Page:United States Statutes at Large Volume 54 Part 1.djvu/1041

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54 STAT.] 76TH CONG. , 3D SESS.-CH. 757-OCT. 8 , 1940 in the case of failure to include in gross income the amount properly 53stat. 7 . includible therein under subsection (b), see section 275 (d). v, i25(d). Infra. "SEC. 395. NONRESIDENT ALIEN INDIVIDUALS AND FOREIGN COR- PORATIONS. "In the case of a shareholder taxable under section 211 (a) or 231 (a), his distributive share of the undistributed Supplement S net income of the corporation required to be included in the gross income shall be considered as a dividend received by him from sources within the United States. "SEC. 396. SHAREHOLDER'S TAX PAID BY CORPORATION. "If a personal service corporation is exempt for any taxable year under section 725 from excess profits tax, it shall at the time of filing its return, pay to the collector an amount equal to the amount that would be required by section 143 (b) or section 144 to be deducted and withheld by the corporation if any amount required by this Supplement to be included in the gross income of the shareholder had been, on the last day of the taxable year of the corporation, paid to the shareholder in cash as a dividend. Such amount shall be col- lected and paid in the same manner as the amount of tax due in excess of that shown by the taxpayer upon a return in the case of a mathematical error appearing on the face of the return." SEC. 503. STATUTE OF LIMITATIONS IN CASE OF CONSTRUCTIVE DIVIDENDS. Section 275 (d) of the Internal Revenue Code (relating to statute of limitations) is amended to read as follows: "(d) CONSTRUCTIVE DIVIDENDS.- I f the taxpayer omits from gross income an amount properly includible therein- "(1) FOREIGN PERSONAL-HOLDING COMPANIES.- Under section 337 (b) (relating to the inclusion in the gross income of United States shareholders of their distributive shares of the undis- tributed Supplement P net income of a foreign personal-holding company); or "'(2) PERSONAL SERVICE CORPORATIONS. -Under section 394 (b) (relating to the inclusion in the gross income of shareholders of their distributive shares of undistributed Supplement S net income of a personal service corporation); the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time within seven years after the return was filed." SEC. 504. CREDIT OF NONRESIDENT ALIEN OF TAX AS SHARE- HOLDER IN PERSONAL SERVICE CORPORATION. Section 216 of the Internal Revenue Code (relating to credit against tax of a nonresident alien individual) is amended by adding at the end thereof a new sentence to read as follows: "A nonresident alien individual shall be allowed as a credit against his tax the amount required by section 396 to be paid by the personal service corporation of which he is a shareholder with respect to his tax liability under Supplement S." . SEC. 505. CREDIT OF FOREIGN CORPORATION OF TAX AS SHARE- HOLDER IN PERSONAL SERVICE CORPORATION. Section 234 of the Internal Revenue Code (relating to credits against tax of foreign corporations) is amended by ading at the end thereof a new sentence to read as follows: "A foreign corpora- 53 Stat. 75 78. 26 U. S. C., Supp. V, § 211 (a),231 (a). Ante, p. 987 . 53 Stat. 61, 62. 26 U. S. C., Supp. V, p 143 (b), 144 . Ante, p. 519. 53 Stat. 87 . 26 U. S. C., Supp. V, 275 (d). Constructive divi- dends. Foreign personal- holding companies. 53 Stat. 96. 26 U. S. C., Supp. V, 337(b). 53 Stat. 92. Personal service cor- porations. Ante, p. 1006. 53 Stat. 77 . 26 U. S. C., Supp. V, 216. Supra. Ante, p. 1005. 53 Stat. 79. 26 U. S. C., Snpp. V, § 234. 1007