74 TII C ONGRESS . SESS. II . CH. 690. JUNE 22, 1936.
1 669 SEC. 48. DEFINITIONS.
Defin itio ns . When used in this title- (a) TAXABLE YEAR .-"Taxable year" means the calendar year, or "Taxable year." the fiscal year ending during such calendar year, upon the basis of which the net income is computed under this Part . "Taxable year" includes, in the case of a return made for a fractional part of a year u nder the pr ovisi ons of this title or u nder r egula tions presc ribed by the Commissioner with the approval of the Secretary, the period for which such return is made . (b) FISCAL YEAR ."Fiscal year" means an accounting period of "Fisc al y ear- " twelve months end ing on the last day of any mon th oth er than De cember . (c) PA ID, INCURRED, ACCRUED .-The terms "paid or incurred" "Paid or i ncurr ed" ; and "paid or accrued" shall be construed according to the method "pai d or accrued ." of accounting upon the basis of which the net income is computed under this Part . (d) TR ADE OR BUSINESS .-The term "trade or business" includes "Trade or business." the performance of the functions of a public office . (e) MUTUAL IN VES TME NT COMPANIES.-
Mutual investment (1) GE NERAL DEFINI TION . -T he te rm "mutual investment co m- compa nies . General definition . pany" means any corporation (whether chartered or created as an investment trust, or otherwise), other than a personal holding Post, p. 1732 . company as defined in section 351, if- (A) It is organized for the purpose of, and substantially all its business consists of, holding, investing, or reinvesting in stock or securities ; and (B) At least 95 per centum of its gross income is derived from dividends, interest, and gains from sales or other disposition of stock or securities ; and (C ) Less than 30 per cent uin of its g ross income is de rived from the sale or other disposition of stock or securities held for less than six months ; and (D) An amount not less than 90 per centum of its net income is d istrib uted to its shar ehold ers as taxa ble di viden ds dur ing t he taxable year ; and (E) Its shareholders are, upon reasonable notice, entitled to redemption of their stock for their proportionate interests in the corporation's properties, or the cash equivalent thereof less a discount not in excess of 3 per centum thereof . (2) LIMITATIoNs.-Despite the provisions of paragraph (1) a Limitations. corporation shall not be considered as a mutual investment com- pany if, subsequent to a date thirty days after the date of the enact- ment of this Act, at any time during the taxable year- (A) More than 5 per centum of the gross assets of the cor- poration, taken at cost, was invested in stock or securities, or both, of any one corporation, government, or political subdivi- sion thereof, but this limitation shall not apply to investments in obligations of the United States or in obligations of any cor- poration organized under gen er al Act of Congress if su ch corporation is an instrumentality of the United States ; or (B) It owned more than 10 per centum of th e outs tandin g stock or securities, or both, of any one corporation ; or (C) It had any outstanding bonds or indebtedness in excess of 10 per centum of its gross assets taken at cost ; or (D) It fails to comply with any rule or regulation prescribed by the Commissioner, with the approval of the Secretary, for the purpose of ascertaining the actual ownership of its outstanding stock .
