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72 c1 CONGRESS . SESS. I. CH . 209. JUNE 6,1932. (b) HOLDERS OF LIFE OR TERMINA BLE INTEREST .-Amounts pa id under the laws of any State, Territory, District of Columbia, pos- session of the United States, or foreign country as income to the holder of a life or terminable interest acquired y gift, bequest, or inheritance shall not be reduced or diminished by any deduction for shrinkage (by whateve r name called) in th e value of such inte rest due to the lapse of time, nor by any deduction allowed by this Act (except Ante, p . 181.
the deductions provid ed for in subsection s (k) and (1) of sec tion 23) for the purpose of computing the net income of an estate or trust but not allowed under the laws of such State, Territory, District of Columbia, possession of the United States , or foreign country for the purpose of computing the income to which such holder is entitled . (c) TAX W ITHHELD ON TAX- FREE CO VENANT BONDS .-For tax with- held on tax-free covenant bonds, see section 143 (a) (3) . SE C. 25. CREDITS OF INDIVIDUAL AGAINST NET INCOME . There shall be allowed for the purpose of the normal tax, but not for the surtax, the f ollowing credits aga inst the net income : (a) DIVIDENDS.-The amount received as divide nds- (1) from a domestic corporation which is subject to taxation under this title, or (2) from a foreign corporation when it is shown to the satisfac- tion of the Commissioner that more than 50 per centum of the gross income of such foreign corp oration for the thre e-year period ending with the close of its taxable year preceding the declaration of such dividends (or for such part of such period as the corporation has been in existence) was derived from sources within the United States as determined under the provisions of section 119 . The credit allowed by this subsection shall not be allowed in respect of dividends received from a corporation organized under the China Trade Act, 1922, or from a corporation which under section 251 is taxable only on its gross income from sources within the United States by reason of its receiving a large percentage of its gross income from sources within a possession of the United States . (b) INT ERE ST ON UNI TED STATES OBLIGATIONS :The amount received as interest upon obligations of the United States which is included in gross income under section 22 . (C) PERS ONA L EXEMPTION .-In the case of a single person, a personal exemption of $1,000 ; or in the case of the head of a family or a married person living with husband or wife, a personal exemp- tion of $2,500. A husband and wife living together shall receive but one personal exemption . The amount of such personal exemption shall be $2,500. If such husband and wife make separate returns, the personal exemption may be taken by either or divided between them. (d) CREDIT FOR DEPENDENTS .-$400 for each person (other than husband or wife) dependent upon and receiving his chief support from the taxpayer if such dependent person is under eighteen years of age or is inca pable of self-suppor t because mentally o r physically defective . Change of status . (e) CHANGE OF STATIIS.-If the status of the taxpayer, in so far During taxable year . a s It affects the personal exemption or credit for dependents, changes during the taxable year, the personal exemption and credit shall be apportioned, under rules and regulations prescribed by the Com- missioner with the approval of the Secretary, in accordance with the number of months before and after such change . For the purpose of such apportionment a fractional part of a month shall be disre- garded unless it amounts to more than half a month in which case it shall be consi dered as a month . INCOME TAX Holders of life or ter- minable interest. Deductions on in- come acquired by gift, etc . Tax-free covenant bonds . Post, p . 215. Credits allowed t udi . viduals against net in- come. Dividends. From domestic cor- porations. For eign co rpo rati on with more than 50 per ce nt of income from United States sources. Post, p . 208. From China Trade Act 'corporations, etc ., excepted . Post, p . 231. Interest on Federal securities . Ante, p. 178 . Personal exemption . Single persons . Husband and wife living together. Separa te return s . Credit for depend- ents. App ortio nment of tax
