74
STAT.]
PUBLIC LAW 86-435-APR. 22, 1960
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Public Law 86-435 AN ACT To amend the Internal Revenue Code of 1954 with respect to the treatment of copyright royalties for purposes of the personal holding company tax.
Aoril22,^1960 [H. R. 7588]
Be it enacted by the Senate and Home of Representatives of the United States of America in Corigress assembled, That (a) section ing"ompany'tax.'** 548(a) of the Internal Revenue Cfode of 1954 (relating to personal ^^^3°^^"^*'* '•°y"^" holding company income) is amended by adding at the end thereof esA Stat. ise. the following new paragraph: ^^ "^^ ^'*^" "(9) COPYRIGHT ROYALTIES.—Copyright royalties, unless— " (A) such royalties (exclusive of royalties received for the use of, or right to use, copyrights or interests in copyrights on works created in whole, or in part, by any shareholder) constitute 50 percent or more of the gross income, " (B) the personal holding company income for the taxable year not taking into account— "(i) copyright royalties, other than royalties received for the use of, or right to use, copyrights or interests in copyrights in works created in whole, or in part, by any shareholder owning more than 10 percent of the total outstanding capital stock of the corporation, and "(ii) dividends from any corporation in which the taxpayer owns at least 50 percent of all classes of stock entitled to vote and at least 50 percent of the total value of all classes of stock and which corporation meets the requirements of this subparagraph and subparagraphs (A) and (C) is 10 percent or less of the ^ o s s income, and " (C) the deductions allowable under section 162 (other 26 USC I62. than deductions for compensation for personal services rendered by the shareholders and other than deductions for royalties to shareholders) constitute 50 percent or more of the gross income. For purposes of this subsection, the term 'copyright royalties' means compensation, however designated, for the use of, or the right to use, copyrights in works protected by copyright issued under title 17 of the United States Code (other than by reason ^^ s*«*- ^52. of section 2 or 6 thereof), and to which copyright protection is also extended hj the laws of any country other than the United States of America by virtue of any international treaty, convention or agreement, or interests in any such copyrighted works, and includes payments from any person for performing rights in any such copyrighted work. For purposes of this paragraph the term 'shareholder' shall include any person who owns stock within the meaning of section 544. This paragraph shall not apply to 26 USC 544. compensation which is rent within the meaning of paragraph (7), determined without regard to the requirement that rents constitute 50 percent or more of the gross income." (b) Such section 543(a) is amended— 26 USC 543. (1) by striking out " (other than mineral, oil, or gas royalties)" in paragraph (1) and inserting in lieu thereof "(other than mineral, oil, or gas royalties or copyright royalties)"; and (2) by adding at the end of paragraph (6) the following new sentence: " For purposes of the preceding sentence, copyright royalties constitute personal holding company income."
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