PUBLIC LAWS-CH. 10 -MAR. 7, 1941 "(2) The character of the business engaged in by the taxpayer as of January 1, 1940, shall be considered different from the character of the business engaged in during one or more of the taxable years in its base period only if- "(A) there is a difference in the products or services furnished; or "(B) there is a difference in the capacity for production or operation; or "(C) there is a difference in the ratio of nonborrowed capital to total capital; or "(D) the taxpayer was in existence during only part of its base period; or "(E) the taxpayer acquired, before January 1, 1940, all or part of the assets of a competitor with the result that the competition of such competitor was eliminated or diminished. "(3) The average base period net income determined under subsection (a) (3) shall be computed in the same manner as Ate ,p. 1 provided in section 713 (d), except paragraphs (2) and (4), but for such purposes computing excess profits net income and deficit in excess profits net income on the basis of the assumptions made in subsection (a) (3). "(4) If subsection (a) (1), or both subsections (a) (1) and (a) (2) are applicable to any taxpayer, its average base period net income under subsection (a) (3) shall not exceed the excess profits net income (as computed for the purposes of subsection (a) (3)) for the last taxable year in such base period. For the purposes of this paragraph, if such last taxable year is of less than twelve months, the excess profits net income for such tax- able year shall be placed on an annual basis by multiplying by twelve and dividing by the number of months included in such taxable year. Post,p.. "(c) LaMITATION ON APPLICATION OF GENERAL RULE. - This section shall not be applicable unless- "(1) the tax under this subchapter for the taxable year com- puted without reference to this section, exceeds 6 per centum of the taxpayer's normal-tax net income for such year; and "(2) the application of this section would result in a diminu- tion of the tax otherwise payable under this subchapter for the taxable year by more than 10 per centum thereof. "(d) EXTENT OF REDUCTION IN TAX UNDER THIS SECTION. - The application of this section shall not reduce the tax payable under this subchapter for the taxable year below 6 per centum of the tax- payer's normal-tax net income for such year. The tax under this subchapter computed with the application of subsection (a) shall be increased by an amount equal to 10 per centum of the tax computed without reference to this section. "(e) APPLICATION FOR RELIEF UNDER THIS SEOCION. -The taxpayer shall compute its tax and file its return under this subchapter with- out the application of this section. The benefits of this section shall not be allowed unless the taxpayer, within six months from the date prescribed by law for the filing of its return, makes application therefor in accordance with regulations to be prescribed by the Com- missioner with the approval of the Secretary, except that if the Commissioner in the case of any taxpayer with respect to the tax liability of any taxable year- (1) issues a preliminary notice stating a deficiency in the tax imposed by this subchapter such taxpayer may, within ninety days after the date of such notice, make such application. or 24 [55 STAT.
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