"(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.

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(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. "(j) 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."

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under

SEC. 302. FOREIGN TAX CREDIT.

PUB LAW 909.]

(a) That portion of section 131 (a) of the Internal Revenue Code. which precedes paragraph (1) thereof is hereby amended by inserting after "subchapter E" the following: "and except, with respect to the tax imposed under subchapter D, only to the extent provided in subsection (j)".

(b) Section 131 of such code is hereby amended by adding at the end thereof the following new subsection:

"(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. 303. EXPENDITURES FOR ADVERTISING AND GOOD WILL.

Section 23 (a) (1) (C) of the Internal Revenue Code (relating to expenditures for advertising and good will) is hereby amended to read as follows:

"(C) Expenditures for Advertising and Good Will.—If a corporation has, for the purpose of computing its excess profits tax credit under Chapter 2E, or subchapter D of this Chapter, claimed the benefits of the election provided in section 733 or section 451, as the case may be, no deduction shall be allowable under subparagraph (A) to such corporation for expenditures for advertising or the promotion of good will which, under the rules and regulations prescribed under section 733 or section 451, as the case may be, may be regarded as capital investments."

SEC. 304. TECHNICAL AMENDMENTS.

(a) Section 3779 of the Internal Revenue Code (relating to extensions of time for payment of taxes by corporations expecting carrybacks) is hereby amended by striking "710 (c) (3)" where it appears in subsection (b) and inserting in lieu thereof "432 (c)", and by striking the words "four equal" where they appear in subsections (c), (g) and (i).

(b) Section 3780 (a) of such code (relating to tentative carry-back adjustments) is hereby amended by striking "710 (c) (3)" and inserting in lieu thereof "432 (c)".

(c) Section 3807 of such code (relating to period of limitations in case of related taxes under chapter 1 and chapter 2) is repealed.

(d) Section 114 (b) (4) (B) of such code is hereby amended by striking out "731 and 735" and inserting in lieu thereof "450 and 453".

(e) Section 122 (d) (6) of such code (relating to the computation of the net operating loss deduction) shall not apply with respect to any taxable year ending after June 30, 1950.

(f) Supplement S of chapter 1 of such code is hereby amended by striking out "section 725" wherever appearing therein and inserting in lieu thereof "section 449".

(g) The amendments made by this section shall be applicable with respect to taxable years ending after June 30, 1950.

SEC. 305. FILING OF RETURNS FOR TAXABLE YEARS ENDING AFTER JUNE 30, 1950, AND BEFORE DECEMBER 31, 1950.

In the case of a corporation subject to the tax imposed by subchapter D of chapter 1 of the Internal Revenue Code for a taxable year ending after June 30, 1950, but prior to December 31, 1950, such corporation shall after the date of the enactment of this Act and before March 15, 1951, make a return for such taxable year with respect to the tax imposed by chapter 1 of the Internal Revenue Code for such taxable year. The return required by this section for such taxable year shall constitute the return for such taxable year for all purposes of the Internal Revenue Code; and no return for such taxable year, with respect to any tax imposed by chapter 1 of such code, filed on or before the date of the enactment of this Act shall be considered for any of such purposes as a return for such year. The taxes imposed by chapter 1 of such code (determined with the amendments made by this Act) for such taxable year shall be paid on March 15, 1951, in lieu of the time prescribed in section 56 (a) of such code. All payments with respect to any tax for such taxable year imposed by chapter 1 of such code under the law in effect prior to the enactment of this Act, to the extent that such payments have not been credited or refunded, shall be deemed payments made at the time of the filing of the return required by this section on account of the tax for such taxable year under chapter 1 determined with the amendments made by this Act.

SEC. 306. PAYMENTS TO ENCOURAGE EXPLORATION, DEVELOPMENT, AND MINING FOR DEFENSE PURPOSES.

Effective with respect to taxable years beginning after December 31, 1950, section 22 (b) of the Internal Revenue Code is amended by adding the following new paragraph:

"(15) PAYMENTS TO ENCOURAGE EXPLORATION, DEVELOPMENT, AND MINING FOR DEFENSE PURPOSES.-An amount paid to a taxpayer by the United States (or any agency or instrumentality thereof), whether by grant or loan, and whether or not repayable, for the encouragement of exploration, development or mining of critical and strategic minerals or metals pursuant to or in connection with any undertaking approved by the United States (or any of its agencies or instrumentalities) and for which an accounting is made or required to be made to an appropriate governmental agency, and the forgiveness or discharge of any of such amount. Any expenditures (other than expenditures made after the repayment of such grant or loan) attributable to such grant or

loan shall not be deductible by the taxpayer as an expense nor increase the basis of the taxpayer's property either for determining gain or loss on sale, exchange, or other disposition or for computing depletion or depreciation, but upon the repayment of any portion of any such grant or loan which has been expended in accordance with the terms thereof such deductions and such increase in basis shall to the extent of such repayment be allowed as if made at the time of such repayment." Approved January 3, 1951, 10:13 a. m.