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Page:United States Statutes at Large Volume 89.djvu/92

 PUBLIC LAW 94-12—MAR. 29, 1975

89 STAT. 32

(c) CLERICAL AMENDMENT. — The table of sections for such subpart is amended by striking out the last item and inserting in lieu thereof the following: "Sec. 43. Credit for certain earned income. "Sec. 44. Overpayments of tax." SEC. 205. WITHHOLDING TAX. (a)

26 USC 3402.

of

section

REQUIREMENT OF W I T H H O L D I N G. — E x c e p t as otherwise p r o -

vided in this section, every employer making payment of wages shall deduct and withhold upon such wages a tax determined i n accordance with tables prescribed by the Secretary or his delegate. The tables so prescribed shall be the same as the tables contained in this subsection as in effect on January 1, 1975, except that the amounts set forth as amounts of income tax to be withheld with respect to wages paid after April 30, 1975, and before January 1, 1976, shall reflect the full calendar year effect for 1975 of the amendments made by sections 201, 202, 203, and 204 of the T a x Reduction Act of 1975. For purposes of applying such tables, the term 'the amount of wages' means the amount by which the wages exceed the number of withholding exemptions claimed, multiplied by the amount of one such exemption as shown in the table in subsection (b)(1). " (b)

26 USC 214.

(a)

3402 (relating to income tax collected at source) is amended to read as follows: "(a)

"The amount of wages."

REQUIREMENT OF WITHHOLDING.—Subsection

CONFORMING AMENDMENT. — S e c t i o n 3402(c)(6)

(relating to

wage bracket withholding) is amended by striking out "table 7 contained in subsection (a) " and inserting i n lieu thereof "the table for an annual payroll period prescribed pursuant to subsection (a) ". SEC. 206. INCREASE IN INCOME LIMITATION APPLICABLE TO CHILD AND DEPENDENT CARE DEDUCTION. Section 214 (relating to expenses for household and dependent care services necessary for gainful employment) is amended by striking out "$18,000" each place it appears in subsection (d) and inserting in lieu thereof "$35,000". SEC. 207. EXTENSION OF PERIOD FOR REPLACING OLD RESIDENCE FOR PURPOSES OF NONRECOGNITION OF GAIN UNDER SECTION 1034. (a) O N E - Y E A R PERIOD INCREASED TO 18 M O N T H S. —

26 USC 1034.

(1) Subsections (a), (c)(4), (c)(5), (d), and (h) of section 1034 (relating to nonrecognition of gain on sale or exchange of residence) are each amended by striking out "1 year" each place it appears and inserting in lieu thereof "18 months". (2) Subsection (c)(5) of section 1034 is amended by striking out "one year " and inserting in lieu thereof "18 months". (b) 18-MoNTii PERIOD FOR CONSTRUCTING N E W RESIDENCE INCREASED

TO 2 YEARS.—Subsection (c)(5) of section 1034 is amended by striking out "18 months " and inserting in lieu thereof "2 years". SEC. 208. CREDIT FOR PURCHASE OF NEW PRINCIPAL RESIDENCE. (a) ALLOWANCE OF C R E D I T. — Subpart A of part IV of subchapter A

26 USC 44.

of chapter 1 (relating to credits allowed) is amended by redesignating section 44 as section 45 and by inserting after section 43 the following new section: "SEC. 44. PURCHASE OF NEW PRINCIPAL RESIDENCE. " (a) GENERAL RULE. — I n the case of an individual there is allowed, as a credit against the tax imposed by this chapter for the taxable year, an amount equal to 5 percent of the purchase price of a new principal residence purchased or constructed by the taxpayer.

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Page:United States Statutes at Large Volume 89.djvu/93

 PUBLIC LAW 94-12—MAR. 29, 1975

89 STAT. 3 3

" (b) LIMITATIONS.—

" (1) MAXIMUM CREDIT.—The credit allowed under subsection (a) may not exceed $2,000. " (2) LIMITATION TO ONE RESIDENCE.—The credit under this section shall be allowed with respect to only one residence of the taxpayer. " (3) MARRIED INDIVIDUALS.—In the case of a h u s b and and wife

who file a joint return under section 6013, the amount specified 26 USC 6013. under paragraph (1) shall apply to the joint return. I n the case of a married individual filing a separate return, paragraph (1) shall be applied by substituting '$1,000' for '$2,000'. "(4)

CERTAIN OTHER TAXPAYERS.—In the case of

individuals

to whom paragraph (3) does not apply who together purchase the same new principal residence for use as their principal residence, the amount of the credit allowed under subsection (a) shall be allocated among such individuals as prescribed by the Secretary or his delegate, b u t the sum of the amounts allowed to such individuals shall not exceed $2,000 with respect to that residence. "(5)

APPLICATION W I T H OTHER CREDITS.—The credit

allowed

by subsection (a) shall not exceed the amount of the tax imposed by this chapter for the taxable year, reduced by the sum of the credits allowable under sections 33, 37, 38, 40, 41, and 42. 26 USC 33, 37, " (c) DEFINITIONS. — For purposes of this section— 38, 40, 41, 42. " (1) N E W PRINCIPAL RESIDENCE.—The term 'new p r i n c i p a l resi-

dence' means a principal residence (within the meaning of section 1034), the original use of which commences with the taxpayer, and includes, without being limited to, a single family structure, a residential unit i n a condominium or cooperative housing p r o j ect, and a mobile home. " (2) PURCHASE PRICE.—The term 'purchase price' means the adjusted basis of the new principal residence on the date of the acquisition thereof. " (3) PURCHASE.—The term 'purchase' means any acquisition of property, but only if— " (A) the property is not acquired from a person whose relationship to the person acquiring it would result i n the disallowance of losses under section 267 or 707(b) (but, in applying section 267(b) and (c) for purposes of this section, paragraph (4) of section 267(c) shall be treated as providing that the family of an individual shall include only his spouse, ancestors, and lineal descendants), and " (B) the basis of the property in the hands of the person acquiring it is not determined— " (i) i n whole o r i n part by reference to the adjusted basis of such property in the hands of the person from whom acquired, or " ( i i) under section 1014(a) (relating to property acquired from a decedent). " (d) RECAPTURE FOR CERTAIN DISPOSITIONS.—

" (1) IN GENERAL.—Except as provided in paragraph s (2) and (3), if the taxpayer disposes of property with respect to the purchase of which a credit was allowed under subsection (a) a t any time within 36 months after the date on which he acquired it (or, in the case of construction by the taxpayer, on the d a y on which he first occupied i t) as his principal residence, then the tax imposed under this chapter for the taxable year in which termi-

26 USC 1034.

26 USC 267, ^^^*

26 USC 1014.

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license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


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Page:United States Statutes at Large Volume 89.djvu/94

 89 STAT. 3 4

PUBLIC LAW 94-12—MAR. 29, 1975 tiates the replacement period under paragraph (2) with respect to the disposition is increased by an amount equal to the amount allowed as a credit for the purchase of such property. " (2) ACQUISITION OF NEW RESIDENCE.—If, in connection w i t h a

Ante, p. 32.

26 USC 1034.

disposition described in paragraph (1) and within the applicable period prescribed in section 1034, the taxpayer purchases or constructs a new principal residence, then the provisions of paragraph (1) shall not apply and the tax imposed by this chapter for the taxable year following the taxable year during which disposition occurs is increased by an amount which bears the same ratio to the amount allowed as a credit for the purchase of the old residence as (A) the adjusted sales price of the old residence (within the meaning of section 1034), reduced (but not below zero) by the taxpayer's cost of purchasing the new residence (within the meaning of such section) bears to (B) the adjusted sales price of the old residence. " (3) D E A T H o r OWNER; CASXIALTY LOSS; INVOLUNTARY CONVER-

26 USC 165. 26 USC 1033.

SION; ETC.—The provisions of paragraph (1) do not apply to— " (A) a disposition of a residence made on account of the death of any individual having a legal or equitable interest therein occurring during the 36 month period to which reference is made under such paragraph, " (B) a disposition of the old residence if it is substantially or completely destroyed by a casualty described in section 165(c)(3) or compulsorily and involuntarily converted (within the meaning of section 1 0 3 3 (a)), or " (C) a disposition pursuant to a settlement in a divorce o r legal separation proceeding where the other spouse retains the residence as principal residence. " (e) PROPERTY TO W H I C H SECTION A P P L I E S. —

" (1) IN GENERAL.—The provisions of this section apply to a new principal residence— " (A) the construction of which began before March 26, 1975, " (B) which is acquired and occupied by the taxpayer after March 12, 1975, and before January 1, 1977, and " (C) if not constructed by the taxpayer, which w a s acquired by the taxpayer under a binding contract entered into by the taxpayer before January 1, 1976. "(2)

SELF-CONSTRUCTED PROPERTY BEGUN BEFORE MARCH

I3,

10 7 5.—In the case of property the construction of which was begun by the taxpayer before March 13, 1975, only that portion of the basis of such property properly allocable to construction after March 12, 1975, shall be taken into account in determining the amount of the credit allowable under subsection (a). " (3) BINDING CONTRACT.—For purposes of this subsection, a contract for the purchase of a residence which is conditioned upon the purchaser's obtaining a loan for the purchase of the residence (including conditions as to the amount or interest rate of such loan) is not considered non-binding on account of that condition. "(4)

CERTIFICATION MUST BE ATTACHED TO RETURN.—This sec-

tion shall not apply to any residence (other than a residence constructed by the taxpayer) unless there is attached to the return of tax on which the credit is claimed a certification by the seller, in accordance with regulations prescribed by the Secretary o r his delegate, that the purchase price is the lowest price at which the residence was ever offered for sale."

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Page:United States Statutes at Large Volume 89.djvu/95

 PUBLIC LAW 94-12—MAR. 29, 1975 (b)

89 STAT. 35

SUITS TO RECOVER AMOUNTS or PRICE INCREASES.—If—

(1) any person certifies under section 44(e)(4) of the Internal Revenue Code of 1954 that the price for which a residence was Ante, p. 32. sold is the lowest price at which the residence was ever offered for sale, and (2) the price for which the residence Avas sold exceeded the lowest price at which the residence was ever offered for sale, such person shall be liable to the purchaser of such residence in an amount equal to three times the amount of such excess. The United States district courts shall have jurisdiction of suits to recover such amounts without regard to any other provision of law. I n any suit brought under this subsection in which judgment is entered for the purchaser, he shall also be entitled to recover a reasonable attorney's fee. (c) D E N I A L OF DEDUCTION.—Notwithstanding the provisions of section 162 or 212 of the I n t e r n a l Revenue Code of 1954, no deduction 26 USC 162, shall be allowed in computing taxable income for two-thirds of any 212. amount paid or incurred on a judgment entered against any person in a suit brought under subsection (b). (d)

T E C H N I C A L AND CLERICAL AMENDMENTS. —

(1) The table of sections for such subpart is amended by striking out the last item and inserting in lieu thereof the following: "Sec. 44. Credit for purchase of new principal residence. "Sec. 45. Overpayments of tax." (2) Section 56(a)(2) (relating to imposition of minimum tax) is amended by striking out " and " at the end of clause (v), by striking out "; and " at the end of clause (vi) and inserting in lieu thereof ", and", and by inserting after clause (vi) the following new clause: " ( v i i) section 44 (relating to credit for purchase of new principal residence); and". (3) Section 56(c)(1) (relating to tax carryovers) is amended by striking out " and " at the end of subparagraph (E), by striking out "exceed" at the end of subparagraph (F) and inserting in lieu thereof "and", and by inserting after subparagraph (F) the following new subparagraph: " (G) section 44 (relating to credit for purchase of new principal residence), exceed". (4) Section 6096(b) (relating to designation of income tax payments to Presidential Election Campaign F u n d) is amended by striking out "and 42" and inserting in lieu thereof "42, and 44". SEC. 209. EFFECTIVE DATES. (a) SECTIONS 201, 202 (a), AND 203.—The amendments made by sections 201, 2 0 2 (a), and 203 shall apply to taxable years ending after December 31, 1974. Such amendments shall cease to apply to taxable years ending after December 31, 1975. (b) SECTION 204.—The amendments made by section 204 shall apply to taxable years beginning after December 31, 1974, and before January 1, 1976. (c) SECTIONS 202(b) AND 205.—The amendments made by sections 202(b) and 205 shall apply to wages paid after April 30, 1975, and before January 1, 1976. (d) SECTION 206.—The amendments made by section 206 apply to taxable years beginning after the date of enactment of this Act. (e) SECTION 207.—The amendments made by section 207 shall apply to old residences (within the meaning of section 1034 of the Internal Revenue Code of 1954) sold or exchanged after December 31, 1974, in taxable years ending after such date.

26 USC 56.

26 USC 6096.

26 USC 42 note,

26 USC 43 note, 26 USC 3402 note, 26 USC 214 note, 26 USC 1034 note. 26 USC 1034.

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Page:United States Statutes at Large Volume 89.djvu/96

 89 STAT. 36

PUBLIC LAW 94-12—MAR. 29, 1975

TITLE III—CERTAIN CHANGES IN BUSINESS TAXES SEC. 301. INCREASE IN INVESTMENT CREDIT. (a) INCREASE OF INVESTMENT C R E D I T. — Paragraph (1) of section 46

26 USC 46.

(a) (determining the amount of the investment credit) is amended to read as follows: " (1) GENERAL RULE.—

" (A) T E N PERCENT CREDIT.—Except as otherwise provided in this paragraph, in the case of a property described in subparagraph (D), the amount of the credit allowed by section 38 for the taxable year shall be an amount equal to 10 percent of the qualified investment (as determined under subsections (c) and (d)). "(B)

26 USC 38.

Supra.

ELEVEN PERCENT CREDIT.—Except as otherwise pro-

vided in this paragraph, in the case of a corporation which elects to have the provisions of this subparagraph apply, the amount of the credit allowed by section 38 for the taxable year with respect to property described in subparagraph (D) shall be an amount equal to 11 percent of the qualified investment (as determined under subsections (c) and (d)). A n election may not be made to have the provisions of this subparagraph apply for the taxable year unless the corporation meets the requirements of section 301(d) of the T a x Reduction Act of 1975. A n election by a corporation to have the provisions of this subparagraph apply shall be made a t such time, in such form, and in such manner as the Secretary or his delegate may prescribe. " (C) SEVEN PERCENT CREDIT.—Except as otherwise provided

in this paragraph, the amount of credit allowed by section 38 for the taxable year shall be an amount equal to 7 percent of the qualified investment (as determined under subsections (c) and (d)). " (D) TRANSITIONAL RULES.—The provisions of subparagraph s (A) and (B) shall apply only to— " (i) property to which subsection (d) does not apply, the construction, reconstruction, or erection of which is completed by the tax p a y e r after January 21, 1975, but only to the extent of the basis thereof attributable to the construction, reconstruction, or erection after January 21, 1975, and before January 1, 1977. " ( i i) property to which subsection (d) does not apply, acquired by the taxpayer after January 21, 1975, and before January 1, 1977, and placed in service by the taxpayer before January 1.1977, and " ( i i i) property to which subsection (d) applies, but only to the extent of the qualified investment (as determined under subsections (c) and (d)) with respect to qualified progress expenditures made after January 21, 1975, and before January 1, 1977." (b) P U B L I C U T I L I T Y PROPERTY.—

(1) DETERMINATION OF QUALIFIED INVESTMENT.—Subparagraph

26 USC 46.

(A) of section 4 6 (c)(3) (relating to determination of qualified investment in the case of public utility property) is amended to read as follows: " (A) To the extent that subsection (a)(1)(C) applies to property which is public utility property, the amount of the qualified investment shall be fj of the amount determined under paragraph (1). ".

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Page:United States Statutes at Large Volume 89.djvu/97

 PUBLIC LAW 94-12—MAR. 29, 1975 (2)

INCREASE

IN

SO-PERCENT

LIMITATION.—Section

89 STAT. 37 46(a)

26 USC 46.

(relating to determination of amount of credit) is amended by adding at the end thereof the following new paragraph: " (6) ALTERNATIVE L I M I T A T I O N I N THE CASE or CERTAIN U T I L I T I E S. —

" (A) IN GENERAL.—If, for a taxable year ending after calendar year 1974 and before calendar year 1981, the amount of the qualified investment of the taxpayer which is attributable to public utility property is 25 percent or more of his aggregate qualified investment, then subparagraph (C) of paragraph (2) of this subsection shall be applied by substituting for 50 percent his applicable percentage for such year. " (B) APPLICABLE PERCENTAGE.—The applicable percentage

of any taxpayer for any taxable year is— " (i) 50 percent, plus " ( i i) that portion of the tentative percentage for the taxable year which the taxpayer's amount of qualified investment which is public utility property bears to his aggregate qualified investment. I f the proportion referred to in clause (ii) is 75 percent or more, the applicable percentage of the taxpayer for the year shall be 50 percent plus the tentative percentage for such year. "(C)

TENTATIVE PERCENTAGE.—For purposes of s u b p a r a -

g r a p h (B), the tentative percentage shall be determined under the following t a b l e: "If the taxable year The tentative ends in: percentage is: 1975 or 1976 1977 1978 1979 1980 "(I))

PUP.LTC T'''TLT'T PROPEPTY DEFINED.

50 40 30 20 10 F o P purpOSCS of

this paragraph, the term 'public utility property' has the m e a n m g given to such term by the first sentence of subsection (c)(3)(B). " (3) L I M I T A T I O N I N (I\SE OF CERTAIN REGULATED COMPANIES.—

Section 46(f), as redesignated by section 302(a) of this Act (relat- Post, p. 40. ing to limitation h^ c^°o '-" ror*'f\'r^ rejjulated companies), is amended by a d d i n g at the end thereof the following new paragraph: "(8)

PROHIBITION o r IMMEDIATE FLOWTHROUGH.—An election

made under paragraph (3) shall apply only to the amount of the credit allowable under section 38 with respect to public utility 26 USC 38. property (within the meanin^r of subsection (a)(6)(D)) determined as if the T a x Keduction Act of 1975 had not been enacted. Any tax p a y e r who had timely made an election under paragraph (3) may, a t his own option and AA'ithout regard to any requirement imposed by an agency described in subsection (c)(3)(B), elect within 90 days after the date of the enactment of the T a x Reduction Act of 1975 (in such manner as the Secretary or his delegate Ante, p. 26. shall prescribe) to have the provisions of paragraph (3) apply with respect to the amount of the credit allowable under section 38 with respect to such property which is in excess of the amount determined under the preceding sentence. I f such taxpayer does not make such an election, paragraph (1) or (2) (whichever paragraph is applicable without regard to this paragraph) shall apply to such excess credit, except that if neither paragraph (1) n o r (2)

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Page:Folk-lore - A Quarterly Review. Volume 7, 1896.djvu/366

 336 it was destroyed by fire. Others, who thought themselves great historians, believed it was put there by pious people, and that either the remains of Queen Eleanor or King John had been borne to the church as a resting-place, and the cross erected to commemorate the event.

"Well, the 'fool' mounted the steps of the cross and made a speech. He soon got down, and he and the boggans and the crowd went just outside the town on the hill, where all the open fields are. The head boggan, called 'The Lord Duke,' then said a few rhyming words and ' threw ' the hood up three times. The third time the crowd may have it. It went up into the air like a bolt, and dozens of hands were outstretched to catch it, as it was not possible to calculate where it would come down, any more than if they had tried to catch a sky rocket. As soon as a man got it, he tried to run away with it, and of course was balked by the crowd, unless he had plenty of his own friends round him. The red-coated boggans always kept pretty well round the outside of the crowd, much as cricketers field, and whenever the crowd threw the hood from one to another and it was possible for a boggan to catch it, or even touch it, it had to be taken back to the Lord Duke and thrown up again from the middle of the field.

"The play was a dangerous, jostling scrimmage, and the modern leather hood was sharper when it hit anyone in the eye than the old sackcloth one. At four o'clock the last or 'Sway Hood' is put up. When I saw it, it appeared to be handed, or passed about, or along, by one party—say Haxey men—and snatched at and scuffled for by another—perhaps Epworth men—and then they shouted loudly, 'Sway, boys, sway,' and a surging crowd, pushing two different ways, and divided into two large masses of people, looked as if they swayed. And it was not safe for women and children to be anywhere but at a fair distance from the players.

"When the 'swaying' begins the boggans no longer try


text:
Page:United States Statutes at Large Volume 89.djvu/98

 89 STAT. 3 8

Ante, p. 26.

26 USC 46 note.

PUBLIC LAW 94-12—MAR. 29, 1975 is applicable (without regard to this paragraph), paragraph (1) shall apply unless the taxpayer elects (in such manner as the Secretary or his delegate shall prescribe) within 90 days after the date of the enactment of the T a x Reduction Act of 1975 to have the provisions of paragraph (2) apply. The provisions of this paragraph shall not be applied to disallow such excess credit before the first final determination which is inconsistent with such requirements is made, determined in the same manner as under paragraph (4)." (4) EFFECTIVE DATES.—The amendment made by paragraph (1) of this subsection shall apply to property placed in service after January 21, 1975, in taxable years ending after January 21, 1975. The amendments made by paragraph s (2) and (3) shall apply to taxable years ending after December 31, 1974. (c) INCREASE F R O M $50,000 TO $100,000 OF DOLLAR LIMITATION ON USED PROPERTY.—

26 USC 48. 26 USC 38.

26 USC 48 note. 26 USC 46 note.

Employee stock ownership plan.

26 USC 4975.

Ante, p. 36.

(1) IN GENERAL.—Paragraph (2) of subsection 48(c) (relating to dollar limitation in case of used section 38 property) is amended— (A) by striking out "$50,000" each place i t appears and inserting in lieu thereof "$100,000", and (B) by striking out "$25,000" and inserting in lieu thereof "$50,000". (£) EFFECTIVE DATE.—The amendments made by paragraph (1) shall apply only to taxable years beginning after December 31, 1974, and before January 1, 1977. (d)

P L A N REQUIREMENTS FOR TAXPAYERS ELECTING 1 1 - P E R C E N T

CREDIT.—In order to meet the requirements of this subsection— ^^^ j ^ corporation (hereinafter in this subsection referred to as ^j^g "employer") must establish an employee stock ownership plan (described in paragraph (2)) which is funded by transfers of employer securities in accordance with the provisions of paragraph (6) and which meets all other requirements of this subsection. (2) The plan referred to in paragraph (I) must be a defined contribution plan established in writing which— (A) is a stock bonus plan, a stock bonus and a money purchase pension plan, or a profit-sharing plan, (B) is designed to invest primarily in employer securities, and (C) meets such other requirements (similar to requirements applicable to employee stock ownership plans as defined in section 4975(e)(7) of the I n t e r n a l Revenue Code of 1954) as the Secretary of the Treasury or his delegate may prescribe. (3) The plan must provide for the allocation of all employer securities transferred to it or purchased by it (because of the requirements of section 4 6 (a)(1)(B) of the I n t e r n a l Revenue Code of 1954) to the account of each participant (who was a participant at any time during the plan year, whether or not he is a participant a t the close of the plan year) as of the close of each plan year in an amount which bears substantially the same proportion to the amount of all such securities allocated to all participants in the plan for that plan year as the amount of compensation paid to such participant (disregarding any compensation in excess of the first $100,000 per year) bears to the compensation paid to all such participants during that year (disregarding any compensation in excess of the first $100,000 with respect to any part i c i p a n t).

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Page:United States Statutes at Large Volume 89.djvu/99

 PUBLIC LAW 94-12—MAR. 29, 1975 Notwithstanding the first sentence of this paragraph, the allocation to participants' accounts may be extended over whatever period may be necessary to comply with the requirements of section 415 of the Internal Revenue Code of 1954. (4) The plan must provide that each participant has a nonforfeitable right to any stock allocated to his account under paragraph (3), and that no stock allocated to a participant's account may be distributed from that account before the end of the eightyfourth month beginning after the month in which the stock is allocated to the account except in the case of separation from the service, death, or disability. (5) The plan must provide that each participant is entitled to direct the plan as to the manner in which any employer securities allocated to the account of the participant are to be voted. (6) On making a claim for credit, adjustment, or refund under section 38 of the Internal Revenue Code of 1954, the employer states in such claim that it agrees, as a condition of receiving any such credit, adjustment, or refund, to transfer employer securities forthwith to the plan having an aggregate value at the time of the claim of 1 percent of the amount of the qualified investment (as determined under section 46(c) and (d) of such Code) of the taxpayer for the taxable year. For purposes of meeting the requirements of this paragraph, a transfer of cash shall be treated as a transfer of employer securities if the cash is, under the plan, used to purchase employer securities. (7) Notwithstanding any other provision of law to the contrary, if the plan does not meet the requirements of section 401 of the Internal Revenue Code of 1954— (A) stock transferred under paragraph (6) and allocated to the account of any participant under paragraph (3) and dividends thereon shall not be considered income of the participant or his beneficiary under the Internal Revenue Code of 1954 until actually distributed or made available to the participant or his beneficiary and, at such time, shall be taxable under section 72 of such Code (treating the participant or his beneficiary as having a basis of zero in the contract), (B) no amount shall be allocated to any participant in excess of the amount which might be allocated if the plan met the requirements of section 401 of such Code, and (C) the plan must meet the requirements of sections 410 and 415 of such Code. (8) If the amount of the credit determined under section 46(a) (1)(B) of the Internal Revenue Code of 1954, is recaptured in accordance with the provisions of such Code, the amounts transferred to the plan under this subsection and allocated under the plan shall remain in the plan or in participant accounts, as the case may be and continue to be allocated in accordance with the original plan agreement. (9) For purposes of this subsection, the term— (A) "employer securities" means common stock issued by the employer or a corporation which is in control of the employer (within the meaning of section 368(c) of the Internal Revenue Code of 1954) with voting power and dividend rights no less favorable than the voting power and dividend rights of other common stock issued by the employer or such controlling corporation, or securities issued by the employer or such controlling corporation, convertible into such stock, and

89 STAT. 39

26 USC 415.

26 USC 38.

Post, p. 40.

26 USC 401.

26 USC 1 et seq.

26 USC 72.

26 USC 410, 415. Ante, p. 36.

"Employer securities." 26 USC 368.

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Page:United States Statutes at Large Volume 89.djvu/100

 89 STAT. 40 "Value."

Regulations and reports. Penalty.

"Amount involved." Ante, p. 36.

26 USC 1 et seq.

26 USC 162, 212, 404.

26 USC 46.

PUBLIC LAW 94-12—MAR. 29, 1975 (B) "value" means the average of closing prices of the employer's securities, as reported by a national exchange on which securities are listed, for the 20 consecutive trading days immediately preceding the date of transfer or allocation of such securities or, in the case of securities not listed on a national exchange, the fair market value as determined in good faith and in accordance with regulations issued by the Secretary of the Treasury or his delegate. (10) The Secretary of the Treasury or his delegate shall prescribe such regulations and require such reports as may be necessary to carry out the provisions of this subsection. (11) If the employer fails to meet any requirement imposed under this subsection or under any obligation undertaken to comply with the requirement of this subsection, he is liable to the United States for a civil penalty of an amount equal to the amount involved in such failure. The preceding sentence shall not apply if the taxpayer corrects such failure (as determined by the Secretary of the Treasury or his delegate) within 90 days after notice thereof. For purposes of this paragraph, the term "amount involved" means an amount determined by the Secretary or his delegate, but not in excess of 1 percent of the qualified investment ©f the taxpayer for the taxable year under section 46(a)(1)(B) and not less than the product of one-half of one percent of such amount multiplied by the number of months (or parts thereof) during which such failure continues. The amount of such penalty may be collected by the Secretary of the Treasury in the same manner in which a deficiency in the payment of Federal income tax may be collected. (12) Notwithstanding any provision of the Internal Revenue Code of 1954 to the contrary, no deductions shall be allowed under section 162, 212, or 404 of such Code for amounts transferred to an employee stock ownership plan and taken into account under this subsection. SEC. 302. ALLOWANCE OF INVESTMENT CREDIT WHERE CONSTRUCTION OF PROPERTY WILL TAKE MORE THAN 2 YEARS. (a) GENERAL RULE.—Section 46 (relating to amount of credit) is

amended by redesignating subsections (d) and (e) as subsections (e) and (f), respectively, and by inserting after subsection (c) the following new subsection: "(d) QUALIFIED PROGRESS EXPENDITURES.—

"(1) IN GENERAL.—In the case of any taxpayer who has made an election under paragraph (6), the amount of his qualified investment for the taxable year (^determined under subsection (c) without regard to this subsection) shall be increased by an amount equal to his aggregate qualified progress expenditures for the taxable year with respect to progress expenditure property. "(2) PROGRESS EXPENDITURE PROPERTY DEFINED.—

26 USC 38.

"(A) IN GENERAL.—For purposes of this subsection, the term 'progress expenditure property' means any property which is being constructed by or for the taxpayer and which— "(i) has a normal construction period of two years or more, and "(ii) it is reasonable to believe will be new section 38 property having a useful life of 7 years or more in the hands of the taxpayer when it is placed in service. Clauses (i) and (ii) of the preceding sentence shall be applied on the basis of facts known at the close of the taxable

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Page:United States Statutes at Large Volume 89.djvu/101

 PUBLIC LAW 94-12—MAR. 29, 1975

8 9 STAT. 4 1

year of the taxpayer in which construction begins (or,^ if later, at the close of the first taxable year to which an election under this subsection applies). " (B) NORMAL CONSTRUCTION PERIOD.—For purposes of sub-

paragraph (A), the term 'normal construction period' means the period reasonably expected to be required for the construction of the property— " (i) beginning with the date on which physical work on the construction begins (or, if later, the first d a y of the first taxable year to which an election under this subsection applies), and " ( i i) ending on the date on which it is expected that the property will be available for placing in service. " (3) QUALIFIED PROGRESS EXPENDITURES DEEINED.—For purposes

of this subsection— "(A)

SELF-CONSTRUCTED PROPERTY.—In the case of

any

self-constructed property, the term 'qualified progress expenditures' means the amount which, for purposes of this subpart, is, properly chargeable ( during such taxable year) to capital account with respect to such property. "(B)

NON-SELF-CONSTRUCI'ED PROPERTY.—In

the

case of

non-self-constructed property, the term 'qualified progress expenditures' means the lesser of— " (i) the amount paid during the taxable year to another person for the construction of such property, or " ( i i) the amount which represents that proportion of the overall cost to the taxpayer of the construction by such other person which is properly attributable to that portion of such construction which is completed during such taxable year. "(4)

SPECIAL RULES FOR APPLYING PARAGRAPH (3). — For p u r -

poses of paragraph (3) — "(A)

COMPONENT PARTS, E T C. — Property which is to be a

component part of, or is otherwise to be included in, any progress expenditure property shall be taken into account— " (i) a t a time not earlier than the time a t which it becomes irrevocably devoted to use in the progress expenditure property, and " ( i i) as if ( a t the time referred to in clause (i)) the tax p a y e r h a d expended an amount equal to that portion of the cost to the taxpayer of such component or other property which, for purposes of this subpart, is properly chargeable ( during such taxable year) to capital account with respect to such property. " (B) CERTAIN BORROWINGS DISREGARDED.—Any a m o u n t bor-

rowed directly or indirectly by the taxpayer from the person constructing the property for h i m shall not be treated as a n amount expended for such construction. " (C) CERTAIN UNUSED EXPENDITURES CARRIED OVER.—In the

case of non-self-constructed property, if for the taxable year— " (i) the amount under clause (i) of paragraph (3)(B) exceeds the amount under clause (ii) of paragraph (3) (B), then the amount of such excess shall be taken into account under such clause (i) for the succeeding taxable year, or " ( i i) the amount under clause (ii) of paragraph (3) (B) exceeds the amount under clause (i) of paragraph

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Page:United States Statutes at Large Volume 89.djvu/102

 89 STAT. 42

PUBLIC LAW 94-12—MAR. 29, 1975 (3)(B), then the amount of such excess shall be taken into account under such clause (ii) for the succeeding taxable year. "(D)

Post, p. 4^.

DEITIRMINATION OF PKRCENTAGE OF COMPLETION.—In

the case of non-self-constructed property, the determination under paragraph (3)(B) (ii) of the proportion of the overall cost to the taxpayer of the construction of any property which is properly attributable to construction completed during any taxable year shall be made, under regulations prescribed by the Secretary or his delegate, on the basis of engineering or architectural estimates or on the basis of cost accounting records. Unless the taxpayer establishes otherwise by clear and convincing evidence, the con'^truction shall be deemed to be completed not more rapidly than ratably over the normal construction period. " (E) No QUALIFIED PROGRESS EXPENDITURES FOR CERTAIN PRIOR PERIODS.—In the case of any property, no qualified progress expenditures shall be taken into account under this subsection for any period before January 22, 1975 (or, if later, before the first day of the first taxable year to which an election under this subsection applies). " (F) No QUALIFIED PROGRESS EXPENDITURES FOR PROPERTY FOR YEAR IT IS PLACED IN SERVICE, ETC.—In the case of any property, no qualified progress expenditures shall be taken into account under this subsection for the earlier of— " (i) the taxable year in which the property is placed in service, or " ( i i) the first taxable year for which recapture is required under section 4 7 (a)(3) with respect to such property, or for any taxable year thereafter. " (5) OTHER DEFINITIONS. — For purposes of this subsection— " (A) SELF-CONSTRUCTED PROPERTY.—The term 'self-con-

structed property' means property more than half of the construction expenditures for which it is reasonable to believe will be made directly by the taxpayer. "(B)

NON-SELF-CONSTRUCTED PROPERTY.—The term

'non-

self-constructed property' means property which is not selfconstructed property. " (C) CONSTRUCTION, ETC.—The term 'construction' includes reconstruction and erection, and the term 'constructed' includes reconstructed and erected. "(D)

O N L Y CONSTRUCTION OF SECTION 38 PROPERTY TO BE

TAKEN INTO ACCOUNT.—Construction shall be taken into account only if, for purposes of this subpart, expenditures therefor are properly chargeable to capital account with respect to the property. " (6) ELECTION.—A election under this subsection may be made at such time and in such manner as the Secretary or his delegate may by regulations prescribe. Such a n election shall apply to the taxable year for which made and to all subsequent taxable years. Such an election, once made, may not be revoked except with the consent of the Secretary or his delegate. " (7) TRANSITIONAL RULES.—The qualified investment taken into account under this subsection for any taxable year beginning before January 1, 1980, with respect to any property shall be ( i n lieu of the full amount) an amount equal to the sum of—

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Page:United States Statutes at Large Volume 89.djvu/103

 89 STAT. 4 3

PUBLIC LAW 94-12—MAR. 29, 1975

" (A) the applicable percentage of the full amount determined under the following t a b l e: "For a taxable year The applicable beginning in: percentage i s: 1974 or 1975 20 1976 40 1977 60 1978 80 1979 100; plus " (B) in the case of any property to which this subsection applied for one or more preceding taxable years, 20 percent of the full amount for each such preceding taxable year. For purposes of this paragraph, the term 'full amount', when used "Full amount, with respect to any property for any taxable year, means the amount of the qualified investment for such property for such year determined under this subsection without regard to this paragraph.-' (b) CONFORMING AMENDMENTS. — (1) AMENDMENT OF SECTION 4 6 (C).—Section 46(c) ( r e l a t i n g to

26 USC 46.

qualified investment) is amended by adding a t the end thereof the following new paragraph: " (4) COORDINATION W I T H SUBSECTION (d). — The amount which

would (but for this paragraph) be treated as qualified investment under this subsection with respect to any property shall be reduced (but not below zero) by any amount treated by the taxpayer or a predecessor of the taxpayer (or, in the case of a sale and leaseback described in section 4 7 (a)(3)(C), by the lessee) as qualified Infrainvestment with respect to such property under subsection (d), to the extent the amount so treated has not been required to be recaptured by reason of section 47(a)(3). " (2) DISPOSITION, ETC.—

(A) Subsection (a) of section 47 (relating to certain dis- 26 USC 47. positions, etc., of section 38 property) is amended by redesignating paragraph (3) as paragraph (4) and by inserting after paragraph (2) the following new paragraph: " (3) PROPERTY CEASES TO BE PROGRESS EXPENDITURE PROPERTY.—

" (A) IN GENERAL.—If during any taxable year any property taken into account in determining qualified investment under section 46(d) ceases (by reason of sale or other disposi- Ante, p. 40. tion, cancellation or abandonment of contract, or otherwise) to be, with respect to the taxpayer, property which, when placed in service, will be new section 38 property, then the tax under this chapter for such taxable year shall be increased by an amount equal to the aggregate decrease in the credits allowed under section 38 for all prior taxable years which would have resulted solely from reducing to zero the qualified investment taken into account with respect to such property. "(B)

CERTAIN EXCESS CREDIT RECAPTURED.—Any

amount

which would have been applied as a reduction of the qualified investment in property by reason of paragraph (4) of section 46(c) but for the fact that a reduction under such paragraph cannot reduce qualified investment below zero shall be treated as a n amount required to be recaptured under subparagraph (A) for the taxable year in which the property is placed i n service. " (C) CERTAIN SALES AND LEASEBACKS.—Under regulations

prescribed by the Secretary or his delegate, a sale by, and

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Page:United States Statutes at Large Volume 89.djvu/104

 89 STAT. 44

PUBLIC LAW 94-12—MAR. 29, 1975 leaseback to, a taxpayer who, when the property is placed in service, will be a lessee to whom section 4 8 (d) applies shall not be treated as a cessation described in sulaparagraph (A) to the extent that the qualified investment which will be passed through to the lessee under section 4 8 (d) with respect to such property is not less than the qualified progress expenditures properly taken into account by the lessee with respect to such property. " (D) COORDINATION WITH PARAGRAPH (i).—If, after property is placed in service, there is a disposition or other cessation described in paragraph (1), paragraph (1) shall be applied as if any credit which was allowable by reason of Section 4 6 (d) and which has not been required to be recaptured before such cessation were allowable for the taxable year the property was placed in service."

26 USC 48.

Ante, p. 40.

(c)

Ante, p. 43.

26 USC 48. 26 USC SOB.

26 USC 11.

(1) Paragraph (4) of section 4 7 (a) (as redesignated by subsection (b)(2)(A) of this section) is amended by striking out " paragraph (1) " and insertino- in lieu thereof " paragraph (1) or (3)". (2) Paragraph s (5) and (6)(B) of section 4 7 (a) are each amended by striking out " paragraph (3) " and inserting in lieu thereof " paragraph (4) ". (3) Paragraph s (1) and (2) of section 4 8 (d) are each amended by striking out "section 4 6 (d)(1) " and inserting in lieu thereof "section 46(e)(1) ". (4) Subsection (f) of section 50B is amended by striking out "section 4 6 (d) " and inserting in lieu thereof "section 4 6 (e) ". SEC. 303. CHANGE IN CORPORATE TAX RATES AND INCREASE IN SURTAX EXEMPTION. (a) TAX RATES.—Section 11(b) (relating to corporate normal tax) is amended to read as follows: " (b) NORMAL T A X. — The normal tax is equal to— " (1) in the case of a taxable year ending before January 1, 1975, or after December 31, 1975, 22 percent of the taxable income, and " (2) in the case of a taxable year ending after December 31, 1974, and before January 1, 1976, the sum of— " (A) 20 percent of so much of the taxable income as doesnot exceed $25,000, plus " (B) 22 percent of so much of the taxable income as exceeds $25,000.". (b) SURTAX EXEMPTION.—Section 11(d) (relating to surtax exemption) is amended by striking out "$25,000" and inserting in lieu thereof "$50,000". (c)

26 USC 1561.

26 USC 11 note.

26 USC 12.

CLERICAL AMENDMENTS. —

T E C H N I C A L AND CONFORMING AMENDMENTS. —

(1) Paragraph (1) of section 1561(a) (as in effect for taxable years beginning after December 31, 1974) (relating to limitations on certain multiple tax benefits in the case of certain controlled corporations) is amended by striking out "$25,000" and inserting in lieu thereof "$50,000". I n a p p l y i n g subsection (b)(2) of section 11, the first $25,000 of taxable income and the second $25,000 of taxable income shall each be allocated among the component members of a controlled group of corporations in the same manner as the surtax exemption is allocated. (2) Paragraph (7) of section 12 (relating to cross references for tax on corporations) is amended by striking out "$25,000" and inserting in lieu thereof "$50,000".

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Page:United States Statutes at Large Volume 89.djvu/105

 PUBLIC LAW 94-12—MAR. 29, 1975

89 STAT, 45

(3) Section 962(c) (relating to surtax exemj^tion for individuals electing to be subject to tax at corporate rates) is amended by striking out "$25,000" and inserting in lieu thereof "$50,000". SEC. 304. INCREASE IN MINIMUM ACCUMULATED EARNINGS CREDIT FROM $100,000 TO $150,000. (a) INCREASE.—Paragraphs (2) and (3) of section 535(c) (relating to accumulated earnings credit) are each amended by striking out "$100,000" and inserting in lieu thereof "$150,000". (b) CONFORMING AMENDMENTS.—Sections 243(b)(3)(C)(i) (relating to qualifying dividends for purposes of the dividends received deduction), 1551 (a) (relating to disallowance of surtax exemption and accumulated earnings credit) and 1561(a)(2) (relating to limitations on certain multiple tax benefits in the case of certain controlled corporations) are each amended by striking out "$100,000" and inserting in lieu thereof "$150,000". SEC. 305. EFFECTIVE DATES. (a) SECTION 302.—The amendments made by section 302 shall apply to taxable years ending after December 31.1974.

26 USC 962.

26 USC 535. 26 USC 243. 26 USC 1551 26 USC 1561.

26 USC 46 note.

(b) SECTION 303.—

(1) IN GENERAL.—The amendments made by section 303 shall 26 USC 11 note. apply to taxable years ending after December 31, 1974. The amendments made by subsections (b) and (c) of such section shall cease to a p p l y for taxable years ending after December 31, 1975. (2) CHANGES TOEATED AS CHANGES I N TAX RATE.—Section 21 26 USC 21. (relating to change in rates during taxable year) is amended by a d d i n g at the end thereof the following new subsection: " (f) INCREASE I N SURTAX E X E M P T I O N. — I n a p p l y i n g subsection (a)

to a taxable year of a taxpayer which is not a calendar year, the change made by section 303(b) of the T a x Reduction Act of 1975 in section 11(d) (relating to corporate surtax exemption) shall be treated as a Ante, p. 44. change in a rate of tax. " (c) SECTION 304.—The amendments made by section 304 apply to 26 USC 535 note. taxable years beginning after December 31, 1974.

TITLE IV—CHANGES AFFECTING INDIVIDUALS AND BUSINESSES SEC. 401. FEDERAL WELFARE RECIPIENT EMPLOYMENT INCENTIVE TAX CREDIT. (a)

IN GENERAL.—

(1) Section 50A (a) (relating to determination of amount of credit) is amended by a d d i n g at the end thereof the following new paragraph: "(6)

LIMITATION

WITH

RESPECT

TO NONBUSINESS

26 USC 50A.

ELIGIBLE

EMPLOYEES.—Notwithstanding paragraph (1), the credit allowed by section 40 with respect to Federal welfare recipient employment 26 USC 40. incentive expenses paid or incurred by the taxpayer during the taxable year to an eligible employee whose services are not performed in connection with a trade or business of the taxpayer shall not exceed $1,000." (2) Section 50A (c)(2)(A) (relating to amount of credit) is amended—• (A) by striking out " o r " at the end of clause ( i i), (B) by striking out the period a t the end of clause (iii) and inserting in lieu thereof a comma and "or", and

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Page:United States Statutes at Large Volume 89.djvu/106

 89 STAT. 46

infra. 26 USC SOB.

PUBLIC LAW 94-12—MAR. 29, 1975 (C) by inserting at the end thereof the following new clause: "(iv) a termination of employment of an individual with respect to whom Federal welfare recipient employment incentive expenses (as described in section 50B (a)(2)) are taken into account under subsection (a)." (3) Section 50B(a) (relating to definitions; special rules) is amended to read as follows: "(a) WORK INCENTIVE PROGRAM EXPENSES.—

42 USC 632.

" (1) IN GENERAL.—For purposes of this subpart, the term 'work incentive program expenses' means the sum of— " (A) the amount of waj^es paid or incurred by the taxpayer for services rendered during the first 12 months of employment (whether or not consecutive) of employees who are certified by the Secretary of Labor as— "(i) having been placed in employment under a work incentive program established under section 432(b)(1) of the Social Security Act, and "(ii) not having displaced any individual from employment, plus " (B) the amount of Federal welfare recipient employment incentive expenses paid or incurred by the taxpayer during the taxable year. "(2) DEFINITION.—For purposes of this section, the term 'Federal welfare recipient employment incentive expenses' means the amount of wages paid or incurred by the taxpayer for services rendered to the taxpayer before July 1, 1976, by an eligible employee. "(3) EXCLUSION.—No item taken into account under paragraph (1)(A) shall be taken into account under paragraph (1)(B), No item taken into account under paragraph (1)(B) shall be taken into account under paragraph 1 (A)." (4) Section 50B(c) is amended— (A) by striking out "subsection (a) " in paragraph (1) and inserting in lieu thereof "subsection (a)(1)(A) ", and (B) by striking out "subsection (a) " in paragraph (4) and inserting in lieu thereof "subsection (a)(1)(A)". (5) Section 50B is amended by redesignating subsection (g) as (h) and by inserting immediately after subsection (f) the following new subsection: "(g)

42 USC 601.

ELIGIBLE EMPLOYEE.— "(1) ELIGIBLE EMPLOYEE.—For

purposes of subsection (a)(1) (B), the term 'eligible employee' means an individual— "(A) who has been certified by the appropriate agency of State or local government as being eligible for financial assistance under part A of title IV of the Social Security Act and as having continuously received such financial assistance during the 90 day period which immediately precedes the date on which such individual is hired by the taxpayer, "(B) who has been employed by the taxpayer for a period in excess of 30 consecutive days on a substantially full-time basis, "(C) who has not displaced any other individual from employment by the taxpayer, and "(D) who is not a migrant worker. The term 'eligible employee' includes an employee of the taxpayer whose services are not performed in connection with a trade or business of the taxpayer.

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Page:United States Statutes at Large Volume 89.djvu/107

 PUBLIC LAW 94-12—MAR. 29, 1975

89 STAT. 47

" (2) MIGRANT WORKER.—For purposes of paragraph (1), the term ' m i g r a n t worker' means an individual who is employed for services for which the customary period of employment by one employer is less than 30 days if the n a t u r e of such services requires that such individual travel from place to place over a short period of time." (b) EFFECTIVE D A T E. — The amendments made by this section with 26 USC 50A respect to federal welfare recipient employment incentive expenses "ot^shall apply to such expenses paid or incurred by a tax p a y e r to an eligible employee whom such tax p a y e r hires after the date of the enactment of this Act. SEC. 402. TIME WHEN CONTRIBUTIONS DEEMED MADE TO CERTAIN PENSION PLANS. Section 1017 of the Employee Retirement Income Security Act of 1974 (relating to effective dates for funding, etc., provisions of that 26 USC 410 note. Act) is amended— (1) in subsection (b) by striking out " (c) through (h), " and inserting in lieu thereof " (c) through (i), "; and (2) by adding at the end thereof the following new subsection: " (i) CONTRIBUTIONS TO H. R. 10 P T ^ N S. — Notwithstanding subsec-

tions (b) and (c)(2), in the case of a plan in existence on January 1, 1974, the amendment made by section 1013(c)(2) of this Act shall 88 Stat. 914. apply, with respect to a plan which provides contributions or benefits 26 USC 412. for employees some or all of whom are employees within the meaning of section 401(c)(1) of the Internal Revenue Code of 1954, for plan 26 USC 401. years beginning after December 31, 1974, but only if the employer (within the meaning of section 401(c)(4) of such Code) elects in such manner and a t such time as the Secretary of the Treasury or his delegate shall by regulations prescribe, to have such amendment so apply. Any election made under this subsection, once made, shall be irrevocable."

TITLE V—PERCENTAGE DEPLETION SEC. 501. LIMITATIONS ON PERCENTAGE DEPLETION FOR OIL AND GAS. (a) IN GENERAL. — Part I of subchapter I of chapter 1 (relatpig to n a t u r a l resources) is amended by inserting after section 613 the following new section: "SEC. 613A. LIMITATIONS ON PERCENTAGE DEPLETION IN CASE OF 26 USC 613A. OIL AND GAS WELLS. " (a) GENERAL RULE. — E x c e p t as otherwise provided in this section, the allowance for depletion under section 611 with respect to any 26 USC 611. oil or gas well shall be computed without regard to section 613. 26 USC 613. "(b)

E X E M P T I O N FOR CERTAIN DOMESTIC G A S WEI^LS.—

" (1) IN GENERAL.—The allowance for depletion under section 611 shall be computed in accordance with section 613 with respect to— " (A) regulated natural gas, " (B) n a t u r a l gas sold under a fixed contract, and " (C) any geothermal deposit in the United States or in a possession of the United States which is determined to be a gas well within the meaning of section 613(b)(1)(A), and 22 percent shall be deemed to be specified in subsection (b) of section 613 for purposes of subsection (a) of that section.

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Page:United States Statutes at Large Volume 89.djvu/108

 89 STAT. 4 8

PUBLIC LAW 94-12—MAR. 29, 1975 " (2) DEFINITIONS. — For purposes of this subsection— ''(A)

NATURAL GAS SOLD UNDER A FIXED CONTRACT.—The

term 'natural gas sold under a fixed contract' means domestic natural gas sold by the producer under a contract, in effect on February 1, 1975, and a t all times thereafter before such sale, under which the price for such gas cannot be adjusted to reflect to any extent the increase in liabilities of the seller for tax under this chapter by reason of the repeal of percentage depletion for gas. Price increases after February 1, 1975, shall be presumed to take increases in tax liabilities into account unless the taxpayer demonstrates to the contrary by clear and convincing evidence. " (B) KEGULATED NATURAL GAS.—The term ' r e g u l a t e d n a t u -

ral g a s ' means domestic natural gas produced and sold by the producer, before July 1, 1976, subject to the jurisdiction of the Federal Power Commission, the price for which has not been adjusted to reflect to any extent the increase in liability of the seller for tax under this chapter by reason of the repeal of percentage depletion for gas. Price increases after February 1, 1975, shall be presumed to take increases in tax liabilities into account unless the tax p a y e r demonstrates the contrary by clear and convincing evidence. "(c) EXEMPTION OWNERS.—

26 USC 611. 26 USC 613.

FOR INDEPENDENT

PRODUCERS

AND ROYALTY

" (1) IN GENERAL.—Except as provided in subsection (d), the allowance for depletion under section 611 shall be computed i n accordance with section 613 with respect to— " (A) so much of the taxpayer's average daily production of domestic crude oil as does not exceed the taxpayer's depletable oil quantity; and " (B) so much of the taxpayer's average daily production of domestic n a t u r a l gas as does not exceed the taxpayer's depletable n a t u r a l gas quantity; and the applicable percentage (determined in accordance with the table contained in paragraph (5)) shall be deemed to be specified i n subsection (b) of section 613 for purposes of subsection (a) of that section. " (2) AVERAGE DAILY PRODUCTION.—For purposes of paragraph

" (A) the taxpayer's average daily production of domestic crude oil or n a t u r a l gas for any taxable year, shall be determined by dividing his aggregate production of domestic crude oil or n a t u r a l gas, as the case may be, during the taxable year by the number of days i n such taxable year, and " (B) in the case of a taxpayer holding a partial interest in the production from any property (including a n interest held in a partnership) such taxpayer's production shall be considered to be that amount of such production determined by multiplying the total production of such property by the tax p a y e r s percentage participation in the revenues from such property. I n applying this paragraph, there shall not be taken into account any production of crude oil or n a t u r a l gas resulting from seconda r y or tertiary processes (as defined i n regulations prescribed by the Secretary o r his delegate). " (3) DEPLETABLE OIL QUANTITY.—

" (A) IN GENERAL.—For purposes of paragraph (1), the taxpayer's depletable oil quantity shall be equal to —

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Page:United States Statutes at Large Volume 89.djvu/109

 PUBLIC LAW 94-12—MAR. 29, 1975

89 STAT, 4 9

" (i) the tentative quantity determined under the table contained in subparagraph (B), reduced (but not below zero) by " (ii) the taxpayer's average daily secondary or tertiary production for the taxable year. "(B)

P H A S E - O U T TABLE.—For purposes of

(A)"In the case of production during the calendar year: 1975 1976 1977 1978 1979 1980 and thereafter

subparagraph

The tentative quantity in barrels is: 2, 000 1, 800 1, 600 1, 400 1, 200 1, 000

" (4) D A I L Y DEPLETABLE NATURAL GAS Q U A N T I T Y. — For purposes

of paragraph (1), the depletable natural gas quantity of any taxpayer for any taxable year shall be equal to 6,000 cubic feet multiplied by the number of barrels of the taxpayer's depletable oil quantity to which the taxpayer elects to have this paragraph apply. The taxpayer's depletable oil quantity for any taxable year shall be reduced by the number of barrels with respect to which an election under this paragraph applies. Such election shall be made at such time and in such manner as the Secretary or his delegate shall by regulations prescribe. " (5) APPLICABLE PERCENTAGE.—For

(1)"In the case of production during the calendar year: 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 and thereafter

purposes

of

paragraph

The applicable percentage is: 22 22 22 22 22 22 20 18 16 15

" (6) O I L AND NATURAL GAS RESULTING FROM SECONDARY OR TERTIARY PROCESSES.—

" (A) IN GENERAL.—Except as provided in subsection (d), the allowance for depletion under section 611 shall be com- 26 USC 611. puted in accordance with section 613 with respect to— ^6 USC 613. " (i) so much of the taxpayer's average daily secondary or tertiary production of domestic crude oil as does not exceed the taxpayer's depletable oil quantity (determined with regard to paragraph (3)(A) ( i i)); and " ( i i) so much of the taxpayer's average daily secondary or tertiary production of domestic natural gas as does not exceed the taxpayer's depletable natural gas quantity (determined without regard to paragraph (3)(A) ( i i)); and 22 percent shall be deemed to be specified in subsection (b) of section 613 for purposes of subsection (a) of that section. " (B) AVERAGE DAILY SECONDARY OR TERTIARY PRODUCTION.—

For purposes of this subsection— " (i) the taxpayer's average daily secondary or tertiary production of domestic crude oil or natural gas for any taxable year shall be determined by dividing his aggregate production of domestic crude oil or natural gas, as

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Page:Folk-lore - A Quarterly Review. Volume 7, 1896.djvu/367

 Rh to keep the hood confined to themselves, but allow the crowd to carry it away. The swiftest runners and best jumpers carry it over hedge and ditch, and when it has once been 'laid' on the doorstep of an inn, it cannot be run for again. It is taken inside, roasted before the fire, and basted with ale, the players drinking this ale whilst hot. The rest of the evening is spent at the inn. The landlords of various inns offer sums of money, from five shillings to twenty shillings, to the man who carries the hood to their house.

"The senior boggan, styled the Lord Duke, has the power of settling all disputes.

"The day following the fool is smoked. A rope used to be fastened round his waist, the other end was thrown over the branch of a tree, and held by men, who hoisted him up and down, and dangled him over a fire made of damp straw. But as the boggans had nearly suffocated a fool at Westwoodside, and had some difficulty in restoring him, that part of the performance was dispensed with at the time I attended the 'throwing of the hood.' He also used to be smoked at Haxey and Burnham two other days.

"I never could quite catch the words of the songs, or the doggerel speeches. As to the origin of the game, what I have always understood was that a lady lost her hood, and it was restored to her by a man wearing a red jacket. The Dutch settlers may have originated the game, or it may have been brought from the south by attendants of King Edward IV., he having a hunting-lodge in this neighbourhood.

"I do not know whether the bids of the inn-keepers for the hood to be taken to their houses had so much weight with the players, as the feeling amongst the men of taking it to their own town."


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Page:United States Statutes at Large Volume 89.djvu/110

 89 STAT. 50

PUBLIC LAW 9 4 - 1 2 - - M A R. 29, 1975 the case may be, resulting from secondary or t e r t i a r y processes during the taxable year by the number of days in such taxable year, and " ( i i) in the case of a taxpayer holding a partial interest in the production from any property (including any interest held in any partnership) such taxpayer's production shall be considered to be that amount of such production determined by multiplying the total production of such property by the taxpayer's percentage participation i n the revenues from such property. " (C) TERMINATION.—This paragraph shall not apply after December 31, 1983. " (7) SPECIAL RULES.— " (A) PRODUCTION OF CRUDE OIL I N EXCESS o r DEPLETABLE

26 USC 613.

OIL QUANTITY.—If the taxpayer's average daily production of domestic crude oil exceeds h i s depletable oil quantity, the allowance under paragraph (1)(A) with respect to oil produced during the taxable year from each property in the United States shall be that amount which bears the same ratio to the amount of depletion which would have been.allowable under section 613(a) for all of the taxpayer's oil produced from such property during the taxable year (computed as if section 613 applied to all of such production a t the rate specified in paragraph (5) or (6), as the case may be) as his depletable oil quantity bears to the aggregate number of barrels representing the average daily production of domestic crude oil of the taxpayer for such year. " (B) PRODUCTION o r NATURAL GAS I N EXCESS OF DEPLETABLE

NATURAL GAS QUANTITY.—If the taxpayer's average daily production of domestic n a t u r a l gas exceeds his depletable n a t u r a l gas quantity, the allowance under paragraph (1)(B) with respect to natural gas produced during the taxable year from each property i n the United States shall be that amount which bears the same ratio to the amount of depletion which would have been allowable under section 613(a) for all of the taxpayers n a t u r a l gas produced from such property during the taxable year (computed as if section 613 applied to all of such production a t the rate specified in paragraph (5) or (6), as the case may be) as the amount of his depletable n a t u r a l g a s quantity in cubic feet bears to the aggregate number of cubic feet representing the average daily production of domestic n a t u r a l g a s of the tax p a y e r for such year. "(C)

TAXABLE INCOME FROM THE PROPERTY.—If b o t h oil

and gas are produced from the property during the taxable year, for purposes of subparagraphs (A) and (B) the taxable income from the property, in applying the 50-percent limitation in section 6 1 3 (a), shall be allocated between the oil production and the gas production in proportion to the gross income during the taxable year from each. " (D) PARTNERSHIPS.—In the case of a partnership, the depletion allowance i n the case of oil and gas wells to which this subsection applies shall be computed separately by the partners and not by the partnership. "(E)

SECONDARY OR TERTIARY PRODUCTION.—If the tax p a y e r

has production from secondary or tertiary recovery processes during the taxable year, this paragraph (under regulations prescribed by the Secretary or his delegate) shall be applied separately with respect to such production.

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Page:A book of the Pyrenees.djvu/151

Rh Oloron was a bishopric as early as 506. Marguerite de Valois, Queen of Navarre, appointed to it Roussel, the reformer, who began as a disciple of Calvin, and finished by entering into unseemly wrangling with him over some petty question in theology in a series of acrimonious letters. Marguerite had to interfere, and entreat both to cease their scurrility as an offence to religion. Roussel, as bishop, did his utmost to detach the people from their ancient faith, which he had sworn to maintain when consecrated, but which at the very moment when he took oath he had resolved on overthrowing. He was preaching one day at Mauleon, assailing Catholic doctrine with vehemence. A gentleman named Matye was present, and unable to endure this without a protest, and being armed with an axe, struck at the slim pedestal of the pulpit with the butt-end, and with such force as to send Roussel a bound into the air. When he came down, again descended the axe, sending the bishop another leap, like a pea on a drum. Roussel's nerves were so shaken that he fled the church, and galloped off to a Pyrenean watering-place, there to recover the shock. But instead of recovering he died, 1549. A suit was brought against Matye in the Parliament at Bordeaux, for having frightened the bishop into his grave; but nothing came of it. Under Jeanne d'Albret the bishopric was suppressed; however, a bishop was appointed in 1599. Oloron ceased to be an episcopal seat at the Revolution. The Val d'Aspe begins at Escot. At the foot of the mountain of Narpayt stands up a rocky needle, named after S. Nicolas, separated from the road by a belt of tillage. From this point the valley narrows; a bridge crosses the river, over which runs the road to the Val d'Ossau. Pinnacles

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Page:United States Statutes at Large Volume 89.djvu/111

 PUBLIC LAW 94-12—MAR. 29, 1975

89 STAT. 51

" (8) BUSINESSES UNDER COMMON CONTROL; MEMBERS o r THE SAME FAMILY. " (A) COMPONENT MEMBERS OF CONTROLLED GROUP TREATED AS

ONE TAXPAYER.—For purposes of this subsection, persons who are members of the same controlled group of corporations shall be treated as one taxpayer. "(B)

AGGREGATION OF BUSINESS ENTITIES UNDER COMMON

CONTROL.—If 50 percent or more of the beneficial interest in two or more corporations, trusts, or estates is owned by the same or related persons (taking into account only persons who own a t least 5 percent of such beneficial interest), the tentative quantity determined under the table in paragraph (3)(B) shall be allocated among all such entities in proportion to the respective production of domestic crude oil during the period in question by such entities. " (C) ALLOCATION AMONG MEMBERS OF THE SAME F A M I L Y. —

I n the case of individuals who are members of the same family, the tentative quantity determined under the table in paragraph (3)(B) shall be allocated among such individuals in proportion to the respective production of domestic crude oil during the period in question by such individuals. " (D) DEFINITION AND SPECIAL RULES.—For purposes of t h i s

paragraph— " (i) the term 'controlled group of corporations' has the meaning given to such term by section 1563(a), except 26 USC 1563. that section 1563(b)(2) shall not apply and except that 'more than 50 percent' shall be substituted for ' a t least 80 percent' each place it appears in section 1563(a), " ( i i) a person is a related person to another person if such persons a r e members of the same controlled g r o u p of corporations or if the relationship between such persons would result in a disallowance of losses under section 267 or 7 0 7 (b), except that for this purpose the family of 26 USC 267, an individual includes only his spouse and minor chil- ^O^dren, " ( i i i) the family of an individual includes only h i s spouse and minor children, and " (iv) each 6,000 cubic feet of domestic n a t u r a l gas shall be treated as 1 barrel of domestic crude oil. " (9) TRANSFER OF OIL OR GAS PROPERTY.—

" (A) I n the case of a transfer (including the subleasing of a lease) after December 31, 1974 of a n interest (including an interest in a partnership or trust) in any proven oil or g a s property, paragraph (1) shall not apply to the transferee (or sublessee) with respect to production of crude oil or natural gas attributable to such interest, and such production shall not be taken into account for any computation by the transferee (or sublessee) under this subsection. A property shall be treated as a proven oil or gas property if a t the time of the transfer the principal value of the property has been demonstrated by prospecting or exploration or discovery work. " (B) Subparagraph (A) shall not apply in the case of— " (i) a transfer of property a t death, or " ( i i) the transfer i n a n exchange to which section 351 26 USC 351. applies if following the exchange the tentative quantity

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Page:United States Statutes at Large Volume 89.djvu/112

 89 STAT. 52

PUBLIC LAW 94-12—MAR. 29, 1975 determined under the table contained i n paragraph (3) (B) is allocated under paragraph (8) between the transferor and transferee. " ( 1 0) SPECIAL RUUE FOR FISCAL YEAR TAXPAYERS.—In a p p l y i n g

this subsection to a taxable year which is not a calendar year, each portion of such taxable year which occurs during a single calendar year shall be treated as if i t were a short taxable year. "(11)

CERTAIlSr PRODUCTION NOT TAKEN INTO ACCOUNT.—In

a p p l y i n g this subsection, there shall not be taken into account the production of n a t u r a l g a s with respect to which subsection (b) applies. " (d) LIMITATIONS ON APPLICATION OF SUBSECTION (C). — " (1) L I M I T A T I O N BASED ON TAXABLE I N C O M E. — The deduction

26 USC 172. 26 USC 1212.

for the taxable year attributable to the application of subsection (C) shall not exceed 65 percent of the taxpayer's taxable income for the year computed without regard to — (A) depletion with respect to production of oil and g a s subject to the provisions of subsection (c), " (B) any n e t operating loss carryback to the taxable year under section 172, and " (C) any capital loss carryback to the taxable year under section 1212. I f an amount is disallowed as a deduction for the taxable year by reason of application of the preceding sentence, the disallowed amount shall be treated as an amount allowable as a deduction under subsection (c) for the following taxable year, subject to the application of the preceding sentence to such taxable year. For purposes of basis adjustments and determining whether cost depletion exceeds percentage depletion with respect to the production from a property, any amount disallowed as a deduction on the application of this paragraph shall be allocated to the respective properties from which the oil or ^as was produced i n proportion to the percentage depletion otherwise allowable to such properties under subsection (c). " (2) RETAILERS EXCLUDED.—Subsection (c) shall not a p p l y in

the case of any tax p a y e r Avho directly, or through a related person, sells oil or n a t u r a l gas, or any product derived from oil or n a t u r a l gas— " (A) through any retail outlet operated by the taxpayer or a related person, or " (B) to any person— " (i) obligated under a n agreement o r contract w i t h the tax p a y e r or a related person to use a trade m a r k, trade name, o r service m a r k o r name owned by such tax p a y e r o r a related person, in m a r k e t i n g or distributing oil or natural gas or any product derived from oil or n a t u r a l gas, or " (ii) given authority, pursuant to an agreement or contract with the tax p a y e r or a related person, to occupy any retail outlet owned, leased, or in any way controlled by the tax p a y e r o r a related person. " (3) RELATED PERSON.—For purposes of this subsection, a person is a related person with respect to the taxpayer if a significant ownership interest i n either the taxpayer or such person is held by the other, or if a t h i r d person has a significant ownership interest in both the tax p a y e r and such person. For purposes of the

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Page:United States Statutes at Large Volume 89.djvu/113

 PUBLIC LAW 94-12—MAR. 29, 1975

89 STAT. 53

preceding sentence, the term 'significant ownership interest' "Significant ownership means— " (A) with respect to any corporation, 5 percent or more in interest." value of the outstanding stock of such corporation, " (B) with respect to a partnership, 5 percent or more interest in the profits or capital of such partnership, and " (C) with respect to an estate or trust, 5 percent or more of the beneficial interests in such estate or trust. " (4) CERTAIN REFINERS EXCLUDED.—If the tax p a y e r or a related

person engages in the refining of crude oil, subsection (c) shall not apply to such tax p a y e r if on any d a y during the taxable year the refinery runs of the taxpayer and such person exceed 50,000 barrels. " (e) DEFINITIONS. — For purposes of this section— " (1) CRUDE OIL.—The term 'crude oil' includes a n a t u r a l gas liquid recovered from a gas well in lease separators or field facilities. " (2) NATURAL GAS.—The term 'natural gas' means any product (other than crude oil) of an oil or gas well if a deduction for depletion is allowable under section 611 with respect to such 26 USC 611. product. " (3) DOMESTIC.—The term 'domestic' refers to production from an oil or gas well located in the United States or in a possession of the United States. " (4) BARREL.—The term 'barrel' means 42 United States gallons." (b) T E C H N I C A L AMENDMENTS. —

(1) Section 613(d) (relating to percentage depletion) amended to read as follows:

is 26 USC 613.

" (d) D E N I A L OF PERCENTAGE DEPLETION I N CASE OF O I L AND G A S

W E L L S. — E x c e p t as provided in section 613A, in the case of any oil or Ante, p. 47. gas well, the allowance for depletion shall be computed without reference to this section." (2) Section 613_(b) is amended— (A) by striking out subparagraph (A) of paragraph (1) and redesignating subparagraph s (B) and (C) as subparagraph s (A) and (B), respectively, (B) by striking out " (1)(C) " each place it appears in paragraph s (3), (4), and (7) and inserting in lieu thereof " (1)(B) ", and (C) by amending the last sentence of paragraph (7) — (i) by striking out " o r " at the end of clause (A), (ii) by striking out the period at the end of clause (B) and inserting in lieu thereof "; or", and (iii) by adding a t the end thereof the following new clause: " (C) oil and gas wells." (3) Section 703(a)(2) (relating to deductions not allowable 26 USC 703,. to a partnership) is amended by striking out " and " a t the end of subparagraph (E), by striking out the period at the end of subparagraph (F) and inserting in lieu ", and ", and by a d d i n g at the end thereof the following new subparagraph: " (G) the deduction for depletion under section 611 with respect to oil and gas production subject to the provisions of section 6 1 3 A (c). " ^ (c) EFFECTIVE DATES.—The amendments made by this section shall 26 USC 613A take effect on January 1, 1975, and shall apply to taxable years ending note. after December 31, 1974.

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Page:United States Statutes at Large Volume 89.djvu/114

 89 STAT. 54

PUBLIC LAW 94-12—MAR. 29, 1975

TITLE VI—TAXATION OF FOREIGN OIL AND GAS AND OTHER FOREIGN INCOME

26 USC 907.

SEC. 691. LIMITATIONS ON FOREIGN TAX CREDIT FOR TAXES PAID IN CONNECTION WITH FOREIGN OIL AND GAS INCOME. (a) I N GENPIRAL.—Subpart A of part III of subchapter N of chapter 1 (relating to foreign tax credit) is amended by adding at the end thereof the following new section: "SEC. 907. SPECIAL RULES IN CASE OF FOREIGN OIL AND GAS INCOME. "(a)

26 USC 901.

26 USC 11. 26 USC 904.

REDUCTION I N A M O U N T ALLOWED AS FOREIGN T A X U N D E R S E C -

TiON 901.—In applying section 901, the amount of any income, w a r profits, and excess profits taxes paid or accrued (or deemed to have been paid) during the taxable year with respect to foreign oil and gas extraction income which would (but for this subsection) be taken into account for purposes of section 901 shall be reduced by the amount (if any) by which the amount of such taxes exceeds the product of— " (1) the amount of the foreign oil and gas extraction income for the taxable year, multiplied by " (2) the percentage which is— " (A) in taxable years ending i n 1975, 110 percent of, " (B) in taxable years ending in 1976, 105 percent of, and " (C) in taxable years ending after 1976, 2 percentage points above, the sum of the normal tax rate and the surtax rate for the taxable year specified in section 11. "(b)

APPLICATION OF SECTION 904 L I M I T A T I O N, — The

provisions

of section 904 shall be applied separately with respect to— " (1) foreign oil related income, and " (2) other taxable income. W i t h respect to foreign oil related income, the overall limitation provided by section 9 0 4 (a)(2) shall apply and the per-country limitation provided by section 904(a)(1) shall not apply. " (c) FOREIGN INCOME DEFINITIONS AND SPECIAL RULES. — For p u r -

poses of this section— " (1) FOREIGN OIL AND GAS EXTRACTION INCOME.—The term 'for-

eign oil and gas extraction income' means the taxable income derived from sources without the United States and its possessions from— " (A) the extraction (by the tax p a y e r or any other person) of minerals from oil or gas wells, or " (B) the sale or exchange of assets used by the taxpayer in the trade or business described in subparagraph (A). "(2)

FOREIGN OIL RELATED INCOME.—The term

'foreign

oil

related income' means the taxable income derived from sources outside the United States and its possessions from— " (A) the extraction (by the taxpayer or any other person) of minerals from oil or gas wells, " (B) the processing of such minerals into their primary products, " (C) the transportation of such minerals or p r i m a r y products, " (D) the distribution or sale of such minerals or p r i m a r y products, or " (E) the sale or exchange of assets used by the taxpayer in the trade or business described in subparagraph (A), (B),(C),or(D).

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Page:United States Statutes at Large Volume 89.djvu/115

 PUBLIC LAW 94-12—MAR. 29, 1975 "(3)

89 STAT. 55

DIVIDENDS, INTEREST, PARTNERSHIP DISTRIBUTION, ETC.—

The term 'foreign oil and gas extraction income' and the term 'foreign oil related income' include— " (A) dividends and interest from a foreign corporation in respect of which taxes are deemed paid by the taxpayer under section 902, 26 USC 902. " (B) dividends from a domestic corporation which are treated under section 861(a)(2)(A) as income from sources 26 USC 861. without the United States, " (C) amounts with respect to which taxes are deemed paid under section 9 6 0 (a), and 26 USC 960. " (D) the taxpayer's distributive share of the income of partnerships, to the extent such dividends, interest, amounts, or distributive share is attributable to foreign oil and gas extraction income, or to foreign oil related income, as the case may b e; except that interest described in subparagraph (A) and dividends described in subparagraph (B) shall not be taken into account in computing foreign oil and gas extraction income b u t shall be taken into account in computing foreign oil-related income. " (4) CERTAIN LOSSES.—If for any foreign country for any taxable year the taxpayer would have a net operating loss if only items from sources within such country (including deductions properly apportioned or allocated thereto) which relate to the extraction of minerals from oil or gas wells were taken into account, such items— " (A) shall not be taken into account in computing foreign oil and gas extraction income for such year, but " (B) shall be taken into account in computing foreign oil related income for such year. "(d)

DISREGARD OF CERTAIN POSTED PRICES, E T C. — For

purposes

of this chapter, in determining the amount of taxable income in the case of foreign oil and gas extraction income, if the oil or gas is disposed of, or is acquired other than from the government of a foreign country, a t a posted price (or other pricing arrangement) which differs from the fair market value for such oil or gas, such fair market value shall be used in lieu of such posted price (or other pricing arrangement). " (e) TRANSITIONAL RULES. — " (1) TAXABLE YEARS ENDING AFTER DECEMBER S I,

1974.—In

applying subsections (d) and (e) of section 904 for purposes of 26 USC 904. determining the amount which may be carried over from a taxable year ending before January 1, 1975, to any taxable year ending after December 31, 1974— " (A) subsection (a) of this section shall be deemed to have been in effect for such prior taxable year and for all taxable years thereafter, and " (B) the carryover from such prior year shall be divided (effective as of the first d a y of the first taxable year ending after December 31, 1974) into— " (i) a foreign oil related carryover, and " ( i i) another carryover, on the basis of the proportionate share of the foreign oil related income, or the other taxable income, as the case may be, of the total taxable income taken into account in computing the amount of such carryover. " (2) TAXABLE YEARS ENDING AFTER DECEMBER 31,

1975.—In

applying subsections (d) and (e) of section 904 for purposes of determining the amount which may be carried over from a tax-

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Page:United States Statutes at Large Volume 89.djvu/116

 89 STAT. 56

26 USC 904.

PUBLIC LAW 94-12—MAR. 29, 1975 able year ending before January 1, 1976. to any taxable year ending after December 81.1975, if the per-country limitation provided by section 9 0 4 (a)(1) applied to such prior taxable year and to the taxpayer's last taxable year ending before January 1, 1976, then in the case of any foreign oil related carryover— " (A) the first sentence of section 9 0 4 (e)(2) shall not apply, b u t " (B) such amount may not exceed the amount which could have been used in such "succeeding taxable year if the percountry limitation continued to apply. " (f) RECAPTURE OF FOREIGN O I L RELATED L O S S. —

" (1) GENERAL RULE.—For purposes of this subpart, in the case of any taxpayer who sustains a foreign oil related loss for any taxable year— " (A) that portion of the foreign oil related income for each succeeding taxable year which is equal to the lesser of— " (i) the amount of such loss (to the extent not used under this paragraph in prior year s), or " ( i i) 50 percent of the foreign oil related income for such succeeding taxable year, shall be treated as income from sources within the United States (and not as income from sources without the United States), and " (B) the amount of the income, w a r profits, and excess profits taxes paid or accrued (or deemed to have been paid) to a foreign country for such succeeding taxable year with respect to foreign oil related income shall be reduced by an amount which bears the same proportion to the total amount of such foreign taxes as the amount treated as income from sources within the United States under subparagraph (A) bears to the total foreign oil related income for such succeeding taxable year. For purposes of this chapter, the amount of any foreign taxes for which credit is denied under subparagraph (B) of the preceding sentence shall not be allowed as a deduction for any taxable year. For purposes of this subsection, foreign oil related income shall be determined without regard to this subsection. " (2) FOREIGN OIL RELATED LOSS DEFINED.—For purposes of t h i s

26 USC 172. 26 USC 1212.

subsection, the term 'foreign oil related loss' means the amount by which the gross income for the taxable year from sources without the United States and its possessions (whether or not the taxpayer chooses the benefits of this subpart for such taxable year) taken into account in determining the foreign oil related income for such year is exceeded by the sum of the deductions properly apportioned or allocated thereto, except that there shall not be taken into account— " (A) any net operating loss deduction allowable for such year under section 172(a) or any capital loss carrybacks and carryovers to such year under section 1212, and " (B) any— " (i) foreign expropriation loss for such year, as defined in section 172(k)(1), o r " ( i i) loss for such year which arises from fire, storm, shipwreck, or other casualty, or from theft, to the extent such loss is not compensated for by insurance or otherwise. " (3) DISPOSITIONS.—

" (A) IN GENERAL.—For purposes of this chapter, if property used in a trade or business described in subparagraph

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Page:United States Statutes at Large Volume 89.djvu/117

 PUBLIC LAW 94-12—MAR. 29, 1975 (A), (B), (C), or (D) of subsection (c)(2) is disposed of during any taxable year— " (i) the taxpayer notwithstanding any other provision of this chapter (other than paragraph (1)) shall be deemed to have received and recognized foreign oil related income in the taxable year of the disposition, by reason of such disposition, in an amount equal to the lesser of the excess of the fair market value of such property over the taxpayer's adjusted basis in such property or the remaining amount of the foreign oil related losses which were not used under paragraph (1) for such taxable year or any prior taxable year, and " ( i i) paragraph (1) shall be applied with respect to such income by substituting '100 percent' for '50 percent'. " (B) DISPOSITION DEFINED.—For purposes of this subsection, the term 'disposition' includes a sale, exchange, distribution, or gift of property, whether or not gain or loss is recognized on the transfer. " (C) EXCEPTIONS.—Notwithstanding subparagraph (B), the term 'disposition' does not include— " (i) a disposition of property which is not a material factor in the realization of income by the taxpayer, or " ( i i) a disposition of property to a domestic corporation in a distribution or transfer described in section 381(a).

89 STAT. 57

26 USC 381.

" (g) W E S T E R N H E M I S P H E R E TRADE CORPORATIONS W H I C H A R E M E M -

BERS OF AN AFFILIATED GROUP.—If a Western Hemisphere trade corporation is a member of an affiliated group for the taxable year, then in applying section 901, the amount of any income, war profits, and 26 USC 901. excess p r o n t s taxes paid or accrued (or deemed to have been paid) during the taxable year with respect to foreign oil and gas extraction income which would (but for this section and section 1503(b)) be 26 USC 1503. taken into account for purposes of section 901 shall be reduced by the greater of— " (1) the reduction with respect to such taxes provided by subsection (a) of this section, or " (2) the reduction determined under section 1503(b) by applying section 1503(b) separately with respect to such taxes, but not by both such reductions." (b) CERTAIN P A Y M E N T S N O T TO B E CONSIDERED AS TAXES.—Section

901 is amended by redesignating subsection (f) as subsection (g), and by a d d i n g after subsection (e) the following new subsection: "(f)

CERTAIN

P A Y M E N T S FOR O I L OR G A S N O T CONSIDERED AS

TAXES.—Notwithstanding subsection (b) and sections 902 and 960, the amount of any income, or profits, and excess profits taxes paid or accrued during the taxable year to any foreign country in connection with the purchase and sale of oil or gas extracted in such country is not to be considered as tax for purposes of section 275(a) and this section if— " (1) the tax p a y e r has no economic interest in the oil or gas to which section 611(a) applies, and " (2) either such purchase or sale is at a price which differs from the fair market value for such oil or gas at the time of such purchase or sale." (c) CLERICAL AMENDMENT. — The table of sections for subpart A of part III of subchapter N of chapter 1 is amended by adding at the end thereof the following new item: "Sec. 907. Special rules in case of foreign oil and gas income."

26 USC 902, ^^O. 26 USC 275. 26 USC 611.

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Page:United States Statutes at Large Volume 89.djvu/118

 89 STAT. 58

PUBLIC LAW 94-12—MAR. 29, 1975

26 use907 note.

(d) EFFECTIVE DATES.—The amendments made by this section shall apply to taxable years ending after December 31, 1974; except that— (1) the second sentence of section 907(b) shall apply to taxable years ending after December 31, 1975, and (2) the provisions of section 907(f) shall apply to losses sustained in taxable years ending after December 31, 1975. SEC. 602. TAXATION OF EARNINGS AND PROFITS OF CONTROLLED FOREIGN CORPORATIONS AND THEIR SHAREHOLDERS.

Ante, p. 54:.

26 USC 963.

(a) REPEAL OF MINIMUM DISTRIBUTION EXCEPTION TO REQUIREMENT or CURRENT TAXATION OF SUBPART F I N C O M E. — (1) REPEAL, OF MINIMUM DISTRIBUTION PROVISIONS.—Section 963

(relating to receipt of minimum distributions by domestic corporations) is hereby repealed. (2) CERTAIN DISTRIBUTIONS BY CONTROLLED FOREIGN CORPORATIONS TO REGULATED INVESTMENT COMPANIES TREATED AS DIVIDENDS.

26 USC 851.

26 USC 951. 26 USC 959.

Subsection (b) of section 851 (relating to limitations on definition of regulated investment company) is amended by a d d i n g at the end thereof the following new sentence: " For purposes of paragraph (2), there shall be treated as dividends amounts included in gross income under section 951(a)(1)(A)(i) for the taxable year to the extent that, under section 959(a)(1), there is a distribution out of the earnings and profits of the taxable year which are attributable to the amounts so included." (3) CONFORMING AMENDMENTS.—

(A) The table of sections for subpart F of part III of subchapter N of chapter 1 is amended by striking out the item relating to section 963. (B) Subparagraph (A)(i) of section 951(a)(1) (relating to general rule for amounts included in gross income of United States shareholders) is amended by striking out "except as provided in section 963.". (b) LIMITATION ON DEFINITION OF FOREIGN B A S E COMPANY SALES

26 USC 954.

I N C O M E. — Paragraph (1) of section 954(d) (relating to definition of foreign base company sales income) is amended by a d d i n g a t the end thereof the following new sentence: " For purposes of this subsection, personal property does not include agricultural commodities which are not grown in the United States in commercially marketable quantities." (c) REPEAL OF EXCEPTION TO REQUIREMENT OF CURRENT TAXATION OF SUBPART F INCOME FOR REINVESTMENT I N L E S S DEVELOPED C O U N TRIES.— (1) REPEAL OF SECTION 954(b)(1). — Paragraph (1) of subsec-

tion (b) of section 954 (relating to exclusions and special rules r e g a r d i n g foreign base company income) is hereby repealed. (2) REPEAL OF SECTION 954(f).—Subsection (f) of section 954

(relating to increase in qualified investments in less developed countries) is hereby repealed. (3) AMENDMENT OF SECTION 951(a)(1)(A) ( i i). — C l a u s e

26 USC 955.

(ii)

of section 9 5 1 (a)(1)(A) is amended by striking out " ( determined under section 9 5 5 (a)(3)) " and inserting m lieu thereof " (determined under section 955(a)(3) as in effect before the enactment of the T a x Reduction Act of 1975)". (4) R E P E A L OF SECTION 9 5 1 (a)(3). — Paragraph (3) of section

951(a) (relating to limitation on p r o r a t a share of previously excluded subpart F income withdrawn from investment) is hereby repealed.

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Page:United States Statutes at Large Volume 89.djvu/119

 PUBLIC LAW 94-12—MAR. 29, 1975 (5)

R E P E A L OF SECTION 955.—Section 955 ( r e l a t i n g to with-

89 STAT. 59 26 USC 955.

d r a w a l of previously excluded subpart F income from qualified investment) is hereby repealed. (6)

L E S S DEVELOPED COUNTRY CORPORATION DEFINED.—Subsec-

tion (d) of section 902 is amended to read as follows: "(d)

26 USC 902.

L E S S DEVELOPED COUNTRY CORPORATION D E F I N E D. — For p u r -

poses of this section, the term 'less developed country corporation' means— " (1) a foreign corporation which, for its taxable year, is a less developed country corporation within the meaning of paragraph (3) or (4), and " (2) a foreign corporation which owns 10 percent or more of the total combined voting power of all classes of stock entitled to vote of a foreign corporation which is a less developed country corporation within the meaning of paragraph (3), and— " (A) 80 percent or more of the gross income of which for its taxable year meets the requirement of paragraph (3)(A), and " (B) 80 percent or more in value of the assets of which on each day of such year consists of property described in paragraph (3)(B). A foreign corporation which is a less developed country corporation for its first taxable year beginning after December 31, 1962, shall, for purposes of this section, be treated as having been a less developed country corporation for each of its taxable years beginning before January 1, 1963. " (3) The term 'less developed country corporation' means a foreign corporation which during the taxable year is engaged in the active conduct of one or more trades or businesses and— " (A) 80 percent or more of the gross income of which for the taxable year is derived from sources within less developed countries; and " (B) 80 percent or more in value of the assets of which on each day of the taxable year consists of— " (i) property used in such trades or businesses and located in less developed countries, " ( i i) money, and deposits with persons carrying on the banking business, " (iii) stock, and obligations which, at the time of their acquisition, have a m a t u r i t y of one year or more, of any other less develoj^ed country corporation, " ( i v) an obligation of a less developed country, " (v) an investment which is required because of restrictions imposed by a less developed country, and " ( v i) property describal in section 956(b)(2). 26 USC 956. For purposes of subparagraph (A), the determination as to whether income is derived from sources within less developed countries shall be made under regulations prescribed by the Secretary or his delegate. " (4) The term 'less developed country corporation' also means a foreign corporation— " (A) 80 percent or more of the gross income of which for the taxable year consists of— " (i) gross income derived from, or in connection with, the using ( o r h i r i n g or leasing for use) in foreign commerce of aircraft or vessels registered under the laws of a less developed country, or from, or in connection with, the performance of services directly related to use of

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Page:United States Statutes at Large Volume 89.djvu/120

 89 STAT. 60

26 USC 956. "Less developed country.

26 USC 955.

PUBLIC LAW 94-12—MAR. 29, 1975 such aircraft or vessels, or from the sale or exchange of such aircraft or vessels, and " ( i i) dividends and interest received from foreign corporations which are less developed country corporations within the meaning of this paragraph and 10 percent or more of the total combined voting power of all classes of stock of which are owned by the foreign corporation, and gain from the sale or exchange of stock or obligations of foreign corporations which are such less developed count r y corporations, and " (B) 80 percent or more of the assets of which on each day of the taxable year consists of (i) assets used, or held for use, for or in connection with the production of income described in subparagraph (A), and (ii) property described in section 956(b)(2). " (5) Xhe term 'less developed country' means (in respect to any foreign corporation) any foreign country (other than an area within the Sino-Soviet bloc) or any possession of the United States with respect to which, on the first day of the taxable year, there is in effect an Executive order by the President of the United States designating such country or possession as an economically less developed country for purposes of this section. For purposes of the preceding sentence, an overseas territory, department, province, or possession may be treated as a separate country. No designation shall be made under this paragraph with respect to— Australia Luxembourg Austria Monaco Belgium Netherlands Canada New Zealand Denmark Norway France Union of South Africa Germany (Federal ReSan Marino public) Sweden Hong Kong Switzerland Italy United K i n g d o m Japan Liechtenstein iifter the President has designated any foreign country or any possession of the United States as an economically less developed country for purposes of this section, he shall not terminate such designation (either by issuing an Executive order for that purpose or by issuing an Executive order under the first sentence of this paragraph which has the effect of terminating such designation) unless, at least 30 days prior to such termination, he has notified the Senate and the House of Representatives of his intention to terminate such designation. Any designation in effect on March 26, 1975, under section 955(c)(3) (as in effect before the enactment of the T a x Reduction Act of 1975) shall be treated as made under this paragraph. " (7) CLERICAL AMENDMENT.—The table of sections for subpart F of part III of subchapter N of chapter 1 is amended by striking out the item relating to section 955. (d) S H I P P I N G PROFITS OF CONTROLLED FOREIGN CORPORATION To B E TAXED CURRENTLY E X C E P T TO E X T E N T REINVESTED I N S H I P P I N G OPERATIONS— (1) S H I P P I N G PROFITS INCLUDED I N GROSS INCOME OF UNITED STATES SHAREHOLDERS.—

26 USC 954.

(A) Section 954(a) (relating to foreign base company income) is amended by striking out " and " at the end of para-

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