98
INTERNAL REVENUE CODE OF 1954
if any, by which the adjusted basis of the property used in determining the loss exceeds the adjusted basis computed without regard to the value of the property on March 1, 1913, and if such amount so applied in reduction of the decrease exceeds such loss, the excess over such loss shall increase that part of the earnings and profits consisting of increase in value of property accrued before March 1, 1913. (h) EARNINGS
AND PROFITS
OF PERSONAL
SERVICE
CORPORA-
TIONS.—In the case of a personal service corporation subject for any taxable year to supplement S of the Internal Revenue Code of 1939, an amount equal to the undistributed supplement S net income of the personal service corporation for its taxable year shall be considered as paid in as of the close of such taxable year as paid-in surplus or as a contribution to capital, and the accumulated earnings and profits as of the close of such taxable year shall be correspondingly reduced, if such amount or any portion thereof is required to be included as a dividend in the gross income of the shareholders. (i) ALLOCATION IN CERTAIN
CORPORATE SEPARATIONS.—In
the
case of a distribution or exchange to which section 355 (or so much of section 356 as relates to section 355) applies, proper allocation with respect to the earnings and profits of the distributing corporation and the controlled corporation (or corporations) shall be made under regulations prescribed by the Secretary or his delegate. (j) DISTRIBUTION OF PROCEEDS OF LOAN INSURED BY THE UNITED STATES.—
(1) IN GENERAL.—If a corporation distributes property with respect to its stock, and if, at the time of the distribution— (A) there is outstanding a loan to such corporation which was made, guaranteed, or insured by the United States (or by any agency or instrumentality thereof), and (B) the amount of such loan so outstanding exceeds the adjusted basis of the property constituting security for such loan, then the earnings and profits of the corporation shall be increased by the amount of such excess, and (immediately after the distribution) shall be decreased by the amount of such excess. For purposes of subparagraph (B) of the preceding sentence, the adjusted basis of the property at the time of distribution shall be determined without regard to any adjustment under section 1016(a)(2) (relating to adjustment for depreciation, etc.). For purposes of this paragraph, a commitment to make, guarantee, or insure a loan shall be treated as the making, guaranteeing, or insuring of a loan. (2) EFFECTIVE DATE.—Paragraph (1) shall apply only with respect to distributions made on or after June 22, 1954. Subpart C—Definitions; Constructive Ownership of Stock Sec. 316. Dividend defined. Sec. 317. Other definitions. Sec. 318. Constructive ownership of stock.
«-
SEC. 316. DIVIDEND DEFINED. (a) GENERAL RULE. — For purposes of this subtitle, the
term "dividend" means any distribution of property made by a corporation to its shareholders— § 312(g)(2) ,,
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