PUBLIC LAWS-CH. 757-OCT. 8, 1940 Taxable years after Dec. 31, 1939. 53 Stat.7. 26 U. S. C., Supp. V, 13 (note). Post, p. 980. Income taxes. 53 Stat. 35. 26 U. S. C., Supp. r, 1102. Long-term gainsand losses. 53 Stat. 14 . 26 U. S. C., Snpp. V, i23 (). Income from retire- ment or discharge of bonds, etc. Refunds and inter- est on Agricultural Adjustment Act taxes. 48 Stat. 31. 7U.S.C., ch.26; Supp. V, ch. 26 . Recoveries of bad debts. Dividends received. Post, p. 981. Dividends received. Interest. Pot, p. 984 . more than $25,000, the amount by which the excess profits credit for the preceding taxable year (if beginning after December 31, 1939) exceeds the excess profits net income for such preceding taxable year. "SEC. 711. EXCESS PROFITS NET INCOME. "(a) TAXABLE YEARS BEGINNING AFTER DECEMBER 31, 1939. - The excess profits net income for any taxable year beginning after Decem- ber 31, 1939, shall be the normal-tax net income, as defined in section 13 (a) (2), for such year except that the following adjustments shall be made: "(1) EXCESS PROFITS CREDIT COMPUTED UNDER INCOME CREDIT-- If the excess profits credit is computed under section 713, the adjustments shall be as follows: "(A) Income Taxes. -The deduction for taxes shall be increased by an amount equal to the tax (not including the tax under section 102) under Chapter 1 for such taxable year; "(B) Long-term Gains and Losses. -There shall be excluded long-term capital gains and losses. There shall be excluded the excess of gains from the sale or exchange of property held for more than eighteen months which is of a character which is subject to the allowance for depreciation provided in section 23 (1) over the losses from the sale or exchange of such property; "(C) Income From Retirement or Discharge of Bonds, and So Forth.- There shall be excluded, in the case of any taxpayer, income derived from the retirement or discharge by the taxpayer of any bond, debenture, note, or certificate or other evidence of indebtedness, if the obligation of the taxpayer has been outstanding for more than eighteen months, including, in case the issuance was at a premium, the amount includible in income for such year solely because of such retirement or discharge; "(D) Refunds and Interest on Agricultural Adjustment Act Taxes. - There shall be excluded income attributable to refund of tax paid under the Agricultural Adjustment Act of 1933, as amended, and interest upon any such refund; "(E) Recoveries of Bad Debts. -There shall be excluded income attributable to the recovery of a bad debt if a deduc- tion with reference to such debt was allowable from gross income for any taxable year beginning prior to January 1, 1940; "(F) Dividends Received.- The credit for dividends received shall apply, without limitation, to dividends on stock of domestic corporations. "(2) ExcEss PROFITS CREDIT COMPUTED UNDER INVESTED CAPITAL CRarET.- I f the excess profits credit is computed under section 714, the adjustments shall be as follows: "(A) Dividends Received. -The credit for dividends received shall apply, without limitation, to all dividends on stock of all corporations, except dividends (actual or con- structive) on stock of foreign personal-holding companies; "(B) Interest.- The deduction for interest shall be reduced by an amount equal to 50 per centum of so much of such interest as represents interest on the indebtedness included in the daily amounts of borrowed capital (determined under section 719 (a)); 976 [54 STAT.