714 INCOME TA X. COMPUTATION OF NET I NCOME - Contd . If no part accruing to suc h State, etc ., net income from operation to be taxable . Dividends from "China Trade Act" cor por ati ons . Shi powne rs' mutu al associations . Receipts . Capital gains and losses. Computation of tax . Definition of "capi- tal assets ." Determination of pe- riod for which hel d . Property received on an exc hange . Ante, p . 706. P eriod of pro per ty holding . 73d C ONGRESS. SESS. II. CH. 277. MAY 10, 1934 . the refund is to be applied in part payment for the acquisition of such bridge . (2) If by the t erms of su ch con tract no part of the proce eds from the operation of the bridge for the taxa ble year would, irrespective of the tax imposed by this title, accrue directly to or for the use of or be applied for the benefit of such State or political subdivision, then the tax upon the net income from the operat ion of s uch brid ge shall be levi ed, asse ssed, co llected, and paid in the manner and at the rates prescribed in this title . (f) DIV IDEN D FR OM " CHINA TRADE ACT" CORPORATION .-In the ca se of a pe rs on, amounts distributed as dividends to or for his benefit by a corporation organized under the China Trade Act, 1922, if, at the t ime of s uch distr ibution, he is a residen t of Chi na, and the equitable right to the income of the shares of stock of the corp oration is in go od faith vested i n him . (g) SHI POWN ERS' PRO TECT ION AND INDE MNIT Y AS SOCI ATIO NS .-The rece ipts of shipowne rs' mutua l protec tion and indemni ty assoc iations not organized for profit, and no part of the net earnings of which inur es to th e benefi t of any private sharehol der ; but suc h corpor a- tions shall be subject as other persons to the tax upon their net inco me from interest , dividen ds, and rents . SEC. 117 . C APITAL GAINS AND L OSSES . (a) GENERAL RULE .-In the case of a taxpayer, other than a corpo- ration, only the following percentages of the gain or loss recognized upo n the sale or exchange of a capi tal a sset s hall be taken into ac cou nt in computing net income 100 per centum if the capital asset has been held for not more than 1 year ; 80 per centum if the capital asset has been held for more than 1 year but not for more than 2 years ; 60 per centum if the capital asset has been held for more than 2 years but not for more than 5 years ; 40 per centum if the capital asset has been held for more than 5 years but not for more than 10 years ; 30 per centum if the capital asset has been held for more than 10 years . (b) DEFINITION OF CAPITAL ASSETS .-For the purposes of th is title, " capital assets " means property held by the taxpayer (whether or not connected with his trade or business), but does not include stoc k in trade of th e tax payer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business . (c) DETERMINATION OF PERIOD FOR WHICH HELD .-For the purpose of su bse ct ion ( a)- (1) In determining the period for which the taxpayer has held prope rty received on an exchange there shall be included the period for which he he ld the property exchanged, if under the provisions of section 113, the property received has, for the purpose of determining ga in or loss from a sale or exchange, the same basis in whole or in part in his hands as the property exchanged . (2) In determining the period for which the taxpayer has held property however acquired there shall be included the period for which such property was held by any other person, if under the provisions of section 113, such property has, for the purpose of determining gain or loss from a sale or exchange, the same basis
