CODIFICATION OF INTERNAL REVENUE LAWS days on which was payable a partial distribution (as defined in paragraph (5)), in which case it means the last of such days. (4) CONSENT DISTRIBUTION.-The term "consent distribution" means the distribution which would have been made if on the con- sent dividends day (as defined in paragraph (3)) there had actu- ally been distributed in cash and received by each shareholder mak- ing a consent filed by the corporation under subsection (d), the specific amount stated in such consent. (5) PARTIAL DISTRIBUTION.-The term "partial distribution" means such part of an actual distribution, payable during the last month of the taxable year of the corporation, as constitutes a distribution on the whole or any part of the consent stock (as defined in paragraph (1)), which part of the distribution, if con- sidered by itself and not in connection with a consent distribution (as defined in paragraph (4)), would be a preferential distribu- tion, as defined in paragraph (6). (6) PREFERENTIAL DISTRIBUTION. -The term "preferential dis- tribution" means a distribution which is not pro rata, or which is with preference to any share of stock as compared with other shares of the same class, or to any class of consent stock as com- pared with any other class of consent stock. (b) CORPORATIONS NOT ENTITLED TO CREDIT. -A corporation shall not be entitled to a consent dividends credit with respect to any taxable year- (1) Unless, at the close of such year, all preferred dividends (for the taxable year and, if cumulative, for prior taxable years) have been paid; or (2) If, at any time during such year, the corporation has taken any steps in, or in pursuance of a plan of, complete or partial liqui- dation of all or any part of the consent stock. (c) ALLOWANCE OF CREDIT. - There shall be allowed to the corpora- tion, as a part of its basic surtax credit for the taxable year, a con- sent dividends credit equal to such portion of the total sum agreed to be included in the gross income of shareholders by their consents filed unler subsection (d) as it would have been entitled to include in computing its basic surtax credit if actual distribution of an amount equal to such total sum had been made in cash and each shareholder making such a consent had received, on the consent dividends day, the amount specified in the consent. (d) SHAREHOLDERS' CONSENTS.- The corporation shall not be en- titled to a consent dividends credit with respect to any taxable year- (1) Unless it files with its return for such year (in accordance with regulations prescribed by the Commissioner with the approval of the Secretary) signed consents made under oath by persons who were shareholders on the last day of the taxable year of the cor- poration, of any class of consent stock; and (2) Unless in each such consent the shareholder agrees that he will include as a taxable dividend, in his return for the taxable year in which or with which the taxable year of the corporation ends, a specific amount; and (3) Unless the consents filed are made by such of the share- holders and the amount specified in each consent is such, that the consent distribution would not have been a preferential distribu- tion- (A) If there was no partial distribution during the last month of the taxable year of the corporation, or (B) If there was such a partial distribution, then when con- sidered in connection with such partial distribution; and 22
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