Page:United States Statutes at Large Volume 54 Part 1.djvu/1028

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PUBLIC LAWS-CH. 757-OCT. 8 , 1940 Exclusions in case of certain component corporations. Ante, p. 992. Qualified compo- nent corporations. Acquisitions during taxable year. Ante, p. 981. Use of term "corpo- ration." "Exchange." 53 Stat. 37. 26 U. S. C., Supp. V, § 112 (b) (4), (6). 53 Stat. 39. 26U.S.C Supp. V, §112 (c),(dj,(e). 53 Stat. 42 . 26 U. S. C., Supp. V, i 113 (a) (8) (B). "(2) In the case of a component corporation which became a qualified component corporation only by reason of section 740 (f), there shall be excluded from the various computations under sub- section (a) (2) of this section the portion of its excess profits net income, or of the excess over gross income therein referred to, which is attributable to any period before it first became an acquiring corporation. "(3) In the case of a qualified component corporation which was actually in existence on the date of the beginning of the taxpayer's base period, there shall be excluded from the various computations under subsection (a) (2) of this section the portion of its excess profits net income, or of the excess over gross income therein referred to, which is attributable to the period before such date. "(4) If during the taxable year for which tax is computed under this subchapter the taxpayer acquires assets in a transaction which constitutes it an acquiring corporation, the amount includible under subsection (a) (2), attributable to such transaction, shall be limited to an amount which bears the same ratio to the amount computed without regard to this paragraph as the number of days in the taxable year after such transaction bears to the total number of days in such taxable year. "SEC. 743. NET CAPITAL CHANGES. "(a) For the purposes of section 713 (c), upon the date of the transaction which constitutes a corporation an acquiring corporation, there shall be added to its daily capital addition or reduction for such day, the net capital addition or reduction, as the case may be, of each of the component corporations involved in such transaction, but no other capital addition or reduction shall be considered as having been made by reason of such transaction. "(ba For the purposes of this section- "(1) In computing the net capital addition of each such com- ponent corporation there shall be disregarded property paid in to such corporation by the taxpayer or by any of its component corporations. "(2) In computing the net capital reduction of each such com- ponent corporation there shall be disregarded distributions made to the taxpayer or to any of such component corporations. "SEC. 744. FOREIGN CORPORATIONS. "The term 'corporation' as used in this Supplement does not include a foreign corporation. "Supplement B-Highest Bracket Amount and Invested Capital "SEC. 750. DEFINITIONS. "As used in this Supplement- "(a) EXCHANGE.-The term 'exchange' means an exchange, to which section 112 (b) (4) or (5) or so much of section 112 (c), (d), or (e) as refers to section 112 (b) (4) or (5), or to which a corre- sponding provision of a prior revenue law, is or was applicable, by one corporation of its property wholly or in part for stock or securities of another corporation, or a transfer of property by one corporation to another corporation after December 31, 1917, the basis of which in the hands of such other corporation is or was determined under section 113 (a) (8) (B), or would have been so determined had such section been in effect. 994 [54 STAT.