INCOME TAX 35 (17) Teachers' retirement fund associations of a purely local character, if (A) no part of their net earnings inures (other than through payment of retirement benefits) to the benefit of any private shareholder or individual, and (B) the income consists solely of amounts received from public taxation, amounts received from assessments upon the teaching salaries of members, and income in respect of investments; (18) Religious or apostolic associations or corporations, if such associations or corporations have a common treasury or community treasury, even if such associations or corporations engage in busi- ness for the common benefit of the members, but only if the mem- bers thereof include (at the time of filing their returns) in their gross income their entire pro-rata shares, whether distributed or not, of the net income of the association or corporation for such year. Any amount so included in the gross income of a member shall be treated as a dividend received. SEC. 102. SURTAX ON CORPORATIONS IMPROPERLY ACCUMULATING SURPLUS. (a) IMPOSrrIIN OF TAX. There shall be levied, collected, and paid for each taxable year (in addition to other taxes imposed by this chapter) upon the net income of every corporation (other than a personal holding company as defined in section 501 or a foreign per- sonal holding company as defined in Supplement P) if such corpora- tion, however created or organized, is formed or availed of for the purpose of preventing the imposition of the surtax upon its share- holders or the shareholders of any other corporation, through the medium of permitting earnings or profits to accumulate instead of being divided or distributed, a surtax equal to the sum of the following: 25 per centum of the amount of the undistributed section 102 net income not in excess of $100,000, plus 35 per centum of the undistributed section 102 net income in excess of $100,000. (b) PRIMA FACIE EVIDENCE.- The fact that any corporation is a mere holding or investment company shall be prima facie evidence of a purpose to avoid surtax upon shareholders. (c) EVIDENCE DETERMINATIVE OF PURPOSE.-The fact that the earn- ings or profits of a corporation are permitted to accumulate beyond the reasonable needs of the business shall be determinative of the purpose to avoid surtax upon shareholders unless the corporation by the clear preponderance of the evidence shall prove to the contrary. (d) DEFINITIONS.- As used in this chapter- (1) SECTION 102 NET INCOME.-The term "section 102 net income" means the net income minus the sum of- (A) TAxES.- Federal income, war-profits, and excess-profits taxes paid or accrued during the taxable year, to the extent not allowed as a deduction by section 23, but not including the tax imposed by this section or a corresponding section of a prior income-tax law. (B) DISALLOWED CHARITABLE, ETC., CONTRIBUTIONS.--Contribu- tions or gifts payment of which is made within the taxable year, not otherwise allowed as a deduction, to or for the use of donees described in section 23 (o), for the purposes therein specified. (C) DISALLOWEw LOssEs. -Losses from sales or exchanges of capital assets which are disallowed as a deduction by section 117 (d). (2) UNmDISTUBED SECTION 102 NET INcoME.- The term "undis- tributed section 102 net income" means the section 102 net income minus the basic surtax credit provided in section 27 (b), but the
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