52 STAT.] 75TH CONG. , 3D SESS.-CH. 289-MAY 28, 1938 time of issuance of not exceeding twenty-four months, exclusive of days of grace; (3) Securities issued or guaranteed as to principal or interest by a government or subdivision thereof (including those issued by a corporation which is an instrumentality of a government or subdivision thereof); (4) Stock or securities which were acquired after February 28, 1938, unless such stock or securities (other than obligations described as nonexempt property in paragraph (2) or (3)) were acquired in obedience to an order of the Securities and Exchange Commission; (5) Money, and the right to receive money not evidenced by a security other than an obligation described as nonexempt prop- erty in paragraph (2) or (3). (f) The term "stock or securities" means shares of stock in any corporation, certificates of stock or interest in any corporation, notes, bonds, debentures, and evidences of indebtedness (including any evidence of an interest in or right to subscribe to or purchase any of the foregoing). TITLE IA-PERSONAL HOLDING COMPANIES SEC. 401. SURTAX ON PERSONAL HOLDING COMPANIES. There shall be levied, collected, and paid, for each taxable year, upon the undistributed Title IA net income of every personal holding company (in addition to the taxes imposed by Title I) a surtax equal to the sum of the following: (1) 65 per centum of the amount thereof not in excess of $2,000; plus (2) 75 per centum of the amount thereof in excess of $2,000. SEC. 402 . DEFINITION OF PERSONAL HOLDING COMPANY. (a) GENERAL RULE.- For the purposes of this title, and Title I, the term "personal holding company" means any corporation if- (1) GRoss INCOME REQUIREMENT.-At least 80 per centum of its gross income for the taxable year is personal holding com- pany income as defined in section 403; but if the corporation is a personal holding company with respect to any taxable year beginning after December 31, 1936, then, for each subsequent taxable year, the minimum percentage shall be 70 per centum in lieu of 80 per centum, until a taxable year during the whole of the last half of which the stock ownership required by para- graph (2) does not exist, or until the expiration of three con- secutive taxable years in each of which less than 70 per centum of the gross income is personal holding company income; and (2) STOCK OWNERSHlIP REQUIREMENT.-At any time during the last half of the taxable year more than 50 per centum in value of its outstanding stock is owned, directly or indirectly, by or for not more than five individuals. (b) EXCEPTIONS. -The term "personal holding company" does not include a corporation exempt from taxation under section 101, a bank as defined in section 104, a life insurance company, a surety company, a foreign personal holding company as defined in section 331, or a licensed personal finance company, under State supervision, at least 80 per centum of the gross income of which is lawful interest received from individuals each of whose indebtedness to such company did not at any time during the taxable year exceed $300 in principal amount, if such interest is not payable in advance or compounded and is computed only on unpaid balances. 557 " Stock or securi- ties." Title IA-Personal Holding Companies. Surtax. Rates imposed. Definition. "Personal holding company." Gross income re- quirement. Stock ownership re- quirement. Exceptions. Ante, pp. 480 , 484, 545.
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