Sec. 204. Insurance companies other than life or mutual. Sec. 205. Taxes of foreign countries and possessions of United States. Sec. 261. Taxation in general. Sec. 262. Credit against net income. Sec. 271. Definition of deficiency. Sec. 272. Procedure in general. Sec. 273. Jeopardy assessments. Sec. 274. Bankruptcy and receiverships. Sec. 275. Period of limitation upon assessment and collection. Sec. 291. Failure to file return. Sec. 292. Interest on deficiencies. Sec. 293. Additions to the tax in case of deficiency. Sec. 294. Additions to the tax in case of nonpayment. Sec. 295. Time extended for payment of tax shown on return. Sec. 296. Time extended for payment of deficiency. Sec. 297. Interest in case of jeopardy assessments. Sec. 298. Bankruptcy and receiverships. Sec. 299. Removal of property or departure from United States. SUPPLEMENT P-FOREIGN PERSONAL HOLDING COMPANIES Sec. 331. Definition of foreign personal holding company. Sec. 332. Foreign personal holding company income. Sec. 333. Stock ownership. Sec. 334. Gross income of foreign personal holding companies. Sec. 335. Undistributed supplement P net income. Sec. 336. Supplement P net income. Sec. 337. Corporation income taxed to United States shareholders. Sec. 338. Information returns by officers and directors. Sec. 339. Information returns by shareholders. Sec. 340. Returns as to information, etc., of foreign corporations. CHAPTER 1-INCOME TAX SUBCHAPTER A-INTRODUCTORY PROVISIONS SEC. 1. APPLICATION OF CHAPTER. The provisions of this chapter shall apply only to taxable years beginning after December 31, 1937. Income, war-profits, and excessprofits taxes for taxable years beginning prior to January 1, 1938, shall not be affected by the provisions of this chapter, but shall remain subject to the applicable provisions of the Revenue Act of 1936 and prior revenue acts, except as such provisions are modified by legislation enacted subsequent to the Revenue Act of 1936. SEC. 2. CROSS REFERENCES. The cross references in this chapter to other portions of the chapter, where the word "see" is used, are made only for convenience, and shall be given no legal effect. SEC. 3. CLASSIFICATION OF PROVISIONS. The provisions of this chapter are herein classified and designated as Subchapter A-Introductory provisions, Subchapter B-General provisions, divided into Parts and sec tions, Subchapter C-Supplemental provisions, divided into Supplements and sections. SEC. 4. SPECIAL CLASSES OF TAXPAYERS. The application of the General Provisions and of Supplements A to D, inclusive, to each of the following special classes of taxpayers, shall be subject to the exceptions and additional provisions found in the Supplement applicable to such class, as follows: (a) Estates and trusts and the beneficiaries thereof,-Supple ment E. (b) Members of partnerships,-Supplement F. (c) Insurance companies, Supplement G. (d) Nonresident alien individuals,-Supplement H. (e) Foreign corporations,-Supplement I. (f) Individual citizens of any possession of the United States who are not otherwise citizens of the United States and who are not residents of the United States, Supplement J. (g) Individual citizens of the United States or domestic corporations, satisfying the conditions of section 251 by reason of deriving a large portion of their gross income from sources within a possession of the United States,-Supplement J. (h) China Trade Act corporations,-Supplement K. (i) Foreign personal holding companies and their shareholders,— Supplement P. SUBCHAPTER B-GENERAL PROVISIONS Part I-Rates of Tax SEC. 11. NORMAL TAX ON INDIVIDUALS. There shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax of 4 per centum of the amount of the net income in excess of the credits against net income provided in section 25. SEC. 12. SURTAX ON INDIVIDUALS. (a) DEFINITION OF "SURTAX NET INCOME".-As used in this section the term "surtax net income" means the amount of the net income in excess of the credits against net income provided in section 25 (b). (b) RATES OF SURTAX.-There shall be levied, collected, and paid for each taxable year upon the surtax net income of every individual a surtax as follows: Upon a surtax net income of $4,000 there shall be no surtax; upon surtax net incomes in excess of $4,000 and not in excess of $6,000, 4 per centum of such excess. $80 upon surtax net incomes of $6,000; and upon surtax net incomes in excess of $6,000 and not in excess of $8,000, 5 per centum in addition of such excess. $180 upon surtax net incomes of $8,000; and upon surtax net incomes in excess of $8,000 and not in excess of $10,000, 6 per centum in addition of such excess. $300 upon surtax net incomes of $10,000; and upon surtax net incomes in excess of $10,000 and not in excess of $12,000, 7 per centum in addition of such excess. $440 upon surtax net incomes of $12,000; and upon surtax net incomes in excess of $12,000 and not in excess of $14,000, 8 per centum in addition of such excess. $600 upon surtax net incomes of $14,000; and upon surtax net incomes in excess of $14,000 and not in excess of $16,000, 9 per centum in addition of such excess. $780 upon surtax net incomes of $16,000; and upon surtax net incomes in excess of $16,000 and not in excess of $18,000, 11 per centum in addition of such excess. $1,000 upon surtax net incomes of $18,000; and upon surtax net incomes in excess of $18,000 and not in excess of $20,000, 13 per centum in addition of such excess. $1,260 upon surtax net incomes of $20,000; and upon surtax net incomes in excess of $20,000 and not in excess of $22,000, 15 per centum in addition of such excess. $1,560 upon surtax net incomes of $22,000; and upon surtax net incomes in excess of $22,000 and not in excess of $26,000, 17 per centum in addition of such excess. $2,240 upon surtax net incomes of $26,000; and upon surtax net incomes in excess of $26,000 and not in excess of $32,000, 19 per centum in addition of such excess. $3,380 upon surtax net incomes of $32,000; and upon surtax net incomes in excess of $32,000 and not in excess of $38,000, 21 per centum in addition of such excess. $4,640 upon surtax net incomes of $38,000; and upon surtax net incomes in excess of $38,000 and not in excess of $44,000, 24 per centum in addition of such excess. $6,080 upon surtax net incomes of $44,000; and upon surtax net incomes in excess of $44,000 and not in excess of $50,000, 27 per centum in addition of such excess $7,700 upon surtax net incomes of $50,000; and upon surtax net incomes in excess of $50,000 and not in excess of $56,000, 31 per centum in addition of such excess. $9,560 upon surtax net incomes of $56,000; and upon surtax net incomes in excess of $56,000 and not in excess of $62,000, 35 per centum in addition of such excess. $11,660 upon surtax net incomes of $62,000; and upon surtax net incomes in excess of $62,000 and not in excess of $68,000, 39 per centum in addition of such excess. $14,000 upon surtax net incomes of $68,000; and upon surtax net incomes in excess of $68,000 and not in excess of $74,000, 43 per centum in addition of such excess. $16,580 upon surtax net incomes of $74,000; and upon surtax net incomes in excess of $74,000 and not in excess of $80,000, 47 per centum in addition of such excess. $19,400 upon surtax net incomes of $80,000; and upon surtax net incomes in excess of $80,000 and not in excess of $90,000, 51 per centum in addition of such excess. $24,500 upon surtax net incomes of $90,000; and upon surtax net incomes in excess of $90,000 and not in excess of $100,000, 55 per centum in addition of such excess. $30,000 upon surtax net incomes of $100,000; and upon surtax net incomes in excess of $100,000 and not in excess of $150,000, 58 per centum in addition of such excess. $59,000 upon surtax net incomes of $150,000; and upon surtax net incomes in excess of $150,000 and not in excess of $200,000, 60 per centum in addition of such excess. $89,000 upon surtax net incomes of $200,000; and upon surtax net incomes in excess of $200,000 and not in excess of $250,000, 62 per centum in addition of such excess. $120,000 upon surtax net incomes of $250,000; and upon surtax net incomes in excess of $250,000 and not in excess of $300,000, 64 per centum in addition of such excess. $152,000 upon surtax net incomes of $300,000; and upon surtax .net incomes in excess of $300,000 and not in excess of $400,000, 66 per centum in addition of such excess. $218,000 upon surtax net incomes of $400,000; and upon surtax net incomes in excess of $400,000 and not in excess of $500,000, 68 per centum in addition of such excess. $286,000 upon surtax net incomes of $500,000; and upon surtax net incomes in excess of $500,000 and not in excess of $750,000, 70 per centum in addition of such excess. $461,000 upon surtax net incomes of $750,000; and upon surtax net incomes in excess of $750,000 and not in excess of $1,000,000, 72 per centum in addition of such excess. $641,000 upon surtax net incomes of $1,000,000; and upon surtax net incomes in excess of $1,000,000 and not in excess of $2,000,000, 73 per centum in addition of such excess. $1,371,000 upon surtax net incomes of $2,000,000; and upon surtax net incomes in excess of $2,000,000 and not in excess of $5,000,000, 74 per centum in addition of such excess. $3,591,000 upon surtax net incomes of $5,000,000; and upon surtax net incomes in excess of $5,000,000, 75 per centum in addition of such excess. (c) TAX ON PERSONAL HOLDING COMPANIES. For surtax on personal holding companies, see section 500. (d) AVOIDANCE OF SURTAXES BY INCORPORATION.— For surtax on corporations which accumulate surplus to avoid surtax on stockholders, see section 102. (e) SALE OF MINES AND OIL OR GAS PROPERTIES.— For limitation of surtax attributable to sale of mines and oil or gas wells, see section 105. SEC. 13. NORMAL TAX ON CORPORATIONS. (a) DEFINITION.-As used in this chapter the term "normal-tax net income" means the net income minus the sum of— (1) INTEREST ON OBLIGATIONS OF THE UNITED STATES AND ITS INSTRUMENTALITIES.-The credit provided in section 26 (a). (2) DIVIDENDS RECEIVED.-The credit provided in section 26 (b). Such credit shall not be allowed in the case of a mutual investment company, as defined in section 48. (3) DIVIDENDS PAID.-In the case of a mutual investment company the credit provided in section 27, computed without the benefit of subsection (b) thereof (relating to dividend carry-over). (b) IMPOSITION OF TAX.-There shall be levied, collected, and paid for each taxable year upon the normal-tax net income of every corporation, a normal tax as follows: Upon normal-tax net incomes not in excess of $2,000, 8 per centum. $160 upon normal-tax net incomes of $2,000; and upon normal-tax net incomes in excess of $2,000 and not in excess of $15,000, 11 per centum in addition of such excess. $1,590 upon normal-tax net incomes of $15,000; and upon normaltax net incomes in excess of $15,000 and not in excess of $40,000, 13 per centum in addition of such excess. $4,840 upon normal-tax net incomes of $40,000; and upon normaltax net incomes in excess of $40,000, 15 per centum in addition of such excess. (c) EXEMPT CORPORATIONS. For corporations exempt from taxation under this chapter, see section 101. (d) BANKS AND TRUST COMPANIES. For rate of tax on certain banks and trust companies, see section 104. SEC. 14. SURTAX ON UNDISTRIBUTED PROFITS. (a) DEFINITIONS.-As used in this chapter (1) The term "adjusted net income" means the net income minus the sum of (A) The normal tax imposed by section 13. (B) The credit provided in section 26 (a), relating to interest on certain obligations of the United States and Government corporations. (C) In the case of a holding company affiliate (as defined in section 2 of the Banking Act of 1933 [June 16, 1933, c. 89, 48 Stat. 162 (U. S. C., Title 12, § 221a]), the amount allowed as a credit under section 26 (d). (D) In the case of a national mortgage association created under Title III of the National Housing Act, June 27, 1934, c. 847, 48 Stat. 1252 (U. S. C., Title 12, § 1716), the amount allowed as a credit under section 26 (e). (2) The term "undistributed net income" means the adjusted net income minus the sum of the dividends paid credit provided in section 27 and the credit provided in section 26 (c), relating to contracts restricting dividends. (b) IMPOSITION OF TAX.-There shall be levied, collected, and paid for each taxable year upon the net income of every corporation a surtax equal to the sum of the following, subject to the application of the specific credit as provided in subsection (c): 7 per centum of the portion of the undistributed net income which is not in excess of 10 per centum of the adjusted net income. 12 per centum of the portion of the undistributed net income which is in excess of 10 per centum and not in excess of 20 per centum of the adjusted net income. 17 per centum of the portion of the undistributed net income which is in excess of 20 per centum and not in excess of 40 per centum of the adjusted net income, |