53 STAT.] 76TH CONG. , 1ST SESS.-CH. 247-JUNE 29, 1939 SEC. 2. SPORTING ARMS AND AMMUNITION TAX. Section 3407 of the Internal Revenue Code (relating to the tax on firearms, shells, and cartridges) is amended by adding at the end thereof the following new paragraph: "The provisions of section 3452 (relating to expiration of taxes) shall not apply to the tax imposed by this section." SEC. 3 . TOILET PREPARATIONS TAX AMENDMENTS. (a) Section 3401 of the Internal Revenue Code (relating to the tax on toilet preparations) is amended by inserting at the end thereof the following new paragraphs: "In the case of a sale by a manufacturer to a selling corporation of an article to which the tax under this section applies, the transaction shall be prima facie presumed to be otherwise than at arm's length if either the manufacturer or the selling corporation owns more than 75 per centum of the outstanding stock of the other, or if more than 75 per centum of the outstanding stock of both corporations is owned by the same persons in substantially the same proportions. Sales by a manufacturer to a selling corporation shall in all other cases be prima facie presumed to be at arm's length. "Notwithstanding section 3441 (a), in determining, for the pur- pose of this section, the price for which an article is sold, whether at arm's length or not, there shall be included any charge for cover- ings and containers of whatever nature, only if furnished by the actual manufacturer of the article, and any charge incident to placing the article in condition packed ready for shipment, only if performed by the actual manufacturer of the article, but there shall be excluded the amount of the tax imposed by this section, whether or not stated as a separate charge. Whether sold at arm's length or not, a trans- portation, delivery, insurance, or other charge, and the wholesaler's salesmen's commissions and costs and expenses of advertising and selling (not required by the foregoing sentence to be included), shall be excluded from the price only if the amount thereof is established to the satisfaction of the Commissioner, in accordance with the regu- lations." (b) The amendments made by subsection (a) shall be effective only with respect to sales made after the date of the enactment of this Act. 863 Firearms, shells, and cartridges. Ante, p. 412. I.R.C.53407. Expiration of taxes. Ante, ). 420. I.R.('. §3152 Toilet preparations. Ante, p. 410. 1. t.C.13401. Transactions other- wise than at arm's length. Presumption of sales at arm's length. Charge for cover- ings and containers. Ante, p. 416. I. R. C. §3441 (a). Items excluded from price. Effective diate of itenlldtlnelts. TITLE II-INCOME TAX AMENDMENTS SEC. 201. CORPORATION TAX IN GENERAL. Sections 13, 14, and 15 of the Internal Revenue Code are amended AnteR. ' 7-l . to read as follows: "SEC. 13. TAX ON CORPORATIONS IN GENERAL. "(a) DEFINrTIONrs. -For the purposes of this chapter- "(1) ADJUSTED NET INCOME.-The term 'adjusted net income' means the net income minus the credit provided in section 26 (a), relating to interest on certain obligations of the United States and Government corporations. "(2) NORMAL-TAX NET INCOME. -The term 'normal-tax net in- come' means the adjusted net income minus the credit for divi- dends received provided in section 26 (b). "(b) IMPOSITION OF TAx.- There shall be levied, collected, and paid for each taxable year upon the normal-tax net income of every cor- poration the normal-tax net income of which is more than $25,000 Definitions. "Adjusted net in- come." Ante, p. 15. 1.R. ('. §26(a). "Normal-tax net in- come." Ante, p. 19. 1.R.C. 26(b). Imposition of tax.
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