830 INCOME TAX Cre dit s for foreign taxes may be taken in the year accrued . On same b asis for subs equen t ye ars . Evidence requ ired of foreign income. Taxes of foreign sub- sidiary . Propo rtion of forei gn tax on dividends re- ceived deemed to have been been pai d . Proviso. Limit on credit al- lowed . Meaning of "accu- mulated profits ." Determination of, by Commi ssio ner . Accounting period for f oreig n co rpora tions . Corporations treated as foreign. In United States pos- sessions . Post,p. 850. China Trade Act corporations . Post, p . 851 . Payments under 1926 Act . Credit or refund for . Post, p. 861 . SEVENTIETH CONGRESS . SEss . I . CH. 852. 1928. (d) Year in which credit taken .-The credits provided for in this section may, at the option of the taxpayer and irrespective of the method of accounting employed in keeping his books, be taken in the year in which the taxes of the foreign country or the possession of the United States accrued, subject, however, to the conditions pre- scribed in subsection (c) of this section . If the taxpayer elects to take such credits in the year in which the taxes of the foreign country or the possession of the United States accrued, the credits for all subsequent years shall be taken upon the same basis . (e) Proof of credits . -The se c redi ts s hall be allo wed only if the taxpayer furnishes evidence satisfactory to the Commissioner show- ing the amount of income derived from sources without the United States, and all other information necessary for the verification and com puta tion of such cre dits . (f) Taxes of foreign subsidiary .-For the purposes of this section a domestic corporation which owns a majority of the voting stock of a foreign corporation from which it receives dividends (not deductible under section 23 (p) ) in any taxable year shall be deemed to have paid the same proportion of any income, war-profits, or excess-profits taxes paid by such foreign corporation to any foreign country or to any possession of the United States, upon or with respect to the accumulated profits of such foreign corporation from which such dividends were paid, which the amount of such dividends bears to the amount of such accumulated profits : Provided, That the credit allowed to any domestic corporation under this subsection shall in no case exceed the same proportion of the taxes against which it is credited, which the amount of such dividends bears to the amount of the entire net income of the domestic corporation in which such dividends are included . The term " accumulated profits " when used in this subsection in reference to a foreign corporation, means the amount of its gains, profits, or income in excess of the income, war- profits, and excess-profits taxes imposed upon or with respect to such profits or income ; and the Commissioner with the approval of the Secretary shall have full power to determine from the accumu- lated profits of what year or years such dividends were paid ; treating dividends paid in the first sixty days of any year as having been paid from the accumulated profits of the preceding year or years (unless to his satisfaction shown otherwise), and in other respects treating dividends as having been paid from the most recently accumulated gains, profits, or earnings . In the case of a foreign corporation, the income, war-profits, and excess-profits taxes of which are determined on the basis of an accounting period of less than one year, the word " year " as used in this subsection shall be construed to mean such accounting period . (g) Corporations treated as foreign .-For the purposes of this section the following corporations shall be treated as foreign corporations (1) A corporation entitled to the benefits of section 251, by reason of receiving a large percentage of its gross income from sources within a possession of the United States ; (2) A corporation organized under the China Trade Act, 1922, and entitled to the credit provided for in section 261 . SEC. 132. PAYMENTS UNDER 1926 ACT . Any amount paid before or after the enactment of this Act on account of the tax imposed for a fiscal year beginning in 1927 and ending in 1928 by Title II of the Revenue Act of 1926 shall be credited toward the payment of the tax imposed for such fiscal year by this Act, and if the amount so paid exceeds the amount of such tax imposed by this Act, the excess shall be credited or refunded in accordance with the provisions of section 322 .
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