Income and profits taxes deemed under section 131 (f) to have been paid, computed as follows: Dividend received on December 31 of the taxable year----- $50,000 Accumulated profits ($200,000 minus $30,000) – French taxes applicable to accumulated profits 30,000 170,000 7,500 50,000 330,000 of $45,375 6, 875 Income and profits taxes deemed to have been paid (French taxes applicable to accumulated profits distributed to domestic corporation, reduced in accordance with the limitation under section 131 (f))‒‒‒‒‒‒‒ $6,875 Total income and profits taxes paid or accrued and deemed to have been paid to France Limitation under section 131 (b) (1) (300,000 of $45,375)------ Tentative credit 18, 875 9, 625 9, 625 Great Britain Canada__ Brazil Puerto Rico_ France Sum of tentative credits Limitation on sum of tentative credits under section 131 (b) (2) to de Total amount of credit allowable (sum of tentative credits reduced in accordance with the limitation under section 131 (b) (2))-- $4, 125 1,800 2,400 1,250 9, 625 19, 200 17,875 17,875 CHAPTER XXII RETURNS AND PAYMENT OF TAX Supplement D-Returns and Payment of Tax [Supplementary to Subtitle B, Part V] SEC. 141. CONSOLIDATED RETURNS OF RAILROAD CORPORATIONS. (a) Privilege to file consolidated returns.—An affiliated group of corporations shall, subject to the provisions of this section, have the privilege of making a consolidated return for the taxable year in lieu of separate returns. The making of a consolidated return shall be upon the condition that all the corporations which have been members of the affiliated group at any time during the taxable year for which the return is made consent to all the regulations under subsection (b) (or, in case such regulations are not prescribed prior to the making of the return, then the regulations prescribed under section 141 (b) of the Revenue Act of 1932 insofar as not inconsistent with this Act) prescribed prior to the making of such return; and the making of a consolidated return shall be considered as such consent. In the case of a corporation which is a member of the affiliated group for a fractional part of the year the consolidated return shall include the income of such corporation for such part of the year as it is a member of the affiliated group. (b) Regulations.-The Commissioner, with the approval of the Secretary, shall prescribe such regulations as he may deem necessary in order that the tax liability of any affiliated group of corporations making a consolidated return and of each corporation in the group, both during and after the period of affiliation, may be determined, computed, assessed, collected, and adjusted in such manner as clearly to reflect the income and to prevent avoidance of tax liability. (c) Computation and payment of tax.-In any case in which a consolidated return is made the tax shall be determined, computed, assessed, collected, and adjusted in accordance with the regulations under subsection (b) (or, in case such regulations are not prescribed prior to the making of the return, then the regulations prescribed under section 141 (b) of the Revenue Act of 1932 insofar as not inconsistent with this Act) prescribed prior to the date on which such return is made; except that there shall be added to the rate of tax prescribed by section 13 (a) a rate of 2 per centum, but the tax at such increased rate shall be considered as imposed by section 13 (a). (249) (d) Definition of "affiliated group ".-As used in this section an "affiliated group means one or more chains of corporations connected through stock ownership with a common parent corporation if— (1) At least 95 per centum of the stock of each of the corporations (except the common parent corporation) is owned directly by one or more of the other corporations; and (2) The common parent corporation owns directly at least 95 per centum of the stock of at least one of the other corporations; and (3) Each of the corporations is either (A) a corporation whose principal business is that of a common carrier by railroad or (B) a corporation the assets of which consist principally of stock in such corporations and which does not itself operate a business other than that of a common carrier by railroad. For the purpose of determining whether the principal business of a corporation is that of a common carrier by railroad, if a common carrier by railroad has leased its railroad properties and such properties are operated as such by another common carrier by railroad, the business of receiving rents for such railroad properties shall be considered as the business of a common carrier by railroad. As used in this subsection (except in paragraph (3)) the term "stock" does not include nonvoting stock which is limited and preferred as to dividends. (e) Foreign corporations.-A foreign corporation shall not be deemed to be affiliated with any other corporation within the meaning of this section. (f) China Trade Act Corporations.-A corporation organized under the China Trade Act, 1922, shall not be deemed to be affiliated with any other corporation within the meaning of this section. (g) Corporations deriving income from possessions of United States.For the purposes of this section a corporation entitled to the benefits of section 251, by reason of receiving a large percentage of its income from possessions of the United States, shall be treated as a foreign corporation. (h) Subsidiary formed to comply with foreign law. In the case of a domestic corporation owning or controlling, directly or indirectly, 100 per centum of the capital stock (exclusive of directors' qualifying shares) of a corporation organized under the laws of a contiguous foreign country and maintained solely for the purpose of complying with the laws of such country as to title and operation of property, such foreign corporation may, at the option of the domestic corporation, be treated for the purpose of this title as a domestic corporation. (i) Suspension of running of statute of limitations.-If a notice under section 272 (a) in respect of a deficiency for any taxable year is mailed to a corporation, the suspension of the running of the statute of limitations, provided in section 277, shall apply in the case of corporations with which such corporation made a consolidated return for such taxable year. (j) Allocation of income and deductions.-For allocation of income and deductions of related trades or businesses, see section 45. ART. 141-1. Consolidated returns of affiliated corporations for taxable years beginning after December 31, 1933.-The regulations prescribed under section 141 (b) have been promulgated as Regulations 89 and are applicable to the making, after the promulgation of such regulations, of consolidated returns by affiliated corporations for taxable years beginning after December 31, 1933, and to the determination, computation, assessment, collection, and adjustment of tax liabilities under consolidated returns for such years. For definition of taxable year, see section 48. ART. 141-2. Formation of and changes in affiliated group.-An affiliated group of corporations, within the meaning of section 141, is formed at the time that the common parent corporation becomes the owner directly of at least 95 per cent of the stock (as defined by section 141 (d)) of another corporation. A corporation becomes a member of an affiliated group at the time that one or more members of the group become the owners directly of at least 95 per cent of its stock. A corporation ceases to be a member of an affiliated group at the time that the aggregate of its stock owned directly by the members of the group becomes less than 95 per cent. ART. 141-3. Corporations to be included in consolidated returns for taxable years beginning after December 31, 1933. The privilege of filing consolidated returns for taxable years beginning after December 31, 1933, is limited to corporations constituting an "affiliated group" as defined in section 141 (d). The Act requires each corporation to be either (1) a corporation whose principal business is that of a "common carrier by railroad" or (2) a corporation whose assets consist principally of stock in such corporations and which does not itself operate a business other than that of a "common carrier by railroad." The term "common carrier by railroad" includes steam and electric railroads, but does not include street, suburban and interurban electric railways or express, refrigerator, or sleeping car companies. The term "electric railroads" includes an interurban electric line even though called or commonly referred to as an interurban electric railway, if it has the right of eminent domain, operates over its private right of way, performs essential railroad service, including the interchange of traffic with railroads, and publishes or concurs in tariffs. If a "common carrier by railroad" as above defined has leased its railroad properties and such properties are operated as such by another common carrier by railroad, the business of receiving rents for such properties is considered as the business of a common carrier by railroad. A consolidated return must include every domestic corporation which is a member of the "affiliated group "; but shall not include a foreign corporation (except as provided in section 141 (h)); a corporation organized under the China Trade Act, 1922; or a corporation entitled to the benefits of section 251. ART. 141-4. Foreign corporations which may be treated as domestic corporations. In the case of a domestic corporation owning or controlling, directly or indirectly, 100 per cent of the capital stock (exclusive of directors' qualifying shares) of a corporation described in section 141 (d) (3) and organized under the laws of Canada or of Mexico and maintained solely for the purpose of complying with the laws of such country as to title and operation of property, such foreign corporation may, at the option of the domestic corporation, be treated for taxable years beginning after December 31, 1933, as a domestic corporation. The option to treat such foreign corporation as a domestic corporation must be exercised at the time of making the first consolidated return under the Act, and can not be exercised at any time thereafter. If the election is exercised to treat such foreign corporation as a domestic corporation it must be included in the consolidated return of the affiliated group of which it is a member for each year for which such group makes or is required to make a consolidated return. SEC. 142. FIDUCIARY RETURNS. (a) Requirement of return.-Every fiduciary (except a receiver appointed by authority of law in possession of part only of the property of an individual) shall make under oath a return for any of the following individuals, estates, or trusts for which he acts, stating specifically the items of gross income thereof and the deductions and credits allowed under this title (1) Every individual having a net income for the taxable year of $1,000 or over, if single, or if married and not living with husband or wife; (2) Every individual having a net income for the taxable year of $2,500 or over, if married and living with husband or wife; (3) Every individual having a gross income for the taxable year of $5,000 or over, regardless of the amount of his net income; (4) Every estate or trust the net income of which for the taxable year is $1,000 or over; (5) Every estate or trust the gross income of which for the taxable year is $5,000 or over, regardless of the amount of the net income; and (6) Every estate or trust of which any beneficiary is a nonresident alien. (b) Joint fiduciaries.-Under such regulations as the Commissioner with the approval of the Secretary may prescribe a return made by one of two or more joint fiduciaries and filed in the office of the collector of the district where such fiduciary resides shall be sufficient compliance with the above requirement. Such fiduciary shall make oath (1) that he has sufficient knowledge of the affairs of the individual, estate, or trust for which the return is made, to enable him to make the return, and (2) that the return is, to the best of his knowledge and belief, true and correct. (c) Law applicable to fiduciaries.-Any fiduciary required to make a return under this title shall be subject to all the provisions of law which apply to individuals. |