56 STAT.] 77TH CONG., 2n SESS.-CH. 619-OCT. 21 , 1942 "(4) PARTNERSHIPS AND ESTATES.-In the case of any such indi- vidual who is a member of a partnership or a beneficiary of an estate or trust, his proportionate share of such taxes of the part- nership or the estate or trust paid or accrued during the taxable year to a foreign country or to any possession of the United States, as the case may be. "Such choice may be made or changed at any time prior to the expiration of the period prescribed for making a claim for credit or refund of the tax imposed by this chapter." (b) DEDUCTION DENIED IF CREDIT CHosEN.- Section 23 (c) (1) (C) (relating to deduction from gross income for taxes) is amended to read as follows: "(C) income, war-profits, and excess-profits taxes imposed by the authority of any foreign country or possession of the United States, if the taxpayer chooses to take to any extent the benefits of section 131." (c) The amendments made by subsections (a) and (b) shall be applicable with respect to taxable years beginning after December 31, 1940. (d) LIMIT ON CREDIT IN CASE OF CORPORATIONS.- Section 131 (b) is amended to read as follows: "(b) LIMIT ON CREDIT.-The amount of the credit taken under this section shall be subject to each of the following limitations: "(1) The amount of the credit in respect of the tax paid or accrued to any country shall not exceed the same proportion of the tax against which such credit is taken, which the taxpayer's net income from sources within such country bears to his entire net income, in the case of a taxpayer other than a corporation, or to the sum of the normal-tax net income and the amount of the credit for adjusted excess profits net income provided in section 26 (e), in the case of a corporation, for the same taxable year; and "(2) The total amount of the credit shall not exceed the same proportion of the tax against which such credit is taken, which the taxpayer's net income from sources without the United States bears to his entire net income, in the case of a taxpayer other than a corporation, or to the sum of the normal-tax net income and the amount of the credit for adjusted excess profits net income provided in section 26 (e), in the case of a corporation, for the same taxable year." (e) CREDIT ON ACCOUNT OF SUBSIDIARY OF FOREIGN SUBSIDIARY.- Section 131 (f) (relating to credit for taxes of a foreign subsidiary) is amended to read as follows: "(f) TAXES OF FOREIGN SUBSIDIARY. - "(1) FOREIGN SUBSIDIARY OF DOMESTIC CORPORATION.-For the purposes of this section, a domestic corporation which owns a majority of the voting stock of a foreign corporation from which it receives dividends in any taxable year shall be deemed to have paid the same proportion of any income, war-profits, or excess-profits taxes paid or deemed to be paid by such foreign corporation to any foreign country or to any possession of the United States, upon or with respect to the accumulated profits of such foreign corporation from which such dividends were paid, which the amount of such dividends bears to the amount of such accumulated profits: Provided, That the amount of tax deemed to have been paid by such domestic corporation under this subsection shall in no case exceed the same proportion of the tax against which credit is taken which the amount of such dividends bears to the amount of the normal-tax net income of 857 55 Stat. 700. 26 .S. C. Supp.I, 23 (c) (1) (6). 53 Stat 56. 26U.S.C. 131. Ante p. 856; port, pp. 858, 893; infra. Taxable years to which applicable. 53 Stat. 56. 26U. S.C . 131(b). Ante. p. 8M. Ante, p. 808. 53 Stat. 57. 26U.S.C. 131(r). Proriso. Limitation.
�
