Detach pages 5 and 6 before filing

Page 5

GENERAL INSTRUCTIONS—Continued

(A) for purposes of the stock ownership requirement provided in
section 542 (a) (2), if, but only if, the effect is to make the corpora-
tion a personal holding company;

(B) for purposes of section 543 (a) (5) (relating to personal
service contracts), of section 543 (a) (6) (relating to the use of
property by shareholders), or of section 543 (a) (9) (relating to
copyright royalties), if, but only if, the effect is to make the amounts
therein referred to includible under such paragraph as personal hold-
ing company income.

(5) CONSTRUCTIVE OWNERSHIP AS ACTUAL OWNERSHIP.—Stock con-
structively owned by a person by reason of the application of paragraph
(1) or (3) shall, for purposes of applying paragraph (1) or (2), be
treated as actually owned by such person; but stock constructively owned
by an individual by reason of the application of paragraph (2) shall not
be treated as owned by him for purposes of again applying such para-
graph in order to make another the constructive owner of such stock.

(6) Option RULE IN LIEU OF FAMILY AND PARTNERSHIP RULE.—
If stock may be considered as owned by an individual under either
paragraph (2) or (3) it shall be considered as owned by him under
paragraph (3).

(b) CONVERTIBLE SECURITIES —Outstanding securities convertible into
stock (whether or not convertible during the taxable year) shall be
considered as outstanding stock—

(1) for purposes of the stock ownership requirement provided in
section 342 (a) (2), but only if the effect of the inclusion of all such
securities is to make the corporation a personal holding company;

(2) for purposes of section 543 (a) (5) (relating to personal service
contracts), but only if the effect of the inclusion of all such securities
is to make the amounts therein referred to includible under such para
graph as personal holding company income;

(3) for purposes of section 543 (a) (6) (relating to the use of
property by shareholders), but only if the effect of the inclusion of all
such securities is to make the amounts therein referred to includible
under such paragraph as personal holding company income; and

(4) for purposes of section 543 (a) (9) (relating to copyright
royalties), but only if the effect of the inclusion of all such securities is
to make the amounts therein referred to includible under such paragraph
as personal holding company income.

‘The requirement in paragraphs (1), (2), (3), and (4) that all convertible
securities must be included if any are to be included shall be subject to the
exception that, where some of the outstanding securities are convertible
only after a later date than in the case of others, the class having the earlier
conversion date may be included although the others are not included, but
no convertible securities shall be included unless all outstanding securities
having a prior conversion date are also included.

SPECIFIC INSTRUCTIONS

‘The following instructions are numbered to correspond with line numbers on page 1 of this schedule

1, Taxable income before net operating loss deduction and special deduc-
ns, Form 1120.—Enter here the amount shown on line 28, page 1, Form
1120, computed in accordance with the provisions of subtitle A, but with-
out regard to section 443 (b) (relating to income placed on an annual
basis). In the event such taxable income on line 1 includes aay amount
with respect to coal royalties to which section 631 (c) is applicable, see
section 631 (c) and the regulations thereunder.

In the case of a nonresident foreign corporation (not engaged in trade
or business within the United States) which qualifies as a personal holding
company under section 542 but not as a foreign personal holding company
under section 552, the amount to be entered on line 1_ must be computed
under section 861 rather than under section 881 (a). The taxable income
so computed will reflect, in addition to income from all other sources
within the United States, gains from sales or exchanges made within the
United States of capital assets including stocks, securities, and commodi-
ties. Although such gains may not be subject to tax under section 881 (a),
they are subject to the tax imposed by section 541.

3. Expenses and depreciation applicable to property of the taxpayer in
excess of amount allowable under section 545 (b} (8) —1¢ the corporation
derived rent ot other compensation for the use or right to use property
which was less.than the sum of the expenses incurred in connection there-
with and deductible under section 162 and the depreciation allowable
under section 167, Schedule A should be filled in and the excess of the
expenses and depreciation over the rent or other compensation shown
therein should be entered on line 3, page 1. This adjustment must be made
unless the taxpayer establishes, in’ accordance with section 545 (b) (8),
that the rent or other compensation received was the highest obtainable, or,
if none was received, that none was obtainable; that the property was held
in the course of a business carried on bona fide for profit; and either that
there was reasonable expectation that the operation of the property would
result in a profit, or that the property was necessary to the conduct of the
business.

‘The burden of proof will rest upon the taxpayer to sustain the deduction
of the aggregate of the expenses and depreciation allowed under subtitle
A in excess of the rent or other compensation derived from the property.
A corporation claiming such excess deductions shall, in lieu of filling in
Schedule A, attach to the return a statement setting forth its claim for
allowance of the deductions together with a complete statement of facts,
circumstances, and arguments on which it relies in support of the deduc-
tions, Such statement shall sho"

(a) A description of the property;

(4) The cost or other basis to the corporation and the nature and value
of the consideration paid for the property;

(¢) The name and address of the person from whom the property was
acquired and the date thereof;

(@) The name and address of the person to whom the property was
leased or rented, or the person permitted to use the property, and the num-
ber of shares of stock, if any, held by such person and the members of his

amily;

(e) The nature (cash, securities, services, etc.) and gross amount of
the rent or other compensation received or accrued for the use of, or the
right to use, the property during the taxable year and for each’ of the
5 preceding years and the amount of the expenses incurred with respect
to, and the depreciation sustained on, the property for such years;

(f) Evidence that the rent or other compensation was the highest obtain-
able and if none was received or accrued, a statement of the reasons
therefor;

(g) A copy of the contract, lease, or rental agreement;

@) The purpose for which the property was used;

(i) The business carried on by the corporation with respect to which
the property was held and the gross income, expenses, and net income
derived from the conduct of such business for the taxable year and for
cach of the 5 preceding years;

(j) A statement of any reasons which existed for expectation that the
operation of the property would be profitable, or a statement of the neces-
sity for the use of the property in the business of the corporation and the
reasons why the property was acquired;

(4) Any other information on which the corporation relies

Amount added to taxable income where lien in favor of the United States
is satisfied or released.—The sum of the amounts deducted from taxable
income under section 545 (b) (9) with respect to any lien in favor of
the United States must be added to taxable income, in computing undis-
tributed personal holding company income, in the taxable year in which
the lien is satisfied or released. Similarly, in the case of a partial satisfac-
tion or release of such lien, to the extent satisfied or released. Where an
amount is so added to taxable income, the shareholders of the corporation
may, pursuant to regulations prescribed by the Secretary or his delegate,
elect to compute the income tax with respect to such dividends as are
attributable to such amount as though they were received ratably over
the period the lien was in effect. See Specific Instruction 13.

7. Federal and foreign income, war profits, and excess profits taxes—
Section 545 (b) (1) provides that there shall be allowed as a deduction
from taxable income Federal income and excess profits taxes accrued during
the taxable year, but not including the accumulated earnings tax imposed
by section 531, the personal holding company tax imposed by section 541,
or the taxes imposed by corresponding sections of 2 prior income tax law.
However, a taxpayer shall deduct Federal income and excess profits taxes
under this paragraph when paid if for each taxable year in which it was
subject to tax imposed by section 500 of the Internal Revenue Code of 1939
it deducted such taxes when paid, unless it elects, in its return for a taxable
year ending after June 30, 1954, to deduct the taxes described in this para-
graph when accrued, in which case only taxes accrued may be deducted.
Such an election shall be irrevocable and shall apply to the taxable year for
which the election is made and all subsequent taxable years.

The credit allowed to domestic corporations by section 901 for income,
war profits, and excess profits taxes of foreign countries and United States
possessions is not allowed as a credit with respect to the personal holding
company tax. There shall be allowed as a deduction from taxable income,
however, the income, war profits, and excess profits taxes accrued during
the taxable year to foreign countries and possessions of the United States
if the taxpayer claims a credit for such taxes in computing its income tax.

Foreign corporations should treat such taxes as deductions to be allocated
in accordance with section 861 in computing income from sources within
the United States, and in such cases taxes of this nature will be reflected
in taxable income stated on line 1 instead of being stated separately as a
deduction on line 7.

8. Contributions or gifts deductible under section 545 (b) (2).—For purposes
of the personal holding company tax, section 545 (b) (2) provides for a
different limitation on deductions for charitable contributions than the
5 percent limitation for purposes of determining the corporate tax. The
limitations on charitable deductions of individuals are applicable but
are to be applied to the amount of taxable income to which the 5 percent
limitation applied. (See Specific Instruction 19, Form 1120.) However,
‘a further adjustment for this purpose is that the taxable income shall also
be computed without the deduction of the amount disallowed under section
545 (b) (8) (relating to expenses and depreciation applicable to property
of the taxpayer).



GENERAL INSTRUCTIONS

Page 4

(Under Subtitle A, Internal Revenue Code)
(References are to the Internal Revenue Code unless otherwise noted)

Corporations which must file Schedule PH (1120).—Every corporation
which comes within the classification of a “personal holding company”
must file a Schedule PH. The term “personal holding company" means
any corporation, other than those listed in the exceptions below, if at least
80 percent of its gross income for the taxable year is personal holding
company income and if at any time during the last half of the taxable year
more than 50 percent in value of its outstanding stock is owned, directly
or indirectly, by or for not more than 5 individuals. For purposes of
determining ‘such stock ownership, an organization described in section
503 (b) ora portion of a trust permanently set aside or to be used exclu-
sively for the purposes described in section 642 (c) or a corresponding
provision of a prior income tax law shall be considered an individual,
unfess such organization or trust meets the requirements of section
542 (a) (2).

In the case of corporations filing consolidated returns, see section 542 (b)

The term “personal holding company,” as referred to above, does not
include any of the following:

(1) A corporation exempt from tax under subchapter F (sec. 501
and following) ;

(2) a bank as defined ‘in section 581;

(3 ) a life insurance company;

'4) a surety company;

(5) a foreign personal holding company as defined in section 552;

(6) a licensed personal finance company as defined in section 542
(c), (6)5

(7) a lending’ company as defined in section 542 (c) (7);

(8) a (" ‘or investment corporation as defined in section 542
c) (8)3

(9) a 9.6 ‘company as defined in section 542 (c) (9);
(10) a foreign corporation the gross income and stock ownership of
which falls within the provisions of section 542 (c) (10); and
(11) a seal busines investment company as defined in section 542
(c) (11).

A foreign corporation, whether resident or nonresident, which is classi-
fied as a personal holding company under section 542 (not including a
foreign personal holding company as defined in section 552) is subject to
the tax imposed by section 541 with respect to its income from sources
within the United States even though such income is not fixed or deter-
minable annual or periodical income specified in section 881 (a). (Sce
section 861.) In the case of a nonresident foreign corporation, Schedule
PH shall be attached to Form 1120-F. The term “personal hold-
ing company” as used in subtitle (A) does not include a foreign
corporation if (1) its gross income from sources within the United States
for the period specified in section 861 (a) (2) (B) is less than 50 percent
of its total gross income from all sources and (2) all of its stock out-
standing during the last half of the taxable year is owned by nonresident
alien individuals, whether directly or indirectly through other foreign
corporations.

Personal holding company income.—The term “personal holding com-
pany income” is defined by section 543 as the portion of the gross income
which consists of:

(1) Divenns, Er¢.—Dividends, interest, royalties (other than min-
eral, oil, or gas royalties or copyright royalties), and annuities. ‘This
paragraph shall not apply to interest constituting rent as defined in
paragraph (7) or to interest on amounts set aside in a reserve fund
under section 511 or 607 of the Merchant Marine Act, 1936.

(2) STOCK AND SECURITIES TRANSACTIONS.—Except in the case of
regular dealers in stock or securities, gains from the sale or exchange
of stock or securities.

(3) ComMopITIEs TRANSACTIONS.—Gains from futures transactions
in any commodity on or subject to the rules of a board of trade or com-
modity exchange. This paragraph shall not apply to gains by a producer,

rocessor, merchant, or handler of the commodity which arise out of
ona fide hedging transactions reasonably necessary to the conduct of
its business in the manner in which such business is customarily and
usually conducted by others.

(4) EsTATEs AND TRUSTS —Amounts includible in computing the
taxable income of the corporation under part I of subchapter J (sec. 641
and following, relating to estates, trusts, and beneficiaries); and gains
from the sale or other disposition of any interest in an estate or trust.

(5) PERSONAL SERVICE CONTRACTS.—

(A) Amounts received under a contract under which the corporation
is to furnish personal services; if some person other than the corporation
has the right to designate (by name or by description) the individual
who is to perform the services, or if the individual who is to perform
the services is designated (by name or by description) in the contract;
and

(B) amounts received from the sale or other disposition of such a
contract. This paragraph shall apply with respect to amounts received
for services under a particular contract only if at some time during the
taxable year 25 percent or more in value of the outstanding stock of the
corporation is owned, directly or indirectly, by or for the individual who
has performed, is to perform, or may be designated (by name or by
description) as the one to perform, such services.

(6) Usz OF CORPORATION PROPERTY BY SHAREHOLDER.—Amounts
received as compensation (however designated and from whomsoever
received) for the use of, or right to use, property of the corporation in
any case where, at any time during the taxable year, 25 percent or more
in value of the outstanding stock of the corporation is owned, directly or
indirectly, by or for an individual entitled to the use of the property;
whether such right is obtained directly from the corporation or by means
of a sublease or other arrangement. This paragraph shall apply only to
a corporation which has personal holding company income for the tax-
able year, computed without regard to this paragraph and paragraph (7),
in excess of 10 percent of its gross income. For purposes of the pre-
ceding sentence, copyright royalties constitute personal holding company
income.

(7), Rents.—Rents, unless constituting 50 percent or more of the
gross income. For purposes of this paragraph, the term “rents” means
compensation, however designated, for the use of, or right to use, prop-
erty, and the interest on debts owed to the corporation, to the extent such
debts represent the price for which real property held primarily for
sale to customers in the ordinary course of its trade or business was sold
or exchanged by the corporation; but does not include amounts con-
stituting personal holding company income under paragraph (6).

(8) MINERAL, OIL, OR GAS ROYALTIES.—Mineral, oil, or gas royalties,
unless—

(A) such royalties constitute 50 percent or more of the gross
income, and

(B) ‘the deductions allowable under section 162 (relating to trade
or business expenses) other than compensation for personal services
rendered by the shareholders, constitute 15 percent or more of the
gross income,

(9) CopyricnT royarties.—Copyright royalties, unless—

(A) such royalties (exclusive of royalties received for the use of,
or right to use, copyrights or interests in copyrights on works created
in whole, or in part, by any shareholder) constitute 50 percent or
more of the gross income,

(B) the personal holding company income for the taxable year not
taking into account—

(i) copyright royalties, other than royalties received for the use
of, or right to use, copyrights or interests in copyrights in works
created in whole, or in part, by any shareholder owning more than
10 percent of the total outstanding capital stock of the corporation,

(ii) dividends from any corporation in which the taxpayer owns
at least 50 percent of all classes of stock entitled to vote and at
least 50 percent of the total value of all classes of stock and. which
corporation meets the requirements of this subparagraph and sub-
paragraphs (A) and (C)

is 10 percent or less of the gross income, and

(C) the deductions allowable under section 162 (other than deduc-
tions for compensation for personal services rendered by the share-
holders and other than deductions for royalties to shareholders) con-
stitute 50 percent or more of the gross income.

For purposes of this subsection, the term “copyright royalties” means com-

pensation, however designated, for the use of, or the right to use, copy-

tights in works protected by copyright issued under title 17 of the United

States Code (other than by reason of sec. 2 or 6 thereof), and to which

copyright protection is also extended by the laws of any country other

than the United States of America by virtue of any international treaty,
convention, or agreement, or interests in any such copyrighted works, and
includes payments from any person for performing rights in any such
copyrighted work. For purposes of this paragraph, the term “shareholder”
shall include any person who owns stock within the meaning of section
344. This paragraph shall not apply to compensation which is rent
within the meaning of paragraph (7), determined without regard to the
requirement that rents constitute 50 percent or more of the gross income.
Stock ownership.—Section 544 contains the following provision with
reference to stock ownership.
(a) Constructive OWNERSHIP—For purposes of determining whether

a corporation is a personal holding company, insofar as such determina-

tion is based on stock ownership under section 542 (a) (2), section

543 (a) (5), section 543 (a) (4), or section 543 (a) (9)—

(1) Stock Not OWNED BY INDIVIDUAL—Stock owned, directly ot
indirectly, by or for a corporation, partnership, estate, or trust shall be
considered as being owned proportionately by its shareholders, partners,
or beneficiaries.

(2) FAMILY AND PARTNERSHIP OWNERSHIP.—An individual shall be
considered as owning the stock owned, directly or indirectly, by or for
his family or by or for his partner. For purposes of this paragraph, the
family of an individual includes only his brothers and sisters (whether
by the whole or half blood), spouse, ancestors, and lineal descendants.

(3) Options.—If any person has an option to acquire stock, such
stock shall be considered as owned by such person. For purposes of this
paragraph, an option to acquire such an option and each one of a series
of such options, shall be considered as an option to acquire such stock.

(4) APPLICATION OF FAMILY-PARTNERSHIP AND OPTION RULES.—
Paragraphs (2) and (3) shall be applied—

{See pages 5 and 6 for additional instructions)


Page 6

SPECIFIC INSTRUCTIONS—Continued

For purposes of the personal holding company tax, the contribution
carryover under the provisions of section 170 (b) (2) is not allowed (sec-
tion 542 (b) (2) of the Code, as amended).

9. Net operating loss for the preceding year deductible under section
545 (b) {ay Section 545 (b) (4) provides that in lieu of the net oper-
ating loss deduction provided in section 172 there shall be allowed the
amount of the net operating loss (as defined in section 172 (c)) for the
preceding taxable year computed without the deductions provided in
Part VIII (except organizational expenses, section 248) of subchapter B.

12, Amounts used or irrevocably set aside to pay or retire indebtedness of
any kind incurred prior to Jonuary I, 1934.-Enter on line 12 the total
amount teflected in line 12, Schedule D. Section 545 (b) (7) provides
that in determining undistributed personal holding company income there
shall be allowed as a deduction amounts used or irrevocably set aside to
pay or retire indebtedness of any kind incurred before January 1, 1934, if
such amounts are reasonable with reference to the size and terms of such
indebtedness.

13. Lien in favor of the United States——The taxpayer may deduct the
amount of any lien in favor of the United States (notice of which has
been filed as provided in section 6323 (a) (1), (2), or (3)) to which
the taxpayer is subject at the close of the taxable year. However, the
amount deducted may not exceed taxable income as adjusted under section
545 (b), computed without regard to this deduction. Thus the amount
to be entered on line 13 shall not exceed line 6 less the total of lines 7
through 12, inclusive.

14. Deduction for dividends paid.—Enter on line 14 the amount of the
dividends-paid deduction as computed in Schedule E. The deduction for
dividends paid is the sum of (1) the dividends paid during the taxable
year, (2) the consent dividends for the taxable year, and (3) the dividend
carryover from the 2 preceding taxable years.

In determining the deduction for dividends paid, the rules provided in
section 562 (relating to rules applicable in determining dividends eligible
for dividends-paid deduction) and section 563 (relating to dividends paid
after the close of the taxable year) shall be applicable.

Tn general, a consent dividend is not an actual corporate distribution but
is a hypothetical distribution evidenced by shareholders’ consents to treat
as a dividend an amount which would constitute a dividend if distributed
in money to such shareholders on the last day of the taxable year of such
corporation. Such consent dividend may be availed of only if the person
fling such consent owns common stock (or participating preferred stock,
the participating rights of which are unlimited), and the amount specified
in the consent is pro rata, with no preference to any share of stock as
compared with other shares of the same class, and with no preference to
one class of stock as compared with another class except to the extent that
the former is entitled to such preference. The effect of the consent is that
the amount of the consent dividend is treated both as a dividend and as a
contribution to the capital of the corporation by the shareholder on the
last day of the taxable year of the corporation. A consent shall be filed
in duplicate on Form 972 at any time but not later than the due date of
the corporation's income tax return for the taxable year for which credit is
claimed. In addition, Form 973 must be filed by the taxpayer corporation.

‘The dividend carryover to a taxable year shall be determined as follows:

(1) For each of the 2 preceding taxable years there shall be determined
the taxable income computed with the adjustments provided in section 545
(relating to the computation of undistributed personal holding company

income) (whether or not the taxpayer was a personal holding company
for either of such preceding taxable years), and there shall also be deter-
mined for each such year the deduction for dividends paid during such
year as provided in section 561 (but determined without regard to the
dividend carryover to such year).

(2) There shall be determined for each such taxable year whether there
is an excess of such taxable income over such deduction for dividends paid
or an excess of such deduction for dividends paid over such taxable income,
and the amount of each such excess

(3) If there is an excess of such deductions for dividends paid over
such taxable income for the first preceding taxable year, such excess shall
be allowed as a dividend carryover to the taxable year.

(4) If there is an excess of such deduction for dividends paid over such
taxable income for the second preceding taxable year, such excess shall be
reduced by the amount determined in paragraph (5), and the remainder
of such excess shall be allowed as a dividend carryover to the taxable year.

(5) The amount of the reduction specified in paragraph (4) shall be
the amount of the excess of the taxable income, if any, for the first pre-
ceding taxable year over such deduction for dividends paid, if any, for
the first preceding taxable year.

17. Dividends paid after close of taxable year (excluding deficiency divi-
dends as defined in section 547 (d)).—Enter on line 17 and not in Schedule
E, the amount of the dividends paid after the close of the taxable year
and before the 15th day of the third month thereafter, if the taxpayer
elects in its return for the taxable year to have such dividends considered
as paid during such taxable year. The amount allowed as a dividend
under this paragraph with respect to any taxable year shall not exceed
either the undistributed personal holding company income of the corpora-
tion for the taxable year, computed without regard to the dividends paid
pursuant to this paragraph (line 16 of page 1 of this Schedule) or 10
percent of the sum of the dividends paid during the taxable year, computed
without regard to this paragraph (i. e., 10 percent of line 1, Schedule E).

Neither line 14 nor line 17 should include “deficiency dividends.” The
term “deficiency dividends" means in general only those dividends which
are paid by a corporation pursuant to a specific procedure set forth in
section 547, which includes a requirement that there must first be a deter-
mination by a court, by closing agreement, or (under regulations) a written
agreement signed by the District Director and by or on behalf of the
taxpayer relating to the liability of the corporation for personal holding
company tax.

Schedule required under section 6501 (f).—Section 6501 (f) provides as
follows:

(f) Personal Holding Company Tax.—If a corporation which is a per-
sonal holding company for any taxable year fails to file with its return
under chapter 1 for such year a schedule setting forth—

(1) the items of gross income, described in section 543 (a), received
by the corporation during such year, and

(2) the names and addresses of the individuals who owned, within
the meaning of section 544 (relating to rules for determining stock own-

ership), at any time during the last half of such year more than 50

percent in value of the outstanding capital stock of the corporation,
the personal holding company tax for such year may be assessed, or a pro-
ceeding in court for the collection of such tax may be begun without assess-
ment, at any time within 6 years after the return for such year was filed.

te U.S. GOVERNMENT PRINTING OFFICE : 1951~O-600808


SCHEDULE PH

(Form 1120) | COMPUTATION OF U. S. PERSONAL HOLDING COMPANY TAX] 1961

U.S. Treasury Department
Internal Revenue Service

FOR CALENDAR YEAR 1961
or other taxable year beginning 1961, and ending 19
Name and address Employer Identification No.

UNDISTRIBUTED PERSONAL HOLDING COMPANY INCOME COMPUTATION

Instruction
and Line No.
1. Taxable income before net operating loss deduction and special deductions from Form 1120 (line 28) . .

Additions:
2. Contributions or gifts deducted in computing line 1 (line 19, Form 1120) ....

3. Excess of expenses and depreciation under section 545 (b) (8). (Schedule A).
4. Amount added to taxable income where lien in favor of the United States is satisfied or

released . .

5. Total of lines 2 to 4, inclusive

6. Total of lines 1 and 5
Deductions:

. Federal and foreign income, war-profits, and excess profits taxes. (Not deducted in com-

puting line 1) (Schedule B)

s

8. Contributions or gifts deductible under section 545 (b) (2).

9. Net operating loss for the preceding taxable year deductible under section 845 (b) (4)

10. Excess of net long-term capital gain over net short-term capital
loss (line 11, separate Schedule D, 1120)..............2..55-

Less: Income tax attributable to such excess. (Attach
computation if amount is different from line 19, sepa-

rate Schedule D, 1120) .............cceeeeeeeeen ee

11, Special deduction for bank affiliates allowable under section 545 (b) (6)
12, Amounts used or irrevocably set aside to pay or retire indebtedness of any kind incurred
prior to January 1, 1934. (Schedule D)

13. Amount of a lien in favor of the United States. (See instructions for limitations)
14. Deduction for dividends paid (excluding dividends paid after close of taxable year).
(Schedule E)

15. Total of lines 7 to 14, inclusive........ 6... c cece eee reece eee e eee teen eee ee eee e ee nee ees |—————____

16. Undistributed personal holding company income before the deduction shown on line 17 (line 6, minus line 15)
17. Less: Dividends paid after close of taxable year (excluding deficiency dividends as defined in section 547
(d)) but not in excess of the lesser of line 16 or 10% of line 1, Schedule E................0.000e cece

18. Undistributed personal holding company income (line 16 minus line 17) ........... 06000000 ce cece eeee cece eens

COMPUTATION OF TAX
19. Tax on portion of line 18 not in excess of $2,000, at 75%

20. Tax on portion of line 18 in excess of $2,000, at 85%. .......ceccceeeeeeeeeeeeeeeeeeeteeeeeeeeeeeesseeeees _
21. Total Personal Holding Company tax due (total of lines 19 and 20). (Enter here and on Form 1120 (line 8, Tax
Computation, page 3) or Form 1120-F (line 10, page 2, or line 6, Tax Computation, page 5), whichever is applicable) .



Page 2

SCHEDULE REQUIRED UNDER SECTION 6501 (£) (See page 6)
(a) Personal Holding Company Income

1. Dividends
2. Interest .. we bee .
3. Royalties (other than mineral, oil, or gas royalties or copyright royalties) .
4. Annuities .

8. Net gains from sale or exchange of stock or securities .

6. Net gains from futures transactions
1. Amounts received from estates and trusts and gains from the sale or other disposition of any interest in an estate

§. Amounts received as compensation for use of corporation property by shareholder. .

10. Rents
11. Mineral, oil, or gas royalties

12. Copyright royalties........
13. Total personal holding company income .

(b) Stock Ownership
Enter below the names and addresses of the individuals who owned, directly or indirectly, at any time during the last half of the taxable year,

more than 50 percent in value of the outstanding stock of the corporation:

Highest percentage of shares owned during last half of taxable year

Name Address
Preferred Common

Schedule A.—EXCESS OF EXPENSES AND DEPRECIATION OVER INCOME FROM PROPERTY NOT ALLOWABLE UNDER SECTION 545 (b) (8)
(See Instruction 3)

5. Repairs, Insurance, and Other|6. Aggregate of Expenses|7 income from Rent or|8. Excess (Column 6
xperises (section 162) ‘and Depreciation in |7-gyncome from Rent or 8. Excess (Column,
itemise below) Cee atetg” | ‘Other Compensation | minus Column 7)

2. Date

1, Kind of Property Kiqured | 3 Castor Other Basis} 4. Depreciation

(Enter here and on line 3, page 1) ..

Total excess of expenses and depreciation over rent or other compensation.

Explanation of expenses entered in column 5

Schedule B.—FEDERAL AND FOREIGN INCOME, WAR PROFITS, AND EXCESS PROFITS TAXES
(See Instruction 7)

Nature of Tax Taxable Year Amount Nature of Tax Taxable Year ‘Amount

Total. (Enter here and on line 7, page 1) ........---. see



Page 3

‘Schedule C.CONTRIBUTIONS OR GIFTS PAID. (See Instruction 8)

Name and Address of Organization Amount Name and Address of Organization Amount

Total. (Enter here and on line 8, page 1, subject to appropriate percentage limitations) ..................-+++++.-+-

Schedule D.—AMOUNT USED OR SET ASIDE TO PAY OR RETIRE INDEBTEDNESS INCURRED PRIOR TO JANUARY 1, 1934. (See Instruction 12)

1. Description of indebtedness.
2. Date incurred or assumed.
3.
4. Original amount of indebtedness.
§. Amount used or set aside prior to January 1, 1934, to pay or

retire such indebtedness. ......... 60. es ecee seen eee e cece eee

6. Excess of indebtedness on January 1, 1934, over total amount used
or set aside prior to that date to pay or retire such indebtedness.
1. Aggregate of amounts used or set aside to retire such indebtedness
in taxable years beginning on and after January 1, 1934 (not
including taxable year covered by this return)
8. Amount used or irrevocably set aside during the taxable year
covered by this return to pay or retire such indebtedness .
9. Total of lines 7 and 8 .
10. Balance of indebtedness (line 6 minus line 9) ............000005
11. Indicate separately:

(a) Amount actually used during the taxable year covered
by this return to pay or retire the indebtedness........

(b) Amount irrevocably set aside during the taxable year
covered by this return to pay or retire the indebtedness,

but not actually used during the taxable year for such

PUFPOSE eee eee ence ee eeeeeeeeeeeeeeneeea nes

12. Portions of amounts entered on line 8 above, claimed as deductions
for the taxable year covered by this return, (Enter portions of
amounts here and total of such portions on line 12, page 1) ...

Indicate by check mark whether the deduction claimed on line 12, page 1 of this return, represents:
A (J Amount actually used during the taxable year to pay or retire the indebtedness;
B (] Amount irrevocably set aside during the taxable year to pay or retire the indebtedness; or
C (1 Combination of both A and B.

There must be furnished all of the facts and circumstances upon which the taxpayer relies to establish the reasonableness of the amount
claimed as a deduction, Describe fully in an attached statement the plan for payment or retirement of the obligations, indicating date and method
of adoption, and, where the plan is covered by a mandatory sinking fund agreement or similar arrangement, submit a copy of the indenture
or agreement by which the fund was established and under which it is maintained.

If the amount claimed as a deduction on line 12, page 1 of this return, represents an amount irrevocably set aside to pay or retire the indebted-
ness, explain fully in an attached statement the circumstances and method by which it was irrevocably set aside.

Schedule E.—DEDUCTION FOR DIVIDENDS PAID. (See Instruction 14)

1. Taxable dividends paid, excluding (a) dividends considered as paid in the preceding taxable year under section
563, and (b) deficiency dividends as defined in section 547..... 0.0.6... cece eee cece cence eee eee e tenes -
2. Consent dividends. (Submit schedule). .
3. Taxable distributions (total of lines 1 and 2) . .
4. Dividend carryover from first and second preceding taxable years. (Submit schedule of computation)
5. Deduction for dividends paid (total of lines 3 and 4). (Enter here and on line 14, pagel).......................-
(See page 4 for General Instructions)