56 STAT.] 77TH CONG., 2 D SESS.-CH. 619-OCT. 21, 1942 875 "(ii) losses from the sale or exchange of capital assets sold or exchanged to obtain funds to meet abnormal insurance losses and to provide for the payment of dividends and similar distributions to policyholders. "(c) RENTAL VALUE OF REAL ESTATE. -The deduction under sub- section (b) (4) (C) or (b) (4) (D) of this section on account of any real estate owned and occupied in whole or in part by a mutual insurance company other than life or marine, shall be limited to an amount which bears the same ratio to such deduction (computed with- out regard to this subsection) as the rental value of the space not so occupied bears to the rental value of the entire property. "(d) AMORTIZATION OF PREMIUM AND ACCRUAL OF DISCOUNT.- The gross amount of income during the taxable year from interest, the deduction provided in subsection (b) (4) (A), and the credit allowed against net income in section 26 (a) shall each be decreased by the 53 s8tat- s2 26U.s. 0. §26(a). appropriate amortization of premium and increased by the appro- A, p. 825. priate accrual of discount attributable to the taxable year on bonds, notes, debentures or other evidences of indebtedness held by a mutual insurance company other than life or marine. Such amortization and accrual shall be determined (1) in accordance with the method regularly employed by such company, if such method is reasonable, and (2) in all other cases, in accordance with regulations prescribed by the Commissioner with the approval of the Secretary. "(e) DEDUCTIONS OF FOREIGN CORPORATIONS.-In the case of a foreign corporation the deductions allowed in this section shall be allowed to the extent provided in Supplement I in the case of a foreign 2 suatS.C a 1- corporation engaged in trade or business within the United States. 28; upp. i, 231. "(f) DOUBLE DEDUCIONS. -Nothing in this section shall be con- 86A"'" 808 , 88 strued to permit the same item to be twice deducted. "(g) CREDITS UNDER SECTION 26. - For the purposes of this section, 26 'U.at. in computing normal tax net income and corporation surtax net Ante, pp. ,807, income, the credits provided in section 26 shall be allowed in the S8tat8 manner and to the extent provided in sections 13 (a) and 15 (a)." 26U.S. C. 13(a). (c) CRoss REFERENCE. - For stamp tax on policies written by for- Ai""t p.805 . eign insurers, see section 502 of this Act. P ol,p. 95 SEC. 166. TECHNICAL AMENDMENT TO DEFINITION OF "DIVIDEND". Section 115 (a) (relating to definition of dividends) is amended by striking out "(except in section 203 (a) (3) and section 207 (c) (1), relating to insurance companies)" and inserting the following (except in section 201 (c) (5), section 204 (c) (11) and section 207 (a) (2) and (b) (3) (where the reference is to dividends of insurance companies paid to policy holders))." SEC. 167. TRANSACTIONS IN STOCKS, SECURITIES, AND COMMODI- TIES NOT CONSIDERED ENGAGING IN TRADE OR BUSI- NESS IN CERTAIN CASES. The last sentence of section 211 (b) (relating to definition of being engaged in trade or business in the United States) is amended to read as follows: "Such phrase does not include the effecting, through a resident broker, commission agent, or custodian, of transactions in the United States in commodities (if of a kind customarily dealt in on an organized commodity exchange, if the transaction is of the kind customarily consummated at such place, and if the alien, partner- ship, or corporation has no office or place of business in the United States at any time during the taxable year through which or by the direction of which such transactions in commodities are effected), or in stocks or securities." 53 Stat. 46 . 26U.8.C. 11(a). Post, p. 895. Ante, pp. 868 872 , 873 53 Stat. 76 . 26U. .C. 211(b). Ante, p. 861.
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