SEVENTIETH CONGRESS. SEss. I. Cii. 852. 1928.
815 (b) The f act th at any corpo ration is a mere ho lding or inv estmen t company, or that the gains or profits are permitted to accumulate beyond the reasonable needs of the business, shall be prima facie evidence of a purpose to escape the surtax . (c) As used in this section the term "net income" means the net income as defined in section 21, increased by the sum of the amount of the dividend deduction allowed under section 23(p) and the amount of the interest on obligations of the United States issued after September 1, 1917, which would be subject to tax in whole or in part in the hands of an indiv idual owner . (d) The tax imposed by this section shall not apply if all the sh arehol ders o f the corpor ation includ e (at t he tim e of f iling their re turns) in their gr oss incom e their e ntire di stributiv e shares, whether distributed or not, of the net income of the corporation for such year . Any amount so included in the gross income of a shareholder shall be treated as a dividend received . Any subsequent distribution made by th e corp oratio n out of the earni ngs or profit s for such t axable year shall, if distributed to any shareholder who has so included in his gross income his distributive share, be exempt from tax in the amount of the share so included . SEC . 105. TAXABLE PERIOD EMBRACING YEARS WITH DIFFER- ENT LAWS . If it is necessary to compute the tax for a period beginning in one calendar year (hereinafter in this section called "first calendar year ") and ending in the following calendar year (hereinafter in this section called " second calendar year ") and the law applicable to the sec ond ca lendar year is dif ferent from t he law appli cable to the first cal endar yea r, then t he tax un der this title for the peri od ending during the second calendar year shall be the sum of : (1) the same proportion of a tax for the entire period, determined under the law applicable to the first calendar year and at the rates for such year, which the portion of such period falling within the first calendar year is of the entire period ; and (2) the same proportion of a tax for the entire period, determined under the law applicable to the second calendar year and at the rates for such year, which the portion of such p eriod fal ling with in the se cond cale ndar year is of th e entire period . Supplement B-Computation of Net Income INCOME TAX Evidence of purpose of ev asion . Meaning of "net in- come" as used . Ante, pp . 797, 801 . A dditi onal tax not a pplic able if d istri bu- tive share included in income of shareholders . Subsequent distribu- tions . Taxable period em- bracing years with dif- fer ent laws . Computation of tax f or pe riod begi nning in one calendar year and end ing in the fo llowing . Compu tati on o f net income. [Supplementary t o Subtitle B, Part II] SEC . 111 . DETERMINATION OF AMOUNT OF GAIN OR LOSS .
Gain or loss . (a) Computation of gain or loss .-Except as hereinafter pro- Basis of d eter minin g, vided in this section, the gain from the sale or other disposition of on disposal of property . property shall be the excess of the amount realized therefrom over the basis provided in section 113, and the loss shall be the excess of Post, p . 818. such basis over the amount realized . (b) Adjustment of basis .-In computing the amount of gain or Computation . loss under subsection (a)- (1) Proper adjustment shall be made for any expenditure,
- tAdj ustm ent
of cap- receipt, loss, or other item, properly chargeable to capital account, and The basis shall be diminished by the amount of the de- haustion Deduction en for ex- (2)
etc. . of prop- duct ions f or exh austio n, wea r and tear, o bsoles cence, amort iza- er ty tion, and depletion which have since the acquisition of the property been allowable in respect of such property under this Act or prior income tax laws ; but in no case shall the amount of Limitation. the diminution in respect of depletion exceed a depletion deduc-
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