Page:United States Statutes at Large Volume 54 Part 1.djvu/1013

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54 STAT.] 76TH CONG. , 3D SESS.-CH. 757-OCT. 8, 1940 "(H) All expenditures for intangible drilling and develop- ment costs paid or incurred in or for the drilling of wells or the preparation of wells for the production of oil or gas, or expenditures for development costs in the case of mines, which the taxpayer has deducted from gross income as an expense, shall not be allowed to the extent that in the light of the taxpayer's business it was abnormal for the taxpayer to incurr a liability of such character or, if the taxpayer normally incurred such liability, to the extent that the amount of such liability in the taxable year was grossly dis- proportionate to the amount of such liability in the four previous taxable years; and "(I) Dividends Received.-T he credit for dividends received shall apply, without limitation, to dividends on stock of domestic corporations. "(2) CAPITAL GAINS AND LOSSES. -For the purposes of this sub- section the normal-tax net income and the special-class net income referred to in paragraph (1) shall be computed as if section 23 (g) (2), section 23 (k) (2), and section 117 were part of the revenue law applicable to the taxable year the excess profits net income of which is being computed, with the exception that the net short-term capital loss carry-over provided in subsection (e) of section 117 shall be applicable to net short-term capital losses for taxable years beginning after December 31, 1934. Such exception shall not apply for the purposes of computing the tax under this subchapter for any taxable year beginning before January 1, 1941. 979 Oi or gas wells. etc. Dividends received. Capital gains and losses. 53 Stat. 13, 50. 26 U. S. C., Supp. V, §§23 (g) (2), (k) (2), 117. 53 Stat. 52 . 26 U. S. C., Supp. V, §117 (e). "SEC. 712. EXCESS PROFITS CREDIT-ALLOWANCE. "(a) DOMESTIC CORPORATIONS.- In the case of a domestic corpo- o mesti c corpora- ration which was in existence before January 1, 1940, the excess o profits credit for any taxable year shall, at the election of the tax- payer made in its return for such taxable year, be an amount com- puted under section 713 or section 714. (For election in case of Poet,pp.9 W , 981 certain reorganizations of corporations not qualified under the pre- ceding sentence, see section 741.) In the case of all other domestic Pot. . 992. corporations the excess profits credit for any taxable year shall be an amount computed under section 714. In the case of a domestic tFalure to Ail r e. corporation which for any taxable year does not file a return befor urn the expiration of the time prescribed by law for filing such return, the excess profits credit for such taxable year shall be an amount computed under section 714. "(b) FOREIGN CORPORATIONS. - - In the case of a foreign corporation Foreign corpori, - engaged in trade or business within the United States or having an office or place of business therein, the first taxable year of which under this subchapter begins on any date in 1940, which was in existence on the day forty-eight months prior to such date and which at any time during each of the taxable years in such forty-eight months was engaged in trade or business within the United States or had an office or place of business therein, the excess profits credit for any taxable year shall, at the election of the taxpayer in its return for such taxable year, be an amount computed under section 713 or P P. PP . 981. section 714. In the case of all other such foreign corporations the excess profits credit for any taxable year shall be an amount com- puted under section 714. In the case of a foreign corporation which Failure to ile r for any taxable year does not file a return before the expiration of turn. the time prescribed by law for filing such return, the excess profits credit for such taxable year shall be an amount computed under section 714.