80 STAT. ]
PUBLIC LAW 89-389-APRIL 14, 1966
113
(B) credit or refund of the amount of any overpayment for the taxable year in which such distribution or distributions were received is prevented on the date of the enactment of this Act, by the operation of any law or rule of law (other than chapter 74 of the Internal Revenue Code of 1954, relating to closing agreements 71^23"^*^ ^^^^ and compromises), credit or refund of such overpayment may, nevertheless, be allowed or made, to the extent such overpayment is attributable to an election under this subsection, if claim therefor is filed before the expiration of the 2-year period beginning on the date on which the regulations prescribed under this subsection are published in the Federal Register. (8) No interest on any deficiency attributable to an election under this subsection shall be assessed or collected for any period before the expiration of the 2-year period beginning on the date on which the regulations prescribed under this subsection are published in the Federal Register. No interest on any overpayment attributable to an election under this subsection shall be allowed or paid for any period before the expiration of such 2-year period. SEC. 2. (a) Subchapter S of chapter 1 of the Internal Revenue Code of 1954 (relating to election by certain small business corporations 72 Stat. leso. as to taxable status) is amended by adding at the end thereof the following new section: "SEC. 1378. TAX IMPOSED ON CERTAIN CAPITAL GAINS. " (a) GENERAL RULE. — I f for a taxable year of an electing small business corporation— " (1) the excess of the net long-term capital gain over the net short-term capital loss of such corporation exceeds $25,000, and exceeds 50 percent of its taxable income for such year, and "(2) the taxable income of such corporation for such year exceeds $25,000, there is hereby imposed a tax (computed under subsection (b)) on the income of such corporation. " (b) AMOUNT OF TAX.—The tax imposed by subsection (a) shall be the lower of— " (1) an amount equal to 25 percent of the amount by which the excess of the net long-term capital gain over the net shortterm capital loss of the corporation for the taxable year exceeds $25,000, or "(2) an amount equal to the tax which would be imposed by section 11 on the taxable income (computed as provided in section 1373(d)) of the corporation for the taxable year if the corporation was not an electing small business corporation. No credit shall be allowable under part IV of subchapter A of this ^^ "sc 31-40. chapter (other than under section 39) against the tax imposed by ^^ Stat. lev. subsection (a). "(c)
EXCEPTIONS.—
"(1) IN GENERAL.—Subsection (a) shall not apply to an electing small business corporation for any taxable year if the election under section 1372(a) which is in effect with respect to such corporation for such taxable year has been in effect for the 3 immediately preceding taxable years. " (2) NEW CORPORATIONS.—Subsection (a) shall not apply to an electing small business corporation if— " (A) it has been in existence for less than 4 taxable years, and " (B) an election under section 1372(a) has been in effect with respect to such corporation for each of its taxable years.
Nonappucabiuty
provisions.
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