laws of such country as to title and operation of property, such foreign corporation may, at the option of the domestic corporation, be treated for the purpose of this chapter as a domestic corporation. "(h) SUSPENSION OF RUNNING OF STATUTE OF LIMITATIONS.-If a notice under section 272 (a) in respect of a deficiency for any taxable year is mailed to a corporation, the suspension of the running of the statute of limitations, provided in section 277, shall apply in the case of corporations with which such corporation made a consolidated. return for such taxable year. "(i) ALLOCATION OF INCOME AND DEDUCTIONS.-For allocation of income and deductions of related trades or businesses, see section 45. "(i) INCLUDIBLE REGULATED PUBLIC UTILITIES.-Despite the provisions of paragraph (8) of subsection (e), two or more regulated public utilities each of which has made and filed a consent, applicable to the taxable year, to compute its excess profits credit under section 448 only, shall be considered as includible corporations for the purpose of the application of subsection (d) to such regulated public utilities alone. The consent shall be made and filed at such time and in such manner as may be prescribed by the Secretary. The consent shall be applicable to the taxable year for which filed and to each consecutive subsequent taxable year for which a consolidated return is filed." Sec. 121(f), RA of 1950, amended Sec. 141(c), IRC, by inserting after the first sentence the following: "If the affiliated group includes one or more western hemisphere trade cor- Sec. 221(e), RA of 1950, amended Sec. 143(a)(1), "As used in this subsection the term 'nonresident Sec. 221(k), RA of 1950, makes amendment applicable to taxable years beginning after Dec. 31, 1950. Sec. 221(e), RA of 1950, amended Sec. 143(b), IRC, by adding at the end thereof the following: "As used in this subsection the term 'nonresident Sec. 221(k), RA of 1950, makes amendment applicable to taxable years beginning after Dec. 31, 1950. |