53 STAT.] 76TH CONG., 1ST SESS.-CH. 247-JUNE 29, 1939 (g) DENIAL OF DEDIUCTON TO FOREIGN PERSONAL HOLDING COM- PANIES. -Section 336 (b) of the Internal Revenue Code (relating to disallowed deductions in computing net income of foreign personal holding companies) is amended by inserting at the end thereof the following: "(3) NET LOSS CARRY-OVER DISALLOWED.-The deduction for net operating losses provided in section 23 (s) shall not be allowed." (h) DENIAL OF DEDUCTION TO MUTUAL INVESTMENT COMPANIES.- Section 362 (a) of the Internal Revenue Code (relating to definition of Supplement Q net income) is amended to read as follows: "(a) SUPPLEMENT Q NET INCOME.-For the purposes of this chap- ter the term 'Supplement Q net income' means the adjusted net in- come, computed without the net operating loss deduction provided in section 23 (s), minus the basic surtax credit computed under section 27 (b) without the application of paragraphs (2) and (3)." (i) DENIAL OF DEDUCTION TO DOMESTIC PERSONAL HOLDING COM- PANIES.- Section 505 of the Internal Revenue Code (relating to defi- nition of subchapter A net income) is amended by inserting at the end thereof the following: "(c) NET Loss CARRY-OVER DISALLOWED. -The deduction for net operating losses provided in section 23 (s) shall not be allowed." (j) TECHNICAL AMENDMENT.- Section 26 (c) (2) of the Internal Revenue Code (relating to operating loss credit) is amended by strik- ing out "chapter" and inserting in lieu thereof "section". SEC. 212 . CORPORATION CAPITAL LOSSES. (a) LMrITATIONs.- Section 117 (d) of the Internal Revenue Code (relating to limitation on capital losses) is amended to read as follows: "(d) LIMITATION ON CAPITAL LOSSES. - Long-term capital losses shall be allowed, but short-term capital losses shall be allowed only to the extent of short-term capital gains." (b) NET SHORT-TERM Loss CARRY-OVER.- Section 117 (e) of the Internal Revenue Code (relating to the one-year carry-over of net short-term capital loss) is amended to read as follows: "(e) NET SIIORT-TFIRM CAPITAL Loss CARRY-OVER.-If any tax- payer sustains in any taxable year, beginning after December 31, 1937, in the case of a taxpayer other than a corporation, or beginning after December 31, 1939, in the case of a corporation, a net short- term capital loss, such loss (in an amount not in excess of the net income for such year) shall be treated in the succeeding taxable year as a short-term capital loss, except that it shall not be included in computing the net short-term capital loss for such year." (c) CAPITAL LOSSES OF FOREIGN PERSONAL HOLDING COMPANIES.- Section 336 of the Internal Revenue Code (relating to definition of Supplement P net income) is amended by inserting at the end thereof the following new subsection: "(c) CAPITAL LOSSES.- The net income shall be computed without regard to section 117 (d) and (e), and losses from sales or exchanges of capital assets shall be allowed only to the extent of $2,000 plus the gains from such sales or exchanges." (d) CAPITAL LOSSES OF DOMESTIC PERSONAL HOLDING COMPANIES.- Section 505 of the Internal Revenue Code (relating to definition of subchapter A net income) is amended by inserting at the end thereof the following new subsection: "(d) CAPITAI LossEs.-T he net income shall be computed without regard to section 117 (d) and (e), and losses from sales or exchanges of capital assets shall be allowed only to the extent of $2,000 plus the gains from such sales or exchanges." 869 Foreign personal holding compa- nies, disallowed de- ductions. Ante, p. 96. I. R.C. §336(b). Ante, p. 867. Mutual investment companies, disallowed deductions. Ante, p. 99. I.R. C. § 362 (a). " Supplement Q net income", defined. Ante, p. 867. Ante, p. 20 . I. R. C. §27 (b). Subchapter A net income. Ante, p. 108. I.R.C.§505. Disallowed deduc- tions. Ante, p. 867. Operating loss cred- it, technical amend- ment. Ante, p. 19. I.R.C.§26(c) (2). Corporation capital losses. Ante, p. .52. I.R.C.§117(d). Limitation on cap- ital losses. Net short-term loss carry-over. Ante, p . S52 It. C.§ 117(e). Not short-term cap- ital loss carry-over . Supplement P net income. Ante, p. 95. I. R. C. §336. Capital losses. I. R. C. 1117 (d), (e). Subchapter A net income. Ante, p. 108. I. R. C. §505. Capital losses. Ante, p. 52. I. R. C. §117 (d), (e).
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