CH. 1
NORMAL TAXES AND SURTAXES
351
(e) ELECTION IRREVOCABLE.—Except as provided in subsection (f), the election described in subsection (a) shall be irrevocable— (1) with respect to an enterprise as to which such election has been made and the proprietor or partners of such enterprise; and (2) any unincorporated successor to the business of such enterprise and the proprietor or partners of such successor. (f) CHANGE OF O W N E R S H I P. — I n any year in which the electing proprietor or partners have an interest of 80 percent or less in profits and capital of an enterprise described in subsection (e), such enterprise shall not be considered a domestic corporation for such year or for subsequent years unless the proprietor or partners of such enterprise make a new election in accordance with subsection (a). (g) CONSTRUCTIVE O W N E R S H I P. — For purposes of subsection (f), the ownership of an interest shall be determined in accordance with the rules for constructive ownership of stock provided in section 267 (c) other than paragraph (3) thereof. (h) IMPOSITION OF T A X E S. — The unincorporated business enterprise as to which a n election has been made under subsection (a) shall be subject to— ,., (1) the normal tax and surtax imposed by section 11, (2) the accumulated earnings tax imposed by section 531, and (3) the alternative tax for capital gains imposed by section 1201. (i) PERSONAL HOLDING COMPANY I N C O M E. — (1) EXCLUDED PROM INCOME OF ENTERPRISE.—There
shall not be included in the gross income of the enterprise as to which an election has been made under subsection (a) any personal holding company income (as defined in section 543), except income earned by such enterprise from buying and selling real property, stock, securities, or commodities for the account of others. (2) INCOME AND DEDUCTIONS OF OWNERS.—Any personal holding company income not included in the gross income of the enterprise under paragraph (1), and the expenses attributable thereto, shall be treated as the income and deductions of the proprietor or partners (in accordance with their distributive shares of partnership income) of such enterprise. (3) DISTRIBUTIONS.^—If the amount of personal holding company income includible under paragraph (2) in the income of the proprietor or partner is distributed to him during the year earned, such amount shall not be taxed as a corporate distribution. The amount of such income not distributed during such year shall be considered as paid-in surplus or as a contribution to capital as of the close of such year. (4) R E N T S AND ROYALTIES.'—For the purpose of
determining
whether rents, and mineral, oil, or gas royalties constitute personal holding company income under paragraph (1), all income earned by the enterprise in any taxable year shall enter into the determination of its gross income for such year. (j) COMPUTATION OF TAXABLE I N C O M E. — I n computing the taxable
income of an unincorporated business enterprise as to which an election has been made under subsection (a)— (1) a reasonable deduction shall be allowed for salary or compensation to a proprietor or partner for services actually rendered; and §1361(j)(l)
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