52 STAT.] 75TH CONG. , 3D SESS.-CH. 289--MAY 28, 1938 (b) CREDITS FOR BOTH NORMAL TAX AND SURTAx. -There shall be allowed for the purposes of the normal tax and the surtax the following credits against net income: (1) PERSONAL EXEMPTION. -In the case of a single person or a married person not living with husband or wife, 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 re- ceive but one personal exemption. The amount of such per- sonal exemption shall be $2,500. If such husband and wife make separate returns, the personal exemption may be taken by either or divided between them. (2) CREDIT FOR DEPENDENTS. -$ 4 0 0 for each person (other than husband or wife) dependent upon and receiving his chief sup- port from the taxpayer if such dependent person is under eighteen years of age or is incapable of self-support because mentally or physically defective. (3) CHANGE OF STATUS.- If the status of the taxpayer, insofar as 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 pre- scribed by the Commissioner 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 disregarded unless it amounts to more than half a month in which case it shall be considered as a month. SEC. 26. CREDITS OF CORPORATIONS. In the case of a corporation the following credits shall be allowed to the extent provided in the various sections imposing tax- (a) INTEREST ON OBLIGATIONS OF THE UNITED STATES AND ITS INSTRU- MENTALIIES.- The amount received as interest upon obligations of the United States or of corporations organized under Act of Congress which is allowed to an individual as a credit for purposes of normal tax by section 25 (a) (1) or (2). (b) DIVIDENDS RECEIVED.- 85 per centum of the amount received as dividends from a domestic corporation which is subject to taxation under this title, but not in excess of 85 per centum of the adjusted net income. The credit allowed by this subsection shall not be allowed in respect of dividends received from a corporation organ- ized 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. (c) NET OPERATING Loss OF PRECEDING YEAR.- (1) AMOUNT OF CREDIT. -T he amount of the net operating loss (as defined in paragraph (2)) of the corporation for the preced- ing taxable year, but not in excess of the adjusted net income for the taxable year. (2) DEFIITION.-As used in this title the term "net operating loss" means the excess of the deductions allowed by this title over the gross income, with the following exceptions and limitations- (A) The deduction for depletion shall not exceed the amount which would be allowable if computed without reference to discovery value or to percentage depletion under section 114 (b) (2), (3), or (4); 467 Credits for both nor- mal tax and surtax. Personal exemption. Single person, etc. Husband and wife living together. Separate returns. Credit for depend- ents. Change of status during taxable year. Apportionment. Credits of corpora- tions. Interest on obliga- tions of United States and its instrumentali- ties. Ante, p. 466. Dividends received. 42 Stat. 849. 16U.S.C.§§141- 161; 28 U.S.C. 53. Post, p. 532 . Net operating loss of preceding year. Amount of credit. " Net operating loss", defined. Exceptions and lim- itations. Post,p . 495.
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