77TH CONG. , 1ST SESS.- CH. 10-MIAR. 7, 1941 the highest excess profits net income for any taxable year in the base period. For the purpose of such limitation if any tax- able year is of less than twelve months, the excess profits net income for such taxable year shall be placed on an annual basis by multiplying by twelve and dividing by the number of months included in such taxable year. "(7) For the purposes of this subsection, the excess profits net income for any taxable year ending after May 31, 1940, shall not be greater than an amount computed as follows: "(A) By reducing the excess profits net income by an amount which bears the same ratio thereto as the number of months after May 31, 1940, bears to the total number of months in such taxable year; and "(B) By adding to the amount ascertained under sub- paragraph (A) an amount which bears the same ratio to the excess profits net income for the last preceding taxable year as such number of months after May 31, 1940, bears to the number of months in such preceding year. The amount added under this subparagraph shall not exceed the amount of the excess profits net income for such last preceding taxable year. "(C) If the number of months in such preceding taxable year is less than such number of months after May 31, 1940, by adding to the amount ascertained under subparagraph (B) an amount which bears the same ratio to the excess profits net income for the second preceding taxable year as the excess of such number of months after May 31, 1940, over the number of months in such preceding taxable year bears to the number of months in such second preceding tax- able year." (c) Section 713 (c) of the Internal Revenue Code is amended by striking out "(c)" and inserting in lieu thereof "(g)". (d) Section 743 (a) of the Internal Revenue Code is amended by striking out "section 713 (c)" and inserting in lieu thereof "section 713 (gY". SEC. 5. ABNORMALITIES IN INCOME IN TAXABLE PERIOD. Section 721 of the Internal Revenue Code is amended to read as follows: "SEC. 721. ABNORMALITIES IN INCOME IN TAXABLE PERIOD. "(a) DEFINITIONs.-For the purposes of this section- "(1) ABNORMAL INCOME. -T he term 'abnormal income' means income of any class includible in the gross income of the tax- payer for any taxable year under this subchapter if it is abnor- mal for the taxpayer to derive income of such class, or, if the taxpayer normally derives income of such class but the amount of such income of such class includible in the gross income of the taxable year is in excess of 125 per centum of the average amount of the gross income of the same class for the four previous taxable years, or, if the taxpayer was not in existence for four previous taxable years, the taxable years during which the taxpayer was in existence. "(2) SEPARATE CLASSES OF INCOME. -Each of the following sub- paragraphs shall be held to describe a separate class of income: "(A) Income arising out of a claim, award, judgment, or decree, or interest on any of the foregoing; or 54 Stat. 981. 26 U. S .C. 713(c). 54 Stat. 994 . 26U.S.C.§743(a). 54 Stat. 988. 26U. .0. 721. 21 55 STAT.]
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