An Act relating to the income tax treatment of certain distributions pursuant to the Bank Holding Company Act of 1956, as amended
PL 90-225 (H.R.4765), enacted 12/27/1967

730 
PUBLIC LAW 90-225-DEC. 27, 1967 
[81 STAT. 
Notice to 
Congress. 
may be terminated at an earlier date if necessitated by the defense 
requirements of the United States. 
SEC. 4. No loan may be made or extended under this Act unless the 
Secretary of Defense, after consultation with the Joint Chiefs of 
Staff, determines that such loan or extension is in the best interest 
of the United States. The Secretary of Defense shall keep the Con-
gress currently advised of all loans made or extended under this Act. 
SEC. 5. The President may promulgate such rules and regulations 
as he deems necessary to carry out the provisions of this Act. 
Approved December 26, 1967, 4:09 p.m. 
Public Law 90-225 
December 
[H. R. 
Taxes. 
27,1967 
4765] 
Bank Holding 
Company 
butions. 
26 u s e 
12 u s e 
note. 
distfi-
1102. 
1841 
80 Stat. 236. 
70 Stat. 139. 
AN ACT 
To amend the Internal Revenue Code of 19.14 \A'ith respect to the income tax 
treatment of certain distributions pursuant to the Bank Holding Company Act 
of 1956, as amended, and for other purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress oAsemhled^ That section 1102 
of the Internal Revenue Code of 1954 (relating to special rules for 
income tax treatment of distributions pursuant to the Bank Holding 
Company Act of 1956) is amended by adding at the end thereof the 
following new subsection: 
"(e) CERTAIN BANK HOLDING COMPANIES.—This part shall apply 
in respect of any company which becomes a bank holding company 
as a result of the enactment of the Act entitled 'An Act to amend the 
Bank Holding Company Act of 1956', approved July 1, 1966 (Public 
Law 89-485), with the following modifications: 
"(1) Subsections (a) (3) and (b) (3) of section 1101 shall not 
apply. 
"(2) Subsections (a) (1) and (2) and (b) (1) and (2) of sec-
tion 1101 shall apply in respect of distributions to shareholders of 
the distributing bank holding corporation only if all distributions 
\a each class of shareholders which are made— 
"(A) after April 12,1965, and 
"(B) on or before the date on which the Board of Gover-
nors of the Federal Reserve System makes its final certifica-
tion under section 1101 (e), 
are pro rata. For purposes of the precedin|^ sentence, any redemp-
tion of stock made in whole or in part with property other than 
money shall be treated as a distribution. 
"(3) In applying subsections (c) and (d) of section 1101 and 
ID, 
81 STAT.] 
PUBLIC LAW 90-225-DEC. 27, 1967 
731 
subsection (b) of section 1103, the date 'April 12, 1965' shall be 
^^ stat. i44. 
substituted for the date 'May 15,1955'. 
"(4) In applying subsection (d)(3) of section 1101, the date 
of the enactment of this subsection shall be treated as being the 
date of the enactment of this part. 
"(5) In applying subsection (b)(2)(A) of section 1103, the 
reference to the Bank Holding Company Act of 1956 shall be 
treated as referring to such Act as amended by Public Law 
89-485." 
The amendment made by this section shall apply with respect to distri- 
Effective date, 
butions made after the date of the enactment of this Act in taxable 
years ending after such date. 
SEC. 2. (a) Section 46(b) of the Internal Eevenue Code of 1954 ^"vestment 
/ 
1 ,• 
, 
1 1 
1 
/. 
! • 
, . , . 
credit carry.' 
(relating to carryback and carryover oi unused investment credits) is backs, 
amended by striking out paragraph (3) (relating to effect of net oper- 
'^^ s
*
^
*
* ^''^• 
ating loss carryback). 
(b) Section 6411 (a) of such Code (relating to application for tenta- 
^° ^*^*- ^•^^°-
tive carryback adjustment) is amended by inserting after "within a 
period of 12 months from the end of such taxable year" in the second 
sentence the following: "(or, with respect to any portion of an invest-
ment credit carryback from a taxable year attributable to a net operat-
ing loss carryback from a subsequent taxable year, within a period of 12 
months from the end of such subsequent taxable year)". 
(c) Section 6501 (j) of such Code (relating to limitations on assess- 
'^^ stat. 971. 
ment in the case of investment credit carrybacks) is amended by insert-
ing before the period at the end thereof the following: ", or, with 
respect to any portion of an investment credit carryback from a taxable 
year attributable to a net operating loss carryback from a subsequent 
taxable year, at any time before the expiration of the period within 
which a deficiency for such subsequent taxable year may be assessed". 
(d) Section 6511(d) (4) (A) of such Code (relating to special period 
of limitation on refunds with respect to investment credit carrybacks) 
is amended by inserting after "which results in such carryback" in the 
first sentence the following: "(or, with respect to any portion of an 
investment credit carryback from a taxable year attributable to a net 
operating loss carryback from a subsequent taxable year, the period 
shall be that period which ends with the expiration of the 15th day of 
the 40th month, or 39th month, in the case of a corporation, following 
the end of such subsequent taxable year)". 
(e) Section 6601(e) (2) of such Code (relating to interest on under-
payments, etc.) is amended by inserting before the period at the end 
thereof the following: ", or with respect to any portion of an invest-
ment credit carryback from a taxable year attributable to a net oper-
76 Stat. 971. 
732 
PUBLIC LAW 90-225-DEC. 27, 1967 
[81 STAT. 
Effective date. 
Operating loss 
carrybacks. 
76 Stat. 889; 
78 Stat. 47. 
ating loss carryback from a subsequent taxable year, such increase shall 
not affect the computation of interest under this section for the period 
ending with the last day of such subsequent taxable year". 
(f) Section 6611(f) (2) of such Code (relating to interest on over-
payments) is amended by inserting before the period at the end thereof 
the following: ", or, with respect to any portion of an investment credit 
carryback from a taxable year attributable to a net operating loss 
carryback from a subsequent taxable year, such overpayment shall be 
deemed not to have been made prior to the close of such subsequent tax-
able year". 
(g) The amendments made by this section shall apply with respect to 
investment credit carrybacks attributable to net operating loss carry-
backs from taxable years ending after July 31,1967. 
SEC. 3. (a) Section 172(b) of the Internal Eevenue Code of 1954 
(relating to net operating loss carrybacks and carryovers) 
is 
amended— 
(1) by striking out "subparagraph (D)" in paragraph (1) (A) 
(i) and inserting in lieu thereof "subparagraphs (D) and ( E ) " ; 
(2) by striking out "subparagraphs (C) and (D)" in para-
graph (1) (B) and inserting in lieu thereof "subparagraphs (C), 
( D ) , a n d ( E ) " ; 
(3) by adding at the end of paragraph (1) the following new 
subparagraph: 
"(E) In the case of a taxpayer which is a domestic corpo-
ration qualifying under paragraph (3) (E), a net operating 
loss for any taxable year ending after December 31, 1966, 
and prior to January 1, 1969, shall be a net operating loss 
carryback to each of the 5 taxable years preceding the taxable 
year of such loss and shall be a net operating loss carryover 
to each of the 3 taxable years following the taxable year of 
such loss."; and 
(4) by adding at the end of paragraph (3) the following new 
subparagraphs: 
"(E) Paragraph (1) (E) shall apply only if— 
"(i) the amount of the taxpayer's net operating loss 
for the taxable year exceeds the sum of the taxable income 
(computed as provided in paragraph (2)) for each of 
the 3 preceding taxable years of the taxpayer, 
"(ii) the amount of the taxpayer's net operating loss 
for the taxable year, increased by the amount of the tax-
payer's net operating loss for the preceding taxable year 
or decreased by the amount of the taxpayer's taxable 
income for such preceding year, exceeds 15 percent of 
the sum of the money and other property (in an amount 
81 STAT.] 
PUBLIC LAW 90-225-DEC. 27, 1967 
733 
equal to its adjusted basis for determining gain) of the 
taxpayer, determined as of the close of the taxable year 
of such loss without regard to any refund or credit of 
any overpayment of tax to which the taxpayer may be 
entitled under paragraph (1) (E), 
"(iii) the ag'gregate unadjusted basis of property de-
scribed in section 1231(b)(1) (without regard to any 
holding period therein provided), the basis for which 
was determined under section 1012, which was acquired 
by the taxpayer during the period beginning with the 
first day of its fifth taxable year preceding trie taxable 
year of such loss and ending with the last day of the tax-
able year of such loss, equals or exceeds the aggregate 
adjusted basis of property of such description of the 
taxpayer on, and determined as of, the first day of the 
fifth preceding taxable year, and 
"(iv) the taxpayer derived 50 percent or more of its 
gross receipts (other than gross receipts derived from 
the conduct of a lending or finance business), for the tax-
able year of such loss and for each of its 5 preceding 
taxable years, from the manufacture and production of 
units within the same single class of products, and 3 or 
fewer United States persons (including as one person an 
affiliated group as defined in section 1504(a)) other than 
the taxpayer manufactured and produced in the United 
States, in the calendar year ending in or with the taxable 
year of such loss, 85 percent or more of the total number 
of all units within such class of products manufactured 
and produced in the United States in such calendar year. 
"(F) For purposes of subparagraph (E) (iv)— 
" (i) the t«rm 'class of products' means any of the cate-
gories designated and numbered as a 'class of products' 
m the 1963 Census of Manufactures compiled and pub-
lished by the Secretary of Commerce under title 13 of 
the United States Code, and 
" (ii) information compiled or published by the Secre-
tary of Commerce, as part of or in connection with the 
Statistical Abstract of the United States or the census of 
manufactures, regarding the number of units of a class of 
products manufactured and produced in the United 
States during a calendar year, or, if such information 
should not be available, information so compiled or pub-
lished regarding the number of such units shipped or 
sold by such manufacturers during a calendar year, shall 
constitute prima facie evidence of the total number of all 
units of such class of products manufactured and pro-
duced in the United States in such calendar year." 
(b) I
S
T
o interest shall be paid or allowed with respect to any over-
payment of tax resulting from the application of the amendments 
made by subsection (a) for any period prior to the date of the enact-
ment of this Act. 
(c) The amendments made by subsection (a) shall apply with 
respect to net operating losses sustained in taxable years ending after 
December 31.1966. 
SEC. 4. (a) Section 815(f) of the Internal Revenue Code of 1954 
(relating to definition of distribution) is amended— 
(1) by striking out "or" at the end of paragraph (2) ; 
(2) by striking out the period at the end of paragraph (3) and 
inserting in lieu thereof "; or"; and 
Ante, p. 732. 
68A Stat. 325. 
" C l a s s of 
products." 
68 Stat. 1012. 
Effective date. 
78 Stat. 859. 
734 
PUBLIC LAW 90-226-DEC. 27, 1967 
[81 STAT. 
68A Stat. 113. 
78 Stat. 859. 
Effective date. 
(3) by inserting after paragraph 
(3) the following new 
paragraph: 
" (1) any distribution after December 31,1966, of the stock of a 
controlled corporation to which section 355 applies, if such dis-
tribution is made to a corporation which immediately after the 
distribution is in control (within the meaning of section 368(c)) 
of both the distributing corpor^ition and such controlled corpora-
tion and if such controlled corporation is a life insurance company 
of which the distributing corporation has been in control at all 
times since December 31,1957." 
(b)(1) The next to last sentence of section 815 (f) is amended— 
(A) by striking out "Paragraph (3) shall not" and inserting in 
lieu thereof "Neither paragraph (3) nor paragraph (4) shall"; 
and 
(B) by striking out "subparagraph (B) of such paragraph" 
and inserting in lieu thereof "paragraph (3) (B)". 
(2) The last sentence of section 815(f) is amended by striking out 
"paragraph (3) also" and inserting in lieu thereof "paragraphs (3) 
and (4) also". 
(c) The amendments made by this section shall apply to taxable 
years beginning after December 31,1966. 
Approved December 27, 1967. 
December 27, 1967 
[H. R. 10783] 
Public Law 90-226 
AN ACT 
Relating to crime and criniinal procedure in the District of Columbia. 
District of 
Columbia. 
Crime and crim-
inal procedure. 
Arrests 
warrant. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assemhled, 
TITLE I 
SEC. 101. Section 397 of the Revised Statutes of the United States, 
relating to the District of Columbia (D.C. Code, sec. 4-140), is 
amended to read as follows: 
"SEC. 397. (a) An officer or member of the Metropolitan Police force 
may arrest without a warrant and take into custody any person who 
commits, or threatens or attempts to commit, in the presence of, or 
within the view of, such officer or member any breach of the peace or 
otfense directly prohibited by an Act of Congress or by any other law^ 
in force in the District. 
"(b) An officer or member of the Metropolitan Police force may 
arrest a person without a warrant if he has probable cause to believe 
that such person (1) has committed or is about to commit any offense 
listed in subsection (c) of this section, and (2) unless immediately 
arrested, may not be apprehended, may cause injury to others or dam-
age to property, or may tamper with, dispose of, or destroy evidence.