56 STAT.] 77TH CONG. , 2D SESS.-CH. 619-OCT. 21 , 1942 (b) DISCOVERY DEPLETION NOT APPLICABLE TO FLUORSPAR, BALL AND SAGGER CLAY OR RoCK ASPHALT MINES.- Section 114 (b) (2) is amended by striking out "metal, coal, or sulphur mines" and inserting in lieu thereof "metal, coal, fluorspar, ball and sagger clay, rock asphalt, or sulphur mines". SEC. 146. EFFECT ON EARNINGS AND PROFITS OF XWASH SALE LOSSES. (a) WASH SALE LOSSES NOT RECOGNIZED.- Section 115 (1) (relating to earnings and profits of corporations) is amended by inserting after the third sentence thereof the following new sentence: "For the pur- poses of this subsection, a loss with respect to which a deduction is disallowed under section 118, or a corresponding provision of a prior income-tax law, shall not be deemed to be recognized." (b) EFFCTrIvE DATE OF AMENDMENT.- The amendment made by this section shall be effective as if it were made by section 501 of the Second Revenue Act of 1940. SEC. 147. DISTRIBUTIONS IN LIQUIDATION. Section 115 (c) is amended to read as follows: "(c) DISTRIBUTIONS IN LIQUIDATION.- Amounts distributed in com- plete liquidation of a corporation shall be treated as in full payment in exchange for the stock, and amounts distributed in partial liquida- tion of a corporation shall be treated as in part or full payment in exchange for the stock. The gain or loss to the distributee resulting from such exchange shall be determined under section 111, but shall be recognized only to the extent provided in section 112. In the case of amounts distributed (whether before January 1, 1939, or on or after such date) in partial liquidation (other than a distribution to which the provisions of subsection (h) of this section are applicable) the part of such distribution which is properly chargeable to capital account shall not be considered a distribution of earnings or profits. If any distribution in partial liquidation or in complete liquidation (including any one of a series of distributions made by the corporation in complete cancellation or redemption of all its stock) is made by a foreign corporation which with respect to any taxable year beginning on or before, and ending after, August 26, 1937, was a foreign personal holding company, and with respect to which a United States group (as defined in section 331 (a) (2)) existed after August 26, 1937, and before January 1, 1938, then, despite the foregoing provisions of this subsec- tion, the gain recognized resulting from such distribution shall be considered as a gain from the sale or exchange of a capital asset held for not more than 6 months." SEC. 148. INCOME FROM SOURCES WITHOUT UNITED STATES IN CER- TAIN CASES. (a) EXCLUSION OF EARNED INCOME FROM FOREIGN SOURCES. -Sec- tion 116 (a) (relating to earned income from sources without the United States) is amended to read as follows: "(a) EARNED INCOME FROM SOURCES WITHOUT THE UNITED STATES.- "(1) FOREIGN RESIDENT FOR ENTIRE TAXABLE YEAR.-In the case of an individual citizen of the United States, who establishes to the satisfaction of the Commissioner that he is a bona fide resident of a foreign country or countries during the entire taxable year, amounts received from sources without the United States (except amounts paid by the United States or any agency thereof) if such amounts would constitute earned income as defined in section 841 53 Stat. 45 . 26U.S.o. §114(b) (2). 64 Stat. 1004. 26U. S. C. §115 (.). 53 Stat. 53. 26 U. S. C. §118. 54 Stat. 1004. 26U.S. C. §115(0). 53 Stat. 46. 26U. S.C. 115(). 53 Stat. 37 . 26U.S.C.S5111, 112. Ante, p. 838; post, p. 847. Foreign corporation. 63 Stat. 92. 20U.S.C.§331(a) (2). 53 Stat. 48. 26U.S. C. §116 (a).
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