56 STAT.] 77TH CONG. , 2 D SESS.-CH. 619-OCT. 21 , 1942 Treasury and the character of the services performed by employees of the Government of the United States in such Commonwealth." (b) The amendment made by this section shall be applicable only to taxable years beginning after December 31, 1939. SEC. 150. CAPITAL GAINS AND LOSSES. (a) DEFINITIONS.- (1) HoLDING PERIOD, SHORT- AND LONG-TERM GAINS AND LOSSES. - Section 117 (a) is amended by striking out "18 months" wherever occurring therein and inserting in lieu thereof "6 months". (2) NET SHORT-TERM GAIN. -Section 117 (a) (6) is amended to read as follows: "(6) NET SHORT-TERE CAPITAL GAIN. -T he term 'net short-term capital gain' means the excess of short-term capital gains for the taxable year over the short-term capital losses for such year ;". (b) DEFINITIONS OF "NET CAPITAL GAIN" AND "NET CAPITAL Loss". - Section 117 (a) is amended by inserting at the end thereof the follow- ing new paragraphs: "(10) NET CAPITAL GAIN.- "(A) Corporations.- In the case of a corporation, the term 'net capital gain' means the excess of the gains from sales or exchanges of capital assets over the losses from such sales or exchanges; and "(B) Other Taxpayers.- In the case of a taxpayer other than a corporation, the term 'net capital gain' means the excess of (i) the sum of the gains from sales or exchanges of capital assets, plus net income of the taxpayer or $1,000, whichever is smaller, over (ii) the losses from such sales or exchanges. For purposes of this subparagraph, net income shall be computed without regard to gains or losses from sales or exchanges of capital assets. "(11) NET CAPITAL Loss. -The term 'net capital loss' means the excess of the losses from sales or exchanges of capital assets over the sum allowed under subsection (d). For the purpose of deter- mining losses under this paragraph, amounts which are short- term capital losses under subsection (e) (1) shall be excluded." (c) RULE ON TAXABILITY, LIMITATION ON LOSSES, AND CARRY-OVER.- Section 117 (b), (c), (d), and (e) are amended to read as follows: "(b) PERCENTAGE TAKEN INTO ACCOUNT.- In the case of a tax- payer, other than a corporation, only the following percentages of the gain or loss recognized upon the sale or exchange of a capital asset shall be taken into account in computing net capital gain, net capital loss, and net income: "100 per centum if the capital asset has been held for not more than 6 months; "50 per centum if the capital asset has been held for more than 6 months. "(c) ALTERNATIVE TAXES. - "(1) CORPORATIONS.-I f for any taxable year the net long-term capital gain of any corporation exceeds the net short-term capital loss, there shall be levied, collected, and paid, in lieu of the tax imposed by sections 13, 14, 15, 204, 207 (a) (1) or (3), and 500, a tax determined as follows, if and only if such tax is less than the tax imposed by such sections: "A partial tax shall first be computed upon the net income reduced by the amount of such excess, at the rates and in the manner as if this subsection had not been enacted, and the total tax shall be the partial tax plus 25 per centum of such excess. 843 53 Stat. 50. 26U. .C. 117(a); Supp. I, § 117 (a). Post, p. 846. Post, p. 844. Post, p. 844. 53 Stat. 51, 52. 26 U.S. C. §117 (b), (c), (d), (e). 53 Stat. 7, 8, 72,104. 26U.S.C. 13,14, 204; Supp. I, §§ 13, 14, 500. Ante, pp . 805.821. Post. pp. 861, 870- 873,881,894.
�
