PUBLIC LAWS--CH. 289-MAY 28, 1938 If no part accruing to State, etc. Dividend from "China Trade Act" Corporation. 42 Stat. 849. 15U. S. C. §141. Shipowners' protec- tion and indemnity associations. Compensation of employees of foreign governments. Rule for exclusion. Employee not a U. S . citizen. Services similar to American foreign serv- ice. Equivalent exemp- tion granted by for- eign government. Certificate by Sec- retary of State. Capital gains and losses. Definitions. "Capital assets." Ante, p. 462. " Short-term capital gain. " " Short-term capital loss." (2) If by the terms of such contract no part of the proceeds from the operation of the bridge for the taxable year would, irrespective of the tax imposed by this title, accrue directly to or for the use of or be applied for the benefit of such State or political subdivision, then the tax upon the net income from the operation of such bridge shall be levied, assessed, collected, and paid in the manner and at the rates prescribed in this title. (f) DIVIDEND FROM "CHINA TRADE ACT" CORPORATION.- In the case of a person, amounts distributed as dividends to or for his benefit by a corporation organized under the China Trade Act, 1922, if, at the time of such distribution, he is a resident of China, and the equitable right to the income of the shares of stock of the corporation is in good faith vested in him. (g) SHIPOWNERS' PROTECTION AND INDEMNITY AssocIATIONS. -The receipts of shipowners' mutual protection and indemnity associations not organized for profit, and no part of the net earnings of which inures to the benefit of any private shareholder; but such corpora- tions shall be subject as other persons to the tax upon their net income from interest, dividends, and rents. (h) COMPENSATION OF EMPLOYEES OF FOREIGN GOVERNMENTS.- (1) RmLE FOR ExCLUSION-Wages, fees, or salary of an employee of a foreign government (including a consular or other officer, or a nondiplomatic representative) received as compensation for official services to such government- (A) If such employee is not a citizen of the United States; and (B) If the services are of a character similar to those performed by employees of the Government of the United States in foreign countries; and (C) If the foreign government whose employee is claim- ing exemption grants an equivalent exemption to employees of the Government of the United States performing similar services in such foreign country. (2) CERTIFICATE BY SECRETARY OF STATE.- The Secretary of State shall certify to the Secretary of the Treasury the names of the foreign countries which grant an equivalent exemption to the employees of the Government of the United States per- forming services in such foreign countries, and the character of the services performed by employees of the Government of the United States in foreign countries. SEC. 117. CAPITAL GAINS AND LOSSES. (a) DEFINrTIoNS. -As used in this title- (1) CAPITAL ASSETS.- T he term "capital assets" means prop- erty held by the taxpayer (whether or not connected with his trade or business), but does not include stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or busi- ness, or property, used in the trade or business, of a character which is subject to the allowance for depreciation provided in section 23 (1); (2) SHORT-TERM CAPITAL GAIN.- The term "short-term capital gain means gain from the sale or exchange of a capital asset held for not more than 18 months, if and to the extent such gain is taken into account in computing net income; (3) SHORT-TERM CAPITAL Loss.-The term "short-term capital loss" means loss from the sale or exchange of a capital asset [52 STAT.
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