108 CODIFICATION OF INTERNAL REVENUE LAWS (3) 10 per centum of the sum of- (A) The dividends paid during the taxable year (reduced by the amount allowed under this subsection in the computation of the tax under this subchapter for the taxable year preceding the taxable year); and (B) The consent dividends credit for the taxable year. SEC. 505. SUBCHAPTER A NET INCOME. For the purposes of this subchapter the term "Subchapter A Net Income" means the net income with the following adjustments: (a) ADDITIONAL DEDucTIONS.-T here shall be allowed as deduc- tions- (1) Federal income, war-profits, and excess-profits taxes paid or accrued during the taxable year to the extent not allowed as a deduction under section 23; but not including the tax imposed by section 102, section 500, or a section of a prior income-tax law corre- sponding to either of such sections. (2) In lieu of the deduction allowed by section 23 (q), contribu- tions or gifts, payment of which is made within the taxable year to or for the use of donees described in section 23 (q) for the pur- poses therein specified, to an amount which does not exceed 15 per centum of the taxpayer's net income, computed without the benefit of this paragraph and section 23 (q), and without the deduction of the amount disallowed under subsection (b) of this section. (3) In the case of a corporation organized prior to January 1, 1936, to take over the assets and liabilities of the; 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 liability of the decedent existed prior to January 1, 1934. No deduction shall be allowed under paragraph (2) of this subsection for a taxable year for which a deduction is allowed under this paragraph. (b) DEDUCTIONS NOT ALLOWED. -T he 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 allowed only in an amount equal to the rent or other compensation received for the use of, or the right to use, the property, unless it is established (under regulations prescribed by the Commissioner with the approval of the Secretary) to the satisfaction of the Commis- sioner: (1) That the rent or other compensation received was the highest obtainable, or if none was received, that none was obtainable; (2) That the property was held in the course of a business carried on bona fide for profit; and (3) Either that there was reasonable expectation that the opera- tion of the property would result in a profit, or that the property was necessary to the conduct of the business. SEC. 506. DEFICIENCY DIVIDENDS-CREDITS AND REFUNDS. (a) CREDIT AGAINST UNPAID DEFICIENCY. -If the amount of a defi- ciency with respect to the tax imposed by this subchapter for any taxable year has been established- (1) by a decision of the Board of Tax Appeals which has become final; or (2) by a closing agreement made under section 3760; or (3) by a final judgment in a suit to which the United States is a party; then a deficiency dividend credit shall be allowed against the amount of the deficiency so established and all interest, additional amounts, and additions to the tax provided by law not paid on or before the date when claim for a deficiency dividend credit is filed under sub-
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