78 STAT. ]
PUBLIC LAW 88-272-FEB. 26, 1964
' ' (b) COMPONENT JVIEMBER.— "(1) GENERAL RULE.—For
121
purposes of this part, a corporation is a component member of a controlled group of corporations on a December 31 of any taxable year (and with respect to the taxable year which includes such December 31) if such corporation— " (A) is a member of such controlled group of corporations on the December 31 included in such year and is not treated as an excluded member under paragraph (2), or " (B) is not a member of such controlled group of corporations on the December 31 included in such year but is treated as an additional member under paragraph (3). "(2) EXCLUDED MEMBERS.—A corporation which is a member of a controlled group of corporations on December 31 of any taxable year shall be treated as an excluded member of such group for the taxable year including such December 31 if such corporation— " (A) is a member of such group for less than one-half the number of days in such taxable year which precede such December 31, " (B) is exempt from taxation under section 501(a) (except ^^^^ ^*^*' ^^^' a corporation which is subject to tax on its unrelated business 26 USC so i, s11. taxable income under section 511) for such taxable year, " (C) is a foreign corporation subject to tax under section 881 for such taxable year, ^e use ss i. " (D) is an insurance company subject to taxation under section 802 or section 821 (other than an insurance company yeStat.^^gsg!^' which is a member of a controlled group described in sub- 26 USC 802,821. section (a)(4)), or " (E) is a franchised cori^oration, as defined in subsection (f)(4). " (3) ADDITIONAL MEMBERS.—A corporation which—
" (A) was a member of a controlled group of corporations at any time during a calendar year, " (B) is not a member of such group on December 31 of such calendar year, and " (C) is not described, with respect to such group, in subparagraph (B), (C), (r)), o r (E) of paragraph (2), shall be treated as an additional member of such group on December 31 for its taxable year including such December 31 if it was a member of such group for one-half (or more) of the number of days in such taxable year which precede such December 31. " (4) OVERLAPPING GROUPS.—If a corporation is a component
member of more than one controlled group of corporations with respect to any taxable year, such corporation shall be treated as a component member of only one controlled group. The determination as to the group of which such corporation is a component member shall be made under regulations prescribed by the Secretary or his delegate which are consistent with the purposes of this part. " (c) CERTAIN STOCK EXCLUDED.— "(1) GENERAL RULE.—For purposes
of this part, the term
'stock' does not include— " (A) nonvoting stock which is limited and preferred as to dividends, " (B) treasury stock, and " (C) stock which is treated as 'excluded stock' under paragraph (2).
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