832
SEVENTIETH CONGRESS . SESS. I . CH. 852. 1928 . INCO ME TAX
(h) Subsidiary formed to comply with foreign law .-In the c ase of Sub sidi ary of do- mestic corporation a domestic corporation owning or controlling, directly or indi- formed to comply with rectl . 100 pe r centur n of the capital stock ( exclusiv e of dir ectors' for eign , l aw, deemed
ydomestic .
qualifying shares) of a corporation organized under the laws of a contiguous for ei gn co unt ry and mai nt ain ed solely for the pu rp ose of c omplying with th e laws o f such co untry as to titl e and op eration of property, such foreign corporation may, at the option of the domestic corporation, be treated for the purpose of this title as a domestic corporation . Application of sus-
of pension of statute of
(i) Suspension of running of statute of limitations .-If a notice under limitatio n .
section 272(a) in respect ofa deficiency for any taxable year is Post, pp . 852,857. mailed to a corporation, the suspension of the running of the statute of limitations, provided in section 277, shall apply in the case of corporations with which such corporation made a consolidated return for such taxable year . Allocatio n of income (j) Allocation of income and deductions .-For allocation of income and deductions . Ante, p. 896 .
and deductions of related trades or businesses, see section 45 . Consoli dated re- turn s 1 928
SEC. 142. CONSOLIDATED RETURNS OF CORPORATIONS-TAXABLE , . YEAR 1928 . Affiliated
corpora- tio ns
or
(a) Consolidated returns permitted.--Corporations which are afƒili- tion s may ma ke separate.
ated within the meaning of this section may, for the taxable Vol. 44, p . 46. year 1928, make separate returns or, under regulations prescribed by the Commiss ioner with the approval of the Secretary, make a consolidated return of net income for the pu rpo se of t his title, in which case the taxes thereunder shall be computed and determined upon the basis of such return . If return for the taxable year 1927 was ma de upon either o f such b ases,-re turn for the tax able yea r 1928 shall be upon the same basis unless permission to change the basis is gr an ted by the Commissioner. Computation of pro- (b) Computation and payment of tax .-In any case in which a tax portionatea ssessments . is assessed upon the basis of a consolidated return, the total tax sh all be computed in the fi rst instance as a un it and shall th en be ass essed up on the r espectiv e affili ated cor poration s in suc h pro- portions as may be agreed u pon among the m, or, in the absence of any such agree ment, then on the basis of the net income proper ly on ly one specific assignable to each . There shall be allowed in computing the income c=~me p 803
tax only one specific credit computed as provided in section 26(b) . Corporations deemed
(c) Definition of affiliation .-For the pur po se of th is se ct ion two affiliated . or more domestic corpor ations shall be deemed to be affiliated (1) if one corporation owns at least 95 per centum of the stock of the other or others, or (2) if at least 95 per centum of the stock of two or more corporat ions is owned by the sam e intere sts . As used in this subsection the term "stock " does not include nonvoting stock which is limited and preferred as to dividends . China trade c orpora-
d China Trade Act cor orations .-A corporation organized under tions deemed not af- ( )
li fili ated .
the
China
Trade
Act,
1922,
shall
not
be
deemed
to
be
affiliated
with
any o ther c orpor ation
withi n the
mean ing of
this
sect ion .
Corporatio ns
in
(e) Corporations deriving income from possessions of United States .- United States posses- sions, deemed foreign . For the purposes of this se ction a corporation entitle d to the benefits of section 251, by reason of receiving a large percentage of its income from possessions of the United States, shall be treated as a for eign cor poration . A pplic atio n
suo
f) S uspensio n of run ning of s tatute o f limita tions .- If a notice pension caof s statute of
( limitationsn
under section 272(a) in respect of a deficiency for the taxable Post, pp. 852, 857 . year 1928 is mailed to a corporation, the suspension of the running of the statute of limitations, provided in section 277, shall apply in the case of corporations with which such corporation made a con- solidated return for such taxable year .
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