PUBLIC LAWS--H. 289-MAY 28, 1938 S ecal dividend. onditions. Ownership of stock. "China" defined. 42 Stat. 849. 15U.s. . § 142. Credits against tax. Ante, p. 506 . Affiliation. Ante, p. 508 . section; and in no case shall the diminution, by reason of such credit, of the tax imposed by such section 106 or 602 (computed without regard to this section) exceed the amount by which such special dividend exceeds the diminution permitted by this section in the tax imposed by such section 14. (b) SPECIAL DIVIDEND.- Such credit shall not be allowed unless the Secretary of Commerce has certified to the Commissioner- (1) The amount which, during the year ending on the date fixed by law for filing the return, the corporation has distributed as a special dividend to or for the benefit of such persons as on the last day of the taxable year were resident in China, the United States, or possessions of the United States, or were indi- vidual citizens of the United States or China, and owned shares of stock of the corporation; (2) That such special dividend was in addition to all other amounts, payable or to be payable to such persons or for their benefit, by reason of their interest in the corporation; and (3) That such distribution has been made to or for the benefit of such persons in proportion to the par value of the shares of stock of the corporation owned by each; except that if the corpo- ration has more than one class of stock, the certificates shall con- tain a statement that the articles of incorporation provide a method for the apportionment of such special dividend among such persons, and that the amount certified has been distributed in accordance with the method so provided. (c) OWNERSHIP OF STocK. - For the purposes of this section shares of stock of a corporation shall be considered to be owned by the per- son in whom the equitable right to the income from such shares is in good faith vested. (d) DEFIITION OF CHNA.-As used in this section the term "China" shall have the same meaning as when used in the China Trade Act, 1922. SEC. 263. CREDITS AGAINST THE TAX. A corporation organized under the China Trade Act, 1922, shall not be allowed the credits against the tax for taxes of foreign coun- tries and possessions of the United States allowed by section 131. SEC. 264 . AFFILIATION. A corporation organized under the China Trade Act, 1922, shall not be deemed to be affiliated with any other corporation within the meaning of section 141. Income of share- SEC. 265 . INCOME OF SHAREHOLDERS. holders. at9e, p. 4vB. Assessment and col- lection of deficiencies. "Deficiency" de- fined. For exclusion of dividends from gross income, see section 116. Supplement L-Assessment and Collection of Deficiencies SEC. 271. DEFINITION OF DEFICIENCY. As used in this title in respect of a tax imposed by this title "deficiency" means- (a) The amount by which the tax imposed by this title exceeds the amount shown as the tax by the taxpayer upon his return; but the amount so shown on the return shall first be increased by the amounts previously assessed (or collected without assessment) as a deficiency, and decreased by the amounts previously abated, credited, refunded, or otherwise repaid in respect of such tax; or 534 [52 STAT.
�
