CODIFICATION OF INTERNAL REVENUE LAWS first year with respect to which it is subject to the tax. For each subsequent three-year period, the adjusted declared value for a declaration year shall be the value as declared by the corporation in its return for such declaration year. The value declared by a corporation in its return for a declaration year (which declaration of value cannot be amended) shall be as of the close of its last income-tax taxable year ending with or prior to the close of such declaration year (or as of the date of organization in the case of a corporation having no income-tax taxable year ending with or prior to the close of such declaration year). (b) SUBSEQUENT YEARS.-- (1) DOMESTIC CORPORATIONS. -For each year of any three-year period subsequent to the declaration year, the adjusted declared value in the case of a domestic corporation shall be the value de- clared in the return for the declaration year plus- (A) the cash, and the fair market value of property, paid in for stock or shares, (B) paid-in surplus and contributions to capital, (C) its net income, (D) its income wholly exempt from Federal income tax, and E) the amount, if any, by which the deduction for depletion exceeds the amount which would be allowable if computed with- out regard to discovery value or to percentage depletion, under section 114 (b) (2), (3), or (4) of chapter 1 or a corresponding section of a later Revenue Act; and minus- (i) the cash, and the fair market value of property, distrib- uted to shareholders, (ii) the amount disallowed as a deduction by section 24 (a) (5) of chapter 1 or a corresponding provision of a later Revenue Act, and (iii) the excess of the deductions allowable for income tax purposes over its gross income. The adjustments provided in this paragraph shall be made for each income-tax taxable year included in the three-year period from the date as of which the value was declared in the return for the declaration year to the close of the last income-tax taxable year endling with or prior to the close of the year for which the tax is imposed by this section. The amount of such adjust- ment for each such year shall be computed (on the basis of a separate return) according to the income tax law applicable to such year. (2) FoREIGN CORPORATIONS.-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 declaration year adjusted (for the same income-tax taxable years as in the case of a domestic cor- poration), in accordance with regulations prescribed by the Com- missioner with the approval of the Secretary, to reflect increases or decreases in the capital employed in the transaction of its busi- ness in the United States. (c) CORIORALTIONS IN BANKRUPTCY OR RECEnERsVHIP.-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. (d) CaEIrr FOR CHINA TXIAD ACT CORPORaTIONS. -For the purpose of the tax imposed by section 1200 there shall be allowed in the case of a corporation organized under the China Trade Act, 1922, 42 Stat. 849 (U. S. C ., Title 15, c. 4), as a credit against the adjusted declared 170
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