814 INCOME TAX Lim itat ion on mar- ket ing produ cts of no n- members. Organization by ex- empt associations for financing crop opera- tions of members . Res trict ion as to divi - dend rate of stock, etc . Reserve allowed. As trustees for ex- emp ted organizations. Federal land banks, etc . Vol.39,p.362 . Voluntary employ- ees' beneficiary associa- tions for life, accident, etc., benefits . Teachers' retirement fund associations . Accumulation of sur- plus to evade surtaxes. Tax on income of cor- porations accumulating gains, etc., to avoid sur- tax on its sha reholders . Addition to c orpora- tion tax. Ante, p . 797. SEVENTIETH CONGRESS . SEss. I . Cu. 852. 1928. law or a reasonable reserve for any necessary purpose . Such an association may m arket the products of nonmembers in an amount the value of which does not exceed the value of the products marketed for members, and may purchase supplies and equipment for nonmembers in an amount the value of which does not exceed the value of the supplies and equipment purchased for member s, provided the value of the purchases made for persons who are neither members nor producers does not exceed 15 per centum of the value of all its purchases ; ( 13) C orpor atio ns or ganiz ed by an assoc iatio n ex empt under the provisions of paragraph (12), or members thereof, for the purpose of financing the ordinary crop operations of such mem- bers or other producers, and o perated . in conjunction with such association . Exemption shall not be denied any such corpora- tion because it has capital stock, if the dividend rate of such stock is fixed at not to exceed the legal rate of interest in the State of incorporation or 8 per centum per annum, whichever is greater, on the value of the consideration for which the stock was issued, and if substantially all such stock (other than non- voting preferred stock, the owners of which are not entitled or pe rmitted t o partici pate, dir ectly or indirect ly, in th e profits of the corporation, upon dissolution or otherwise, beyond the fixed dividends) is owned by such association, or members thereof ; nor shall exemption be denied any such corporation because there is accumulated and maintained by it a reserve required by State law or a reasonable reserve for any necessary purpose ; (14) Corporations organized for the exclusive purpose of holding title to property, collecting income therefrom, and turning over the entire amount thereof, less expenses, to an organization which itself is exempt from the tax imposed by this title ; (15 ) Fede ral la nd ban ks, na tional farm- loan as sociat ions, and Federal intermediate credit banks, as provided in the Federal Farm Loan Act, as amended ; (16) Voluntary employees' beneficiary associations providing for the payment of life, sick, accident, or other benefits to the members of such association or their dependents, if (A) no part of their net earnings inures (other than through such pay- ments) to the benefit of any private shareholder or individual, and (B) 85 per centum or mo re of the income con sists of amounts collected from members for the sole purpose of making such payments and meeting expenses ; (17) Teachers' retirement fund associations of a purely local character, if (A) no part of their net earnings inures (other than through payment of retirement benefits) to the benefit of any private shareholder or individual, and (B) the income consists solely of amounts received from public taxation, am ounts rec eived from asse ssme nts u pon t he t eachi ng sa larie s of members, and income in respect of investments . SEC. 104 . ACCUMULATION OF SURPLUS TO EVADE SURTAXES . (a) If any corporation, however created or organized, is formed or availed of for the purpose of preventing the imposition of the surtax upon its sh arehol ders t hrough the m edium o f perm itting its g ains a nd profit s to a ccumul ate in stead of bei ng divi ded or distr ibuted , ther e shall be levied, collected, and paid for each taxable year upon the net income of such corporation a tax equal to 50 per centum of the amount thereof, which shall be in addition to the tax imposed by section 13 and shall be computed, collected, and paid upon the same basis and in the same manner and subject to the same provisions of law, inc luding pe nalties, as that t ax .
�
