878 53 Stat. 87, 86. 26 U. . S .§§276 (b), 275. Ante. p. 877. 53 stat. 98. 26 U. . C. I. 361, 362; Supp. I, ii 362, 863. "Regulated invest- ment company." 53 Stat. 104. 26U.S.C.§01. Pod, pp. 894. 895. 54 Stat. 798. 15 U. . 0. 806a-3 (c) (3). 53 Stat. 68 . 26 U. . O. I 169. PUBLIC LAWS-CH. 619-OCT. 21, 1942 [56 STAT. as part of its decision (1) that such portion was paid (A) within two years before the filing of the claim, the mailing of the notice of deficiency, or the execution of an agreement by both the Commissioner and the taxpayer pursuant to section 276 (b) to extend beyond the time prescribed in section 275 the time within which the Commis- sioner might assess the tax, whichever is earliest, or (B) within three years before the filing of the claim, the mailing of the notice of deficiency, or the execution of the agreement, whichever is earliest, if the claim was filed, the notice of deficiency mailed, or the agree- ment executed within three years from the time the return was filed by the taxpayer, or (C) after the execution of such an agreement and before the expiration of the period within which the Commissioner might make an assessment pursuant to such agreement or any exten- sion thereof, or (D) after the mailing of the notice of deficiency; or (2), if such portion was not paid within the period described in clause (1), but the notice of deficiency was mailed within seven years from the time prescribed for the filing of the return, or a claim described in subsection (b) (5) was filed, that such portion does not exceed the amount of the overpayment attributable to the deductibility of items described in subsection (b) (5)." (c) EFFECTVE DATE OF AMENDMENT.- The amendment inserting paragraph (5) of section 322 (b) shall be applicable to taxable years beginning after December 31, 1938. SEC. 170. REGULATED INVESTMENT COMPANIES. (a) DEFINITION AND RATES OF NORMAL TAX AND SuRwTAX. -Supple- ment Q of Chapter 1 is amended to read as follows: "Supplement Q-Regulated Investment Companies "SEC. 361. DEFINITION. "(a) IN GENERAL. -For the purposes of this chapter, the term 'regulated investment company' means any domestic corporation (whether chartered or created as an investment trust, or otherwise), other than a personal holding company as defined in section 501, which at all times during the taxable year is registered under the Investment Company Act of 1940 (54 Stat. 789, 15 U. S . C ., 1940 ed., secs. 80 a-1 to 80 b-2), or that Act, as amended, either as a management company or as a unit investment trust, or which is a common trust fund or similar fund excluded by section 3 (c) (3) of such Act from the defi- nition of 'investment company' and is not included in the definition of 'common trust fund' by section 169. "(b) LIMrrATIoNs.- Despite the provisions of subsection (a), a corporation shall not be considered a regulated investment company for any taxable year unless- "(1) At least 90 per centum of its gross income is derived from dividends, interest, and gains from the sale or other disposition of stock or securities; and "(2) Less than 30 per centum of its gross income is derived from the sale or other disposition of stock or securities held for less than three months; and "(3) At the close of each quarter of the taxable year (A) at least 50 per centum of the value of its total assets is represented by cash and cash items (including receivables), Government securities, securities of other regulated investment companies, and other securities for the purposes of this calculation limited in respect of any one issuer to an amount not greater in value than 5 per centum of the value of the total assets of the taxpayer and to not more than 10 per centum of the outstanding voting securi- ties of such issuer, and (B) not more than 25 per centum of the
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