Page:United States Statutes at Large Volume 48 Part 1.djvu/728

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73d C ONGRESS . SESS. II. CH. 277. MAY 10, 1934 . RTES of TAX denied any such corporation because there is accumulated and Contd.

maintained by it a reserve required by State law or a reasonable reserve for any necessary purpose ; Corporations exempted for exempted or.

(14) Corporations organized for the exclusive purpose of gan iza tio ns . holding title to property, collecting income therefrom, and turning over th e enti re amo unt th ereof, less expense s, to an org anizat ion which itself is exempt from the tax imposed by this title

st Corporations ifi

( 15) Corporations organized under Act of Congress, if such rumentalities of united states . corporations are instrumentalities of the United States and if, u nder such Act, as a mende d and sup pleme nted, suc h cor porat ions are exempt from Federal income taxes ; Voluntary e mploy- e es'beneficiary as ocia-

(16) Voluntary employees' beneficiary associations p r ovidi ng tions. for the payment of life, sick, accident, or other benefits to the members of such association or their dependents, if (A) no part of their net earnings inures (other than through such payments) to the benefit of any private shareholder or individual, and (B) 85 per centum or more of the income consists of amounts collected from members for the sole purpose of making such payments and Loeal teachers' re-

me eting exp enses ; tirement fund associa-

(17) Teachers' retirement fund associations of a purely local dons. character, if (A) no part of their net earnings inures (other than through payment of retirement benefits) to the benefit of any private shareholder or individual, and (B) the income con- sists solely of amounts received from public taxation, amounts received from assessments upon the teaching salaries of members, and income in respect of investments . S urtax on corp ora- SEC. 102 . SURTAX ON CORPORATIONS IMPROPERLY ACCUMULAT- mulatinpsurplus .aCell-

ING SURPLUS . Tax imposed .

(a) IMPOSITION OF TAx .-There shall be levied, collected, and paid for each taxable year upon the adjusted net income of every Post,p.751.

corpo ratio n (ot her than a per sona l hol ding compa ny a s def ined in section 351) if such corporation, however created or organized, is formed or availed of for the purpose of preventing the imposition of the surtax upon its sh arehol ders o r the s hareho lders of any other corporation, through the medium of permitting gains and profits Surtax rates .

to accumulate instead of being divided or distributed, a surtax equal to the sum of the following : (1) 25 per centum of the amount of the adjusted net income not in excess of $100,000, plus (2) 35 per centum of the amount of the adju sted net incom e in excess of $100,000 . Evidence of purpose (b) PRIMA FACIE EVIDENCE .--The fact that any corporation is a of evasion . mere holding or investment company, or that the gains or profits are permitted to accumulate beyond the reasonable needs of the Definition of "gad- business, shall be prima facie evidence of a purpose to avoid surtax . justed net income ."

(C) DEFIN ITION OF "ADJUSTED NET INCOME " .-As used in this section, the term "adjusted net income" means the net income computed without the allowance of the dividend deduction otherwise a llowa ble, but dimin ished by t he a mount of d ivid ends paid duri ng surtax on pro rata the taxable year . shares . (d) PAYMENT OF SURTAX ON PRO RATA STARES.--The tax imposed by this sect ion shall not appl y if all the share holders o f the cor pora- tion include (at the time of filing their returns) in their gross income their entire pro rata shares, whether distributed or not, of the " adjusted net income " of the corporation for such year . Any amount so included in the gross income of a shareholder shall be .