Source: http://www.scribd.com/doc/24622981/PL-76-801-Second-Revenue-Act-of-1940
Timestamp: 2013-12-13 09:26:56
Document Index: 219634883

Matched Legal Cases: ['§13', '§14', '§14', '§14', '§362', '§13', '§102', '§2']

PL 76-801 Second Revenue Act of 1940
P. 1PL 76-801 Second Revenue Act of 1940PL 76-801 Second Revenue Act of 1940Views: 581|Likes: 0Published by Tax HistoryFull text of the Second Revenue Act of 1940 (PL 76-801).Full text of the Second Revenue Act of 1940 (PL 76-801).More info: categoriesBusiness/LawPublished by: Tax History on Dec 30, 2009Copyright:Attribution Non-commercialAvailability:Read on Scribd mobile: iPhone, iPad and Android.Free download as PDF, TXT or read online for free from ScribdFlag for inappropriate content|Add to collectionSee MoreSee lesshttp://www.scribd.com/doc/24622981/PL-76-801-Second-Revenue-Act-of-194009/28/2013pdftextoriginal 974:
PUBLICL A W S -C H .7 5 7 - O C T .8 ,1940
[54S T A T .
[CHAPTER7 5 7 ]
October8,1940
'[H.R .1 0 4 1 3 ]
Top r o v i d er e v e n u e ,a n df o ro t h e rp u r p o s e s .
-'[Public,N o '.8 0 1 1
Beite n a c te db yt h eS e n a t ea n d H o u s eo f Representativeso ft h e
UnitedS t a t e sofA m e r i c ainC o n g r e s sa s s e m b l e d ,T h a tt h i sA c tm a y
bec i t e dast h e" S e c o n dR ev en u eA c to f1 9 4 0 " .
TITLEI-C O R P O R A T IO NIN C O M ET A X
SEC.101.C O R P O R A T IO NIN C O M ET A X .
,Oorporationsing e n -
(a)T A XO NC oR PoR A T Im O sING E N E R A L .- S e c tio n1 3(L -)o ft h e
53S t a t .7 ,8 6 3 .
InternalR e v e n u eC o d e,as a m e n d e db ys e c tio n3ofth eR e v e n u eA c t
26U .S.C . ,S u p p .
V,§13( b ) .
of1 9 4 0 , isa m e n d e dt or e a dasfo llo w s:
Ante,p.517.
"(b)IM PO SIT IO NO FT A x .- T h e r es h a llb ele v ie d ,collected, and
paidf o re a c h taxable year upon then o r m a l- ta x netin co m eo fe v e ry
corporation the normal-tax netin c o m eo f which ism o ret h a n$ 2 5 ,0 0 0
53Stat.8 ,7 ,7 1 ,9 8 .
(exceptacorporations u b je c tt o the taxim p o se db ys e c tio n1 4 ,s e c -
26U .S .C .,S u p p .
V,§§14,2 3 1(a), 2 0 1 -
tion2 3 1(a ),S u p p le m e n tG ,o r S u p p le m e n tQ )w h ic h e v e r o ft h e
208,3 6 1 - 3 6 2 .
followingta x e sist h e le s s e r:
"(1)G E N E R aL1 u L E .- At a xo f2 2 -p e rc e n tu m o ft h en o r m a l-
taxn e tin c o m e ;o r
"1(2)A L T E R N A T IV ET A X(C O R P O R A T IO N SW IT HN O R M A L -T A XN E T
INCOME SLIGHTLYM O R ET H A N$ 2 5 ,O 0 O ).-At a xo f$ 3 ,7 7 5 ,p lu s
35p e r centum oft h ea m o u n to f the normal-tax n e tincom ein
excesso f$ 2 5 , 0 0 0 . "
Foreignc o r p o r a -
(b)T A XONF O R E I G NC O R P O R A T i o N s . - S e c t i o n14(c)(1) of the
53Stat.8,8 6 4 .
InternalR e v e n u e Code, asa m e n d e db ys e c tio n3oft h eR e v e n u eA ct
V,§14( e ) , §14(note.of1 9 4 0 ,i samendedt or e a da s
Ante,p .5 1 8 .
FOREIGNC O R P O R A T IO N S .-
"(1)Inth e case of a foreign corporatione n g a g e di nt r a d eo r
businessw i t h i n the UnitedS ta te so r h a v in ga no f f i c e or placeo f
businesst h e r e i n ,t h et a xs h a llb e ana m o u n t equalto2 2
centumo ft h en o r m a l- ta xn e tincom e,re g a rd le s so fth ea m o u n t
Mutualin v e s tm e n t
TAxo NM U T U A LIN V E S T M E N TC o M P n N i E s . - S e c t i o n3 6 2(b)of
53s t a t .9 9 , s 6 6 .
theI n t e r n a lR ev en u eCode,a sa m e n d e db ys e c tio n3oft h e R e v e n u e
V,§362(b).
Acto f1 9 4 0 ,isa m e n d e dt or e a d a sf o llo w s :
Ante,p.518.
"(b)IM P O S IT IO NO FT A x .- T h e r es h a llb ele v ie d ,c o lle c te d ,a n dp a id
foreachta x a b le year upont h eS u p p le m e n tQ n e tin co m eo fevery
mutualin v e s tm e n tc o m p a n yataxe q u a lt o22-'lp e r
centumo ft h e
amountt h e r e o f . "
Defenset a x .
(d)D E F E N S ET A XF O RF I V EY E A ts .- T h ef i r s tsen ten ceo fsection
53Stat.9 .
28U .s.C.,s u p p .
15o ft h eI n t e r n a lR ev en u eC o d e ,a d d e dtosu c hCode b ys e c tio n2 0 1o f
V,615.
A1e,p.520.
theR e v e n u eA c to f1 9 4 0 ,isa m e n d e dt or e a da sf o l l o w s " :
Inth ec a s e
ofa n yt a x p a y e r ,t h e amount of t a xu n d e r this chapterf o ra n yt a x -
abley e a rb e g in n in ga f t e rD ecem ber3 1 ,1 9 3 9 ,a n db e f o r eJ a n u a r y1,
1945,s h a llbeth et a xc o m p u te dw ith o u tr e g a r dt oth issection,
increasedb y1 0p e rc e n tu m ; e x c e p tt h a ti nt h ec a s eo facorporation
thein c re a ses h a llb elim ite dt o1 0p e rc e n tu mo ft h e
taxc o m p u te d
withoutr e g a r dto thea m e n d m e n tsm ad eb yse c tio n1 0 1(a ),( b ) ,
and( c )o f theSecondR evenueA c to f1 9 4 0 ."
Taxabley e a r st o
(e)T A X A B L EY EA R ST OW IC HA F P L IO A B L .-A m e n d m e n tsm ad eb y
whicha p p l i c a b l e ,
thissections h a llb ea p p lic a b leo n lyw ithre sp e c ttota x a b ley e a rs
beginninga f t e rD e c e m b e r3 1 ,1 9 3 9 .
54S T A T .]
76THCO N G .,3 DS E S S .- C H .7 5 7 - O C T .8 ,1940
TITLEII-E X C E S SP R O F I T ST A X
SEC.201.E X C E S SP R O F IT ST A XO F1940.
TheI n t e r n a lR evenueC o d eisa m e n d e db yi n s e r t i n ga f t e rse c tio n
ExcessP r o f t sTax
706t h ef o llo w in gnews u b c h a p te rw h ic hm a yb e c ite da st h e" E x c e ss
63S ta t.1 1 7 .
ProfitsT a xA c to f1940":
26u .S.c.,Supp.V .
"SUBCHAPTERE -E X C E S SP R O F IT ST A X
"SEC.7 1 0 .I M P O S I T I O NO FT A X .
"(a)Im P o s rrio N .-T h e res h a llb e levied, collected,a n dp a id ,fo r
eacht a x a b l ey e a rb e g in n in ga f t e rD ecem b er 31, 1939,o nt h ea d j u s t e d
excessp r o f itsn e tincom e,a sdefinedi ns u b s e c tio n(b ),o fe v e ry
poration(ex cep tacorporatione x e m p tu n d e rse c tio n7 2 7 )ataxa s
"(1)U p o na d ju s te de x c e s sp r o f itsn e tincom eso fl e s sth a n
$20,000,2 5p e rc e n tu mo f the adjustede x c e s sp r o f itsn e tin co m e.
"$5,000u p o na d j u s t e de x c e s sp r o f i t sn e tin co m eso f$ 2 0 ,0 0 0 ;a n d
upona d j u s t e de x c e s sp r o f i t sn e tincomesine x c e s so f$ 2 0 ,0 0 0 ,a n d
notine x c e s sof$ 5 0 ,0 0 0 ,3 0p e rc e n tu mi na d d i t i o no f
suche x c e s s .
"$14,000u p o na d ju s te dexcessp r o f itsn e tincom eso f$ 5 0 ,0 0 0 ;
andu p o na d j u s t e de x c e s s profits netincom es ine x c e s so f$ 5 0 ,0 0 0 ,
andn o ti nexcesso f$ 1 0 0 ,0 0 0 ,3 5p e rc e n tu mi na d d i t i o n
ofs u c h
"$31,500u p o na d j u s t e de x c e s sp r o f itsn e tincom eso f$ 1 0 0 ,0 0 0 ;
andu p o na d j u s t e de x c e s sp r o f i t sn e tin co m esi ne x c e s so f$ 1 0 0 ,0 0 0 ,
andn o ti ne x c e s so f$ 2 5 0 ,0 0 0 ,4 0p e rc e n tu mi na d d i t i o n
"$91,500u p o na d j u s t e de x c e s sp r o f i t sn e tincom eso f$ 2 5 0 ,0 0 0 ;
andu p o na d j u s t e de x c e s sp r o f i t sn e tincom esi ne x c e s so f$ 2 5 0 ,0 0 0 ,
andn o ti ne x c e s so f$ 5 0 0 ,0 0 0 ,4 5p e rc e n tu mi na d d i t i o n
',$204,000u p o na d j u s t e de x c e s sp r o f i t sn e tincom eso f$ 5 0 0 ,0 0 0 ;
andu p o na d j u s t e dexcessp r o f i t sn e tin co m esi ne x c e s so f$ 5 0 0 ,0 0 0 ,
50p e rc e n tu mi na d d i t i o nof suche x c e s s .
APPLICATIONO FR A T E SINC A S EO F C E R T A T NE X C H A N G E S .-
Ifth et a x p a y e r 'sh ig h e s tb r a c k e ta m o u n tf o r the taxableyear
computedu n d e rsection7 5 2( r e l a t i n gtoc e r ta inex ch an g es)is
lesst h a n$ 5 0 0 ,0 0 0 ,th e ninth e a p p lic a tio nofp a r a g r a p h(1)o f
thiss u b s e c tio nt os u c ht a x p a y e r ,i nlie uo feacha m o u n t,o th e r
thant h ep e r c e n ta g e s ,specifiedi nsuchp a r a g r a p h ,t h e r es h a llb e
substituteda na m o u n tw h ic hb e a r st h esa m er a t i otot h ea m o u n t
sospecifieda st h eh ig h e s tb r a c k e ta m o u n ts oc o m p u te db e a r st o
"(b)D E F IN IT IO NO FA D JU S T E DE x c E s sP R O F IT SN E TIN C O M E .-A S
usedi nt h i ssection,t h e term 'adjustede x c e s sp r o f i t sn e tincome'i n
thec a s eo fa n yt a x a b l ey e a rm e a n sth ee x c e s sp r o f i t sn e t
income( a s
definedi ns e c tio n7 1 1 )m in u st h es u mo f :
"(1)S P E C IF ICE X E M P T IO N .-As p e c i f i ce x e m p t i o no f$ 5 ,0 0 0 :
"(2)E X C E S SP R O F IT SC R E D I T .- T h ea m o u n to ft h ee x c e s sp r o f i t s
credita llo w e du n d e rs e c tio n712;a n d
"1(3)
UNUSEDE X C E S SP R O F I T SC - R E D I T .- I nt h ec a s eo fataxpayer
then o r m a l - t a xn e tincomeo fw h ic hf o rt h eta x a b ley e a ris
Adjustede x c e s sp r o f -
itsn e ti n c o m e .
Post,p .9 8 8 .
Applicationo fr a t e s
in case ofc e r t a i ne x -
Post,p .9 9 5 .
profitsn e tin c o m e "
Post,p .9 7 6 .
Post,p .97D.
PUBLICL A W S -C I .7 5 7 -O C T .8 ,1 9 4 0
Taxabley e a rsafter
Dec.3 1 ,1 9 3 9 .
53S t a t .7 .
26U .S.C .,S a p p .
V,§13( n o te ) .
Post,p .9 8 0 .
Incometaxes.
53S ta t.3 5 .
26U .S.C ., Supp.
V,§102.
Long-termg a i n sa n d
53S t a t .1 4 .
v,§2 3 ().
Incomefromr e tir e .
ment or dischargeo f
bonds,etc.
Refundsa n din te r -
esto nA g ricu ltu ral
AdjustmentA c ttaxes.
48S t a t .3 1 .
7U.S .C .,c h .2 6 ;
Supp.V ,o h .2 6 .
Recoverieso fbad
Dividendsreceived.
Post,p.9 8 1 .
Post,p .9 8 4 .
moret h a n$ 2 5 ,0 0 0 ,t h ea m o u n tb yw h ic h t h eexcessp r o f i t s credit
fort h e preceding taxabley e a r(if b e g in n in ga f t e rD e c e m b e r3 1 ,
1939)exceedsth ee x c e s s p r o f itsn e tin c o m ef o rs u c hp r e c e d in g
taxabley e a r .
"SEC.7 1 1 .E X C E S SP R O F I T SN E T INCOME.
"(a)TA X A BLEYEARSB E G IN N IN GA F T I RD E c F O B E R3 1 ,1 9 3 9 .- T h e
excessp r o f i t sn e tin c o m ef o ra n yt a x a b l ey e a rb e g i n n i n ga f t e rD ecem -
ber3 1 ,1 9 3 9 ,s h a l lbet h en o r m a l - t a xn e tin c o m e ,a sd e fin e d
ins e c tio n
13(a )( 2 ) ,f o rs u c hy e a re x c e p tt h a tt h ef o l l o w i n ga d ju s tm e n ts
bem a d e :
"(1)ExcEssP R O F I T sC R E D ITC O M P U T E DU N D E RIN C O M EC R E D I .-
Ifth eexcessp r o f itsc r e d i ti sc o m p u te du n d e rs e c tio n7 1 3 ,t h e
adjustmentss h a llb ea sfo llo w s :
"(A)In c o m eT a x e s .- T h ed e d u c tio nf o rta x e ss h a llb e
increasedb ya na m o u n te q u a l to the tax (noti n c l u d i n gt h e
taxu n d e rs e c tio n1 0 2 )u n d e rC h a p te r1forsu c ht a x a b l e
"(B)L o n g -te rmG ain sa n dL o s s e s .- T h e r es h a llb e
excludedlo n g - te r mc a p i t a lgains andlo sses.T h e res h a l lb e
excludedt h eexcesso fg a in sf r o mt h esaleo re x c h a n g eo f
propertyh e ldf o rm o ret h a ne ig h te e nm o n th sw h ic hiso fa
characterw h ic h is subjectt ot h ea llo w a n c ef o rd e p r e c ia tio n
providedi ns e c tio n2 3(1)o v e rt h elossesf r o mt h es a le
exchangeo fs u c hp r o p e r t y ;
"(C)In co m eF r o mR e tir e m e n to rD is c h a r g eo fB o n d s ,
andS oF o r t h - T h e r es h a llbee x c lu d e d ,i nt h ecaseo fa n y
taxpayer,incom ed e r iv e df r o m the retiremento rd is c h a r g e
byt h et a x p a y e ro fa n yb o n d ,d e b e n tu r e ,n o te ,o rc e r t i f i c a t e
oro th e re v id e n c eo fin d e b te d n e s s ,i ft h e obligation oft h e
taxpayerh a sbeeno u ts ta n d in gf o rm o ret h a ne ig h te e n
months,i n c l u d i n g ,i ncaset h eis s u a n c ew a sa tap re m iu m ,
theamount includiblei nin c o m ef o rs u c hy e a rs o le lyb e c a u s e
ofs u c hr e t i r e m e n to rd i s c h a r g e ;
"(D)R e fu n d sa n dI n t e r e s to nA g r i c u l t u r a lA d ju s tm e n t
ActT a x e s .- T h e r es h a llb ee x c lu d e dincom ea t t r i b u t a b l et o
refundo ft a x paid under the AgriculturalA d ju s tm e n tA ct
of1 9 3 3 ,a sa m e n d e d ,a n di n t e r e s tu p o na n ysuchr e f u n d ;
"(E)R ecoverieso fB a dD e b t s .- T h e r es h a ll be excluded
incomea t t r i b u t a b l et ot h ere c o v e ryo fabadd e b ti fa
tion withr e f e r e n c et osu chd e b twasa llo w a b lef r o mg ro s s
incomef o ra n y taxable yearb e g in n in gp r i o rtoJ a n u a r y1,
"(F)D iv id e n d sR e c e iv e d .-T h ec re d itf o rd iv id e n d s
receiveds h a lla p p ly ,w ith o u tl i m i t a t i o n ,t od iv id e n d so n
stocko fd o m e sticc o r p o r a tio n s .
EXCESSP R O F IT SC R E D ITC O M P U T E DU N D E RIN V E S T E DC A P IT A L
CREDIT.-Ifth ee x c e s sp r o f itsc r e d itisc o m p u te du n d e rsection
714,t h ea d j u s t m e n t ss h a llb ea sfo llo w s :
"(A)D iv id e n d sR e c e iv e d .- T h ec re d itf o rd iv id e n d s
receiveds h a lla p p ly , without limitation, to alld iv id e n d so n
stocko fa llc o r p o r a tio n s ,e x c e p td iv id e n d s( a c tu a lo rc o n -
structive)ons to c ko f foreign personal-holdingco m p an ies;
"(B)I n t e r e s t .- T h ed e d u c tio nf o ri n t e r e s ts h a l lb er e d u c e d
bya na m o u n te q u a lto5 0p e rc e n tu mo fs om u c h
interesta sr e p r e s e n tsi n t e r e s tont h ein d e b te d n e s sin c lu d e d
int h ed a i l ya m o u n tso fb o r r o w e dc a p i t a l( d e te r m in e du n d e r
section7 1 9 "( a ) ) ;