822 75TH CONG RESS, 1S T SESSION-CH . 815-AUGUST 26, 1937 Corporation income "SEC. 337. CORPORATION INCOME TAXED TO UNITED STATES SHARE- taxed to United States
HOLDERS . shareholders . General rule . «(a) GENERAL RULE.-The undistributed Supplement P net income of a foreign personal holding company shall be included in the gross income of the citizens or residents of the United States, domestic corporations, domestic partnerships, and estates or trusts (other than estates or trusts the gross income of which under this title includes only income from sources within the United States), who are share- holders in such foreign personal holding company (hereinafter called United States shareholders') in the manner and to the extent set forth in this Supplement . Amount included in a (b) AMOUNT INCLUDED IN GROSS INCOME .Each Uni ted St ates gross income . shareholder, who was a shareholder on the day in the taxable year of the company which was the last day on which a United States group (as defined in section 331 (a) (2 )) existe d with respe ct to the company, shall include in his gross income, as a dividend, for the taxable year in which or with which the taxable year of the company ends, the amount he would have received as a dividend if on such last day there had been distributed by the company, and received by the shareholders, an amount which bears the same ratio to the undistributed Supplement P net income of the company for the taxable year as the portion of such taxable year up to and includ- ing such last day bears to the entire taxable year. Credit for oblige-
a (C) CREDIT FOR OBLIGATIONS OF U . S . AND ITS I NSTR UME NTAL I- tand its United St ates TIES.-Each United States shareholder shall be allowed a credit ties. against net income, for the purpose of the tax imposed by section 11, 13, 14, 201, or 204, of his proportionate share of the interest specified in section 25 (a) (1) or (2) which is included in the gross income of the company otherwise than by the application of the provisions of section 334 (b) (relating to the inclusion in the gross income of a foreign personal holding company of its distributive share of the undistributed Supplement P net income of another foreign personal holding company in which it is a shareholder) . Information in re- "( d) INFORMATION IN RETURN .-Every United States shareholder tutu. who is requi red un der su bsecti on (b) to in clude in his gross incom e any amount with respect to the undistributed Supplement P net income of a foreign personal holding company and who, on the last day on which a United States group existed with respect to the company, owned 5 per centum or more in value of the outstanding stock of such company, shall set forth in his return in complete detail the gross income, deductions and credits, net income, Supple- ment P net income, and undistributed Supplement P net income of such company . Effect on oapita lae- ~'(e) EFFECT ON CAPITAL ACCOUNT or FOREIGN PERSONAL HOLDING count of forego per- s onal holding com. COMPANY .-An amount which bears the same ratio to the undis- pany . tribu ted S upple ment P net inco me of the forei gn p erson al ho lding company for its taxable year as the portion of such taxable year up to and including the last day on which a United States group existed with respect to the company bears to the entire taxable year, shall, for the purpose of determining the effect of distributions in subse- quent taxable years by the corporation, be considered as a contribu- tion to capital . hands o f shareholders . Basis of stock is . " (f) BASIS OF STOCK IN HANDS OF SHAREHOLDERS . -T he ERS .-The amount required to be included in the gross income of a United States shareholder under subsection (b) shall, for the purpose of adjusting the basis of his stock with respect to which the distribution would have been made (if it had been made), be treated as having been reinvested by the shareholder as a contribution to the capital of the corporation ; but only to the extent to which such amount is included
