Page:United States Statutes at Large Volume 54 Part 1.djvu/1016

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PUBLIC LAWS-CH. 757-OCT. 8, 1940 "SEC. 715. DEFINITION OF INVESTED CAPITAL. Post, p. 985. 53 Stat. 79; post, p. 987. 26 U. S. C., Supp. V, § 251. Post, p. 984. Definition. Money paid in. Property paid in. 63 Stat. 44 . 26 U. 8. C., Supp. V, 113 (b) (2). Distributions in stock. Earnings and prof- its. Gain on tax-free liquidation. 63 Stat. 43 . 26U.S. ., Supp. V, 113 (a) (16). 63 Stat. 38 . 26 U. S. C., Supp. V, 112(b) (6). "For the purposes of this subchapter the invested capital for any taxable year shall be the average invested capital for such year, determined under section 716, reduced by an amount computed under section 720 (relating to inadmissible assets). If the Commissioner finds that in any case the determination of invested capital, on a basis other than a daily basis, will produce an invested capital differing by not more than $1,000 from an invested capital determined on a daily basis, he may, under regulations prescribed by him with the approval of the Secretary, provide for such determination on such other basis. (For computation of invested capital in case of foreign corporations and corporations entitled to the benefits of section 251, see section 724.) "SEC. 716. AVERAGE INVESTED CAPITAL. "The average invested capital for any taxable year shall be the aggregate of the daily invested capital for each day of such taxable year, divided by the number of days in such taxable year. "SEC. 717. DAILY INVESTED CAPITAL. "The daily invested capital for any day of the taxable year shall be the sum of the equity invested capital for such day plus the bor- rowed invested capital for such day determined under section 719. "SEC. 718. EQUITY INVESTED CAPITAL. "(a) DEFINrrON. - The equity invested capital for any day of any taxable year shall be determined as of the beginning of such day and shall be the sum of the following amounts, reduced as provided in subsection (b)- "(1) MONEY PAID IN.- Money previously paid in for stock, or as paid-in surplus, or as a contribution to capital; "(2) PROPERTY PAID IN. -Property (other than money) previ- ously paid in (regardless of the time paid in) for stock, or as paid-in surplus, or as a contribution to capital. Such property shall be included in an amount equal to its basis (unadjusted) for determining loss upon sale or exchange. If the property was disposed of before such taxable year, such basis shall be deter- mined in the same manner as if the property were still held at the beginning of such taxable year. If such unadjusted basis is a substituted basis it shall be adjusted, with respect to the period before the property was paid in, in the manner provided in sec- tion 113 (b) (2); "(3) DISTRIBUTIONs IN STOCK.- Distributions in stock- "(A) Made prior to such taxable year to the extent to which they are considered distributions of earnings and profits; and "(B) Previously made during such taxable year to the extent to which they are considered distributions of earnings and profits other than earnings and profits of such taxable year; "(4) EARNINGS AND PROFITS AT BEGINNING OF YEAR.- -The accu- mulated earnings and profits as of the beginning of such taxable year; and "(5) INCREASE ON ACCOUNT OF GAIN ON TAX-FREE LIQUIDATION. - In the case of the previous receipt of property (other than prop- erty described in the last sentence of section 113 (a) (15)) by the taxpayer in complete liquidation of another corporation under section 112 (b) (6), or the corresponding provision of a prior revenue law, an amount, with respect to each such liquidation, [54 STAT. 982