An Act to amend the Internal Revenue Code of 1954 with respect to the treatment of copyright royalties for purposes of the personal holding company tax
PL 86-435 (H.R.7588), enacted 04/22/1960

74 S T A T . ] 
PUBLIC LAW 86-435-APR. 22, 1960 
T7 
Public Law 86-435 
AN ACT 
Aoril22,^l960 
To amend the Internal Revenue Code of 1954 with respect to the treatment of 
[H. R. 7588] 
copyright royalties for purposes of the personal holding company tax. 
Be it enacted hy the Senate and Home of Representatives 
of the 
United States of America in Corigress assembled, That (a) section ing"ompany'tax.'** 
548(a) of the Internal Kevenue Cfode of 1954 (relating to personal ^^^3°^^"^*'* '•°y"^" 
holding company income) is amended by adding at the end thereof 
esA stat. ise. 
the following new paragraph: 
^^ "^^ ^'*^" 
"(9) COPYRIGHT ROYALTIES.—Copyright royalties, unless— 
"(A) such royalties (exclusive of royalties received for the 
use of, or right to use, copyrights or interests in copyrights 
on works created in whole, or in part, by any shareholder) 
constitute 50 percent or more of the gross income, 
"(B) the personal holding company income for the taxable 
year not taking into account— 
"(i) copyright royalties, other than royalties received 
for the use of, or right to use, copyrights or interests in 
copyrights in works created in whole, or in part, by any 
shareholder owning more than 10 percent of the total 
outstanding capital stock of the corporation, and 
"(ii) dividends from any corporation in which the 
taxpayer owns at least 50 percent of all classes of stock 
entitled to vote and at least 50 percent of the total value 
of all classes of stock and which corporation meets the 
requirements of this subparagraph and subparagraphs 
(A) and (C) 
is 10 percent or less of the ^ o s s income, and 
"(C) the deductions allowable under section 162 (other 
26 use I62. 
than deductions for compensation for personal services 
rendered by the shareholders and other than deductions for 
royalties to shareholders) constitute 50 percent or more of 
the gross income. 
For purposes of this subsection, the term 'copyright royalties' 
means compensation, however designated, for the use of, or the 
right to use, copyrights in works protected by copyright issued 
under title 17 of the United States Code (other than by reason 
^^ s*«*- ^52. 
of section 2 or 6 thereof), and to which copyright protection is 
also extended hj the laws of any country other than the United 
States of America by virtue of any international treaty, conven-
tion or agreement, or interests in any such copyrighted works, 
and includes payments from any person for performing rights in 
any such copyrighted work. For purposes of this paragraph the 
term 'shareholder' shall include any person who owns stock within 
the meaning of section 544. This paragraph shall not apply to 
26 use 544. 
compensation which is rent within the meaning of paragraph (7), 
determined without regard to the requirement that rents consti-
tute 50 percent or more of the gross income." 
(b) Such section 543(a) is amended— 
26 use 543. 
(1) by striking out " (other than mineral, oil, or gas royalties)" 
in paragraph (1) and inserting in lieu thereof "(other than 
mineral, oil, or gas royalties or copyright royalties)"; and 
(2) by adding at the end of paragraph (6) the following new 
sentence: "For purposes of the preceding sentence, copyright 
royalties constitute personal holding company income." 
78 
PUBLIC LAW 86-436-APR. 22, 1960 
[74 STAT. 
26'^icf*544**' 
^^^ Section 544(a) of such Code is amended— 
(1) hj striking out "For purposes of determining whether a 
corporation is a personal holding company, insofar as such deter-
mination is based on stock ownership under section 542(a) (2), 
section 543(a)(5), or section 543(a)(6)" and inserting in lieu 
thereof "For purposes of determining whether a corporation is a 
personal holding company, insofar as such determination is based 
on stock ownership under section 542(a) (2), section 543(a) (5), 
section 543(a) (6), or section 543(a) (9)"; and 
(2) by revising subparagraph (B) of paragraph (4) thereof 
to read as follows: 
"(B) for purposes of section 543(a) (5) (relating to per-
sonal service contracts), of section 543(a)(6) (relating to 
use of property hj shareholders), or of section 543(a) (9) 
(relating to copyright royalties), if, but only if, the effect is 
to make the amounts therein referred to includible under such 
paragraph as personal holding company income." 
(d) Section 544(b) of such Code is amended— 
(1) by striking out the word "and" appearing at the end of 
paragraph (2) ; 
(2) by striking out the period appearing at the end of para-
graph (3) and inserting in lieu thereof "; and"; 
(3) by inserting the following new paragraph (4) immediately 
after existing paragraph (3) thereof: 
"(4) for purposes of section 543(a) (9) (relating to copyright 
royalties), but only if the effect of the inclusion of all such securi-
ties is to make the amounts therein referred to includible under 
such paragraph as personal holding company income."; and 
(4) by striking out "paragraphs (1), (2), and (3)" appearing 
in the last sentence and inserting in lieu thereof "paragraphs (1), 
(2), (3), and (4)". 
6
8
A Stat. 195. 
(e) Scctiou 553 of such Code is amended by striking out "all royal-
^^^ 
^" 
ties, whether or not mineral, oil, or gas royalties" and inserting in 
lieu thereof "all royalties, whether or not mineral, oil, or gas royalties 
or copyright royalties". 
^^pp^^^c^^^i^^y 
SEC. 2. The amendments made by the first section of this Act shall 
apply only with respect to taxable years beginning after December 31, 
1959. 
Approved April 22, 1960. 
Public Law 86-436 
April 22, 1960 
AN ACT 
[H. R. 9737] 
^^ ameud the Act of March 3, 1901, to eliminate the requirement that certain 
District of Columbia corporations be managed by trustees the majority of 
whom are citizens of the District of Columbia. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That section 608 of 
the Act entitled "An Act to establish a code of law for the District of 
31 Stat. 1285. 
Columbia", approved March 3, 1901, as amended (D.C. Code 29-204), 
is amended by striking out ", respectively," and by striking out "and 
a majority citizens of the District," 
Approved April 22, 1960