stock is owned, directly or indirectly, by or for not more than five individuals who are citizens or residents of the United States, hereinafter called "United States group". (b) ExcEPrToNs.- T he term "foreign personal holding company" does not include a corporation exempt from taxation under section 101. SEC. 332. FOREIGN PERSONAL HOLDING COMPANY INCOME. For the purposes of this chapter the term "foreign personal holding company income" means the portion, of the gross income determined for the purposes of section 331 (a) (1), which consists of: (a) Dividends, interest, royalties, annuities. (b) STOCK AND SECURITIES TRANSACTrONS.-Except in the case of regular dealers in stock or securities, gains from the sale or exchange of stock or securities. (c) CoMMoDITIEs TRANSACTIONs.-Gains from futures transactions in any commodity on or subject to the rules of a board of trade or commodity exchange. This subsection shall not apply to gains by a producer, processor, merchant, or handler of the commodity which arise out of bona fide hedging transactions reasonably necessary to the conduct of its business in the manner in which such business is customarily and usually conducted by others. (d) ESTATES AND TBJSTS.- Amounts includible in computing the net income of the corporation under Supplement E; and gains from the sale or other disposition of any interest in an estate or trust. (e) PERSONAL SERVICE CONTRACTS.- (1) Amounts received under a contract under which the corporation is to furnish personal services; if some person other than the corporation has the right to designate (by name or by description) the individual who is to perform the services, or if the individual who is to perform the services is desig- nated (by name or by description) in the contract; and (2) amounts received from the sale or other disposition of such a contract. This subsection shall apply with respect to amounts received for services under a particular contract only if at some time during the taxable year 25 per centurn or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for the individual who has performed, is to perform, or may be designated (by name or by description) as the one to perform, such services. (f) USE OF CORPORATION PROPERTY BY SHARuEOLDER.-Amounts received as compensation (however designated and from whomsoever received) for the use of, or right to use, property of the corporation in any case where, at any time during the taxable year, 25 per centum or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for an individual entitled to the use of the property; whether such right is obtained directly from the cor- poration or by means of a sublease or other arrangement. (g) RENTS.- Rents, unless constituting 50 per centum or more of the gross income. For the purposes of this subsection the term "rents" means compensation, however designated, for the use of, or right to use, property; but does not include amounts constituting foreign personal holding company income under subsection (f). SEC. 333. STOCK OWNERSHIP. (a) CONSTRUCrIVE OWNERSHIP. -For the purpose of determining whether a foreign corporation is a foreign personal holding company, insofar as such determination is based on stock ownership under sec- tion 331 (a) (2), section 332 (e), or section 332 (f)- (1) STOCK NOT OWNED BY INDIIDmuA.--Stock owned, directly or indirectly, by or for a corporation, partnership estate, or trust shall be considered as being owned proportionately by its share- holders, partners, or beneficiaries. (2) FAMILY AND PATNhEZP OWNmRSHIP.- An individual shall be considered as owning the stock owned, directly or indirectly, by or INCOME TAX 93
�
