PUBLIC LAWS-CH. 757-OCT. 8, 1940 Election as to tax- ability. 53Stat. 4. 26U. S.C., Supp.V, ch. 1. Post, p. 1005. Tax provisions. 49 Stat. 1998. 46 U.S. C., Supp. V, § 1155 (b). Ante, p. 975. Computation. Exempt corpora- tions. 53 Stat. 33. 26 U. S. C., Supp. V, 101. 53 Stat. 92. 26 U. S. C., Supp. V, § 331. 53 Stat. 98. 26 U. S. C., Supp. V, §361. Ante, p. 789. 53 Stat. 104 . 26 U. 8S. C., Supp. V, I 501. 52 Stat. 987. 49 U. 8. C., Snpp. V, § 481-96. "(b) ELECION AS TO TAXABILITY. -I f a personal service corpora- tion signifies, in its return under Chapter 1 for any taxable year, its desire not to be subject to the tax imposed under this subchapter for such taxable year, it shall be exempt from such tax for such year, and the provisions of Supplement S of Chapter 1 shall apply to the share- holders in such corporation who were such shareholders on the last day of such taxable year of the corporation. "SEC. 726. CORPORATIONS COMPLETING CONTRACTS UNDER MER- CHANT MARINE ACT, 1936. "(a) If the United States Maritime Commission certifies to the Commissioner that the taxpayer has completed within the taxable year any contracts or subcontracts which are subject to the provisions of section 505 (b) of the Merchant Marine Act of 1936, as amended, then the tax imposed by this subchapter for such taxable year shall be, in lieu of a tax computed under section 710, a tax computed under subsection (b) of this section, if, and only if, the tax computed under subsection (b) is less than the tax computed under section 710. "(b) The tax computed under this subsection shall be the excess of- "(1) A tentative tax computed under section 710 with the normal-tax net income increased by the amount of any payments made, or to be made, to the United States Maritime Commission with respect to such contracts or subcontracts; over "(2) The amount of such payments. "SEC. 727. EXEMPT CORPORATIONS. "The following corporations shall be exempt from the tax imposed by this subchapter: "(a) Corporations exempt under section 101 from the tax imposed by Chapter 1. "b) Foreign personal-holding companies, as defined in section 331. "(c) Mutual investment companies, as defined in section 361. "(d) Investment companies which under the Investment Company Act of 1940 are registered as diversified companies at all times during the taxable year. For the purposes of this subsection, if a company is so registered before July 1, 1941, it shall be considered as so registered at all times prior to the date of such registration. "(e) Personal-holding companies, as defined in section 501. "(f) Foreign corporations not engaged in trade or business within the United States and not having an office or place of business therein. "(g) Domestic corporations satisfying the following conditions: "(1) If 95 per centum or more of the gross income of such domestic corporation for the three-year period immediately pre- ceding the close of the taxable year (or for such part of such period during which the corporation was in existence) was derived from sources other than sources within the United States; and "(2) If 50 per centum or more of its gross income for such period or such part thereof was derived from the active conduct of a trade or business. "(h) Any corporation subject to the provisions of Title IV of the Civil Aeronautics Act of 1938, in the gross income of which for any taxable year beginning after December 31, 1939, there is includible compensation received from the United States for the transportation of mail by aircraft if, after excluding from its gross income such compensation, its adjusted excess profits net income for such year is zero or less. 988 [54 STAT.