7 5TH CONGRESS, 1ST SESSION-CH . 815-AUGUST 26, 1937 "(3) In the case of a corporation organized .prior to January 1, 1936, to take o ver the a ssets and liabilit ies of th e estate of a decedent, amounts paid in liquidation of any liability of the cor- poration based on the liability of the decedent to make contribu- tions or gifts to or for the use of donees described in section 23 (o) for the purposes therein specified, to the extent such liabili ty of the de cedent exist ed pri or to J anuary 1, 19 34 . No deduction shall be allowed under paragraph (2) of this subsection for a taxable year for which a deduction is allowed under this para graph . "(b) DE DUC TION S NOT ALLOWED .-The aggregate of the deductions allowed under section 23 (a), relating to expenses, and section 23 ( 1), relating to depreciation, which are allocable to the operation and maintenance of property owned or operated by the corporation, shall be a llowed only in an amount equal to the rent or oth er com pensat ion received for the use or right to use the property, unless it is estab- lished (under regulations prescribed by the Commissioner with the approval of the Secretary) to the satisfaction of the Commissioner : "(1) That the rent or other compensation received was the hi ghest obt ainable, or, if no ne was re ceived, that none was obta in- able ; "(2) That the property was held in the course of a business carried on bonaa fide for profit ; and "(3) Either that there was reasonable expectation that the operation of the property would result in a profit, or that the pr operty was n ecessa ry to the co nduct of the busine ss . "SEC. 357 . MEANING OF TERMS USE D. "The terms used in this title shall have the same meaning as when used in Title I . "SEC . 358 . ADMINISTRATIVE PROVISIONS . "All p rovisi ons of law ( includ ing pe nalties ) appl icable in re spect of th e taxes i mposed by Title I of this Act, shal l insofar as not i ncon- sistent with this title, be applicable in respect of the tax imposed by this title, except that the provisions of section 131 of that title shall not be applicable . "SEC . 359. IMPROPER ACCUMULATION OF SURPLUS . "For surtax on corporations which accumulate surplus to avoid surtax on stockholders, see section 102 . "SEC . 360 . FOREIGN PERSONAL H OLDING COM PANIES . "For p rovisi ons re lating to fo reign persona l hold ing co mpanie s and their shareholders, see Supplement P of Title I ." SEC. 2. CHANGES IN CROSS-REFERENCES . Section 12 (c), section 14 (f), and section 102 (e) of the Revenue Act of 1936 are amended by striking out "section 351" and inserting in lieu thereof "Title IA". SEC. 3 . EFFECTIVE DATES . The amendment made by section 1 shall apply only with respect to taxable years beginning after December 31, 1936 ; and Title IA of the Revenue Act of 1936, as it existed prior to such amendment, shall not apply to a foreign personal holding company (as defined in section 331 of the Revenue Act of 1936, added to such Act by section 201 of this Act) with respect to any taxable year ending after the date of the enactment of this Act . 125151•-37 42 817 Asset s and li abiliti es of decedent's estate . Deductions not al . lowed . Meaning of terms used . 49 Stat. 1652. Administrative pro- visions . 49 Stat. 1696. Improper accumu- lation of surplus . 49 Stat .1676. Foreign
personal holding companies . Post, p . 818 . Changes in cross ref . erences. 49 Stat . 1655, 1656, 1677 . Effective dates . 49 Stat. 1732. Post, p . 818.
