77TH CONG., 2D SESS.-CH. 619-OCT. 21 , 1942 907 period shall be an amount equal to the excess output of such property for such year multiplied by one-half of the unit net income from such property for such year, or an amount deter- mined under paragraph (1), whichever the taxpayer elects in accordance with regulations prescribed by the Commissioner with the approval of the Secretary. "(3) TIMBER PROPERTIES.- For any taxable year, the nontax- able income from exempt excess output of a timber block which was in operation during the base period shall be an amount equal to the excess output of such property for such year multi- plied by one-half of the unit net income from such property for such year. "(c) NONTAXABLE BONUS INCOME.- T he term 'nontaxable bonus income' means the amount of the income derived from bonus pay- ments made by any agency of the United States Government on account of the production in excess of a specified quota of a mineral product or of timber the exhaustion of which gives rise to an allow- ance for depletion under section 23 (m), but such amount shall not exceed the net income (computed with the allowance for depletion) attributable to the output in excess of such quota. "(d) RULE IN CASE INCOME FROM EXCESS OUTPUT INCLUDES BONUS PAYMENT.- In any case in which the income attributable to the excess output includes bonus payments (as provided in subsection (c)), the taxpayer may elect, under regulations prescribed by the Commis- sioner with the approval of the Secretary, to receive either the benefits of subsection (b) or subsection (c) with respect to such income as is attributable to excess output above the specified quota." (d) RETROACTIVE EXCLUSION OF NONTAXABLE BONUS INCOME. -The amendments made by this section inserting section 711 (a) (1) (I), section 711 (a) (2) (K), and section 735 (c), to the extent that they relate to nontaxable bonus income, shall be applicable to taxable years beginning after December 31, 1940. SEC. 210. NET OPERATING LOSS DEDUCTION ADJUSTMENT. (a) Section 711 (a) (1) (relating to the excess profits credit com- puted under income credit) is amended by adding at the end thereof the following new subparagraph: "(J) NET OPERATING LOSS DEDUCTION ADJUSTMENT.-TIlh net operating loss deduction shall be adjusted as follows: (i) In computing the net operating loss for any taxable year under section 122 (a), and the net income for any tax- able year under section 122 (b), no deduction shall be allowed for any excess profits tax imposed by this subchapter, and, if the excess profits credit for such taxable year was com- puted under section 714, the deduction for interest shall be reduced by the amount of any reduction under paragraph (2) (B) for such taxable year; and "(ii) In lieu of the reduction provided in section 122 (c), such reduction shall be in the amount by which the excess profits net income computed with the exceptions and limi- tations specified in section 122 (d) (1), (2), (3), and (4) and computed without regard to subparagraph (B), without regard to any credit for dividends received, and without regard to any credit for interest received provided in section 26 (a) exceeds the excess profits net income (computed with- out the net operating loss deduction)." 53 Stat. 14. 26 U.S.C . §23(m). Ante, p. 904 . Supra. Ante, p. 904. Ante, pp. 07, 847. Poet, p. 911. Ante, pp. 807, S48 53 Stat. 867. 26U.S.C.§122(d) (1), (2), (3), (4). Ante, pp. 807, 844. 53 Stat. 18 26U.S .C .§ 26(a). Ante, p. 825 . 56 STAT.]
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