PUBLIC LAWS-CH. 757-OCT. 8 , 1940 "Qualified compo- nent corporation." Base period. Base period years. Existence of acquir- ing corporation. Component cor- porations of compo- nent corporations. Pot, pp. 9e3, 994. Ante, pp . 979, 980, 981. "(c) QUALIFIED COMPONENT CORPORATION.- T he term 'qualified component corporation' means a component corporation which was in existence on the date of the beginning of the taxpayer's base period. "(d) BASE PERIOD. -In the case of a taxpayer which is an acquiring corporation the base period shall be: "(1) If the tax is being computed for any taxable year begin- ning in 1940, the forty-eight months preceding the beginning of such taxable year; or "(2) If the tax is being computed for any taxable year begin- ning after December 31, 1940, the forty-eight months preceding what would have been its first taxable year beginning in 1940 if it had had a taxable year beginning in 1940 on the date on which the taxable year for which the tax is being computed began. "(e) BASE PERIOD YEARS. - In the case of a taxpayer which is an acquiring corporation its base period years shall be the four suc- cessive twelve-month periods beginning on the same date as the beginning of its base period. "(f) EXISTENCE OF ACQUImING CORPORATION. -For the purposes of subsection (c) and section 741, if any component corporation was in existence on the date of the beginning of the taxpayer's base period (either actually or by reason of this subsection), its acquiring cor- poration shall be considered to have been in existence on such date. "(g) C1MPONENT CORPORATIONS OF COMPONENT CORPORATIONS. -I f a corporation is a component corporation of an acquiring corpora- tion, under subsection (b) or under this subsection, it shall (except for the purposes of section 742 (d) (1) and (2) and section 743 (a)) also be a component corporation of the corporation of which such acquiring corporation is a component corporation. "SEC. 741. ELECTION OF INCOME CREDIT. "In addition to the corporations which under section 712 (a) may elect the excess profits credit computed under section 713 or the excess profits credit computed under section 714, a taxpayer which is an acquiring corporation which was in existence on the date of the beginning of its base period shall have such election. "SEC. 742. AVERAGE BASE PERIOD NET INCOME. nvetg boe eriod "In the case of a taxpayer which is an acquiring corporation which was actually in existence on the date of the beginning of its base period, or which is entitled under section 741 to elect the excess profits Ae,p.8 credit computed under section 713, its average base period net income (for the purpose of the credit computed under section 713) shall be omptatn computed as follows, in lieu -f the method provided in section 713: "(a) By ascertaining with respect to each of its base period years- "(1) The amount of its excess profits net income for each of its taxable years beginning after December 31,1935, and ending with or within such base period year; or, in the case of each such taxable year in which the deductions plus the credit for dividends received exceeded the gross income, the amount of such excess; "(2) With respect to each of its qualified component corpora- tions, the amount of its excess profits net income for each of its taxable years beginning after December 31, 1935, and ending with or within such base period year of the taxpayer; or, in the case of each such taxable year in which the deductions plus the credit for dividends received exceeded the gross income, the amount of such excess; 992 [54 STAT.
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