7 4TH C ONGRESS . SESS. II. CH. 690. JUNE 22, 1936 .
168 7 he elects to have the depletion allowance for such property for the taxable year for which the return is made computed with or without regard to percentage depletion, and the depletion allow- ance in respect of such pro perty for such year shall be computed according to the election thus made . If' the taxpayer fails to Computa tion it no make such statement in the return, the depletion allowance for sta teme nt made . such property for such year shall be computed without reference to percentag e depletio n . The meth od, det ermi ned as a bove , o f computing the depletion allowance shall be applied in the case of the property for all taxable years in which it is in the hands of such taxpayer, or of any other person if the basis of the Ante, p. 1682 . property (for determining gain) in his hands is, under section 113, determined by reference to the basis in the hands of such taxpayer, either directly or through one or more substituted bases, as defined in that section . The above right of election shall be subject to Qualifica tion . th e qualific ation that this para graph shal l, for the purpose o f determining whether the method of computing the depletion al lowance fo llows the property, be conside red a cont inuation o f section 114 (b) (4) of the Revenue Act of 1934, and as giving no Vol.48,p.710 . new election in cases where such section would, if applied, give no new elect ion . SEC. 115. DISTRIBUTIONS BY CORPORATIONS .
D istributio ns by cor - pora tions . (a) D EFINI TION OF DIVIDEND .-The term " dividend " when used "Divid end" defined. in this title (except in section 203 (a) (3) and section 207 (c) (1), Post, pp . 1711, 1714 . relating to insurance companies) means any distribution made by a corporation to its shareholders, whether in money or in other property, (1) out of its earnings or profits accumulated after Feb- ruary 28, 1913, or (2) out of the earnings or profits of the taxable year (com puted as o f the clo se of the taxable ye ar without diminu- tion by reason of any distributions made during the taxable year), without regard to the amount of the earnings and profits at the time the distribution was made . (b) SOURCE or DISTRIBUTIONS.-For the purposes of this Act every source. distribution is made out of earnings or profits to the extent thereof, and from the most recently accumulated earnings or profits . Any before March s, es., earnings or profits accumulated, or increase in value of property tax-free . accr ued , be fore Mar ch 1, 1913, may be dist ribu ted exe mpt from tax , after the earnings and profits accumulated after February 28, 1913, have been distribut ed, but a ny such ta x-free dis tribution shall be applied against and reduce the adjusted basis of the stock provided Ante, p . 1682 . in section 113 . (C) DISTRIBUTIONS IN LIQUIDATION .-Amounts distributed in COm- Dist ributions in liq- plete liquidation of a corporation shall be treated as in full payment uidation . i n exchange for the stock, and amounts distributed in partial liquida- tion of a corporation shall be treated as in part or full payment in exchange for the stock . The gain or loss to the distributee resulting Gain or loss to di s- from such exchange shall be determined under section 111, but shall t Autee . 1 0 7 8 e be recognized only to the extent provided in section 112 . Despite the provisions of section 117 (a), 100 per centum of the gain so Post, p .1691 . recognized shall be taken into account in computing net income except in the case of amounts distributed in complete liquidation of a corporation . For the purpose of the preceding sentence, "complete ti ono on plete edliquida. liquidation includes any one of a series of distributions made by a corporation in complete cancellation or redemption of all of its stock in accordance with a b ona fide p lan of liq uidation a nd under -which th e transfer of the p roperty un der the li quidation is to be completed within a time specified in the plan, not exceeding two years from the close of the taxable year during which is made the
