PUBLIC LAWS-CH. 619-OCT. 21 , 1942 53 Stat. 107, 108 . 26U.S. C.§§504(c), 506; Supp. I, §§ 504 (c), SOS. Infra. Ante, p. 895; post, p. 898. 52 Stat. 496. 52 Stat. 560, 561. Infra. 49 Stat. 1687. 53 Stat. 46; 52 Stat. 496; 49 Stat. 1687. 26U.S. o. 115 (b). 53 Stat. 107; 52 Stat. 560. 26U.S.C.i504(c); Supp. I, § 504 (c). 53 Stat. 109. 26 U.s. C.C 506 (c) (1). "Deficiency divi- dends." s2 Stat. s. is made under section 504 (c) or section 506 or a corresponding provision of a prior income tax law, is a personal holding com- pany under the law applicable to such taxable year." (2) AMENDMENT TO REVENUE ACT OF 1938.-Section 115 (a) of the Revenue Act of 1938 (relating to definition of dividend) is amended by inserting at the end thereof the following new sen- tence: "Such term also means any distribution to its sharehold- ers, whether in money or in other property, made by a corpora- tion which, under the law applicable to the taxable year in which the distribution is made, is a personal holding company, or which, for the taxable year in respect of which the distribution is made under section 405 (c) or section 407 is a personal hold- ing company under the law applicable to such taxable year." (3) AMENDMENT TO REVENUE ACT OF 1936.-Section 115 (a) of the Revenue Act of 1936 (relating to definition of dividend) is amended by inserting at the end thereof the following new sen- tence: "Such term also means any distribution to its sharehold- ers, whether in money or in other property, made by a corporation in a taxable year of the corporation beginning after December 31, 1936, which, for such year, is a personal holding company." (b) PERSONAL HOLDING COMPANY DIVIDENDS NOT APPLIED IN REDUCTION OF BASIS.- Section 115 (b) (relating to source of distribu- tions) of the Internal Revenue Code, the Revenue Act of 1938, and the Revenue Act of 1936, are amended by inserting at the end of such subsection the following new sentence: "The preceding sentence shall not apply to a distribution which is a dividend within the mean- ing of the last sentence of subsection (a)." (c) DIVIDENDS PAID AFTER CLOSE OF TAXABLE YEAR.- Section 504 (c) of the Internal Revenue Code and section 405 (c) of the Revenue Act of 1938 (relating to credit for dividends paid after close of tax- able year) are amended as follows: (1) By amending subsection (c) (1) and (2) to read as follows: "(c) Dividends paid after the close of the taxable year and before the 15th day of the third month following the close of the taxable year, if claimed under this subsection in the return, but only to the extent to which such dividends would have been includible in the computation of the basic surtax credit for the taxable year if dis- tributed during such taxable year; but the amount allowed under this subsection shall not exceed either: "(1) The undistributed Subchapter A net income for the tax- able year computed without regard to this subsection; or"; (2) And by striking out "(3)" and inserting in lieu thereof "(2)". (d) DEFICIENCY DIVIDENDS.- (1) AMENDMENT OF INTERNAL REVENUE coDE. -The first sen- tence of section 506 (c) (1) is amended to read as follows: "For the purposes of this subchapter, the term 'deficiency dividends' means the amount of the dividends paid, on or after the date of the closing agreement or on or after the date the decision of the Board or the judgment becomes final, as the case may be, and prior to filing claim under subsection (d), which would have been includible in the computation of the basic surtax credit for the taxable year with respect to which the deficiency was asserted if distributed during such taxable year." (2) AMENDMENT OF REVENUE ACT OF 93ss. -T he first sentence of section 407 (c) (1) of the Revenue Act of 1938 is amended to read as follows: "For the purposes of this title, the term 'deficiency dividends' means the amount of the dividends paid, [56 STAT.
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