An Act to amend the Internal Revenue Code of 1954 to provide a personal exemption for children placed for adoption and to clarify certain provisions relating to the election of small business corporations as to taxable status
PL 86-376 (H.R.47), enacted 09/23/1959

73 S T A T . ] 
PUBLIC LAW 86-376-SEPT. 23, 1959 
699 
SEC. 7. Nothing contained herein shall be interpreted or construed 
as approving any act, action, or conduct which is or has been or may 
be in violation of existing law nor shall anything herein contained 
constitute a defense to any action, suit, or proceeding pending or here-
after instituted on account of any prohibited antitrust or monopolistic 
act, action, or conduct. 
SEC. 8. The right is herebj reserved to the Congress or any of its 
standing committees to require the disclosure and furnishing of such 
information or data by the Wabash Valley Interstate Commission as 
is deemed appropriate by the Congress or any such committee. 
Approved September 23, 1959. 
Public Law 86-376 
A N A C T 
September 23, 1959 
To amend the Internal Revenue Code of 1954 to provide a personal exemption 
f"- ^- ^"^^ 
for children placed for adoption and to clarify certain provisions relating to 
the election of small business corporations as to taxable status. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That (a) section 
152(b)(2) of the Internal Revenue Code of 1954 (relating to 
the definition of the term "dependent") is amended by striking out "a 
legally adopted child of an individual" and inserting in lieu thereof 
the following: "a legally adopted child of an individual (and a child 
who is a member of an individual's household, if placed with such 
individual by an authorized placement agency for legal adoption by 
such individual)". 
(b) The amendment made by subsection (a) shall apply to taxable 
years beginning after December 31,1958. 
SEC. 2. (a) Section 1371 of the Internal Revenue Code of 1954 
(relating to definitions applicable to certain small business corpora-
tions) is amended by adding at the end thereof the following new 
subsection: 
"(c) STOCK OWNED BY HUSBAND AND WIFE.—For purposes of sub-
section (a) (1) stock which— 
"(1) is community property of a husband and wife (or the 
income from which is community income) under the applicable 
community property law of a State, or 
"(2) is held by a husband and wife as joint tenants, tenants by 
the entirety, or tenants in common, 
shall be treated as owned by one shareholder." 
(b) Section 1374(b) of the Internal Revenue Code of 1954 (relat-
ing to allowance of net operating loss to shareholders of electing small 
business corporations) is amended by inserting after "the taxable year 
of the corporation ends" the following: "(or for the final taxable year 
of a shareholder who dies before the end of the corporation's taxable 
year)". 
(c) Section 1504(b) of the Internal Revenue Code of 1954 (relating 
to definition of includible corporation) is amended by striking out 
paragraph (8) thereof. 
(d) The amendment made by subsection (a) shall apply to taxable 
years beginning after December 31, 1959. The amendments made by 
subsections (b) and (c) shall take effect on the day after the date of 
the enactment of this Act. 
Internal Revenue 
C o d e of 
1 9 5 4 , 
amendment. 
68A Stat. 43. 
72 Stat. 1650. 
72 Stat. 1653. 
68A S t a t . 369; 
72 Stat. 1657. 
32716 O-60—47 
700 
PUBUC LAW 86-377-SEPT. 23, 1959 
[73 ST A T , 
eSAStat. 182. 
S m a l l business 
investment 
com-
pany. 
72 Stat. 689. 
15 u s e 661 note. 
68A Stat. 188. 
SEC. 3. (a) Section 542(c) of the Internal Revenue Code of 1954 
(relating to exceptions from definition of a personal holding com-
pany) is amended— 
(a) by inserting ";" in lieu of "." at the end thereof and 
(b) by adding at the end thereof the following new paragraph 
"(11) A small business investment company which is 
licensed by the Small Business Administration and operating 
under the Small Business Investment Act of 1958 and which 
is actively engaged in the business of providing funds to 
small business concerns under that Act. 
This paragraph 
shall not apply if any shareholder of the small business 
investment company owns at any time during the taxable year 
directly or indirectly (including, in the case of an individual, 
ownership by the members of his family as defined in section 
544(a) (2)) a 5 per centum or more proprietary interest in 
a small business concern to which funds are provided by the 
investment company or 5 per centum or more in value of the 
outstanding stock of such concern." 
(b) The amendment made by this section shall apply to taxable years 
beginning after December 31,1958. 
Approved September 23, 1959. 
September 23, 1959 
[H. R. 6059] 
Defense Depart-
ment. Civilian po-
sitions. 
63 Stat. 959. 
Public Law 86-377 
AN ACT 
To provide additional civilian positions for the Department of Defense for 
purposes of scientific research and development relating to the national 
defense, to improve the management of the activities of such Department, 
and for other purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That (a) section 505 
of the Classification Act of 1949, as amended (5 U.S.C. 1105), is 
amended by adding the following new subsection at the end thereof: 
"(j) The Secretary of Defense is authorized, subject to the stand-
ards and procedures prescribed by this Act, to place a total of three 
hundred seventy-tw^o positions in the Department of Defense in grades 
16, 17, and 18 of the General Schedule." 
(b) The total number of positions authorized by section 505(b) of 
the Classification Act of 1949, as amended (5 U.S.C. 1105(b)), to be 
placed in grades 16,17, and 18 of the General Schedule of such Act at 
any time shall be deemed to have been reduced by the number of 
positions in such grades allocated to the Department of Defense 
immediately prior to the date of enactment of this Act. 
The respective 
numbers of positions authorized by such section 505(b) to be placed 
in grades 17 and 18 of such schedule at any one time shall be deemed 
to nave been reduced by the respective numbers of positions in such 
grades allocated to the Department of Defense immediately prior to 
the date of enactment of this Act. 
(c) Nothing contained in this section shall affect any position 
existing under authority of section 505(b) of the Classification Act 
of 1949, as in effect immediately prior to the date of enactment of 
this Act, the compensation attached to any such position, and any 
incumbent thereof, his appointment thereto, and his right to re-
ceive the compensation attached thereto, until appropriate action is