An Act to provide revenue, and for other purposes
PL 82-183 (H.R.4473), enacted 10/20/1951

4 5 2 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
Public Law 183 
CHAPTER 521 
AN ACT 
October 20,1951 
[H. R. 4
4
7
3
] 
To provide revenue, and for other purposes. 
Be it eTiacted hy the Senate and House of Representatives of the 
^^Revenue Act o
f jj^fg^ States of AmeHca in Congress assem^led^ That (a) SHORT 
TITLE.—This Act, divided into titles and sections according to the 
following table of contents, may be cited as the "Revenue Act of 1951": 
TABLE OF CONTENTS 
TITLE I—INCREASE IN INCOME TAX RATES 
Poa, p. 459. 
PABT I—^INDIVIDUAL INCOME TAXES 
Sec. 
101. 
Increase 
in 
surtax 
for 
1951,1952, 
and 
1953. 
(a) Rates of surtax. 
(b) Limitation on tax. 
Sec. 102. Individuals with adjusted gross income of less than $5,000. 
Sec. 103. Inapplicability of certain penalties and additions to tax. 
(a) Penalties for failure to file return. 
(b) Additions to tax. 
Sec. 104. Computation of tax in case of certain joint returns. 
Sec. 105. Effective date of Part I. 
Post, p. 465. 
PABT n—CORPORATION INCOME TAXES 
Sec. 121. Increase in rate of corporation normal tax. 
(a) Amendment of section 13. 
(b) Maximum tax. 
(c) Mutual insurance companies other than life or marine. 
(d) Regulated investment companies. 
(e) Business income of certain section 101 organizations. 
(f) Amendment of section 15. 
(g) Technical amendment. 
Sec. 122. Credits of corporations. 
(a) Dividends received credit. 
(b) Credit for dividends paid on certain preferred stock. 
(c) Western hemisphere trade corporations. 
Sec. 123. Computation of alternative capital gains tax. 
Sec. 124. Filing of corporation returns for taxable years ending after March 13, 
1951, and before October 1,1951. 
Sec. 125. Effective date. 
Post, p. 471. 
PART III—FISCAL TEAR TAXPAYERS 
Sec. 131. Fiscal year taxpayers. 
(a) Amendment of section 108. 
(b) Computation of excess profits tax. 
(c) Technical amendments. 
Post, p. 474. 
TITLE II—WITHHOLDING OF TAX AT SOURCE 
Sec. 201. Percentage method of withholding. 
Sec. 202. Wage bracket withholding. 
Sec. 203. Additional withholding of tax on wages upon agreement by employer 
and employee. 
Sec. 204. Effective date. 
Post, p. 480. 
TITLE III—MISCELLANEOUS INCOME TAX AMENDMENTS 
Sec. 301. Tax treatment in case of head of household. 
(a) Surtax in case of head of household. 
(b) Computation of tax by collector. 
(c) Effective date. 
Sec. 302. Payments to beneficiaries of deceased employees. 
(a) Amendment of section 22 (b) (1). 
(b) Effective date. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
4 5 3 
TABLE OF CONTENTS—Continued 
TITLE III—iliscELLANEOus INC»ME TAX AMENDMENTS—Continued 
Post, p. 483. 
Sec. 303. Joint and survivor annuities. 
(a) Amendment of section 22 (b) (2). 
(b) Amendment of section 113 (a) (5). 
(c) Effective dates. 
Sec. 304. Income from discharge of indebtedness. 
(a) Amendment of section 22 (b) (9). 
;b) Amendment of section 22 (b) (10). 
Sec. 305. Compensation of certain members of the armed forces. 
[a) Amendment of section 22 (b) (13). 
(b) Definition of service in combat zone. 
fc) Withholding on wages. 
(d) Effective dates. 
Sec. 306. Involuntary liquidation and replacement of inventory. 
[a) Amendment of section 22 (d) (6) (F) (iii). 
(b) Effective date. 
Sec. 307. Medical expenses. 
[a) Amendment of section 23 (x). 
(b) Effective date. 
Sec. 308. Standard deduction. 
(a) Method of election. 
(b) Change of election. 
(c) Effective date. 
Sec. 309. Expenditures in the development of mines. 
[a) Deduction of expenditures. 
;b) Adjusted basis for determining gain or loss upon sale or exchange. 
(c) Technical amendment. 
[d) Effective date. 
Sec. 310. Gross income of dependent of taxpayer. 
[ a) Increase in amount of gross income permitted. 
(b) Effective date. 
Sec. 311. Credit for dividends received. 
(a) Dividends from foreign corporation engaged in trade or business in the 
United States. 
(b) Technical amendment. 
(c) Effective date. 
Sec. 312. Joint return after filing separate return. 
L) Change of election, 
(b) Effective date. 
Sec. 313. Mutual savings banks, building and loan associations, cooperative banks. 
(a) Mutual savings banks. 
(b) Building and loan associations and cooperative banks. 
(c) Exemptions from excess profits tax. 
(d) Federal savings and loan associations. 
(e) Bad debt reserves. 
(f) Dividends paid to depositors. 
(g) Deduction for repayment of certain loans. 
(h) Definition of bank. 
[i) Definition of domestic building and loan association. 
(j) Effective date. 
Sec. 314. Income tax treatment of exempt cooperatives. 
(a) Amendment of section 101 (12). 
(b) Technical amendments. 
(c) Information returns. 
(d) Effective date. 
Sec. 315. Surtax on corporations improperly accumulating surplus. 
(a) Long-term capital gains. 
[b) Effective date. 
Sec. 316. Election as to recognition of gain in certain corporate liquidations. 
(a) Amendment of section 112 (b) (7). 
(b) Basis of property. 
(c) Effective date. 
Sec. 317. Certain distributions of stock on reorganization. 
(a) Distributions not in liquidation. 
(b) Basis of stock. 
(c) Effective date. 
Sec. 318. Gain from sale or exchange of taxpayer's residence. 
(a) Nonrecognition of gain in certain cases. 
(b) Technical amendments. 
(c) Effective date. 
4 5 4 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
TABLE OF CONTENTS—Ck)ntlnned 
Post, p. 497. 
TITLE III—MISCEX^LANEOUS INCOME TAX AMENDMENTS—Ck>ntintied 
See. 319. Percentage depletion, 
(a) Allowance of percentage depletion. 
(b) Technical amendment 
(c) Effective date. 
Sec. 320. Redemption of stock to pay death taxes. 
(a) Amendment of section 115 (g) (3). 
(b) Effective date. 
Sec. 321. Earned income from sources without the United States. 
(a) Exclusion from gross income. 
(b) Withholding of tax on wages. 
(c) Effective dates. 
Sec. 322. Capital gains and losses. 
(a) Treatment of long-term capital gains and losses. 
(b) Alternative tax. 
(c) Technical amendments. 
(d) Effective date. 
Sec. 323. Sale of land with unharvested crop. 
(a) Treatment of gain or loss. 
(b) Treatment of deductions. 
(c) Effective date. 
Sec. 324. Sales of livestock. 
Sec. 325. Tax treatment of coal royalties. 
(a) Definition of property used in the trade or business. 
(b) Gain or loss upon certain disposals of timber or coal. 
(c) Clerical amendment. 
(d) Technical amendment. 
(e) Conforming amendments. 
(f) Effective date. 
Sec. 326. Collapsible corporations. 
(a) Definitions with respect to collapsible corporations. 
(b) Limitations on application of section 117 (m). 
(c) Effective date. 
Sec. 327. Dealers in securities—capital gains and ordinary losses. 
Sec. 328. Treatment of gain on sales of certain property between spouses and 
between an individual and a controlled corporation. 
(a) Disallowance of capital gain treatment. 
(b) Effective date. 
Sec. 329. Receipts of certain termination payments by employee. 
(a) Taxability to employee as capital gain. 
(b) Effective date. 
Sec. 330. Net operating loss carry-over. 
(a) Loss for taxable year beginning before 1948. 
(b) Allowance of three-year loss carry-over from taxable years 1948-1949. 
(c) Effective date. 
Sec. 331. Stock options. 
(a) Option subject to stockholder approval. 
(b) Effective date. 
Sec. 332. Credit for taxes of foreign corjwrations. 
(a) Foreign subsidiary of a domestic corporation. 
(b) Foreign subsidiary of a foreign corporation. 
(c) Clerical amendment. 
Sec. 333. Information at source on imyments of interest. 
Sec. 334. Abatement of income tax for certain members of armed forces upon 
death. 
Sec. 335. Employees' trusts. 
(a) Amendment of section 165 (b). 
(b) Effective date. 
Sec. 336. Life insurance companies. 
(a) Tax for 1951. 
(b) Adjusted normal-tax net income for 1951. 
(e) Technical amendments. 
(d) Effective date. 
Sec. 337. Tax treatment of certain investment companies. 
(a) Inclusion of certain registered management companies in the defini-
tion of regulated investment company. 
(b) Technical amendment. 
(c) Effective date. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
4 5 5 
TABLE OF CONTENTS—Continued 
TITLE III—MISCELLANEOUS INCOME TAX AMENDMENTS—Continued 
Post, p. 5io. 
Sec, 338. Exchanges and distributions in obedience to orders of Securities and 
Exchange Conunission. 
(a) Definition of system group. 
(b) Effective date. 
Sec. 339. Taxation of business income of State colleges and universities. 
(a) Amendment of section 421 (b). 
(b) Unrelated trade or business. 
(c) Effective date. 
Sec. 340. Family partnerships. 
(a) Definition of partner. 
(b) Allocation of partnership income. 
(c) Effective date. 
Sec. 341. War losses. 
(a) Tax upon war loss recovery. 
(b) Basis of recovered property. 
(c) Credit for foreign taxes. 
(d) Effective dates. 
Sec. 342. Deduction of expenditures for mine exploration. 
(a) Deduction of mine exploration exi)enditures. 
(b) Adjusted basis for determining gain or loss upon sale or exchange. 
(c) Effective date. 
Sec. 343. Definition of employee. 
(a) Amendment of section 3797 (a). 
(b) Effective date. 
Sec. 344. Nonbusiness casualty losses. 
(a) Removal of limitation. 
(b) Effective date. 
Sec. 345. Abatement of tax on certain trusts for members of armed forces dying 
in service. 
Sec. 346. Life insurance departments of mutual savings banks. 
(a) Computation of tax. 
(b) Technical amendment. 
(c) Effective date. 
Sec. 347. Publishing business carried on by tax-exempt organization. 
(a) Treatment as related trade or business. 
(b) Effective date. 
Sec. 348. Deduction with respect to certain unrelated business net income. 
(a) Unrelated business net income. 
(b) Effective date. 
Sec. 349. Nondistributable income of personal holding companies. 
TITLE IV—EXCISE TAXES 
PAET I—TAX ON ADMISSIONS AND CABARETS 
Post, p. 519. 
Sec. 401. Removal of tax on free admissions. 
Sec. 402. Exemptions from admissions tax. 
(a) Reinstatement of prewar exemptions. 
(b) Amendment of section 1701 (a) and (b). 
(c) Admissions to municipal swimming pools, etc. 
Sec. 403. Effective date of amendments relating to admissions. 
Sec. 404. Tax on cabarets, roof gardens, etc, 
(a) Ballrooms and dance halls. 
(b) Effective date, 
PART II—^TAX ON CIGARETTES 
Post, p. 521. 
Sec. 421. Tax on cigarettes. 
(a) Increase in rate. 
(b) Effective date. 
Sec. 422. Floor stocks tax and floor stocks refund on cigarettes. 
Sec. 423. Reduction of tax on tobacco and snuff. 
(a) Reduction in rate. 
(b) Effective date. 
4 5 6 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
TABLE OF CONTENTS—Continued 
TITLE IV—EXCISE TAXES—Continued 
Post, p. 523. 
PABT m—^BETAli:.EaiS' EXCISE TAXBS 
Sec. 431. Retailers' excise tax on toilet preparations. 
(a) Baby oils, etc. 
(b) Sales to barber shops, etc. 
Sec. 432. Effective date of Part III. 
Post, p. 623. 
PART IV—^DIESH^L FUEL 
Sec. 441. Diesel fuel used in highway vehicles. 
(a) Imposition of tax. 
(b) Effective date. 
Post, p. 624. 
PAKT V—LIQtrOB 
Sec. 451. Increase in tax on distilled spirits from $9 to $10.50 per gallon. 
(a) Distilled spirits generally. 
(b) Imported perfumes containing distilled spirits. 
(c) Floor stocks tax. 
Sec. 452. Wines. 
(a) Increase in rate of tax. 
(b) Floor stocks. 
Sec. 453. Fermented malt liquor. 
(a) Increase in tax on fermented malt liquors from $8 to $9 per barrel. 
(b) Floor stocks tax. 
Sec. 454. Floor stocks refunds. 
(a) Amendment of section 1656 (a). 
(b) Amendment of section 1656 (b). 
Sec. 455. Clerical amendment. 
Sec. 456. Effective date of Part V. 
Post, p. 528. 
PABT VI—OCCUPATIONAL TAXES 
Sec. 461. Dealers in liquors. 
(a) Wholesale dealers in liquors. 
(b) Retail dealers in liquors. 
(c) Wholesale dealers in malt liquors. 
Sec. 462. Drawback in the case of distilled spirits used in the manufacture of 
certain nonbeverage products. 
(a) Drawback. 
(b) Effective date. 
Sec. 463. Tax on coin-operated gaming devices. 
Sec. 464, Effective date of Part VI. 
Post, p. 529. 
PABT VH—WAGEBINO 
Sec. 471. Wagering taxes. 
(a) Imposition of taxes. 
(b) Technical amendment. 
Sec. 472. Effective date of Part VII. 
Post, p. 532. 
PART Vin—MANUEACTUBEES' EKOISB TAXBS 
Sec. 481. Automobiles, trucks, and parts or accessories. 
(a) Increase in tax on trucks. 
(b) Increase in tax on passenger automobiles and motorcycles. 
(c) Increase in tax on parts or accessories. 
(d) Rebuilt parts or accessories. 
(e) Technical amendment. 
(f) Parts or accessories for farm equipment. 
(g) Effective date of subsection (f). 
(h) Removal of tax on tires for toys, etc. 
Sec. 482. Navigation receivers sold to the United States. 
(a) Exemption on sales to United States of certain radio sets. 
(b) Tax-free sales of radio parts. 
(c) Refund in case of use of parts. 
(d) Refund in case of resale to United States. 
(e) Use by manufacturer of tazable parts. 
(f) Effective dates. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
4 5 7 
TABLE OF CONTENTS—Continued 
TITLE IV—EXCISE TAXES—Continued 
PAET vm—MANUTACTUBERS' EXCISE TAXES—Continued 
Post, p. 534. 
Sec. 483. Tax-free sales of refrigerator components to wholesalers for resale 
to manufacturers. 
Sec. 484. Sporting goods. 
Sec. 485. Electric, gas, and oil appliances. 
Sec. 486. Adjustments of tax rates on photographic apparatus and film; repeal 
of tax on certain items. 
(a) Items subject to tax. 
(b) Floor stocks refund on bulbs. 
Sec. 487. Imposition of tax on mechanical pencils, fountain and ball point pens, 
and mechanical lighters for cigarettes, cigars, and pipes. 
Sec. 488. Repeal of tax on electrical energy. 
(a) Repeal of tax. 
(b) Effective date. 
Sec. 489. Tax on gasoline. 
(a) Increase in rate. 
(b) Floor stocks tax and refund. 
Sec. 490. Effective date of Part VIII. 
PART IX 
MISCELLANEOUS EXCISE TAX AMENDMENTS 
Post, p . 538. 
Sec. 491. Reduction of tax on telegraph dispatches. 
(a) Reduction of tax. 
(b) Effective date. 
(c) Amounts paid pursuant to bills rendered. 
(d) Rate reduction date. 
Sec. 492. Exemption of certain overseas telephone calls from the tax on telephone 
facilities. 
(a) Telephone calls from members of armed forces in combat zojies. 
(b) Effective date. 
Sec. 493. Exemption of fishing trips from tax on transportation. 
(a) Exemption. 
(b) Effective date. 
Sec. 494. Tax on transportation of persons. 
(a) Exemption of certain foreign travel. 
(b) Effective date. 
Sec. 495. Transportation of material excavated in the course of construction 
work. 
(a) Amendment of section 3475. 
(b) Effective date. 
Sec. 496. Articles from foreign trade zones. 
(a) Imported articles. 
(b) Previously tax-paid articles. 
Sec. 497. Refunds on articles from foreign trade zones. 
(a) Imported articles. 
(b) Previously tax-paid articles. 
Sec. 498. Tax refunds on spirits lost in floods of 1951. 
(a) Authorization. 
(b) Destruction of spirits. 
(c) Credit. 
(d) Regulations. 
TITLE V—EXCESS PROFITS TAX 
Post, p. 54i. 
Sec. 501. Maximum tax for new corporations. 
Sec, 502. Payments from foreign sources for technical assistance, etc. 
(a) Amendment of section 433 (a) (1). 
(b) Amendment of section 433 (b). 
Sec. 503. Average base period net income in case of certain fiscal year taxpayers. 
Sec. 504. Average base period net income—alternative based on growth in case 
of new corporations. 
(a) General rule. 
(b) Amendment of Part II. 
Sec. 505. Average base period net income—alternative based on growth. 
Sec. 506. Adjustments for changes in inadmissible assets in case of banks. 
(a) Amendment of section 435 (g). 
(b) Amendment of section 438. 
(c) Amendment of section 435 (f). 
(d) Effective date of subsection (c) (3). 
4 5 8 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
TABLE OF CONTENTS—Ck)ntinuecl 
Post, p. 547. 
TITLE V—^EXCESS PEOFITS TAX—Continued 
Sec. 507. Decrease in inadmissible assets. 
See. 508. Election with respect to certain inadmissible assets. 
(a) Amendment of section 440. 
(b) Amendment of section 433 (a) (1). 
(c) Amendment of section 433 (b). 
Sec. 509. Alternative average base period net income. 
(a) Amendment of section 442. 
(b) Technical amendments. 
Sec. 510. Definition of total assets for purposes of sections 442-446. 
Sec. 511. Average base period net income—change in products or services. 
Sec. 512. Average base period net income—new corporation. 
Sec. 513. Excess profits credit—regulated public utilities. 
Sec. 514. Consolidated returns of regulated public utilities. 
Sec. 515. Nontaxable income from certain mining properties. 
Sec. 516. Transition from war production and increase in peacetime capacity. 
(a) In general. 
(b) Technical amendments. 
Sec. 517. Base period catastrophe. 
Sec. 518. Consolidation of newspapers. 
Sec. 519. Television broadcasting companies. 
Sec. 520. Increase in capacity for production or operation. 
Sec. 521. Excess profits credit based on income in connection with certain tax-
able acquisitions. 
(a) General rule. 
(b) Technical amendments. 
Sec. 522. Strategic minerals. 
Sec. 523. Effective date of title V. 
Post, p. 662. 
TITM: VI—^MISCELLANEOUS PROVISIONS AND AMENDMENTS 
Sec, 601. Exemption of certain organizations from income tax for prior taxable 
years. 
Sec. 602. Excess profits credit based on income. 
(a) Percentage of average base period net income taken into account. 
(b) Effective date. 
Sec. 603. Foreign estate tax credit. 
(a) Credit against basic estate tax. 
(b) Credit against additional estate tax. 
(c) Reversionary or remainder interest. 
(d) Extension of period of limitations, etc., in case of recovery of taxes 
claimed as credit. 
(e) Effective date. 
Sec. 604. Estate and gift tax treatment of United States bonds held by certain 
nonresident aliens. 
(a) Estate tax. 
(b) Gift tax. 
Sec. 605. Estate tax exemption for works of art loaned by nonresident aliens. 
(a) Amendment of section 863 (c). 
(b) Effective date. 
Sec. 606. Exemption from additional estate tax of members of armed forces upon 
death. 
Sec. 607. Transfers conditioned upon survivorship. 
Sec. 608. Transfers with income reserved. 
Sec. 609. Transfers taking effect at death. 
Sec. 610. Reversionary interests in case of life insurance. 
Sec. 611. Income pursuant to award of Interstate Commerce Commission. 
Sec. 612. Credit in prior taxable years for dividends received on preferred stock 
of a public utility. 
Sec. 613. Consolidated returns—-includible corporations. 
Sec. 614. Time for performing certain acts postponed in case of China Trade 
Act corporations. 
Sec. 615. Treaty obligations. 
Sec. 616. Reorganization Plan Numbered 26 of 1950. 
Sec. 617. Claims under the Renegotiation Act. 
Sec. 618. Prohibition upon denial of Social Security Act funds. 
Sec. 619. Removal of tax exemption from expense allowances of the President, 
the Vice President, the Speaker and Members of Congress. 
(a) Expense allowance of the President. 
(b) Expense allowance of the Vice President. 
(c) Expense allowance of the Speaker of the House of Representatives. 
(d) Expense allowances of Members of Congress. 
(e) Effective dates. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
459 
(b) ACT AMENDATORY OF INTERNAL REVENUE CODE.—Except as 
otherwise expressly provided, wherever in this Act an amendment or 
repeal is expressed in terms of an amendment to or repeal of a chapter, 
subchapter, title, supplement, section, subsection, subdivision, para-
graph, subparagraph, or clause, the reference shall be considered to 
be made to a provision of the Internal Revenue Code. 
(c) MEANING or TERMS USED.—Except as otherwise expressly pro-
vided, terms used in this Act shall have the same meaning as when 
used in the Internal Revenue Code. 
TITLE I—INCREASE IN INCOME TAX RATES 
PART I—INDIVIDUAL INCOME TAXES 
SEC. 101. INCREASE IN SURTAX FOR 1951,1952, AND 1953. 
(a) Rates of Surtax.—Section 12 (b) (relating to rates of surtax) 
is hereby amended to read as follows: 
"(b) 
RATES OF SURTAX.— 
"(1) CALENDAR YEAR 1951.—In the case of a taxable year 
beginning on January 1, 1951, and ending on December 31, 1951, 
there shall be levied, collected, and paid for such taxable year 
upon the surtax net income of every individual the surtax shown 
in the following table: 
"If the surtax net income is: 
The surtax shall be: 
Not over $2,000 
17.4% of the surtax net income. 
Over $2,000 but not over $4,000 
$348, plus 19.4% of excess over $2,000. 
Over $4,000 but not over $6,000 
$736, plus 24% of excess over $4,000. 
Over $6,000 but not over $8,000 
$1,216, plus 27% of excess over $6,000. 
Over $8,000 but not over $10,000 
$1,756, plus 32% of excess over $8,000. 
Over $10,000 but not over $12,000 
$2,396, plus 36% of excess over 
$10,000. 
Over $12,000 but not over $14,000 
$3,116, plus 40% of excess over 
$12,000. 
Over $14,000 but not over $16,000 
$3,916, plus 45% of excess over $14,000. 
Over $16,000 but not over $18,000 
$4,816, plus 48% of excess over $16,000. 
Over $18,000 but not over $20,000 
$5,776, plus 51% of excess over $18,000. 
Over $20,000 but not over $22,000 
$6,796, plus 54% of excess over $20,000. 
Over $22,000 but not over $26,000 
$7,876, plus 57% of excess over $22,000. 
Over $26,000 but not over $32,000 
$10,156, plus 60% of excess over 
$26,000. 
Over $32,000 but not over $38,000 
$13,756, plus 63% of excess over 
$32 000. 
Over $38,000 but not over $44,000 
$17,536, plus 66% of excess over 
$38,000. 
Over $44,000 but not over $50,000 
$21,496, plus 70% of excess over 
$44,000. 
Over $50,000 but not over $60,000 
$25,696, plus 72% of excess over 
$50,000. 
Over $60,000 but not over $70,000 
$32,896, plus 75% of excess over 
$60,000. 
Over $70,000 but not over $80,000 
$40,396, plus 79% of excess over 
$70,000. 
Over $80,000 but not over $90,000 
$48,296, plus 81% of excess over 
$80 000 
Over $90,000 but not over $100,000__ 
$56,3^, plus 84% of excess over 
$90 000 
Over $100,000 but not over $150,000__ 
$64,796, plus 86% of excess over 
$100,000. 
Over $150,000 but not over $200,000— 
$107,796, plus 87% of excess over 
$150,000. 
Over $200,000 
$151,296, plus 88% of excess over 
$200,000. 
63 Stat. 5. 
26 U. 8. C. S 12 (b). 
460 
Post, p. 480. 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
"(2) 
TAXABLE YEARS BEGINNING AFTER OCTOBER 31, 1951, AND 
BEFORE JANUARY 1, 1954.—In the case of taxable years beginning 
after October 31, 1951, and before January 1, 1954, there shall 
be levied, collected, and paid for each taxable year upon the sur-
tax net income of every individual (other than a head of a house-
hold to whom subsection (c) applies) the surtax shown in the 
following table: 
"If the surtax net income is: 
The surtax shall b e : 
Not over $2,000 
19.2% of the surtax net income. 
Over $2,000 but not over $4,000 
$384, plus 21.6% of excess over $2,000. 
Over $4,000 but not over $6,000 
$816, i)lus 26% of excess over $4,000. 
Over $6,000 but not over $8,000 
$1,336, plus 3 1 % of excess over $6,000., 
Over $8,000 but not over $10,000 
$1,956, plus 3.j% of excess over $8,000. 
Over $10,000 but not over $12,000 
$2,6.")6, plus 
39% 
of 
excess 
over 
$10,000. 
Over $12,000 but not over $14,000 
$3,436, plus 
45% 
of 
excess 
over 
$12,000. 
Over $14,000 but not over $16,000 
$4,336, 
plus 
50% 
of 
excess 
over 
$14,000. 
Over $16,000 but not over $18,000 
$5,336, plus 
53% 
of 
excess 
over 
$16,000. 
Over $18,000 but not over $20,000 
$6,396, plus 
56% 
of 
excess 
over 
$18,000. 
Over $20,000 but not over $22,000 
$7,516, plus 
59% 
of 
excess 
over 
$20,000. 
Over $22,000 but not over $26,000 
$8,696, 
plus 
63% 
of 
excess 
over 
$22,000. 
Over $26,000 but not over $32,000 
$11,216, plus 64% ol' excess 
over 
$26,000. 
Over $32,000 but not over $38,000 
$15,056, plus 65% of excess 
over 
$32,000. 
Over $38,000 but not over $44,000 
$18,956, plus 69% of excess 
over 
$38,000. 
Over $44,000 but not over $50,000 
$23,096, plus 72% of excess 
over 
$44,000. 
Over $50,000 but not over $60,000 
$27^416, plus 74% of excess 
over 
$50,000. 
Over $60,000 but not over $70,000 
$34,816, plus 77% of excess 
over 
$60,000. 
Over $70,000 but not over $80,000 
$42,516, plus 
80% 
of excess 
over 
$70,000. 
Over $80,000 but not over $90,000 
$50,516, plus 82% of excess 
over 
$80,000. 
Over $90,000 but not over $100,000___ 
$.58,710, plus 85% of excess o\ er 
$90,000. 
Over $100,000 but not over $150,000__ 
$67,216, plus 87% of 
excess 
over 
$100,000. 
Over $150,000 but not over $200,000__ 
.$110,716, plus 88% of excess over 
$150,000. 
Over $200,000 
$154,716, plus 89% of excess oA-er 
$200,000. 
" ( 3 ) 
T A X A B L E YEARS B E G I N N I N G AFTER DECEMBER 3 I , 1 9 5 3 . — I n 
the case of taxable years beginning after December 31,1953, there 
shall be levied, collected, and paid for each taxable year upon 
the surtax net income of every individual (other than a head of a 
household to whom subsection (c) applies) the surtax shown in 
the following table: 
"If the surtax net income is: 
The surtax shall b e : 
Not over $2,000 
17% of the surtax net income. 
Over $2,000 but not over $4,000 
$340, plus 19%, of excess over $2,000. 
Over $4,000 but not over $6,000 
$720, plus 23% of excess over $4,000. 
Over $6,000 but not over $8,000 
$1,180, plus 27% of excess over $6,000. 
Over $8,000 but not over $10,000 
$1,720, plus 8 1 % of excess over $8,000. 
Over $10,000 but not over $12,000 
$2,340, plus 
35% 
of 
excess 
over 
$10,000. 
Over $12,000 but not over $14,000___ 
$3,040, plus 
40% 
of 
excess 
over 
$12,000. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
461 
44% 
47% 
50% 
53% 
56% 
59% 
of 
of 
of 
of 
of 
of 
excess 
excess 
excess 
excess 
excess 
excess 
over 
over 
over 
over 
over 
over 
The surtax shall be: 
$3,840, plus 
$14,000. 
$4,720, plus 
$16,000. 
$5,660, plus 
$18,000. 
$6,660, plus 
$20,000. 
$7,720, plus 
$22,000. 
$9,960, plus 
$26,000. 
$13,500, plus 62% of excess over 
$32,000. 
$17,220, plus 66% of excess over 
$38,000. 
$21,180, plus 69% of excess over 
$44,000. 
$25,320, plus 72% of excess over 
$50,000. 
$32,520, plus 75% of excess over 
$60,000. 
$40,020, plus 78% of excess over 
$70,000. 
$47,820, plus 81% of excess over 
$80,000. 
$55,920, plus 84% of excess over 
$90,000. 
$64,320, plus 86% of excess over 
$100,000. 
$107,320, plus 87% of excess over 
$150,000. 
$150,820, plus 88% of excess over 
$200,000." 
(b) Limitation On Tax.—Section 12 (f) (relating to limitation on 
tax) is hereby amended to read as follows: 
" ( f ) 
LIMITATION ON T A X . — 
" ( 1 ) 
CALENDAR TEAR 
I 9 5 1 . — I n the case of a taxable year 
beginning on J a n u a r y 1, 1951, and ending December 31, 1951, 
the combined normal tax and surtax shall in no event exceed 87.2 
per centum of the net income for the taxable year. 
"(2) 
TAXABLE YEARS BEGINNING AFTER OCTOBER 3 1 , 1951, AND 
BEFORE JANUARY 1, 19 54.—III the case of taxable years beginning 
after October 31, 1951, and before J a n u a r y 1, 1954, the combined 
normal tax and surtax shall in no event exceed 88 per centum of 
the net income of the taxable year. 
"(3) 
TAXABLE TEARS BEGINNING AFTER DECEMBER 3 1 , 1953.—In 
the case of taxable years beginning after December 31, 1953, the 
combined normal tax and surtax shall in no event exceed 87 per 
centum of the net income for the taxable year." 
SEC. 102. INDIVIDUALS WITH ADJUSTED GROSS INCOME OF LESS THAN 
$5,000. 
Section 400 (relating to optional tax on individuals with adjusted 
gross incomes of less than $5,000) is hereby amended by striking out 
the tables contained therein and inserting in lieu thereof the following: 
'*If the surtax net income is: 
Over $14,000 but not over $16,000— 
Over $16,000 but not over $18,000___ 
Over $18,000 but not over $20,000_— 
Over $20,000 but not over $22,000— 
Over $22,000 but not over $26,000— 
Over $26,000 but not over $32,000— 
Over $32,000 but not over $38,000— 
Over $38,000 but not over $44,000— 
Over $44,000 but not over $50,000— 
Over $50,000 but not over $60,000— 
Over $60,000 but not over $70,000— 
Over $70,000 but not over $80,000— 
Over $80,000 but not over $90,000— 
Over $90,000 but not over $100,000— 
Over $100,000 but not over $150,000.._ 
Over $150,000 but not over $200,000— 
Over $200,000 
53 Stat. 7. 
26 U. S. C. § 12 (f). 
56 Stat. 689; 64 Stat, 
911. 
26U. S. C. §400. 
462 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
"Table I 
'Taxable year beginning January 1,1951, and ending December 31,1951 
I f adjusted 
gross in-
come 
At 
least 
$0 
675 
700 
725 
750 
775 
800 
825 
850 
875 
900 
925 
960 
975 
1,000 
1,025 
1,050 
1,075 
1.100 
1,125 
1,150 
1,175 
1,200 
1,225 
1,250 
1,275 
1,300 
1,325 
1,350 
1,375 
1,400 
1,425 
1,450 
1,475 
1,500 
1,525 
1,550 
1,575 
1,600 
1,625 
1,650 
1,675 
1,700 
1,725 
1,750 
1,775 
1,800 
1,825 
1,850 
1,875 
1,900 
1,925 
1,950 
1,975 
2,000 
2,025 
2,050 
2,075 
2,100 
2,125 
2,150 
2,175 
2,200 
2,225 
2,250 
2,275 
2,300 
IS— 
But 
less 
than 
$675 
700 
725 
750 
775 
800 
825 
850 
875 
900 
925 
950 
975 
1,000 
1,025 
1,050 
1,075 
1,100 
1,125 
1,150 
1,175 
1,200 
1,225 
1,250 
1,275 
1,300 
1,325 
1,350 
1,375 
1.400 
1,425 
1,450 
1,475 
1,500 
1,525 
1,550 
1, 675 
1,600 
1.625 
1,650 
1,675 
1,700 
1.725 
1,750 
1,775 
1,800 
1,826 
1,850 
1,875 
1,900 
1,925 
1,960 
1,975 
2,000 
2,025 
2,050 
2,075 
2,100 
2.126 
2.150 
2,175 
2,200 
2,225 
2,250 
2,275 
2,300 
2,325 
And the number 
of exemptions 
1 
IS— 
2 
3 
4 or 
more 
T h e tax shall be— 
$0 
4 
8 
13 
18 
22 
27 
31 
36 
41 
45 
50 
64 
69 
63 
68 
73 
77 
82 
86 
91 
96 
100 
105 
109 
114 
119 
123 
128 
132 
137 
142 
146 
151 
155 
160 
164 
169 
174 
178 
183 
187 
192 
197 
201 
206 
210 
215 
220 
224 
229 
233 
238 
243 
247 
252 
256 
261 
265 
270 
275 
279 
284 
288 
293 
298 
302 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1 
6 
10 
16 
19 
24 
28 
33 
37 
42 
47 
51 
66 
60 
65 
70 
74 
79 
83 
88 
93 
97 
102 
106 
111 
116 
120 
125 
129 
134 
138 
143 
148 
162 
157 
161 
166 
171 
175 
180 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
2 
7 
11 
16 
21 
25 
30 
34 
39 
44 
48 
53 
57 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
If adjusted 
gross in-
come 
At 
least 
$2,325 
2,350 
2,375 
2,400 
2,426 
2,450 
2,476 
2,500 
2,525 
2,550 
2,575 
2,600 
2,625 
2,660 
2,675 
2,700 
2,726 
2,750 
2,775 
2,800 
2,825 
2,850 
2,875 
2,900 
2,925 
2,950 
2,975 
3,000 
3,050 
3,100 
3,150 
3,200 
3,250 
3,300 
3,350 
3,400 
3,450 
3,600 
3,650 
3,600 
3,650 
3,700 
3,750 
3,800 
3,850 
3,900 
3,950 
4,000 
4,050 
4,100 
4,150 
4,200 
4,250 
4,300 
4,350 
4,400 
4,450 
4,500 
4,550 
4,600 
4,650 
4,700 
4,750 
4,800 
4,850 
4,900 
4,950 
IS— 
But 
less 
than 
$2,350 
2,375 
2,400 
2,425 
2,450 
2,475 
2,500 
2,625 
2,550 
2,575 
2,600 
2,626 
2,650 
2,675 
2 700 
2,726 
2.750 
2,775 
2,800 
2,825 
2,850 
2,875 
2,900 
2,925 
2,950 
2,975 
3,000 
3,050 
3,100 
3,150 
3,200 
3,250 
3,300 
3,350 
3,400 
3,450 
3,500 
3,5.50 
3.600 
3,650 
3,700 
3,760 
3,800 
3,850 
3,900 
3,960 
4,000 
4,060 
4,100 
4,150 
4,200 
4,250 
4,300 
4,350 
4,400 
4,450 
4,500 
4,560 
4,600 
4,650 
4.700 
4,750 
4,800 
4,850 
4,900 
4,950 
5,000 
1 
And the number of exemptions is 
2 
And tax-
payer is 
single or 
married 
filing 
sepa-
rately 
And 
a 
joint 
re-
turn 
is 
filed 
3 
And tax-
payer is 
single or 
married 
filing 
sepa-
rately 
And 
a 
joint 
re-
turn 
is 
filed 
4 
5 
— 
6 
7 
8 or 
more 
T h e tax shall be— 
$307 
311 
316 
321 
326 
330 
334 
339 
343 
348 
353 
357 
362 
366 
371 
376 
380 
385 
389 
394 
399 
403 
408 
413 
418 
423 
428 
435 
446 
456 
466 
476 
486 
496 
506 
516 
526 
636 
546 
556 
666 
677 
687 
597 
607 
617 
627 
637 
647 
657 
667 
677 
687 
698 
708 
718 
728 
738 
748 
758 
768 
778 
788 
798 
808 
818 
829 
$184 
189 
194 
193 
203 
207 
212 
216 
221 
226 
230 
236 
239 
244 
249 
253 
258 
262 
267 
272 
276 
281 
285 
290 
295 
299 
304 
311 
320 
329 
338 
347 
356 
366 
375 
384 
393 
402 
412 
422 
432 
442 
452 
462 
472 
482 
493 
503 
513 
523 
533 
543 
553 
663 
673 
583 
593 
603 
614 
624 
634 
644 
654 
664 
674 
684 
694 
$184 
189 
194 
198 
203 
207 
212 
216 
221 
226 
230 
235 
239 
244 
249 
263 
268 
262 
267 
272 
276 
281 
285 
290 
295 
299 
304 
311 
320 
329 
338 
347 
356 
366 
375 
384 
393 
402 
412 
421 
430 
439 
448 
457 
467 
476 
486 
494 
503 
613 
622 
531 
540 
549 
558 
568 
677 
586 
595 
604 
614 
623 
632 
641 
660 
659 
669 
$62 
67 
71 
76 
80 
86 
90 
94 
99 
103 
lOS 
112 
117 
122 
126 
131 
135 
140 
145 
149 
154 
168 
163 
168 
172 
177 
181 
188 
197 
207 
216 
225 
234 
243 
262 
262 
271 
280 
289 
298 
308 
317 
326 
335 
344 
353 
363 
372 
381 
390 
399 
409 
419 
429 
439 
449 
459 
469 
479 
489 
499 
609 
519 
530 
540 
660 
560 
$62 
67 
71 
76 
80 
85 
90 
94 
99 
103 
108 
112 
117 
122 
126 
131 
135 
140 
145 
149 
154 
158 
163 
168 
172 
177 
181 
188 
197 
207 
216 
225 
234 
243 
252 
262 
271 
280 
289 
298 
308 
317 
326 
335 
344 
353 
363 
372 
381 
390 
399 
409 
418 
427 
436 
445 
454 
464 
473 
482 
491 
500 
609 
519 
528 
637 
646 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
4 
8 
13 
18 
22 
27 
31 
36 
41 
45 
50 
54 
69 
66 
75 
84 
93 
103 
112 
121 
130 
139 
148 
158 
167 
176 
185 
194 
203 
213 
222 
231 
240 
249 
259 
268 
277 
286 
295 
304 
314 
323 
332 
341 
350 
360 
369 
378 
387 
396 
405 
415 
424 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
8 
17 
26 
36 
44 
54 
63 
72 
81 
90 
99 
109 
118 
127 
136 
146 
165 
164 
173 
182 
191 
200 
210 
219 
228 
237 
246 
256 
266 
274 
283 
292 
301 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
5 
14 
23 
32 
41 
50 
60 
69 
78 
87 
96 
106 
116 
124 
133 
142 
151 
161 
170 
179 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
2 
11 
20 
29 
38 
47 
57 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
*Table II 
^Taxable years begrinning after October 31,1951, and before January 1,1954 
463 
I f a 4 J u t e d 
groM in-
come is— 
At 
least 
$0 
675 
700 
725 
750 
775 
800 
825 
850 
875 
900 
925 
950 
975 
1,000 
1,025 
1,050 
1,075 
1,100 
1,125 
1,150 
1,175 
1,200 
1,225 
1,250 
1,275 
1,300 
1,325 
1,350 
1,375 
1,400 
1,425 
1,460 
1,475 
1,500 
1,525 
1,550 
1,675 
1,600 
1,625 
1,650 
1,675 
1,700 
1,725 
1,750 
1,776 
1,800 
1,826 
1,850 
1,875 
1,900 
1,925 
1,950 
1,975 
2,000 
2,025 
2,050 
2,075 
2,100 
2,125 
2,150 
2,175 
2,200 
2,225 
2,250 
2,275 
2,300 
But 
less 
than 
$675 
700 
725 
750 
775 
800 
825 
850 
875 
900 
925 
950 
975 
1,000 
1,025 
1,050 
1,075 
1,100 
1,125 
1,150 
1,175 
1,200 
1,225 
1,250 
1,275 
1,300 
1,325 
1,350 
1,375 
1,400 
1,425 
1,450 
1,475 
1,500 
1,525 
1,550 
1,575 
1,600 
1,625 
1,650 
1,675 
1,700 
1,725 
1,750 
1,775 
1,800 
1,825 
1,850 
1,875 
1,900 
1,925 
1,950 
1,975 
2,000 
2,025 
2,050 
2,075 
2,100 
2,125 
2,150 
2,175 
2,200 
2,226 
2,250 
2,275 
2,300 
2,325 
And the nnm-
ber of exemp-
i 
1 
ionsii 
2 3 
9— 
4 or 
more 
T h e tax shall 
b e -
so 
4 
9 
14 
19 
24 
29 
34 
39 
44 
49 
54 
59 
64 
69 
74 
79 
84 
89 
94 
99 
104 
109 
114 
119 
124 
129 
134 
139 
144 
149 
154 
159 
164 
169 
174 
179 
184 
189 
194 
199 
204 
209 
214 
219 
224 
229 
234 
239 
244 
249 
254 
259 
264 
269 
274 
279 
284 
289 
294 
299 
304 
309 
314 
319 
324 
329 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1 
6 
11 
16 
21 
26 
31 
36 
41 
46 
61 
66 
61 
66 
71 
76 
81 
86 
91 
96 
101 
106 
111 
116 
121 
126 
131 
136 
141 
146 
151 
156 
161 
166 
171 
176 
181 
186 
191 
196 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
2 
7 
12 
17 
22 
27 
32 
37 
42 
47 
52 
57 
62 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
If adjusted 
gross In-
come 
At 
least 
$2, 325 
2,350 
2,376 
2,400 
2,425 
2,450 
2,475 
2,500 
2,526 
2,550 
2,575 
2,600 
2,625 
2,650 
2,675 
2,700 
2,725 
2,750 
2,775 
2,800 
2,826 
2,850 
2,876 
2,900 
2,926 
2,960 
2,975 
3,000 
3,060 
3,100 
3,150 
3,200 
3,250 
3,300 
3,350 
3,400 
3,460 
3,500 
3,560 
3,600 
3,660 
3,700 
3,760 
3,800 
3,860 
3,900 
3,950 
4,000 
4,050 
4,100 
4,150 
4,200 
4,250 
4,300 
4,360 
4,400 
4,460 
4,500 
4,550 
4,600 
4,650 
4,700 
4,750 
4,800 
4,860 
4,900 
4,950 
is— 
But 
less 
than 
$2,350 
2,375 
2,400 
2,425 
2,450 
2,475 
2,500 
2,626 
2,550 
2,575 
2,600 
2,626 
2,650 
2,675 
2,700 
2,725 
2,750 
2,775 
2,800 
2,826 
2,850 
2,876 
2,900 
2,925 
2,960 
2,975 
3,000 
3,050 
3,100 
3,150 
3,200 
3,260 
3,300 
3,350 
3,400 
3,460 
3,500 
3,550 
3,600 
3,650 
3,700 
3,750 
3,800 
3,850 
3,900 
3,950 
4,000 
4,050 
4,100 
4,150 
4,200 
4,250 
4,300 
4,350 
4,400 
4,45C 
4,50C 
4,65C 
4,60C 
4,65C 
4, 70C 
4, 75C 
4,80C 
4,85C 
4,90C 
4,95C 
5,00C 
1 
And tax-
payer is 
single or 
married 
filing 
sepa-
rately 
And 
tax-
payer 
s h e a d 
of 
house-
hold 
And the number of exemptions is— 
And tax-
payer is 
single or 
married 
filing 
sepa-
rately 
2 
And 
tax-
payer 
IS head 
of 
house-
hold 
And 
a 
joint 
re-
turn 
is 
filed 
And tax-
payer is 
single or 
married 
filing 
sepa-
rately 
a 
And 
tax-
payer 
s h e a d 
of 
house-
hold 
And 
a 
joint 
re-
turn 
is 
filed 
4 
5 
6 7 
8 or 
mora 
The tax shall be— 
$334 
339 
344 
349 
354 
369 
364 
369 
374 
379 
384 
389 
394 
399 
404 
409 
414 
419 
424 
429 
434 
439 
444 
449 
465 
460 
466 
474 
485 
496 
507 
618 
529 
641 
552 
563 
574 
586 
5% 
607 
618 
629 
640 
651 
662 
673 
684 
696 
707 
718 
729 
740 
751 
762 
773 
784 
795 
806 
817 
828 
839 
851 
862 
873 
884 
896 
006 
$334 
339 
344 
349 
364 
359 
364 
369 
374 
379 
384 
389 
394 
399 
404 
409 
414 
419 
424 
429 
434 
439 
444 
449 
454 
459 
466 
473 
483 
494 
604 
615 
626 
636 
646 
657 
667 
578 
588 
699 
610 
620 
631 
641 
652 
662 
673 
683 
694 
704 
716 
725 
736 
746 
757 
768 
778 
789 
799 
810 
820 
831 
841 
852 
862 
873 
883 
$201 
206 
211 
216 
221 
226 
231 
236 
241 
246 
251 
256 
261 
266 
271 
276 
281 
286 
291 
296 
301 
306 
311 
316 
321 
326 
331 
338 
348 
358 
368 
378 
388 
398 
408 
418 
428 
438 
448 
469 
470 
482 
493 
504 
616 
626 
637 
648 
669 
570 
581 
692 
603 
614 
625 
636 
648 
669 
670 
681 
692 
703 
714 
725 
736 
747 
758 
$201 
206 
211 
216 
221 
226 
231 
236 
241 
246 
251 
266 
261 
266 
271 
276 
281 
286 
291 
296 
301 
306 
311 
316 
321 
326 
331 
338 
348 
368 
368 
378 
388 
398 
408 
418 
428 
438 
448 
469 
469 
480 
490 
601 
611 
522 
532 
543 
653 
564 
574 
585 
596 
606 
617 
627 
638 
648 
658 
669 
68C 
690 
701 
711 
722 
732 
743 
$201 
206 
211 
216 
221 
226 
231 
236 
241 
246 
251 
256 
261 
266 
271 
276 
281 
286 
291 
296 
301 
306 
311 
316 
321 
326 
331 
338 
348 
358 
368 
378 
388 
398 
408 
418 
428 
438 
448 
468 
468 
478 
488 
498 
608 
518 
528 
538 
548 
568 
568 
578 
588 
598 
608 
618 
628 
638 
648 
658 
668 
678 
688 
698 
708 
718 
728 
$67 
72 
77 
82 
87 
92 
97 
102 
107 
112 
117 
122 
127 
132 
137 
142 
147 
152 
167 
162 
167 
172 
177 
182 
187 
192 
197 
205 
215 
225 
235 
246 
265 
266 
275 
285 
296 
306 
316 
325 
335 
345 
356 
366 
375 
385 
395 
405 
415 
425 
436 
445 
456 
467 
478 
489 
600 
611 
622 
533 
544 
565 
566 
677 
589 
600 
611 
$67 
72 
77 
82 
87 
92 
97 
102 
107 
112 
117 
122 
127 
132 
137 
142 
147 
152 
157 
162 
167 
172 
177 
182 
187 
192 
197 
205 
216 
225 
235 
245 
256 
265 
275 
286 
295 
305 
316 
326 
335 
345 
355 
365 
375 
385 
395 
405 
415 
426 
436 
445 
455 
466 
476 
487 
497 
608 
518 
629 
539 
650 
560 
571 
581 
592 
603 
$67 
72 
77 
82 
87 
92 
97 
102 
107 
112 
117 
122 
127 
132 
137 
142 
147 
152 
157 
162 
167 
172 
177 
182 
187 
192 
197 
205 
215 
225 
235 
245 
266 
266 
276 
285 
296 
305 
315 
325 
335 
345 
356 
366 
376 
386 
395 
405 
415 
425 
435 
446 
465 
465 
475 
485 
495 
504 
514 
524 
534 
544 
564 
664 
674 
684 
594 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
4 
0 
14 
19 
24 
29 
34 
39 
44 
49 
54 
59 
64 
72 
82 
92 
102 
112 
122 
132 
142 
152 
162 
171 
181 
191 
201 
211 
221 
231 
241 
251 
261 
271 
281 
291 
301 
311 
321 
331 
341 
351 
361 
371 
381 
391 
401 
411 
421 
431 
441 
461 
461 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
8 
18 
28 
38 
48 
58 
68 
78 
88 
98 
108 
118 
128 
138 
148 
158 
168 
178 
188 
198 
208 
218 
228 
238 
248 
268 
268 
278 
288 
298 
308 
318 
328 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
6 
15 
26 
36 
45 
55 
65 
75 
86 
95 
105 
116 
125 
135 
146 
165 
165 
176 
186 
196 
$0 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
2 
0 
12 
0 
22 
0 
32 
0 
42 
0 
52 
0 
62 
0 
76100 O - 52 (PT. I) - 32 
464 
PUBLIC LAW 183—OCT. 20, 1951 
"Table III 
"Taxable years beginning after December 31, 1953 
[65 
STAT. 
If adjusted 
gross i a 
come is-
At 
least 
675 
700 
725 
750 
775 
800 
825 
850 
875 
900 
925 
950 
975 
1,000 
1,025 
1,050 
1,075 
1,100 
1.125 
1,150 
1,175 
1,200 
1,225 
1,250 
1,275 
1,300 
1, 325 
1,350 
1,375 
1,400 
1,425 
1,450 
1,475 
1,500 
1,525 
1,550 
1,575 
1,600 
1,625 
1,650 
1,675 
1,700 
1,725 
1,750 
1,775 
1,800 
1,825 
1,850 
1,875 
1,900 
1,925 
1,950 
1,975 
2,000 
2,025 
2,050 
2.075 
2,100 
2,125 
2,150 
2,175 
2,200 
2,225 
2,250 
2,275 
2,300 
But 
less 
than 
$675 
700 
725 
750 
775 
800 
825 
850 
875 
900 
925 
950 
975 
1,000 
1,025 
1,050 
1,075 
1,100 
1,125 
1,150 
1,175 
1,200 
1,225 
1,250 
275 
1,300 
1,325 
1,350 
1,375 
1,400 
1,425 
1,450 
1,475 
1,500 
1,525 
1,550 
1.575 
1,600 
1,625 
1,650 
1,675 
1,700 
1,725 
50 
1,775 
1,800 
1,825 
1,850 
1,875 
1,900 
1, 925 
1,950 
1,975 
2,000 
2,025 
2,050 
2,075 
2,100 
2,125 
2,150 
2,175 
2,200 
2,225 
2,250 
2,275 
2,300 
2,325 
And the num-
ber of exemp-
tions is— 
4 or 
more 
The tax shall 
be— 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
a 
0 
0 
0 
1 
5 
10 
14 
19 
23 
28 
32 
37 
41 
46 
50 
.
5
5 
59 
64 
68 
73 
77 
82 
86 
91 
95 
M) 
104 
109 
113 
118 
122 
127 
131 
136 
140 
145 
149 
1.54 
l
.
-
i
S 
16;^ 
167 
172 
176 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
»
; 
Oj 
" 
" 
2' 
I 
11 
16 
20 
25 
29 
34 
3
8
l 
431 
47! 
,52i 
56! 
If adjusted 
gross in-
come is— 
At 
least 
$2,325 
2,350 
2,375 
2,400 
2,425 
2,450 
2,475 
2 500 
2,525 
2,650 
2,575 
2,600 
2,625 
2,650 
2,675 
2,700 
2,725 
2,750 
2,775 
2,800 
2,825 
2,850 
2,875 
2,900 
2,925 
2,950 
2,975 
3,000 
3,050 
3,100 
3,150 
3,200 
3,250 
3,300 
3,350 
3,400 
3,450 
.3,500 
3,550 
3,600 
3,650 
3,700 
3,750 
3,800 
3,850 
3,900 
3,950 
4,000 
4,050 
4,100 
4,150 
4,200 
4,250 
4,300 
4,350 
4,400 
4,450 
4,500 
4,550 
4,600 
4,650 
4,700 
4,750 
4,800 
4,850 
4,900 
4,950 
But 
less 
than 
And the number of exemptions is-
1 
A n d tax-
payer 
IS 
single 
or 
married 
filing 
sepa-
rately 
And 
tax-
payer 
is 
head 
of 
house-
hold 
A n d tax-
payer 
IS 
single 
or 
married 
filing 
sepa-
rately 
2 
And 
tax-
payer 
is 
head 
of 
house-
hold 
And 
a 
joint 
re-
turn 
IS 
filed 
And 
tax-
payer 
IS 
single 
or 
married 
filing 
sepa-
rately 
3 
And 
tax-
payer 
is 
head 
of 
house-
hold 
And 
a 
joint 
re-
turn 
is 
filed 
4 5 6 7 8or 
more 
The tax shall be— 
$301 
305 
310 
314 
319 
323 
328 
332 
337 
341 
346 
350 
355 
359 
364 
368 
373 
377 
382 
386 
391 
395 
400 
405 
410 
415 
420 
427 
437 
447 
457 
467 
476 
486 
496 
506 
516 
526 
.
5
3
6 
546 
556 
566 
575 
.
5
8
5 
595 
605 
615 
625 
635 
645 
655 
665 
674 
684 
694 
704 
714 
724 
734 
744 
754 
764 
773 
783 
793 
803 
813 
$301 
305 
310 
314 
319 
323 
328 
332 
337 
341 
346 
350 
355 
359 
364 
368 
373 
377 
382 
386 
391 
395 
400 
404 
409 
414 
419 
426 
435 
445 
454 
464 
473 
482 
492 
501 
511 
520 
530 
539 
519 
558 
567 
577 
586 
596 
605 
615 
624 
634 
643 
653 
662 
671 
681 
690 
700 
709 
719 
728 
738 
747 
756 
766 
775 
785 
794 
$181 
185 
190 
194 
199 
203 
208 
212 
217 
221 
226 
230 
235 
239 
244 
248 
253 
257 
262 
266 
271 
275 
280 
284 
289 
293 
298 
305 
314 
323 
332 
341 
350 
359 
368 
377 
386 
395 
404 
414 
424 
434 
443 
453 
463 
473 
483 
493 
503 
513 
523 
533 
542 
552 
562 
572 
582 
592 
602 
612 
622 
632 
641 
651 
661 
671 
681 
$181 
185 
190 
194 
199 
203 
208 
212 
217 
221 
226 
230 
235 
239 
244 
248 
253 
257 
262 
266 
271 
275 
280 
284 
289 
293 
298 
305 
314 
323 
332 
341 
350 
359 
368 
377 
386 
395 
404 
413 
423 
432 
441 
451 
460 
470 
479 
489 
498 
508 
517 
527 
536 
545 
555 
564 
574 
583 
593 
602 
612 
621 
630 
640 
649 
659 
668 
$181 
185 
190 
194 
199 
203 
208 
212 
217 
221 
226 
230 
235 
239 
244 
248 
253 
257 
262 
266 
271 
275 
280 
284 
289 
293 
298 
305 
314 
323 
332 
341 
350 
359 
368 
377 
386 
395 
404 
413 
422 
431 
440 
449 
458 
467 
476 
485 
494 
503 
512 
521 
530 
539 
548 
557 
566 
575 
584 
593 
602 
611 
620 
629 
638 
647 
656 
$61 
65 
70 
74 
79 
83 
88 
92 
97 
101 
106 
110 
115 
119 
124 
128 
133 
137 
142 
146 
151 
155 
160 
164 
169 
173 
178 
185 
194 
203 
212 
221 
230 
239 
248 
257 
266 
275 
284 
293 
302 
311 
320 
329 
338 
347 
356 
365 
374 
383 
392 
401 
410 
420 
430 
440 
450 
460 
470 
480 
490 
500 
509 
519 
529 
539 
549 
$61 
65 
70 
74 
79 
83 
88 
92 
97 
101 
106 
110 
115 
119 
124 
128 
133 
137 
142 
146 
151 
155 
160 
164 
169 
173 
178 
185 
194 
203 
212 
221 
230 
239 
248 
257 
266 
275 
284 
293 
302 
311 
320 
329 
338 
347 
356 
365 
374 
383 
392 
401 
410 
419 
429 
438 
448 
457 
467 
476 
486 
495 
504 
514 
523 
533 
542 
$61 
65 
70 
74 
79 
83 
88 
92 
97 
101 
106 
110 
116 
119 
124 
128 
133 
137 
142 
146 
151 
155 
160 
164 
169 
173 
178 
186 
194 
203 
212 
221 
230 
239 
248 
257 
266 
275 
284 
293 
302 
311 
320 
329 
338 
347 
356 
365 
374 
383 
392 
401 
410 
419 
428 
437 
446 
456 
464 
473 
482 
491 
500 
509 
518 
527 
536 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
4 
8 
13 
17 
22 
26 
31 
35 
40 
44 
49 
53 
58 
65 
74 
83 
92 
101 
110 
119 
128 
137 
146 
156 
164 
173 
182 
191 
200 
209 
218 
227 
236 
246 
254 
263 
272 
281 
290 
299 
308 
317 
326 
335 
344 
353 
362 
371 
380 
389 
398 
407 
416 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
8 
17 
26 
35 
44 
53 
62 
71 
80 
89 
98 
107 
116 
125 
134 
143 
152 
161 
170 
179 
188 
197 
206 
216 
224 
233 
242 
261 
260 
269 
278 
287 
296 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
5 
14 
23 
32 
41 
50 
59 
68 
77 
86 
95 
104 
113 
122 
131 
140 
149 
168 
167 
176 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
2 
11 
20 
29 
38 
47 
66 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
465 
SEC. 103. INAPPLICABILITY OF CERTAIN PENALTIES AND ADDITIONS 
TO TAX. 
(a) PENALTIES FOR FAILURE TO FILE RETURN.—Section 145 (relat-
ing to penalties with respect to failure to file returns, pay tax, etc.) is 
hereby amended by relettering subsection (f) as subsection (g) and 
^u^s c^V45 
by adding after subsection (e) a new subsection (f) as follows: 
"(f) In the case of taxable years beginning prior to November 1, 
1951, and ending after October 31, 1951, the penalties prescribed by 
this section for willful failure to make declarations of, or pay, esti-
mated tax shall not be applicable to a failure to take into account the 
increase in rates of tax imposed on individuals by the Revenue Act 
of 1951." 
(b) ADDITIONS T
O TAX.—Section 294 (d) (2) (relating to additions 
leu^s ^c'§ 2
9
4 (d) 
to tax for substantial under-estimates of estimated tax) is hereby (2). 
amended by adding at the end thereof a new sentence as follows: 
"In the case of taxable years beginning prior to November 1, 1951, 
and ending after October 31, 1951, the additions to tax prescribed by 
this subsection shall not be applicable if the taxpayer failed to meet 
the requirements of this paragraph by reason of the increase in rates 
of tax on individuals imposed by the Revenue Act of 1951." 
SEC. 104. COMPUTATION OF TAX IN CASE OF CERTAIN JOINT RETURNS. 
If a joint return of a husband and wife is filed under the provisions 
of section 51 (b) (3) of the Internal Revenue Code in a case where 
2
6 u^s ^cf'§ 5
1 (b) 
the husband and wife have different taxable years because of the death (3). 
of either spouse, and the taxable year of the surviving spouse covered 
by such joint return began before November 1, 1951, and ended after 
October 31, 1951, the amendments made by this part and section 131 
Post, p. 471. 
shall be applicable in respect of such joint return as if the taxable years 
of both spouses covered by the joint return ended on the date of the 
closing of the surviving spouse's taxable year. 
SEC. 105. EFFECTIVE DATE OF PART I. 
Except as provided in section 104, the amendments made by this 
part shall be applicable only with respect to taxable years beginning 
after October 31, 1951, and to taxable years beginning on January 
1, 1951, and ending on December 31, 1951. For treatment of taxable 
years (other than the calendar year 1951) beginning before November 
1,1951, and ending after October 31,1951, see section 131. 
P"'*' P- "^L 
PART II—CORPORATION INCOME TAXES 
SEC. 121. INCREASE IN RATE OF CORPORATION NORMAL TAX. 
(a) AMENDMENT OF SECTION 13.—Subsections (a) and (b) of sec-
tion 13 (relating to normal tax on corporations) are hereby amended 
^u^g c 513 
to read as follows: 
Post', p'. 518. 
" (a) DEFINITIONS.—For the purposes of this chapter— 
"(1) ADJUSTED NET INCX)ME.—The term 'adjusted net income' 
means the net income minus the credit provided in section 26 (a), 
^u^g c" 526 
relating to interest on certain obligations of the United States and 
Government corporations. 
"(2) NORMAL-TAX NET INCOME.—The term 'normal-tax net in-
come' means the adjusted net income minus the sum of the follow-
ing credits: 
"(A) The credit for dividends received provided in section 
2 6 ( b ) ; 
"(B) In the case of a public utility, the credit for dividends 
paid on its preferred stock provided in section 26 (h) ; and 
^ f
f
*
*
|
- ^ j g
g (i,) 
Post, p.m. 
466 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
"(C) In the case of a western hemisphere trade corpora-
^^6 Stat. 838; 6
4 Stat. 
^ion (as defined in section 109), the credit provided in section 
26 U. S. C. §§ 109, 
26 ( i ) . 
^ ^'^' 
"(b) IMPOSITION OF TAX.—There shall be levied, collected, and paid 
for each taxable year upon the normal-tax net income of every cor-
poration (except a corporation subject to a tax imposed by section 
i u**sV^'sfisi 2^^ (^)' Supplement G, or Supplement Q)— 
(a), 2
0
1 eiseg'., 3
6
1 et 
" (1) CAIENDAR Y
E
A
R 1951.—In the case of a taxable year begin-
**'• 
ning on January 1, 1951, and ending on December 31, 1951, a tax 
of 28% per centum of the normal-tax net income. 
"(2) 
TAXABLE YEARS BEGINNING AFTER MARCH 
3 1 , 1951, AND 
B
E
F
O
R
E APRIL 1,1954.—^In the case of taxable years beginning after 
March 31, 1951, and before April 1, 1954, a tax of 30 per centum 
of the normal-tax income. 
"(3) 
TAXABLE YEARS BEGINNING AFTER MARCH 31, 1954.—^In 
the case of taxable years beginning after March 31, 1954, a tax 
of 25 per centum of the normal-tax net income." 
26u?s. c^^§43o(a) 
(b) MAXIMUM TAX.—Section 430 (a) (2) (relating to the limita-
(2). 
tion on the rate of the excess profits tax) is hereby amended as 
follows: 
(1) By inserting after "(2)" the following: "(A) in the case 
of taxable years ending before April 1,1951, . 
(2) By striking out the period at the end of paragraph (2) and 
inserting ", or" and by adding after paragraph (2) the follow-
ing: 
"(B) in the case of taxable years beginning on January 1,1951, 
and ending on December 31, 1951, an amount equal to 17^4 P®r 
centum of the excess profits net income for the taxable year, except 
that in the case of an affiliated group of includible corporations 
making or required to make a consolidated return for the taxable 
2
6 u^s ^' § 1
4
1 
y^^^ under section 141, such amount shall be reduced by an 
amount which bears the same ratio (but not in excess of 100 per 
centum) to the increase of 2 per centum in the surtax imposed by 
reason of section 141 (c) as the amount of the consolidated excess 
profits net income bears to the amount of the consolidated corpo-
ration surtax net income, or 
"(C) in the case of taxable years beginning after March 31, 
1951, an amount equal to 18 per centum of the excess profits net 
income for the taxable year, except that in the case of an affiliated 
group of includible corporations making or required to make a 
consolidated return for the taxable year under section 141, such 
amount shall be reduced by an amount which bears the same 
ratio (but not in excess of 100 per centum) to the increase of 2 
per centum in the surtax imposed by reason of section 141 (c) 
as the amount of the consolidated excess profits net income bears 
to the amount of the consolidated corporation surtax net income, 
or", 
(c) 
MUTUAL INSURANCE COMPANIES OTHER THAN LIFE OR MARINE.— 
26uf8.c!|207(a) 
(1) Sectiou 207 (a) (1) (relating to normal tax and surtax on 
(1). 
mutual insurance companies, other than life or marine) is hereby 
amended by striking out subparagraphs (A) and (B) and insert-
ing in lieu thereof the following: 
"(A) Taxable Years Beginning After December 31, 1960, 
and Before April 1,1951.—In the case of taxable years begin-
ning after December 31, 1950, and before April 1,1951, and 
ending after March 31,1951— 
" (i) Normal tax.—^A normal tax of 28% per centum of 
the normal-tax net income, or 57^^ per centum of the 
26 U. S. C. § 207 (a) 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
467 
amount by which the normal-tax net income exceeds 
$3,000, whichever is the lesser; plus 
"(ii) Surtax.—A surtax of 22 per centum of the cor-
poration surtax net income in excess of $25,000. 
" (B) Taxable Years Beginning After March 31,1951, and 
Before April 1,1954.—In the case of taxable years beginning 
after March 31,1951, and before April 1,1954— 
"(i) Normal tax.—A normal tax of 30 per centum of 
the normal-tax net income, or 60 per centum of the 
amount by which the normal-tax net income exceeds 
$3,000, whichever is the lesser; plus 
"(ii) Surtax.—A surtax of 22 per centum of the cor-
poration surtax net income in excess of $25,000. 
"(C) Taxable Years Beginning After March 31, 1954.— 
In the case of a taxable year beginning after March 31,1954— 
"(i) Normal tax.—A normal tax of 25 per centum of 
the normal-tax net income, or 50 per centum of the 
amount by which the normal-tax net income exceeds 
$3,000, wliichever is the lesser; plus 
"(ii) Surtax.—A surtax of 22 per centum of the cor-
poration surtax net income in excess of $25,000." 
(2) Section 207 (a) (3) (relating to a normal tax and surtax on 
se stat. 8
7
2
, 
interinsurers and reciprocal underwriters) is hereby amended by (3). 
striking out subparagraphs (A) and (B) and inserting in lieu 
thereof the following: 
"(A) Taxable Years Beginning After December 31, 1950, 
and before April 1,1951.—^In the case of taxable years begin-
ning after December 31, 1950, and before April 1, 1951, and 
endmg after March 31, 1951— 
"(i) Normal tax.—A normal tax of 28% per centum 
of the normal-tax net income, or 571^ per centum of the 
amount by which the normal-tax net income exceeds 
$50,000, whichever is the lesser; plus 
" (ii) Surtax.—A surtax of 22 per centum of the corpo-
ration surtax net income in excess of $25,000, or 33 per 
centum of the amount by which the corporation surtax 
net income exceeds $50,000, whichever is the lesser. 
"(B) Taxable Years Beginning After March 31,1951, and 
Before April 1,1954.—In the case of taxable years beginning 
after March 31,1951, and before April 1,1954— 
"(i) Normal tax.—A normal tax of 30 per centum of 
the normal-tax net income, or 60 per centum of the 
amount by which the normal-tax net income exceeds 
$50,000, whichever is the lesser; plus 
" (ii) Surtax.—A surtax of 22 per centum of the corpo-
ration surtax net income in excess of $25,000, or 33 per 
centum of the amount by which the corporation surtax net 
income exceeds $50,000, whichever is the lesser. 
"(C) Taxable Years Beginning After March 31,1954.—In 
the case of a taxable year beginning after March 31, 1954— 
"(i) Normal tax.—A normal tax of 25 per centum of 
the normal-tax net income, or 50 per centum of the amount 
by which the normal-tax net income exceeds $50,000, 
whichever is the lesser; plus 
"(ii) Surtax.—A surtax of 22 per centum of the cor-
poration surtax iiet income in excess of $25,000, or 33 per 
centum of the amount by which the corporation surtax net 
income exceeds $50,000, whichever is the lesser." 
468 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
6
6 ^tat m ^^^ ^^^ 
((J) EEGULATED INVESTMENT COMPANIES.—Section 362 (b) (relating 
to tax on regulated investment companies) is hereby amended by 
striking out paragraphs (3) and (4) and inserting in lieu thereof the 
following: 
" (3) In the case of taxable years beginning after December 31, 
1950, and before April 1, 1951, and ending after March 31, 1951, 
there shall be levied, collected, and paid for each taxable year upon 
2
6 u^s.^c. § 3
6
1 et 
^^^ Supplement Q net income a tax equal to 28% per centum of the 
seq. 
amount thereof. In the case of taxable years beginning after 
March 31, 1951, and before April 1, 1954, there shall be levied, 
collected, and paid for each taxable year upon its Supplement Q 
net income a tax equal to 30 per centum of the amount thereof. 
In the case of taxable years beginning after March 31,1954, there 
shall be levied, collected, and paid for each taxable year upon its 
Supplement Q net income a tax equal to 25 per centum of the 
amount thereof. 
"(4) In the case of taxable years beginning after December 31, 
1950, there shall be levied, collected, and paid for each taxable year 
upon its Supplement Q surtax net income a tax equal to 22 per 
centum of the amount thereof in excess of $25,000." 
(e) BUSINESS INCOME OF CERTAIN SECTION 101 ORGANIZATIONS.— 
2
6 u*.^s. ^^•§ 4
2
1 (a) Section 421 (a) (1) (relating to imposition of tax on business income of 
(!)• 
certain section 101 organizations) is hereby amended by inserting 
2
6 u.V. c! § 101. 
before the period at the end thereof the following: "; except that (A) 
in the case of taxable years beginning before April 1,1951, and ending 
after March 31, 1951, the normal tax shall be 28% per centum of the 
2
6 u^s ^c' § 4
2
1 et Supplement U net income, and (B) in the case of taxable years begin-
««?. 
ning after March 31, 1951, and before April 1, 1954, the normal tax 
shall be 30 per centum of the Supplement U net income". 
2
6 u*s c°§i5 
(^) -A-MENDMENT OF SECHON 15.-—Section 15 (relating to surtax on 
corporations) is hereby amended to read as follows: 
"SEC. 15. SURTAX ON CORPORATIONS. 
"(a) CORPORATION SURTAX NET INCOME.—For the purposes of this 
chapter, the term 'corporation surtax net income' means the net income 
minus the sum of the following credits: 
"(1) The credit for dividends received provided in section 
63 Stat. 18. 
O
f
t (h\ ' 
26 U. S. 0. § 26 (b). 
- ^ " ^ ^ O ; , 
<
. 
, . 
. 
. 
, 
"(2) In the case of a public utility, the credit for dividends 
5
6 Stat, m^ ^
^ ^
^
^ 
paid on its preferred stock provided in section 26 ( h ) ; 
"(3) In the case of a western hemisphere trade corporation (as 
^^6 Stat. 8
3
8
; 6
4 Stat. 
defined in section 109), the credit provided in section 26 (i). 
2
6 u. s. c. §
§ 1
0
9
, 
"(b) IMPOSITION OF TAX.—There shall be levied, collected, and paid 
for each taxable year upon the corporation surtax net income of every 
corporation (except a corporation subject to a tax imposed by section 
53s^at^78^7i^98^^ 231 (a), Supplement G, or Supplement Q) a surtax of 22 per centum 
(a), 2
0
1 eiseq'., 3
6
1 et of the amouiit of the corporation surtax net income in excess of $25,000. 
"(c) DISALLOWANCE OF SURTAX EXEMPTION AND MINIMUM EXCESS 
PROFITS CREDIT.—If any corporation transfers, on or after January 
1, 1951, all or part of its property (other than money) to another 
corporation which was created for the purpose of acquiring such 
property or which was not actively engaged in business at the time 
of such acquisition, and if after such transfer the transferor corpora-
tion or its stockholders, or both, are in control of such transferee 
corporation during any part of the taxable year of such transferee 
corporation, then such transferee corporation shall not for such tax-
seq 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
469 
able year (except as may be otherwise determined under section 129 
(b)) be allowed either the $25,000 exemption from surtax provided in 
26u!Ua§i29(b). 
subsection (b) or the $25,000 minimum excess profits credit provided 
in the last sentence of section 431, unless such transferee corporation 
^ |^^|- c^*§43i 
shall establish by the clear preponderance of the evidence that the 
securing of such exemption or credit was not a major purpose of such 
transfer. 
For the purposes of this subsection, control means the own-
ership of stock possessing at least 80 per centum of the total combined 
voting power of all classes of stock entitled to vote or at least 80 per 
centum of the total value of shares of all classes of stock of the corpora-
tion. 
In determining the ownership of stock for the purpose of this 
subsection, the ownership of stock shall be determined in accordance 
with the provisions of section 503, except that constructive ownership 
^ u.*s. c^§ sos. 
under section 503 (a) (2) shall be determined only with respect to the 
individual's spouse and minor children. 
The provisions of section 
129 (b), and the authority of the Secretary under such section, shall, 
to the extent not inconsistent with the provisions of this subsection, 
be applicable to this subsection. This subsection shall not apply to 
any taxable year with respect to which the tax imposed by subchapter 
D of this chapter is not in effect." 
^ u.^s.^c.^§ 4
3
0 et 
(g) TECHNICAL AMENDMENT.—Section 14 (relating to normal tax «
«
«
• 
on special classes of corporations in the case of taxable years beginning 
before July 1,1950) is hereby repealed. 
SEC. 122. CREDITS OF CORPORATIONS. 
(a) 
DIVIDENDS RECEIVED CREDIT.—Paragraphs 
(1) 
and 
(2) 
of 
section 26 (b) (relating to credit for dividends received; are hereby 
2
6 u.*s.c% 26(b). 
amended to read as follows: 
^o*^- P- ^87. 
"(1) I N GENERAL.—85 j)er centum of the amount received as 
dividends (other than dividends described in paragraph (2) on 
the preferred stock of a public utility) from a domestic corpo-
ration which is subject to taxation under this chapter. 
"(2) 
CERTAIN PREFERRED STOCK.— 
"(A) Calendar Year 1951.—In the case of a taxable year 
beginning on January 1, 1951, and ending on December 31, 
1951, 61 per centum of the amount received as dividends on 
the preferred stock of a public utility which is subject to 
taxation under this chapter and with respect to which the 
credit provided in section 26 (h) for dividends paid is 
^''^'^"• 
allowable. 
"(B) Taxable Years Beginning After March 31, 1951, and 
Before April 1, 1954.—^In the case of taxable years begin-
ning after March 31, 1951, and before April 1, 1954, 62 
per centum of the amount received as dividends on the pre-
ferred stock of a public utility which is subject to taxation 
under this chapter and with respect to which the credit pro-
vided in section 26 (h) for dividends paid is allowable. 
"(C) Taxable Years Beginning After March 31, 1954.— 
In the case of taxable years beginning after March 31, 1954, 
59 per centum of the amount received as dividends on the 
preferred stock of a public utility which is subject to taxation 
under this chapter and with respect to which the credit pro-
vided in section 26 (h) for dividends paid is allowable." 
(b) CREDIT FOR DivmENDs PAID ON CERTAIN PREFERRED STOCK.— 
The first sentence of section 26 (h) (1) (relating to amount of credit 
2
6 u*^s 0% 2
6 oi) 
for dividends paid on certain preferred stock) is hereby amended 
470 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
to read as follows: "In the case of a public utility, (A) for a taxable 
year beginning on January 1,1951, and ending on December 31,1951, 
an amount equal to 28 per centum of the lesser of (i) the amount oi 
dividends paid during the taxable year on its preferred stock or (ii) 
the adjusted net income for such taxable year minus the credit for 
dividends received provided in subsection (b) for such year, (B) 
for a taxable year beginning after March 31, 1951, and before April 
1, 1954, an amount equal to 27 per centum of the lesser of (i) the 
amount of dividends paid during the taxable year on its preferred 
stock or (ii) the adjusted net income for such taxable year minus 
PMt'^'m' 
^
^
^
® credit for dividends received provided in subsection (b) for such 
year, and (C) for a taxable year beginning after March 31, 1954, 
an amount equal to 30 per centum of the lower of (i) the amount of 
dividends paid during the taxable year on its preferred stock or (ii) 
the adjusted net income for such taxable year minus the credit for 
dividends received provided in subsection (b) for such year." 
26ufs.^c!§26 (i), 
(^) WESTERN HEMISPHERE TRADE CORPORATIONS.—Section 26 (i) 
(relating to credit of a western hemisphere trade corporation) is 
hereby amended to read as follows: 
"(i) WESTERN HEMISPHERE TRADE CORPORATIONS.—In the case of a 
6
6 Stat, m.^ ^^ 
western hemisphere trade corporation (as defined in section 109)— 
"(1) CALENDAR TEAR 1951.—^In the case of a taxable year begin-
ning on January 1, 1951, and ending on December 31, 1951, an 
amount equal to 28 per centum of its normal-tax net income 
computed without regard to the credit provided in this subsection. 
"(2) 
TAXABLE YEARS BEGINNING AFTER MARCH 31, 1951, AND 
BEFORE APRIL 1, 1954.—In the case of a taxable year beginning 
after March 31,1951, and before April 1,1954, an amount equal to 
27 per centum of its normal-tax net income computed without 
regard to the credit provided in this subsection. 
"(3) 
TAXABLE YEARS BEGINNING AFTER MARCH 31, 1954.—^In the 
case of a taxable year beginning after March 31,1954, an amount 
ec^ual to 30 per centum of its normal-tax net income computed 
without regard to the credit provided in this subsection." 
SEC. 123. COMPUTATION OF ALTERNATIVE CAPITAL GAINS TAX. 
iu!^s.c'. § 117(c) 
Section 117 (c) (1) (relating to alternative tax on corporations) 
(1). 
is hereby amended by striking out the second paragraph and inserting 
in lieu thereof the following: 
" (A) A partial tax shall first be computed upon the net income 
reduced by the amount of such excess, at the rates and in the 
manner as if this subsection had not been enacted. 
"(B) There shall then be ascertained an amount equal to 25 
per centum of such excess, except that in the case of any taxable 
year beginning after March 31, 1951, and before April 1, 1954, 
there shall be ascertained an amount equal to 26 per centum of 
such excess. 
"(C) The total tax shall be the partial tax computed under 
subparagraph (A) plus the amount computed under subpara-
graph (B)." 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
471 
53 Stat. 5. 
26 U. S. C. § 1 et aei'. 
53 Stat. 31. 
26 U.S. C. §66 (a). 
SEC. 124. PILING OF CORPORATION RETURNS FOR TAXABLE YEARS 
ENDING AFTER MARCH 31, 1951, AND BEFORE OCTOBER 1, 
1951. 
In the case of a corporation subject to a tax imposed by chapter 1 
of the Internal Revenue Code for a taxable year ending after March 
31,1951, but prior to October 1,1951, such corporation shall after the 
date of the enactment of this Act and on or before January 15, 1952, 
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 January 15,1952, 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. 125. EFFECTIVE DATE. 
The amendments made by this part shall be applicable only with 
respect to taxable years beginning after March 31,1951, and to taxable 
years beginning on January 1, 1951, and ending on December 31, 
1951, except that the amendments made to sections 207, 362, and 421 
of the Internal Revenue Code shall be applicable to taxable years 
beginning after December 31, 1950, and ending after March 31, 1951. 
In the case of an insurance company subject to the tax imposed by 
section 207, the provisions of section 26 (D) of such code applicable 
to the calendar year 1951 shall be applicable to a taxable year begin-
ning after December 31, 1950, and before April 1, 1951, and ending 
after March 31, 1951. For treatment of taxable years (other than 
the calendar year 1951) beginning before April 1, 1951, and ending 
after March 31,1951, see section 131. 
PART III—FISCAL YEAR TAXPAYERS 
SEC 131. FISCAL YEAR TAXPAYERS. 
(a) AMENDMENT or SEOTION 108.—Section 108 is hereby amended 
^ u^1"^c°§los. 
by striking out paragraph (2) of subsection (f) and inserting in lieu Postip!m. 
thereof the following: 
" (2) that portion of a tentative tax consisting of— 
"(A) a tentative normal tax of 25 per centum of the 
normal-tax net income, plus 
"(B) a tentative surtax of 20 per centum of the surtax 
net income in excess of $25,000, 
which the number of days in such taxable year after June 30, 
1950, and before April 1, 1951, bears to the total number of days 
in such taxable year, plus (if the taxable year ends after March 
31, 1951) 
ArOe, pp. 466-468. 
Post, p. 510. 
Ante, p. 469. 
Post, p. 487. 
472 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
Ante, pp. 469, 470. 
Post, p. 487. 
Ante, pp. 466, 468. 
Post, p. 518. 
64 Stat. 1216. 
26U. S. C. §26. 
53 Stat. 5; 64 Stat. 
948 
26 U. S. C. §§ 11, 
421 (a) (2). 
Ante, pp. 459, 461. 
Post, p. 480. 
64 Stat. 948. 
26 U. S. C. § 421 (b) 
(2). 
" (3) that portion of a tentative tax consisting of— 
"(A) a tentative normal tax of 30 per centum of the 
normal-tax net income, plus 
"^B) a tentative surtax of 20 per centum of the surtax 
net income in excess of $26,000, 
which the number of days in such taxable year after March 31, 
1951, bears to the total number of days in such taxable year. 
In computing for the purposes of paragraph (2) the normal-tax net 
income and the corporation surtax net income, the credits provided 
in section 26 applicable to taxable years beginning on July 1, 1950, 
shall be allowed in the manner and to the extent provided in sections 
13 and 15 applicable to years beginning on such date, except that such 
credits shall be applied without regard to the amendments made to 
section 26 by title I I of the Excess Profits Tax Act of 1950. In com-
puting for the purposes of paragraph (3) the normal-tax net income 
and the corporation surtax net income, the credits provided in section 
26 applicable to taxable years beginning on April 1, 1951, shall be 
allowed in the manner and to the extent provided in sections 13 and 
15 applicable to years beginning on such date. 
"(g) 
CERTAIN TAXABLE YEARS OF CORPORATIONS BEGINNING AFTER 
JUNE 30, 1950, AND BEFORE APRIL 1, 1951.—^In the case of a taxable 
year (other than one beginning on January 1, 1951, and ending on 
December 31, 1951) of a corporation beginning after June 30, 1950, 
and before April 1, 1951, and ending after March 31, 1951, tne tax 
imposed by sections 13 and 15 shall be an amount equal to the sum of— 
"(1) that portion of a tentative tax, computed under the pro-
visions of sections 13 and 15 applicable to such taxable year, 
which the number of days in such taxable year prior to April 1, 
1951, bears to the total number of days in such taxable year, plus 
"(2) that portion of a tentative tax, computed under the pro-
visions of sections 13 and 15 applicable to years beginning on 
April 1,1951, as if such provisions were applicable to such taxable 
year, which the number of days in such taxable year after March 
31,1951, bears to the total number of days in such taxable year. 
"(h) CERTAIN TAXABLE YEARS OF iNDivmuALs BEGINNING BEFORE 
NOVEMBER 1, 1951, AND ENDING AFTER OCTOBER 31, 1951.—In the case 
of a taxable year (other than one beginning on January 1, 1951, and 
ending on December 31,1951) of a taxpayer, other than a corporation, 
beginning before November 1, 1951, and ending after October 31, 
1951, the tax imposed by sections 11 and 12, section 400, or section 421 
(a) (2), shall be an amount equal to the sum of— 
"(1) that portion of a tentative tax, computed under the provi-
sions of sections 11 and 12, section 400, or section 421 (a) (2), 
applicable to such year, which the number of calendar months in 
such taxable year prior to November 1, 1951, bears to the total 
number of calendar months in such taxable year, plus 
"(2) that portion of a tentative tax, computed under the pro-
visions of sections 11 and 12, section 400, or section 421 (-a) (2), 
applicable to years beginning on November 1,1951, as if such pro-
visions (other than the provisions relating to head of household) 
were applicable to such taxable year, which the number of calen-
dar months in such taxable year after October 31,1951, bears to the 
total number of calendar months in such taxable year. 
This subsection shall not apply in the case of a trust described in sec-
tion 421 (b) (2) if the taxable year of such trust began before January 
1, 1951. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
473 
"(i) DEFINITION OF CALENDAR MONTH.—For the purposes of this 
section, a calendar month only part of which falls within a taxable 
year (1) shall be disregarded if less than 15 days of such month are 
included in such taxable year, and (2) shall be included as a calendar 
month within the taxable year if more than 14 days of such month fall 
within the taxable year. 
" (j) TAXABLE YEARS OF INDIVIDUALS BEGINNING IN 195S AND ENDING 
IN 1954.—In the case of a taxable year of a taxpayer, other than a cor-
poration, beginning before January 1,1954, and ending after Decem-
ber 31,1953, the tax imposed by sections 11 and 12, section 400, or sec-
tion 421 (a) (2), shall be an amount equal to the sum of— 
^f stat. 5; 6
4 stat. 
"(1) that portion of a tentative tax, computed under the pro- 
2
6 u. s. c. §
§ n, 4:JI 
visions of sections 11 and 12, section 400, or section 421 (a) (2), ^^liSe,pp.459,m. 
applicable to years beginning on January 1,1953, which the num- 
Post,'p. m. ' 
ber of calendar months in such taxable year prior to January 1, 
1954, bears to the total number of calendar months in such taxable 
year, plus 
"(2) that portion of a tentative tax, computed under the pro-
visions of sections 11 and 12, section 400, or section 421 (a) (2), 
applicable to years beginning on January 1, 1954, as if such pro-
visions were applicable to such taxable year, which the number of 
calendar months in such taxable year after December 31, 1953, 
bears to the total number of calendar months in such taxable year, 
"(k) TAXABLE YEARS OF CORPORATIONS BEGINNING BEFORE APRIL 1, 
1954, AND ENDING AFTER MARCH 31, 1954.—In the case of a taxable 
year of a corporation beginning before April 1,1954, and ending after 
March 31, 1954, the tax imposed by sections 13 and 15, or section 421 
(a) (1), shall be an amount equal to the sum of— 
PM/'P^618^' *^' 
(1) that portion of a tentative tax, computed under the pro-
visions of sections 13 and 15, or section 421 (a) (1), applicable to 
years beginning on January 1, 1953, which the number of days in 
such taxable year prior to April 1,1954, bears to the total number 
of days in such taxable year, plus 
"(2) that portion of a tentative tax, computed under the pro-
visions of sections 13 and 15, or section 421 (a) (1), applicable to 
years beginning on April 1, 1954, as if such provisions were 
applicable to such taxable year, which the number of days in such 
taxable year after March 31, 1954, bears to the total number of 
days in such taxable year." 
(b) COMPUTATION OF EXCESS PROFITS TAX.—Subsection (b) of sec-
tion 430 (relating to computation of excess profits tax in the case of 
^ ^**| ^
^
^
^
T
^
. 
certain taxable years) is hereby amended to read as follows: 
"(b) CERTAIN TAXABLE YEARS BEGINNING BEFORE 1951.— 
"(1) TAXABLE YEARS ENDING BEFORE APRIL 1, 1951.—In the case 
of a taxable year beginning before July 1, 1950, and ending 
after June 30, 1950, and before April 1, 1951, the tax imposed 
by subsection (a) shall be an amount equal to that portion of a 
tentative tax, computed under the provisions of subsection (a) 
applicable to taxable years ending on December 31, 1950, which 
the number of days in such taxable year after June 30,1950, bears 
to the total number of days in such taxable year. 
" (2) TAXABLE YEARS ENDING AFTER MARCH 31,1951.—^In the case 
of a taxable year (other than a taxable year beginning on January 
1, 1951, and ending on December 31, 1951) beginning before 
26 U. B.C. §430. 
474 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
April 1, 1951, and ending after March 31, 1951, the tax imposed 
by subsection (a) shall he an amount equal to the sum of— 
"(A) that portion of a tentative tax, computed under 
the provisions of subsection (a) applicable to taxable years 
ending on December 31, 1950, which the number of days 
in such taxable year after June 30, 1950, and before April 
1, 1951, bears to the total number of days in such taxable 
year, plus 
"(B) that portion of a tentative tax, computed under the 
P
rovisions of subsection (a) applicable to taxable years 
eginning on April 1, 1951, which the number of days in 
such taxable year after March 31, 1951, bears to the total 
number of days in such taxable year." 
(c) TECHNICAL AMENDMENTS.— 
26u.^s.*a§io8. 
^1) Section 108 (e) (2) is hereby amended by inserting after 
Ante,p.471. 
"sectiou 400," the following: "applicable to years beginnmg on 
October 1, 1950,". 
(2) Section 108 (g) is hereby amended by striking out " ( g ) " 
and inserting in lieu thereof "(1)". 
TITLE II—WITHHOLDING OF TAX AT SOURCE 
SEC. 
201. PERCENTAGE METHOD OF WITHHOLDING. 
26u!s*.c^§i622(a). 
Scction 1622 (a) (relating to percentage method of withholding 
on wages) is hereby amended by inserting before the period at the 
end thereof the following: ", except that m the case of wages paid 
on or after November 1, 1951, and before January 1, 1954, the tax 
shall be equal to 20 per centum of such excess in lieu of 18 per centum". 
SEC 202. WAGE BRACKET WITHHOLDING. 
2
6 u!*s.' c^§ 1
6
2
2 (c) 
So much of section 1622 (c) (1) as precedes the tables in such section 
(!)• 
is hereby amended to read as follows: 
"(1) (A) Wages paid after October 31, 1951, and before 
January 1, 1954.—^At the election of the employer with re-
spect to any employee, the employer shall deduct and with-
hold upon the wages paid to such employee after October 
31, 1951, and before January 1, 1954, a tax determined in 
accordance with the following tables, which shall be in lieu 
of the tax required to be deducted and withheld under 
subsection ( a ) : 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
I f the payroll period with respect to an employee is weekly 
475 
And the wages are— 
At least 
$0 
$13 
$14 
$15 
$16 
$17 
$18 
$19 
$20 
$21 
$22 
$23 
$24 
$25 
$27 
$28 
$29-
$30- 
-
$31 
$32 
$33 
$34 
$35 
$36 
$37-
$38 
$39 
$40_ 
-
$41 
$42 
$43 
-
$ 4 4 - . 
$45 
$46 
$47 
$48 
$49 
$50 
$61 
$52 
$53 
$54 
$55 
$56 
$57... 
$58. 
$59 
$60. 
$62 
$64 
$66 
$68 
$70 
$72 
$74 
$76. 
$78 
$80 
$82 
$84 
$86 
$88 
$90 
$92 
$94 
$96 
$98 
$100 
$110 
$115 
$120-
$125 
$130-
$135 
$140 
$145 
$150 
$160 
$170 
$180 
$190 
$200 and 0 
But less 
than 
$13 
$14 
$16 
$17 
$18 
$19 
$20 
$21 
$22 
$23 
$24 
$25 
$26 
$27 
$28 
$29 
$30 
$31 
$32 
$33 
$34 
$35 
$36 
$37 
$38 
$39 
$40 
$41 
$42 
$43 
$44 
$45 
$46 
$47 
$48 
$49 
$50 
$51 
$52 
$63 
$54 
$55 
$56 
$57 
$58 
$59 
$60 
$62 
$64 
$66 
$68 
$70 
$72 
$74 
$76 
$78 
$80 
$82 
$84 
$86 
$88. 
$90 
$92 
$94 
$96 
$98 
$100 
$105 
$110 
$115 
$120 
$125 
$130 
$135 
$140 
$150 
$160 
$170 
$180 
$190 
$200 
ver 
0 
ao%of 
wagM 
$2.70 
2.90 
3.10 
3.30 
3.50 
3.70 
3.90 
4.10 
4.30 
4.50 
4.70 
4.90 
5.10 
5.30 
5.50 
5.70 
5.90 
6.10 
6.30 
6.50 
6.70 
6.90 
7.10 
7.30 
7.50 
7.70 
7.90 
8.10 
8.30 
8.50 
8.70 
8.90 
9.10 
9.30 
9.50 
9.70 
9.90 
10.10 
10.30 
10.50 
10.70 
10.90 
11.10 
11.30 
11.60 
11.70 
11.90 
12.20 
12.60 
13.00 
13.40 
13.80 
14.20 
14.60 
16.00 
15.40 
15.80 
16.20 
16.60 
17.00 
17.40 
17.80 
18.20 
18.60 
19.00 
19.40 
19.80 
20.50 
21.50 
22.50 
23.50 
24.50 
25.50 
26.50 
27.50 
28.50 
29.50 
31.00 
33.00 
35.00 
37.00 
39.00 
40.00 
And the number of withholding exemptions claimed is— 
1 
$0 
.10 
.30 
.50 
.70 
.90 
1.10 
1.30 
1.50 
1.70 
1.90 
2.10 
2.30 
2.50 
2.70 
2.90 
3.10 
3.30 
3.50 
3.70 
3.90 
4.10 
4.30 
4.50 
4.70 
4.90 
5.10 
5.30 
5.50 
5.70 
5.90 
6.10 
6.30 
6.50 
6.70 
6.90 
7.10 
7.30 
7.50 
7.70 
7.90 
8.10 
8.30 
8.60 
8.70 
8.90 
9.10 
9.30 
9.60 
10.00 
10.40 
10.80 
11.20 
11.60 
12.00 
12.40 
12.80 
13.20 
13.60 
14.00 
14.40 
14.80 
16.20 
15.60 
16.00 
16.40 
16.80 
17.20 
17.90 
18.90 
19.90 
20.90 
21.90 
22.90 
23.90 
24.90 
25.90 
26.90 
28.40 
30.40 
32.40 
34.40 
36.40 
37.40 
2 
3 
4 
6 
6 
7 
8 
The amount of tax to be withbdd shall be— 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.20 
.40 
.60 
.80 
1.00 
1.20 
1.40 
1.60 
1.80 
2.00 
2.20 
2.40 
2.60 
2.80 
3.00 
3.20 
3.40 
3.60 
3.80 
4.00 
4.20 
4.40 
4.60 
4.80 
6.00 
6.20 
6.40 
6.60 
6.80 
6.00 
6.20 
6.40 
6.60 
6.80 
7.10 
7.60 
7.90 
8.30 
8.70 
9.10 
9.50 
9.90 
10.30 
10.70 
11.10 
11.50 
11.90 
12.30 
12.70 
13.10 
13.50 
13.90 
14.30 
14.70 
15.40 
16.40 
17.40 
18.40 
19.40 
20.40 
21.40 
22.40 
23.40 
24.40 
25.90 
27.90 
29.90 
31.90 
33.90 
34.90 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.20 
.40 
.60 
.80 
1.00 
1.20 
1.40 
1.60 
1.80 
2.00 
2.20 
2.40 
2.60 
2.80 
3.00 
3.20 
3.40 
3.60 
3.80 
4.00 
4.20 
4.50 
4.90 
5.30 
5.70 
6.10 
6.60 
6.90 
7.30 
7.70 
8.10 
8.50 
8.90 
9.30 
9.70 
10.10 
10.60 
10.90 
11.30 
11.70 
12.10 
12.80 
13.80 
14.80 
15.80 
16.80 
17.80 
18.80 
19.80 
20.80 
21.80 
23.30 
25.30 
27.30 
29.30 
31.30 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.20 
.40 
.60 
.80 
1.00 
1.20 
1.40 
1.60 
1.90 
2.30 
2.70 
3.10 
3.60 
3.90 
4.30 
4.70 
5.10 
6.60 
6.90 
6.30 
6.70 
7.10 
7.50 
7.90 
8.30 
8.70 
9.10 
9.50 
10.20 
11.20 
12.20 
13.20 
14.20 
15.20 
16.20 
17.20 
18.20 
19.20 
20.70 
22.70 
24.70 
26.70 
28.70 
20 percent of tb 
32.30 
29.70 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.20 
.60 
1.00 
1.40 
1.80 
2.2Q. 
2.60 
3.00 
3.40 
3.80 
4.20 
4.60 
6.00 
6.40 
5.80 
6.20 
6.60 
7.00 
7.70 
8.70 
9.70 
10.70 
11.70 
12.70 
13.70 
14.70 
15.70 
16.70 
18.20 
20.20 
22.20 
24.20 
26.20 
eexcesi 
27.20 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.40 
.80 
1.20 
1.60 
2.00 
2.40 
2.80 
3.20 
3.60 
4.00 
4.40 
5.10 
6.10 
7.10 
8.10 
9.10 
10.10 
11.10 
12.10 
13.10 
14.10 
15.60 
17.60 
19.60 
21.60 
23.60 
) over $i 
24.60 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.30 
.70 
1.10 
1.60 
1.90 
2.60 
3.60 
4.60 
6.60 
6.60 
7.60 
8.60 
9.60 
10.60 
11.60 
13.10 
16.10 
17.10 
19.10 
21.10 
M0plu» 
22.10 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
a 
0 
0 
0 
0 
1.00 
2.00 
3.00 
4.00 
5.00 
6.00 
7.00 
8.00 
9.00 
10.50 
12.50 
14.50 
16.50 
18.50 
19.50 
9 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
O
i 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.40 
1.40 
2.40 
3.40 
4.40 
5.40 
6.40 
7.90 
9.90 
11.90 
13.90 
16.90 
16.90 
10 or 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
t) 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.90 
1.90 
2.90 
3.90 
5.40 
7.40 
9.40 
11.4b 
13.40 
14.40 
476 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
*'If the payroll period with respect to an employee is biweekly 
And the wages 
And the number of withholding exemptions claimed is— 
At least 
But less 
than 
1 
2 
3 
4 
5 
6 
7 
8 
9 
The amount of tax to be withheld shall be— 
10 or 
more 
$0... 
$26-
$28. 
$30. 
$32. 
$34. 
$36. 
$38. 
$40. 
$42. 
$14. 
$46. 
$48. 
$50. 
$52. 
$54. 
$56. 
$58. 
$60. 
$62. 
$64. 
$66. 
$68. 
$70. 
$72., 
$74. 
$76. 
$78.. 
$80. 
$82-
$84.. 
$86.. 
$88.. 
$90. 
$92.. 
$94.. 
$98 
$100 
$102 
$104.. 
$106 
$108 
$110 
$112 
$114 
$116 
$118 
$120 
$124 
$128 
$132 
$136 
$140 
$144 
$148 
$152 
$156 
$160 
$164 
$168 
$172 
$176 
$180 
$184 
$188 
$192 
$196 
$200 
$210 
$220 
$230 
$240 
$250 
$260 
$270 
$280 
$290 
$300 
$320 
$340 
$360 
$380 
$26. 
$28. 
$30. 
$32. 
$34. 
$36. 
$38. 
$40. 
$42. 
$44. 
$46. 
$48. 
$50-
$52. 
$54. 
$56. 
$58. 
$60. 
$62. 
$64. 
$66-
$68-
$70-
$72-
$74. 
$76. 
$78-
$80. 
$82. 
$84-
$86. 
$88. 
$90. 
$92. 
$94. 
$96. 
$100. 
$102. 
$104. 
$106. 
$108. 
$110. 
$112. 
$114. 
$116-
$118. 
$120. 
$124. 
$128. 
$132-
$136-
$140-
$144. 
$148. 
$152. 
$156-
$160-
$164-
$168-
$172. 
$176. 
$180. 
$184. 
$188. 
$192. 
$196. 
$200. 
$210. 
$220. 
$230. 
$240-
$250. 
$260. 
$270. 
$280-
$290. 
$300-
$320-
$340. 
$360. 
$380. 
$400. 
20% of 
wagM 
$5.40 
5.80 
6.20 
6.60 
7.00 
7.40 
7.80 
8.20 
8.60 
9.00 
9.40 
9.80 
10.20 
10.60 
11.00 
11.40 
11.80 
12.20 
12.60 
13.00 
13.40 
13.80 
14.20 
14.60 
15.00 
15.40 
15.80 
16.20 
16.60 
17.00 
17.40 
17.80 
18.20 
18.60 
19.00 
19.40 
19.80 
20.20 
20.60 
21.00 
21.40 
21.80 
22.20 
22.60 
23.00 
23.40 
23.80 
24.40 
25.20 
26.00 
26.80 
27.60 
28.40 
29.20 
30.00 
30.80 
31.60 
32.40 
33.20 
34.00 
34.80 
35.60 
36.40 
37.20 
38.00 
38.80 
39.60 
41.00 
43.00 
45.00 
47.00 
49.00 
61.00 
53.00 
55.00 
57.00 
59.00 
62.00 
66.00 
70.00 
74.00 
78.00 
$0 
.30 
.70 
1.10 
1.50 
1.90 
2.30 
2.70 
3.10 
3.50 
3.90 
4.30 
4.70 
6.10 
5.50 
5.90 
6.30 
6.70 
7.10 
7.60 
7.90 
8.30 
8.70 
9.10 
9.50 
9.90 
10.30 
10.70 
11.10 
11.50 
11.90 
12.30 
12.70 
13.10 
13.50 
13.90 
14.30 
14.70 
16.10 
15.50 
15.90 
16.30 
16.70 
17.10 
17.60 
17.90 
i a 3 0 
i a 7 0 
19.30 
20.10 
20.90 
21.70 
22.50 
23.30 
24.10 
24.90 
25.70 
26.50 
27.30 
28.10 
28.90 
29.70 
30.50 
31.30 
32.10 
32.90 
33.70 
34.50 
35.90 
37.90 
39.90 
41.90 
43.90 
45.90 
47.90 
49.90 
61.90 
53.90 
56.90 
60.90 
64.90 
68.90 
72.90 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.30 
.70 
1.10 
1.50 
1.90 
2.30 
2.70 
3.10 
3.50 
3.90 
4.30 
4.70 
6.10 
6.50 
6.90 
6.30 
6.70 
7.10 
7.50 
7.90 
aso 
8.70 
9.10 
9.60 
9.90 
10.30 
10.70 
11.10 
11.50 
11.90 
12.30 
12.70 
13.10 
13.50 
14.10 
14.90 
15.70 
16.60 
17.30 
18.10 
18.90 
19.70 
20.50 
21.30 
22.10 
22.90 
23.70 
24.50 
25.30 
26.10 
26.90 
27.70 
28.50 
29.30 
30.70 
32.70 
34.70 
3470 
38.70 
40.70 
42.70 
44.70 
46.70 
48.70 
61.70 
65.70 
59.70 
63.70 
67.70 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.40 
.80 
1.20 
1.60 
2.00 
2.40 
2.80 
3.20 
3.60 
4.00 
4.40 
4.80 
5.20 
6.60 
6.00 
6.40 
6.80 
7.20 
7.60 
8.00 
8.40 
9.00 
9.80 
10.60 
11.40 
12.20 
13.00 
13.80 
14.60 
16.40 
16.20 
17.00 
17.80 
18.60 
19.40 
20.20 
21.00 
21.80 
22.60 
23.40 
24.20 
26.60 
27.60 
29.60 
31.60 
33.60 
35.60 
37.60 
39.60 
41.60 
43.60 
46.60 
50.60 
64.60 
58.60 
62.60 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.10 
.60 
.90 
1.30 
1.70 
2.10 
2.50 
2.90 
3.30 
3.90 
4.70 
5.50 
6.30 
7.10 
7.90 
8.70 
9.60 
10.30 
11.10 
11.90 
12.70 
13.60 
14.30 
15.10 
15.90 
16.70 
17.50 
18.30 
19.10 
20.50 
22.60 
24.60 
26.60 
28.50 
30.50 
32.60 
34.60 
36.50 
38.50 
41.50 
45.50 
49.50 
53.60 
57.60 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.40 
1.20 
2.00 
2.80 
3.60 
4.40 
5.20 
6.00 
6.80 
7.60 
8.40 
9.20 
10.00 
10.80 
11.60 
12.40 
13.20 
14.00 
15.40 
17.40 
19.40 
21.40 
23.40 
26.40 
27.40 
29.40 
31.40 
33.40 
36.40 
40.40 
44.40 
48.40 
52.40 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.80 
1.60 
2.40 
3.20 
4.00 
4.80 
6.60 
6.40 
7.20 
8.00 
8.80 
10.20 
12.20 
14.20 
16.20 
18.20 
20.20 
22.20 
24.20 
26.20 
28.20 
31.20 
35.20 
39.20 
43.20 
47.20 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.60 
1.30 
2.10 
2.90 
3.70 
5.10 
7.10 
9.10 
11.10 
13.10 
16.10 
17.10 
19.10 
21.10 
23.10 
26.10 
30.10 
34.10 
38.10 
42.10 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
2.00 
4.00 
6.00 
8.00 
10.00 
12.00 
14.00 
16.00 
18.00 
21.00 
25.00 
29.00 
33.00 
37.00 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.80 
2.80 
4.80 
6.80 
8.80 
10.80 
12.80 
16.80 
19.80 
23.80 
27.80 
31.80 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1.70 
3.70 
6.70 
7.70 
10.70 
14.70 
18.70 
22.70 
26.70 
$400 and over. 
20 percent of the excess OTCT $400 plus— 
80.00 
69.70 
64.60 
59.50 
64.40 
49.20 
44.10 
39.00 
28.70 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
"If the payroll period with respect to an employee is semimonthly 
477 
And the wages are— 
And the number of withholding exemptions claimed is— 
But less 
than 
1
2
3
4
5
6
7
8
9 
The amount of tax to be withheld shall be— 
10 
or 
more 
$30, 
$32_ 
$34. 
$36-
$38. 
$40_ 
$42. 
$44_ 
$30-
$32. 
$34. 
$36. 
$38-
$40-
$42-
$44-
$50. 
$52. 
$54. 
$56. 
$50-
$52-
$54-
$56-
$62-
$64. 
$70... 
$72— 
$74.-
$76— 
$70-
$72. 
$76-
$82. 
$84. 
$90-
$92-
$94. 
$94-
$100-
$102-
$104-
$106-
$108-
$110-
$112-
$114-
$116-
$118.. 
$120-
$124-. 
$128-
$132-
$136. 
$140-
$144-. 
$148-
$152-
$156. 
$160-
$164-
$168-
$172-. 
$176. 
$180.. 
$184-
$188-
$192. 
$196-
$200. 
$210-
$220. 
$230-
$240-
$250. 
$260-
$270. 
$280. 
$290. 
$300-
$320-
$340. 
$360. 
$380. 
$400. 
$420.. 
$440.. 
$460.. 
$480-
$100-
$102. 
$104. 
$106. 
$108-
$110. 
$112-
$114. 
$116-
$118-
$120-
$124-
$128-
$132-
$136-
$140-
$144. 
$148-
$162-
$156-
$160-
$164-
$168-
$172. 
$176-
$188. 
$192-
$196-
$200. 
$210. 
$220. 
$230-
$240. 
$250.' 
$260. 
$270. 
$280. 
$290. 
$300. 
$320. 
$340. 
$360-
$380. 
$400. 
$420. 
$440-
$460-
$480-
$500. 
$500 and over. 
20% of 
5.80 
6.20 
6.60 
7.00 
7.40 
7.80 
8.20 
8.60 
9.00 
9.40 
9.80 
10.20 
10.60 
11.00 
11.40 
11.80 
12.20 
12.60 
13.00 
13.40 
13.80 
14.20 
14.60 
15.00 
15.40 
15.80 
16.20 
16.60 
17.00 
17.40 
17.80 
18.20 
18.60 
19.00 
19.40 
19.80 
20.20 
20.60 
21.00 
21.40 
21.80 
22.20 
22.60 
23.00 
23.40 
23.80 
24.40 
25.20 
26.00 
26.80 
27.60 
28.40 
29.20 
30.00 
30.80 
31.60 
32.40 
33.20 
34.00 
34.80 
35.60 
36.40 
37.20 
38.00 
38.80 
39.60 
41.00 
43.00 
45.00 
47.00 
49.00 
51.00 
53.00 
55.00 
57.00 
59.00 
62.00 
66.00 
70.00 
74.00 
78.00 
82.00 
86.00 
90.00 
94.00 
98.00 
$0 
.20 
.60 
1.00 
1.40 
1.80 
2.20 
2.60 
3.00 
3.40 
3.80 
4.20 
4.60 
5.00 
5.40 
5.80 
6.20 
6.60 
7.00 
7.40 
7.80 
8.20 
8.60 
9.00 
9.40 
9.80 
10.20 
10.60 
11.00 
11.40 
11.80 
12.20 
12.60 
13. 00 
13.40 
13.80 
14.20 
14.60 
15.00 
15.40 
15.80 
16.20 
16.60 
17.00 
17.40 
17.80 
18.20 
18.80 
19.60 
20.40 
21.20 
22.00 
22.80 
23.60 
24.40 
25.20 
26.00 
26.80 
27.60 
28.40 
29.20 
30.00 
30.80 
31.60 
32.40 
33.20 
34.00 
35.40 
37.40 
39.40 
41.40 
43.40 
45.40 
47.40 
49.40 
51.40 
53.40 
56.40 
60.40 
64.40 
68.40 
72.40 
76.40 
80.40 
84.40 
88.40 
92.40 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.30 
.70 
1.10 
1.50 
1.90 
2.30 
2.70 
3.10 
3.50 
3.90 
4.30 
4.70 
6.10 
5.50 
5.90 
6.30 
6.70 
7.10 
7.50 
7.90 
8.30 
8.70 
9.10 
9.50 
9.90 
10.30 
10.70 
11.10 
11. 50 
11.90 
12.30 
12.70 
13.30 
14.10 
14.90 
16.70 
16. 50 
17.30 
18.10 
18.90 
. 19. 70 
20.50 
21.30 
22.10 
22.90 
23.70 
24.50 
25.30 
26.10 
26.90 
27.70 
28.50 
29.90 
31.90 
33.90 
35.90 
37.90 
39.90 
41.90 
43.90 
45.90 
47.90 
50.90 
64.90 
58.90 
62.90 
66.90 
70.90 
74.90 
78.90 
82.90 
86.90 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.30 
.70 
1.10 
1.50 
1.90 
2.30 
2.70 
3.10 
3.50 
3.90 
4.30 
4.70 
5.10 
6. 50 
6.90 
6.30 
6.70 
7.10 
7.70 
8.50 
9.30 
10.10 
10.90 
11.70 
12.50 
13.30 
14.10 
14.90 
15.70 
16.50 
17.30 
18.10 
18.90 
19.70 
20.50 
21.30 
22.10 
22.90 
24.30 
26.30 
28.30 
30.30 
32.30 
34.30 
36.30 
38.30 
40.30 
42.30 
45.30 
49.30 
53.30 
57.30 
61.30 
65.30 
69.30 
73.30 
77.30 
81.30 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.40 
.80 
1.20 
1.60 
2.20 
3.00 
3.80 
4.60 
5.40 
6.20 
7.00 
7.80 
8.60 
9.40 
10.20 
11.00 
11.80 
12.60 
13.40 
14.20 
15.00 
15.80 
16.60 
17.40 
18.80 
20.80 
22.80 
24.80 
26.80 
28.80 
30.80 
32.80 
34.80 
36.80 
39.80 
43.80 
47.80 
61.80 
65.80 
69.80 
63.80 
67.80 
71.80 
75.80 
.$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.60 
1.40 
2.20 
3.00 
3.80 
4.60 
5.40 
6.20 
7.00 
7.80 
8.60 
9.40 
10.20 
11.00 
11.80 
13.20 
16.20 
17.29 
19.20 
21.20 
23.20 
25.20 
27.20 
29.20 
31.20 
34.20 
38.20 
42.20 
46.20 
50.20 
64.20 
68.20 
62.20 
66.20 
70.20 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.70 
1.50 
2.30 
3.10 
3.90 
4.70 
5.60 
6.30 
7.70 
9.70 
11.70 
13.70 
15.70 
17.70 
19.70 
21.70 
23.70 
25.70 
28.70 
32.70 
36.70 
40.70 
44.70 
48.70 
52.70 
56.70 
60.70 
64.70 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.70 
2.10 
4.10 
6.10 
8.10 
10.10 
12.10 
14.10 
16.10 
18.10 
20.10 
23.10 
27.10 
31.10 
35.10 
39.10 
43.10 
47.10 
51.10 
55.10 
59.10 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.60 
2.60 
4.60 
6.60 
8.60 
10.60 
12.60 
14.60 
17.60 
21.60 
25.60 
29.60 
33.60 
37.60 
41.60 
45.60 
49.60 
63.60 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1.00 
3.00 
5.00 
7.00 
9.00 
12.00 
16.00 
20.00 
24.00 
28.00 
32.00 
36.00 
40.00 
44.00 
4S.0O 
20 percent of the excess oyer $500 plus— 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1.40 
3.40 
6.40 
10.40 
14.40 
18.40 
22.40 
26.40 
30.40 
34.40 
38.40 
42.40 
100.00 
94.40 
88.90 
83.30 
77.80 
72.20 
66.70 
61.10 
56.60 
50.00 
44.40 
478 
PUBLIC LAW ISa—OCT. 20, 1951 
[65 STAT. 
"If the payroll period with respect to an employee is monthly 
And the wages are— 
At least 
$0 
$56 
$60 
$64 
$68 
$72 
$76 
. -
$80 
$84 
$88 
-
$92.. 
$96 
$100. 
$104.. 
$108 
$112 
$116 
$120 
$124 
$128 
$132 
$136 
$ 1 4 0 . . . , - . 
$144 
$148 
$152 
$156 
$160. 
$164 
$168 
$172 
$176 
$180 
$184 
$188 
$192 
$196 
$200.. 
$204.. 
$208 
$212 
$216 
$220 
$224 
$228 
$232 
$236 
$240 
$248 
$256 
$264 
$272 
$280 
$288 
$296 
$304 
$312 
$320 
$328 
$336 
$344__ 
$352 
$360 
$368 
$376 
$384__ 
$392._ 
$400 
$420 
$440 
$460 
$480 
$500 
$520 
$540 
$560 
$580 
$600 
$640 
$680 
$720 
$760 
$800 
$840 
$880.. 
$920 
$960 
$1,000 and 
But less 
than 
$56 
$60 
$64. 
$68 
$72. 
$76 
$80 
$84 
$88. 
$92 
$96 
$100 
$104 
$108 
$112 
$116 
$120 
$124 
$128 
$132 
$136 
$140 
$144 
$148 
$152 
$156 
$160 
$164 
$168 
$172 
$176 
$180 
$184 
$188 
$192 
$196 
$200 
$204 
$208 
$212 
$216 
$220 
$224 
$228 
$232 
$236 
$240 
$248 
$256 
$264 
$272 
$280 
$288 
$296 
$304 
$312 
$320 
$328 
$336 
$344 
$352 
$360 
$368--.--
$376 
$384 
$392 
$400 
$420 
$440 
$460 
$480 
$500 
$520 
$540 
$560 
$580 
$600 
$640 
$680 
$720 
$760 
$800 
$840 
$880 
$920 
$960 
$1,000-.. 
jver 
And the number of withholding exemptions claimed is— 
0 
1 
1 
2 
3 
4 
5 
6 
7 
1 8 
1 
The amount of tax to be withheld slwll be— 
30% of 
$11.60 
12.40 
13.20 
14.00 
14.80 
15.60 
16.40 
17.20 
18.00 
18.80 
19.60 
20.40 
21.20 
22.00 
22.80 
23.60 
24.40 
25.20 
26.00 
26.80 
27.60 
28.40 
29.20 
30.00 
30.80 
31.60 
32.40 
33.20 
34.00 
34.80 
35.60 
36.40 
37.20 
38.00 
38.80 
39.60 
40.40 
41.20 
42.00 
42.80 
43.60 
44.40 
45.20 
46.00 
46.80 
47.60 
48.80 
50.40 
52.00 
53.60 
55.20 
56.80 
58.40 
60.00 
61.60 
63.20 
64.80 
66.40 
68. 00 
69.60 
71.20 
72.80 
74.40 
76.00 
77.60 
79.20 
82.00 
86.00 
90.00 
94.00 
98.00 
102.00 
106.00 
110.00 
114.00 
118.00 
124.00 
132.00 
140.00 
148.00 
156.00 
164.00 
172.00 
180.00 
188.00 
196.00 
$0 
.50 
1.30 
2.10 
2.90 
3.70 
4.50 
5.30 
6.10 
6.90 
7.70 
8.50 
9.30 
10.10 
10.90 
11.70 
12.50 
13.30 
14.10 
14.90 
15.70 
16.50 
17.30 
18.10 
18.90 
19.70 
20.50 
21.30 
22.10 
22.90 
23.70 
24.60 
25.30 
26.10 
26.90 
27.70 
28.50 
29.30 
30.10 
30.90 
31.70 
32.50 
33.30 
34.10 
34.90 
35.70 
36.50 
37.70 
39.30 
40.90 
42.50 
44.10 
45.70 
47.30 
48.90 
50.50 
52.10 
53.70 
55.30 
56.90 
58.50 
60.10 
61.70 
63.30 
64.90 
66.50 
68.10 
70.90 
74.90 
78.90 
82.90 
86.90 
90.90 
94.90 
98.90 
102.90 
106.90 
112.90 
120.90 
128.90 
136.90 
144.90 
152.90 
160.90 
168.90 
176.90 
184.90 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.60 
1.40 
2.20 
3.00 
3.80 
4.60 
5.40 
6.20 
7.00 
7.80 
8.60 
9.40 
10.20 
11.00 
11.80 
12.60 
13.40 
14.20 
15.00 
15.80 
16.60 
17.40 
18.20 
19.00 
19.80 
20.60 
21.40 
22.20 
23.00 
23.80 
24.60 
25.40 
26.60 
28.20 
29.80 
31.40 
33.00 
34.60 
36.20 
37.80 
39.40 
41.00 
42.60 
44.20 
45.80 
47.40 
49.00 
50.60 
52.20 
53.80 
55.40 
57.00 
59.80 
63.80 
67.80 
71.80 
75.80 
79.80 
83.80 
87.80 
91.80 
95.80 
101.80 
109.80 
117.80 
125.80 
133. 80 
141. 80 
149. 80 
157.80 
165.80 
173.80 
2 
200.00 188.90 177.80 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.70 
1.50 
2.30 
3.10 
3.90 
4.70 
5.50 
6.30 
7.10 
7.90 
8.70 
9.50 
10.30 
11.10 
11.90 
12.70 
13.50 
14.30 
15.50 
17.10 
18.70 
20.30 
21.90 
23.50 
25.10 
26.70 
28.30 
29.90 
31. 50 
33.10 
34.70 
36.30 
37.90 
39.50 
41.10 
42.70 
44.30 
45.90 
48.70 
52.70 
66.70 
60.70 
64.70 
68.70 
72.70 
76.70 
80.70 
84.70 
90.70 
98.70 
106.70 
114.70 
122. 70 
130.70 
138. 70 
146. 70 
154.70 
162. 70 
) percen 
166. 70 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.80 
1.60 
2.40 
3.20 
4.40 
6.00 
7.60 
9.20 
10.80 
12.40 
14.00 
15.60 
17.20 
18; 80 
20.40 
22.00 
23.60 
25.20 
26.80 
28.40 
30.00 
31.60 
33.20 
34.80 
37.60 
41.60 
45.60 
49.60 
53.60 
57.60 
61.60 
65.60 
69.60 
73.60 
79.60 
87.60 
95.60 
103.60 
111.60 
119.60 
127.60 
135.60 
143.60 
151.60 
t of the 
155.60 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1.20 
2.80 
4.40 
6.00 
7.60 
9.20 
10.80 
12.40 
14.00 
15.60 
17.20 
18.80 
20.40 
22.00 
23.60 
26.40 
30.40 
34.40 
38.40 
42.40 
46.40 
50.40 
54.40 
58.40 
62.40 
68.40 
76.40 
84.40 
92.40 
100.40 
108.40 
116.40 
124.40 
132.40 
140.40 
excess 
144.40 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1.30 
2.90 
4.60 
6.10 
7.70 
9.30 
10.90 
12.50 
15.30 
19.30 
23.30 
27.30 
31.30 
35.30 
39.30 
43.30 
47.30 
51.30 
57.30 
65.30 
73.30 
81.30 
89.30 
97.30 
105.30 
113.30 
121.30 
129.30 
over $1, 
133.30 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
e 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1.40 
4.20 
8.20 
12.20 
16.20 
20.20 
24.20 
28.20 
32.20 
36.20 
40.20 
46.20 
54.20 
62.20 
70.20 
78.20 
86.20 
94.20 
102.20 
110.20 
118.20 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
1.10 
6.10 
9.10 
13.10 
17.10 
21.10 
25.10 
29.10 
35.10 
43.10 
51.10 
59.10 
67.10 
75.10 
83.10 
91.10 
99.10 
107.10 
1)00 pins— 
122.20 111. 10 
9 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
2.00 
6.00 
10.00 
14.00 
18.00 
24.00 
32.00 
40.00 
48.00 
56.00 
64.00 
72.00 
80.00 
88.00 
06.00 
100.00 
10 or 
more 
$0 
0 
0 
0 
0 
0 
•0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
2.90 
6.90 
12.90 
20.90 
28.90 
36.90 
44.90 
52.90 
60.90 
68.90 
76.90 
84.90 
88.00 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
479 
"If the payroll period with respect to an employee is a daily payroll period or 
a miscellaneous payroll period 
And the wages 
dirided by the nnm-
ber of days in such 
period) 
And the number of withholding exemptions claimed is— 
10 or 
more 
At least-
Butless 
than— 
The amount of tax to l>e withheld shall be the following amount multiplied by 
the numl>er of days in such period— 
$0 
$2.00.— 
$2.25.— 
$2.50—. 
$2.75.--
$3.00-... 
$3.26..-
$3.50---
$3.75--
$4.00— 
$4.25..--
$4.50—-
$4.75-.-
$5.00---
$5.25----
$5.50---
$5.75.--
$6.00---
$6.25--
$6.50-.-
$6.75--
$7.00..--
$7.26.-.. 
$7.50..-
$7.76.... 
$8.00- — 
$8.25-.-
$8.50-.-
$8.76.-.-
$9.00 
$9.25-. 
$9.60... 
$9.75---
$10.00-. 
$10.50.. 
$11.00.-
$11.50-
$12.00.-
$12.60-
$13.00.. 
$13.50.-
$14.00-
$14.50-
$16.00-
$15.60.. 
$16.00-
$16.60-
$17.00-
$17.60-
$18.00.. 
$18.50.-
$19.00.. 
$19.50-
$20.00-
$21.00.. 
$22.00--
$23.00-
$24.00.. 
$26.00-. 
$26.00.. 
$27.00-
$28.00--
$29.00-
$2.00--
$2.26-. 
$2.50.. 
$2.75.. 
$3.00.. 
$3.25.. 
$3.60.. 
$3.75.. 
$4.00--
$4.26.. 
$4.50.-
$4.75--
$5.00--
$6.26.-
$5.50.-
$5.76.-
$6.00.. 
$6.25.. 
$6.50.. 
$6.76-. 
$7.00.. 
$7.26-
$7.60.. 
$7.76.. 
$8.00.. 
$8.25--
$8.50--
$8.75--
$9.00-. 
$9.25-. 
$9.50-. 
$9.76.-
$10.00. 
$10.50. 
$11.00. 
$11.60. 
$12.00. 
$12.50. 
$13.00. 
$13.50. 
$14.00. 
$14.60. 
$16.00. 
$15.60. 
$16.00. 
$16.50. 
$17.00-
$17.50-
$18.00. 
$18.50-
$19.00-
$19.50. 
$20.00. 
$21.00. 
$22.00. 
$23.00. 
$24.00. 
$25.00-
$26.00. 
$27.00. 
$28.00. 
$29.00. 
$30.00. 
$30 and over. 
30% of 
WMCM 
$0.40 
.45 
.50 
.65 
.60 
.65 
.70 
.76 
.80 
.86 
.90 
.95 
1.00 
1.05 
1.10 
1.15 
1.20 
1.25 
1.30 
1.36 
1.40 
1.46 
1.50 
1.65 
1.60 
1.65 
1.70 
1.75 
1.80 
1.86 
1.90 
1.95 
2.06 
2.16 
2.25 
2.35 
2.46 
2.55 
2.65 
2.75 
2.85 
2.96 
3.05 
3.15 
3.25 
3.35 
3.45 
3.65 
3.66 
3.76 
3.85 
3.95 
4.10 
4.30 
4.50 
4.70 
4.90 
6.10 
5.30 
6.50 
6.70 
5.90 
$0 
.05 
.10 
.15 
.20 
.26 
.30 
.36 
.40 
.45 
.50 
.65 
.60 
.66 
.70 
.75 
.80 
.85 
.90 
.95 
1.00 
1.05 
1.10 
1.16 
1.20 
1.25 
1.30 
1.35 
1.40 
1.46 
1.50 
1.66 
1.60 
1.70 
1.80 
1.90 
2.00 
2.10 
2.20 
2.30 
2.40 
2.50 
2.60 
2.70 
2.80 
2.90 
3.00 
3.10 
3.20 
3.30 
3.40 
3.50 
3.60 
3.76 
3.95 
4.15 
4.35 
4.55 
4.76 
4.95 
5.15 
5.36 
6.55 
$0 
0 
0 
0 
0 
0 
0 
0 
.05 
.10 
.15 
.20 
.26 
.30 
.35 
.40 
.46 
.50 
.55 
.60 
.65 
.70 
.75 
.80 
.85 
.90 
.95 
1.00 
1.06 
1.10 
1.16 
1.20 
1.26 
1.30 
1.40 
1.50 
1.60 
1.70 
1.80 
1.90 
2.00 
2.10 
2.20 
2.30 
2,40 
2.50 
2.60 
2.70 
2.80 
2.90 
3.00 
3.10 
3.20 
3.35 
3.56 
3.75 
3.95 
4.15 
4.36 
4.66 
4.75 
4.95 
5.15 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.05 
.10 
.15 
.20 
.26 
.30 
.35 
.40 
.46 
.50 
.56 
.60 
.66 
.70 
.76 
.80 
.85 
.90 
.95 
1.05 
1.15 
1.25 
1.35 
1.45 
1.65 
1.65 
1.75 
1.85 
1.95 
2.06 
2.16 
2.25 
2.35 
2.45 
2.66 
2.65 
2.76 
2.85 
3.00 
3.20 
3.40 
3.60 
?.80 
4.00 
4.20 
4.40 
4.60 
4.80 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.06 
.10 
.15 
.20 
.26 
.30 
.36 
.40 
.46 
.50 
.60 
.70 
.80 
.90 
1.00 
1.10 
1.20 
1.30 
1.40 
1.50 
1.60 
1.70 
1.80 
1.90 
2.00 
2.10 
2.20 
2.30 
2.40 
2.60 
2.65 
2.85 
3.06 
3.25 
3.45 
3.65 
3.85 
4.06 
4.26 
4.45 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.06 
.10 
.16 
.20 
.30 
.40 
.60 
.60 
.70 
.80 
.90 
1.00 
1.10 
1.20 
1.30 
1.40 
1.50 
1.60 
1.70 
1.80 
1.90 
2.00 
2.10 
2.25 
2.45 
2.66 
2.85 
3.05 
3.25 
3.46 
3.66 
3.85 
4.06 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.06 
.16 
.26 
.36 
.46 
.66 
.65 
.75 
.86 
.95 
1.05 
1.16 
1.25 
1.35 
1.45 
1.55 
1.65 
1.76 
1.90 
2.10 
2.30 
2.50 
2.70 
2.90 
3.10 
3.30 
3.50 
3.70 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.10 
.20 
.30 
.40 
.60 
.60 
.70 
.80 
.90 
1.00 
1.10 
1.20 
1.30 
1.40 
1.56 
1.76 
1.95 
2.15 
2.35 
2.56 
2.76 
2.95 
3.15 
3.35 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.06 
.15 
.25 
.35 
.45 
.55 
.65 
.76 
.85 
.95 
1.05 
1.20 
1.40 
1.60 
1.80 
2.00 
2.20 
2.40 
2.60 
2.80 
3.00 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.06 
.16 
.25 
.35 
.45 
.56 
.65 
.80 
1.00 
1.20 
1.40 
1.60 
1.80 
2.00 
2.20 
2.40 
2.60 
$0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
0 
.10 
.20 
.30 
.46 
.66 
.85 
1.05 
1.25 
1.46 
1.65 
1.86 
2.06 
2.26 
20 percent of the excess oy«' $30 plus— 
6.00 
5.66 
5.25 
4.90 
4.56 
4.15 
3.80 
3.45 
3.10 
2.70 
2.36 
76100 O - 52 (PT. I) - 33 
480 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
"(B) Wages paid after December 31,1953.—^At the election 
of the employer with respect to any employee, the employer 
shall deduct and withhold upon the wages paid to such 
employee after December 31, 1953, a tax determined in 
accordance with the following tables, which shall be in lieu 
of the tax required to be deducted and withheld under 
Ante.p.m. 
subsection (a) :". 
SEC. 203. ADDITIONAL WITHHOLDING OF TAX ON WAGES UPON AGREE-
MENT BY EMPLOYER AND EMPLOYEE. 
26U^s c^U622 
Scctiou 1622 (relating to income tax collected at source on wages) 
Ante,p.m. 
is hereby amended by adding at the end thereof the following new 
subsection: 
"(k) ADDITIONAL WITHHOLDING.—The Secretary is authorized by 
regulations to provide, under such conditions and to such extent as he 
deems proper, for withholding in addition to that otherwise required 
under this section in cases in which the employer and the employee 
agree (in such form as the Secretary may by regulations prescribe) to 
such additional withholding. Such additional withholding shall for 
all purposes be considered tax required to be deducted and withheld 
under this subchapter." 
SEC. 204. EFFECTIVE DATE. 
The amendments made by this title shall be applicable only with 
respect to wages paid on or after November 1,1951. 
TITLE III—MISCELLANEOUS INCOME TAX 
AMENDMENTS 
SEC. 301. TAX TREATMENT IN CASE OF HEAD OF HOUSEHOLD. 
§u*k^c.§ 12(c). 
(a) SURTAX IN CASE OF HEAD OF HOUSEHOLD.—Section 12 (c) is 
hereby amended to read as follows: 
"(c) RATES OF SURTAX—HEAD OF HOUSEHOLD.— 
"(1) TAXABLE YEARS BEGINNING AFTER OCTOBER 31, 1951, AND 
BEFORE JANUARY 1, 1954.—In the case of taxable years beginning 
after October 31,1951, and before January 1,1954, there shall be 
levied, collected, and paid for each taxable year upon the surtax 
net income of every individual who is the head of a household the 
surtax shown in the following table: 
"If the surtax net income is: 
The surtax shall be: 
Not over $2,000 
19.2% of the surtax net income. 
Over $2,000 but not over $4,000 
$384, plus 20.4% of excess over $2,000. 
Over $4,000 but not over $6,000 
$792, plus 24% of excess over $4,000. 
Over $6,000 but not over $8,000 
$1,272, plus 26% of excess over $6,000. 
Over $8,000 but not over $10,000 
$1,792, plus 31% of excess over $8,000. 
Over $10,000 but not over $12,000 
$2,412, plus 32% of excess 
over 
$10,000. 
Over $12,000 but not over $14,000 
$3,052, plus 88% of excess 
over 
$12,000. 
Over $14,000 but not over $16,000 
$3,812, plus 41% of excess 
over 
$14,000. 
Over $16,000 but not over $18,000 
$4,632, plus 44% of excess 
over 
$16,000. 
Over $18,000 but not over $20,000 
$5,512, plus 45%, of excess 
over 
$18,000. 
Over $20,000 but not over $22,000 
$6,412, plus 49% of excess 
over 
$20,000. 
Over $22,000 but not over $24,000 
$7,392, plus 51% of excess 
over 
$22,000. 
Over $24,000 but not over $28,000. 
$8,412, plus 54%, of excess 
over 
$24,000. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
"If the surtax net income is: 
The surtax shall be: 
Over $28,000 but not over $32,000 
$10,572, plus 57% of excess over 
$28,000. 
Over $32,000 but not over $38,000 
$12,852, plus 60% of excess over 
$32,000. 
Over $38,000 but not over $44,000 
$16,452, plus 63% of excess over 
$38,000. 
Over $44,000 but not over $50,000 
$20,282, plus 68% of excess over 
$44,000. 
Over $50,000 but not over $60,000 
$24,312, plus 69% of excess over 
$50,000. 
Over $60,000 but not over $70,000 
$31,212, plus 70% of excess over 
$60,000. 
Over $70,000 but not over $80,000 
$38,212, plus 74% of excess over 
$70,000. 
Over $80,000 but not over $90,000 
$45,612, plus 76% of excess over 
$80,000. 
Over $90,000 but not over $100,000 
$.53,212, plus 78% of excess over 
$90,000. 
Over $100,000 but not over $150,000__ 
$61,012, plus 82% of excess over 
$100,000. 
Over $150,000 but not over $200,000— 
$102,012, plus 85% of excess over 
$150,000. 
Over $200,000 but not over $300,000— 
$144,512, plus 88% of excess over 
$200,000. 
Over $300,000 
$232,512, plus 89% of excess over 
$300,000. 
"(2) 
TAXABLE YEARS BEGINNING AFTER DECEMBER 3 1 , 1953.—In 
the case of taxable years beginning after December 31,1953, there 
shall be levied, collected, and paid for each taxable year upon the 
surtax net income of every individual who is the head of a house-
hold the surtax shown in the following table: 
"If the surtax net income is: 
The surtax shall be: 
Not over $2,000 
17% of the surtax net income. 
Over $2,000 but not over $4,000 
$340, plus 18% of excess over $2,000. 
Over $4,000 but not over $6,000 
$700, plus 21% of excess over $4,000. 
Over $6,000 but not over $8,000 
$1,120, plus 23% of excess over $6,000. 
Over $8,000 but not over $10,000 
$1,580, plus 27% of excess over $8,000. 
Over $10,000 but not over $12,000 
$2,120, plus 29% of excess over 
$10,000. 
Over $12,000 but not over $14,000 
$2,700, plus 33% of excess over 
$12,000. 
Over $14,000 but not over $16,000 
$3,360, plus 36% of excess over 
$14,000. 
Over $16,000 but not over $18,000 
$4,080, plus 39% of excess over 
$16,000. 
Over $18,000 but not over $20,000—_ 
$4,860, plus 40% of excess over 
$18 000 
Over $20,000 but not over $22,000 
$5,660, plus 44% of excess over 
$20,000. 
Over $22,000 but not over $24,000 
$6,540, plus 46% of excess over 
$22 000 
Over $24,000 but not over $28,000 
$7,460, plus 49% of excess over 
$24,000. 
Over $28,000 but not over $32,000 
$9,420, plus 51% of excess over 
$28 000 
Over $32,000 but not over $38,000 
$11,460, plus 55% of excess over 
$32,000. 
Over $38,000 but not over $44,000 
$14,760, plus 59% of excess over 
$38,000. 
Over $44,000 but not over $50,000 
$18,300, plus 63% of excess over 
$44,000. 
Over $50,000 but not over $60,000 
$22,080, plus 65% of excess over 
$50,000. 
Over $60,000 but not over $70,000 
$28,580, plus 68% of excess over 
$60,000. 
Over $70,000 but not over $80,000 
$35,380, plus 71% of excess over 
$70,000. 
481 
482 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
"If the surtax net income is: 
The surtax shall be: 
Over $80,000 but not over $90,000— 
$42,480, plus 73% of excess over 
$80,000, 
Over $90,000 but not over $100,000— 
$49,780, plus 77% of excess over 
$90,000, 
Over $100,000 but not over $150,000— 
$57,480, plus 80% of excess over 
$100,000, 
Over $150,000 but not over $200,000— 
$97,480, plus 84% of excess over 
$150,000, 
Over $200,000 but not over $300,000— 
$139,480, plus 87% of excess over 
$200,000, 
Over $300,000 
: 
$226,480, plus 88% of excess over 
$300,000. 
"(3) DEFINITION OF HEAD OF HOUSEHOLD.—For the purposes 
of this chapter, an individual shall be considered a head of a 
household if, and onl}^ if, such individual is not married at the 
close of his taxable year and maintains as his home a household 
which constitutes for such taxable year the principal place of 
abode, as a member of such household, of: 
"(A) A son, stepson, daughter, or stepdaughter of the 
taxpayer, or a descendant of a son or daughter of the tax-
payer, but if such son, stepson, daughter, stepdaughter, or 
descendant is married at the close of the taxpayer's taxable 
year, only if the taxpayer is entitled to an exemption for the 
2
6 u.^s.c'. 5 25(b). 
taxable year for such person under section 25 (b) ; or 
Post, p. 487. 
"(B) Any other person who is a dependent of the taxpayer, 
if the taxpayer is entitled to an exemption for the taxable 
year for such person under section 25 (b). 
An individual shall be considered as maintaining a household 
only if over half of the cost of maintaining the household dur-
ing the taxable year is furnished by such individual. 
"(4) DETERMINATION OF STATUS.—For the purposes of this sub-
section— 
"(A) a legally adopted child of a person shall be con-
sidered a child of such person by blood; 
"(B) an individual who is legally separated from his 
spouse under a decree of divorce or of separate maintenance 
shall not be considered as married; 
"(C) a taxpayer shall be considered as not married at the 
close of his taxable year if at any time during the taxable year 
his spouse is a nonresident alien; and 
"(D) a taxpayer shall be considered as married at the close 
of his taxable year if his spouse (other than a spouse 
described in subparagraph (C)) died during the taxable 
year. 
"(5) NONRESIDENT ALIEN.—For the purposes of this chapter a 
taxpayer shall in no case be considered a head of a household if 
at any time during the taxable year he is a nonresident alien." 
(b) COMPUTATION OF TAX BY COLLECTOR.— 
2
6 u^s^; 161(f) 
(^) Section 51 (f) (1) (relating to tax computed by collector 
(1). ' ' ' 
in case of wage earners) is hereby amended by adding at the end 
thereof the following: "In the case of a head of a household 
electing the benefits of this subsection, the tax shall be computed 
by the collector under Supplement T without regard to the tax-
payer's status as head of a household." 
2
6 u^s ^c' j§%2, 
(^) Section 402 (relating to effect of election to pay the tax 
4
0
0
-
4
0
4
'
. ' • 
' 
imposed by Supplement T) is hereby amended by adding at the 
Ante, p. 461, 
^^^ thereof the following: "In the case of a head of a household 
electing to have his tax computed by the collector pursuant to the 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
483 
provisions of section 51 (f), the tax imposed by section 400 shall 
^"'*' PP •
*
^
^
' *^'-
be computed without regard to the status of the taxpayer as a 
head of a household." 
(c) EFFECTIVE DATE.—^The amendments made by this section shall 
be applicable only with respect to taxable years beginning after 
October 31,1951. 
SEC. 302. PAYMENTS TO BENEFICIARIES OF DECEASED EMPLOYEES. 
(a) AMENDMENT OF SECTION 22 (b) (1) .—Section 22 (b) (1) (relat- 
g ff^|/^- j ^ (b) 
ing to exclusion of life insurance proceeds from gross income) is (i)-
hereby amended to read as follows: 
"(1) 
LIFE INSURANCE, ETC.—Amounts received— 
"(A) under a life insurance contract, paid by reason of 
the death of the insured; or 
"(B) under a contract of an employer providing for the 
payment of such amounts to the beneficiaries of an employee, 
paid by reason of the death of the employee; 
whether in a single sum or otherwise (but if such amounts are 
held by the insurer, or the employer, under an agreement to pay 
interest thereon, the interest payments shall be included in gross 
income). The aggregate of the amounts excludible under sub-
paragraph (B) by all the beneficiaries of the employee under all 
such contracts of any one employer may not exceed $5,000." 
(b) EFFECTIVE DATE.—The amendment made by this section shall 
be applicable with respect to taxable years beginning after December 
31, 1950. 
SEC. 303. JOINT AND SURVIVOR ANNUITIES. 
(a) AMENDMENT OF SECTION 22 (b) (2).—Section 22 (b) (2) is 
1
^ u.Vc. § 2
2 (b) 
amended by adding at the end thereof the following new subpara- (2)-
graph: 
"(C) Joint and Survivor Annuities.—^For purposes of 
subparagraphs (A) and (B) of this paragraph, where 
amounts are received by a surviving annuitant under a joint 
and survivor's annuity contract and the basis of such sur-
vivor annuitant's interest is determined under section 113 (a) 
(5) the consideration paid for such survivor's annuity shall 
be considered to be an amount equal to such basis." 
(b) AMENDMENT OF SECTION 113 (a) (5).—Section 113 (a) (5) is 
gfr*1-.c; §ii3(a) 
amended by adding at the end thereof the following: "For the pur- (s). 
poses of this paragraph, the survivor's interest in a joint and sur-
vivor's annuity shall be considered to be property 'acquired by bequest, 
devise, or inheritance' from the decedent if the death of the decedent 
was after December 31, 1950, and if the value of any part of such 
interest was required to be included in determining the value of the 
decedent's gross estate under section 811." 
^ u.*s. c^'s su. 
(c) EFFECTIVE DATES.—The amendments made by this section shall 
be applicable to taxable years ending after December 31,1950. 
SEC. 304. INCOME FROM DISCHARGE OF INDEBTEDNESS. 
(a) AMENDMENT OF SECTION 22 (b) (9).—Effective with respect to 
discharges of indebtedness occurring within taxable years ending after (»)'• 
Deceml>er 31, 1950, section 22 (b) (9) (relating to income from dis-
charge of indebtedness) is hereby amended (1) by striking out "if the 
taxpayer makes and files at the time of filing the return, in such 
manner as the Commissioner, with the approval of the Secretary, by 
regulations prescribes, its consent" and inserting in lieu thereof "if 
the taxpayer, at such time and in such manner as the Secretary by 
regulations prescribes, makes and files its consent", and (2) by striking 
out the last sentence thereof. 
53 Stat. 875. 
26 U. S. C. § 22 (b) 
484 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
2
^ u^s.^c;§ 2
2 (b) 
(b) AMENDMENT OF SECTION 22 (b) (10).—Section 22 (b) (10) 
(10)- 
(relating to income from discharge of indebtedness of a railroad cor-
poration) is hereby amended by striking out "December 31,1951" and 
inserting in lieu thereof "December 31,1954". 
SEC. 305. COMPENSATION OF CERTAIN MEMBERS OF THE ARMED 
FORCES. 
SiLW.'5 22(b) 
(a) AMENDMENT OF SECTION 22 (b) (13).—Section 22 (b) (13) 
(13). ' • * 
(relating to exclusion from gross income of compensation of certain 
members of the armed forces) is hereby amended by striking out sub-
paragraphs (A) and (B) and inserting in lieu thereof the following: 
"(A) Enlisted Personnel.—Compensation received 
for 
active service as a member below the grade of commissioned 
officer in the armed forces of the United States for any month 
during any part of which such member— 
"(i) served in a combat zone after June 24, 1950, 
and prior to January 1,1954, or 
"(ii) was hospitalized as a result of wounds, disease, 
or injury incurred while serving in a combat zone prior 
to January 1, 1954; but this clause shall not apply for 
any month during any part of which there are no com-
batant activities in any combat zone as determined under 
^"^'•''- 
subparagraph (C) (iii) of this paragraph. 
"(B) Commissioned Officers.—So much of the compen-
sation as does not exceed $200 received for active service as a 
commissioned officer in the armed forces of the United States 
for any month during any part of which such officer— 
"(i) served in a combat zone after June 24, 1950, and 
prior to January 1,1954, or 
"(ii) was hospitalized as a result of wounds, disease, 
or injury incurred while serving in a combat zone prior 
to January 1, 1954; but this clause shall not apply for 
any month during any part of which there are no com-
batant activities in any combat zone as determined under 
subparagraph (C) (iii) of this paragraph." 
(b) DEFINITION OF SERVICE IN COMBAT ZONE.—Clause (iii) of section 
2
6 u^s.^c.'§ 2
2 (b) ^ (b) (1^) (^) ^^ hereby amended by striking out "such zone; and" 
(13) (C). • • 
and inserting in lieu thereof "such zone, except that June 25, 1950, 
shall be considered the date of the commencing of combatant activities 
2
6 u. s. G. J 2
2 note, j ^ t,he combat zone designated in Executive Order 10195; and". 
26U^V^ §1621 
(^). WITHHOLDING O
N WAGES.—Section 1621 (a) (1) (relating to 
(a) (1).' • ' 
definition of the term "wages") is hereby amended to read as follows: 
"(1) for active service as a member of the armed forces of the 
United States performed prior to January 1, 1954, in a month 
for which such member is entitled to the benefits of section 22 
(b)(13),or". 
(d) EFFECTIVE DATES.—^The amendments made by subsections (a) 
and (b) shall be applicable to taxable years ending after June 24, 
1950. 
The amendment made by subsection (c) shall be applicable 
with respect to wages paid after the tenth day following the date of 
the enactment of this Act. 
SEC. 306. INVOLUNTARY UQUIDATION AND REPLACEMENT OF INVEN-
TORY. 
(a) AMENDMENT OF SECTION 22 (d) (6) (F) (iii).—Section 22 (d) 
2
6 u*8.^c.*§ 2
2 (d) (^) (^) 
(iii) (relating to replacement of inventory involuntarily 
(6) (F)(iii).• 
liquidated) is hereby amended by striking out the last sentence and 
inserting in lieu thereof the following: "If, for any taxable year end-
ing after June 30, 1950, and prior to January 1, 1953, subparagraph 
2
6 u*s^o'§ 2
2 (d) (C) is applicable with respect to involuntary liquidations of goods 
(6)(C)". 
66 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
485 
of the same class subject to the provisions of both subparagraph (A) 
and this subparagraph, the involuntary liquidations of such goods sub-
ject to the provisions of this subparagraph shall be considered for 
the purpose of subparagraph (C) as having occurred prior to the 
involuntary liquidations of such goods subject to the provisions of 
subparagraph (A). For the purpose of this clause, and with respect 
to the taxable years covered by this subparagraph, the reference in 
subparagraph (E) to section 734 (d) shall be taken as a reference to 
section 452(d)." 
, 
^^^c.^Ucd). 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall be applicable with respect to taxable years ending after June 
30, 1950. 
SEC. 307. MEDICAL EXPENSES. 
(a) AMENDMENT OF SECTION 23 (x).—Section 23 (x) (relating 
26u*s 1!%23(x) 
to medical, dental, etc., expenses) is hereby amended to read as 
follows: 
"(x) MEDICAL, DENTAL, ETC., EXPENSES.—Expenses paid during the 
taxable year, not compensated for by insurance or otherwise, for 
medical care of the taxpayer, his spouse, or a dependent specified in 
section 25 (b) ( 3 ) - 
' 
g ?t.^|/«-. ^,, ^.^ 
" (1) If neither the taxpayer nor his spouse has attained the age (3). 
of 65 before the close of the taxable year, to the extent that such 
expenses exceed 5 per centum of the adjusted gross income; or 
"(2) If either the taxpayer or his spouse has attained the age 
of 65 before the close of the taxable year, (A) the amount of such 
expenses for the care of the taxpayer and his spouse, and (B) the 
amount by which such expenses for the care of such dependents 
exceed 5 per centum of the adjusted gross income. 
The deduction under this subsection shall not be in excess of $1,250 
multiplied by the number of exemptions allowed under section 25 (b) 
for the taxable year (exclusive of exemptions allowed under section 
25 (b) (1) (B) or (C), with a maximum deduction of $2,500, except 
|f*^*g238 
that the maximum deduction shall be $5,000 in the case of a joint (i). 
return of husband and wife under section 51 (b). The term'medical 
^ufs.^c. 
care', as used in this subsection, shall include amounts paid for the 
diagnosis, cure, mitigation, treatment, or prevention of disease, or 
for the purpose of affecting any structure or function of the body 
(including amounts paid for accident or health insurance). 
The 
determination of whether an individual is married at any time during 
the taxable year shall be made in accordance with the provisions of 
section 51 (b) (5)." 
Eeu's'c'Hi (b) 
(b) EFFECTIVE DATE.—The amendment made by this section shall (5). 
be applicable with respect to taxable years beginning after December 
31, 1950. 
SEC. 308. STANDARD DEDUCTION. 
(a) METHOD OF ELECTION.—Subparagraphs (A) and (B) of section 
23 (aa) (3) (relating to optional standard deduction for individuals) 
^u?s.c.^23(aa). 
are hereby amended by striking out the word "only"; and subpara-
graph (C) of section 23 (aa) (3) is hereby amended to read as follows: 
"(C) If the taxpayer upon making his return fails to 
signify, in the manner provided by subparagraph (A) or 
(B), his election to take the standard deduction, such failure 
shall be considered his election not to take the standard 
deduction." 
(b) CHANGE OF ELECTION.—Section 23 (aa) is hereby amended by 
adding at the end thereof the following new paragraph: 
"(7) CHANGE OF ELECTION.—Under regulations prescribed by 
the Secretary, a change of an election to take, or not to take, the 
26 U. S. C. § 25 (b) 
§ 51(b). 
486 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
standard deduction for any taxable year may be made after the 
filing of the return for such year. If the spouse of the taxpayer 
filed a separate return for any taxable year corresponding, for 
the purposes of paragraph (4), to the taxable year of the tax-
payer, the change shall not be allowed unless, in accordance with 
such regulations— 
''(A) the spouse makes a change of election with respect 
to the standard deduction for the taxable year covered in 
such separate return, consistent with the change of election 
sought by the taxpayer, and 
"(B) the taxpayer and his spouse consent in writing to the 
assessment, within such period as may be agreed upon with 
the Secretary, of any deficiency, to the extent attributable to 
such change of election, even though at the time of the filing 
of such consent the assessment of such deficiency would other-
wise be prevented by the operation of any law or rule of law. 
This paragraph shall not apply if the tax liability of the tax-
payer's spouse, for the taxable year corresponding (for the pur-
poses of paragraph (4)) to the taxable year of the taxpayer, has 
fa u.^s.*a'5 3761. 
"6®^ compromised under the provisions of section 3761." 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
be applicable only with respect to taxable years beginning after De-
cember 31,1949. 
SEC. 309. EXPENDITURES IN THE DEVELOPMENT OF MINES. 
6
3 Stat. 1^. 
(a) DEDUCTION or ExPENDiTUBES.^—Section 23 (relating to deduc-
^W,p'.486. • 
tions from gross income) is hereby amended by adding at the end 
49^616. ^^' *^' ^^^' thereof the following new subsection: 
"(cc) DEVELOPMENT OF MINES.— 
"(1) I N GENERAL.—Except as provided in paragraph (2), all 
expenditures paid or incurred during the taxable year for the 
development of a mine or other natural deposit (other than an 
oil or gas well) if paid or incurred after December 31, 1950, and 
after me existence of ores or minerals in commercially market-
able quantities has been disclosed. This subsection shall not apply 
to expenditures for the acc^uisition or improvement of property 
of a character which is subject to the allowance for depreciation 
26U*s c' §23©. 
provided in section 23 (1), but allowances for depreciation shall 
be considered, for the purposes of this subsection, as expenditures. 
"(2) ELECTION OF TAXPAYER.—^At the election of the taxpayer, 
made in accordance with regulations prescribed by the Secretary, 
expenditures described in paragraph (1) paid or incurred during 
the taxable year shall be treated as deterred expenses and shall 
be deductible on a ratable basis as the units of produced ores or 
minerals benefited by such expenditures are sold. In the case of 
such expenditures paid or incurred during the development stage 
of the mine or deposit, the election shall apply only with respect 
to the excess of such expenditures during the taxable year over 
the net receipts during the taxable year from the ores or minerals 
produced from such mine or deposit. The election under this 
paragraph, if made, must be for the total amount of such expendi-
tures, or the total amount of such excess, as the case may be, with 
respect to the mine or deposit, and shall be binding for such 
taxable year. 
"(3) ADJUSTED BASIS or MINE OR DEPOSIT.—The amount of 
expenditures which are treated under paragraph (2) as deferred 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
487 
expenses shall be taken into account in computing the adjusted 
basis of the mine or deposit, except that such amount, and the 
adjustments to basis provided in section 113 (b) (1) ( J ) , shall 
^''^'•" 
be disregarded in determining the adjusted basis of the property 
for the purpose of computing a deduction for depletion under 
section 114." 
iu^sc%ii4 
(b) ADJUSTES) BASIS FOR DETERMINING GAIN OR Loss UPON SALE Post',p'.m. 
O
R EXCHANGE.—Section 113 (b) (1) (relating to adjusted basis of 
26u.^s.a § 113(b) 
property) is hereby amended by adding at the end thereof the (^)-
following subparagraph: 
" ( J ) for amounts allowed as deductions as deferred 
, ' 
expenses under section 23 (cc) (2) (relating to certain Arue,p.486. 
expenditures in the development of mines) and resulting in 
a reduction of the taxpayer's taxes under this chapter, but 
not less than the amounts allowable under such section for 
the taxable year and prior years." 
(c) TECHNICAL AMENDMENT.—Section 24 (a) (2) (relating to 
^ u.*s.^c. 5 2
4 (a) 
items not deductible) is hereby amended by adding after the word (2)-
^'estate" the following: ", except expenditures for the development 
of mines or deposits deductible under section 23 (cc)". 
(d) EFFECTIVE DATE.—The amendments made bv this section shall 
be applicable to taxable years ending after December 31, 1950. 
SEC. 310. GROSS INCOME OF DEPENDENT OF TAXPAYER. 
(a) 
INCREASE IN AMOUNT OF GROSS INCOME PERMITTED.—Section 
25 (b) (1) (D) (relating to exemptions for dependents of taxpayer) 
2
6 u^s ^a § as (b) 
is hereby amended by striking out "$500" and inserting in lieu thereof (
D (O). 
"$600". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall 
be applicable only with respect to taxable years beginning after 
December 31, 1950. 
SEC 311. CREDIT FOR DIVIDENDS RECEIVED. 
(a) 
DIVIDENDS FROM FOREIGN CORPORATION ENGAGED IN TRADE OR 
BUSINESS IN THE UNITED STATES.—Section 26 (b) (relating to divi- 
2
6 u*sc% 26(b) 
dends received credit) is hereby amended by inserting after paragraph 
Arue, p. m. 
(2) the following new paragraph: 
" (3) DIVIDENDS RECEIVED FROM CERTAIN FOREIGN CORPORATIONS.-^ 
In the case of dividends received from a foreign corporation (other 
than a foreign personal holding company) which is subject to 
taxation under this chapter, if, for an uninterrupted period of not 
less than 36 months ending with the close of such foreign corpora-
tion's taxable year in which such dividends are paid (or, if the 
corporation has not been in existence for 36 months at the close of 
such taxable year, for the period the foreign corporation has been 
in existence as of the close of such taxable year) such foreign 
corporation has been engaged in trade or business within the 
United States and has derived 50 per centum or more of its gross 
income from sources within the United States— 
"(A) an amount equal to 85 per centum of the dividends 
received out of its earnings or profits specified in clause (2) 
of the first sentence of section 115 (a), but such amount shall 
^u**|- (?• j jj^ ^^^ 
not exceed an amount which bears the same ratio to 85 per 
centum of such dividends received out of such earnings or 
profits as the gross income of such foreign corporation for 
the taxable year from sources within the United States bears 
to its gross income from all sources for such taxable year, and 
"(B) an amount equal to 85 per centum of the dividends 
received out of that part of its earnings or profits specified in 
488 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
clause (1) of the first sentence of section 115 (a) accumulated 
after the beginning of such uninterrupted period, but such 
amount shall not exceed an amount which bears the same ratio 
to 85' per centum of such dividends received out of such 
accumulated earnings or profits as the gross income of such 
foreign corporation from sources within the United States 
for the portion of such uninterrupted period ending at the 
beginning of such taxable year bears to its gross income from 
all sources for such portion of such uninterrupted period. 
For determination of earnings or profits distributed in any taxable 
iu.1:c:§ii5(b). 
year, see section 115 (b)." 
^ u ^ s c s u o 
^ ^ 
TECHNICAL AMENDMENT.—Section 119 (a) (2) (B) (relating 
^
^ • • 
to rules as to source of income in the case of dividends) is hereby 
amended by inserting before the semicolon at the end thereof the 
following: "to the extent exceeding the amount which is 100/85ths of 
Ante, p. 4
8
7
. 
^jjg amouut of the credit allowable under section 26 (b) in respect of 
such dividends". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
be applicable only with respect to taxable years beginning after 
December 31,1950. 
SEC. 312. JOINT RETURN AFTER FIUNG SEPARATE RETURN. 
2
6 u.*s. a § 51. 
(a) CHANGE OF ELECTION.—Section 51 of the Internal Revenue Code 
Ante,p.m. 
(relating to making of individual returns) is hereby amended by 
adding at the end mereof the following new subsection: 
"(g) JOINT RETURN AFTER FILING SEPARATE RETURN.— 
"(1) I N GENERAL.—^If an individual has filed a separate return 
for a taxable year for which a joint return could have been made 
by him and his spouse under subsection (b) of this section, and 
the time prescribed by law for filing the return for such taxable 
year has expired, such individual and his spouse may nevertheless 
make a joint return for such taxable year. A joint return filed 
by the husband and wife in such a case shall constitute the return 
of the husband and wife for such taxable year, and all payments, 
credits, refunds, or other repayments made or allowed with respect 
to the separate return of either spouse for such taxable year shall 
be taken into account in determining the extent to which the tax 
based upon the j oint return has been paid. 
" (2) PAYMENTS REQUIRED BEFORE JOINT RETURN CAN BE MADE.— 
A joint return can be made under paragraph (1) only if there is 
paid in full at or before the time of the filing of the joint return— 
"(A) all amounts previously assessed with respect to either 
spouse for such taxable year; 
"(B) all amounts shown as the tax by either spouse upon 
his separate return for such taxable year; and 
"(C) any amount determined, at the time of the filing of 
the joint return, as a deficiency with respect to either spouse 
for such taxable year if, prior to such filing, a notice under 
53 Stat. 82. 
section 272 (a) of such deficiency has been mailed. 
26 U. 8. C. §272 (a). 
« / o \ 
rr* 
* • • 
j. 
j. 
i. 
"(3) TIME FOR MAKING JOINT RETURN.—^A joint return cannot 
be made under paragraph (1)— 
"(A) after the expiration of three years from the last 
date prescribed by law for filing the return for such taxable 
year (determined without regard to any extension of time 
granted to either spouse); 
"(B) after there has been mailed to either spouse, with 
respect to such taxable year, a notice of deficiency under 
section 272 (a), if the spouse, as to such notice, files a petition 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
489 
with the Tax Court of the United States within the time 
prescribed in such section; 
"(C) after either spouse has commenced a suit in any 
court for the recovery of any part of the tax for such taxable 
year; or 
"(D) after either spouse has entered into a closing agree-
ment under section 3760 with respect to such taxable year, 
^?s.c^§37<io. 
or after any civil or criminal case arising against either 
spouse with respect to such taxable year has been com-
promised under section 3761. 
"(4) 
El^CTTIONS MADE IN SEPARATE RETURN. If a joiut r e t u m 
is made under this subsection, any election (other than the elec-
tion to file a separate return) made by either spouse in his sepa-
rate return for such taxable year with respect to the treatment 
of any income, deduction, or credit of such spouse shall not be 
changed in the making of the joint retum where such election 
would have been irrevocable if the joint return had not been 
made. 
"(5) DEATH OF SPOUSE.—If a joint return is made under this 
subsection after the death of either spouse, such return with 
respect to the decedent can be made only by his executor or 
administrator. 
"(6) ADDITIONS TO THE TAX.—^Where the amount shown as the 
tax by the husband and wife on a joint return made under this 
subsection exceeds the aggregate of the amounts shown as the 
tax upon the separate return of each spouse— 
"(A) Negligence.—If any part of such excess is attribu-
table to negligence or intentional disregard of rules and regu-
lations (but without intent to defraud) at the time of the 
making of such separate return, then 5 per centum of the 
total amount of such excess shall be assessed, collected, and 
paid in the same manner as if it were a deficiency; 
"(B) Fraud.—If any part of such excess is attributable 
to fraud with intent to evade tax at the time of the making 
of such separate return, then 50 per centum of the total 
amount of such excess shall be so assessed, collected, and 
paid, in lieu of the 60 per centum addition to the tax pro-
vided in section 3612 (d) (2). 
i u V ^ n 
" ( 7 ) 
KULES FOR APPLICATION OF SECTIONS 27 5 AND 291.—^FoF (d)(2), 
the purposes of section 275 (relating to period of limitations upon 
assessment and collection), and for the purposes of section 291 
^ u**s^c^§§ 2
7
5 
(relating to delinquent returns), a joint return made under this 291. 
" ' 
subsection shall be deemed to have been filed— 
"(A) where both spouses filed separate returns prior to 
making the joint return—on the date the last separate re-
turn was filed (but not earlier than the last date prescribed 
by law for filing the return of either spouse); 
"(B) where only one spouse filed a separate return prior 
to the making of the joint return, and the other spouse had 
less than $600 of gross income for such taxable year—on the 
date of the filing of such separate return (but not earlier 
than the last date prescribed by law for the filing of such 
separate return); or 
"(C) where only one spouse filed a separate return prior 
to the making of the joint return, and the other spouse had 
gross income of $600 or more for such taxable year—on the 
date of the filing of such joint return. 
"(8) RULE FOR APPLICATION OF SECTION 322.—^For the purposes 
of section 322 (relating to refunds and credits), a joint return 
S?**!• *^-.o„. 
' ' 
* 
26 U. D. O. 8 ail. 
26 U. S. C. § 3612 
490 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
made under this subsection shall be deemed to have been filed on 
the last date prescribed by law for filing the return for such tax-
able year (determined without regard to any extension of time 
granted to either spouse). 
"(9) ADDITIONAL TIME roR ASSESSMENT.—If a joint return is 
made under this subsection, the period of limitations provided in 
26^u^*s^^c i§ 275, 
sections 275 and 276 on the making of assessments and the begin-
276. 
' 
ning of distraint or a proceeding in court for collection shall with 
po«<,p.497. 
respect to such return include one year immediately after the 
date of the filing of such joint return (computed without regard 
to the provisions of paragraph (7) of this subsection). 
" (10 ) RULJE FOR APPLICATION OF SECTION 3809 ( a ) . 
F o r the pUT-
26u*s' c^'i3809 (a) 
poscs of scctiou 3809 (a) (relating to criminal penalties in the case 
of fraudulent returns) the term 'return' includes a separate re-
turn filed by a spouse with respect to a taxable year for which a 
joint return is made under this subsection after the filing of such 
separate return." 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall 
be applicable only with respect to taxable years beginning after 
December 31,1950. 
SEC. 313. MUTUAL SAVINGS BANKS, BUILDING AND LOAN ASSOCIA-
TIONS, COOPERATIVE BANKS. 
§u.*s.c.§ioi. 
(^) MUTUAL SAVINGS BANKS.—Section 101 ^2) (relating to exemp-
tion from tax of mutual savings banks) is hereoy repealed. 
(b) 
BUILDING AND LOAN ASSOCIATIONS AND COOPERATIVE BANKS.— 
Section 101 (4) (relating to exemption from tax of building and loan 
associations and cooperative banks) is hereby amended to read as 
follows: 
"(4) Credit unions without capital stock organized and oper-
ated for mutual purposes and without profit; and corporations or 
associations without capital stock organized prior to September 1, 
1951, 
and operated for mutual purposes and without profit for 
the purpose of providing reserve funds for, and insurance of, 
shares or deposits in— 
" (A) domestic building and loan associations, 
"(B) cooperative banks without capital stock organized 
and operated for mutual purposes and without profit, or 
"(C) mutual savings banks not having capital stock rep-
resented by shares;". 
26U*s:o*§464. 
(c) EXEMPTIONS FROM EXCESS PROFITS TAX.—Section 454 (corpora-
tions exempt from the excess profits tax) is hereby amended by adding 
at the end thereof the following: 
" (h) Any mutual savings bank not having capital stock represented 
by shares, any domestic building and loan association (as defined in 
Post, p. 491. 
section 3797 (a) (19)), and any cooperative bank without capital stock 
organized and operated for mutual purposes and without profit." 
(d) 
FEDERAL SAVINGS AND LOAN ASSOCIATIONS.—Section 5 (h) 
of 
the Home Owners' Loan Act of 1933, as amended (12 U. S. C. 1464 
48Stat. 132. 
(h)), is hereby amended by striking out "date)" and inserting in lieu 
thereof the following: "date, and except, in the case of taxable years 
beginning after December 31, 1951, income, war-profits, and excess-
profits taxes)". 
26us*c%23(k)(i) 
(®) BAD DEBT KESERVES.—Section 23 (k) (1) (relating to deduction 
from gross income of bad debts) is hereby amended by adding at the 
end thereof the following: "In the case of a mutual savings bank not 
having capital stock represented by shares, a domestic building and 
loan association, and a cooperative bank without capital stock organ-
26U. S. C. §23 (r). 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1961 
491 
ized and operated for mutual purposes and without profit, the 
reasonable addition to a reserve for bad debts shall be determined 
with due regard to the amount of the taxpayer's surplus or bad debt 
reserves existing at the close of December 31,1951. 
In the case of a 
taxpayer described in the preceding sentence, the reasonable addition 
to a reserve for bad debts for any taxable year shall in no case be less 
than the amount determined by the taxpayer as the reasonable addi-
tion for such year; except that the amount determined by the taxpayer 
under this sentence shall not be greater than the lesser of (A) the 
amount of its net income for the taxable year, computed without regard 
to this subsection, or (B) the amount by which 12 per centum of the 
total deposits or withdrawable accounts of its depositors at the close 
of such year exceeds the sum of its surplus, undivided profits, and 
reserves at the beginning of the taxable year." 
(f) DIVIDENDS PAID TO DEPosrroRs.—Section 23 (r) (relating to 
^?|^|-^A' 
the deduction from gross income of certain dividends paid by banking 
corporations) is hereby amended to read as follows: 
"(r) DIVIDENDS PAm BY BANKING CORPORATIONS.— 
t: 
"(1) In the case of mutual savings banks, cooperative banks, 
and domestic building and loan associations, amounts paid to, or 
credited to the accounts of, depositors or holders of accounts as 
dividends on their deposits or withdrawable accounts, if such 
' 
amounts paid or credited are withdrawable on demand subject 
only to customary notice of intention to withdraw. 
IP 
"(2) For deduction of dividends paid by certain other banking 
corporations, see section 121." 
ssstat.se. 
(g) DEDUCTION FOR REPAYMENT OP CERTAIN LOANS.—Section 23 
Mstat.i?.'*'^^ 
(relating to deductions from gross income) is hereby amended by 
^^e,%p'^^' ^^ 
adding at the end thereof the following: 
4
9
0
. ' 
' 
"(dd) REPAYMENT BY MUTUAL SAVINGS BANKS, ETC., OF CERTAIN 
^"^'-PP-^^O.SIS. 
LOANS.—In the case of a mutual savings bank not having capital stock 
represented by shares, a domestic building and loan association, or a 
cooperative bank without capital stock organized and operated for 
mutual purposes and without profit, amounts paid by the taxpayer 
during the taxable year in repayment of loans made prior to September 
1, 1951, by (1) the United States or any agency or instrumentality 
thereof which is wholly owned by the United States, or (2) any mutual 
fund established under the authority of the laws of any State." 
(h) DEFINITION OP BANK.—Section 104 (a) (relating to definition of 
5
3 stat. 36. 
bank) is hereby amended by inserting at the end thereof the following: 
"Such term also means a domestic building and loan association." 
(i) 
DEFINITION OP DOMESTIC BUILDING AND LOAN ASSOCIATION.— 
Section 3797 (a) (relating to definitions for the purposes of the Inter- 
6
3 stat.469. 
nal Revenue Code) is hereby amended by adding at the end thereof the 
^ ^" ^' ^ ^^^^^ ^*^' 
following new paragraph: 
"(19) DOMESTIC BUILDING AND LOAN ASSOCIATION.—^The term 
^domestic building and loan association' means a domestic build-
ing and loan association, a domestic savings and loan association, 
and a Federal savings and loan association, substantially all the 
business of \7hicl1 is confined to making loans to members." 
(j) EFFECTIVL DATE.—The amendments made by this section shall 
be applicable only with respect to taxable years beginning after 
December 31,1951. 
SEC. 314. INCOME TAX TREATMENT OF EXEMPT COOPERATIVES. 
(a) AMENDMENT OP SECTION 101 (12).--Section 101 (12) is hereby 
S?T**^-??•.,«,,... 
1 
f 
o Ti 
Jo U, o. C 5101 (12). 
amended as follows: 
(1) By inserting after "(12) " t h e folio 
wing: "(A)". 
i U. S. C. § 104 (a). 
492 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
Ante, pp. 466, 468, 
470. 
Poa, p. 518. 
63 Stat. 12. 
26U.S. C. §23. 
Ante, pp. 485, 486, 
490, 491. 
Post, pp. 499,515. 
53 Stat. 33. 
26U.S.C.§101. 
.4m«e,pp.490,491. 
Supra. 
57 Stat. 149. 
26 U. S. 0. 5§ 421-
424. 
Ante, p. 468. 
Post, pp. 610,518. 
63 Stat. 65. 
26U.S. O. §148. 
^2) By inserting after such paragraph the following: 
"(B) An organization exempt from taxation under the pro-
visions of subparagraph (A) shall be subject to the taxes imposed 
by sections 13 and 15, or section 117 (c) (1), except that in 
computing the net income of such an organization there shall be 
allowed as deductions from gross income (in addition to other 
deductions allowable under section 23)— 
"(i) amounts paid as dividends during the taxable" year 
upon its capital stock, and 
" (ii) amounts allocated during the taxable year to patrons 
with respect to its income not derived from patronage 
(whether or not such income was derived during such taxable 
year) whether paid in cash, merchandise, capital stock, revolv-
ing fund 
certificates, retain certificates, certificates of 
indebtedness, letters of advice, or in some other manner that 
discloses to each patron the dollar amount allocated to him. 
Allocations made after the close of the taxable year and on 
or before the fifteenth day of the ninth month following the 
close of such year shall be considered as made on the last day 
of such taxable year to the extent the allocations are attribu-
table to income derived before the close of such year. 
Patronage dividends, refunds, and rebates to patrons with respect 
to their patronage in the same or preceding years (whether paid 
in cash, merchandise, capital stock, revolving fund certificates, 
retain certificates, certificates of indebtedness, letters of advice, or 
in some other manner that discloses to each patron the dollar 
amount of such dividend, refund, or rebate) shall be taken into 
account in computing net income in the same manner as in the 
case of a cooperative organization not exempt under subpara-
graph (A). Such dividends, refunds, and rebates made after the 
close of the taxable year and on or before the 15th day of the ninth 
month following the close of such year shall be considered as made 
on the last day of such taxable year to the extent the dividends, 
refunds, or rebates, are attributable to patronage occurring before 
the close of such year." 
(b) TECHNICAL AMENDMENTS.— 
(1) Section 101 is hereby amended by striking out "Except as 
provided in supplement U" and inserting in lieu thereof the fol-
lowing: "Except as provided in paragraph (12) (B) and in sup-
plement U". 
(2) The last sentence of section 101 is hereby amended by 
striking out "Notwithstanding supplement U" and inserting 
in lieu thereof "Notwithstanding paragraph (12) (B) and 
supplement U". 
(c) INFORMATION RETURNS.—Section 148 (relating to information 
by corporations) is hereby amended by adding at the end thereof the 
following: 
"(f) PATRONAGE DIVIDENDS.—Any corporation allocating amounts 
as patronage dividends, rebates, or refunds (whether in cash, mer-
chandise, capital stock, revolving fund certificates, retain certificates, 
certificates of indebtedness, letters of advice, or in some other manner 
that discloses to each patron the amount of such dividend, refund, or 
rebate) shall render a correct return stating (1) the name and address 
of each patron to whom it has made such allocations amounting to 
$100 or more during the calendar year, and (2) the amount of such 
allocations to each patron. If required by the Secretary, any such 
corporation shall render a correct return of all patronage dividends, 
rebates, or refunds made during the calendar year to its patrons. 
This subsection shall not apply in the case of any corporation (includ-
66 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
493 
ing any cooperative or nonprofit corporation engaged in rural electri-
fication) exempt from taxation under section 101 (10) or (11) or in 
the case of any corporation subject to a tax imposed by supplement G." 
(d) EFFECTIVE DATE.—The amendments made by subsections (a) 
and (b) of this section shall be applicable only with respect to taxable 
years beginning after December 31, 1951. The amendment made by 
subsection (c) shall be applicable to the calendar year 1951 and 
subsequent calendar years. 
SEC. 3
1
5
. 
SURTAX 
ON 
CORPORATIONS 
IMPROPERLY 
ACCUMULATING 
SURPLUS. 
(a) LONG-TERM CAPITAL GAINS.—Section 102 (d) (1) (relating to 
dennition of section 102 net income) is hereby amended by adding at 
the end thereof the following new subparagraph: 
"(D) Long-Term Capital Gains.—The excess of the net 
long-term capital gain for the taxable year over the net short-
term capital loss for such year, minus the taxes imposed by 
this chapter attributable to such excess. The taxes attribu-
table to such excess shall be an amount equal to the difference 
between (i) the taxes imposed by this chapter (except the tax 
imposed by this section) for such year and (ii) such taxes 
computed for such year without including such excess in net 
income." 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall 
be applicable only with respect to taxable years beginning after 
December 31,1950. 
SEC. 316. ELECTION AS TO RECOGNITION OF GAIN IN CERTAIN COR-
PORATE LIQUIDATIONS. 
(a) AMENDMENT OF SECTION 112 (b) (7).—Section 112 (b) (7) 
(relating to recognition of gain in certain corporate liquidations) is 
hereby amended by striking out in subparagraph (A) (ii) "1951" and 
by inserting in lieu thereof "1951 or 1952". 
(b) BASIS OF PROPERTY.—Section 113 (a) (18) (relating to basis of 
property received in certain corporate liquidations) is amended by 
striking out "the Revenue Act of 1950" and by inserting in lieu thereof 
"any revenue act". 
(c) EFFECTIVE DATE.—^The amendments made by this section shall 
be applicable only to taxable years ending after December 31,1951. 
SEC 317. CERTAIN DISTRIBUTIONS OF STOCK ON REORGANIZATION. 
(a) DISTRIBUTIONS NOT IN LIQUIDATION.—Section 112 (b) (relating 
to nonrecognition of gain or loss in the case of certain exchanges) is 
hereby amended by adding at the end thereof the following new 
paragraph: 
"(11) DISTRIBUTION OF STOCK NOT IN LIQUIDATION.—^If there is 
distributed, in pursuance of a plan of reorganization, to a share-
holder of a corporation which is a party to the reorganization, 
stock (other than preferred stock) in another corporation which 
is a party to the reorganization, without the surrender by such 
shareholder of stock, no gain to the distributee from the receipt 
of such stock shall be recognized unless it appears that (A) any 
corporation which is a party to such reorganization was not 
intended to continue the active conduct of a trade or business 
after such reorganization, or (B) the corporation whose stock is 
distributed was used principally as a device for the distribution of 
earnings and profits to the snareholders of any corporation a party 
to the reorganization." 
(b) BASIS OP STOCK.—Section 113 (a) (relating to unadjusted basis 
for determining gain or loss) is hereby amended by adding at the end 
thereof the following new paragraph: 
63 Stat. 33. 
26U. S. C. §101. 
53 Stat. 71. 
26 U. 8. C. §§ 201-
210. 
Ante, pp. 466,467. 
Post, pp. 507, 508. 
53 Stat. 35. 
26U.S.C. §102. 
58 Stat. 40; 64 Stat. 
931 
26 U. S. C. § 112 (b) 
(7). 
53 Stat. 44. 
26 U. S. C. § 113 (a) 
(18). 
53 Stat. 37. 
26U.S.C.§ 112(b). 
/Supra. 
63 Stat. 40. 
26U. S. C. §113(a). 
Ante, p. 483. 
Post, p. 496. 
Poj(,p.496. 
494 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
"(23) TAX-FREE DISTRIBUTIONS.—If the property consists of 
stock distributed after the date of the enactment of the Revenue 
Act of 1951 to a taxpayer in connection with a transaction de-
Ante,pA9i. 
scribed in section 112 (b) (11) (hereinafter in this paragraph 
called 'new stock'), or consists of stock in respect of which such dis-
tribution was made (hereinafter in this paragraph called 'old 
stock'), then the basis of the new stock and of the old stock, respec-
tively, shall, in the shareholder's hands, be determined by allocat-
ing between the old stock and the new stock the adjusted basis of 
the old stock; such allocation to be made under regulations pre-
scribed by the Secretary." 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
be applicable with respect to taxable years ending after the date of the 
enactment of this Act, but shall apply only with respect to distribu-
tions of stock made after such date. 
SEC. 318. GAIN FROM SALE OR EXCHANGE OF TAXPAYER'S RESIDENCE. 
(a) NoNREcoGNinoN OF GAIN IN CERTAIN CASES.—Section 112 (re-
26u*s(J§ii2 
lating to recognition of gain or loss) is hereby amended by adding at 
Ante.p.m. 
the end thereof the following new subsection: 
°"" " '"° 
"(n) GAIN FROM SALE OR EXCHANGE OF RESIDENCE.— 
"(1) NONRECOGNITION OF GAIN.—^If property (hereinafter in 
this subsection called 'old residence') used by the taxpayer as 
his principal residence is sold by him and, within a period 
beginning one year prior to the date of such sale and ending one 
year after such date, property (hereinafter in this subsection 
called 'new residence') is purchased and used by the taxpayer as 
his principal residence, gain (if any) from such sale shall be 
recognized only to the extent that the taxpayer's selling price 
of the old residence exceeds the taxpayer's cost of purchasing 
the new residence. 
" (2) RULES FOR APPLICATION OF SUBSECTION.—For the purposes 
of this subsection: 
"(A) An exchange by the taxpayer of his residence for 
other property shall be considered as a sale of such residence, 
and the acquisition of a residence upon the exchange of 
property shall be considered as a purchase of such residence. 
"(B) If the taxpayer's residence (as a result of its destruc-
tion in whole or in part, theft, or seizure) is compulsorily 
or involuntarily converted into property or into money, such 
destruction, theft, or seizure shall be considered as a sale of 
the residence; and if the residence is so converted into prop-
erty which is used by the taxpayer as his residence, such 
conversion shall be considered as a purchase of such property 
by the taxpayer. 
"(C) In the case of an exchange or conversion described in 
subparagraph (A) or (B), in determining the extent to which 
the selling price of the old residence exceeds the taxpayer's 
- :• .^-- 
cost of purchasing the new residence, the amount realized 
, 
by the taxpayer upon such exchange or conversion shall be 
considered the selling price of the old residence. 
"(D) A residence any part of which was constructed or 
reconstructed by the taxpayer shall be considered as pur-
chased by the taxpayer. In determining the taxpayer's cost 
of purchasing a residence, there shall be included only so 
much of his cost as is attributable to the acquisition, con-
struction, reconstruction, and improvements made which are 
properly chargeable to capital account, during the period 
specified in paragraph (1). 
^
^ 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
495 
"(E) If a residence is purchased by the taxpayer prior to 
the date of his sale of the old residence, the purchased resi-
dence shall not be treated as his new residence if sold or other-
wise disposed of by him prior to the date of the sale of the 
old residence. 
"(F) If the taxpayer, during the period described in para-
f
raph (1), purchases more than one residence which is used Ante.p.iOi. 
y him as his principal residence at some time within one year 
after the date of the sale of the old residence, only the last of 
such residences so used by him after the date of such sale shall 
constitute the new residence. If within the one year referred 
to in the preceding sentence property used by the taxpayer 
as his principal residence is destroyed, stolen, seized, requi-
sitioned, or condemned, or is sold or exchanged under threat 
or imminence thereof, then for the purposes of the preceding 
sentence such one year shall be considered as ending with the 
date of such destruction, theft, seizure, requisition, condem-
nation, sale, or exchange. 
"(G) In the case of a new residence the construction of 
which was commenced by the taxpayer prior to the expira-
tion of one year after the date of the sale of the old residence, 
the period specified in paragraph (1), and the one year 
referred to in subparagraph (F) of this paragraph, shall be 
considered as including a period of 18 months beginning 
with the date of the sale of the old residence. 
"(3) LIMITATION.—The provisions of paragraph (1) shall not 
be applicable with respect to the sale of the taxpayer's residence 
if within one year prior to the date of such sale the taxpayer sold 
at a gain other property used by him as his principal residence, 
and any part of such gain was not recognized by reason of the pro-
visions of paragraph (1). For the purposes of this paragraph, the 
destruction, theft, seizure, requisition, or condemnation of prop-
erty or the sale or exchange of property under threat or imminence 
thereof, shall not be considered as a sale of such property. 
"(4) BASIS OF NEW RESIDENCE.—^Where the purchase of a new 
residence results, under paragraph (1), in the nonrecognition of 
gain upon the sale of an old residence, in determining the adjusted 
basis of the new residence as of any time following the sale of the 
old residence, the adjustments to basis shall include a reduction 
by an amount equal to the amount of the gain not so recognized 
upon the sale of the old residence. For this purpose, the amount 
of the gain not so recognized upon the sale of the old residence 
includes only so much of such gain as is not recognized by reason 
of the cost, up to such time, of purchasing the new residence. 
"(5) TENANT-STOCKHOLDER IN A COOPERATIVE APARTMENT CORPO-
RATION.—^For the purposes of this subsection, section 113 (b) (1) 
(K), and section 117 (h) (7), references to property used by the 
^o»«,p.497. 
taxpayer as his principal residence, and references to the residence 
of a taxpayer, shall include stock held by a tenant-stockholder 
(as defined in section 23 (z) (2)) in a cooperative apartment (as ^^fj^g^c' s 2
3 c
z
) 
defined in such section) if— 
(2). " ' ' 
"(A) in the case of stock sold, the apartment which the 
taxpayer was entitled to occupy as such stockholder was used 
by him as his principal residence, and 
"(B) in the case of stock purchased, the taxpayer used as 
his principal residence the apartment which he was entitled 
to occupy as such stockholder. 
"(6) HUSBAND AND WIFE.—^If the taxpayer and his spouse, in 
accordance with regulations which shall be prescribed by the Sec-
76100 O - 52 (PT. I) - 34 
496 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
retary pursuant to this paragraph, consent to the application of 
subparagraph (B) of this paragraph, then— 
"(A) for the purposes of this subsection, the words 'tax-
payer's selling price of the old residence' shall mean the sell-
ing price (of the taxpayer, or of the taxpayer and his spouse) 
of the old residence, and the words 'taxpayer's cost of purchas-
ing the new residence' shall mean the cost (to the taxpayer, 
his spouse, or both) of purchasing the new residence (whether 
held by the taxpayer, his spouse, or the taxpayer and his 
spouse); and 
"(B) so much of the gain upon the sale of the old residence 
as is not recognized solely by reason of this paragraph, and 
so much of the adjustment under paragraph (4) to the basis 
of the new residence as results solely from this paragraph, 
shall be allocated between the taxpayer and his spouse as 
provided in such regulations. 
This paragraph shall apply only if the old residence and the new 
residence are each used by the taxpayer and his spouse as their 
principal residence. In case the taxpayer and his spouse do not 
consent to the application of subparagraph (B) of this paragraph, 
then the recognition of gain upon the sale of the old residence 
shall be determined under this subsection without regard to the 
rules provided in this paragraph. 
"(7) STATUTE OF LIMITATIONS.—^If the taxpayer during a 
taxable year sells at a gain property used by him as his principal 
residence, then— 
"(A) the statutory period for the assessment of any 
deficiency attributable to any part of such gain shall not 
expire prior to the expiration of three years from the date 
the Secretary is notified by the taxpayer (in such manner 
as the Secretary may by regulations prescribe) of— 
"(i) the taxpayer's cost of purchasing the new resi-
dence which the taxpayer claims results in nonrecog-
nition of any part of such gain, 
"(ii) the taxpayer's intention not to purchase a new 
residence within the period specified in paragraph (1), or 
"(iii) a failure to make such purchase within such 
period; and 
"(B) such deficiency may be assessed prior to the expira-
tion of such three-year period notwithstanding the provisions 
of any other law or rule of law which would otherwise 
prevent such assessment." 
(b) 
TECHNICAL AMENDMENTS.— 
26U*s.^c. jn2(f). 
(1) Section 112 (f) (relating to involuntary conversions) is 
hereby amended by adding at the end thereof the following: 
"This subsection shall not apply, in the case of property used 
by the taxpayer as his principal residence, if the destruction,'theft, 
seizure, requisition, or condemnation of the residence, or the sale 
or exchange of such residence under threat or imminence thereof, 
occurred after December 31, 1950." 
26u*s^c §ii3(a) 
(^) Section 113 (a) (9) (relatingtobasisof property acquired 
(9). • • • 
as a result of involuntary conversions) is hereby amended by 
adding at the end thereof the following: "This paragraph shall 
not apply in respect of property acquired as a result of a compul-
sory or involuntary conversion of property used by the taxpayer 
as his principal residence if the destruction, theft, seizure, requi-
sition, or condemnation of such residence, or the sale or exchange 
of such residence under threat or imminence thereof, occurred 
after December 31,1950." 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
497 
(3) Section 113 (b) (1) (relating to adjusted basis of property) 
is hereby amended by adding at the end thereof the following new 
subparagraph: 
"(K) in the case of a residence the acquisition of which 
resulted, under the provisions of section 112 (n), in the non-
recognition of any part of the gain realized upon the sale, 
exchange, or involuntary conversion of another residence, to 
the extent provided in section 112 (n) (4)." 
(4) Section 117 (h) (relating to determination of holding 
period) is hereby amended by adding at the end thereof the 
following new paragraph: 
"(7) In determining the period for which the taxpayer has 
held a residence, the acquisition of which resulted under section 
112 (n) in the nonrecognition of any part of the gain realized on 
the sale, exchange, or involuntary conversion of another residence, 
there shall be included the period for which such other residence 
had been held as of the date of such sale, exchange, or involuntary 
conversion." 
(5) Section 276 (relating to period of limitation upon assess-
ment and collection) is hereby amended by adding at the end 
thereof the following: 
"(e) GAIN UPON SALE OR EXCHANGE OF EESIDENCE.—^In the case of 
a deficiency described in section 112 (n) (7), such deficiency may be 
assessed at any time prior to the expiration of the time therein 
provided." 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
be applicable to taxable years ending after December 31,1950, but the 
provisions of section 112 (n) (1) and (6) of the Internal Revenue 
Code shall apply only with respect to residences sold (within the 
meaning of such section) after such date. 
SEC. 319. PERCENTAGE DEPLETION. 
(a) ALLOWANCE OF PERCENTAGE DEPLETION.—So much of paragraph 
(4) of section 114 (b) as precedes the last sentence of subparagraph 
(A) is hereby amended to read as follows: 
" (4) 
FERCENTAGE DEPLETION FOR COAL AND METAL MINES AND FOR 
CERTAIN OTHER MINES AND NATURAL MINERAL DEPOSITS. 
"(A) I N GENERAL.—The allowance for depletion under 
section 23 (m) in the case of the following mines and other 
natural deposits shall be— 
"(i) in the case of saiid, gravel, slate, stone (including 
pumice and scoria), brick and tile clay, shale, oyster shell, 
clam shell, granite, marble, sodium chloride, and, if from 
brine wells, calcium chloride, magnesium chloride, and 
bromine, 5 per centum, 
"(ii) in the case of coal, asbestos, brucite, dolomite, 
magnesite, perlite, wollastonite, calcium carbonates, and 
magnesium carbonates, 10 per centum, 
" (iii) in the case of metal mines, aplite, bauxite, fluor-
spar, flake graphite, vermiculite, beryl, garnet, feldspar, 
mica, talc (including pyrophyllite), lepidolite, spodu-
mene, barite, ball clay, sagger clay, china clay, phosphate 
rock, rock asphalt, trona, bentonite, gilsonite, thenardite, 
borax, fuller's earth, tripoli, refractory and fire clay, 
quartzite, diatomaceous earth, metallurgical grade lime-
stone, chemical grade limestone, and potash, 15 per 
centum, and 
"(iv) in the case of sulfur, 23 per centum, 
53 Stat. 44. 
26 U. S. C. § 113 (b) 
(1). 
Ante, p. 487. 
Ante, p. 494. 
53 Stat. 52. 
26U.S.C.§ 117(h). 
53 Stat. 87. 
26U.S.C.i 276. 
Ante, p. 494. 
58 Stat. 44. 
26 U. S. C. § 114 (b) 
(4). 
53 Stat. 14. 
26U. S. C. §23(m). 
4 9 8 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
of the gross income from the property during the taxable 
year, excluding from such gross income an amount equal to 
any rents or royalties paid or incurred by the taxpayer in 
respect of the property." 
(b) TECHNICAL AMENDMENT.—So much of paragraph (2) of section 
5
3 Stat45. ^^^^^^ 114 (b) as precedes "discovered by the taxpayer after February 28, 
(2). 
' ' 
1913" is hereby amended to read as follows: 
"(2) DISCOVERY VALUE I N T H E CASE or M I N E S . — I n the case of 
mines (except mines in respect of which percentage depletion is 
Ante,pA97. 
allowable under paragraph (4) of this subsection)". 
(c) EFFECTIVE DATE.—Tlie amendments made by this section shall 
be applicable only with respect to taxable vears beginning 
after 
December 31, 1950. 
SEC. 320. REDEMPTION OF STOCK TO PAY DEATH TAXES. 
(a) A M E N D M E N T OF SECTION 115 (g) 
(3).—Section 115 (g) 
(3) 
2
6 u^s ^' § 1
1
5 (g) (relating to redemption of stock to pay death taxes) is hereby amended 
(3). 
' ' ' 
by striking out "50 per centum of the value of the net estate" and 
inserting in lieu thereof "35 per centum of the value of the gross 
estate". 
(b) 
EFFECTIVE DATE.—The amendment made by subsection (a) 
shall be applicable to taxable years ending on or after the date of the 
enactment of this Act, but shall apply only to amounts distributed 
on or after such date. 
SEC. 321. EARNED INCOME FROM SOURCES WITHOUT THE UNITED 
STATES. 
(a) 
EXCLUSION FROM GROSS INCOME.—Section 116 (a) (relating to 
^u.^s'.c!§ii6(a). earned income from sources without the United States) is hereby 
amended by striking out paragraphs (1) and (2) and inserting in 
lieu thereof the following : 
"(1) BONA FIDE RESIDENT OF FOREIGN COUNTRY.—In the case of 
an individual citizen of the United States, who establishes to the 
satisfaction of the Secretary that he has been a bona fide resident 
of a foreign country or countries for an uninterrupted period 
which includes an entire taxable year, amounts received from 
sources without the United States (except amounts paid by the 
United States or any agency thereof) if such amounts constitute 
^u^s.^c. § 1
1
6 (a) 
earned income (as denned in paragraph (3)) attributable to 
(3). 
such period; but such individual shall not be allowed as a deduc-
tion from his gross income any deductions properly allocable to or 
chargeable against amounts excluded from gross income under 
this paragraph. 
" (2) PRESENCE I N FOREIGN COUNTRY FOR 17 MONTHS.—In the case 
of an individual citizen of the United States, who during any 
period of 18 consecutive months is present in a foreign country or 
countries during at least 510 full days in such period, amounts 
received from sources without the United States (except amounts 
paid by the United States or any agency thereof) if such amounts 
constitute earned income (as defined in paragraph (3)) attribut-
able to such period; but such individual shall not be allowed as 
a deduction from his gross income any deductions 
properly 
allocable to or chargeable against amounts excluded from gross 
income under this paragraph," 
26U.to^.^§i62i(a) 
(b) WITHHOLDING OF T A X ON_WAGES.—Section 1621 (a) (8) ( A ) 
(8) (A). 
(relating to definition of wages) is hereby amended to read as follows: 
" ( A ) for services for an employer (other than the United 
States or any agency thereof) performed in a foreign country 
by a citizen of the United States, if at the time of the pay-
ment of such remuneration t h e employer is required by the 
law of any foreign country to withhold income tax upon such 
65 STAT. 
PUBLIC LAW 183—OCT. 20, 1951 
499 
remuneration, or it is reasonable to believe that such remuner-
ation will be excluded from gross income under the provisions 
of section 116 (a) (1) or (2), or", 
(c) EFFECTIVE DATES.—^The amendment made by subsection (a) 
shall be applicable to taxable years beginning after December 31,1950. 
The amendment made by subsection (b) shall be applicable with respect 
to wages paid on or after January 1,1952. 
SEC. 322. CAPITAL GAINS AND LOSSES. 
(a) TREATMENT or LONG-TERM CAPITAL GAINS AND LOSSES.— 
(1) AMENDMENT OF SECTION 23.—Section 23 (relating to deduc-
tions from gross income) is hereby amended by adding at the end 
thereof the following new subsection: 
"(ee) LONG-TEKM CAPITAL GAINS.—^In the case of a taxpayer other 
than a corporation, the deduction for long-term capital gains provided 
in section 117 (b)." 
(2) AMENDMENT OF SECTION 117 (b).—Section 117 (b) (relating 
to treatment of long-term capital gains and losses) is hereby 
amended to read as follows: 
"(b) DEDUCTION FROM GROSS INCOME.—^In the case of a taxpayer 
other than a corporation, if for any taxable year the net long-term 
capital gain exceeds the net short-term capital loss, 50 per centum of 
the amount of such excess shall be a deduction from gross income. In 
the case of an estate or trust, the deduction shall be computed by exclud-
ing the portion (if any), of the ^ i n s for the taxable year from sales or 
exchanges of capita;l assets, which, under section 162 (b) or (c), is 
includible by the income beneficiaries as gain derived from the sale or 
exchange of capital assets." 
(b) Ai/TERNATivE TAX.—Section 117 (c) (2) (relating to alternative 
tax) is hereby amended to read as follows: 
"(2) OTHER TAXPAYERS.—^If for any taxable year the net long-
term capital gain of any taxpayer (other than a corporation) 
exceeds the net short-term capital loss, there shall be levied, col-
lected, and paid, in lieu of the tax imposed by sections 11 and 12 
(or, in the case of certain tax-exempt trusts, in lieu of the tax 
imposed by section 421), a tax determined as follows, if and only 
if such tax is less than the tax imposed by such sections: 
"(A) A partial tax shall first be computed upon the net 
income reduced by an amount equal to 50 per centum of such 
excess, at the rates and in the manner as if this subsection had 
not been enacted. 
"(B) There shall then be ascertained an amount equal to 
25 per centum of the excess of the net long-term capital gain 
over the net short-term capital loss. In the case of any tax-
able year beginning after October 31, 1951, and before 
November 1, 1953, there shall be ascertained, in lieu of the 
amount computed under the preceding sentence, an amount 
equal to 26 per centum of the excess of the net long-term 
capital gain over the net short-term capital loss. 
(C) The total tax shall be the partial tax computed under 
subparagraph (A) plus the amount computed under subpara-
graph (B).^' 
(c) TECHNICAL AMENDMENTS.— 
(1) AMENDMENT OF SECTION 22 (n).—Section 22 (n) (relating 
to the definition of adjusted gross income) is hereby amended by 
striking out the word "and 
at the end of paragraph (5), by 
striking out the period at the end of paragraph (6) and inserting 
in lieu thereof "; and", and by inserting after paragraph (6) the 
following new paragraph: 
"(7) IX)NG-TERM CAPITAL GAINS.—^The deduction allowed by sec-
tion 23 (ee)." 
Ante, p. 498. 
53 Stat. 12. 
26U. S. C. §23. 
Ante, pp. 486, 486, 
490, 491. 
PoH, p. 615. 
S3 Stat. 61. 
26U.S.C.§ 117(b). 
53 Stat. 66. 
22 U. S. G. § 162. 
53 Stat. 61. 
26 U. S. C. § 117 (c) 
(2). 
53 Stat. 5. 
26U. S. C.§§11, 12. 
Ante, pp. 459, 461, 
480. 
64 Stat. 948. 
26U. S. C.§421. 
Ante, p. 468. 
Post, p. 610. 
68 Stat. 236. 
26 U. S. C. 5 22 (n). 
Supra. 
500 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
(2) AMENDMENT OP SECTION iix (a).—^Paragraphs (2) and (4) 
26U.^8.c.§n7(a). 
of section 117 (a) (relating to definitions of shoit-term capital 
gain and long-term capital gain) are each hereby amended by 
striking out 
net income" and inserting in lieu thereof "gross 
income". 
(3) AMENDMENT OP SECTION in 
(j).—Section 117 (j) (2) (A) 
26U.^s.^^§ii7(]) 
(relating to gains and losses from involuntary conversion and 
(2) (A). 
from the sale or exchange of certain property used in the trade or 
business) is hereby amended to read as follows: 
"(A) In determining under this para^aph whether gains 
exceed losses, the gains described therein shall be included 
only if and to the extent taken into account in computing gross 
income and the losses described therein shall be included only 
if and to the extent taken into account in computing net 
2
6 u^8c§ 117(d) 
income, except that subsection (d) shall not apply." 
5
3 Stat.'867 
' 
(4) AMENDMENT OF SECTION 122 (d) (4).—Scction 122 (d) (4) 
(4^ • • -51 ( 
(relating to computation of net operating loss deduction) is 
liereby amended to read as follows: 
"(4) The amount deductible on account of losses from sales or 
exchanges of capital assets shall not exceed the amount includible 
on account of gains from such sales or exchanges. The deduc-
Arue,v.i99. 
fioii provided in section 23 (ee) shall not be allowed." 
26u^s*c• § 162(a) 
(^) AMENDMENT OF SECTION 162 (a).—Section 162 (a) (relat-
ing to computation of net income of estates and trusts) is hereby 
amended by striking out the semicolon and inserting in lieu 
thereof a period and the following: "Where any amount of the 
income so paid or set aside is attributable to gain from the sale 
or exchange of capital assets held for more than six months, 
proper adjustment of the deduction otherwise allowable under 
this subsection shall be made for any deduction allowable to the 
^n<e,p.499. 
tr^gt under section 23 (ee) ;". 
(d) EFFECTIVE DATE.—The amendments made by this section shall 
be applicable only with respect to taxable years beginning on or after 
the date of the enactment of this Act. In determining under section 
26u^s'c" § 1
1
7 (e) ^^^ (^) ^^ ^^® Internal Revenue Code the amount of the carryover 
' to a taxable year beginning on or after such date, of the capital loss 
for a taxable year beginning before such date, such amendments shall 
not affect the computation of the amount of the net capital loss or of 
the net capital gain for any taxable year beginning before such date. 
SEC. 323. SALE OF LAND WITH UNHARVESTED CROP. 
26U.*s.^a§ii7(i). 
(^) TREATMENT OF GAIN OR Loss.—Section 117 (j) (relating to sale 
Supra. 
or exchange of property used in the trade or business) is hereby 
amended— 
(1) By inserting immediately before the period at the end of 
the second sentence of paragraph (1) thereof the following: "and 
unharvested crops to which paragraph (3) is applicable"; and 
(2) By adding at the end thereof a new paragraph to read as 
follows: 
" (3) SALE OF LAND WITH UNHARVESTED CROP.—In the case of an 
\ 
unharvested crop on land used in the trade or business and held 
for more than 6 months, if the crop and the land are sold or 
exchanged 
(or compulsorily or involuntarily converted 
as 
described in paragraph (2)) at the same time and to the same 
person, the crop shall be considered as 'property used in the trade 
or business'." 
(b) 
TREATMENT OF DEDUCTIONS.— 
26U.^s.c" §24. 
(1) AMENDMENT OF SECTION 24.—Section 24 (relating to items 
^n<e, p. 487. 
not deductible) is hereby amended by adding at the end thereof 
a new subsection to read as follows: 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
501 
"(f) 
SALE OF LAND W I T H UNHARVESTED CROP.—^Where an unhar-
vested crop sold by the taxpayer is considered under the provisions of 
section 117 (j) (3) as 'property used in the trade or business', in com- Ante,v.50o. 
puting net income no deduction (whether or not for the taxable year 
of the sale and whether for expenses, depreciation, or otherwise) 
attributable to the production of such crop shall be allowed." 
(2) AMENDMENT OF SECTION 113 (b) (1).—Section 113 (b) (1) 
gu**|-.t3:§ 113(b) 
(relating to adjustments to basis) is hereby amended by adding (i). 
at the end thereof a new subparagraph to read as follows: 
"*"**' ^^' ^^^' ^
®
^
" 
" (L) for deductions to the extent disallowed under section 
24 (f), notwithstanding the provisions of any other sub- Ante,p. 500. 
paragraph of this paragraph." 
(c) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall be applicable only with respect to sales, exchanges, and con-
versions, occurring in taxable years beginning after December 31, 
1950. The amendments made by subsection (b) shall be applicable 
to any taxable year for which a deduction is disallowed by reason of 
sales, exchanges, or conversions to which subsection (a) is applicable. 
SEC. 324. SALES OF LIVESTOCK. 
Section 117 (j) (1) is hereby amended by adding at the end thereof 
^«'«. P- s
o
o
-
the following new sentences: "Such term also includes livestock, 
regardless of age, held by the taxpayer for draft, breeding, or dairy 
purposes, and held by him for 12 months or more from the date of 
acquisition. 
Such term does not include poultry." The first sentence 
added to section 117 (j) (1) by the amendment made by this section 
shall be applicable with respect to taxable years beginning after 
December 31,1941, except that the extension of the holding period from 
6 to 12 months shall be applicable only with respect to taxable years 
beginning after December 31, 1950. The second sentence added to 
section 117 (j) (1) by the amendment made by this section shall be 
applicable only with respect to taxable years beginning after December 
31, 1950. 
SEC. 
3
2
5
. 
TAX 
TREATMENT 
OF 
COAL 
ROYALTIES. 
(a) 
DEFINITION OF PROPERTY USED IN THE TRADE OR BUSINESS.— 
Section 117 (j) (1) (relating to the definition of property used in the Ante.p.500. 
trade or business) is hereby amended by adding after the word "tim-
ber" in the second sentence thereof the following: "or coal". 
(b) GAIN OR Loss UPON CERTAIN DISPOSALS OF TIMBER OR COAL.— 
Section 117 (k) (2) (relating to the disposal of timber) is hereby 
2
6 u^s *c'§ 1
1
7 (k) 
amended to read as follows: 
(2). ' ' " 
"(2) In the case of the disposal of timber or coal (including 
lignite), held for more than 6 months prior to such disposal, by 
the owner thereof under any form or type of contract by virtue of 
which the owner retains an economic interest in such timber or 
coal, the difference between the amount received for such timber 
or coal and the adjusted depletion basis thereof shall be con-
sidered as though it were a gain or loss, as the case may be, upon 
the sale of such timber or coal. Such owner shall not be entitled 
to the allowance for percentage depletion provided for in section 
114 (b) (4) with respect to such coal. This paragraph shall not 
Ante.p.m. 
applj^ to income realized by the owner as a co-adventurer, partner, 
or principal in the mining of such coal. The date of disposal of 
such coal shall be deemed to be the date such coal is mined. 
In 
determining the gross income, the adjusted gross income, or the 
net income of the lessee, the deductions allowable with respect 
to rents and royalties shall be determined without regard to the 
provisions of this paragraph. 
This paragraph shall have no 
application, in the case of coal, for the purposes of applying sec-
5 0 2 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
2
6 u^*8^^6!^§ 102, 
tion 102 or subchapter A of chapter 2 (including the computation 
smetseg.' 
' 
under section 117 (c) (1) of a tax in lieu of the tax imposed by 
^"'"•P-*^"- 
section 500)." 
2
6 u.^s! a § 1
1
7 (k). 
(c) CLERICAL AMENDMENT.—The heading to section 117 (k) (relat-
Ante, p. 501. 
ing to the gain or loss upon the cutting of timber) is hereby amended 
to read as follows: "(k) GAIN OR Loss IN THE CASE OF TIMBER OR 
COAL.—". 
26U*s.c!§48i(a) 
(^) TECHNICAL AMENDMENT.—Scction 481 (a) 
f4) is hereby 
(4). 
amended by striking out "cutting or disposal of timber" and inserting 
in lieu thereof "cutting of timber, or the disposal of timber or coal, . 
(e) CONFORMING AMENDMENTS.— 
26U.*s. c^*§433. 
(1) Section 433 (relating to computation of excess profits net 
income) is hereby amended by inserting at the end thereof the 
following new subsection: 
"(d) 
GAIN OR Loss UPON CERTAIN DISPOSALS OF COAL IN BASE 
PERIOD.—For the purpose of subsection (b), the excess profits net 
income shall be computed as if the provisions of section 117 (j) and 
Ante, pp. 500,501. 
(]j) (2) which relate to disposals of coal were a part of the law appli-
cable to the taxable year for which excess profits net income is com-
puted." 
6
4 Stat, mh^^^ ^
^
^ 
(2) Section 440 (a) (1) (relating to definition of "inadmissible 
(1). 
* 
assets") is hereby amended by strikmg out "and" at the end of sub-
paragraph ( A ) ; by striking out the period at the end of sub-
paragraph (B) and inserting in lieu thereof "; and"; and by 
adding at the end thereof the following new subparagraph: 
"(C) The economic interest referred to in the provisions 
^n(e, p.601. 
of scction 117 (k) (2) relating to coal if the taxpayer is 
subject to such provisions with respect to the income from 
such coal." 
(3) The amendments made by this subsection shall be appli-
2
6 u^s.^c.'^i 4
3
0 et 
cable in computing the tax under subchapter D of chapter 1 for 
seg. 
taxable years ending after December 31, 1950. 
(f) EFFECTIVE DATE.—Except as provided in subsection (e), the 
amendments made b^ this section shall be applicable only with respect 
to taxable years ending after December 31,1950 (whether the contract 
was made on, before, or after such date), but shall apply only with 
respect to amounts received or accrued after such date. 
SEC 326. COLLAPSIBLE CORPORATIONS. 
(a) Definitions with Eespect to Collapsible Corporations.—Section 
26U^scVi7(m) 117 (m) (2) (relating to definitions with respect to collapsible corpo-
(2). 
rations) is hereby amended to read as follows: 
"(2) DEFINmONS.— 
"(A) For the purposes of this subsection, the term 'col-
lapsible corporation' means a corporation formed or availed 
of principally for the manufacture, construction, or produc-
tion of property, for the purchase of property which (in the 
, . 
hands of the corporation) is property described in subsec-
26u.*s.^a§ 117(a) 
tion (a) (1) (A), or for the holding of stock in a corpora-
CD (A)'. 
tion so formed or availed of, with a view to— 
"(i) the sale or exchange of stock by its shareholders 
(whether in liquidation or otherwise), or a distribution 
to its shareholders, prior to the realization by the cor-
poration manufacturing, constructing, producing, or 
purchasing the property of a substantial part of the 
net income to be derived from such property, and 
"(ii) the realization by such shareholders of gain 
attributable to such property. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
503 
"(B) For the purposes of subparagraph (A), a corpora-
tion shall be deemed to have manufactured, constructed, 
produced, or purchased property, if— 
"(i) it engaged in the manufacture, construction, or 
production of such property to any extent, 
"(ii) it holds property having a basis determined, in 
whole or in part, by reference to the cost of such proper^ 
in the hands of a person who manufactured, constructed, 
produced, or purchased the property, or 
"(iii) it holds property havmg a basis determined, 
in whole or in part, by reference to the cost of property 
manufactured, constructed, produced, or purchased by 
the corporation." 
(b) LIMITATIONS ON APPLICATION or SECTION 117 (m).—Subpara-
graphs (A), (B), and (C) of section 117 (m) (3) (relating to the ^6*u.1;c*§ii7(ra) 
limitations on the application of section 117 (m)) are hereby amended <
3
)
-
to read as follows: 
"(A) this subsection shall not apply unless, at any time 
after the commencement of the manufacture, construction, 
or production of the property, or at the time of the purchase 
of the property described in subsection (a) (1) (A) or at 
leu.^s.^a§ 117(a) 
any time thereafter, such shareholder (i) owned (or was d) (A). 
considered as owning) more than 10 per centum in value 
of the outstanding stock of the corporation, or (ii) owned 
stock which was considered as owned at such time by another 
shareholder who then owned (or was considered as owning) 
more than 10 per centum in value of the outstanding stock 
of the corporation; 
"(B) this subsection shall not apply to the gain recog-
nized during a taxable year unless more than 70 per centum 
of such gain is attributable to the property so manufactured, 
constructed, produced, or purchased; and 
"(C) this subsection shall not apply to gain realized after 
the expiration of three years following the completion of 
such manufacture, construction, production, or purchase." 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
be applicable to taxable years ending after August 31, 1951, but shall 
be applicable only with respect to gains realized after such date. The 
determination of the tax treatment of gains realized prior to Septem-
ber 1,1951, shall be made as if this section had not been enacted and 
without inferences drawn from the fact that the amendments to sec-
tion 117 (m) made by this section are not expressly made applicable 
to gains realized prior to September 1, 1951, and without inferences 
drawn from the limitations contained in section 117 (m), as amended 
by this section. 
SEC. 327. DEALERS IN SECURITIES—CAPITAL GAINS AND ORDINARY 
LOSSES. 
Effective with respect to sales or exchanges made after the expira-
tion of the thirtieth day after the date of the enactment of this Act, 
section 117 is hereby amended by adding at the end thereof the follow- 
H ff*| ^-. ^^ 
ing new subsection: 
supra.' 
"(n) DEALERS IN SECDKITIES.— 
"(1) CAPITAL GAINS.—Gain by a dealer in securities from the 
sale or exchange of any security shall in no event be considered 
as gain from the sale or exchange of a capital asset unless— 
"(A) the security was, prior to the expiration of the thir-
tieth day after the date or its acquisition or after the date of 
the enactment of the Revenue Act of 1951 (whichever is 
504 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
the later), clearlj identified in the dealer's records as a 
security held for investment; and 
"(B) the security was not, at any time after the expiration 
of such thirtieth day, held by such dealer primarily for sale 
to customers in the ordinary course of his trade or business. 
"(2) ORDINABY LOSSES.—^Loss by a dealer in securities from 
the sale or exchange of any security shall, except as otherwise 
26u.*s.^^§ 1
1
7 (i). 
provided in subsection (i) (relating to bond, etc., losses of banks), 
in no event be considered as loss from the sale or exchange of 
property which is not a capital asset if at any time after the 
thirtieth day following the date of the enactment of the Revenue 
Act of 1951 the security was clearly identified in the dealer's rec-
ords as a security held for investment. 
"(3) DEFINITION OF SECUKITY.—For the purposes of this sub-
section the term 'security' means any share of stock in any cor-
poration, certificate of stock or interest in any corporation, note, 
bond, debenture, or evidence of indebtedness, or any evidence of an 
interest in or right to subscribe to or purchase any of the fore-
going." 
SEC. 
3
2
8
. 
TREATMENT 
OF 
GAIN 
ON 
SALES 
OF 
CERTAIN 
PROPERTY 
BETWEEN 
SPOUSES 
AND 
BETWEEN 
AN 
INDIVIDUAL 
AND 
A 
CONTROLLED 
CORPORATION. 
26U^s.c§ii7 
(*) DISALLOWANCE OF CAPITAL GAIN TREATMENT.—Section 117 
Ante, p. 503. 
(relating to capital gains and losses) is hereby amended by adding at 
the end thereof the following new subsection: 
"(o) GAIN FROM SALE OF CERTAIN PROPERTY BETWEEN SPOUSES OR 
BETWEEN AN INDIVIDUAL AND A CONTROLLED CORPORATION.— 
"(1) TREATMENT OF GAIN AS ORDINARY INCOME.—^In the case 
of a sale or exchange, directly or indirectly, of property described 
in paragraph (2)— 
" (A) between a husband and wife; or 
"(B) between an individual and a corporation more than 
80 per centum in value of the outstanding stock of which is 
owned by such individual, his spouse, and his minor children 
and minor ^andchildren; 
any gain recognized to the transferor from the sale or exchange of 
such property shall be considered as gain from the sale or exchange 
of property which is neither a capital asset nor property described 
Ante, pp. 500, 501. 
J^ gubsCCtion ( j ) . 
"(2) SUBSECTION APPLICABLE ONLY TO SALES OR EXCHANGES OF 
DEPRECIABLE PROPERTY.—This subsection shall apply only in the 
case of a sale or exchange of property by a transferor which in 
the hands of the transferee is property of a character which is sub-
2
6 u*s.^c § 2
3 (J). 
^^^ ^^ t^® allowance for depreciation provided in section 23 (1)." 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall be applicable with respect to taxable years ending after April 30, 
1951, but shall apply only with respect to sales or exchanges made 
after May 3,1951. 
SEC. 329. RECEIPTS OF CERTAIN TERMINATION PAYMENTS BY EM-
PLOYEE. 
(a) TAXABILIIT TO EMPLOYEE AS CAPITAL GAIN.—Section 117 of the 
^"P*""- 
Internal Revenue Code is hereby amended by adding at the end thereof 
the following subsection: 
"(p) TAXABILITY TO EMPLOYEE OP TERMINATION 
PAYMENTS.— 
Amounts received from the assignment or release by an employee, 
after more than twenty years' employment, of all his rights to receive, 
after termination of his employment and for a period of not less than 
five years (or for a period ending with his death), a percentage of 
future profits or receipts of his employer shall be considered an amount 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
505 
received from the sale or exchange of a capital asset held for more 
than six months, if such rights were included in the terms of the 
employment of such employee for not less than twelve years, and if 
the total of the amounts received for such assignment or release are 
received in one taxable year and after the termination of such 
employment." 
(b) EFFECTIVE DATE.—The amendment made by this section shall 
be applicable with respect to taxable years beginning after December 
31,1950. 
SEC. 330. NET OPERATING LOSS CARRY-OVER. 
(a) Loss F
O
R TAXABLE YEAR BEGINNING BEFORE 1948.—So much 
of subparagraph (A) of section 122 (b) (2) (relating to the amount 
26u.^s.c!§ 122(b) 
of carry-overs) as precedes "the taxpayer*' is hereby amended to read (2). 
as follows: 
"(A) Loss for Taxable Year Beginning Before 1948.— 
Except as provided in subparagraph (D), if for any taxable 
^"^'•''• 
year beginning before January 1, 1948,". 
(b) ALLOWANCE OF THREE-YEAR Loss CARRY-OVER FROM TAXABMJ 
YEARS 1948-1949.—Section 122 (b) (2) (relating to the amount of 
carry-over) is hereby amended by adding after subparagraph (B) the 
following new subparagraphs: 
"(C) Loss for Taxable Year Beginning After December 
31,1947, and Before January 1,1950.—If for any taxable year 
beginning after December 31, 1947, and before Januarj^ 1, 
1950, the taxpayer has a net operating loss, such net operating 
loss shall be a net operating loss carry-over for each of the 
three succeeding taxable years, except that the carry-over in 
the case of each such succeeding taxable year (other than the 
first succeeding taxable year) shall be the excess, if any, of 
the amount of such net operating loss over the sum of the net 
income for each of the intervening years computed— 
"(i) with the exceptions, additions, and limitations 
provided in subsection (d) (1), (2), (4), and (6), and ^^53stat.867; 56stat. 
" (ii) by determining the net operating loss deduction 
2
6 u. s. c. § 1
2
2 (d). 
for each intervening taxable year without regard to such 
net operating loss or to the net operating loss for any 
succeeding taxable year and without regard to any 
reduction specified in subsection (c). 
For the purpose of the preceding sentence, the net operating 
loss for any taxable year beginning after December 31, 1947, 
and before January 1, 1950, shall be reduced by the sum of 
the net income for each of the two preceding taxable years 
computed— 
"(iii) with the exceptions, additions, and limitations 
provided in subsection (d) (1), (2), (4), and (6), and 
" (iv) by determining the net operating loss deduction 
without regard to such net operating loss or to the net 
operating loss for the succeeding taxable year, and with-
out regard to any reduction specified in subsection (c). 
"(D) Loss for Taxable Year Beginning After December 
31, 1946, and Before January 1, 1948, in the Case of a Cor-
poration Which Commenced Business After December 31, 
1945.—If for any taxable year beginning after December 31, 
1946, and before January 1, 1948, a corporation which com-
menced business after December 31,1945, has a net operating 
loss, such net operating loss shall be a net operating loss 
carry-over for each of the three succeeding taxable years, 
except that the carry-over in the case of each such succeeding 
taxable year (other than the first succeeding taxable year) 
506 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
shall be the excess, if any, of the amount of such net operating 
loss over the sum of the net income for each of the intervening 
years computed— 
"(i) with the exceptions, additions, and limitations 
provided in subsection (d) (1), (2), (4), and (6), and 
"(ii) by determining the net operating loss deduction 
• 
for each intervening taxable year without regard to such 
net operating loss or to the net operating loss for any 
succeeding taxable year and without regard to any 
§u"s (3^§ 1
2
2 (c) 
reduction specified in subsection (c). 
For the purpose of the preceding sentence, the net operating 
loss for any taxable year beginning after December 31, 1946, 
shall be reauced by the sum of the net income for each of the 
two preceding taxable years computed— 
"(iii) with the exceptions, additions, and limitations 
provided in subsection (d) (1), (2), (4), and (6), and 
" (iv) by determining the net operating loss deduction 
without regard to such net operating loss or to the net 
operating loss for the succeeding taxable year, and with-
out regard to any reduction specified in subsection (c)." 
(c) EFFECTIVE DATE.—^The amendments made by this section shall 
be applicable in computing the net operating loss deduction for taxable 
years beginning after December 31,1948. 
SEC. 331. STOCK OPTIONS. 
26^u**s^'. § 1
3
0
A 
(a-) OPTION SUBJECT TO STOCKHOLDER APPROVAL.—Section 130A (d) 
(d). 
(relating to definition of restricted stock option) is hereby amended 
by striking out "As used in" and inserting "For the purposes of" and 
by adding at the end thereof the following: 
"(5) STOCKHOLDER APPROVAL.—^If the grant of an option is sub-
ject to approval by stockholders, the date of grant of the option 
shall be determined as if the option had not been subject to such 
approval." 
(b) EFFECTIVE DATE.—rThe amendment made by subsection (a) shall 
be effective as if it had been enacted as part of section 218 of the 
l e W c . 5 1
3
0
A Revenue Act of 1950. 
and note. 
^^^ ^^^ CREDIT FOR TAXES OF FOREIGN CORPORATIONS. 
(a) 
FOREIGN SUBSIDIARY OF A DOMESTIC CORPORATION.—Effective 
with respect to dividends received by a domestic corporation from a 
foreign corporation during taxable years beginning after December 31, 
5
6 sta|. 857. ^
^ 
1950, the first sentence of section 131 (f) (1) is hereby amended by 
striking out "a majority" and inserting in lieu thereof "at least 10 per 
centum . 
(b) FOREIGN SUBSIDIARY OF A FOREIGN CORPORATION.—^Effective with 
respect to dividends received by a foreign corporation from another 
foreign corporation in taxable years beginning after December 31,1950, 
section 131 (f) (2) is hereby amended by striking out "all the voting 
stock (except qualifying shares)" and inserting in lieu thereof "50 per 
centum or more of the voting stock". 
(c) CLERICAL AMENDMENT.—So much of section 131 (f) (1) as 
precedes the first sentence thereof is hereby amended to read as follows: 
"(f) 
TAXES OF FOREIGN CORPORATION.— 
" (1) TREATMENT OF TAXES PAID BY FOREIGN CORPORATION.—". 
SEC. 333. INFORMATION AT SOURCE ON PAYMENTS OF INTEREST. 
Section 147 (a) is hereby amended by striking out "interest," in the 
2
6 u*s c! 1147. first sentence. Section 147 (b) is hereby amended to read as follows: 
«(b) RETURNS REGARDLESS OF AMOUNT OF PAYMENT.—Such returns 
may be required, regardless of amounts, (1) in the case of payments of 
(1). 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
507 
interest, and (2) in the case of collections of items (not payable in the 
United States) of interest upon the bonds of foreign countries and 
interest upon the bonds of and dividends from foreign corporations by 
persons undertaking as a matter of business or for profit the collection 
of foreign payments of such interest or dividends by means of coupons, 
checks, or bills of exchange." 
SEC. 334. ABATEMENT OF INCOME TAX FOR CERTAIN MEMBERS OF 
ARMED FORCES UPON DEATH. 
Supplement D of chapter 1 of the Internal Revenue Code (relating 
^^**g^o 
j . , 
to returns and payment of tax) is hereby amended by adding at the 153. 
' ' 
end thereof the following new section: 
^i^'' 
PP- ^' ^ • 
"SEC. 154. INCOME TAXES OF MEMBERS OF ARMED FORCES UPON 
DEATH. 
"In the case of any individual who dies after June 24, 1950, and 
prior to January 1, 1954, while in active service as a member of the 
Armed Forces of the United States, if such death occurred while 
serving in a combat zone (as determined under section 22 (b) (13)) ^»<e,p.484. 
or as a result of wounds, disease, or injury incurred while so serving— 
"(a) the tax imposed by this chapter shall not apply with 
respect to the taxable year in which falls the date of his death, 
or with respect to any prior taxable year ending on or after the 
first day he so served in a combat zone after June 24, 1950; and 
"(b) the tax under this chapter and under the corresponding 
title of each prior revenue law for taxable years preceding those 
specified in clause (a) which is unpaid at the date of his death 
(including interest, additions to the tax, and additional amounts) 
shall not be assessed, and if assessed the assessment shall be abated, 
and if collected shall be credited or refunded as an overpayment." 
SEC. 335. EMPLOYEES' TRUSTS. 
(a) AMENDMENT OF SECTION 165 (b).—Section 165 (b) (relating to 
26u^s'cf^5les(b) 
taxability of beneficiary on distributions from an employees' trust) 
is hereby amended by adding at the end thereof the following new 
sentence: "Where such total distributions include securities of the 
employer corporation, there shall be excluded from such excess the 
net unrealized appreciation attributable to that part of the total dis-
tributions which consists of the securities of the employer corporation 
so distributed. The amount of such net unrealized appreciation and 
the resulting adjustments to basis of the securities of the employer 
corporation so distributed shall be determined in accordance with 
regulations which shall be prescribed by the Secretary. For pur-
poses of this subsection, the term 'securities' means only shares of stock 
and bonds or debentures issued by a corporation with interest coupons 
or in registered form, and the term 'securities of the employer cor-
poration' includes securities of a parent or subsidiary corporation (as 
defined in section 130A (d) (2) and (3)) of the employer corporation." 
^
4 s^at 9
4
^
- ^^^ 
(b) EFFECTIVE DATE.—The amendment made by this section shall (d). 
be applicable with respect to distributions made after December 31, 
1950. 
SEC. 336. LIFE INSURANCE COMPANIES. 
(a) TAX FOR 1951.—Section 201 (a) (1) (relating to imposition of 
Su^g c' §201 (a) 
tax on life insurance companies) is hereby amended by adding at the C
D
-
end thereof the following: "In lieu of the taxes imposed by the pre-
ceding sentence, there shall be levied, collected, and paid for taxable 
years beginning in 1951 upon the 1951 adjusted normal-tax net income 
(as defined in section 203A) of every life insurance company a tax 
POS«,p. 508. 
equal to the sum of the following: 
508 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
" 3 % per centum of the amount thereof not in excess of $200,000, 
plus 
"6% per centum of the amount thereof in excess of $200,000." 
(b) ADJUSTED NORMAL-TAX NET INCOME FOR 1951.—Chapter 1 is 
26U.*s. c'. §203. 
hereby amended by inserting after section 203 the following new sec-
tion : 
"SEC. 203A. 1951 ADJUSTED NORMAL-TAX NET INCOME. 
"(a) 1951 ADJUSTED NORMAL-TAX NET INCOME.—^For the purposes 
Ante, p. 507. 
^f scctioD 201, the term '1951 adjusted normal-tax net income' means 
the normal-tax net income plus eight times the amount of the adjust-
2
6 u*s c°§ 2
0
2 (c) i^^iit ^or Certain reserves provided in section 202 (c) and minus the 
reserve interest credit, if any, provided in subsection (b) of this sec-
tion. 
"(b) RESERVE INTEREST CREDIT.—For the purposes of subsection 
(a), the reserve interest credit shall be an amount determined as 
follows: 
"(1) Divide the amount of the adjusted net income (as defined 
in subsection (c)^ by the amount of the required interest (as 
defined in subsection (d)). 
"(2) If the quotient obtained in paragraph (1) is 1.05 or more, 
the reserve interest credit shall be zero. 
"(3) If the quotient obtained in paragraph (1) is 1.00 or less, 
the reserve interest credit shall be an amount equal to 50 per 
centum of the normal-tax net income. 
"(4) If the quotient obtained in paragraph (1) is more than. 
1.00 but less than 1.05, the reserve interest credit shall be the 
amount obtained by multiplying the normal-tax net income by 
10 times the difference between the figures 1.05 and such quotient. 
" (c) 
ADJUSTED NET INCOME.—For the purposes of subsection (b) 
(1), the term 'adjusted net income' means the net income computed 
without any deduction for tax-free interest minus 50 per centum of 
the amount of the adjustment for certain reserves provided in sec-
tion 202(c). 
"(d) REQUIRED INTEREST.—For the purposes of subsection (b) (1), 
the term 'required interest' means the total of— 
"(1) The sum of the amounts obtained by multiplying (A) 
each rate of interest assumed in computing the taxpayers life 
insurance reserves by (B) the means of the amounts of the tax-
payer's adjusted reserves computed at that rate at the beginning 
and end of the taxable year, 
"(2) 2 per centum of the reserve for deferred dividends, and 
"(3) Interest paid." 
(c) TECHNICAL AMENDMENTS.— 
2^u.t/aH33(a) 
(1) Section 433 (a) (1) (H) (relating to excess profits net 
(1) (H). 
income of life insurance companies) is herebj^ amended by chang-
ing the semicolon at the end thereof to a period and by inserting 
thereafter the following: "In the case of taxable years beginning 
in 1951, there shall be used, in lieu of the figure referred to in 
clause (i) of the first sentence of this subparagraph, the figure 
.87;". 
26u^sc^§201(f) 
(2) Section 201 (f) (relating to disallowance of double 
deductions) is hereby amended by striking out "or 203" and 
^""P'"- 
inserting in lieu thereof ", 203, or 203A". 
(d) EFFECTIVE DATE.—The amendments made by this section shall 
be applicable to taxable years beginning in 1951. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
509 
SEC. 337. TAX TREATMENT OF CERTAIN INVESTMENT COMPANIES. 
(a) 
INCLUSION OF CERTAIN REGISTERED MANAGEMENT COMPANIES 
IN THE DEFINITION OF REGULATED INVESTMENT COMPANY.—Section 
361 (relating to definition of regulated investment companies) is 
^u^sc§36i 
hereby amended by adding at the end thereof the following new sub-
section: 
"(c) CERTAIN INVESTMENT COMPANIES.—^If the Securities and Ex-
change Commission determines in accordance with regulations issued 
by it, and certifies to the Secretary not more than 60 days prior to the 
close of the taxable year of a registered management investment com-
pany, that such investment company is principally engaged in the 
furnishing of capital to other corporations which are principally 
engaged in the development or exploitation of inventions, techno-
logical improvements, new processes, or products not previously gen-
erally available, such investment company may, in the computation of 
50 per centum of the value of its assets under subparagraph (A) of 
subsection (b) (3) for any quarter of such taxable year, include the 
^"^'•''• 
value of any securities of an issuer, notwithstanding the fact that 
such investment company holds more than 10 per centum of the out-
standing voting securities of such issuer, but only if the investment 
company has not continuously held any security of such issuer (or of 
any predecessor company of such issuer as determined under regula-
tions prescribed by the Secretary) for 10 or more years preceding such 
quarter of such taxable year. The provisions of this subsection shall 
not apply at the close of any quarter of a taxable year to an invest-
ment company if at the close of such quarter more than 25 per centum 
of the value of its total assets is represented by securities of issuers 
with respect to each of which the investment company holds more 
than 10 per centum of the outstanding voting securities of such issuer 
and in respect of each of which or any predecessor thereof the invest-
ment company has continuously held any security for 10 or more 
years preceding such quarter unless the value of its total assets so 
represented is reduced to 25 per centum or less within 30 days after the 
close of such quarter. The terms used in this subsection shall have the 
same meaning as in subsection (b) (3) of this section. For the pur-
poses of this subsection, unless the Securities and Exchange Commis-
sion determines otherwise, a corporation shall be considered to be 
principally engaged in the development or exploitation of inventions, 
technological improvements, new processes, or products not previ-
ously generally available, for at least 10 years after the date of the 
first acquisition of any security in such corporation or any predecessor 
thereof by such investment company if at the date of such acquisition 
the corporation or its predecessor was principally so engaged, and 
an investment company shall be considered at any date to be fur-
nishing capital to any company whose securities it holds if within 
10 years prior to such date it has acquired any of such securities, 
or any securities surrendered in exchange therefor, from such other 
company or predecessor thereof. 
For the purposes of the cer-
tification hereunder, the Securities and Exchange Commission shall 
have authority to issue such rules, regulations and orders, and to 
conduct such investigations and hearings, either public or private, as 
it may deem appropriate." 
(b) TECHNICAL AMENDMENT.—Section 361 (b) (3) (A) is hereby 
i^ u*^|-^,5% gei (b) 
amended by inserting after "the total assets of the taxpayer and" the 
following: ", except and to the extent provided in subsection (c),". 
(c) EFFECTIVE DATE.—^The amendments made by this section shall 
be applicable only with respect to taxable years beginning after 
December 31,1950. 
(3) (A). 
510 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
SEC. 338. EXCHANGES AND DISTRIBUTIONS IN OBEDIENCE TO ORDERS 
OF SECURITIES AND EXCHANGE COMMISSION. 
iu^s c%373((i) 
(^) DEFINITION OP SYSTEM GROUP.—Section 373 (d) (1) (relating 
(1). • ' ' 
to the definition of the term "system gfoup") is hereby amended to 
read as follows: 
"(1) At least 90 per centmn of each class of the stock (other 
than (A) stock which is preferred as to both dividends and assets, 
and (B) stock which is limited and preferred as to dividends but 
which is not preferred as to assets but only if the total value of 
such stock is less than 1 per centum of the aggregate value of all 
classes of stock which are not preferred as to both dividends and 
assets) of each of the corporations (except the common parent 
corporation) is owned directly by one or more of the other corpo-
rations; and". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall be applicable with respect to taxable years affected by an exchange 
or distribution made after December 31,1947. 
SEC. 339. TAXATION OF BUSINESS INCOME OF STATE COLLEGES AND 
UNIVERSITIES. 
^u.^s.^% 421(b) 
(a) AMENDMENTorSECTiON421 (b).—Scctiou 421 (b) (1) (organi-
(!)• 
zations subject to tax under Supplement U) is hereby amended to 
read as follows: 
"(1) 
ORGANIZATIONS TAXABLE AS CORPORATIONS.— 
"(A) Organizations Exempt Under Section 101 (1), (6), 
iu.^s.c;'§ioi. 
(7) and (14).—The taxes imposed hj subsection (a) (1) 
shall apply in the case of any organization (other than a 
church, a convention or association of churches, or a trust 
described in paragraph (2)) which is exempt, except as pro-
vided in this supplement, from taxation under this chapter 
by reason of paragraph (1), (6), or (7) of section 101. Such 
taxes shall also apply in the case of a corporation described 
in section 101 (14) if the income is payable to an organiza-
tion which itself is subject to the tax imposed by subsection 
(a) or to a church or to a convention or association of 
churches. 
"(B) State Colleges and Universities.—The taxes imposed 
by subsection (a) (1) shall apply in the case of any college 
or university which is an agency or instrumentality of any 
government or any political subdivision thereof, or which is 
owned or operated by a government or any political subdi-
vision thereof or by any agency or instrumentality of any 
one or more governments or political subdivisions. Such 
taxes shall also apply in the case of any corporaticHi wholly 
owned by one or more such colleges or universities." 
Post, p. 518. 
Qy'^ UNRELATED TRADE OR BUSINESS.—Section 422 (b) (definition of 
unrelated trade or business) is hereby amended as follows: 
(1) By inserting after "under section 101" the following: "(or, 
^"^'•°- 
in the case of an organization described in section 421 (b) (1) (B), 
to the exercise or performance of any purpose or function 
described in section 101 (6))". 
(2) By inserting in paragraph (2) thereof after "section 101 
(6)" the following: "or in the case of a college or university 
described in section 421 (b) (1) (B)". 
(c) EPFECTTVB DATE.—^The amendments made by this section shall 
be applicable only with respect to taxable years beginning after 
December 31,1951. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
511 
SEC. 340. FAMILY PARTNERSHIPS. 
(a) 
DEFINITION OF PARTNER.—Section 3797 (a) 
(2) is hereby 
I§*^^:cf^53797(a) 
amended by adding at the end thereof the following: "A person shall (2). 
be recognized as a partner for income tax purposes if he owns a capital 
interest in a partnership in which capital is a material income-produc-
ing factor, whether or not such interest was derived by purchase or 
gift from any other person." 
(b) 
ALLOCATION 
OF PARTNERSHIP 
INCXDME.—Supplement 
F 
of 
chapter 1 is hereby amended by adding at the end thereof the following 
^ u^*s.^c. §
§ isi-
new section: 
i90-
"SEC. 191. FAMILY PARTNERSHIPS. 
"In the case of any partnership interest created by gift, the dis-
tributive share of the donee under the partnership agreement shall 
be includible in his gross income, except to the extent that such share 
is determined without allowance of reasonable compensation for 
services rendered to the partnership by the donor, and except to the 
extent that the portion of such share attributable to donated capital 
is proportionately greater than the share of the donor attributable to 
the donor's capital. 
The distributive share of a partner in the earn-
ings of the partnership shall not be diminished because of absence 
due to military service. For the purpose of this section, an interest 
purchased by one member of a family from another shall be con-
sidered to be created by gift from the seller, and the fair market value 
of the purchased interest shall be considered to be donated capital. 
The 'family' of any individual shall include only his spouse, ancestors, 
and lineal descendants, and any trust for the primary benefit of such 
persons." 
(c) EFFECTIVE DATE.—The amendments made by this section shall be 
applicable with respect to taxable years beginning after December 31, 
1950. The determination as to whether a person shall be recognized as 
a partner for income tax purposes for any taxable year beginning 
before January 1, 1951, shall be made as if this section had not been 
enacted and without inferences drawn from the fact that this section 
is not expressly made applicable with respect to taxable years begin-
ning before January 1, 1951. In applying this subsection where the 
taxable year of any family partner is different from the taxable year 
of the partnership— 
(1) if a taxable year of the partnership beginning in 1950 ends 
within or with, as to all of the family partners, taxable years which 
begin in 1951, then the amendments made by this section shall be 
applicable with respect to all distributive shares of income derived 
by the family partners from such taxable year of the partnership 
beginning in 1950, and 
(2) if a taxable year of the partnership ending in 1951 ends 
within or with a taxable year of any family partner which began 
in 1950, then the amendments made by this section shall not be 
applicable with respect to any of the distributive shares of income 
derived by the family partners from such taxable year of the 
partnership. 
SEC. 341. WAR LOSSES. 
(a) TAX UPON WAR Loss RECOVERY.—Section 127 (c) (relating to 
^fj^^aff 
recoveries included in gross income) is hereby amended to read as 
follows: 
"(c) 
RECOVERIES.— 
"(1) GENERAL RULE.—Upon the recovery in the taxable year 
of any money or property in respect of property considered under 
subsection (a) as destroyed or seized in any prior taxable year, 
76100 O - 52 (PT. I) - 35 
2 6 U . S . C . § 127(c), 
512 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
the amount of such recovery shall be included in gross income to 
the extent provided in paragraph (2), unless the provisions of 
paragraph (3) are applicable to the taxable year pursuant to an 
election made by the taxpayer under the provisions of paragraph 
(5). 
"(2) 
INCLUSION IN GROSS INCOME.— 
"(A) Amount of Eecovery.—The amount of the recovery 
of any money or property in respect of property considered 
5
6 Stat. 8
5
2
. 
under subsection (a) as destroyed or seized in any prior 
26U.S.C. §i27(a). 
taxable year shall be an amount equal to the aggregate of 
such money and the fair market value of such property, 
determined as of the date of the recovery. 
"(B) Amount of Gain Includible.—To the extent that the 
amount of the recovery plus the aggregate of the amounts of 
previous such recoveries do not exceed that part of the aggre-
gate of the allowable deductions in prior taxable years on 
account of the destruction or seizure of property described 
in subsection (a) which did not result in a reduction of any 
53 Stat. 104. 
tax of the taxpayer under this chapter or chapter 2, such 
^26 u. s. .5 
a 
amount shall not be includible in gross income and shall not 
be deemed gain upon the involuntary conversion of property 
as a result of its destruction or seizure. To the extent that 
such amount plus the aggregate of the amounts of previous 
such recoveries exceed that part of the aggregate of such 
deductions, which did not result in a reduction of any tax 
of the taxpayer under this chapter or chapter 2 and do not 
exceed that part of the aggregate of such deductions which 
did result in a reduction of any tax of the taxpayer under 
this chapter or chapter 2, such amount shall be included in 
gross income but shall not be deemed a gain upon the invol-
untary conversion of property as a result of its destruction or 
seizure. To the extent that such amount plus the aggregate 
of the amounts of previous such recoveries exceed the aggre-
gate of the allowable deductions in prior taxable years on 
account of the destruction or seizure of property described 
in subsection (a), such amount shall be considered a gain 
upon the involuntary conversion of property as a result of 
its destruction or seizure and shall be recognized or not 
Anu, p. 496. 
recognized as provided in section 112 (f). If for any previous 
taxable year the taxpayer chooses under subsection (b) to 
treat any obligations and liabilities as discharged or satisfied 
out of the property or interest described in subsection (a), 
and if such obligations and liabilities were not so discharged 
or satisfied, the amount of such obligations and liabilities 
treated as discharged or satisfied under subsection (b) shall 
be considered for the purposes of this section as a deduction 
by reason of this section which did not result in a reduction of 
any tax of the taxpayer under this chapter or chapter 2. 
For the purposes of this paragraph an allowable deduction 
for any taxable year on account of the destruction or seizure 
of property described in subsection (a) shall, to the extent 
not allowed in computing the tax of the taxpayer for such 
taxable year, be considered an allowable deduction which did 
not result in a reduction of any tax for the taxpayer under 
this chapter or chapter 2. 
"(3) 
TAX ADJUSTMENT MEASURED BY PRIOR BENEFITS.—If 
the 
provisions of this paragraph are applicable to the taxable year 
pursuant to an election made by the taxpayer under the provisions 
Poae, p. 514. 
of paragraph (5)— 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
513 
"(A) Amount of Recovery.—The amount of the recovery 
in the taxable year of any money oi- property in respect of 
property considered under subsection (a) as destroyed or 
2
6 u^s c^'s 1
2
7 (a) 
seized in any prior taxable year shall be an amount equal to 
the aggregate of such money and the fair market value of 
such property, determined as of the date of the recovery. For 
the purpose of this paragraph, in the case of the recovery of 
the same property or interest considered under subsection (a) 
as destroyed or seized, the fair market value of such property 
or interest shall, at the option of the taxpayer, be considered 
an amount equal to the adjusted basis (for determining loss) 
of such property or interest in the hands of the taxpayer on 
the date such property or interest was considered under sub-
section (a) as destroyed or seized. The amount of the recovery 
determined under this subparagraph shall be reduced for 
the purposes of subparagraphs (B) and (C) by the amount 
of the obligations or liabilities with respect to the property 
considered under subsection (a) as destroyed or seized in 
respect of which the recovery was received, if the taxpayer 
for any previous taxable year chose under subsection (b) (2) 
to treat such obligations or liabilities as discharged or satis-
fied out of such property, and such obligations or liabilities 
were not so discharged or satisfied prior to the date of the 
recovery. 
"(B) Adjustment for Prior Tax Benefits.—That part of 
the amount of the recovery, in respect of any property con-
sidered under subsection (a) as destroyed or seized, which is 
not in excess of the allowable deductions in prior taxable years 
on account of such destruction or seizure of the property (the 
amount of such allowable deductions being first reduced by 
the aggregate amount of any prior recoveries in respect of the 
same property) shall be excluded from gross income for the 
taxable year of the recovery for the purpose of computing 
the tax under this chapter and chapter 2; but there shall be 
added to, and assessed and collected as a part of, the tax under 
this chapter for the taxable year of the recovery the total 
increase in the tax under this chapter and chapter 2 for all 
taxable years which would result by decreasing, in an amount 
equal to such part of the recovery so excluded, such deduc-
tions allowable in the prior taxable years with respect to the 
destruction or seizure of the property. Such increase in the 
tax for each such year so resulting shall be computed in 
accordance with regulations prescribed by the Secretary. 
Such regulations shall give effect to previous recoveries of 
any kind (including recoveries described in section 22 (b) 
(12)) with respect to any prior year, and shall provide for 
2
6 u.^s.^a § 2
2 (b) 
the case where there was no tax for the prior year, but shall (12). 
otherwise treat the tax previously determined for any year 
in accordance with the principles set forth in section 3801 (d). 
2
6
U
*
^
s
*
c
'
^
§
"
3
8
0
i (d) 
All credits allowable against the tax for any year and all 
carry-overs and carry-backs affected by so decreasing the 
allowable deductions shall be taken into account in computing 
the increase in the tax, except that the computation of the 
excess profits credit under chapter 2 E for any taxable year 
shall not be affected. 
"(C) Gain Upon Recovery.—The amount of any recovery 
or part thereof, in respect of property considered under sub-
section (a) as destroyed or seized, which is not excluded from 
gross income under the provisions of subparagraph (B) shall 
514 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
Ante, p. 496. 
53 Stat. 27, 471. 
26U. S. C. §§51, 52, 
3801 (b). 
Ante, pp. 482, 488. 
56 Stat. 852. 
26U. S. C. §127 (a). 
53 Stat. 86. 
26 U. S. C. §§ 275, 
276. 
Ante, p. 497. 
Post, p. 516. 
53 Stat. 462. 
26 U. S. C. § 3761. 
be considered for the taxable year of the recovery as gain on 
the involuntary conversion of property as a result of its 
destruction or seizure and shall be recognized or not recog-
nized as provided in section 112 (f). 
"(D) Recoveries Treated as Gross Income for Certain 
Purposes.—For the purposes of sections 51, 52, and 3801 (b) 
the recovery in the taxable year of any money or property in 
respect of property considered under subsection (a) as 
destroyed or seized in any prior taxable year shall be deemed 
to be an item includible in gross income for the taxable year 
in which the recovery is made. 
"(4) 
RESTORATION OP VALUE OF INVESTMENTS REFERABIIE TO 
D
E
S
T
R
O
Y
E
D O
R SEIZED PROPERTY.—For tlic purposc of this subscction 
the restoration in whole or in part of the value of any interest 
described in subsection (a) (3) by reason of any recovery of money 
or property in respect of property to which such interest related 
and which was considered under subsection (a) (1) or (2) as 
destroyed or seized shall be deemed a recovery of property in 
respect of property considered under subsection (a) as destroyed 
or seized. 
In applying paragraph (3) of this subsection such 
restoration shall be treated as the recovery of the same interest 
considered under subsection (a) as destroyed or seized. 
"(5) 
ELECTION BY TAXPAYER FOR .\PPLICATION OF PARAGIJAPH 
(3).—If the taxpayer elects to have the provisions of paragraph 
(3) applicable to any taxable year in which he recovered any 
money or property in respect oi property considered under sub-
section (a) as destroyed or seized, the provisions of paragraph (3) 
shall be applicable to all taxable years of the taxpayer beginning 
after December 31, 1941, and such election, once made, shall be 
irrevocable. 
The election shall be made in such manner and at 
such time as the Secretary may by regulations prescribe, except 
that no election under this paragraph may be made after December 
31, 1952, unless the taxpayer recovers money or property (in 
respect of property considered under subsection (a) as destroyed 
or seized) during a taxable year ending after the date of the 
enactment of the Revenue Act of 1951. If pursuant to such 
election the provisions of paragraph (3) are applicable to any 
taxable year— 
"(A) the period of limitations provided in sections 275 and 
276 on the making of assessments and the beginning of 
distraint or a proceeding in court for collection shall not, with 
respect to— 
" (i) the amount to be added to the tax for such taxable 
year under the provisions of paragraph (3), and 
"(ii) any deficiency for such taxable year or for any 
other taxable year, to the extent attributable to the basis 
of the recovered property being determined under the 
provisions of subsection (d) (2), 
expire prior to the expiration of two years following the date 
of the making of such election, and such amount and such 
deficiency may be assessed at any time prior to the expiration 
of such period notwithstanding any law or rule of law which 
would otherwise prevent such assessment and collection, and 
"(B) in case refund or credit of any overpayment resulting 
from the application of the provisions of paragraph (3) to 
such taxal)le year is prevented on tlie date of the making of 
such election, or within one year from such date, by the 
operation of any law or rule of law (other than section 3761, 
relating to compromises), refund or credit of such overpay-
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
515 
ment may, nevertheless, be made or allowed if claim therefor 
is filed within one year from such date. 
In the case of any taxable year ending before the date of the mak-
ing by the taxpayer of an election under this paragraph, no 
interest shall be paid on any overpayment resulting from the 
application of the provisions of paragraph (3) to such taxable 
year, and no interest shall be assessed or collected with respect 
to any amount or any deficiency specified in clause (A), for any 
period prior to the expiration of six months following the date 
of the making of such election by the taxpayer." 
(b) BASIS or RECOVERED PROPERTY.—Section 127 (d) (relating to 
2
6 u.^s:a*§ 127(d). 
basis of recovered property) is hereby amended to read as follows: 
"(d) 
BASIS OF RECOVERED PROPERTY.— 
" (1) I N GENERAL.—The unadjusted basis of property recovered 
in respect of property considered as destroyed or seized under 
subsection (a) shall be determined under this subsection. 
Such 
basis shall be an amount equal to the fair market value of such 
property, determined as of the date of the recovery, reduced by 
an amount equal to the excess of the aggregate of such fair mar-
ket value and the amounts of previous recoveries of money or 
property in respect of property considered under subsection (a) 
as destroyed or seized over the aggregate of the allowable deduc-
tions in prior taxable years on account of the destruction or 
seizure of property described in subsection (a), and increased by 
that portion of the amount of the recovery which under subsec-
tion (c) is treated as a recognized gain from the involuntary 
^nu.p.sn. 
conversion of property. Upon application of the taxpayer, the 
aggregate of the bases (determined under the preceding sentence) 
of any properties recovered in respect of properties considered 
under subsection (a) as destroyed or seized may be allocated 
among the properties so recovered in such manner as the Secre-
tary may determine under regulations prescribed by him, and 
the amounts so allocated to any such property so recovered shall 
be the unadjusted basis of such property in lieu of the unadjusted 
basis of such property determined under the preceding sentence. 
"(2) 
PROPERTY RECOVERED IN TAXABLE YEAR TO WHICH SUBSEC-
TION (c) (3) IS APPLICABLE.—In the case of a taxpayer who has 
made an election under the provisions of subsection (c) (5), the 
basis of property recovered shall be an amount equal to the value 
at which such property is included in the amount of the recovery 
under subsection (c) (3) (A) (determined without regard to the 
last sentence thereof), reduced by such part of the gain under 
subsection (c) (3) (C) which is not recognized as provided in 
section 112(f)." 
Ante, p.m. 
(c) CREDIT FOR FOREIGN TAXES.—Section 131 (a) 
(relating to 
iu.t; a § 131(a). 
allowance of credit for taxes of foreign countries and possessions of 
the United States ) is hereby amended by inserting after "section 102" 
the following: "and except the additional tax imposed for the taxable 
year under the provisions of section 127 (c) (3)". 
Ante.p.m. 
(d) EFFECTIVE DATES.—The amendments made by this section 
shall be applicable to taxable years beginning after December 31,1941. 
SEC. 342. DEDUCTION OF EXPENDITURES FOR MINE EXPLORATION. 
(a) 
DEDUCTION OF MINE EXPLORATION EXPENDITURES.—Section 23 
iu^gc'523 
(relating to deductions from gross income) is hereby amended by 
Ante, pp. 485,'486,, 
adding at the end thereof the following new subsection: 
*^' *^^' *^' 
"(ff) DEDUCTION OF EXPLORATION EXPENDITURES.— 
"(1) I N GENERAL.—In the case of expenditures paid or incurred 
during the taxable year for the purpose of ascertaining the exist-
ence, location, extent, or quality of any deposit of ore or other 
516 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
mineral, and paid or incurred prior to the beginning of the de-
velopment stage of the mine or deposit, so much of such expendi-
tures as does not exceed $75,000. This subsection shall apply 
only with respect to the amount of such expenditures which, but 
for this subsection, would not be allowable as a deduction for the 
taxable year. 
This subsection shall not apply to expenditures 
for the acquisition or improvement of property of a character 
which is subject to the allowance for depreciation provided in 
^ u^s" c § 2
3 m 
section 23 (1), but allowances for depreciation shall be considered, 
for the purposes of this subsection, as expenditures paid or in-
curred. In no case shall this subsection apply with respect to 
amounts paid or incurred for the purpose of ascertaining the 
existence, location, extent, or quality of any deposit of oil or gas. 
" (2) ELECTION OF TAXPAYER.—If the taxpayer elects, in accord-
ance with regulations prescribed by the Secretary, to treat as 
deferred expenses any portion of the amount deductible for the 
taxable year under paragraph (1), such portion shall not be 
deductible under paragraph (1) but shall be deductible on a 
ratable basis as the units oi produced ores or minerals discovered 
or explored bv reason of such expenditures are sold. An election 
made under tnis paragraph for any taxable year shall be binding 
for such year. 
"(3) LIMITATION.—This subsection shall not apply to any 
amounts paid or incurred in any taxable year if in any four 
preceding years the taxpayer, or any individual or corporation 
who has transferred to the taxpayer any mineral property under 
circumstances which make the provisions of paragraph (7), (8), 
stilS58*°stK' 
( l l ) ' (13), (15), (17), (20) or (22^ of section 113 (a) appll-
26U.S.C.J 113(a). 
Cable to such transfer, has either (A) been allowed a deduction 
under paragraph (1) of this subsection or (B) made the election 
provided under paragraph (2) of this subsection. 
"(4) ADJUSTED BASIS OF MINE OR DEPOSIT.—The amount of ex-
penditures which are treated under paragraph (2) as deferred 
expenses shall be taken into account in computing the adjusted 
basis of the mine or deposit, but such amounts, and the adjust-
^'*-^"- 
ments to basis provided in section 113 (b) (1) (M) shall be 
disregarded in determining the adjusted basis of the property 
for the purpose of computing a deduction for depletion under 
26u1-c-§ii4 
section 114." 
Ante, pp. 497, 498. 
( b ) ADJUSTED B A S I S FOR DETTERMINING G A I N OR LosS IJPON S A L E OR 
lu^sc§u3(b) 
EXCHANGE.—Section 113 (b) (1) (relating to adjusted basis of prop-
Ante, pp.' 4
8
7
, 4
9
7
1 eity) is hereby amended by adding at the end thereof the following: 
^^' 
"(M) for amounts allowed as deductions as deferred ex-
Ante, p. 515. 
peuscs uudcr section 23 (ff) (2) (relating to certain explora-
tion expenditures) and resulting in a reduction of the tax-
payer's taxes under this chapter, but not less than the amounts 
allowable under such section for the taxable year and prior 
years." 
(c) EFFECTIVE DATE.—^The amendments made by this section shall 
be applicable to taxable years ending after December 31, 1950. 
SEC. 343. DEFINITION OF EMPLOYEE. 
26u*s*a%797 (a). 
(*) AMENDMENT or SECTION 3797 (a) .—Section 3797 (a) is amended 
Ante, pp.'49i, 511. 
by adding at the end thereof the following new paragraph: 
"(20) EMPLOYEE.—For the purpose of applying the provisions 
of chapter 1 with respect to contributions to or under a stock 
bonus, pension, profit-sharing, or annuity plan, and with respect 
to distributions under such a plan or by a trust forming part 
of such a plan, the term 'employee' shall include a full-time life 
insurance salesman who is considered an employee for the purpose 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
517 
of subchapter A of chapter 9, or, in the case of services performed 
^ u.^s/a§ i
4
0
0 tt 
before January 1, 1951, who would be considered an employee if »
«
«
• 
his services were performed during 1951." 
(b) EFFECTIVE DATE.—The amendment made by this section shall 
be applicable with respect to taxable years beginning after December 
31, 1938. 
SEC. 344. NONBUSINESS CASUALTY LOSSES. 
(a) REMOVAL or LIMITATION.—Section 122 (d) (5) (relating to net 
^u.^s.c!§i22(di 
operating loss deduction) is hereby amended by inserting at the end (s)-
thereof the following new sentence: "This paragraph shall not apply 
with respect to deductions allowable for losses sustained after Decem-
ber 31,1950, in respect of property, if the losses arise from fire, storm, 
shipwreck, or other casualty, or from theft." 
(b) EFFECTIVE DATE,—The amendment made by this section shall be 
applicable in computing the net operating loss deduction for taxable 
years ending after December 31,1948. 
SEC. 345. ABATEMENT OF TAX ON CERTAIN TRUSTS FOR MEMBERS 
OF ARMED FORCES DYING IN SERVICE. 
In the case of a trust which accumulated income for a beneficiary who 
died on or after December 7,1941, and before January 1,1948, while in 
active service as a member of the military or naval forces of the United 
States or of any of the other United Nations, there shall be allowed as a 
deduction in computing the net income of such trust (in addition to 
other deductions allowable under sections 23 and 162 of the Internal 
Revenue Code) income of the trust for any taxable year (before 
^u.^s.'a'§T23,i62. 
diminution for income tax) which was accumulated for such bene- 
^"/«. PP; ^SS, t^-
c 
. 
. » 
' 
490, 491, 499, 515, 500. 
riciary it— 
(1) the income accumulated was for a taxable year of the trust 
which ended with or within a taxable year (ending on or after 
December 7,1941) of such beneficiary during any part of which he 
was a member of such military or naval forces, or, in the case of the 
taxable year of the trust during which such beneficiary died, the 
income accumulated was for the period in such taxable year prior 
to the death of such beneficiary; and 
(2) the amount of such accumulated income was, without 
regard to this section, taxable to the trust, and 
(3) the income for such taxable year accumulated for the bene-
ficiary, if not distributed to him prior to his death, was payable by 
the trust at or after his death only to his estate, spouse, or lineal 
ancestors or descendants. 
SEC. 346. LIFE INSURANCE DEPARTMENTS OF MUTUAL SAVINGS 
BANKS. 
(a) COMPUTATION OF TAX.—Supplement A of chapter 1 is hereby 
iu^s.^c. § loi e
^ 
amended by adding at the end thereof the following new section : 
m-
"SEC. 110. MUTUAL SAVINGS BANKS CONDUCTING LIFE INSURANCE 
BUSINESS. 
"(a) ALTERNATIVE TAX.—In the case of a mutual savings bank not 
having capital stock represented by shares, authorized under State law 
to engage in the business of issuing life insurance contracts, and which 
conducts a life insurance business in a separate department the 
accounts of which are maintained separately from the other accounts 
of the mutual savings bank, there shall be levied, collected, and paid, 
in lieu of the taxes imposed by sections 13 and 15, or section 117 (c) (1), 47^"^'' PP- ^^' *^' 
a tax consisting of the sum of the partial taxes determined under 
Po«<,p. 518. 
paragraphs (1) and (2) : 
518 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
"(1) A partial tax computed upon the net income determined 
without regard to any items of gross income or deductions properly 
allocable to the business of the life insurance department, at the 
rates and in the manner as if this section has not been enacted; 
and 
"(2) a partial tax computed upon the net income (as defined 
26u*s.^c^§201 (c) 
^^ section 201 (c) (7)) of the life insurance department deter-
(7). • • ' 
mined without regard to any items of gross income or deductions 
not properly allocable to such department, at the rates and in the 
2
6 u*Vc § 2
0
1 e
< 
manner provided in Supplement G with respect to life insurance 
aeg- 
' 
Companies. 
"(b) LiMrrATiONs OF SECTION,—The provisions of subsection (a) 
shall be applicable only if the life insurance department would, if it 
were treated as a separate corporation, qualify as a life insurance 
i U.1: a § 2
0
1 (b). company under section 201 (b)." 
Ante.p.m. 
(b) TECHNICAL AMENDMENT.—Section 13 (relating to normal tax 
on corporations) is hereby amended by adding at the end thereof the 
following new subsection: 
"(f) MUTUAL 
SAVINGS 
BANKS 
CONDUCTING 
LIFE 
INSURANCE 
BUSINESS.—For special tax, in lieu of the taxes imposed by this section 
Ante, p. 468. 
^^^ scction 15, in the case of- a mutual savings bank conducting a life 
Ante, p. 517. 
insurance business, see section 110." 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
be applicable only with respect to taxable years beginning after 
December 31,1951. 
SEC. 347. PUBLISHING BUSINESS CARRIED ON BY TAX-EXEMPT OR-
GANIZATION. 
26u.^s.c^i422(b). 
(^) TREATMENT AS RELATED TRADE OR BUSINESS.—Section 422 (b) 
Ante, p. 610. 
(relating to definition of unrelated trade or business) is hereby 
amended by adding at the end thereof the following: "If a publishing 
business carried on by an organization during a taxable year beginning 
before January 1,1953, is, without regard to this sentence, an unrelated 
trade or business, but before the beginning of the third succeeding 
taxable year the business is carried on by it (or by a successor who 
acquired such business in a liquidation which would constitute a tax-
26u.^s.^a§ 112(b) ^^^^ exchange under section 112 (b) (6)) in such manner that the 
(6). 
conduct thereof is substantially related to the exercise or performance 
by such organization (or such successor) of its educational or other 
63 Stat. ^. 
purpose or function described in section 101 (6), such publishing 
business shall not be considered, for the taxable year, as an unrelated 
trade or business." 
(b) EFFECTIVE DATE.—The amendment made by this section shall 
be applicable with respect to taxable years beginning after December 
31,1950, and prior to January 1,1953. 
SEC. 348. DEDUCTION WITH RESPECT TO CERTAIN UNRELATED 
BUSINESS NET INCOME. 
26U.*8.c*'§422(a). 
(^) UNRELATED BUSINESS NET INCOME.—Scctioii 422 (a) (relating 
to unrelated business net income) is hereby amended by adding at the 
end thereof the following: "In the case of an organization described 
64 &tat. 957. ^^^ ^
^
^ in section 3813 (a) (2) which is a member of a partnership all of whose 
(2). ' 
members are organizations described in section 3813 (a) (2), if a trade 
or business regularly carried on by such partnership is an unrelated 
trade or business with respect to such organization, such organization 
shall, for taxable years beginning before January 1,1954, be allowed a 
deduction in an amount equal to the portion of the gross income of such 
partnership from such unrelated trade or business which such organi-
zation is required (by a provision of a written contract executed by 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
5 1 9 
such organization prior to January 1,1950, which provision expressly 
deals with the disposition of the gross income of the partnership) to 
pay within the taxable year in discharge of indebtedness incurred by 
such organization in acquiring its share of such trade or business, or to 
irrevocably set aside within the taxable year for the discharge of such 
indebtedness (to the extent that such amount has been so paid or set 
aside) if (i) such partnership was formed prior to January 1, 1950, 
for the purpose of carrying on such trade or business, and (ii) sub-
stantially all the assets used in carrying on such trade or business were 
acquired by it or by its members prior to such date. As used in the 
preceding sentence, the word 'indebtedness' does not include indebted-
ness incurred after January 1,1950." 
(b) EFFECTIVE DATE.—The amendment made by this section shall be 
applicable with respect to taxable years beginning after December 31, 
1950, and prior to January 1,1954. 
SEC. 349. NONDISTRIBUTABLE INCOME OF PERSONAL HOLDING COM-
PANIES. 
Effective for taxable years beginning after December 31, 1939, sec-
tion 504 is hereby amended by adding at the end thereof the following g
g
f
^ ®
*
*
*
- ^^^^ ^
*
^
*
-
new subsection: 
2
6 u. s. c. § 6
0
4
. 
"(e) The amount by which the undistributed subchapter A net 
income determined without reference to this subsection exceeds the 
amount which could be distributed on the last day of the taxable year 
as a dividend (1) without violating any action, regulation, rule, order, 
or proclamation taken, promulgated, made, or issued by, or pursuant to 
the direction of, the President or any agency that he may designate, 
under the Trading With the Enemy Act of October 16, 1917, as 
^gff.*s. c^app. ji. 
amended, or the First War Powers Act of 1941, and (2) not subject to 
5
6 stat.'sai 
a lien in favor of the United States." 
jS^.^- ^- ^- *PP-
TITLE IV—EXCISE TAXES 
P a r t I—^Tax on Admissions and Cabarets 
SEC. 401. REMOVAL OF TAX ON FREE ADMISSIONS. 
Section 1700 (a) (1) (relating to tax on single or season tickets) is 
26u*s" C.VTOO (a) 
hereby amended by striking out the second, fourth, and fifth sentences (i). 
thereof. 
SEC. 402. EXEMPTIONS FROM ADMISSIONS TAX. 
(a) 
REINSTATEMENT or 
PREWAR EXEMPTIONS.—^Notwithstanding 
section 541 (b) of the Revenue Act of 1941, the provisions of section 
1701 (relating to exemptions from the admissions tax) shall apply to ^
^
5
6 stat. 7io; 5
3 stat. 
amounts paid on or after the effective date specified in section 403 of 
2
6 u. s. c. § 1
7
0
1
. 
this Act for admissions on or after such date. 
^ °°*^' 
(b) AMENDMENT OF SECTION 1701 (a) AND (b).—Subsections (a^ 
and (b) of section 1701 (relating to exemptions from admissions tax) 
are hereby amended to read as follows: 
" (a) 
OERTAIN RELIGIOUS, EDUCATIONAL, OR CHARITABLE ENTERTAIN-
MENTS, ETC.— 
"(1) I N GENERAL.—Except as provided in paragraph (2), any 
admissions all thcf proceeds of which inure— 
" (A) exclusively to the benefit of— 
"(i) a church or a convention or association of 
churches; 
"(ii) an educational institution which is exempt under 
section 101 (6) or which is an educational institution of 
26u*8 c' §101 (6). 
, 
a government or political subdivision thereof, if such 
organization normally maintains a regular faculty and 
520 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
curriculum and normally has a regularly organized body 
of pupils or students in attendance at the place where its 
educational activities are regularly carried on; 
"(iii) a corporation or any community chest, fund, or 
foundation organized and operated exclusively for 
26u.^s.a§ioi(6). 
charitable purposes, exempt under section 101 (6), if 
such corporation or organization is supported, in whole 
or in part, by funds contributed by the United States or 
any State or political subdivision thereof, or is primarily 
supported by contributions from the general public; 
"(iv) a society or organization conducted for the sole 
purpose of maintaining symphony orchestras or operas 
and receiving substantial support from voluntary con-
tributions ; 
"(v) an organization (organized prior to October 1, 
1951) which is exempt under section 101 (6) and which is 
operated for the purpose of conducting an annual chau-
tauqua program of educational, cultural, and religious 
activities at a permanent location— 
if no part of the net earnings thereof inures to the benefit of 
any private stockholder or individual; 
"(B) exclusively to the benefit of National Guard organ-
izations, Reserve officers' associations or organizations, posts 
or organizations of war veterans, or auxiliary units or 
societies of any such posts or organizations, if such posts, 
organizations, units, or societies are organized in the United 
States or any of its possessions, and if no part of their net 
earnings inures to the benefit of any private stockholder or 
individual; or 
"(C) exclusively to the benefit of a police or fire depart-
ment of any city, town, village, or any municipality or 
exclusively to a retirement, pension, or disability fund for 
the sole benefit of members of such a police or fire department 
or to a fund for the heirs of such members. 
"(2) NoNEXEMPT ADMISSIONS.—The exemption provided under 
paragraph (1) shall not apply in the case of admissions to (A) 
any athletic game or exhibition unless the proceeds inure exclu-
sively to the benefit of an elementary or secondary school or unless 
in the case of an athletic game between two elementary or sec-
ondary schools, the entire gross proceeds from such game inure 
to the benefit of a hospital for crippled children, (B) wrestling 
matches, prize fights, or boxing, sparring, or other pugilistic 
matches or exhibitions, (C) carnivals, rodeos, or circuses in which 
any professional performer or operator participates for compen-
sation, or (D) any motion picure exhibition. 
"(b) AGRICULTURAL FAIRS.—Any admissions to agricultural fairs if 
no part of the net earnings thereof inures to the benefit of any stock-
holders or members of the association conducting the same—if the 
proceeds therefrom are used exclusively for the improvement, mainte-
nance, and operation of such agricultural fairs; or". 
(c) ADMISSIONS TO MUNICIPAL SWIMMING POOLS, ETC.—Section 
26u*8 c^s 1
7
0
1 
^'^^^ ^
® hereby amended by striking out the,period at the end of sub-
Ante, p. 619. ' 
scction (c) and inserting in lieu thereof "; or" and by adding at the 
end of such section the following new subsections: 
"(d) MUNICIPAL SWIMMING POOLS, ETC.—Any admissions to swim-
ming pools, bathing beaches, skating rinks, or other places providing 
facilities for physical exercise, operated by any State or political 
subdivision thereof or by the United States or any agency or instru-
mentality thereof—if the proceeds therefrom inure exclusively to 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
521 
the benefit of the State, political subdivision, United States, agency, 
or instrumentality. 
For the purposes of this subsection the term 
*State' includes Alaska, Hawaii, and the District of Columbia; or 
"(e) (1) HOME AND GARDEN TOURS.—^Any admission to a home or 
garden which is temporarily opened to the general public as part of 
a program conducted by a society or organization to permit the inspec-
tion of historical homes and gardens—if no part of the net earnings 
thereof inures to the benefit of any private stockholder or individual. 
"(2) HISTORIC SITES.—Any admissions to historic sites, houses, 
and shrines, and museums conducted in connection therewith, main-
tained and operated by a society or organization devoted to the preser-
vation and maintenance of such historic sites, houses, shrines, and 
museums—if no part of the net earnings thereof inures to the benefit 
of any private stockholder or individual.*' 
SEC. 403. EFFECTIVE DATE OF AMENDMENTS RELATING TO ADMIS-
SIONS. 
The amendments made by sections 401 and 402 shall be applicable 
'^^'' P- ^
^
®
-
with respect to amounts paid on or after the first day of tne first 
month which begins more than ten days after the date of the enact-
ment of this Act for admissions on or after such date. 
SEC. 
4
0
4
. 
TAX 
ON 
CABARETS, 
ROOF 
GARDENS, 
ETC. 
(a) BAUJROOMS AND DANCE HAIJ:.S.—Section 1700 (e) (1) (relating 
i R cfi i7oo (3) 
to tax on cabarets, roof gardens, etc.) is hereby amended by inserting (i)-
after the second sentence thereof the following new sentence: "In no 
case shall such term include any ballroom, dance hall, or other similar 
place where the serving or selling of food, refreshment, or merchandise 
is merely incidental, unless such place would be considered, without 
the application of the preceding sentence, as a 'roof garden, cabaret, 
or other similar place'." 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall be applicable only with respect to periods after 10 antemeridian 
on the first day of the first month which begins more than ten days 
after the date of the enactment of this Act. 
Part II—Tax on Cigarettes 
SEC. 421. TAX ON aOARETTES. 
(a) INCREASE IN RATE.—Section 2000 (c) (2) (tax on cigarettes) 
2
6 u.^s! c
.
*
§
2
0
0
0 (c) 
is hereby amended by striking out "$3.50 per thousand" and inserting (2). 
in lieu thereof "$4 per thousand until April 1, 1954, and $3.50 per 
thousand on and after April 1,1954". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall take effect on the first day of the first month which begins more 
than 10 days after the date of the enactment of this Act. 
SEC. 422. FLOOR STOCKS TAX AND FLOOR STOCKS REFUND ON 
CIGARETTES. 
Section 2000 (relating to tax on tobacco, etc.) is hereby amended by g^f ^
*
*
*
- ^i^; sestat. 
adding at the end thereof the following new subsections: 
2
6 u. s. c. § 2
0
0
0
. 
"(f) 
1951 FLOOR STOCKS TAX.— 
"(1) TAX.—Upon cigarettes subject to tax under this section 
weighing not more than three pounds per thousand, which on the 
effective date of section 421 of the Revenue Act of 1951 are held by 
'^'''"'"• 
any person for sale, there shall be levied, assessed, collected, and 
paid a floor stocks tax at a rate equal to the increase in rate of tax 
made applicable to such cigarettes by the Revenue Act of 1951. 
"(2) RETURNS.—Every person required by this subsection to 
pay any floor stocks tax shall, on or before the end of the month 
522 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
ri3xt ollowing the month in which section 421 (a) of the Revenue 
AfUe,v>.62i. 
^^.^ .yf 5
^
9
5
2
^ takes effect, under such regulations as the Secretary 
shall prescribe, make a return and pay such tax, except that in 
the case of such cigarettes held by manufacturers and importers, 
the Secretary may collect the tax with respect to such cigarettes 
by means of stamps rather than return, and in such case may 
make an assessment against such manufacturer or importer hav-
ing cigarette tax stamps on hand on the effective date of such sec-
tion for the difference between the amount paid for such stamps 
and the increased rate imposed by such section. 
"(3) LAWS APPLICABLE.—All provisions of law, including pen-
Atue, p. 521. 
alties, applicable in respect of the taxes imposed by section 2000, 
shall, insofar as applicable and not inconsistent with this sub-
section, be applicable with respect to the floor stocks tax imposed 
by this subsection. 
"(g) 
FLOOR STOCKS REFUNDS ON CIGARETTES.— 
"(1) I N GENERAL.—^With respect to cigarettes, weighing not 
more than three pounds per thousand, upon \vhich the tax 
Arue,p.52i. 
imposed by subsection (c) (2), or upon Avhich floor stocks tax 
imposed by subsection (f), has been paid, and which, on April 
1, 1954, are held by any person and intended for sale, or are in 
transit from foreign countries or insular possessions of the 
United States to any person in the United States for sale, there 
shall be credited or refunded to such person (without interest), 
subject to such regulations as may be prescribed by the Secre-
tary, an amount equal to the difference between the tax paid on 
such cigarettes and the tax made applicable to such articles on 
April 1, 1954, if claim for such credit or refund is filed with the 
Secretary prior to July 1,1954. 
"(2) 
LIMITATIONS ON ELIGIBILITY FOR CREDIT OR REFUND.—No 
person shall be entitled to credit or refund under paragraph (1) 
unless (A) such person, for such period or periods both before 
and after April 1, 1954 (but not extending beyond one year 
thereafter), as the Secretary shall by regulations prescribe, 
makes and keeps, and files with the Secretary such records of 
inventories, sales, and purchases as may be prescribed in such 
regulations; and (B) such person establishes to the satisfaction 
of the Secretary, with respect to the cigarettes for which credit 
or refund is claimed by him under this section, that on and after 
April 1,1954, and until the expiration of three months thereafter, 
the price at which cigarettes of such class were sold (until a num-
ber equal at least to the number on hand on April 1, 1954, were 
sold) reflected, in such manner as the Secretary may by regula-
tions prescribe, the amount of the tax reduction. 
" (3) PENALTY AND ADMINISTRATIVE PROCEDURES.—All provisions 
of law, including penalties, applicable in respect of internal rev-
enue taxes on cigarettes shall, insofar as applicable and not incon-
sistent with this subsection, be applicable in respect of the credits 
and refunds provided for in this subsection to the same extent as 
if such credits or refunds constituted credits or refunds of such 
taxes." 
SEC. 423. REDUCTION OF TAX ON TOBACCO AND SNUFF. 
26U**s.a^§20oo(a). 
(^) REDUCTION IN RATE.—Scctiou 2000 (a) (relating to tax on 
tobacco and snuff) is hereby amended by striking out "18 cents per 
pound", wherever it appears therein, and inserting in lieu thereof 
"10 cents per pound". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall take effect on the first day of the first month which begins more 
than ten days after the date of the enactment of this Act. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
523 
P a r t III—Retailers' Excise Taxes 
SEC. 431. RETAILERS' EXaSE TAX ON TOILET PREPARATIONS. 
(a) BABY OILS, ETC.—Section 2402 (a) is hereby amended by 
i u.^s/a§ 2
4
0
2
. 
adding at the end thereof the following new sentence: "The tax im-
posed by this subsection shall not apply to lotion, oil, powder, or 
other article intended to be used or applied only in the care of babies." 
(b) SALES TO BARBER SHOPS, ETC.—Section 2402 (b) is hereby 
amended to read as follows: 
"(b) BEAUTY PARLORS, ETC.—For the purposes of subsection (a), 
the sale of any article described in such subsection to any person 
operating a barber shop, beauty parlor, or similar establishment for 
use in the operation thereof, or for resale, and the sale of miniature 
samples of any such article for demonstration use only to a house-to-
house salesman by the manufacturer or distributor, shall not be con-
sidered as a sale at retail. The resale of such article at retail by such 
person, or the resale of such sample at retail by such house-to-house 
salesman, shall be subject to the provisions of subsection (a)." 
SEC. 432. EFFECTIVE DATE OF PART IIL 
The amendments made by this part shall apply only to articles sold 
on or after the first day of the first month which begins more than 
ten days after the date of the enactment of this Act. 
Part IV—Diesel Fuel 
SEC. 441. DIESEL FUEL USED IN HIGHWAY VEHICLES. 
(a) IMPOSITION OF TAX.—The Internal Revenue Code is hereby 
amended by adding after chapter 19 the following new chapter: 
^ ^t»| '^^•. ^^^ ^^ 
seg. 
"CHAPTER 20—DIESEL FUEL 
"SEC. 2450. TAX ON DIESEL FUEL. 
"There is hereby imposed a tax of 2 cents a gallon upon any liquid 
(other than any product taxable under section 3412)— 
"(1) sold by any person to an owner, lessee, or other operator 
of a diesel-powered highway vehicle, for use as a fuel in such 
vehicle, or 
"(2) used by any person as a fuel in a diesel-powered highway 
vehicle unless there was a taxable sale of such liquid under 
clause (1). 
On and after April 1, 1954, the tax imposed by this section shall 
be 1% cents a gallon in lieu of 2 cents a gallon. 
"SEC. 2451. RETURNS AND PAYMENT. 
" (a) REQUIREMENT.—Every person liable for tax under this chapter 
shall make returns and pay the taxes due to the collector for the 
district in which is located his principal place of business, or if he 
has no principal place of business in the United States, then to the 
collector at Baltimore, Maryland. 
Such returns shall contain such 
information and be made at such times and in such manner as the 
Secretary may by regulations prescribe. 
" (b) INTEREST.—^The tax shall, without assessment or notice, be due 
and payable to the collector at the time prescribed for filing the return. 
If the tax is not paid when due, there shall be added as part of the tax 
interest at the rate of 6 per centum per annum from the time when the 
tax became due until paid. 
524 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
"SEC. 2452. CREDITS AND REFUNDS. 
"(a) NON-TAXABLE USE OR SALE BY VENDEE,—A credit against tax 
under this chapter, or a refund, may be allowed or made to a person in 
the amount of tax paid by him under this chapter with respect to his 
sale of any liquid to a vendee for use as fuel in a diesel-powered high-
way vehicle, if such person establishes, in accordance with regulations 
prescribed by the Secretary, that— 
" (1) the vendee used such liquid otherwise than as fuel in such 
a vehicle or resold such liquid, and 
"(2) such person has repaid or agreed to repay the amount of 
such tax to such vendee, or has obtained the consent of the vendee 
to the allowance of the credit or refund. 
No interest shall be allowed with respect to any amount of tax credited 
or refunded under the provisions of this subsection. 
"(b) PROOF REQUIRED IN CASE OP CERTAIN OVERPAYMENTS.—No 
overpayment of tax under this chapter shall be credited or refunded 
(otherwise than under subsection (a)) in pursuance of a court decision 
or otherwise, unless the person who paid the tax establishes, in accord-
ance with regulations prescribed by the Secretary, (1) that he has not 
included the tax in the price of the article with respect to which it was 
imposed, or collected the amount of tax from the vendee, or (2) that 
he has repaid the amount of the tax to the ultimate purchaser of the 
article, or files with the Secretary written consent of such ultimate 
purchaser to the allowance of the credit or refund. 
"SEC. 2453. TAX-FREE SALES. 
"Under regulations prescribed by the Secretary, no tax under this 
chapter shall be imposed with respect to the sale of any liquid for the 
exclusive use of any State, Territory of the United States, or any 
political subdivision of the foregoing, or the District of Columbia, or 
with respect to the use by any of the foregoing of any liquid as fuel in a 
diesel-powered highway vehicle. 
"SEC. 2454. APPLICABILITY OF ADMINISTRATIVE PROVISIONS. 
"All provisions of law (including penalties) applicable in respect of 
26u*s c*s2700 ^^® taxes imposed by section 2700 shall, insofar as applicable and not 
inconsistent with tliis chapter, be applicable in respect of the taxes 
imposed by this chapter. 
"SEC. 2455. RULES AND REGULATIONS. 
"The Secretary shall prescribe and publish all needful rules and 
regulations for the enforcement of this chapter." 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall 
take effect on the first day of the first month which begins more than 
ten days after the date of the enactment of this Act. 
Part V—Liquor 
SEC. 451. INCREASE IN TAX ON DISTILLED SPIRITS FROM $9 TO $10.50 
PER GALLON. 
5
6 Stat. 970.^^^^^^ 
(a) DISTILLED SPIRITS GENERALLY.—Section 2800 (a) (1) is hereby 
O
R
T
T a n R
o
a
n
n o
> .^j^^j^^j^^ jj^y striking out "$6" and inserting in lieu thereof "$10.50", 
and by inserting after the first sentence the following new sentence: 
"On and after April 1, 1954, the rate of tax imposed by this para-
graph shall be $9 in lieu of $10.50.". 
(b) IMPORTED PERFUMES CONTAINING DISTILLED SPIRITS.—Section 
2800 (a) (3) is hereby amended by striking out "$6" and inserting in 
lieu thereof "$10.50", and by adding at the end thereof the following 
new sentence: "On and after April 1, 1954, the rate of tax imposed 
by this paragraph shall be $9 in lieu of $10.50.". 
26U.S.O. §2800(a). 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
525 
(c) FLOOR STOCKS TAX.—Section 2800 is amended by inserting at ^
^
6
3 stat. 2
9
8
; 5
8 stai;. 
the end thereof the following new subsection: 
2
6 u. s. c. § 2
8
0
0
. 
«(1) 1951 FLOOR STOCKS TAX.— 
Aruc.v>.m. 
"(1) TAX.—^Upon all distilled spirits upon which the internal 
revenue tax imposed by law has oeen paid, and which on the 
effective date of section 451 (a) of the Kevenue Act of 1951, are 
^O««,P 528. 
held and intended for sale or for use in the manufacture or pro-
duction of any article intended for sale, there shall be levied, 
assessed, collected, and paid a floor stocks tax of $1.50 on each 
proof-gallon, and a proportionate tax at a like rate on all frac-
tional parts of such proof-gallon. 
"(2) RETURNS.—Under such regulations as the Secretary shall 
prescribe, every person required by paragraph (1) to pay any 
floor stocks tax snail, on or before the end of the thirtieth day 
following the effective date of section 451 (a) of the Revenue 
Act of 1951 make a return and shall, on or before the first day of 
the third month following such effective date, pav such tax. Pay-
ment of the tax shown to be due may be extended to a date not 
later than the first day of the tenth month following the effective 
date of such section upon the filing of a bond for payment thereof 
in such form and amount and with such surety or sureties as the 
Secretary may prescribe. 
"(3) LAWS APPLICABLE.—^AU provisions of law, including pen-
alties, applicable in respect of internal revenue taxes on distilled 
spirits snail, insofar as applicable and not inconsistent with this 
subsection, be applicable in respect of the floor stocks tax imposed 
hereunder. For the purposes of this subsection the term 'distilled 
spirits' shall include products produced in such manner that the 
person producing them is a rectifier within the meaning of section 
3254 Cfi-^ " 
63 Stat. 391. 
•^^ Vft7' 
26 U. S. C. $ 32M 
SEC. 452. WINES. 
^
^
^
• 
(a) 
INCREASE IN RATE OF TAX.— 
(1) STILL WINES.—SO much of section 3030 (a) (1) (A) (tax 
ig^lgjjaoaoca) 
on still wines, etc.) as precedes the second sentence thereof is d) (A). ' 
hereby amended to read as follows: 
"(A) Imposition.—Upon all still wines, including ver-
mouth, and all artificial or imitation wines or compounds 
sold as still wine, produced in or imported into the United 
States on or after the effective date of section 452 (a) of the 
Revenue Act of 1951, or which on such date were on any 
winery premises or other bonded premises or in transit 
thereto or at any custom house, there shall be levied, collected, 
and paid taxes at rates as follows, when sold, or removed for 
consumption or sale: 
"On wines containing not more than 14 per centum of 
absolute alcohol, 17 cents per wine-gallon, the per centum of 
alcohol under this section to be reckoned by volume and not 
by weight, except that on and after April 1, 1954, the rate 
shall be 15 cents per wine-gallon; 
"On wines containing more than 14 per centum and not 
exceeding 21 per centum of absolute alcohol, 67 cents per 
wine-gallon, except that on and after April 1, 1954, the rate 
shall be 60 cents per wine-gallon; 
"On wines containing more than 21 per centum and not 
exceeding 24 per centum of absolute alcohol, $2.25 per wine-
gallon, except that on and after April 1,1954, the rate shall be* 
$2 per wine-gallon; 
526 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
"All such wines containing more than 24 per centum of 
absolute alcohol by volume shall be classed as distilled spirits 
and shall pay tax accordingly." 
(2) SPAKKUNG WINES, LIQUEURS, AND CORDIALS.—Section 3030 
26U*s.a^§3030{a) 
(*) i^) (tax on Sparkling wincs, liqueurs. and cordials) is hereby 
(2). 
amended as follows: 
(A) By striking out "after June 30, 1940, or which on 
July 1, 1940" and inserting in lieu thereof "on or after the 
effective date of section 452 (a) of the Revenue Act of 1951, 
or which on such date"; 
(B) by striking out "10 cents on each one-half pint or 
fraction thereof" and inserting in lieu thereof "17 cents on 
each one-half pint or fraction thereof, except that on and 
after April 1, 1954, the rate shall be 15 cents on each one-
halfpint or fraction thereof"; and 
(C) by striking out "5 cents on each one-half pint or 
fraction thereof" each place that it occurs and inserting in 
lieu thereof "12 cents on each one-half pint or fraction 
thereof, except that on and after April 1, 1954, the rate 
shall be 10 cents on each one-half pint or fraction thereof". 
6
4 8^at.^525. ^ ^^^ 
(I,) FLOOR STOCKS.—Subchapter F of chapter 26 is hereby amended 
aseq. ' ' ' 
by inserting at the end thereof the following new section: 
"SEC. 3195. 1951 FLOOR STOCKS TAX ON WINES. 
"(a) Upon all wines upon which the internal revenue tax imposed 
by law has been paid, and which on the effective date of section 452 
(a) of the Revenue Act of 1951 are held and intended for sale or for 
use in the manufacture or production of an article intended for sale, 
there shall be levied, assessed, collected, and paid a floor stocks tax 
at rates equal to the increases in rates of tax made applicable to such 
Ante, p. 5
2
5
. 
articles by section 452 (a) of the Revenue Act of 1951. 
"(b) RETURNS.—Under such regulations as the Secretary shall pre-
scribe, every person required by subsection (a) to pay any floor stocks 
tax shall, on or before the end of the thirtieth day following the effec-
tive date of section 452 (a) of the Revenue Act of 1951 make a return 
and shall, on or before the first day of the third month following such 
effective date, pay such tax. 
Payment of the tax shown to be due 
may be extended to a date not later than the first day of the tenth 
month following the effective date of section 452 (a) of the Revenue 
Act of 1951, upon the filing of a bond for payment thereof in such form 
and amount and with such surety or sureties as the Secretary may 
prescribe. 
"(c) LAWS APPLICABLE.—^All provisions of law, including penalties, 
Ante, p. 526. 
applicable in respect of the taxes imposed by section 3030 (a) shall, 
insofar as applicable and not inconsistent with this section, be appli-
cable with respect to the floor stocks tax imposed by subsection (a)." 
SEC. 453. FERMENTED MALT LIQUOR. 
(a) 
INCREASE IN TAX ON FERMENTED MALT LIQUORS FROM $8 TO $9 
5
3 Stat.365; 5
6 Stat, pj-jj BARREL.—Section 3150 (a) (tax on fermented malt liquors) is 
26U.s.c.§3i60(a). hereby amended (1) by striking out "$7" and inserting in lieu thereof 
"$9", and (2) by striking out the second sentence and inserting in 
lieu thereof the following: "On and after April 1, 1954, the tax im-
posed by the preceding sentence shall be at the rate of $8 in lieu of 
$9.". 
5
8 Stat. 67. ^^^ 
(|3^ FLOOR STOCKS TAX.—Section 3150 is hereby amended by insert-
ing at the end thereof the following new subsection: 
"(g) 
1951 FLOOR STOCKS TAX.— 
"(1) TAX.—^Upon all fermented malt liquors upon which the 
internal revenue tax imposed by law has been paid, and which 
65 STAT.] 
PUBLIC LAW 183—OCT. 20. 1951 
527 
on the effective date of section 453 (a) of the Revenue Act of 1951 
are held by any person and intended for sale there shall be levied, 
assessed, collected, and paid a floor stocks tax at a rate of $1 per 
barrel of 31 gallons. 
"(2) RETURNS.—^Under such regulations as the Secretary shall 
grescribe, every person required by paragraph (1) to pay any 
oor stocks tax shall, on or before the end of the thirtieth day 
following the effective date of section 453 (a) of the Revenue Act 
of 1951 make a return and shall, on or before the first day of the 
third month following such effective date, pay such tax. 
Pay-
ment of the tax shown to be due may be extended to a date not 
later than the first day of the tenth month following the effective 
date of section 453 (a) of the Revenue Act of 1951, upon the 
filing of a bond for payment thereof in such form and amount and 
with such surety or sureties as the Secretary may prescribe. 
"(3) LAWS APPLICABLE.—All provisions of law, including pen-
alties, applicable in respect of the taxes imposed by subsection 
(a) shall, insofar as applicable and not inconsistent with this 
subsection, be applicable with respect to the floor stocks tax im-
posed by this subsection." 
SEC. 454. FLOOR STOCKS REFUNDS. 
(a) AMENDMENT OF SECTIGN 1656 (a).—Section 1656 (a) (relating 
to floor stocks refunds on distilled spirits, etc.) is amended to read 
as follows: 
"(a) I N GENERAL.—^With respect to any article upon which tax is 
imposed under section 2800 (a), 3030 (a), or 3150 (a), upon which -4n<«,pp.524-526 
internal revenue tax (including floor stocks tax) at the applicable rate 
prescribed by such section has been paid, and which, on April 1, 1954, 
is held by any person and intended for sale or for use in the manu-
facture or production of any article intended for sale, there shall be 
credited or refunded to such person (without interest), subject to such 
regulations as may be prescribed by the Secretary, an amount equal 
to the difference between the tax so paid and the rate made applicable 
to such articles on and after April 1, 1954, by such section, if claim 
for such credit or refund is filed with the Secretary prior to May 1, 
1954." 
(b) AMENDMENT OF SECTION 1656 (b).—Section 1656 (b) (relating 
to limitations on eligibility for floor stocks refunds on distilled spirits, 
etc.) is amended by striking out "the rate reduction date" wherever 
it appears therein and inserting in lieu thereof "April 1,1954". 
SEC. 455. CLERICAL AMENDMENT. 
The table contained in section 1650 (relating to the war tax rates ^
^
5
4 stat. 523; 6
8 si 
of certain miscellaneous taxes) is hereby amended by striking out the 
?§ u. s. c. § i65o. 
following: 
69 Stat. 576. 
26U. S. C. §1660. 
Post, p. 638. 
"2800(a) (1). 
2800 (a) (3)... 
3030 (a) (1).. 
3030 (a) (2). 
3160. 
Distaied Spirits 
Imported Perfumes Containing 
Distilled Spirits. 
Still Wines: 
(1) Not over 14% of Alcohol... 
(2) Over 14% and not over 
21% of Alcohol. 
(3) Over 21% and not over 
24% of Alcohol. 
Sparkling Wines, Liqueurs, and 
Cordials: 
(1) Champagne or Sparkling 
(2) Artificially 
Carbonated 
Wine. 
(3) Liqueurs, Cordials, Etc... 
Fermented Malt Liquors 
$6 per gallon. 
$6 per gallon. 
10 cents per gallon. 
40 cents per gallon. 
$1 per gallon 
10 cents per half-pint 
or fraction thereof. 
6 cents per half-pint 
or fraction thereof. 
5 cents per half-pint 
or fraction thereof. 
$7 per barrel 
$9 per gallon. 
$0 per gallon. 
16 cents per gallon. 
60 cents per gallon. 
$2 per gallon. 
16 cents per half-pint 
or fraction thereof. 
10 cents iier half-pint 
or fraction thereof. 
10 cents i)er half-pint 
or fraction thereof. 
$8 per barrel." 
76100 O - 52 (PT. I) - 36 
5 2 8 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
SEC. 456. EFFECTIVE DATE OF PART V. 
The amendments made by this part shall take effect on the first day 
of the first month which begins more than 10 days after the date of t h e 
enactment of this Act. 
Part VI—Occupational Taxes 
SEC. 461. DEALERS IN LIQUORS. 
26U.*8.c%3250. 
(^) 
WHOLESALE DEALERS IN LiQUORS.—Scction 3250 (a) (1) 
(relating to occupational tax on wholesale dealers in liquors) is hereby 
amended by striking out "$110" and inserting in lieu thereof "$200 . 
(b) RETAIL DEALEKS I N LIQUORS.—Section 3250 (b) (1) 
(relating 
to occupational tax on retail dealers in liquors) is hereby amended by 
striking out "$27.50" and inserting in lieu thereof "$50". 
(c) WHOLESALE DEALERS I N M A L T LIQUORS.—Section 3250 (d) (1) 
(relating to tax on wholesale dealers in malt liquors) is hereby 
amended by striking out "$55" and inserting in lieu thereof "$100". 
SEC. 462. DRAWBACK IN THE CASE OF DISTILLED SPIRITS USED IN 
THE MANUFACTURE OF CERTAIN NONBEVERAGE PROD-
UCTS. 
26U^V^c. §3250 
(^) DRAWBACK.—Section 3250 (1) (5) (relating to manufacturers 
W (5). 
or producers of designated nonbeverage products) is amended to read 
as follows: 
"(5) DRAWBACK.—In the case of distilled spirits tax-paid and 
^"•'*^°- 
used as provided in this subsection, a drawback shall be allowed— 
" (A) at the rate of $6 on each proof gallon upon which tax 
is paid at a rate of $9 per proof gallon prior to the effective 
date of section 462 of the Revenue Act of 1951, 
" ( B ) at the rate of $9.50 on each proof gallon upon which 
tax is paid at a rate of $10.50 per proof gallon on and after 
the effective date of section 462 of the Revenue Act of 1951, 
and 
" ( C ) at the rate of $8 on each proof gallon upon which tax 
is paid at a rate of $9 per proof gallon after March 31, 1954. 
Such drawback shall be due and payable quarterly upon filing of 
a proper claim with the Secretary. No claim under this subsec-
tion shall be allowed unless filed with the Secretary within the 
three months next succeeding the quarter for which the drawback 
is claimed." 
(b) 
EFFECTIVE D A T E . — T h e amendment made by subsection 
(a) 
shall be applicable only with respect to distilled spirits used on or after 
the first day of the first month which begins more than ten days after 
the date of the enactment of this Act. 
SEC. 463. TAX ON COIN-OPERATED GAMING DEVICES. 
26u!s*'0^3267(a). 
Sectiou 3267 (a) (tax on coin-operated gaming devices) is hereby 
amended by striking out "$150" wherever appearing therein and 
inserting in lieu thereof "$250". 
SEC. 464. EFFECTIVE DATE OF PART VI. 
^"^'•"- 
T h e amendments made by sections 461 and 463 shall take effect on 
the first day of the first month which begins more than ten days after 
the date of the enactment of this Act. I n the case of the year begin-
ning July 1, 1951, where the trade or business on which the tax is 
imposed was commenced prior to the first day of the month specified 
in the preceding sentence, the increase in tax resulting from such 
amendments shall be reckoned proportionately from the first day of 
such month to and including the tliirtieth day of June following and 
shall be due on, and payable on or before, the last day of the month 
specified in the preceding sentence. 
65 STAT.1 
PUBLIC LAW 183—OCT. 20, 1951 
529 
Part VII—Wagering 
SEC. 471. WAGERING TAXES. 
(a) IMPOSITION OF TAXES.—Subtitle B (relating to miscellaneous 
taxes) is hereby amended by inserting after chapter 27 the following 
2
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2
7
0 a 
new chapter: 
*
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^
-
"CHAPTER 27A—WAGERING TAXES 
"Subchapter A—^Tax on Wagers 
"SEC 3285. TAX. 
"(a) WAGERS.—There shall be imposed on wagers, as defined in sub-
section (b), an excise tax equal to 10 per centum of the amount thereof. 
"(b) DEFINITIONS.—For the purposes of this chapter— 
"(1) The term 'wager' means (A) any wager with respect to 
a sports event or a contest placed with a person engaged in the 
business of accepting such wagers, (B) any wager placed in a 
wagering pool with respect to a sports event or a contest, if such 
pool is conducted for profit, and (C) any wager placed in a 
lottery conducted for profit. 
"(2) The term 'lottery' includes the numbers game, policy, and 
similar types of wagering. The term does not include (A) any 
game of a type in which usually (i^ the wafers are placed, (ii) 
the winners are determined, and (iii) the distribution of prizes 
or other property is made, in the presence of all persons placing 
wagers in such game, and (B) any drawing conducted by an 
organization exempt from tax under section 101, if no part of the 
26U.^s.^a § 101. 
net proceeds derived from such drawing inures to the benefit of 
^"<«. PP- 4
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2
. 
any private shareholder or individual. 
"(c) AMOUNT OF WAGER.—In determining the amount of any wager 
for the purposes of this subchapter, all charges incident to the placing 
of such wager shall be included; except that if the taxpayer establishes, 
in accordance with regulations prescribed by the Secretary, that an 
amount equal to the tax imposed by this subchapter has been collected 
as a separate charge from the person placing such w^ager, the amount 
so collected shall be excluded. 
"(d) PERSONS LIABLE FOR TAX.—Each person who is engaged in the 
business of accepting wagers shall be liable for and shallpay the tax 
under this subchapter on all wagers placed with him. Each person 
who conducts any wagering pool or lottery shall be liable for and 
shall pay the tax under this subchapter on all wagers placed in such 
pool or lottery. 
"(e) EXCLUSIONS FROM TAX.—No tax shall be imposed by this sub-
chapter (1) on any wager placed with, or on any wager placed in a 
wagering pool conducted by, a parimutuel wagering enterprise licensed 
mider State law, and (2) on any wager placed in a coin-operated 
device with respect to which an occupational tax is imposed by section 
3267. 
"(f) 
TERRITORIAL EXTENT.—The tax imposed by this subchapter 
shall apply only to wagers (1) accepted in the United States, or (2) 
placed by a person who is in the United States (A) with a person who 
is a citizen or resident of the United States, or (B) in a wagering pool 
or lottery conducted by a person who is a citizen or resident of the 
United States. 
"SEC. 3286. CREDITS AND REFUNDS. 
"(a) No overpayment of tax under this subchapter shall be credited 
or refunded (otherwise than under subsection (b)), in pursuance of 
a court decision or otherwise, unless the person who paid the tax 
530 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
establishes, in accordance with regulations prescribed by the Secretary, 
(1) that he has not collected (whether as a separate charge or other-
wise) the amount of the tax from the person who placed the wager 
on which the tax was imposed, or (2) that he has repaid the amount 
of the tax to the person who placed such wager, or unless he files with 
the Secretary written consent of the person who placed such wager 
to the allowance of the credit or the making of the refund. 
In the 
case of any laid-off wager, no overpayment of tax under this sub-
chapter shall be so credited or refunded to the person with whom such 
laid-off wager was placed unless he establishes, in accordance with 
regulations prescribed by the Secretary, that the provisions of the 
preceding sentence have been complied with both with respect to the 
person who placed the laid-off wager with him and with respect to 
the person who placed the original wager. 
"(b) Where any taxpayer lays off part or all of a wager with 
another person who is liable for tax under this subchapter on the 
amount so laid off, a credit against the tax imposed by this subchapter 
shall be allowed, or a refund shall be made to, the taxpayer laying-off 
such amount. Such credit or refund shall be in an amount which bears 
the same ratio to the amount of tax which such taxpayer paid under 
this subchapter on the original wager as the amount so laid off bears 
to the amount of the original wager. Credit or refund under this sub-
section shall be allowed or made only in accordance with regulations 
prescribed by the Secretary; and no interest shall be allowed with 
respect to any amount so credited or refunded. 
"SEC. 3287. CERTAIN PROVISIONS MADE APPLICABLE. 
"All provisions of law, including penalties, applicable with respect 
^u.^8. c^'§27oo. ^^ ^^y t^^ imposed by section 2700 shall, insofar as applicable and not 
inconsistent with the provisions of this subchapter, be applicable with 
respect to the tax imposed by this subchapter. 
In addition to all other 
Su?s.c?§27oe. 
records required pursuant to section 2709, each person liable for tax 
under this subchapter shall keep a daily record showing the gross 
amount of all wagers on which he is so liable. 
"Subchapter B—Occupational Tax 
"SEC. 3290. TAX. 
"A special tax of $50 per year shall be paid by each person who is 
Anu, p. 52d. 
liable for tax under subchapter A or who is engaged in receiving 
wagers for or on behalf of any person so liable. 
"SEC. 3291. REGISTRATION. 
"(a) Each person required to pay a special tax under this sub-
chapter shall register with the collector of the district— 
" (1) his name and place of residence; 
"(2) if he is liable for tax under subchapter A, each place 
of business where the activity which makes him so liable is 
carried on, and the name and place of residence of each person 
who is engaged in receiving wagers for him or on his oehalf; 
and 
"(3) if he is engaged in receiving wagers for or on behalf of 
any person liable for tax under subchapter A, the name and place 
of residence of each such person. 
" (b) Where subsection (a) requires the name and place of residence 
of a firm or company to be registered, the names and places of resi-
dence of the several persons constituting the firm or company shall 
be registered. 
"(c) In accordance with regulations prescribed by the Secretary, 
the collector may require from time to time such supplemental informa-
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
531 
tion from any person required to register under this section as may 
be needful to the enforcement of this chapter. 
"SEC. 3292. CERTAIN PROVISIONS MADE APPLICABLE. 
"Sections 3271, 3273 (a), 3275, 3276, 3277, 3279, and 3280 shall 
^i*^*s.^c: §j 3271, 
extend to and apply to the special tax imposed by this subchapter 3
2
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3
, 3
2
7
6
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3
2
7
7
, 3
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; 
and to the persons upon whom it is imposed, and for that purpose 
any activity which makes a person liable for special tax under this 
subchapter shall be considered to be a business or occupation described 
in chapter 27. 
No other provision of subchapter B of chapter 27 shall 
f^ u.^s.^a'§^32bo et 
so extend or apply. 
«
«
«
. 
"SEC. 3293. POSTING. 
"Every person liable for specia tax under this subchapter shall 
place and Keep conspicuously in his principal place of business the 
stamp denoting the payment of such special tax; except that if he 
has no such place of business, he shall keep such stamp on his person, 
and exhibit it, upon request, to any officer or employee of the Bureau 
of Internal Revenue. 
"SEC. 3294. PENALTIES. 
"(a) FAILURE To P A T TAX.—^Any person who does anv act which 
makes him liable for special tax under this subchapter, without having 
paid such tax, shall, besides being liable to the payment of the tax, be 
fined not less than $1,000 and not more than $5,000. 
"(b) FArLURE T
O JPosT O
R ExHiBiT STAMP.—Any person who, through 
negligence, fails to comply with section 3293, shall be liable to a 
penalty of $50, and the cost of prosecution. Any person who, through 
willful neglect or refusal, fails to comply with section 3293, shall be 
liable to a penalty of $100, and the cost of prosecution. 
"(c) WiLLFDii VIOLATIONS.—^The penalties prescribed by section 2707 
^ stat m. 
^^^ 
with respect to the tax imposed by section 2700 shall apply with respect 2
7
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. 
to the tax imposed by this subchapter. 
"Subchapter C—^Miscellaneous Provisions 
"SEC. 3297. APPLICABILITY OF FEDERAL AND STATE LAWS. 
"The payment of any tax imposed by this chapter with respect to 
any activity shall not exempt any person from any penalty provided by 
a law of the United States or of any State for engaging in the same 
activity, nor shall the payment of any such tax prohibit any State from 
placing a tax on the same activity for State or other purposes. 
"SEC. 3298. INSPECTION OF BOOKS. 
"Notwithstanding section 3631, the books of account of any person 
^||f^|-^^j^^^ 
liable for tax under this chapter may be examined and inspected as 
frequently as may be needful to the enforcement of this chapter." 
(b) TECHNICAL AMENDMENT.—-Section 3310 (f) (relating to discre- 
gg*^^; ^^53310(0. 
tion allowed the Commissioner with respect to returns and payment of 
tax) is hereby amended by inserting after "subchapter A of chapter 
25," the following: "subchapter A of chapter 27A,". 
^
w
<
«
. P- 529. 
SEC. 472. EFFECTIVE DATE OF PART VIL 
The tax imposed by subchapter A of chapter 27A, as added by section 
471, shall apply only with respect to wagers placed on or after the 
^^' P- ^'^• 
first day of the first month which begins more than 10 days after the 
date of enactment of this Act. No tax shall be payable under sub-
chapter B of chapter 27A, as added by section 471, with respect to any 
^"'*' P- ^• 
period prior to the first day of the first month which begins more 
than 10 days after the date of enactment of this Act. In the case of 
532 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
any person who is liable for tax under subchapter A of chapter 27A, 
Ante, p. 5
2
9
. 
^s added by section 471, or who is engaged in receiving wagers for or 
on behalf of any person so liable, and who commenced the activity 
which makes him subject to such tax, or who was engaged in receiving 
such wagers, prior to the first day of the first month specified in the 
preceding sentence, the tax under subchapter B of chapter 27A, as 
added by section 471, shall be reckoned proportionately from the first 
day of such month to and including the thirtieth day of June fol-
lowing and shall be due on, and payable on or before, the last day 
of the month specified in the preceding sentence. 
Part VIII—Manufacturers' Excise Taxes 
SEC. 481. AUTOMOBILES, TRUCKS, AND PARTS OR ACCESSORIES. 
7if ^
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*
^
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(a) INCREASE IN TAX ON TRUCKS.—Section 3403 (a) (tax on trucks, 
26u. 8. c. §3403. 
busses, etc.) is hereby amended by striking out "5 per centum" and 
inserting in lieu thereof "8 per centum, except that on and after April 
1,1954, the rate shall be 5 per centum". 
(b) 
INCREASE IN TAX ON PASSENGER AUTOMOBIUI:S AND MOTOR-
CYCLES.—Section 3403 (b) (tax on automobile chassis and bodies, etc.) 
is hereby amended to read as follows: 
"(b) OTHER CHASSIS AND BODIES, ETC.—Other automobile chassis 
and bodies, chassis and bodies for trailers and semitrailers (other than 
house trailers) suitable for use in connection with passenger automo-
biles, and motorcycles (including in each case parts or accessories there-
for sold on or in connection therewith or with the sale thereof), except 
tractors, 10 per centum, except that on and after April 1, 1954, the 
rate shall be 7 per centum. A sale of an automobile, trailer, or semi-
trailer shall, for the purposes of this subsection, be considered to be a 
sale of the chassis and of the body." 
(c) INCREASE IN TAX ON PARTS OR ACCESSORIES.—Section 3403 (c) 
(tax on parts or accessories for automobiles, etc.) is hereby amended by 
striking out "5 per centum" and inserting in lieu thereof "8 per centum, 
except that on and after April 1,1954, the rate shall be 5 per centum". 
(d) REBUILT PARTS OR ACCESSORIES.—Section 3403 (c) (tax on parts 
or accessories) is hereby amended by adding at the end thereoi the 
following: "In determining the sale price of a rebuilt automobile part 
or accessory there shall be excluded from the price, in accordance with 
regulations prescribed by the Secretary, the value of a like part or 
accessory accepted in exchange." 
(e) TECHNICAL AMENDMENT.—Section 3403 (e) (relating to certain 
credits against the tax imposed by section 3403) is hereby amended by 
striking out "in the case of an article taxable under subsection (a), 
6 per centum, and in the case of an article taxable under subsection 
(b), 7 per centum" and inserting in lieu thereof "in the case of an 
article taxable under subsection (a) or subsection (b), the applicable 
percentage rate of tax provided in such subsections". 
(f) PARTS OR ACCESSORIES FOR F A R M EQUIPMENT.—Section 3443 (a) 
^^63 Stat. 417; 55 Stat, ^gj ^^'^ jg hereby amended by striking out the period at the end of 
26U.8.c.§3443(a). clausc (v) and inserting in lieu thereof a semicolon, and by inserting 
Post, p. 533. 
^^^^ ^j^^g^ ^^^ ^j^g following: 
^"P''*'- 
"(vi) in the case of articles taxable under section 3403 
(c) 
(other than spark plugs, storage batteries, leaf 
springs, coils, timers, and tire chains), used or resold for 
use as repair or replacement parts or accessories for farm 
equipment (other than equipment taxable under subsec-
tion (a) or (b) of section 3403);". 
(g) EFFECTIVE DATE OF SUBSECTION (f).—^The amendment made by 
subsection (f) shall be effective with respect to articles purchased (by 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
5 3 3 
the user thereof) on or after the first day of the first month which 
begins more than ten days after the date of the enactment of this Act. 
(h) REMOVAL or TAX ON TIRES FOR TOTS, ETC.—^Paragraph (1) of 
section 3400 (a) (relating to tax on tires) is hereby amended by adding 
^
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1 1 1 
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i 
i » - i i 
• 
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^
O U. B. O. §d400 W 
at the end thereof the following: "The tax imposed by this paragraph d). 
shall not apply to (A) tires which are not more than 20 inches in diam-
eter and not more than one and three-fourths inches in cross-section, 
if such tires are of all-rubber construction (whether hollow center or 
solid) without fabric or metal reinforcement, or (B) tires of extruded 
tiring with internal wire fastening agent." 
SEC. 482. NAVIGATION RECEIVERS SOLD TO THE UNITED STATES. 
(a^ EXEMPTION ON SALES TO UNITED STATES OF CERTAIN RADIO SETS.— 
Section 3404 (a) (relating to manufacturers' excise tax on radio receiv- 
^s stat. 7
^
2 ^ ^ 
ing sets, etc.) is hereby amended by adding at the end thereof the fol-
lowing new sentence: "No tax shall be imposed under this subsection 
with respect to the sale to the United States for its exclusive use of a 
communication, detection, or navigation receiver of the type used in 
commercial, military, or marine installations." 
(b) TAX-FREE SALES OF RADIO PARTS.—Section 3404 (b) (relating 
to manufacturers' excise tax on component parts of radio receiving 
sets, etc.) is hereby amended by adding at the end thereof the follow-
ing new sentence: "Under regulations prescribed by the Secretary, no 
tax shall be imposed under this subsection with respect to the sale of 
any article for use by the vendee as material in the manufacture or 
production of, or as a component part of, communication, detection, 
or navigation receivers of the type used in commercial, military, or 
marine installations if such receivers are to be sold by the vendee to 
the Unted States for its exclusive use. If any article sold tax-free to 
such vendee is not so used by him, or being so used the receiver is not 
so sold, the vendee shall be considered as the manufacturer or pro-
ducer of such article." 
(c) REFUND IN CASE or USE or PARTS.—Section 3443 (a) (1) (relat- 
i u.^s'. o'^§ 3
4
4
3 (a) 
ing to credits and refunds) is hereby amended to read as follows: (D-
"(1) to a manufacturer or producer, in the amount of any tax 
under this chapter which has been paid with respect to the sale 
of— 
"(A) any article (other than a tire, inner tube, or auto-
mobile radio or television receiving set taxable under section 
3404) purchased by him and used by him as material in the 
*'"^'^°-
manufacture or production of, or as a component part of, 
an article with respect to which tax under this chapter has 
been paid, or which has been sold free of tax by virtue of 
section 3442, relating to tax-free sales; 
^ f}^l\ c^j3442. 
"(B) any article described in section,3404 (b) purchased 
supra.' 
by him and used by him as material in the manufacture or 
production of, or as a component part of, communication, 
detection, or navigation receivers of the type used in com-
mercial, military, or marine installations if such receivers 
have been sold by him to the United States for its exclusive 
use." 
(d) REFUND IN CASE OF RESALE TO UNITED STATES.—Section 3443 
(a) (3) (A) is hereby amended by adding at the end thereof the Ante,p.si2. 
following: 
"(vii) in the case of a communication, detection, or 
navigation receiver of the type used in commercial, mili-
tary, or marine installations, resold to the United States 
for its exclusive use." 
534 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
2
6 u*^s.'at 
3444(b). 
i^) .UsE BY MANUFACTURER OF T 
A
X 
ABLE PARTS.—Section 3444 (b) 
(relating to tax on use by manufacturer of taxable articles) is hereby 
amended to read as follows: 
"(b) This section shall not apply with respect to the use by the 
manufacturer, producer, or importer of articles described in section 
Arue, p. 533. 
3404 (b) if such articles are used by him as material in the manufac-
ture or production of, or as a component part of, communication, 
detection, or navigation receivers of the type used in commercial, 
military, or marine installations if such receivers are to be sold to the 
United States for its exclusive use." 
(f) EFFECTIVE DATES.—The amendments made by subsections (a) 
Po»t, p. 637. 
Qj^^ ^]^^ shall take effect as provided in section 490. 
The amend-
ments made by subsections (c) and (e) shall be applicable with respect 
to articles used in receivers sold to the United States on or after the 
first day of the first month which begins more than ten days after 
the date of the enactment of this Act, and the amendment made by 
subsection (d) shall be applicable with respect to articles resold to the 
United States on or after such first day. 
SEC. 483. TAX-FREE SALES OP REFRIGERATOR COMPONENTS TO 
WHOLESALERS FOR RESALE TO MANUFACTURERS. 
26u!8*.c!|3406(b) 
Section 3405 (b) is hereby amended by inserting "(hereinafter 
referred to as 'refrigerating equipment')" before the period at the 
end of the first sentence and by striking out the second and third 
sentences and inserting in lieu thereof the following: "Under regula-
tions prescribed by the Secretary, the tax under this subsection shall 
not apply in the case of sales of any such refrigerator components 
by the manufacturer, producer, or importer to (1) a manufacturer or 
producer of refrigerating equipment, or (2) a vendee for resale to a 
manufacturer or producer of refrigerating equipment if such com-
ponents are in due course so resold. If any such refrigerator com-
ponents are resold by the manufacturer or producer to whom sold or 
resold otherwise than on or in connection with, or with the sale of, 
complete refrigerating equipment manufactured or produced by him, 
then for the purposes of this section such manufacturer or producer 
shall be considered the manufacturer or producer of the refrigerator 
components so resold by him." 
SEC. 484. SPORTING GOODS. 
65Stat. 716. 
Scctiou 3406 (a) (1) (relating to manufacturers' excise tax on 
sporting goods) is hereby amended to read as follows: 
''(1) 
SPORTING GOODS.—Badminton nets; badminton rackets 
(measuring 22 inches over all or more in length); badminton 
racket frames (measuring 22 inches over all or more in length); 
badminton racket string; badminton shuttlecocks; badminton 
standards; billiard and pool tables (measuring 45 inches over all 
or more in length); billiard and pool balls and cues for such tables; 
bowling balls and pins; clay pigeons and traps for throwing clay 
pigeons; cricket balls; cricket bats; croquet balls and mallets; 
curling stones; deck tennis rings, nets, and posts; golf bags (meas-
uring 26 inches or more in length); golf balls; golf clubs (measur-
ing 30 inches or more in length); lacrosse balls; lacrosse sticks; 
polo balls; polo mallets; skis; ski poles; snowshoes; snow 
toboggans and sleds (measuring more than 60 inches over all in 
length) ; squash balls; squash rackets (measuring 22 inches over all 
or more in length); squash racket frames (measuring 22 inches 
over all or more in length); squash racket string; table tennis 
tables, balls, nets, and paddles; tennis balls; tennis nets; tennis 
rackets (measuring 22 inches over all or more in length) ; tennis 
26U.S. C. §3406(a) 
(1). 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
535 
racket frames (measuring 22 inches over all or more in length); 
tennis racket string; 15 per centum, except that on and after 
April 1,1954j the rate shall be 10 per centum; fishing rods, creels,' 
reels, and artificial lures, baits, and flies; 10 per centum." 
SEC. 485. ELECTRIC, GAS, AND OIL APPLIANCES. 
Section 3406 (a) (3) (relating to manufacturers'excise tax on elec- 
26u.^s.c.^§3406(a) 
trie, gas, and oil appliances) is hereby amended (1) by striking out (3). 
"Electric direct motor-driven fans and air circulators;" and inserting 
in lieu thereof "Electric direct motor-driven fans and air circulators 
(not of the industrial type); and the following appliances of the 
household type:", (2) by striking out "electric heating pads and 
blankets" and inserting in lieu thereof "electric blankets, sheets, and 
spreads", and (3) by inserting after "juicers;" the following: "electric 
belt-driven fans; electric exhaust blowers; electric or gas clothes 
driers; electric door chimes; electric dehumidifiers; electric dishwash-
ers; electric floor polishers and waxers; electric food choppers and 
grinders; electric hedge trimmers; electric ice cream freezers; electric 
mangles; electric motion or still picture projectors; electric pants 
pressers; electric garbage disposal units; and power lawn mowers;". 
SEC. 486. ADJUSTMENTS OF TAX RATES ON PHOTOGRAPHIC APPA-
RATUS AND FILM; REPEAL OF TAX ON CERTAIN ITEMS. 
(a) ITEMS SUBJECT T
O TAX.—Section 3406 (a) (4) (relating to the 
^^|**^; ^
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3
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manufacturers' excise tax on photographic apparatus) is hereby (4). 
amended to read as follows: 
"(4) PHOTOGRAPHIC APPARATUS.—Cameras and camera lenses, 
and unexposed photographic film in rolls (including motion pic-
ture film), 20 per centum. The tax imposed under this paragraph 
shall not apply to X-ray cameras, to cameras weighing more than 
four pounds exclusive of lens and accessories, to still camera lenses 
having a focal length of more than one hundred and twenty mil-
limeters, to motion picture camera lenses having a focal length 
of more than thirty millimeters, to X-ray film, to film more than 
one hundred and fifty feet in length, or to film more than twenty-
five feet in length and more than thirty millimeters in width. 
Any 
person who acquires unexposed photographic film not subject to 
tax under this paragraph and sells such unexposed film in form 
and dimensions subject to tax hereunder (or in connection with a 
sale cuts such film to form and dimensions subject to tax here-
under) shall for the purposes of this subsection be considered the 
manufacturer of the film so sold by him." 
(b) 
FLOOR STOCKS REFUNDS ON BULBS.— 
(1) With respect to any photo-flash or other bulb upon which 
the tax imposed under section 3406 (a) (4) of the Internal 
Revenue Code has been paid, and which on the effective date 
specified in section 489 of this Act is held by any person and Post.p.sse. 
intended for sale, or for use in the manufacture or production of 
any article intended for sale, there shall be credited or refunded 
to the manufacturer or producer of such bulb (without interest), 
subject to such regulations as may be prescribed by the Secretary, 
an amount equal to so much of the tax so paid as has been paid 
by such manufacturer or producer to such person as reimburse-
ment for tlie elimination on such effective date of the tax on such 
bulb, if claim for such credit or refund is filed with the Secretary 
prior to the expiration of three months after such effective date. 
No credit or refund shall be alloMable under this paragraph for 
any bulb held by any person for sale which was purchased by such 
person as a component part of any other article. 
536 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
(2) No person shall be entitled to credit or refund under para-
graph (1) unless he has in his possession such evidence of the 
inventories with respect to which he has made the reimbursements 
described in paragraph (1) as the regulations under paragraph 
(1) shall prescribe. 
(3) All provisions of law, including penalties, applicable with 
26u^scV406(a) 
respect to the tax imposed under section 3406 (a) (4) of the 
(4). 
Internal Eevenue Code shall, insofar as .applicable and not incon-
sistent with this subsection, be applicable in respect of the credits 
and refunds provided for in this subsection to the same extent as 
if such credits or refunds constituted credits or refunds of such 
taxes. 
SEC. 487. IMPOSITION OF TAX ON MECHANICAL PENCILS, FOUNTAIN 
AND BALL POINT PENS, AND MECHANICAL UGHTERS FOR 
aOARETTES, CIGARS, AND PIPES. 
Chapter 29 (relating to manufacturers' excise and import taxes) is 
^u.*s o^§3407. hereby amended by adding after section 3407 the following new 
section: 
"SEC 3408. TAX ON MECHANICAL PENCILS, FOUNTAIN AND BALL POINT 
PENS, AND MECHANICAL LIGHTERS FOR CIGARETTES, 
CIGARS, AND PIPES. 
"(a) IMPOSITION OP TAX.—There shall be imposed on the following 
articles, sold by the manufacturer, producer, or importer, a tax equal 
to 15 per centum of the price for which so sold: Mechanical pencils, 
fountain pens, and ball point pens; mechanical lighters for cigarettes, 
cigars, and pipes. 
"(b) EXEMPTION IF ARTICLE TAXABLE AS JEWELRY.—No tax shall 
be imposed under this section on any article taxable under section 
26u^s c^§2400 
^ ^ ^ (relating to jewelry tax)." If any article, on the sale of which 
tax has been paid under this section, is further manufactured or 
processed resulting in an article taxable under section 2400, the per-
son who sells such article at retail shall, in the computation of the 
retailers' excise tax due on such sale, be entitled to a credit or refund 
in an amount equal to the tax paid under this section." 
SEC. 488. REPEAL OF TAX ON ELECTRICAL ENERGY. 
(a) REPEAL OF TAX.—Section 3411 (relating to tax on electrical 
energy for domestic or commercial consumption), and sections 3441 
26u*8.*c:?ft4iii (^) ^^^ ^^^ 
(^) (related provisions), are hereby repealed. 
3441(d), 3447(0). 
' 
( b ) EFFECTIVE D A T E . 
(1) Except as provided in paragraph (2), the provisions of 
subsection (a) shall apply to electrical energy sold on or after 
the first day of the first month which begins more than ten days 
after the date of the enactment of this Act. 
(2) In the case of electrical energy sold which is billed to the 
customer for a period beginning before the effective date specified 
in paragraph (1) and ending on or after such date, the provisions 
of subsection (a) shall apply to that portion of the amount billed 
for the electrical energjr sold during such period which the num-
ber of days in such period on and after such effective date bears 
to the total number of days in such period. This section shall 
not apply to electrical energy sold before such effective date for 
which a bill was rendered prior to such date. 
SEC. 489. TAX ON GASOLINE. 
26u!s*:c%'34i2(a). 
(a) INCREASE IN RATE.—Section 3412 (a) is hereby amended by 
striking out "ll^ cents" and inserting in lieu thereof "2 cents" and 
by adding at the end thereof the following new sentence: "On and 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
537 
after April 1, 1954, the tax imposed by this section shall be 1 ^ cents 
a gallon in lieu of 2 cents a gallon." 
(b) FLOOR STOCKS TAX AND REFUND.—Section 3412 is hereby 
i6u.*s.c^§34i2. 
amended by adding at the end thereof the following new subsections: ^^f, P- sae-
"(f) 1951 FLOOR STOCKS TAX.—On gasoline subject to tax under 
this section which, on the effective date of section 489 (a) of the 
Revenue Act of 1951, is held and intended for sale, there shall be 
levied, assessed, collected, and paid a floor stocks tax at the rate of 
y2 cent per gallon. The tax shall not apply to gasoline in retail stocks 
held at the place where intended to be sold at retail, nor to gasoline 
held for sale by a producer or importer of gasoline. The provisions 
of section 3443 shall be applicable to the floor stocks tax imposed by 
^ |f*|- ^^''•^ g^ 
this subsection so as to entitle, subject to all the provisions of such 
^W, pp. 5
3
2
,
5
3
3
"
. 
section, (1) any manufacturer or producer to a refund or credit of 
such tax under subsection (a) (1) of such section, and (2) any person 
Ante,p.m. 
paying such floor stocks tax to a refund or credit thereof where gaso-
line is by such person or any other person used or resold for any of 
the purposes specified in suoparagraphs (A) (i), (ii), and (iii) of 
subsection (a) (3) of such section. 
"(g) FLOOR STOCKS REFUNDS ON GASOLINE.— 
"(1) I N GENERAL.—With respect to any gasoline taxable under 
this section, upon which tax (including floor stocks tax) at the 
applicable rate has been paid, and which, on April 1, 1954, is 
held and intended for sale by any person, there shall be credited 
or refunded (without interest) to the producer or importer who 
paid the tax, subject to such regulations as may be prescribed by 
the Secretary, an amount equal to so much of the difference 
between the tax so paid and the amount of tax made applicable 
to such gasoline on and after April 1, 1954, as has been paid 
by such producer or importer to such person as reimbursement for 
the tax reduction on such gasoline, if claim for such credit or 
refund is filed with the Secretary prior to July 1,1954. No credit 
or refund shall be allowable under this subsection with respect to 
gasoline in retail stocks held at the place where intended to be 
sold at retail, nor with respect to gasoline held for sale by a pro-
ducer or importer of gasoline. 
"(2) LIMITATION ON ELTGIBILITY FOR CREDIT OR REFUND.—No 
producer or importer shall be entitled to a credit or refund under 
paragraph (1) unless he has in his possession satisfactory evi-
dence of the inventories with respect to which he has made the 
reimbursements described in such paragraph, and establishes to 
the satisfaction of the Secretary with respect to the quantity of 
gasoline as to which credit or refund is claimed under such para-
graph, that on or after April 1, 1954, such quantity of gasoline 
was sold to the ultimate consumer at a price which reflected the 
amount of the tax reduction. 
"(3) PENALTY AND ADMINISTRATIVE PROCEDURES.—All provisions 
of law, including penalties, applicable in respect of the tax 
imposed under this section shall, insofar as applicable and not 
inconsistent with this subsection, be applicable in respect of the 
credits and refunds provided for in this subsection to the same 
extent as if such credits or refunds constituted credits or refunds 
of such taxes." 
SEC. 490. EFFECTIVE DATE OF PART VIII. 
Except as otherwise expressly provided in this part, the amend-
ments made by this part shall take effect on the first day of the first 
month which begins more than 10 days after the date of the enactment 
of this Act. 
538 
PUBLIC LAW 183—OCT. 20. 1951 
[65 
STAT. 
58 Stat. 61. 
26U. S. C. §1650 
Ante, p. 627. 
Supra. 
63 Stat. 422. 
26 U. S. C. § 3465. 
55 Stat. 714. 
26U. S. C. §3466. 
65 Stat. 714. 
26U.8.C.§3465(a). 
ATite, p. 484. 
65 Stat. 721. 
26U.S.C.§3469(b). 
Part IX—Miscellaneous Excise Tax Amendments 
SEC. 491. REDUCTION OF TAX ON TELEGRAPH DISPATCHES. 
(a) REDUCTION OF TAX.—The table contained in section 1650 (relat-
ing to the war tax rates of certain miscellaneous taxes) is hereby 
amended by striking out the following: 
Domestic Telegraph, Cable, or 
Radio Dispatches. 
16 per centum 
25 per centum 
"3465 (a) (1) (B) (insofar 
as it relates to domestic 
telegraph, cable, and 
radio dispatches). 
(b) EFFECTIVE DATE.—Subject to the provisions of subsection (c), 
the amendments made by this section shall apply with respect to 
amounts paid on or after the rate reduction date (as defined in sub-
section (d)) for services rendered on or after such date. 
(c) AMOUNTS PAm PURSUANT TO BILLS RENDERED.—^The amend-
ments made by this section shall not apply with respect to amounts 
paid pursuant to bills rendered prior to the rate reduction date. 
In 
the case of amounts paid pursuant to bills rendered on or after the 
rate reduction date for services for which no previous bill was ren-
dered, the amendments made by this section shall apply except with 
respect to such services as were rendered more than 2 months before 
such date. 
In the case of services rendered more than 2 months before 
such date the provisions of sections 1650 and 3465 of the Internal 
Revenue Code in effect at the time such services were rendered shall be 
applicable to the amounts paid for such services. 
(d) RATE REDUCTION DATE.—^For the purposes of this section the 
term "rate reduction date" means the first day of the first month which 
begins more than 10 days after the date of the enactment of this Act. 
SEC. 492. EXEMPTION OF CERTAIN OVERSEAS TELEPHONE CALLS 
FROM THE TAX ON TELEPHONE FACILITIES. 
(a) TELEPHONE CALLS FROM MEMBERS OF ARMED FORCES IN COMBAT 
ZONES.—Section 3466 is amended by redesignating subsection (c) 
thereof as subsection " ( d ) " and by inserting after subsection (b) the 
following new subsection: 
"(c) No tax shall be imposed under section 3465 (a) (1) (A) upon 
any payment received for any telephone or radio telephone message 
which originates within a combat zone, as defined in section 22 (b) 
(13), from a member of the Armed Forces of the United States per-
forming service in such combat zone, as determined under such section, 
provided a certificate, setting forth such facts as the Secretary may by 
regulations prescribe, is furnished to the person receiving such 
payment." 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall apply to amounts paid on or after the first day of the first month 
which begins more than 10 days after the date of enactment of this 
Act for telephone or radio telephone messages made on or after such 
date. 
SEC. 493. EXEMPTION OF FISHING TRIPS FROM TAX ON TRANSPOR-
TATION. 
(a) EXEMPTION.—Section 3469 (b) (relating to exemption of cer-
tain trips from the tax of transportation of persons) is hereby amended 
by striking out "or to amounts" and inserting in lieu thereof "to 
amounts", and by inserting after the words "one month or less" the 
following ", or to amounts paid for transportation by boat for the 
purpose of fishing from such boat". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to amounts paid on or after the first day of the first month 
which begins more than 10 days after the date of the enactment of this 
Act for transportation on or after such first day. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
539 
SEC. 494. TAX ON TRANSPORTATION OF PERSONS. 
(a) EXEMPTION OF CERTAIN FOREIGN TRAVEL,—Section 3469 (a) 
of the Internal Revenue Code (relating to tax on transportation of 26u*'s"c^\'3469(a) 
persons) is hereby amended by striking out the third sentence and 
inserting in lieu of such sentence tlie following: "In the case of 
transportation by water on a vessel which makes one or more inter-
mediate stops at ports within the United States, Canada, or Mexico 
on a voyage which begins or ends in the United States and ends or 
begins outside the northern portion of the Western Hemisphere, no 
part of such transportation shall be considered for the purposes of 
the preceding sentence to be from any port within the United States, 
Canada, or Mexico to any other such port if the vessel in stopping 
at any such intermediate port is not authorized both to discharge and 
to take on passengers. A port or station within Newfoundland shall 
not, for the purposes of the preceding two sentences, be considered 
as a port or station within Canada." 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to amounts paid on or after the first day of the first 
month which begins more than ten days after the date of the enact-
ment of this Act for transportation on or after such first day. 
SEC. 495. TRANSPORTATION OF MATERIAL EXCAVATED IN THE COURSE 
OF CONSTRUCTION WORK. 
(a) AMENDMENT OF SECTION 3475.—Section 3475 (relating to tax 
2
6 u^s ^a § 3
4
7
5
. 
on transportation of property) is hereby amended by adding at the 
end thereof the following: "The tax imposed by this section shall 
not apply to the transportation of earth, rock, or other material 
excavated within the boundaries of, and in the course of, a construc-
tion project and transported to any place within, or adjacent to, the 
boundaries of such project." The determination as to the applica-
bility of the tax imposed by section 3475 in the case of the transporta-
tion of any excavated material, other than transportation to which the 
amendment made by this subsection applies, shall be made as if this 
subsection had not been enacted and without inferences drawn from 
the fact that the amendment made by this subsection is not expressly 
applicable to the transportation of such other excavated material. 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to amounts paid on or after the first day of the first month 
which begins more than ten days after the date of enactment of this 
Act for transportation on or after such first day. 
SEC. 496. ARTICLES FROM FOREIGN TRADE ZONES. 
(a) IMPORTED ARTICLES.—Upon all articles specified in section 2000 
(c) (2), 2800 (a), 3030 (a), or 3150 (a) of the Internal Kevenue Code ^^fj^'^ PP- ^21,524-
on which the internal revenue taxes imposed by law have been deter-
mined, pursuant to section 3 of the Act of June 18, 1934, as amended 
(U. S. C , title 19, sec. 81c), prior to the effective date of the rates of 
^s stat. m. 
tax imposed on such articles by this Act, and which on or after such 
effective date are brought from foreign trade zones into customs terri-
tory of the United States, there shall be levied, assessed, collected, and 
paid on such articles, in addition to the tax so determined, an addi-
tional tax at rates equal to the increases in rates of tax made appli-
cable to such articles by this Act. The tax imposed by this subsection 
vshall be collected, paid, and accounted for at the same time and in 
the same manner as tax on such article is collected, paid, and accounted 
for when brought from the foreign trade zone into the customs 
territory, 
(b) PREVIOUSLY TAXPAID ARTICLES.—Upon all taxpaid articles 
specified in section 2000 (c) (2), 2800 (a), 3030 (a), or 3150 (a) of 
the Internal Revenue Code which have been taken into foreign trade 
540 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
zones from the customs territory of the United States and placed 
under the supervision of the collector of customs, pursuant to the 
second proviso of section 3 of the Act of June 18, 1934, as amended 
48 Stat. 999. 
(XJ. S. C, title 19, sec. 81c), prior to the effective date of the rates of 
tax imposed on such articles by this Act, and which on or after such 
effective date are (without loss of identity) returned from foreign 
trade zones to customs territory of the United States, there shall be 
levied, assessed, collected, and paid on such articles an additional tax 
at rates equal to the increases in rates of tax made applicable to such 
articles by this Act, The tax imposed by this subsection on any article 
shall be collected, paid, and accounted for at the same time and in 
the same manner as if such article had been taken into the foreign 
trade zone free of tax. 
SEC. 497. REFUNDS ON ARTICLES FROM FOREIGN TRADE ZONES. 
(a) IMPORTED ARTICLES.—^With respect to any article specified in 
section 2000 (c) (2), 2800 (a), 3030 (a), or 3150 (a) of the Internal 
52^"*'' ^^' ^^^' ^^*" Revenue Code on which internal revenue tax at the applicable rate 
prescribed in such section has been determined pursuant to section 3 
4
8 Stat. 999. 
of the Act of June 18, 1934, as amended (U. S. C , title 19, sec. 81c), 
prior to April 1, 1954, and which on or after such date is brought 
from a foreign trade zone into customs territory of the United States 
and the tax so determined thereon paid, there shall be credited or 
refunded (without interest) to the taxpayer, subject to such regula-
tions as may be prescribed by the Secretary, an amount equal to the 
difference between the tax so paid and the amount of tax made appli-
cable to such articles on and after April 1, 1954, if claim for such 
credit or refund is filed with the Secretary within thirty days after 
payment of the tax. 
(b) PREVIOUSLY TAXPAID ARTICLES.—With respect to any article 
specified in section 2000 (c) (2), 2800 (a), 3030 (a), or 3150 (a) of the 
Internal Revenue Code, upon which internal revenue tax (including 
floor stocks tax) at the applicable rate prescribed in such section has 
been paid, and which was taken into a foreign trade zone from the 
customs territory of the United States and placed under the super-
vision of the collector of customs, pursuant to the second proviso of 
section 3 of the Act of June 18, 1934, as amended (U. S. C, title 19, 
sec. 81c), prior to April 1, 1954, and which on or after such date 
is (without loss of identity) returned from a foreign trade zone to 
customs territory of the United States, there shall be credited or 
refunded (without interest) to the person so returning such article, 
subject to such regulations as may be prescribed by the Secretary, an 
amount equal to the difference between the tax so paid and the amount 
of tax made applicable to such articles on and after April 1, 1954, 
if claim for such credit or refund is filed with the Secretary within 
thirty days after the return of the article to customs territory. 
SEC. 498. TAX REFUNDS ON SPIRITS LOST IN FLOODS OF 1951. 
(a) AUTHORIZATION.—The Secretary of the Treasury is authorized 
and directed to make refund, or allow credit in the case of a distiller 
or rectifier if he so elects, in the amount of the internal-revenue tax and 
customs duties paid on spirits previously withdrawn, and lost, or 
rendered unmarketable, by reason of the floods of 1951 wh*ile such 
spirits were in the possession oi (1) the person originally paying such 
tax or such tax and duty on such spirits, (2) a rectifier for rectification 
or for bottling, or which have been used in the process of rectification, 
under Government supervision as provided by law and regulations, or 
(3) a wholesale or retail liquor dealer, all hereafter referred to as the 
possessor or possessors. The refunds and credits authorized by this 
section may be made to (1) any of the possessors, except a retail liquor 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
541 
dealer, or (2) to any distiller, rectifier, importer, or wholesale liquor 
dealer who replaced for the possessor the full equivalent of the distilled 
spirits so destroyed or rendered unmarketable, without compensation, 
remuneration, payment, or credit of any kind in respect of the tax, 
or tax and duty on such distilled spirits. A claim for the amount of 
such tax, or such tax and duty, shall be filed with the Secretary of the 
Treasury within ninety days from the date of enactment of this Act. 
The claimant shall furnish proof to the Secretary's satisfaction that 
(1) the internal-revenue tax on such spirits, or the tax and duty if 
imported, was fully paid, (2) such spirits were lost, or rendered 
unmarketable, by reason of damage sustained as the result of the 
aforesaid flood conditions, (3) claimant was not indemnified by any 
valid claim of insurance or otherwise against loss of the tax (or tax 
and duty if imported) paid on the spirits, and (4) in those cases where 
applicable, that the claimant has replaced for the possessor the full 
equivalent of the distilled spirits so destroyed or rendered unmarket-
able, without compensation, remuneration, payment, or credit of any 
kind in respect of the tax, or tax and duty, on such distilled spirits. 
(b) DESTRUCTION OF SPIRITS.—^When the Secretary, pursuant to this 
section, makes refund, or allows credit, in the amount of the tax, or 
tax and duty, on spirits rendered unmarketable, such spirits shall be 
destroyed under the supervision of the Secretary. 
(c) CREDIT.—^Where credit is allowed to a distiller or rectifier for 
the internal-revenue tax previously paid as aforesaid, the Secretary 
is authorized and directed to provide for the issuance of stamps to 
cover the tax on spirits subsequently withdrawn or rectified to the 
extent of the credit so allowed. 
(d) REGULATIONS.—^The Secretary is authorized to make such rules 
and regulations as may be necessary to carry out the provisions of 
this section. 
TITLE V—EXCESS PROFITS TAX 
SEC. 501. MAXIMUM TAX FOR NEW CORPORATIONS. 
Section 430 (relating to impositon of tax) is hereby amended as 
26U.^s/aH30 
follows : 
Ante, p. 473. 
(1) By adding at the end of subsection (a) thereof, as amended 
by section 121 of this Act, the following: 
^»'«' P- *
^
*
-
"(3) in the case of a corporation for which an amount is deter-
mined for the taxable year under subsection (e), the amount 
determined under such subsection." 
(2) By redesi^ating subsection (e) as subsection (f); and 
(3) By inserting after subsection (d) the following new sub-
section : 
"(e) NEW CORPORATIONS.— 
"(1) ALTERNATIVE AMOUNT.—In the case of a taxpayer which 
commenced business after July 1, 1945, and whose fifth taxable 
year ends after June 30,1950, the amount referred to in subsection 
(a) (3) shall be— 
supra. 
" (A) If the taxable year is the first or second taxable year 
of the taxpayer, an amount equal to 5 per centum of the excess 
profits net income for the taxable year, except that if the 
excess profits net income exceeds $300,000, the amount shall 
be the sum of $15,000 plus the amount determined under sub-
paragraph (E) of this paragraph. 
"(B) If the taxable year is the third taxable year of the 
taxpayer, an amount equal to 8 per centum of the excess 
profits net income for the taxable year, except that if the 
excess profits net income exceeds $300,000, the amount shall 
542 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
be the sum of $24,000 plus the amount determined under 
subparagraph (E) of this paragraph. 
"(C) If the taxable year is the fourth taxable year of the 
taxpayer, an amount equal to 11 per centum of the excess 
profits net income for the taxable year, except that if the 
excess profits net income exceeds $300,000, the amount shall 
be the sum of $33,000 plus the amount determined under 
subparagraph (E) of this paragraph. 
"(D) If the taxable year is the fifth taxable year of the 
taxpayer, an amount equal to 14 per centum of the excess 
profits net income for the taxable year, except that if the 
excess profits net income exceeds $300,000, the amount shall 
be the sum of $42,000 plus the amount determined under sub-
paragraph (E) of this paragraph. 
"(E) The amount determined under this subparagraph 
shall be— 
"(i) if the taxable year ends before April 1, 1951, an 
amount equal to 15 per centum of the excess of the excess 
profits net income for the taxable year over $300,000. 
" (ii) if the taxable year begins on January 1,1951, and 
ends on December 31,1951, an amount equal to iTi/^ per 
centum of the excess of the excess profits net income for 
the taxable year over $300,000. 
"(iii) if the taxable year (other than a taxable year 
described in clause (ii)) ends after March 31, 1951, an 
amount equal to 18 per centum of the excess of the excess 
profits net income for the taxable year over $300,000. 
" (2) FIRST FIVE TAXABLE YEARS.—For the purpose of this sub-
section— 
"(A) The taxable year in which the taxpayer commenced 
business and the first, second, third, and fourth succeeding 
taxable years shall be considered its first, second, third, fourth, 
and fifth taxable years, respectively. 
"(B) The taxpayer shall be considered to have been in 
existence and to have had taxable years for any period during 
which it or any corporation described in any clause of this 
subparagraph was in existence, and the taxpayer shall be con-
sidered to have commenced business oti the earliest date on 
which it or any such corporation commenced business: 
"(i) Any corporation which during or prior to the 
taxable year was a party with the taxpayer to a trans-
^u.liJ'H45(g). 
action described in section 445 (g) (2) (A), (B),or (C), 
determined as if the date 'July 1, 1945' were substituted 
for the date 'December 1,1950* in section 445 (g) (2) (C). 
"(ii) Any corporation if a group of not more than 
four persons who control the taxpayer at any time during 
the taxable year also controlled such corporation at any 
time during the period beginning twelve months preced-
ing their acquisition of control of the taxpayer and end-
ing with the close of the taxable year; but only if at any 
time during such period (and while such persons con-
trolled such corporation) such corporation was engaged 
in a trade or business substantially similar to the trade or 
business of the taxpayer during the taxable year. For the 
purpose of this clause, the term 'control' means the own-
ership of more than 50 per centum of the total combined 
voting power of all classes of stock entitled to vote, or 
more than 50 per centum of the total value of shares of 
all classes of stock. A person shall not be considered a 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
543 
member of the group referred to in this clause unless 
during the period referred to in this clause he owns stock 
in such corporation at a time when the members of the 
group control such corporation and he owns stock in the 
taxpayer at a time when the members of the group con-
trol the taxpayer. 
For the purpose of this clause, the 
ownership of stock shall be determined in accordance 
with the provisions of section 503, except that construe- 
leu.^l". c^§soa 
tive ownership under section 503 (a) (2) shall be deter-
mined only with respect to the individual's spouse and 
minor children. 
"(iii) In case the taxpayer during or prior to the tax-
able year was a purchasing corporation (as defined in 
part IV), the selling corporation (as defined in such 
Po«t,p.55&. 
part) whose properties were acquired in the part IV 
transaction; but this clause shall not apply unless for 
the taxable year or for any preceding taxable year the 
conditions of paragraphs (1), (2), and (3) of section 
474 (c) were satisfied with respect to such transaction. 
Post, p. 5^. 
"(iv) Any corporation which, under regulations pre-
scribed by the Secretary, is determined by one or more 
additional applications of clauses (i) to (iii) to stand 
indirectly in the same relation to the taxpayer as though 
such corporation were described in any such clause. 
If as of the beginning of December 1,1950, the adjusted basis 
for determining gain upon sale or exchange of the aggregate 
assets theretofore acquired by the taxpayer in transactions 
described in clauses (i) and (iii) (or acquired in the ordinary 
course of business in replacement of such assets) and held by 
it at such time constituted less than 20 per centum of the 
adjusted basis for determining gain upon sale or exchange of 
its total assets held at such time, then transactions described 
in such clauses occurring prior to such date shall be disre-
garded in determining the date as of which the taxpayer shall 
be considered to have commenced business. 
"(3) LIMITATION.—The provisions of paragraph (1) of this 
subsection shall not apply to a taxpayer which derives more than 
50 per centum of its gross income (determined without regard to 
dividends and without regard to gains from sales or exchanges of 
capital assets) for the taxable year from contracts and subcon-
tracts to which the provisions of title I of the Renegotiation Act 
of 1951 (or the provisions of any prior renegotiation act) are Ante.p.y. 
applicable." 
SEC. 502. PAYMENTS FROM FOREIGN SOURCES FOR TECHNICAL 
ASSISTANCE, ETC. 
(a) AMENDMENT OF SECTION 433 (a) (1).—Section 433 (a) (1) 
^^^^'g"^^- 
4
3
3 
(relating to excess profits net income for taxable years ending after (a) (i)." 
June 30, 1950) is hereby amended by adding at the end thereof the 
PS'P.'549.' 
following new subparagraph: 
"(B) Payments From Foreign Sources for Technical 
Assistance, Etc.—^In the case of a domestic corporation which 
renders to a related foreign corporation technical assistance, 
engineering services, scientific assistance, or similar services 
(such services or assistance being related to the production 
or improvement of products of the type manufactured by such 
domestic corporation), there shall be excluded the remunera-
tion for such services or assistance if such remuneration con-
stitutes income derived from sources without the United 
76100 O - 52 (PT. I) - 37 
544 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
States. Any deductions in connection with or properly alloc-
able to the rendering of such services or assistance shall not 
be allowed. For the purpose of this subparagraph, a foreign 
corporation shall be considered to be a 'related foreign cor-
poration' if the domestic corporation at the time it renders 
such services or assistance owns 10 per centum or more of the 
outstanding stock of such foreign corporation." 
2
6 u.^s. c.'1'433 (b). 
(^) AMENDMENT OF SECTION 433 (b).—Section 433 (b) (relating to 
Post, p. 649. 
taxable years in base period) is hereby amended by adding at the end 
thereof the following new paragraph: 
"(16) 
PAYMENTS FROM FOREIGN SO' .CES FOR TECHNICAL ASSIST-
ANCE, Evc.—In the case of a domestic corporation which rendered 
to a related foreign corporation technical assistance, engineering 
services, scientific assistance, or similar services (such services or 
assistance being related to the production or improvement of 
products of the type manufactured by such domestic corpora-
tion) , there shall be excluded the remuneration for such services 
or assistance if such remuneration constituted income derived from 
sources without the United States. Any deductions in connection 
with or properly allocable to the rendering of such services or 
assistance shall not be allowed. For the purpose of this para-
graph, a foreign corporation shall be considered to be a 'related 
foreign corporation' if the domestic corporation at the time it 
rendered such services or assistance owned 10 per centum or more 
of the outstanding stock of such foreign corporation." 
SEC. 503. AVERAGE BASE PERIOD NET INCOME IN CASE OF CERTAIN 
FISCAL YEAR TAXPAYERS. 
2
6 u^s o*§'435 (d) 
Section 435 (d) (relating to the general average method for the 
computation of average base period net income) is hereby amended 
by adding at the end thereof the following: "For the purpose of the 
computations under this subsection in the case of a taxpayer whose first 
taxable year under this subchapter is a taxable year which either 
began before January 1, 1950, or was preceded by a taxable year 
beginning before January 1, 1950, and ending after March 31, 1950, 
there shall be substituted for the base period of the taxpayer the period 
of 48 consecutive months ending March 31, 1950, if such substitution 
produces a lesser tax under this subchapter for the taxable year for 
which the tax is being computed. 
In computing the average base 
period net income for such substituted period, the excess profits net 
income for January, February, and March of 1950 shall be computed 
by use of the 'weighted excess profits net income', as defined in section 
435 (e) (2) (E), for the taxable year in which such months fall." 
SEC. 
5
0
4
. 
AVERAGE 
BASE 
PERIOD 
NET 
INCOME—ALTERNATIVE 
BASED 
ON 
GROWTH 
IN 
CASE 
OF 
NEW 
CORPORATIONS. 
64sm.^n49. 
^
^
^ 
(aj GENERAL RULE.—Section 435 (e) (1) (relating to the alterna-
(e) (1).' • 
tive Dased on growth) is hereby amended by striking out the phrase 
"the beginning of its base period" and inserting in lieu thereof the 
following: "the end of its base period." 
26u^s c^M62 (c) 
('^) AMENDMENT OF PART II.—Section 462 (c) (relating to the use 
' by an acquiring corporation in a Part I I transaction of an alterna-
tive average base period net income based on growth) is hereby 
amended as follows: 
(1) By amending paragraph (1) thereof to read as follows: 
26U^s o^§'46i(a). 
"(1) ^^ the casc of a transaction described in section 461 (a), 
other than a transaction described in section 461 (a) (1) (E),— 
"(A) The acquiring corporation shall not be denied the 
right to determine whether it is eligible for the benefits of 
2
6 u% c^5"435 (e) 
scctiou 435 (e) without reference to the recomputation of its 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
545 
excess profits net income provided for in section 462 (b) where 
^ ^.^g- c ^
§
"
4
6
2 (b) 
the transaction occurred on or after Jul^ 1, 1950, but it shall 
be denied such right where the transaction occurred prior to 
July 1,1950. 
"(B) Where, immediately prior to the date of the transac-
tion, the acquiring corporation and all the component cor-
porations (other than a corporation created incident to such 
transaction) met the requirements of section 435 (e) (1) (A) 
(i), and, in case the transaction occurred on or after July 1, 
26u*^s' c
*
§
"
4
3
5 (ei 
1950, had commenced business prior to the beginning of its 
base period (determined without reference to section 461 
(d)), the acquiring corporation shall be entitled to compute 
|^u*^g' c^f^ei (di 
its average base period net income under section 435 (e) with 
reference to the recomputation of its excess profits net-income 
provided for in section 462 (b) if the tests of section 435 (e) 
are satisfied. 
For that purpose, the acquiring corporation 
shall combine with its total payroll and its total gross receipts 
for that portion of its base period which preceded such trans-
action the total payroll and total gross receipts of such com-
ponent corporations for that portion of such period and it 
shall combine with its net sales for that portion of the period 
prior to January 1,1951, which preceded such transaction the 
net sales of such component corporations for that portion of 
such period. 
The allocation oi payroll and gross receipts 
amounts of a component corporation to any such portion of 
such period shall be made in accordance with the rules pro-
vided in section 435 (e) (4) and (5). For purposes of quali-
fying under section 435 (e) (1) (A) (i) (relating to total 
assets of the taxpayer), such acquiring corporation shall com-
bine its total assets on the date specified in section 435 (e) 
(1) (A) (i) with the total assets of each component corpora-
tion on such date. 
The Secretary shall prescribe by regula-
tions such rules as may be necessary to insure that such 
combined total gross receipts do not reflect a duplication for 
purposes of this section. 
"(C) Where, immediately prior to the date of the transac-
tion, either the acquiring corporation or one or more com-
ponent corporations (other than a corporation created inci-
dent to such transaction) did not meet the requirements of 
section 435 (e) (1) (A) (i), or, in case the transaction 
occurred on or after July 1, 1950, had not commenced busi-
ness prior to the beginning of its base period (determined 
without reference to section 461 (d)), the acquiring cor-
poration shall not be entitled to compute its average base 
period net income under secti'^n 435 (e) with reference to 
the recomputation of its excess profits net income provided 
for in section 462 (b). In any such case, where the transac-
tion occurred on or after July 1, 1950, the monthly excess 
profits net income of the corporation entitled to the benefits 
of section 435 (e) for any month of the acquiring corpora-
tion's base period shall be, for purposes of the recomputation 
provided for in section 462 (b), one-twelfth of the average 
base period net income to which such corporation was entitled 
under section 435 (e), and such monthly excess profits net 
income shall be in lieu of the monthly excess profits net income 
determined under paragraphs 
(1) and 
(2) of section 
462 (b)." 
(2) By striking from the second sentence of paragraph (2) 
^^u^*g"^; 
thereof the words: "had commenced business prior to the begin- (c) (2).* 
' *
^
^ 
546 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
ning of its base period (determined without reference to section 
^ v l 0.1-461 (d). 
461 (d)) and". 
(3) By striking from paragraph (3) thereof the words "which 
had commenced business prior to the beginning of its base 
period" and by inserting in lieu thereof the following: "which 
had commenced business prior to the end of its base period". 
SEC. 
5
0
5
. 
AVERAGE 
BASE 
PERIOD 
NET 
INCOME—ALTERNATIVE 
BASED 
ON 
GROWTH. 
26U.^s.c*§'435(e). 
Section 435 (e) (2) (G) (relating to the alternative based on 
growth) is hereby amended by striking out the word "only'*. 
SEC. 506. ADJUSTMENTS FOR CHANGES IN INADMISSIBLE ASSETS IN 
CASE OF BANKS. 
26u.*s.c^§'435(g). 
(^) AMENDMENT OF SECTION 435 (g).—^Section 435 (g) (relating to 
net capital addition or reduction) is hereby amended by redesignating 
paragraph (8) as paragraph (11) and by adding after paragraph (7) 
the following new paragraph: 
" (8) 
ADJUSTMENTS FOR CHANGES IN INADMISSIBLE ASSETS IN CASE 
Ante, p. 491. 
Q^ BANKS.—^In the case of a bank (as defined in section 104)— 
"(A) If the increase in total assets for the taxable year 
exceeds the net capital addition computed without regard to 
the adjustment under paragraph (1) for an increase in inad-
missible assets, then tne net capital addition for the taxable 
year shall not be less than the excess of— 
"(i) the amount determined under the first sentence of 
paragraph (1) over 
"(ii) an amount which bears the same ratio to the 
increase in inadmissible assets for the taxable year, deter-
mined under paragraph (6), as the amount computed 
under such first sentence Dears to the increase in total 
assets for the taxable year. 
"(B) If the decrease in total assets for the taxable year 
exceeds the net capital reduction computed without regard to 
the adjustment under paragraph (2) for a decrease in inad-
missible assets, then the net capital reduction for the taxable 
year shall not be less than the excess of— 
"(i) the amount determined under the first sentence 
of paragraph (2) over 
"(ii) an amount which bears the same ratio to the 
decrease in inadmissible assets for the taxable year, deter-
mined under paragraph (5), as the amount computed 
under such first sentence bears to the decrease in total 
assets for the taxable year. 
For the purpose of this paragraph, the increase or decrease in total 
assets for the taxable year shall be computed in the same manner 
as the increase or decrease in inadmissible assets for the taxable 
year is computed under paragraph (5), except that such computa-
tions shall be made with respect to all assets, whether admissible 
6
4 sta| mh ^^ 
oj, inadmissible assets as defined in section 440." 
^W.p. 502. • 
(b) AMENDMENT OF SECTION 438.—Section 438 (relating to new cap-
Kat. 1
1
5
9
. 
ital credit changes) is hereby amended by adding after subsection (f) 
2
6 u. s. c. § 438. 
(^Q following new subsection: 
"(g) 
ADJUSTMENTS FOR INADMISSIBLE ASSETS IN CASE OF BANKS.— 
Ante, p. 491. 
jj^ ^j^g ^.g^gg ^f j^ fcank (as defined in section 104), if the increase in total 
assets for the taxable year (determined in the manner provided in the 
^^p^'^- 
last sentence of section 435 (g) (8)) exceeds the net new capital addi-
tion computed without regard to the adjustment under subsection (b) 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
547 
for an increase in inadmissible assets, then the net new capital addition 
for the taxable year shall not be less than the excess of the amount 
determined under the first sentence of subsection (b) over an amount 
^n**Q" n^LQO ,
^
>
,
x 
I
'
l
l 
,-1 
•
l
i
t
' 
•
• 
T
'
-
l
i 
r 
1 
^ U . B . O . j 4d8 (D). 
which bears the same ratio to the increase m inadmissible assets for the 
taxable year, determined under section 435 (g) (5), as the amount 
computed under such first sentence bears to such increase in total assets 
for the taxable year." 
(c) AMENDMENT OF SECTION 435 (f).—Section 435 (f) (relating to 
^gtat. \\h2. 
capital additions in base period) is hereby amended as follows : 
(1) By inserting immediately after the word "reduced" in para-
graph (1) thereof the following: "(but not below zero)". 
(2) By adding at the end of paragraph (1) thereof the follow-
"For special rule in the case of banks, see paragraph (6)." 
(3) By renumbering paragraph (6) as paragraph (7), and by 
adding immediately after paragraph (5) the following new para-
graph : 
"(6) YEARLY BASE PERIOD CAPITAL OF BANKS.—In the case of a 
bank (as defined in section 104), the yearly base period capital for 
^"<«' P- *8I-
any taxable year shall be determined as follows: 
"(A) A tentative yearly base period capital shall be com-
puted under paragraph (1) without regard to paragraph (1) 
(A). 
"(B) The tentative yearly base period capital so deter-
mined shall be reduced hy the amount determined under sec-
tion 440 (b) (relating to inadmissible assets). For the pur- 
26u.*s. ".^§'440(b) 
pose of this subparagraph, the computation under section 
440 (b) shall include only the daily amounts (described in 
such section) for the first day of such taxable year.** 
(d) EFFECTIVE DATE OF SUBSECTION (c) (3).—The amendment made 
by subsection (c) (3) (adding a new paragraph (6) to section 435 (f)) 
^"^''"• 
shall be applicable with respect to taxable years beginning on or after 
the date of the enactment of this Act, and, at the election of the tax 
payer made in accordance with regulations prescribed by the Secre-
tary, shall be applicable to all taxable years ending after June 30, 
1950. 
SEC. 507. DECREASE IN INADMISSIBLE ASSETS. 
Section 435 (g) (relating to net capital addition or reduction) is 
^u."!. 0.^435(g). 
hereby amended as follows: 
Ami, p. 546. 
(a) By adding at the end of paragraph (1) thereof the following: 
"For further adjustment with respect to the amount determined 
under the preceding provisions of this paragraph, see paragraph 
(9)." 
(b) By adding immediately after paragraph (8), as added by sec-
tion 506 of this Act, the following new paragraphs: 
^'^'' P- ^• 
"(9) 
DECREASE IN INADMISSIBLE ASSETS.— 
"(A) Except as otherwise provided in subparagraph (B) 
(relating to banks), the excess of the amount computed under 
paragraph (2) (A) or (B), whichever is applicable to the 
taxpayer (whether or not any amount is determined under the 
first sentence of paragraph (2)), over the amount, if any, 
computed under the first sentence of paragraph (2) shall be 
considered the net capital addition for the taxable year or 
shall be added to the net capital addition otherwise deter-
mined under paragraph (1), as the case may be. The amount 
of the excess so determined shall be subject to the exceptions 
and limitations provided in paragraph (10). 
Po«<, P.MS. 
Infra. 
548 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
Arue,p.i9i. 
"(B) In the case of a bank (as defined in section 104), the 
computation under subparagraph (A) shall be made by 
substituting for the amount computed under paragraph (2) 
(A) or (B) whichever of the following amounts is the lesser: 
"(i) An amount which bears the same ratio to the 
decrease in inadmissible assets as the sum of the equity 
26u.*8 c""437(c). 
Capital (as defined in section 437 (c)) and the daily 
6
4 Stat. 1161. 
borrowed capital (as defined in section 439 (b)), each 
26U.S.C. 5439(b). 
determined as of the first day of the first taxable year 
ending after June 30, 1950, bears to the total assets as 
of the beginning of such day; 
"(ii) If paragraph (8) (B) is applicable, the amount 
Ante, p. 646. 
computed uuder paragraph (8) (B) (ii). 
"(10) 
EXCEPTIONS AND LIMITATIONS FOR THE PURPOSE OF PARA-
Anu,p.M7. 
GRAPH (9).—For the purpose of paragraph (9)— 
"(A) The adjustment to the decrease in inadmissible assets 
26^u**'s"^'. 5 4
3
5 
required under subparagraph (B) of paragraph (2) shall not 
(g)(2)." ' 
be greater than 25 per centum of the excess of the net capital 
reduction computed under the first sentence of paragraph (2) 
(and computed without regard to the percentage limitations 
in paragraph (4) (C) and (E)) over the net capital reduc-
tion computed under such sentence without regard to par-
agraph (4) (C) and (E). 
"(B) The amount determined under paragraph (9) shall 
not be greater than the excess of the increase in operating 
assets for the taxable year over the net capital addition 
(determined without regard to paragraph (9) and deter-
mined without regard to the limitation to 75 per centum pro-
vided in paragraph (3) (C) and paragraph (4) (C) and 
(E)). 
For the purpose of the preceding sentence, the 
increase in operating assets for the taxable year shall be 
determined in the same manner as the increase in inadmissible 
assets for the taxable year is determined under paragraph 
(5), 
For the purpose of such determination, the term 
'operating assets' means— 
"(i) property used in the taxpayer's trade or business 
Ante, p. BOO. 
within the meaning of section 117 (j) (1) except that 
such property need not be held more than six months, 
and 
"(ii) stock in trade or other property of a kind which 
would properly be includible in the inventory of the 
taxpayer if owned at the close of the taxable year, and 
property held by the taxpayer primarily for sale to 
customers in the ordinary course of the taxpayer's trade 
or business, 
except any such assets which constitute inadmissible assets, 
stock, securities, or intangible property (such intangible pro-
perty not being limited to the property described in section 
64 Stat. 1163. 
V i i 7 - \ \ 
'^ 
26 U. S. C. J 441 (i). 
^^^K^))' 
_ 
. 
, 
Ante,p.m. 
"(C) The amount determmed under paragraph (9) shall 
be subject to reduction to the extent that the Secretary deter-
mines that the increase in operating assets is a result, directly 
or indirectly, of an increase in indebtedness of the taxpayer 
(other 
than 
indebtedness 
which 
constitutes 
borrowed 
capital)." 
26 U. S. C. § 23 (b). 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
549 
SEC 508. ELECTION WITH RESPECT TO CERTAIN INADMISSIBLE 
ASSETS. 
(a) AMENDMENT OF SECTION 440.—Section 440 (relating to admis- 
^^u^*s"c' § 4
4
o 
sible and inadmissible assets) is hereby amended by adding at the Arue,'p.m.' 
end thereof the following new subsection: 
"(c) 
TREATMENT OF GOVERNMENT OBLIGATIONS AS ADMISSIBLE 
ASSETS.—If the taxpayer elects for any taxable year, in accordance 
with regulations prescribed by the Secretary, to increase its excess 
profits net income by an amount equal to the amount by which the 
interest received or accrued during the taxable year on Government 
obligations exceeds the sum of— 
"(1) the amount of interest paid or accrued during such year 
which is not allowed as a deduction under section- 23 (b), and 
ss ^stat. ^2.^ 
"(2) the amount of the adjustments required for the taxable 
year under section 22 (o) (relating to adjustment for certain 
^ufl"."". §22(0). 
bond premiums), but not in excess of the amount of interest 
received or accrued during the taxable year on Government obliga-
tions to which such section is applicable, 
then for the taxable year for which the election is made the term 
'admissible assets' shall include Government obligations, and the term 
'inadmissible assets' shall not include Government obligations. 
For 
the purpose of applying section 435 to the taxable year for which the 
^ u.**s.^c*§ 435. 
election is made, Government obligations shall not be considered 'inad- 
Ante,' pjp. 5
4
4
-
5
4
8
! 
missible assets' in determining original inadmissible assets or yearly 663.°*'' ^^' ^^^' ^^' 
base period capital. As used in this subsection the term 'Government 
obligations' means obligations described in section 22 (b) (4) any 
2
6 IT.*8/C. j 2
2 (b) 
part of the interest from which is excludible from gross income or (4). 
allowable as a credit against net income; but such term shall include 
only such obligations as in the hands of the taxpayer are property 
described in section 117 (a) (1) (A). For the purpose of determining 
^u.*s.c.^ii7(a). 
the excess profits credit for a taxable year for which the election is 
Ante,p.m. 
made, the excess profits net income under section 433 (b) for any tax- 
^u*g-0^5433(b) 
able year shall include the amount by which the interest received or 
Ante, p. 5
4
4
; infra. ' 
accrued during such taxable year on Government obligations exceeds 
the amount of interest paid or accrued during such year which is not 
allowed as a deduction under section 23 (b) and, if the taxable year 
26U*s/c. § 23(b) 
ends after June 30, 1950, the amount with respect to such year 
described in paragraph (2)." 
(b) AMENDMENT OF SECTTION 433 (a) (1).—Section 433 (a) (relat- 
|^*lc.1433(a). 
ing to adjustments in excess profits net income for the taxable year) 
Ante, pp.'sos, 543! 
is hereby amended by adding the following new subparagraph at the 
end thereof: 
"(S) Interest on Certain Government Obligations.—For 
adjustment in the case of a taxpayer making an election 
provided in section 440 (c), relating to dealers in certain 
*"^''"-
Government obligations, see section 440 (c).*' 
(c) AMENDMENT OF SECTION 433 (b).—Section 433 (b) (relating to 
^"'«' P- ^• 
adjustments in excess profits net income for taxable years in base 
period) is hereby amended by adding at the end thereof the follow-
ing new paragraph: 
"(17) 
INTEREST ON CERTAIN GOVERNMENT OBLIGATIONS.—^For 
adjustment in the case of a taxpayer making an election pro-
vided in section 440 (c), relating to dealers in certain Govern- 
"^"P™-
ment obligations, see section 440 (c)." 
SEC 509. ALTERNATIVE AVERAGE BASE PERIOD NET INCOME. 
(a) AMENDMENT OF SECTION 442.—Section 442 (relating to abnorm- 
^ ^u**s!^c; § 442. 
alities during the base period) is hereby amended as follows: 
5 5 0 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
(1) By inserting at the end of subsection (a) thereof the 
following: 
"If such taxpayer is also entitled to the benefits of subsection (h), the 
taxpayer's average base period net income determined under this sec-
tion shall be the amount computed under subsection (c) or (d), which-
ever is applicable to the taxpayer, or the amount computed under 
subsection (h), whichever results in the lesser tax under this sub-
chapter for the taxable year. In the case of any other taxpayer entitled 
to the benefits of subsection (h), the taxpayer's average base period 
net income determined under this section shall be the amount com-
puted under subsection (h)." 
(2) By striking out "determined under this section" in sub-
section^ (c) and (d) thereof each place it occurs and inserting in 
lieu thereof the following: "computed under this subsection". 
(3) By inserting after "subsection (c) (2)" in subsection (e) 
(1) thereof the following: "and subsection (h)". 
(4) By redesignating subsections (h) and (i) thereof as (i) 
and (j), respectively, and by inserting after subsection (g) there-
of the following new subsection: 
"(h) 
ALTERNATIVE AVERAGE BASE PERIOD NET INCOME.— 
"(1) ELIGIBILITY REQUIREMENTS.—^A taxpayer 
which com-
menced business on or before the first day of its base period shall 
be entitled to the benefits of this subsection if— 
"(A) the aggregate excess profits net income (if any) for 
the 12 months selected under paragraph (2) (B) is less than 
36 per centum of one-half of the aggregate excess profits net 
income for the 24 months remaining under such paragraph; 
and 
"(B) normal production, output, or operation was inter-
rupted or diminished because of the occurrence, within 12 
months preceding (i) the first day of the 12-month period 
selected under paragraph (2) (B) (i),or (ii) the first day of 
any period of 6 or more consecutive months selected under 
paragraph (2) (B) (ii), of events unusual or peculiar in the 
experience of such taxpayer. 
This subsection shall have no application unless the taxpayer has 
an aggregate excess profits net income for the 24 months remaining 
under paragraph (2) (B). 
"(2) COMPUTATION.—If the taxpayer is entitled to the benefits 
X- 
of this subsection, its average base period net income computed 
under this subsection shall be computed as follows: 
"(A) By determining under subsection (b) the period sub-
»i,.. . ject to adjustment under this section. For the purposes of 
subparagraph (B) but not for the purposes of paragraph 
(1) (B) such period shall be considered a period of 36 
consecutive months. 
"(B) By selecting from such period whichever of the fol-
,, 
;,s lowing 12 months results in the higher remaining aggregate 
• 
excess profits net income— 
"(i) the 12 consecutive months the elimination of 
which produces the highest remaining aggregate excess 
profits net income, or 
" (ii) the 12 months which remain after retaining the 
24 consecutive months which produce the highest remain-
ing aggregate excess profits net income. 
"(C) By computing for each of the 12 months selected 
under subparagraph (B) a substitute excess profits net income 
computed under subsection (e). 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
551 
"(D) By computing the sum of— 
"(i) the aggregate of the substitute excess profits net 
income, as determined under subparagraph (C), for the 
12 months selected under subparagraph (B), but the 
amount computed under this clause shall not exceed one-
half of the aggregate excess profits net income for the 
24 months remaining under subparagraph (B), and 
" (ii) the aggregate of the excess profits net income for 
each of the 24 months remaining under subparagraph 
(B), computed in the manner provided by the second 
sentence of section 435 (d) (1). 
^"*«' P- ^• 
"(E) By dividing by three the amount ascertained under 
subparagraph (D). 
"(3) AGGREGATE EXCESS PROFITS NET INCOME.—The 'aggregate 
excess profits net income' for any period shall be computed for the 
purposes of this subsection in the same manner as under sub-
section (b)." 
(b) 
TECHNICAL AMENDMENTS.— 
(1) Section 435 (f) (3) (relating to capital addition in the 
^11**1/^^^5435(0 
base period) is hereby amended by inserting immediately after (3). 
the words "under section 442 (c) (1)", wherever appearing there-
in, the following: "or under section 442 (h)". 
6
4 ^tf^^ig.^^n^i. 
(2) Section 461 (relating to definitions for purposes of part 
(D, 442(h)." 
II) is hereby amended by inserting at the end thereof the follow- 
^°*'' P- ^^^' 
ing new subsection: 
"(g) APPLICATION OF SECTION 442 (h).—For the purpose of this part, 
the reference to section 442 (c) in any section in this part shall be 
deemed a reference to section 442 (c) or (h)." 
SEC. 510. DEFINITION OF TOTAL ASSETS FOR PURPOSES OF SECTIONS 
442-446. 
The first sentence of section 442 (f) (relating to definition of total 
^f/^g "^§442(0 
assets) is hereby amended to read as follows: "For the purposes of 
this section, the taxpayer's total assets for any day shall be determined 
as of the end of such day and shall be an amount equal to the excess 
of— 
"(1) the sum of the cash and the property (other than cash, 
inadmissible assets, and loans to members of a controlled group 
as defined in section 435 (f) (4)) held by the taxpayer in good 
ae u^s c^^§435 (
O 
faith for the purposes of the business, over 
(4). " ' " 
"(2) the amount of any indebtedness (other than borrowed 
capital as defined in section 439 (b) (1)^ to a member of a con-
trolled group (as defined in section 435 (g) (6)) which includes 
26u*s*c"§^§is^fbi 
the taxpayer." 
(D, 4
3
5 (g)'(6). 
SEC. 
5
1
1
. 
AVERAGE 
BASE 
PERIOD 
NET 
INCOME—CHANGE 
IN 
PRODUCTS 
OR 
SERVICES. 
Section 443 (f) (relating to change in products or services) is hereby 
^ u*s "^''5 4
4
3 (f) 
amended to read as follows: 
"(f) 
RULES FOR APPLICATION OF SECTION.— 
"(1) The benefits of this section shall not be allowed unless 
the taxpayer makes application therefor in accordance with sec-
tion 447 (e). 
64 Stat. 1174. 
"(2) If after the end of the base period of the taxpayer there 
was a substantial change in the products produced by the tax-
E
ayer, such change shall, for the purpose of subsection (a) (1), 
e considered to have occurred on the last day of its base period 
if the taxpayer prior to July 1,1950, commenced the construction 
of the facilities for the production of such new product, and if 
26 U. S. C. § 447 (e),, 
53 Stat. 58. 
26 U. S. C. § 141. 
552 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
such construction and the production of such new product is in 
furtherance of a course of action to which the taxpayer (or a cor-
poration with which the taxpayer has the privilege under section 
141 of filing a consolidated return for its first taxable year under 
this subchapter) was committed prior to the close of the base 
period by contract with another person, which contract granted 
a license, franchise, or similar right essential for the production 
of such new product." 
SEC. 
5
1
2
. 
AVERAGE 
BASE 
PERIOD 
NET 
INCOME—NEW 
CORPORATION. 
2
6 u.^s.c^§'445(c). 
Section 445 (c) (relating to total assets for first three years of 
new corporation) is hereby amended by adding at the end thereof 
the following new sentence: "For the purpose of this subsection, the 
net capital addition or reduction shall be computed without regard 
to the limitation to 75 per centum provided in section 435 (g) (3) 
^Ts'c: 
1435. (C) and section 435 (g) (4) (C) ancf (E)." 
SEC. 513. EXCESS PROFITS CREDIT—REGULATED PUBLIC UTIUTIES. 
26 u.^8."!^§ 4
4
8 (c) 
Section 448 (c) (3) (relating to regulated public utilities) is hereby 
(3). 
amended to read as follows: 
"(3) 6 per centum in the case of a corporation engaged as a 
common carrier (A) in the furnishing or sale of transportation 
by railroad, if subject to the jurisdiction of the Interstate Com-
merce Commission, or (B) in the furnishing or sale of transpor-
tation of oil or other petroleum products (including shale oil) by 
pipe line, if subject to the jurisdiction of the Interstate Commerce 
Commission or if the rates for such furnishing or sale are subject 
to the jurisdiction of a public service orpublic utility commission 
or other similar body of the District of Columbia or of any State." 
SEC. 514. CONSOLIDATED RETURNS OF REGULATED PUBLIC UTILITIES. 
2
6 u.^s. W.\u» (e). 
Section 448 (e) (relating to consolidated returns of regulated public 
utilities) is hereby amended by adding at the end thereof the following 
new sentence: "For purposes of filing a consolidated return with its 
railroad lessee corporation, a railroad lessor corporation described in 
26U.^8 ci'434(d). sectiou 434 (d) (without regard to the requirement of payment of 
the lessor's taxes b^ the lessee) shall be considered a corporation 
described in subsection (c) (3)." 
SEC. 515. NONTAXABLE INCOME FROM CERTAIN MINING PROPERTIES. 
26u^s c^\"453 
Section 453 (relating to nontaxable income from exempt excess 
output) is hereby amended as follows: 
(a) By amending the first sentence of subsection (a) (13) thereof 
to read as follows: "The term 'unit net income' means the amount 
ascertained by dividing the net income (computed with the allowance 
for depletion) from the coal, ore, sulphur, potash, metallurgical grade 
limestone, chemical grade limestone, or timber recovered from the 
mineral property, or timber block, as the case may be, during the 
taxable year by the number of units of such mineral or timber recov-
ered from such property in such year." 
(b) By inserting immediately after the words "coal mining prop-
erty" in subsection (b) (2) thereof the following: ", or of a sulphur, 
potash, metallurgical grade limestone, or chemical grade limestone 
mineral property,". 
(c) By striking out so much of subsection (b) (4) as precedes the 
second sentence and inserting in lieu thereof the following: 
"(4) 
CERTAIN PROPERTIES NOT IN OPERATION DURING NORMAL 
PERIOD.—For any taxable year, the nontaxable income from 
exempt excess output of a metal or coal mining property, of a 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
553 
sulphur, potash, metallurgical grade limestone, or chemical grade 
limestone mineral property, of a timber block, or of a natural gas 
property, which was not in operation during the normal period, 
shall be an amount equal to one-third of the net income for such 
taxable year (computed with the allowance for depletion) from 
such property or timber block, as the case may be." 
SEC. 516. TRANSITION FROM WAR PRODUCTION AND INCREASE IN 
PEACETIME CAPACITY. 
(a) I N GENERAL.—Part I of subchapter D of chapter 1 is hereby 
%v%^W.'imet 
amended by adding at the end thereof a new section to read as follows: »
«
?
• 
"SEC. 459. MISCELLANEOUS PROVISIONS. 
"(a) AVERAGE BASE PERIOD NET INCOME—TRANSITION FROM WAR 
PRODUCTION AND INCREASE IN PEACETIME CAPACITY.—^In the case of a 
taxpayer which commenced business before January 1,1940, and since 
such date has engaged primarily in manufacturing, the taxpayer's 
average base period net income determined under this subsection shall 
be the amount computed under section 435 (e) (2) (G) (i) and (ii) 
|^u.^s. C^HSS (e). 
if— 
Ante, p. 546. 
"(1) The adjusted basis of the taxpayer's total facilities (as 
defined in section 444 (d)) as of the beginning of its base period 
^u*.^s'. c.^§'444 (di. 
(when added to the total facilities at such time of all corporations 
with which the taxpayer has the privilege under section 141 of 
filing a consolidated return for its first taxable year under this 
subchapter) did not exceed $10,000,000; 
"(2) The basis (unadjusted) of the taxpayer's total facilities 
(as defined in section 444 (d)) at the close of its base period was 
250 per centum or more of the basis (unadjusted) of its total 
facilities at the beginning of its base period; 
"(3) The percentage of the taxpayer's aggregate gross income 
which was from contracts with the United States and related sub-
contracts was (A) at least 70 per centum for the period compris-
ing all taxable years beginning after December 31, 1941, and end-
ing before January 1, 1946, (B) less than 20 per centum for the 
period comprising all taxable years ending after December 31, 
1945, and before January 1,1950, and (C) less than 20 per centum 
for the period comprising all taxable years ending after December 
31,1949, and beginning before July 1,1950; and 
"(4) The average monthly excess profits net income of the tax-
payer (computed in the manner provided in section 443 (e)) for— 
^ ^**|- "^1-443 (g) 
"(A) the period comprising all taxable years ending with 
or within the last 24 months of its base period, and 
"(B) the last taxable year ending before the first day of 
its base period, 
are each 300 per centum or more of the average monthly excess 
profits net income (so computed) of the taxpayer for the period 
comprising all taxable years ending with or within the first 24 
months of its base period." 
(b) TECHNICAL AMENDMENTS.—Section 435 (c) (relating to deter- 
^ f%- ^c^^^^^ (c) 
mination of average base period net income) is hereby amended as 
follows: 
(1) By inserting immediately after "445 or 446," the follow-
ing : "or any subsection of section 459,". 
^^P^"-
(2) By inserting immediately after "or under such section" 
the following: "or subsection". 
554 
PUBLIC LAW 183—OCT. 20, 1951 
[66 STAT. 
SEC. 517. BASE PERIOD CATASTROPHE. 
Ante, p. 653. 
Section 459, as added by section 516 of this Act, is hereby amended 
by adding after subsection (a) thereof the following new subsection: 
"(b) 
BASE PERIOD CATASTROPHE.— 
"(1) EuGiBiLiTr REQUIREMENTS.—^A taxpayer shall be entitled 
to the benefits of this subsection only if it was engaged throughout 
its base period primarily in manufacturing and it— 
"(A) the taxpayer suffered during the last thirty-six 
months of its base period a catastrophe by fire, storm, explo-
sion, or other casualty which destroyed or rendered inopera-
tive a production facility constituting a complete plant or 
plants having in the hands of the taxpayer immediately prior 
to the catastrophe an adjusted basis equal to 15 per centum 
or more of the adjusted basis of all the taxpayer's production 
facilities at such time; 
"(B) as a result of such catastrophe the taxpayer's normal 
production or operation was substantially interrupted for a 
period of more than twelve consecutive months; and 
"(C) the taxpayer, prior to the end of its base period, 
replaced such production facility with a production facility 
which at the end of its base period had in its hands an 
adjusted basis not less than the adjusted basis immediately 
prior to the catastrophe of the production facility destroyed 
or rendered inoperative. 
"(2) COMPUTATION.—^The taxpayer's base period net income 
determined under this subsection shall be the amount computed 
under subparagraph (A) or the amount computed under subpara-
graph (B), whichever results in the lesser tax under this sub-
chapter for the taxable year for which the tax is being computed: 
Ante, p. 544. 
« (A) The amouut computed under section 435 (d) by sub-
stituting for the excess profits net income for each month in 
the taxable year in which the catastrophe described in para-
graph (1) occurred an amount equal to the aggregate, divided 
by the number of months in the base period preceding such 
taxable year, of the excess profits net income for each month 
2
6 u*s c
^
^
s 4
3
5 (d) 
(computed under section 435 (d) ( l ) ) i n the base period pre-
(1). 
• • 
ceding such taxable year. The average base period net income 
computed under this subparagraph shall, for the purpose of 
section 435 (a) (1) (B),be considered jan average base period 
net income determined under section 435 (d). 
"(B) The amount computed under section 435 (e) (2) (G) 
64Stat. 1151. 
/ ; \ strtA (\\\ " 
26 U.S.C.§ 436(e). 
\^) 
* " ^ 
^ " / * 
Anu, p. 546. 
gj,^ gjg^ CONSOUDATION OF NEWSPAPERS. 
Ante, p. 553. 
Sectiou 459, as added by section 516 and 517 of this Act, is hereby 
amended by adding after subsection (b) thereof the following new 
subsection: 
"(c) CONSOLIDATION OP NEWSPAPER OPERATIONS.—In the case of a 
taxpayer engaged primarily in the newspaper publishing business 
in its last taxable year ending before July 1,1950, if— 
"(1) After the close of the first half of the base period of the 
taxpayer and prior to July 1, 1950, the taxpayer consolidated its 
mechanical, circulation, advertising, and accounting operations 
in connection with its newspaper publishing business with such 
operations of another corporation engaged in the newspaper pub-
lishing business in the same area; and 
" (2) The taxpayer establishes to the satisfaction of the Secre-
tary that, during the period beginning with the consolidation 
66 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
555 
and ending with the close of the first taxable year beginning after 
the consolidation, such consolidation resulted in substantial 
reductions in the amounts which would otherwise have been paid 
or incurred as expenses in the conduct of the operations described 
in paragraph (1); and either 
"(3) The total deductions of the taxpayer under section 23, 
computed without regard to section 23 (s) and (bb), for the first stft.S!' ^^' ^''' ^' 
taxable year beginning after such consolidation were not in excess 
2
6 u. s. c. § 23. 
of 80 per centum of the average of such deductions for the two 
taxable years of the taxpayer next preceding the taxable year in 
which such operations were consolidated; or 
"(4) The excess profits net income of the taxpayer, computed 
as provided in section 433 (b), for the first taxable year of the 
2
6
U
*
.
*
8
'
. c.*§'433(b). 
taxpayer beginning after such consolidation was 125 per centum 
^«<«. PP- 5
4
4
, 549. 
or more of the amount determined under section 435 (d) (4) ; 
^ u^l; c*§'435 (d). 
the taxpayer's average base period net income determined under this 
subsection shall be an amount computed under section 435 (d) plus 
an amount equal to the excess of the average of the amounts paid or 
incurred as expenses in the conduct of the operations described in 
paragraph (1) during the two taxable years of the taxpayer next 
preceding the taxable year in which such operations were consolidated 
over such amounts paid or incurred during the first taxable year of the 
taxpayer beginning after such consolidation. 
In determining such 
excess amount proper adjustment shall be made for increase in labor 
costs and newsprint following such consolidation. 
Proper adjust-
ment shall also be made for any case in which a taxable year referred 
to in this subsection is a period of less than twelve months. This sub-
section shall not be applicable to any taxable year of the taxpayer 
unless the consolidation described in paragraph (1) was continued 
throughout such taxable year." 
SEC. 519. TELEVISION BROADCASTING COMPANIES. 
Section 459, as added by sections 516 to 518 of this Act, is hereby 
^^^' PP- ^^' ^^^ 
amended by adding after subsection (c) thereof the following new 
subsections: 
"(d) 
TELEVISION BROADCASTING COMPANIES.— 
"(1) I N GENERAL.—In the case of a taxpayer engaged in the 
business of television broadcasting throughout a period beginning 
before January 1, 1951, and ending with the close of the taxable 
year, the taxpayer's average base period net income determined 
under this subsection shall be the amount computed under para-
graph (2) or (3), whichever is applicable. 
"(2) 
I F ENGAGED IN TELEVISION BROADCASTING AT CLOSE OF BASE 
PERIOD,—^If the taxpayer was engaged in the business of television 
broadcasting at the close of its base period, the average base 
period net income computed under this paragraph shall be com-
puted as follows: 
"(A) If the taxpayer was engaged during its base period 
in any business or businesses other than television broadcast-
ing, by computing the average base period net income under 
section 435 (d) for such other business or businesses (deter- 
26u^s" C^HSS(d) 
mined without regard to income, deductions, losses, or other 
items attributable to the television broadcasting business). 
"(B) By multiplying such part of its total assets (as 
defined in section 442 (f)), for the last day of its base period, 
^"''' P- ^5^-
as was attributable to the television broadcasting business 
by— 
556 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
"(i) the base period rate of return determined under 
2
6 ui^s.c^l447(c). 
section 447 (c) for the industry classification which 
includes radio broadcasting, or 
"(ii) if the taxpayer was engaged during its base 
period in the business of radio broadcasting, its indi-
vidual rate of return computed under paragraph (4), 
whichever rate of return produces the greater average base 
period net income under this subsection. If the amount com-
puted under this subparagraph is computed by the use of the 
rate of return specified in clause (i), the amount so computed 
shall be reduced by an amount equal to such portion of the 
total interest paid or incurred by the taxpayer, for the period 
of 12 months following the close of its base period, as is 
attributable to its television broadcasting business. 
"(C) By adding the amount computed under subparagraph 
(B) to the amount, if any, computed under subparagraph 
(A). 
"(3) 
COMMENCING TELEVISION BROADCASTING AFTER BASE PERIOD 
AND BEFORE 1951.—If the taxpayer acquires its television broad-
casting business after the close of its base period and before 
January 1, 1951, the average base period net income computed 
under this paragraph shall be computed as provided in paragraph 
(2), except that— 
"(A) the applicable rate of return under paragraph (2) 
(B) shall be multiplied by such part of its total assets (as 
Ante,p.551. 
defined in section 442 (f)), for the last day of the calendar 
month in which it first engaged in such business, as was 
attributable to such business, and 
"(B) the reduction specified in the last sentence of para-
graph (2) (B) shall, if applicable, be equal to such portion 
of the total interest paid or incurred by the taxpayer, for the 
period of 12 months following the month in which it first 
engaged in such business, as is attributable to such business. 
"(4) INDIVIDUAL RATE OF RETURN.—The individual rate of 
return shall be computed as follows: 
"(A) By determining the amount of the taxpayer's total 
assets (as defined in section 442 (f) attributable to the busi-
ness of radio broadcasting for the last day of each month in 
its base period. 
"(B) By computing the aggregate of the amounts ascer-
tained under subparagraph (A) and dividing by 48. 
"(C) By computing for each month in the base period the 
excess profits net income of the radio broadcasting business 
(determined without regard to income, deductions, losses, or 
other items attributable to any other business), by adding 
such amounts for all of the months in the base period, and by 
dividing by 4. 
"(D) By dividing the amount computed under subpara-
graph (C) by the amount computed under subparagraph (B). 
" (5) KuiiEs F
O
R APPLICATION OF SUBSECTION.— 
2
6 u 1" ci'435 (a) 
" (^) ^^^ *^^ purpose of section 435 (a) (1) (B), an aver-
age base period net income determined under this subsection 
shall be considered an average base period net income deter-
26u*sci"435(d) 
mined under section 435 ( d ) ; but, in computing the base 
Ante,p.5ii. 
period capital addition under section 435 (f), the computa-
Anu, p. 547. 
tions uuder such section shall be adjusted, under regulations 
prescribed by the Secretary, so as to exclude therefrom items 
attributable to the television broadcasting business. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
557 
"(B) If any part of the total assets referred to in para-
graph (2) (B) or paragraph (3) (A), whichever is appli-
cable, were acquired, directly or indirectly, through the use 
of assets attributable at any time during the base period to a 
business of the taxpayer other than television broadcasting, 
the amount determined under paragraph (2) (A) shall be 
properly adjusted by eliminating from the excess profits net 
income (computed for the purpose of paragraph (2) (A)) for 
each month prior to such acquisition such portion thereof as 
is attributable to the assets used, directly or indirectly, for 
such acquisition. For the purpose of this subparagraph, the 
excess profits net income for any month shall be attributed 
to such assets on the basis of the ratio, as of the beginning of 
the day of the acquisition, of such assets to total assets (as 
defined in section 442 (f)) determined without regard to 
^«<«. P-SSI-
assets attributable to the television broadcasting business. 
"(C) The Secretary shall by regulations prescribe rules for 
the application of this subsection, including rules for the com-
putation of the taxpayer's net capital addition or reduction. 
"(6) APPLICATION OF PART II.—The Secretary shall prescribe 
regulations for the application of Part II for the purpose of this 
^ |*^*g ^^^-j ^gj ^
^ 
subsection in the case of an acquiring corporation or a component seg. 
corporation in a transaction described in section 461 (a) which 
2
6 u.^s'. C^HGI (a;. 
occurred prior to January 1, 1951. 
"(e) BASIS OF ASSETS.—For the purposes of this section, any refer-
ence to the adjusted basis of property or to the basis (unadjusted) of 
property means the adjusted basis or the basis (unadjusted), as the case 
may be, for determining gain upon sale or exchange." 
SEC. 520. INCREASE IN CAPACITY FOR PRODUCTION OR OPERATION. 
Section 444 (f) (relating to increase in capacity for production or 
26u*^sc.^'444(f). 
operation) is hereby amended to read as follows: 
"(f) 
RULES FOR APPLICATION OF SECTION.— 
"(1) The benefits of this section shall not be allowed unless the 
taxpayer makes application therefor in accordance with section 
447 / p \ 
64 Stat. n74. 
**• 
\^)' 
. 
» 
26U.S.C.§ 447(e). 
" (2) If, during its first taxable year ending after June 30,1950, 
the taxpayer completed construction of (including the installation 
of the machinery or equipment for use in) a factory building or 
other manufacturing establishment, such factory building or other 
manufacturing establishment and such machinery or equipment 
shall, for the purpose of determining whether there is an increase 
in capacity under the provisions of subsection (b), be considered 
to have been added to its total facilities on the last day of its base 
period if— 
"(A) the taxpayer, prior to the end of its base period, had 
completed construction work representing more than 40 per 
centum of the total cost of construction of such factory build-
ing or other manufacturing establishment, and 
"(B) the completion of such factory building or other man-
ufacturing establishment was in pursuance of a plan to which 
the taxpayer was committed prior to the end of its base period. 
This paragraph shall not apply in determining the amount of the 
taxpayer's total assets for the purpose of subsection (c)." 
SEC. 521. EXCESS PROFITS CREDIT BASED ON INCOME IN CONNEC-
TION WITH CERTAIN TAXABLE ACQUISITIONS. 
(a) GENERAL RULE.—Subchapter D (relating to the excess profits 
tax) of chapter 1 is hereby amended by inserting immediately follow-
ing section 472 the following new part: 
^ ^u^*s!^c; § 472. 
64 Stat. 1191. 
26U. S. C. §461(a). 
558 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
"Part IV—Excess Profits Credit Based on Income in Connection 
With 
Certain 
Taxable 
Acquisitions 
Occurring 
Prior 
to 
December 1, 1950. 
"SEC. 474. EXCESS PROFITS CREDIT BASED ON INCOME—CERTAIN 
TAXABLE ACQUISITIONS. 
" (a) DEFTNITIONS.—^For the purpose of this part— 
"(1) PURCHASING CORPOBATION.—The term 'purchasing corpo-
ration' means a corporation which, before December 1, 1950, 
acquired— 
"(A) In a transaction other than a transaction described 
in section 461 (a), substantially all of the properties (other 
than cash) of another corporation, of a partnership, or of a 
business owned by a sole proprietorship; or 
"(B) Properties of another corporation or of a partnership 
if (i) such properties constituted, immediately prior to the 
acquisition, substantially all of the properties (other than 
cash) of one or more separate businesses of such other cor-
poration or such partnership, (ii) such other corporation or 
such partnership was engaged in one or more separate busi-
nesses other than those described in clause (i), and (iii) sub-
stantially all of the properties (other than cash) of such other 
corporation or such partnership were acquired, in further-
ance of a single plan of complete liquidation for such other 
corporation or such partnership, by the purchasing corpora-
tion, and by one or more other persons, in transactions other 
than transactions described in section 461 (a). 
"(2) SEIXING CORPORATION.—The term 'selling corporation' 
means a corporation, a partnership, or a business owned by a sole 
proprietorship, as the case may be, properties of which were 
acquired by a purchasing corporation in a transaction described 
in paragraph (1). 
"(3) PART IV TRANSACTION.—^The term 'part IV transaction' 
means a transaction described in paragraph (1). 
"(b) 
AVERAGE BASE PERIOD NET INCOME OF PURCHASING COR-
PORATION.—The average base period net income of a purchasing cor-
poration, if computed with reference to this part, shall be determined 
under section 435 (d). 
The average base period net income under 
2
6 u^s c*§'435 (d) 
sectiou 435 (d) of a purchasing corporation shall be determined by 
Arue, p. 5
4
4
. 
' computing its excess profits net income either with or without refer-
ence to this part, whichever produces the lesser tax under this sub-
chapter for the taxable year for which the tax is being computed. 
If 
computed with reference to this part, the excess profits net income of a 
purchasing corporation for any month of its base period shall be its 
excess profits net income (or deficit therein), computed without refer-
ence to this part, and increased or decreased, as the case may be, by the 
addition or reduction resulting from including— 
"(1) In the case of a transaction described in subsection (a) 
(1) (A), the excess profits net income (or deficit therein) for 
such month of the selling corporation, or 
"(2) In the case of a transaction described in subsection (a) 
(1) (B), the excess profits net income (or deficit therein) for 
such month of the selling corporation properly attributable to the 
business or businesses acquired by the purchasing corporation 
and properly allocable to such purchasing corporation. 
The excess profits net income of a purchasing corporation for any 
month, recomputed as provided in the previous sentence, shall not be 
less than zero. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
559 
" (c) LIMITATIONS.—This part shall apply only if each of the follow-
ing conditions is satisfied: 
"(1) The selling corporation (A) did not, after the part l y 
transaction (or the last transaction described in subsection (a) 
Ante, p. 558. 
(1) (B)), continue any business activities other than those inci-
dent to its complete liquidation, and (B) within a reasonable time 
after ceasing business activities, completely liquidated in a trans-
action other than a transaction described in section 461 (a), and 
^u^s C^M6I O
O 
ceased existence. 
"(2) During so much of the base period of the purchasing cor-
poration and of the period thereafter as preceded the part IV 
transaction, the properties acquired in the part IV transaction 
were substantially all of the properties (other than cash) which 
were used, or which in the ordinary course of business replaced 
properties used, by the selling corporation (or by a component 
corporation, as defined in section 461 (b), of such selling corpora-
tion) in the production of the excess profits net income (or deficit 
therein) which under subsection (b) increases or decreases the 
excess profits net income of the purchasing corporation. For the 
purpose of this paragraph, if a business in the hands of both the 
selling corporation and the purchasing corporation was operated 
under a substantially identical franchise or license, granted by 
the same person, such franchise or license shall be deemed acquired 
by the purchasing corporation from the selling corporation. 
"(3) The business or businesses acquired in the part IV trans-
action (including the properties so acquired or properties in 
replacement thereof) were operated by the purchasing corpora-
tion from the date of such transaction to the end of the taxable 
year or were transferred during the taxable year by the purchasing 
corporation in a part I I transaction to which the provisions of 
^^^^g^Jf^j ^gj ^
^ 
section 462 (b) (4) are applicable. 
m. 
"(d) SPECIAL R U L E S . - 
^"''P-^^-
"(1) For the purpose of subsection (a) (1), the properties of 
a selling corporation shall be considered to have been acquired by 
a purchasing corporation only if acquired from— 
"(A) such selling corporation, or 
"(B) persons who received the properties upon the 
liquidation of such selling corporation and who forthwith 
transferred such properties to the purchasing corporation in a 
transaction other than a transaction described in section 
461 (a). 
"(2) The computations required by this part in the case of a 
selling corporation which is a partnership or a business owned 
by a sole proprietorship shall be made, under regulations pre-
scribed by the Secretary, as if such partnership or such business 
owned by a sole proprietorship had been a corporation. 
"(3) In no case shall more than 100 per centum of the excess 
pronts net income (or deficit therein) for any month of a selling 
corporation be allocated to the purchasing corporation or, in the 
case of transactions described in subsection (a) (1) ( B ) , t o the 
several persons (or to any one or more of such persons) receiving 
the properties of such selling corporation in such transactions. 
"(e) 
SUCCESSIVE TRANSACTIONS.— 
" ( 1 ) 
PART IV TRANSACTION FOLLOWING PART IV TRANSACTION.— 
In the case of a selling corporation which was a purchasing cor-
poration in a previous part IV transaction, or which acquired 
properties of a purchasing corporation in a transaction to which 
section 462 (b) (4) is applicable, the computations under this part 
Post, p. 56i. 
76100 O - 52 (PT. I) - 38 
560 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
64 Stat. 1191. 
26U. S. C. §461(a). 
Post, pp. 561, 562. 
64 Stat. 1208. 
26 U. S. C. § 464. 
Post, p. 562. 
64 Stat. 1206. 
26 U. S. C. § 463. 
Post, p. 562. 
64 Stat. 1203. 
26 U. 8. C. § 462 (i). 
Post, p. 561. 
64 Stat. 1204. 
26 U. S. C. 
0) (1). 
64 Stat. 1192. 
26U. S. C. § 461(c). 
64 Stat. 1194. 
26U.S.C.§ 462(b). 
64 Stat. 1149-1170. 
26 U. S. C. §§ 435, 
442-446. 
64 Stat. 1149. 
26 U. S. C. §435 (a) 
(3). 
Ante, p. 558. 
with respect to the selling corporation shall be made without 
regard to the previous part IV transaction. 
"(2) 
PART IV TRANSACTION FOLLOWING PART II TRANSACTION.— 
Subject to the provisions of paragraph (1), in the case of a selling 
corporation which was an acquiring corporation as defined in 
section 461 (a) in a previous transaction, its excess profits net 
income (or deficit therein) which increases or decreases the excess 
profits net income (or deficit therein) of the purchasing corpora-
tion under subsection (b) (1) or (2), and its capital changes which 
are taken into account under this part in determining the capital 
changes of the purchasing corporation, shall be determined with 
the application of the rules of part I I to such selling corporation 
with respect to the part I I transaction. 
"(3) 
PART II TRANSACTION FOLLOWING PART IV TRANSACTION.— 
For i-ules applicable in the case of a part II transaction following 
a part IV transaction, see sections 462 (b) (4), 463 (c), and 
464 (c). 
"(f) REGULATIONS.—The Secretary shall by regulations prescribe 
rules for the application of this part. 
Such regulations shall include 
the following rules: 
"(1) BASE PERIOD CAPITAL ADDITION.—^Rules (consistent with 
the principles of section 464) for the determination of the base 
period capital addition of the purchasing corporation by reference 
to the capital changes of the selling corporation and of the pur-
chasing corporation. 
"(2) NET CAPITAL ADDITION OR REDUCTION.—Rules (consistent 
with the principles of section 463) for the determination of the 
net capital addition or reduction of the purchasing corporation by 
reference to the capital changes of the selling corporation and of 
the purchasing corporation. 
"(3) EXCESS PROFITS NET INCOME.—Rules (consistent with the 
principles of section 462 (i)) for the determination of the amount 
of excess profits net income (or deficit therein) of the selling cor-
poration attributable to the business or businesses acquired by a 
purchasing corporation in a transaction described in subsection 
(a) (1) (B) and properly allocable to such purchasing corpo-
ration. 
"(4) DUPLICATION.—Rules for the application under this part 
of the principles of section 462 (j) (1) and the other provisions 
of part II relating to the prevention of duplication, 
"(5) EXCESS PROFITS CREDIT.—In the event that the part IV 
transaction occurred in a taxable year of the purchasing corpora-
tion which ended after June 30, 1950, rules (consistent with the 
principles of section 462 (j) (2)) for the determination of the 
excess profits credit of such corporation for the year in which the 
transaction occurred. 
Such rules shall not include the principles of section 461 (c) (relating 
to the excess profits credit of the component corporation), of section 
462 (b) (2) (relating to constructive excess profits net income for 
months during which a corporation was not in existence), of section 
462 (1) (relating to minimum average base period net income in the 
case of certain acquiring corporations), or of such other provisions 
of part II as relate to sections 435 (e), 442, 443, 444, 445, or 446." 
(b) 
TECHNICAL AMENDMENTS.— 
(1) Section 435 (a) (3) (relating to amount of excess profits 
credit) is hereby amended by inserting before the period at the 
end thereof the following: ", and in the case of certain taxable 
acquisitions, see part IV of this subchapter". 
65 STAT.] 
PUBLIC LAW 183~OCT. 20, 1951 
561 
II) is 
new 
(2) Section 461 (relating to definitions under part 
amended by inserting at the end thereof the followir^ 
subsections: 
"(g) 
COMPONENT CORPORATION W H I C H WAS A PURCHASING COR-
PORATION IN A PREVIOUS TRANSACTION.—See section 462 (b) (4) for 
rules applicable if the component corporation was a purchasing corpo-
ration (as defined in part IV) in a previous part IV transaction, or if 
(as an acquiring corporation in a previous part I I transaction) it was 
subject to the provisions of section 462 (b) (4). 
"(h) 
DEFINITION OF PART I I TRANSACTION.—For the purpose of 
this subchapter, the term 'part I I transaction' means a transaction 
described in section 461 (a)." 
(3) Section 462 (b) (relating to the method of recomputing the 
excess profits net income of an acquiring corporation under part 
II) is hereby amended by adding at the end thereof the following 
new paragraph: 
" (4) If the average base period net income of the acquiring cor-
poration is determined under section 435 (d) with reference to 
this subsection, and if the provisions of section 474 (b) (relating 
to the computation of excess profits net income in the case of cer-
tain purchasing corporations) were applicable to the component 
corporation immediately prior to the part I I transaction (or 
would have been applicable if such part II transaction had 
occurred in a taxable year of the component corporation ending 
after June 30,1950), then the excess profits net income (or deficit 
therein) of the component corporation shall, for the purpose of 
this subsection, be determined with the application of the pro-
visions of section 474 (b). For the purpose of this paragraph, if 
a component corporation was an acquiring corporation in a pre-
vious part I I transaction and, immediately prior to the later part 
I I transaction, the provisions of this paragraph were applicable to 
such component corporation, its excess profits net income (or 
deficit therein) shall be determined with the application of the 
provisions of the preceding sentence. This paragraph shall be 
applicable to an acquiring corporation only if— 
"(A) the properties acquired by the acquiring corporation 
from the component corporation include substantially all of 
the properties (other than cash), or properties acquired in the 
ordinary course of business in the replacement of properties, 
which the component corporation acquired either from the 
selling corporation in the part IV transaction or from a pre-
vious component corporation subject (immediately prior to 
such acquisition) to the provisions of this paragraph; 
"(B) the business or businesses acquired by the acquiring 
corporation were operated by the acquiring corporation from 
the date of such transaction to the end of the taxable year or 
were transferred during the taxable year by the acquiring 
corporation in a part I I transaction to which the provisions of 
this paragraph are applicable; and 
"(C) in the event that the part I I transaction is one de-
scribed in section 461 (a) (1) (E), the provisions of section 
462 (i) (6) are satisfied." 
(4) Section 462 (i) (6) (relating to allocation rules in the case 
of transactions described in section 461 (a) (1) ( E ) ) i s hereby (C 
amended by adding at the end thereof the following: "Notwith-
standing the provisions of paragraph (1), if an acquiring cor-
poration in a transaction described in section 461 (a) (1) (E) 
determines its average base period net income under section 435 
64 Stat. 1191. 
26 U. S. C. § 461. 
Ante, p. 551. 
Infra. 
Ante, p. 558. 
64 
Stat. 1191. 
26U. 
S. C. §461 (a). 
64 
Stat. 1149. 
26U.S.C.§ 
435(d). 
Ante, p. 
544. 
Ante, p. 
558. 
64 
Stat. 1191. 
26 U. S. 
C. 
§ 461 (a) 
(1) (E). 
64 
Stat. 1203. 
26 U. S. 
C. 
§ 462 (
i
) 
562 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
64 Stat. 1149. 
26U.S.C.§ 435(d). 
Ante, p. 561. 
64 Stat. 1206. 
26 U. S. C. § 463. 
Ante, p. 561. 
64 Stat. 1208. 
26 U. S. C. § 464. 
64 Stat. 1177. 
26 U. 8. C. § 450 (b) 
(1). 
Ante, p. 547. 
(d) by recomputing its excess profits net income under the provi-
sions of section 462 (b) (4), the amount of the component cor-
poration's excess profits net income for any month which shall 
be taken into account by the acquiring corporation shall be such 
portion of the component corporation s excess profits net income 
for such month as is determined on the basis of the earnings ex-
perience of the assets transferred and the assets retained by the 
component corporation." 
(5) Section 463 (relating to capital changes) is amended by 
inserting at the end thereof the following new subsection: 
"(c) 
COMPONENT CORPORATION W H I C H WAS A PURCHASING CORPO-
RATION IN A PREVIOTJS TRANSACTION.—The Secretary shall provide by 
regulations for the application of this section in cases to which section 
462 (b) (4) is applicable." 
(6) Section 464 (relating to capital changes during the base 
period) is amended by inserting at the end thereof the following 
new subsection: 
"(c) The Secretary shall provide by regulation for the application 
of this section in cases to which section 462 (b) (4) is applicable." 
SEC 522. STRATEGIC MINERALS. 
Section 450 (b) (1) (relating to corporations engaged in mining of 
strategic minerals) is hereby amended by inserting after "chromite," 
the following: "bauxite,". 
SEC. 523. EFFECTIVE DATE OF TITLE V. 
Except as otherwise provided in section 506 (d), the amendments 
made by this title shall be applicable only with respect to taxable 
years ending after June 30,1950. 
TITLE VI—MISCELLANEOUS PROVISIONS AND 
AMENDMENTS 
64 Stat. 953. 
26U.S.C. §101note. 
53 Stat. 33. 
26 U. S. C. § 101. 
Ante, pp. 490-492. 
SEC. 60L EXEMPTION OF CERTAIN ORGANIZATIONS FROM INCOME 
TAX FOR PRIOR TAXABLE YEARS. 
Section 302 of the Revenue Act of 1950 (relating to exemption of 
certain organizations for past years) is amended by adding at the 
end thereof the following new subsection: 
"(d) 
PROFITS INURING TO THE BENEirr OF CERTAIN EDUCATIONAL 
ORGANIZATIONS OR HOSPITALS.—For any taxable year beginning prior 
to January 1,1951, an organization operated for the primary purpose 
of carrying on a trade or business for profit, no part of the net earn-
ings of which inures to the benefit of any private shareholder or in-
dividual and all of the net earnings of which inure to the benefit of 
an educational organization which normally maintains a regular 
faculty and curriculum and normally has a regularly organized body 
of pupils or students in attendance at the place where its educational 
activities are regularly carried on, or to the benefit of a hospital, or an 
institution for the rehabilitation of physicalljr handicapped persons, 
which maintains or is building for proper maintenance a hospital or 
institution staffed or to be staffed by qualified professional persons for 
the treatment of the sick and/or the rehabilitation of the physically 
handicapped, shall not be denied exemption from taxation under sec-
tion 101 of the Internal Revenue Code on the ground that it is carrying 
on a trade or business for profit. The determination as to whether an 
organization other than one described in this subsection is exempt 
under section 101 of the Internal Revenue Code from taxation for any 
taxable year beginning before January 1,1951, shall be made as if this 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
503 
subsection and section 301 (b) of this Act had not been enacted and 
^u.^g c^j JQI 
without inferences drawn from the fact that this subsection and the 
amendment made by section 301 (b) are not expressly made applicable 
with respect to taxable years beginning before January 1,1951." 
SEC 602. EXCESS PROFITS CREDIT BASED ON INCOME. 
(a) 
PERCENTAGE or AVERAGE BASE PERIOD NET INCOME TAKEN INTO 
ACCOUNT.— 
(1) I N GENERAL.—^Paragraph (1) (A), and paragraph (2), of 
section 435 (a) (relating to excess profits credit based on income) 
26u!^s.c!f435(a). 
are each amended by striking out "85 per centum" and inserting 
in lieu thereof "83 per centum . 
(2) 
TAXABLE YEARS BEGINNING BEFORE JULY i, i951, AND ENDING 
AFTER JUNE 30, 1951.—Scctiou 435 (a) is hereby amended by 
Ante,p.m. 
adding at the end thereof the following new paragraphs: 
"(4) CALENDAR YEAR 1951.—In the case of a taxable year 
beginning on January 1, 1951, and ending on December 31, 1951, 
there shall be used, for the purposes of paragraph (1) (A) and 
paragraph (2), in lieu of 85 per centum of the average base period 
net income, an amount equal to 84 per centum of the average base 
period net income. 
" ( 5 ) 
T A X A B L E YEARS ( O T H E R T H A N CALENDAR YEAR 1951) B E G I N -
N I N G BEFORE JULY 1, 1951, AND ENDING AFTER JUNE 30, 1951.—In 
the case of any taxable year (other than a taxable year described 
ih paragraph (4)) beginning before July 1, 1951, and ending 
after June 30, 1951, there shall be used, for the purposes of para-
graph (1) (A) and paragraph (2), in lieu of 85 per centum of 
the average base period net income, an amount equal to the sum 
of— 
"(A) that portion of an amount equal to 85 per centum of 
the average base period net income which the number of days 
in such taxable year prior to July 1, 1951, bears to the total 
number of days in such taxable year, plus 
"(B) that portion of an amount equal to 83 per centum of 
the average base period net income which the number of days 
in such taxable year after June 30, 1951, bears to the total 
number of days m such taxable year." 
(b) EFFECTIVE DATE.—^The amendments made by subsection (a) 
shall be applicable only with respect to taxable years ending after 
June 30,1951. 
SEC. 603. FOREIGN ESTATE TAX CREDIT. 
(a) ClffiDiT AGAINST BASIC ESTATE TAX.—Section 813 (relating to 
iu.^s. c^§8i3. 
credits against estate tax) is hereby amended by adding at the end 
thereof the following new subsection: 
"(c) 
SAME—^PAID TO FOREIGN COUNTRIES.— 
"(1) I N GENERAL.—^The tax imposed by section 810 shall be 
iu^s c°§8io 
credited with the amount of any estate, inheritance, legacy, or 
succession taxes actually paid to any foreign country in respect of 
any property situated within such foreign country and included 
in the gross estate (not including any such taxes paid with respect 
to the estate of a person other than the decedent). 
If the 
decedent at the time of his death was not a citizen of the United 
States, credit shall not be allowed under this subsection unless 
the foreign country of which such decedent was a citizen or 
subject, in imposing such taxes, allows a similar credit in the 
case of a citizen of the United States resident in such country. 
The determination of the country within which property is sit-
uated shall be made in accordance with the rules applicable under 
564 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
26 %^^'i^c. 
§ 860 
Part I I I of this subchapter in determining whether property is 
«' ««?• 
situated within or without the United States. 
"(2) LIMITATIONS ON CREDIT.—The credit provided in this sub-
section with respect to such taxes paid to any foreign country— 
"(A) shall not, with respect to any such tax, exceed an 
amount which bears the same ratio to the amount of such tax 
actually paid to such foreign country as the value of property 
which is— 
"(i) situated within such foreign country, 
" ^ii) subjected to such tax, and 
"(iii) included in the gross estate 
bears to the value of all property subjected to such tax; and 
"(B) shall not, with respect to all such taxes, exceed an 
amount which bears the same ratio to the tax imposed by 
26u!^s.c°§8io. 
section 810 (after deducting from such tax the credits pro-
vided by subsections (a) and (b) of this section) as the value 
of property which is— 
"(i) situated within such foreign country, 
"(ii) subjected to the taxes of such foreign country, 
and 
"(iii) included in the gross estate 
bears to the value of the entire gross estate reduced by the 
aggregate amount of the deductions allowed under subsec-
iif Stat. 1
2
3
; 6
2 Stat. 
tions (c), (d), and (e) of section 812. 
2
6 u. s. c. § 812. 
" (3) VALUATION OF PROPERTT.— 
"(A) The values referred to in the ratio stated in para-
graph (2) (A) are the values determined for the purposes 
of the tax imposed by such foreign country. 
"(B) The values referred to in the ratio stated in para-
graph (2) (B) are the values determined under this chap-
ter ; but, in applying such ratio, the value of any property 
described in clauses (i), (ii), and (iii) thereof shall be 
reduced by such amount as will properly reflect, in accord-
ance with regulations prescribed by the Secretary, the deduc-
tions allowed in respect of such property under subsections 
(c), (d), and (e) of section 812. 
"(4) PROOF or CREDIT.—The credits provided in this subsection 
Post, p. 565. 
aj^(j jj^ section 936 (c) shall be allowed only if the taxpayer estab-
lishes to the satisfaction of the Secretary (A) the amount of taxes 
actually paid to the foreign country, (B) the amount and date of 
each pajnnent thereof, (C) the description and value of the prop-
erty in respect of which such taxes are imposed, and (D) all other 
information necessary for the verification and computation of 
the credits. 
"(5) PERIOD OF LIMITATION.—The credits provided in this sub-
section and in section 936 (c) shall be allowed only for such taxes 
as were actually paid and credit therefor claimed within four 
^u.^s. c^§821. 
years after the filing of the return required by section 821, except 
that— 
"(A) If a petition for redetermination of a deficiency has 
been filed with The Tax Court of the United States within 
i u^s W\871 
^^® ^^"^® prescribed in section 871, then within such four-year 
period or before the expiration of 60 days after the decision of 
The Tax Court becomes final. 
i u^*s.^c'.1§-822. 
"(B) If, under section 822 (a) (2) or section 871 (h), an 
871. 
' 
extension of time has been granted for payment of the tax 
shown on the return, or of a deficiency, then within such four-
year period or before the date of the expiration of the period 
' 
of the extension. 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
565 
Refund based on such credits may (despite the provisions of sec-
tions 910 to 912, inclusive) be made if claim therefor is filed within 
^ u**s^^c' ^fssio 
the period above provided. Any such refund shall be made with- 9
1
2
. 
out interest." 
(b) CREDIT AGAINST ADDITIONAL ESTATE TAX.—Section 936 (relat- 
2
6 u.*s c^'§ 9
3
6 
ing to credits against estate tax) is hereby amended by adding at the 
end thereof the following new subsection: 
"(c) ESTATE, ETC., TAXES PAID T
O FOREIGN COUNTRIES.— 
" (1) I N GENERAL.—In the case of the estate of a citizen or resi-
dent of the United States, the tax imposed by section 935 shall be 
credited with the amount of any estate, inheritance, legacy, or suc-
cession taxes actually paid to any foreign country in respect of 
any property situated within such foreign country and included 
in the gross estate (not including any such taxes paid with respect 
to the estate of a person other than the decedent). If the decedent 
at the time of his death was not a citizen of the United States, 
credit shall not be allowed under this subsection unless the foreign 
country of which such decedent was a citizen or subject, in impos-
ing such taxes, allows a similar credit in the case of a citizen 
of the United States resident in such country. The determina-
tion of the country within which property is situated shall be 
made in accordance with the rules applicable under Part I I I of 
^l ?^^t; ^??-, o
«
n , 
subchapter A m determining whether property is situated within «
«
?
. 
or without the United States. 
"(2) LIMITATIONS ON CREDIT.—The credit provided in this sub-
section with respect to such taxes paid to any foreign country— 
" (A) shall not exceed the amount by which such taxes paid 
to the foreign country exceed the amount of the credit allowed 
therefor under section 813 (c) ; and 
^"'«' P- ^^• 
"(B) shall not exceed an amount which bears the same 
ratio to the tax imposed by section 935 (after deducting from 
such tax the credit provided by subsection (b) of this section) 
as the value of property which is— 
"(i) situated within such foreign country, 
"(ii) subjected to the taxes of such foreign country, 
and 
"(iii) included in the gross estate 
bears to the value of the entire gross estate reduced by the 
aggregate amount of the deductions allowed under subsec-
tions (c), (d), and (e) of section 812. 
53 stat. 123; 62 stat. 
" ( 3 ) 
S A M E — S P E C I A L R U L E S . — 
^26 u. s. c. § 812. 
"(A) For the purposes of paragraph (2) (A),'such taxes 
paid to the foreign country' shall, with respect to any tax paid 
to the foreign country, be the amount computed under section 
813 (C) (2) (A). 
Ante,p.56S. 
"(B) The values referred to in the ratio stated in para-
graph (2) (B) are the values determined under this chapter; 
but, in applying such ratio, the value of any property 
described in clauses (i), (ii), and (iii) thereof shall be 
reduced by such amount as will properly reflect, in accord-
ance with regulations prescribed by the Secretary, the deduc-
tions allowed in respect of such property under subsections 
(c), (d),and (e) of section 812. 
"(4) PROOF or CREDIT.— 
"For provisions relating to proof of credit, see section 813 
(c) (4). 
Ante,p.5U. 
" (5) PERIOD OF LIMITATION.— 
"For provisions relating to period of limitation on claiming 
566 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
Ante, p. 564. 
53 Stat. 140. 
26 U. S. C. § 927. 
53 Stat. 125. 
26U.S.C.§ 813(b). 
Ante, p. 563. 
Ante, p. 565. 
53 Stat. 135. 
26U.S.C.§ 874(b). 
53 Stat. 125. 
26U.S.C.§ 813(b). 
Ante, pp. 563, 565. 
53 Stat. 129. 
•26 U.S. C. §861. 
53 Stat. 144. 
26U. 8. 0.§ 1000(b). 
of credit or refund based thereon and nonpayment of interest 
on refund, see section 813 (c) (5) .'* 
(c) KEVERSIONARY OR REMAINDER INTEREST.—Section 927 (relating 
to credit for State death taxes) is hereby amended to read as follows: 
"SEC. 927. CREDIT FOR DEATH TAXES. 
"Such part of any estate, inheritance, legacy, or succession taxes 
allowable as a credit under section 813 (b) or (c) against the tax 
imposed by this subchapter, or under section 936 (c) against the tax 
imposed by subchapter B, as is attributable to such reversionary or 
remainder interest may be allowed as a credit against the tax attribut-
able to such interest, subject to the limitations on the amount of credit 
contained in such sections, if such part is paid, and credit therefor 
claimed, at any time prior to the expiration of 60 days after the 
termination of the precedent interest or interests in the property." 
(d) EXTENSION or PERIOD OF LIMITATIONS, ETC., IN CASE OF RECOV-
ERY OF TAXES CLAIMED AS CREDIT.—Section 874 (b) 
(relating to 
exceptions to general rule as to period of limitation upon assessment 
and collection of estate tax) is hereby amended by inserting at the 
end thereof the following new paragraph: 
" (3) RECOVERY OF TAXES CLAIMED AS CREDIT.—If any tax claimed 
as a credit under section 813 (b) or (c) or section 936 (c) is 
recovered from any foreign country, any State, any Territory 
or possession of the United States, or the District of Columbia, 
the executor, or any other person or persons recovering such 
amount, shall give notice of such recovery to the Secretary at 
such time and in such manner as may be required by regulations 
prescribed by him, and the Secretary shall redetermine the 
amount of the tax under this chapter and the amount, if any, of 
the tax due upon such redetermination, shall be paid by the 
executor or such person or persons, as the case may be, upon 
notice and demand." 
(e) EFFECTIVE DATE.—^The amendments made by this section shall 
be applicable with respect to estates of decedents dying after the date 
of the enactment of this Act. 
SEC. 604. ESTATE AND GIFT TAX TREATMENT OF UNITED STATES 
BONDS HELD BY CERTAIN NONRESIDENT ALIENS. 
(a) ESTATE TAX.—Effective with respect to estates of decedents 
dying after February 10, 1939, section 861 (relating to the computa-
tion of the net estate of a decedent nonresident not a citizen of the 
United States) is hereby amended by adding at the end thereof the 
following new subsection: 
"(c) UNITED STATES BONDS.—For the purposes of subsection (a), 
the value of the gross estate (determined as provided in section 811) 
of a decedent who was not engaged in business in the United States 
at the time of his death— 
"(1) 
shall not include obligations issued by the United States 
prior to March 1, 1941; and 
"(2) shall include obligations issued by the United States on 
or after March 1,1941, but only if the decedent died after the date 
of the enactment of the Revenue Act of 1951." 
(b) GIFT TAX.—Effective with respect to gifts made aiter the date 
of enactment of this Act, section 1000 (b) (relating to application of 
gift tax) is hereby amended by adding at the end thereof the follow-
ing : "In the case of such a nonresident who is not engaged in business 
in the United States at the time of a transfer of obligations issued by 
the United States, the tax shall apply in respect of any such obliga-
tions only if issued on or after March 1,1941." 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
567 
SEC. 605. ESTATE TAX EXEMPTION FOR WORKS OF ART LOANED BY 
NONRESIDENT ALIENS. 
(a) AMENDMENT OF SECTION 863 (c).—Section 863 (c) (relating 
^n^|-i^^sa^, 
to exemption of works of art loaned by nonresident aliens) is hereby 
amended to read as follows: 
"(c) WORKS OF ART ON LOAN FOR EXHIBITION,—Works of art owned 
by a nonresident not a citizen of the United States (1) imported into 
the United States solely for exhibition purposes, (2) loaned for such 
purposes to a public gallery or museum, no part of the net earnings of 
which inures to the benefit of any private stockholder or individual, 
and (3) at the time of the death of the owner, on exhibition, or en route 
to or from exhibition, in such a public gallery or museum." 
(b) EFFECTIVE DATE.—The amendment made by this section shall 
be applicable only with respect to estates of decedents dying after the 
date of the enactment of this Act. 
SEC. 606. EXEMPTION FROM ADDITIONAL ESTATE TAX OF MEMBERS 
OF ARMED FORCES UPON DEATH. 
Section 939 (relating to the estate tax treatment of certain members^ ^ f
/
^
*
|
- ^^\ g
g
g 
of the armed forces) is hereby amended as follows: 
' Ante,^.4i. 
(1) By inserting before the first sentence thereof the following: 
"(a) DEATHS AITER DECEMBER 6, 1941, AND BEFORE JANUARY 1, 
(2) By adding at the end thereof the following: 
" (b) DEATHS AFTER J U N E 24, 1950, AND BEFORE JANUARY 1,1954.— 
The tax imposed by section 935 shall not apply to the transfer of the 
^| |f^|- ^^-j 9
3
5 
net estate of a citizen or resident of the United States dying after 
June 24, 1950, and before January 1, 1954, while in active service as a 
member of the armed forces of the United States, if such decedent— 
"(1) was killed in action while serving in a combat zone, as 
determined under section 22 (b) (13); or 
^«<«. P- ^^• 
"(2) died as a result of wounds, disease, or injury suffered, 
while serving in a combat zone (as determined under section 22 
(b) (13)) and while in line of duty, by reason of a hazard to 
which he was subjected as an incident of such service." 
SEC. 607. TRANSFERS CONDITIONED UPON SURVIVORSHIP. 
In the case of property transferred by a decedent dying after March 
18, 1937, and before February 11, 1939, the determination of whether 
such property is to be included in his gross estate under section 302 
(c) of the Eevenue Act of 1926 (44 Stat. 70) as a transfer intended 
to take effect in possession or enjoyment at or after his death shall be 
made in conformity with Treasury Regulations in force at the time 
of his death. 
SEC. 608. TRANSFERS WITH INCOME RESERVED. 
Section 7 (b) of the Act entitled "An Act to amend certain provi-
sions of the Internal Revenue Code", approved October 25, 1949 (63 
Stat. 895), is hereby amended by striking out "January 1, 1950" and 
26U.s.c.§8iinote. 
inserting in lieu thereof "January 1, 1951". 
SEC. 609. TRANSFERS TAKING EFFECT AT DEATH. 
Effective with respect to estates of decedents dying after February 
10, 1939, section 7 (b) of the Act entitled "An Act to amend certain 
provisions of the Internal Revenue Code", approved October 25, 
1949 (63 Stat. 895), is hereby amended by striking out the word 
26u.s.c.§8iinote. 
"sentence" and inserting in lieu thereof "two sentences" and by insert-
ing immediately preceding the last sentence thereof the following 
sentence: "The provisions of section 811 (c) (1) (C) of such code 
shall not apply to a transfer made prior to September 8, 1916." The 
568 
PUBLIC LAW 183—OCT. 20, 1951 
[65 STAT. 
provisions of section 7 (c) of such Act, as amended, shall not apply to 
an overpayment resulting from the application of this section. 
SEC. 6
1
0
. 
REVERSIONARY INTERESTS 
IN 
CASE OF LIFE 
INSURANCE. 
If refund or credit of any overpayment resulting from the applica-
2
6 u!s*." a §
'
8
1
1 note. ^^^^ ^f section 503 of the Revenue Act of 1950 was prevented on October 
25,1950, by the operation of any law or rule of law (other than section 
3760 of the Internal Revenue Code, relating to closing agreements, and 
i u*s.*c?.' §
§ 3
7
6
0
, other than section 3761 of such code, relating to compromises), refund 
3761. 
or credit of such overpayment may, nevertheless, be made or allowed if 
claim therefor was filed after October 25, 1949, and on or before 
October 25, 1950. 
SEC. 611. INCOME PURSUANT TO AWARD OF INTERSTATE COMMERCE 
COMMISSION. 
26u.*s.c! §42. 
(^) Notwithstanding section 42 of the Internal Revenue Code, 
amounts received, pursuant to an award under the order issued under 
3
9 u^ s.^a § 5
2
3 et the Railway Mail Pay Act of 1916 by the Interstate Commerce Com-
m- 
mission on December 4, 1950, as compensation for the transportation 
of mail during 1950 and prior years shall be deemed to be income 
which accrued in the taxable years in which the services to which such 
^"^''"" 
compensation relates were rendered. 
Notwithstanding section 292 of 
such code, no interest shall be assessed or collected for any period 
prior to July 1,1951, with respect to that part of any deficiency which 
the Secretary determines to be attributable to the inclusion of income 
in a taxable year by reason of the application of this section. 
Any 
deficiency attributable to the inclusion of income in any taxable year 
by reason of the application of this section may be assessed at any 
time prior to the expiration of the period for assessment with respect 
to the taxable year of the taxpayer which includes December 4, 1950, 
2
6 u^s.^c. § 275. notwithstanding the provisions of section 275 of the Internal Revenue 
Code or any other provision of law or rule of law which would other-
wise prevent such assessment. 
26u.*s.^'. §292. 
(b) Section 292 (relating to interest on deficiencies) is hereby 
amended by adding at the end thereof the following new subsection: 
"(d) With respect to any corporation entitled to receive payment 
for the transportation of United States mail, if an award is retro-
actively received for the transportation of United States mail, and if 
such award is required to be treated as income in the year or years in 
which the mail was carried, then, notwithstanding the provisions of 
subsection (a) of this section, no interest shall be due, with respect 
to any period prior to thirty days after such award is granted, for 
tax deficiencies resulting from the inclusion of such additional mail 
payments retroactively. 
SEC. 612. CREDIT IN PRIOR TAXABLE YEARS FOR DIVIDENDS RECEIVED 
ON PREFERRED STOCK OF A PUBLIC UTILITY. 
In the case of taxable years beginning before April 1, 1951, any 
Ante, pp. 468, 4
6
9
, reference in section 15 (a) or 26 (b) of the Internal Revenue Code to 
dividends received on the preferred stock of a public utility shall be 
construed as referring only to dividends received on the preferred 
stock of a public utility with respect to which the credit provided in 
^n««,p.469. 
section 26 (h) of such Code for dividends paid was allowable. 
SEC. 
6
1
3
. 
CONSOLIDATED RETURNS—INCLUDIBLE 
CORPORATION. 
If an aifiliated group making a consolidated return with respect to 
the first taxable year of the group ending after June 30,1950, included 
a corporation described in section 454 (f) of the Internal Revenue 
Stat M
*
^
*
' ^^^' ^ Code pursuant to the consent provided in section 141 (e) (7) of such 
26U.S. c. §
§ 4
5
4
, code, such corporation may withdraw such consent at any time within 
141 (e) (7). 
T 
t- 
J 
J 
487, 
65 STAT.] 
PUBLIC LAW 183—OCT. 20, 1951 
569 
ninety days after the enactment of this Act. If such consent is with-
drawn under the preceding sentence, the tax liability of the affiliated 
group and its several members for the taxable year shall be deter-
mined, assessed, and collected as if such corporation had never joined 
in the making of the consolidated return. 
SEC. 614. TIME FOR PERFORMING CERTAIN ACTS POSTPONED IN CASE 
OF CHINA TRADE ACT CORPORATIONS. 
Section 3805 (relating to postponement of income tax due dates in 
2
6 u.^s. ^a'§ asos. 
the case of China Trade Act corporations) is hereby amended to read 
4
2 stat.'849. 
A Ti 
15 U. S. G. 5 141. 
as follows: 
"SEC. 3805. INCOME TAX DUE DATES POSTPONED IN CASE OF CfflNA 
TRADE ACT CORPORATIONS. 
"In the case of any taxable year beginning after December 31, 1948, 
and ending before October 1, 1953, no Federal income tax return of, 
or payment of any Federal income tax by, any corporation organized 
under the China Trade Act of 1922 (42 Stat. 849, U. S. C , Title 15, 
chapter 4), as amended, shall become due until December 31, 1953, 
but only with respect to any such corporation and any such taxable 
year which the Secretary may determine reasonable under the cir-
cumstances in China pursuant to such regulations as he may prescribe. 
Such due date shall be subject to the power of the Secretary to extend 
the time for filing such return or paying such tax, as in other cases." 
SEC. 615. TREATY OBLIGATIONS. 
No amendment made by this Act shall apply in any case where its 
application would be contrary to any treaty obligation of the United 
States. 
SEC. 616. REORGANIZATION PLAN NUMBERED 26 OF 1950. 
The provisions of Reorganization Plan Numbered 26 of 1950 shall 
^xj*8*cf^'i 
be applicable to all functions vested by this Act in any officer, note. 
employee, or agency of the Department of the Treasury. 
SEC. 617. CLAIMS UNDER THE RENEGOTIATION ACT. 
Subsection (a) (4) (D) of the Renegotiation Act, as amended by 
so^u^fc app 
section 201 (c) of the Renegotiation Act of 1951, is hereby amended §
1
1
9
1 (a) (4) (D). 
by striking out "June 30,1951," and inserting in lieu thereof "October 
^"''' ^- ^• 
31, 1951,". 
SEC. 618. PROHIBITION UPON DENIAL OF SOCIAL SECURITY ACT 
FUNDS. 
No State or any agency or political subdivision thereof shall be 
deprived of any grant-in-aid or other payment to which it otherwise 
is or has become entitled pursuant to title I, TV, X, or XIV of the 
Social Security Act, as amended, by reason of the enactment or enforce- ^^f stat. 6
2
0
; 6
4 stat. 
ment by such State of any legislation prescribing any conditions under 
4
2 u. s. c. §
§ 301-
which public access may be had to records of the disbursement of any ^351^35^^' ^
2
0
1
-
1
2
0
6
, 
such funds or payments within such State, if such legislation prohibits 
the use of any list or names obtained through such access to such 
records for commercial or political purposes. 
SEC. 619. REMOVAL OF TAX EXEMPTION FROM EXPENSE ALLOW-
ANCES OF THE PRESIDENT, THE VICE PRESIDENT, THE 
SPEAKER, AND MEMBERS OF CONGRESS. 
(a) EXPENSE ALLOWANCE OF THE PREsmENT.—Section 102 of title 3 
of the United States Code is amended by striking out "no tax liability g^^j stat. 678; es 
shall accrue and for which no accounting shall be made by him" and 
inserting in lieu thereof "no accounting, other than for income tax 
purposes, shall be made by him". 
5 U. S. C. 5 133Z-15 
570 
PUBLIC LAW 184—OCT. 20, 1951 
[65 STAT. 
63 Stat. 4. 
63 Stat. 4. 
2U. S. C. §31b. 
60 Stat. 850. 
2U. S. C. §31a. 
(b) EXPENSE AXLOWANCE OF THE VICE PREsroENT.—Section HI of 
title 3 of the United States Code is amended by striking out "for which 
no tax liability shall occur or accounting be made by him" and inserting 
in lieu thereof "for which no accounting, other than for income tax 
purposes, shall be made by him". 
(c) EXPENSE AULOWANCE OF THE SPEAKER OF THE HOUSE OP 
REPRESENTATFVES.—Subsection (e) of the first section of the Act 
entitled "An Act to increase rates of compensation of the President, 
Vice President, and the Speaker of the House of Representatives", 
approved January 19,1949 (Public Law 2,81st Congress), is amended 
by striking out "for which no tax liability shall occur or accounting 
be made by him" and inserting in lieu thereof "for which no account-
ing, other than for income tax purposes, shall be made by him". 
(d) 
EXPENSE ALLOWANCES OP MEMBERS OF CONGRESS.—Section 601 
(b) of the Legislative Reorganization Act of 1946 is amended by 
striking out "for which no tax liability shall incur, or accounting be 
made" and inserting in lieu thereof "for which no accounting, other 
than for income tax purposes, shall be made". 
(e) EFFECTIVE DATES.—^The amendments made by subsections (a) 
and (b) of this section shall become effective at noon on January 20, 
1953, and the amendments made by subsections (c) and (d) shall 
become effective at noon on January 3,1953. 
Approved October 20, 1951, 2:07 p. m., E.S.T. 
October 20,1951 
[S. 1450] 
Public Law 184 
CHAPTER 
5 2 2 
AN ACT 
To provide for the exchange of certain lands owned by the United States of 
, ,. 
America for certain privately owned lands. 
Be it eTiacted hy the Senate and House of Representatives 
of the 
intcrfo?*™^"* °^ *
^
^ C^nxi^efi? States of America in Congress assembled^ That, in order to 
Exchange o
f certain adjust the boundary of the Rock Creek and Potomac Parkway in 
andsm . 
connection with plans for providing a park-like treatment at the 
entrance to Georgetown, and in connection with the future widening 
of Pennsylvania Avenue, the Secretary of the Interior is authorized 
to accept on behalf of and without cost to the United States of 
America, from the owner thereof, unencumbered fee-simple title to the 
following-described parcel of land situated in the District of Columbia 
and more particularly described as follows: 
Part of lot 14, square 1194, as per plat recorded in the Office of the 
Surveyor of the District of Columbia in book 29, page 72, described 
as follows: 
Beginning for the same at the intersection of the easterly line of 
Twenty-eighth Street and the south line of M Street, said point of 
beginning being also the northwest corner of said lot 14; thence along 
the south line of M Street east seventy and ninety-five one-hundredths 
feet to the northeast corner of said lot 14; thence in a southwesterly 
direction along the arc of the circle, the radius of which is two hundred 
and no tenths feet, deflecting to the right an arc distance of seventy-
one and two one-hundredths feet to the northerly line of Pennsylvania 
Avenue; thence along said northerly line of Pennsylvania Avenue 
north sixty-five degrees twenty minutes west forty-four and fifty one-
hundredths feet to the easterly line of Twenty-eighth Street and the 
southwest corner of said lot 14; thence along said easterly line of 
Twenty-eighth Street north no degrees three minutes west forty-five 
and seventeen one-hundredths feet to the point of beginning, contain-