52 STAT.] 75TH CONG. , 3D SESS.-CH. 28--MAY 28, 1938 (5) For each year of any three-year period subsequent to the declaration year the adjusted declared value in the case of a foreign corporation shall be the value declared in the return for the declara- tion year adjusted (for the same income-tax taxable years as in the case of a domestic corporation), in accordance with regulations pre- scribed by the Commissioner with the approval of the Secretary, to reflect increases or decreases in the capital employed in the transac- tion of its business in the United States. (6) The capital-stock tax year beginning with or within an income- tax taxable year within which bankruptcy or receivership, due to insolvency, of a domestic corporation, is terminated shall constitute a declaration year. In such case the adjusted declared value for any subsequent year of the three-year period shall be determined on the basis of the value declared in the return for such declaration year. (g) For the purpose of the tax imposed by this section there shall be allowed in the case of a corporation organized under the China Trade Act, 1922, as a credit against the adjusted declared value of its capital stock, an amount equal to the proportion of such adjusted declared value which the par value of the shares of stock of the corporation, owned on the last day of the taxable year by (1) per- sons resident in China, the United States, or possessions of the United States, and (2) individual citizens of the United States or China wherever resident, bears to the par value of the whole number of shares of stock of the corporation outstanding on such date. For the purposes of this subsection shares of stock of a corporation shall be considered to be owned by the person in whom the equitable right to the income from such shares is in good faith vested; and as used in this subsection the term "China" shall have the same meaning as when used in the China Trade Act, 1922. (h) The capital stock tax imposed by section 105 of the Revenue Act of 1935, as amended, shall not apply to any taxpayer with respect to any year after the year ending June 30, 1937. SEC. 602. EXCESS-PROFITS TAX. (a) If any corporation is taxable under section 601 with respect to any year ending June 30, there is hereby imposed upon its net income for the income-tax taxable year ending after the close of such year, an excess-profits tax equal to the sum of the following: 6 per centum of such portion of its net income for such income- tax taxable year as is in excess of 10 per centum and not in excess of 15 per centum of the adjusted declared value; 12 per centum of such portion of its net income for such income-tax taxable year as is in excess of 15 per centum of the adjusted declared value. (b) The adjusted declared value shall be determined as provided in section 601 as of the close of the preceding income-tax taxable year (or as of the date of organization if it had no preceding income-tax taxable year). If the income-tax taxable year in respect of which the tax under this section is imposed is a period of less than 12 months, such adjusted declared value shall be reduced to an amount which bears the same ratio thereto as the number of months in the period bears to 12 months. For the purposes of this section the net income shall be the same as the net income for income-tax purposes for the year in respect of which the tax under this section is imposed, computed without the deduction of the tax imposed by this section, but with a credit against net income equal to the credit for dividends received provided in section 26 (b) of this Act. 567 Foreign corpora- tions. Capital-stock tax year; when considered a declaration year. Determination ofad- justed declared value. Credit allowed in case of China Trade Act corporations. 42 Stat. 149. 15U...C., ch.4. "C hina" construed. 49 Stat. 1017. 26 U. S. C., Supp. m, § 1358a. Excess-profits tax. Rates. Ante, p. 565. Determination of adjusted declared value. Ante, p. 467.
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