73d CONGRESS . SESS . II. CH. 277. MAY 10, 1934.
711 ante in respect of such property for such year shall be computed INCOME TA ON according to the election thus made. If the taxpayer fails to make OF NET I NCOME- suc h sta tement in the return, the d eplet ion al lowan ce fo r such Coal no statement is property for such year shall be computed without reference to made . percentage depletion . The method, determined as above, of com- puting the depletion allowance shall be applied in the case of the property for all taxable years in which it is in the hands of such taxp ayer, or of any other pe rson if the basis of the property (for determining gain) in his hands is, under section 113, determined by reference to the basis in the hands of such taxpayer, either directly or through one or more substituted bases, as defined in that section . SEC. 115. DIS TR IBU TI ONS BY CORPORATIONS . (a) DF.I°I NrrIoN OF DIvIDEND .-The term " div idend " when used in this title (e xcept in section 203 (a) (4) and section 207(c) (1), relating to insurance companies) means any distribution made by a corporation to its shareholders, whether in money or in other prop- erty, out of its earnings or profits accumulated after February 28, 1913 . (b) SOURC E of DIsTRIBuTioNs .-For the purposes of this Act every distribution is made out of earnings or profits to the extent thereof, and from the most recently accumulated earnings or profits . Any earnings or profits accumulated, or increase in value of property accrued, before March 1, 1913, may be distributed exempt from tax, after the earnings and profits accumulated after February 28, 1913, have been distributed, but any such tax-free distribution shall be applied against and reduce the adjusted basis of the stock provided in section 113 . ( c) DIS TRIBU TIONS IN LIQUIDATION .-Amounts distributed in com- plete liquidation of a corporation shall be treated as in full payment in exchange for the stock, and amounts distributed in partial liqui- dation of a corporation shall be treated as in part or full payment in exchange for the stock . The gain or loss to the distributee resulting from such exchange shall be determined under section 111, but shall be recognized only to the extent provided in section 112 . Despite the provisions of section 117(a), 100 per centum of the gain so recognized shall be taken into account in computing net income . In the case of amounts distributed (whether before January 1, 1934, or on or after such date) in partial liquidation (other than a distri- bution within the provisions of subsection (h) of this section of st ock or s ecuritie s in con nection with a r eorganiz ation) t he part of such distribution which is properly chargeable to capital account shall not be considered a distribution of earnings or profits within the me aning of subsection (b) of this secti on fo r the purpo se of deter mini ng the t axab ilit y of sub sequ ent dis trib utio ns by the cor oration . d) OTHER DISTRIBUTIONS FROM CAPITAL .-If any distribution (not in partial or complete liquidation) made by a corporation to its shareh older s is not out of increa se in valu e of proper ty ac crued before March 1, 1913, and is not out of earnings or profits, then the amount of such distribution shall be applied against and reduce the adjusted basis of the stock provided in section 113, and if in excess of such basis, such excess shall be taxable in the same manner as a gain from the sale or exchange of property . (e) DISTRIBUTIONS BY PERSONAL SERVICE CORPORATIONS .-Any dis- tribution made by a corporation, which was classified as a personal service corporation under the provisions of the Revenue Act of 1918 or the Revenue Act of 1921, out of its earn ings or pro fits which D istri butio ns by cor- porations . "Dividend" defined . Pod, pp., 732, 735 . Earnings after Feb- ruary 28, 1913, deemed dividends. Sources . Accumulations, etc., be fore Ma rch l,1 913, tax free . Ante, p. 708. Distributions in liq . uidation, to be in full payment for stock . Gain or loss to dis- tributes . Post, p.714. Partial liquidation distribution . Distributions not out of increase in value be . fore March 1, 1913, nor from earnings or profits. Ant e, p. 708 . Distr ibuti ons b y per - sonal service corpora- tions ; exemptions Vol.40, p. 1070; Vol. 42, p.245.
