CH. 1—NORMAL TAXES AND SURTAXES
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of the United States or on obligations of corporations organized under Act of Congress which are instrumentalities of the United States, b u t only if— (1) such interest is included in gross income; and (2) such interest is exempt from normal tax under the Act authorizing the issuance of such obligations. (b)
CROSS R E F E R E N C E. —
For reduction of deduction under subsection (a) on account of amortizable bond premium, see section 171. SEC. 243. DIVIDENDS RECEIVED BY CORPORATIONS. (a) GENERAL RULE. — I n the case of a corporation, there shall be allowed as a deduction an amount equal to 85 percent of the amount received as dividends (other than dividends described in paragraph (1) of section 244, relating to dividends on the preferred stock of a public utihty) from a domestic corporation which is subject to taxation under this chapter. (b)
SPECIAL RULES FOR CERTAIN DISTRIBUTIONS.—For purposes
of subsection (a)— (1) Any amount allowed as a deduction under section 591 (relating to deduction for dividends paid by mutual savings banks, etc.) shall not be treated as a dividend. (2) A dividend received from a regulated investment company shall be subject to the limitations prescribed in section 854. SEC. 244. DIVIDENDS RECEIVED ON CERTAIN PREFERRED STOCK. In the case of a corporation, there shall be allowed as a deduction an amount computed as follows: (1) First determine the amount received as dividends on the preferred stock of a public utility which is subject to taxation under this chapter and with respect to which the deduction provided in section 247 for dividends paid is allowable. (2) Then multiply the amount determined under paragraph (1) by the fraction— (A) the numerator of which is 14 percent, and (B) the denominator of which is that percentage which equals the sum of the normal tax rate and the surtax rate for the taxable year prescribed by section 11. (3) Finally ascertain the amount which is 85 percent of the excess of— (A) the amount determined under paragraph (1), over (B) the amount determined under paragraph (2). SEC. 245. DIVIDENDS RECEIVED FROM CERTAIN FOREIGN CORPORATIONS. In the case of dividends received from a foreign corporation (other than a foreign personal holding company) which is subject to taxation under this chapter, if, for an uninterrupted period of not less than 36 months ending with the close of such foreign corporation's taxable year in which such dividends are paid (or, if the corporation has not been in existence for 36 months at the close of such taxable year, for the period the foreign corporation has been in existence as of the close of such taxable year) such foreign corporation has been §245 49012"—54
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