PUBLIC LAWS-CH. 619-OCT. 21, 1942 "Accumulated profits. " Determination of years dividends were paid. Period of less than one year. "Year." 53 Stat. 56 . 26 U.S. C. §131. 55 Stat. 700. 26U.S. C., Supp. I, § 23 (c) (1). Ante, pp. 806, 857. the domestic corporation in which such dividends are included. The term 'accumulated profits' when used in this subsection in reference to a foreign corporation, means the amount of its gains, profits, or income in excess of the income, war-profits, and excess-profits taxes imposed upon or with respect to such profits or income; and the Commissioner with the approval of the Secretary shall have full power to determine from the accumu- lated profits of what year or years such dividends were paid; treating dividends paid in the first sixty days of any year as having been paid from the accumulated profits of the preced- ing year or years (unless to his satisfaction shown otherwise), and in other respects treating dividends as having been paid from the most recently accumulated gains, profits, or earnings. In the case of a foreign corporation, the income, war-profits, and excess-profits taxes of which are determined on the basis of an accounting period of less than one year, the word 'year' as used in this subsection shall be construed to mean such accounting period. "(2) FOREIGN SUBSIDIARY OF FOREIGN CORPORATION.-If such for- eign corporation owns all the voting stock (except qualifying shares) of another foreign corporation from which it receives dividends in any taxable year it shall be deemed to have paid the same proportion of any income, war-profits, or excess-profits taxes paid by such other foreign corporation to any foreign country or to any possession of the United States, upon or with respect to the accumulated profits of the corporation from which such dividends were paid, which the amount of such dividends bears to the amount of such accumulated profits." . (f) CREDIT FOR TAXES IN LIEU OF INCOME, ETC., TAxES. - Section 131 (relating to credit for taxes of foreign countries and possessions of the United States) is amended by inserting at the end thereof the following new subsection: (h) CREDIT FOR TAXES IN LIEU OF INCOME, ETC., TAXES. -For the purposes of this section and section 23 (c) (1), the term 'income, war- profits, and excess-profits taxes' shall include a tax paid in lieu of a tax upon income, war-profits; or excess-profits otherwise generally imposed by any foreign country or by any possession of the United States." SEC. 159. EXTENSION OF CONSOLIDATED RETURNS PRIVILEGE TO CERTAIN CORPORATIONS. 23Stat.8. (a) GENERAL RULE. -Section 141 (relating to consolidated returns of railroad corporations) is amended to read as follows: Affiliated group of corporations. Conditions. "SEC. 141 . CONSOLIDATED RETURNS. "(a) PRIVILEGE TO FILE CONSOLIDATED INCOME AND ExcESS-PRoFrrs- TAX RETURNS. - An affiliated group of corporations shall, subject to the provisions of this section, have the privilege of making consoli- dated income and excess-profits-tax returns for the taxable year in lieu of separate returns. The making of consolidated returns shall be upon the condition that the affiliated group shall make both a con- solidated income-tax return and a consolidated excess-profits-tax return for the taxable year, and that all corporations which at any time during the taxable year have been members of the affiliated group making a consolidated income-tax return consent to all the consoli- dated income- and excess-profits-tax regulations prescribed under sub- section (b) prior to the last day prescribed by law for the filing of 858 [56 STAT.
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