§ 5008. Abatement, remission, refund, and allowance for loss or destruction of distilled spirits

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1958

   Pub. L. 85–859 title II § 201 · 72 Stat. 1275

   Enacted · 26 U.S.C. § 5008

   Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1323

   Source evidence

   Code source credit
   Added Pub. L. 85–859, title II, § 201, Sept. 2, 1958, 72 Stat. 1323

   Enacted provision · exact public law section
   SEC. 201. AMENDMENT OF CHAPTER 51 OF THE INTERNAL REVENUE CODE OF 1954. Chapter 51 of the Internal Revenue Code of 1954 is amended to 26 USC 5001–5693. read as follows: “CHAPTER 51— DISTILLED SPIRITS, WINES, AND BEER “Subchapter A. Gallonage and occupational taxes. “Subchapter B. Qualification requirements for distilled spirits plants. “Subchapter C. Operation of distilled spirits plants. “Subchapter D. Industrial use of distilled spirits. “Subchapter E. General provisions relating to distilled spirits. “Subchapter F. Bonded and taxpaid wine premises. “Subchapter G. Breweries. “Subchapter H. Miscellaneous plants and warehouses. “Subchapter I. Miscellaneous general provisions. “Subchapter J. Penalties, seizures, and forfeitures relating to liquors. “Subchapter A— Gallonage and Occupational Taxes “Part I. Gallonage taxes. “Part II. Occupational tax. “PART I— GALLONAGE TAXES “Subpart A. Distilled spirits. “Subpart B. Rectification. “Subpart C. Wines. “Subpart D. Beer. “Subpart E. General provisions. “Subpart A— Distilled Spirits “Sec. 5001. Imposition, rate, and attachment of tax. “Sec. 5002. Definitions. “Sec. 5003. Cross references to exemptions, etc. “Sec. 5004. Lien for tax. “Sec. 5005. Persons liable for tax. “Sec. 5006. Determination of tax. “Sec. 5007. Collection of tax on distilled spirits. “Sec. 5008. Abatement, remission, refund, and allowance for loss or destruction of distilled spirits. “Sec. 5009. Drawback. “SEC. 5001. IMPOSITION, RATE, AND ATTACHMENT OF TAX. “(a) Rate of Tax— “(1) General.— There is hereby imposed on all distilled spirits in bond or produced in or imported into the United States an internal revenue tax at the rate of $10.50 on each proof gallon or wine gallon when below proof and a proportionate tax at a like rate on all fractional parts of such proof or wine gallon. On and after July 1, 1959, the rate of tax imposed by this paragraph shall be $9 in lieu of $10.50. “(2) Products containing distilled spirits.— All products of distillation, by whatever name known, which contain distilled spirits, on which the tax imposed by law has not been paid, shall be considered and taxed as distilled spirits. “(3) Imported perfumes containing distilled spirits.— There is hereby imposed on all perfumes imported into the United States containing distilled spirits a tax of $10.50 per wine gallon, and a proportionate tax at a like rate on all fractional parts of such wine gallon. On and after July 1, 1959, the rate of tax imposed by this paragraph shall be $9 in lieu of $10.50. “(4) Wines containing more than 24 percent alcohol by volume.— Wines containing more than 24 percent of alcohol by volume shall be taxed as distilled spirits. “(5) Distilled spirits withdrawn free of tax.— Any person who removes, sells, transports, or uses distilled spirits, withdrawn 26 USC 7510. free of tax under section 5214 (a) or section 7510, in violation of laws or regulations now or hereafter in force pertaining thereto, and all such distilled spirits shall be subject to all provisions of law relating to distilled spirits subject to tax, including those requiring payment of the tax thereon; and the person so removing, selling, transporting, or using the distilled spirits shall be required to pay such tax. “(6) Denatured distilled spirits or articles.— Any person who produces, withdraws, sells, transports, or uses denatured distilled spirits or articles in violation of laws or regulations now or hereafter in force pertaining thereto, and all such denatured distilled spirits or articles shall be subject to all provisions of law pertaining to distilled spirits that are not denatured, including those requiring the payment of tax thereon: and the person so producing, withdrawing, selling, transporting, or using the denatured distilled spirits or articles shall be required to pay such tax. “(7) Fruit-flavor concentrates.— If any volatile fruit-flavor concentrate (or any fruit mash or juice from which such concentrate is produced) containing one-half of 1 percent or more of alcohol by volume, which is manufactured free from tax under section 5511, is sold, transported, or used by any person in violation of the provisions of this chapter or regulations promulgated thereunder, such person and such concentrate, mash, or juice shall be subject to all provisions of this chapter pertaining to distilled spirits and wines, including those requiring the payment of tax thereon; and the person so selling, transporting, or using such concentrate, mash, or juice shall be required to pay such tax. “(8) Imported liqueurs and cordials.— Imported liqueurs and cordials, or similar compounds, containing distilled spirits, shall be taxed as distilled spirits. “(9) Imported distilled spirits withdrawn for beverage purposes.— There is hereby imposed on all imported distilled spirits withdrawn from customs custody under section 5232 without payment of the internal revenue tax, and thereafter withdrawn from bonded premises for beverage purposes, an additional tax equal to the duty which would have been paid had such spirits been imported for beverage purposes, less the duty previously paid thereon. “(10) Alcoholic compounds from Puerto rico.— Except as provided in section 5314, upon bay rum, or any article containing distilled spirits, brought from Puerto Rico into the United States for consumption or sale there is hereby imposed a tax on the spirits contained therein at the rate imposed on distilled spirits produced in the United States. “(b) Time of Attachment on Distilled Spirits.— The tax shall attach to distilled spirits as soon as this substance is in existence as such, whether it be subsequently separated as pure or impure spirits, or be immediately, or at any subsequent time, transferred into any other substance, either in the process of original production or by any subsequent process. “(c) Cross Reference.— “For provisions relating to the tax on shipments to the United States of taxable articles from Puerto Rico and the Virgin Islands, see section 7652. “SEC. 5002. DEFINITIONS. “(a) Definitions.— When used in this chapter— “(1) Distilled spirits plant.— The term ‘distilled spirits plant’ means an establishment which is qualified under subchapter B to perform any operation, or any combination of operations, for which qualification is required under such subchapter. “(2) Bonded premises.— The term ‘bonded premises’, when used with reference to distilled spirits, means the premises of a distilled spirits plant, or part thereof, as described in the application required by section 5171 (a), on which operations relating to production, storage, denaturation, or bottling of distilled spirits, prior to the payment or determination of the distilled spirits tax, are authorized to be conducted. “(3) Bottling premises.— The term ‘bottling premises’, when used with reference to distilled spirits plants, means the premises of a distilled spirits plant, or part thereof, as described in the application required by section 5171 (a), on which operations relating to the rectification or bottling of distilled spirits or wines on which the tax has been paid or determined, are authorized to be conducted. “(4) Bonded warehouseman.— The term ‘bonded warehouseman’ means the proprietor of a distilled spirits plant who is authorized to store distilled spirits after entry for deposit in storage and prior to payment or determination of the internal revenue tax or withdrawal as provided in section 5214 or 7510. “(5) Distiller.— The term ‘distiller’ shall include every person— 26 USC 7510. “(A) who produces distilled spirits from any source or substance; or “(B) who brews or makes mash, wort, or wash, fit for distillation or for the production of distilled spirits (except a person making or using such material in the authorized production of wine or beer, or the production of vinegar by fermentation); or “(C) who by any process separates alcoholic spirits from any fermented substance; or “(D) who, making or keeping mash, wort, or wash, has also in his possession or use a still. “(6) Distilled spirits.— “(A) General Definition.— The terms ‘distilled spirits’, ‘alcoholic spirits’, and ‘spirits’ mean that substance known as ethyl alcohol, ethanol, or spirits of wine, including all dilutions and mixtures thereof, from whatever source or by whatever process produced, and shall include whisky, brandy, rum, gin, and vodka. “(B) Products of Rectification.— As used in section 5291 (a) the term ‘distilled spirits’ includes products produced in such manner that the person producing them is a rectifier within the meaning of section 5082. “(7) Proof spirits.— The term ‘proof spirits’ means that liquid which contains one-half its volume of ethyl alcohol of a specific gravity of seven thousand nine hundred and thirty-nine ten-thousandths (.7939) at 60 degrees Fahrenheit referred to water at 60 degrees Fahrenheit as unity. “(8) Proof gallon.— The term ‘proof gallon’ means a United States gallon of proof spirits, or the alcoholic equivalent thereof. “(9) Container.— The term ‘container’, when used with respect to distilled spirits, means any receptacle, vessel, or form of package, bottle, tank, or pipeline used, or capable of use, for holding, storing, transferring, or conveying distilled spirits. “(10) Approved container.— The term ‘approved container’, when used with respect to distilled spirits, means a container the use of which is authorized by regulations prescribed by the Secretary or his delegate. “(11) Articles.— The term ‘articles’ means any substance or preparation in the manufacture of which denatured distilled spirits are used, unless another meaning is distinctly expressed or manifestly intended. “(b) Cross References.— “(1) For definition of wine gallon, see section 5041 (c). “(2) For definition of rectifier, see section 5082. “(3) For definition of manufacturer of stills, see section 5102. “(4) For definition of dealer, see section 5112 (a). “(5) For definitions of wholesale dealers, see section 5112. “(6) For definitions of retail dealers, see section 5122. “(7) For definitions of general application to this title, see chapter 79. “SEC. 5003. CROSS REFERENCES TO EXEMPTIONS, ETC. “(1) For provisions authorizing the withdrawal of distilled spirits free of tax for use by Federal or State agencies, see sections 5214 (a) (2) and 5313. “(2) For provisions authorizing the withdrawal of distilled spirits free of tax by nonprofit educational organizations, scientific universities or colleges of learning, laboratories, hospitals, blood banks, sanitariums, and charitable clinics, see section 5214 (a) (3). “(3) For provisions authorizing the withdrawal of certain imported distilled spirits from customs custody without payment of tax, see section 5232. “(4) For provisions authorizing the withdrawal of denatured distilled spirits free of tax, see section 5214 (a) (1). “(5) For provisions exempting from tax distilled spirits for use in production of vinegar by the vaporizing process, see section 5505 (j). “(6) For provisions relating to the withdrawal of wine spirits without payment of tax for use in the production of wine, see section 5373. “(7) For provisions exempting from tax volatile fruit-flavor concentrates, see section 5511. “(8) For provisions authorizing the withdrawal of distilled spirits from bonded premises without payment of tax for export, see section 5214 (a) (4). “(9) For provisions authorizing withdrawal of distilled spirits without payment of tax to customs manufacturing bonded warehouses for export, see section 5522 (a). “(10) For provisions relating to withdrawal of distilled spirits without payment of tax as supplies for certain vessels and aircraft, see 19 U. S. C. 1309. “(11) For provisions authorizing regulations for withdrawal of distilled spirits for use of United States free of tax, see section 7510. “(12) For provisions relating to withdrawal of distilled spirits without payment of tax to foreign-trade zones, see 19 U. S. C. 81c. “(13) For provisions relating to exemption from tax of taxable articles going into the possessions of the United States, see section 7653 (b). “(14) For provisions authorizing the removal of samples free of tax for making tests or laboratory analyses, see section 5214 (a) (9). “(15) For provisions relating to allowance for certain losses in bond, see section 5008 (a). “SEC. 5004. LIEN FOR TAX. “(a) Distilled Spirits Subject to Lien.— “(1) General.— The tax imposed by section 5001 (a) (1) shall be a first lien on the distilled spirits from the time the spirits are in existence as such until the tax is paid. “(2) Exceptions.— The lien imposed by paragraph (1), or any similar lien imposed on the spirits under prior provisions of internal revenue law, shall terminate in the case of distilled spirits produced on premises qualified under internal revenue law for the production of distilled spirits when such distilled spirits are— “(A) withdrawn from bonded premises on determination of tax; or “(B) withdrawn from bonded premises free of tax under provisions of section 5214 (a) (1), (2), (3), or (9), or section 7510; or 26 USC 7510. “(C) exported, deposited in a foreign-trade zone, used in the production of wine, deposited in customs manufacturing bonded warehouses, or laden as supplies upon, or used in the maintenance or repair of, certain vessels or aircraft, as provided by law. “(b) Other Property Subject to Lien.— “(1) General.— The tax imposed by section 5001 (a) (1) shall be a first lien on the distillery used for producing the distilled spirits, the stills, vessels, and fixtures therein, the lot or tract of land on which such distillery is situated, and on any building thereon, from the time such spirits are in existence as such until the tax is paid, or until the persons liable for the tax under section 5005 (a) or (b) have been relieved of liability for such tax by reason of the provisions of section 5005 (c) (2), (c) (3), (d), or (e). In the case of a distilled spirits plant producing distilled spirits, the premises subject to lien shall comprise the bonded premises of such plant, any building containing any part of the bonded premises and the land on which such building is situated, as described in the application for registration of such plant. Any similar lien on the property described in this paragraph arising under prior provisions of internal revenue law shall not be assertable as to the tax on any distilled spirits in respect to which the persons liable for the tax have been relieved of liability therefor by reason of the provisions of section 5005 (c) (2), (c) (3), (d), or (e). “(2) Exception during term of bond.— No lien shall attach to any lot or tract of land, distillery, building, or distilling apparatus, under this subsection, by reason of distilling done during any period included within the term of any bond given under section 5173 (b) (1) (C). “(3) Extinguishment of lien.— Any lien under paragraph (1), or any similar lien imposed on the property described in paragraph (1) under prior provisions of internal revenue law, shall be held to be extinguished— “(A) if the property is no longer used for distilling and there is no outstanding liability against any person referred Infra. to in section 5005 (a) or (b) for taxes or penalties imposed by law on the distilled spirits produced thereon, and no litigation is pending in respect of any such tax or penalty; or “(B) if an indemnity bond given under the provisions of section 5173 (b) (1) (C), further conditioned to stand in lieu of such lien or hens and to indemnify the United States for the payment of all taxes and penalties which otherwise could be asserted against such property by reason of such lien or liens, is accepted and approved by the Secretary or his delegate. Such bond shall not be accepted or approved if there is any pending litigation or outstanding assessment with respect to such taxes or penalties, or if the Secretary or his delegate has knowledge of any circumstances indicating that such bond is tendered with intent to evade payment or defeat collection of any tax or penalty. “(4) Certificate of discharge.— Any person claiming any interest in the property subject to lien under paragraph (1) may apply to the Secretary or his delegate for a duly acknowledged certificate to the effect that such lien is discharged and, if the Secretary or his delegate determines that such lien is extinguished, the Secretary or his delegate shall issue such certificate, and any such certificate may be recorded. “(c) Cross Reference.— “For provisions relating to extinguishing of lien in case of redistillation, see section 5223 (d). “SEC. 5005. PERSONS LIABLE FOR TAX. “(a) General.— The distiller or importer of distilled spirits shall be liable for the taxes imposed thereon by section 5001 (a) (1). “(b) Domestic Distilled Spirits.— “(1) Liability of persons interested in distilling.— Every proprietor or possessor of, and every person in any manner interested in the use of, any still, distilling apparatus, or distillery, shall be jointly and severally liable for the taxes imposed by law on the distilled spirits produced therefrom. “(2) Exception.— A person owning or having the right of control of not more than 10 percent of any class of stock of a corporate proprietor of a distilled spirits plant shall not be deemed to be a person liable for the tax for which such proprietor is liable under the provisions of paragraph (1). This exception shall not apply to an officer or director of such corporate proprietor. “(c) Proprietors of Distilled Spirits Plants.— “(1) Bonded storage.— Every person operating bonded premises of a distilled spirits plant shall be liable for the internal revenue tax on all distilled spirits while the distilled spirits are stored on such premises, and on all distilled spirits which are in transit to such premises (from the time of removal from the transferor’s bonded premises) pursuant to application made by him. Such liability for the tax on distilled spirits shall continue until the distilled spirits are transferred or withdrawn from bonded premises as authorized by law, or until such liability for tax is relieved by reason of the provisions of section 5008 (a). Nothing in this paragraph shall relieve any person from any liability imposed by subsection (a) or (b). “(2) Transfers in bond.— When distilled spirits are transferred in bond in accordance with the provisions of section 5212, persons liable for the tax on such spirits under subsection (a) or (b), or under any similar prior provisions of internal revenue law, shall be relieved of such liability, if proprietors of transferring and receiving premises are independent of each other and neither has a proprietary interest, directly or indirectly, in the business of the other, and all persons liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, have divested themselves of all interest in the spirits so transferred. Such relief from liability shall be effective from the time of removal from the transferor’s bonded Premises, from the time of such divestment of interest, or on July 1, 1959, whichever is later. The provisions of this paragraph shall be construed to apply to distilled spirits transferred in bond, whether such transfers occur prior to or on or after July 1, 1959, but shall not apply in any case in which the tax was paid or determined prior to such date. “(3) Withdrawals on determination of tax.— “(A) Any person who withdraws distilled spirits from the bonded premises of a distilled spirits plant on determination of tax, upon giving of a withdrawal bond as provided for in section 5174, shall be liable for payment of the internal revenue tax on the distilled spirits so withdrawn, from the time of such withdrawal. “(B) All persons liable for the tax on distilled spirits under subsection (a) or (b), or under any similar prior provisions of internal revenue law, shall be relieved of liability with respect to the tax on any distilled spirits withdrawn on determination of tax under withdrawal bond (as provided for in section 5174) if the person withdrawing such spirits and the person, or persons, liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, are independent of each other and neither has a proprietary interest, directly or indirectly, in the business of the other, and all persons liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, have divested themselves of all interest in the spirits so withdrawn. “(d) Withdrawals Free of Tax.— All persons liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, shall be relieved of such liability as to distilled spirits withdrawn free of tax under the provisions of section 5214 (a) (1), (2), (3), or (9), or under section 7510, at the time such spirits 26 USC 7510. are so withdrawn from bonded premises. “(e) Withdrawals Without Payment of Tax.— “(1) Liability for tax.— Any person who withdraws distilled spirits from the bonded premises of a distilled spirits plant without payment of tax, as provided in section 5214 (a) (4), (5),(6), (7), or (8), shall be liable for the internal revenue tax on such distilled spirits, from the time of such withdrawal; and all persons liable for the tax on such distilled spirits under subsection (a) or (b), or under any similar prior provisions of internal revenue law, shall, at the time of such withdrawal, be relieved of any such liability on the distilled spirits so withdrawn if the person withdrawing such spirits and the person, or persons, liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, are independent of each other and neither has a proprietary interest, directly or indirectly, in the business of the other, and all persons liable for the tax under subsection (a) or (b), or under any similar prior provisions of internal revenue law, have divested themselves of all interest in the spirits so withdrawn. “(2) Relief from liability.— All persons liable for the tax on distilled spirits under paragraph (1) of this subsection, or under subsection (a) or (b), or under any similar prior provisions of internal revenue law, shall be relieved of any such liability at the time, as the case may be, the distilled spirits are exported, deposited in a foreign-trade zone, used in the production of wine, deposited in customs manufacturing bonded warehouses, or laden as supplies upon, or used in the maintenance or repair of, certain vessels or aircraft, as provided by law. “(f) Cross References.— “(1) For provisions conditioning warehousing bonds on the payment of the tax, see section 5173 (c). “(2) For provisions relating to transfer of tax liability to redistilled in case of redistillation, see section 5223. “(3) For liability for tax on denatured distilled spirits, articles, and volatile fruit-flavor concentrates, see section 5001 (a) (6) and (7). . . “(4) For liability for tax on distilled spirits withdrawn free of tax. see section 5001 (a) (5). “(5) For liability of wine producer for unlawfully using wine spirits withdrawn for the production of wine, see section 5391. “SEC. 5006. DETERMINATION OF TAX. “(a) Requirements.— “(1) General.— Except as otherwise provided in this section, the internal revenue tax on distilled spirits shall be determined when the spirits are withdrawn from bond. Such tax shall be determined by such means as the Secretary or his delegate shall by regulations prescribe, and with the use of such devices and apparatus (including but not limited to storage, gauging, and bottling tanks and pipelines) as the Secretary or his delegate may require. The tax on distilled spirits withdrawn from the bonded premises of a distilled spirits plant shall be determined upon completion of the gauge for determination of tax and before withdrawal from bonded premises, under such regulations as the Secretary or his delegate shall prescribe. “(2) Distilled spirits entered for storage.— “(A) Bonding period limitation.— Except as provided in subparagraph (B), the tax on distilled spirits entered for deposit in storage in internal revenue bond shall be determined within 20 years from the date of original entry for deposit in such storage. “(B) Exceptions.— Subparagraph (A) and section 5173 (c) (1) (A) shall not apply in the case of— “(i) distilled spirits of 190 degrees or more of proof; “(ii) denatured distilled spirits; or “(iii) distilled spirits which on July 26, 1936, were 8 years of age or older and which were in bonded warehouses on that date. “(C) Distilled spirits mingled in internal revenue bond.— In applying subparagraph (A) and section 5173 (c) (1) (A) to distilled spirits entered for deposit in storage on different dates and lawfully mingled in internal revenue bond, the Secretary or his delegate shall, by regulations, provide for the application of the 20-year period to such spirits in such manner that no more spirits will remain in bond than would have been the case had such mingling not occurred. “(3) Distilled spirits not accounted for.— If the Secretary or his delegate finds that the distiller has not accounted for all the distilled spirits produced by him, he shall, from all the evidence he can obtain, determine what quantity of distilled spirits was actually produced by such distiller, and an assessment shall be made for the difference between the quantity reported and the quantity shown to have been actually produced, at the rate of tax imposed by law for every proof gallon. “(b) Taxable Loss.— “(1) On original quantity.— Where there is evidence satisfactory to the Secretary or his delegate that there has been any loss of distilled spirits from any cask or other package deposited in storage in internal revenue bond, other than a loss which by reason of section 5008 (a) is not taxable, the Secretary or his delegate may require the withdrawal from bonded premises of such distilled spirits, and direct the officer designated by him to collect the tax accrued on the original quantity of distilled spirits entered for deposit in storage in internal revenue bond in such cask or package, notwithstanding that the time specified in any bond given for the withdrawal of the spirits entered in storage in such cask or package has not expired, except that, under regulations prescribed by the Secretary or his delegate, when the extent of any loss from causes other than theft or unauthorized voluntary destruction can be established by the proprietor to the satisfaction of the Secretary or his delegate, an allowance of the tax on the loss so established may be credited against the tax on the original quantity. If such tax is not paid on demand it shall be assessed and collected as other taxes are assessed and collected. “(2) Alternative method.— Where there is evidence satisfactory to the Secretary or his delegate that there has been access, other than as authorized by law. to the contents of casks or packages stored on bonded premises, and the extent of such access is such as to evidence a lack of due diligence or a failure to employ necessary and effective controls on the part of the proprietor, the Secretary or his delegate (in lieu of requiring the casks or packages to which such access has been had to be withdrawn and tax paid on the original quantity of distilled spirits entered for deposit in storage in internal revenue bond in such casks or packages as provided in paragraph (1)) may assess an amount equal to the tax on 5 proof gallons of distilled spirits at the prevailing rate on each of the total number of such casks or packages as determined by him. “(3) Application of subsection.— The provisions of this subsection shall apply to distilled spirits which are filled into casks or packages, as authorized by law, after entry and deposit in storage in internal revenue bond, whether by recasking, filling from storage tanks, consolidation of packages, or otherwise; and the quantity filled into such casks or packages shall be deemed to be the original quantity for the purpose of this subsection, in the case of loss from such casks or packages. “(c) Distilled Spirits Not Bonded.— “(1) General.— The tax on any distilled spirits, removed from the place where they were distilled and (except as otherwise provided by law) not deposited in storage on bonded premises of a distilled spirits plant, shall, at any time within the period of limitation provided in section 6501. when knowledge of such fact is obtained by the Secretary or his delegate, be assessed on the distiller of such distilled spirits (or other person liable for the tax) and payment of such tax immediately demanded and, on the neglect or refusal of payment, the Secretary or his delegate shall proceed to collect the same by distraint. This paragraph shall not exclude any other remedy or proceeding provided by law. “(2) Production at other than qualified plants.— Except as otherwise provided by law, the tax on any distilled spirits produced in the United States at any place other than a qualified distilled spirits plant shall be due and payable immediately upon production. “(d) Unlawfully Imported Distilled Spirits.— Distilled spirits smuggled or brought into the United States unlawfully shall, for purposes of this chapter, be held to be imported into the United States, and the internal revenue tax shall be due and payable at the time of such importation. “(e) Cross Reference.— “For provisions relating to removal of distilled spirits from bonded premises on determination of tax, see section 5213. “SEC. 5007. COLLECTION OF TAX ON DISTILLED SPIRITS. “(a) Tax on Distilled Spirits Removed From Bonded Premises.— “(1) General.— The tax on domestic distilled spirits and on distilled spirits removed from customs custody under section 5232 shall be paid in accordance with section 5061. “(2) Distilled spirits withdrawn to bottling premises under withdrawal bond.— If distilled spirits are withdrawn from bonded premises under section 5213 and a withdrawal bond is posted under section 5174 (a) (2), the Secretary or his delegate shall, in fixing the time for filing the return and the time for payment of the tax under section 5061 (a), make allowance for the period of transportation of the distilled spirits from the bonded premises to the bottling premises, not to exceed such maximum periods as he may by regulations prescribe. “(b) Collection of Tax on Imported Distilled Spirits and Perfumes Containing Distilled Spirits.— “(1) Distilled spirits.— The internal revenue tax imposed by section 5001 (a) (1) and (2) upon imported distilled spirits shall be collected by the Secretary or his delegate and deposited as internal revenue collections, under such regulations as the Secretary or his delegate may prescribe. Such tax shall be in addition to any customs duty imposed under the Tariff Act of 1930 (46 Stat. 590; 19 U. S. C., chapter 4), or any subsequent act. 26 USC 5688. Section 5688 shall be applicable to the disposition of imported spirits. “(2) Perfumes containing distilled spirits.— The internal revenue tax imposed by section 5001 (a) (3) upon imported perfumes containing distilled spirits shall be collected by the Secretary or his delegate and deposited as internal revenue collections, under such regulations as the Secretary or his delegate may prescribe. “(c) Cross References.— “(1) For authority of the Secretary or his delegate to make determinations and assessments of internal revenue taxes and penalties, see section 6201 (a). “(2) For authority to assess tax on distilled spirits not bonded, see section 5006 (c). “(3) For provisions relating to payment of tax, under certain conditions, on distilled spirits withdrawn free of tax, denatured distilled spirits, articles, and volatile fruit-flavor concentrates, see section 5001 (a) (5), (6), and (7). “SEC. 5008. ABATEMENT, REMISSION, REFUND, AND ALLOWANCE FOR LOSS OR DESTRUCTION OF DISTILLED SPIRITS. “(a) Distilled Spirits Lost or Destroyed in Bond.— “(1) Extent of loss allowance.— No tax shall be collected in respect of distilled spirits lost or destroyed while in bond, except that such tax shall be collected— “(A) Theft.— In the case of loss by theft, unless the Secretary or his delegate finds that the theft occurred without connivance, collusion, fraud, or negligence on the part of the proprietor of the distilled spirits plant, owner, consignor, consignee, bailee, or carrier, or the employees or agents of any of them; and “(B) Voluntary destruction.— In the case of voluntary destruction, unless such destruction is carried out as provided in subsection (b) (1). “(2) Proof of loss.— In any case in which distilled spirits are lost or destroyed, whether by theft or otherwise, the Secretary or his delegate may require the proprietor of the distilled spirits plant or other person liable for the tax to file a claim for relief from the tax and submit proof as to the cause of such loss. In every case where it appears that the loss was by theft, the burden shall be upon the proprietor of the distilled spirits plant or other person responsible for the distilled spirits tax to establish to the satisfaction of the Secretary or his delegate that such loss did not occur as the result of connivance, collusion, fraud, or negligence on the part of the proprietor of the distilled spirits plant, owner, consignor, consignee, bailee, or carrier, or the employees or agents of any of them. “(3) Refund of tax.— In any case where the tax would not be collectible by virtue of paragraph (1), but such tax has been paid, the Secretary or his delegate shall refund such tax. “(4) Limitations.— Except as provided in paragraph (5), no tax shall be abated, remitted, credited, or refunded under this subsection where the loss occurred after the tax was determined (as provided in section 5006 (a)). The abatement, remission, credit, or refund of taxes provided for by paragraphs (1) and (3) in the case of loss of distilled spirits by theft shall only be allowed to the extent that the claimant is not indemnified against or recompensed in respect of the tax for such loss. “(5) Applicability.— The provisions of this subsection shall extend to and apply in respect of distilled spirits lost after the tax was determined and prior to the completion of the physical removal of the distilled spirits from bonded premises, but shall not be applicable where the loss occurred after the time prescribed for the withdrawal of the distilled spirits from bonded premises under section 5006 (a) (2) unless the loss occurred in the course of physical removal of the spirits immediately subsequent to such time. This paragraph shall not be applicable to any loss of distilled spirits for which abatement, remission, credit, or refund of tax is allowable under the provisions of subsection (c), or would be allowable except for the limitations established under subsection (c) (3). “(b) Voluntary Destruction.— “(1) Distilled spirits in bond.— The proprietor of the distilled spirits plant or other persons liable for the tax imposed by this chapter with respect to any distilled spirits in bond may voluntarily destroy such spirits, but only if such destruction is under such supervision, and under such regulations, as the Secretary or his delegate may prescribe. “(2) Distilled spirits withdrawn for rectification or bottling.— Whenever any distilled spirits withdrawn from bond on or after July 1, 1959, on payment or determination of tax for rectification or bottling are (before the completion of the bottling and casing or other packaging of such spirits for removal from the bottling premises of the distilled spirits plant to which removed from bond) found by the proprietor who withdrew such spirits to be unsuitable for the purpose for which intended to be used, such spirits may, on application to the Secretary or his delegate, be destroyed after such gauge and under such supervision as the Secretary or his delegate may by regulations prescribe. If a claim is filed within 6 months from the date of such destruction, the Secretary or his delegate shall, under such regulations as he may prescribe, abate, remit, or, without interest, credit or refund the tax imposed under section 5001 (a) (1) on the spirits so destroyed, to the proprietor of the distilled spirits plant who withdrew the distilled spirits on payment or determination of tax. “(c) Loss of Distilled Spirits Withdrawn From Bond for Rectification or Bottling.— “(1) General.— Whenever any distilled spirits withdrawn from bond on payment or determination of tax for rectification or bottling are lost before the completion of the bottling and casing or other packaging of such spirits for removal from the bottling premises of the distilled spirits plant to which removed from bond, the Secretary or his delegate shall, under such regulations as he may prescribe, abate, remit, or, without interest, credit or refund the tax imposed on such spirits under section 5001 (a) (1) to the proprietor of the distilled spirits plant who withdrew the distilled spirits on payment or determination of tax for removal to his bottling premises, if it is established to the satisfaction of the Secretary or his delegate that— “(A) such loss occurred (i) by reason of accident while being removed from bond to bottling premises, or (ii) by reason of flood, fire, or other disaster; or “(B) such loss occurred by reason of, and was incident to, authorized rectifying, packaging, bottling, or casing operations (including losses by leakage or evaporation occurring during removal from bond to the bottling premises and during storage on bottling premises pending rectification or bottling). “(2) Limitation.— No abatement, remission, credit, or refund of taxes shall be made under this subsection— “(A) in any case where the claimant is indemnified or recompensed for the tax; “(B) in excess of the amount allowable under paragraph (3), in case of losses referred to in paragraph (1) (B); or “(C) unless a claim is filed, under such regulations as the Secretary or his delegate may prescribe, by the proprietor of the distilled spirits plant who withdrew the distilled spirits on payment or determination of tax, (i) within 6 months from the date of the loss in case of losses referred to in paragraph (1) (A), or (ii) within 6 months from the close of the fiscal year in which the loss occurred in case of losses referred to in paragraph (1) (B). The quantity of distilled spirits lost within the meaning of subparagraph (B) of paragraph (1) shall be determined at such times and by such means or methods as the Secretary or his delegate shall by regulations prescribe. “(3) Maximum loss allowances.— “(A) If all the alcoholic ingredients used in distilled spirits products during the fiscal year were distilled spirits withdrawn from bond by the proprietor of the bottling premises on payment or determination of tax, for removal to such premises, the loss allowable in such fiscal year under paragraph (1) (B) shall not be greater than the excess of losses over gains, and shall not exceed the maximum amount of loss allowable as shown in the following schedule: “If total completions during the fiscal year in proof gallons The maximum allowable loss are: in proof gallons is: “Not over 24.000 2 percent of completions. “Over 24,000 but not over 120,000 480 proof gallons plus 1% of excess over 24,000. “Over 120,000 but not over 600,000 1,440 proof gallons plus .6% of excess over 120,000. “Over 600,000 but not over 2,400,000 4,320 proof gallons plus .3% of excess over 600,000. “Over 2,400,000 9,720 proof gallons plus .2% of excess over 2,400,000. The Secretary or his delegate may, by regulations, reduce the amount of the maximum allowable losses in the preceding schedule when he finds that such adjustment is necessary for protection of the revenue, or increase the amount of such maximum allowable losses if he finds that such may be done without undue jeopardy to the revenue and is necessary to more nearly provide for the actual losses described in paragraph (1) (B). However, in no event shall allowable losses exceed 2 percent of total completions. “(B) If alcoholic ingredients other than distilled spirits withdrawn from bond by the proprietor of the bottling premises on payment or determination of tax, for removal to such premises, were used in distilled spirits products during the fiscal year, the loss allowable under paragraph (1) (B) shall be determined by first obtaining the amount that would have been allowable if all of the ingredients had been distilled spirits withdrawn from bond by the proprietor of the bottling premises on payment or determination of tax, for removal to such premises, and thereafter reducing this amount by an amount proportional to the percentage which the total proof gallons of such alcoholic ingredients bears to the total proof gallons of all alcoholic ingredients used in such distilled spirits products. “(C) As used in this subsection, the term ‘completions’ means the distilled spirits products bottled and cased or otherwise packaged or placed in approved containers for removal from the bottling premises, and the term ‘fiscal year’ means the period from July 1 of a calendar year through June 30 of the following year. “(D) The Secretary or his delegate may, under such regulations and conditions as he may prescribe, make tentative allowances for losses provided for in paragraph (1) (B), for fractional parts of a year, which allowances shall be computed by the procedures prescribed in paragraphs (3) (A) and (3) (B), except that the numerical values for the completions and for the maximum allowable losses in proof gallons in the schedule in paragraph (3) (A) shall be divided by the number of such fractional parts within the fiscal year. “(E) The loss allowable to any proprietor qualifying for abatement, remission, credit, or refund of taxes under para-graph (1) (B) shall not exceed the quantity which would be allowed by a tentative estimates schedule constructed in accordance with paragraph (3) (D) for the portion of the fiscal year that such proprietor was qualified to operate the distilled spirits plant. “(F) Notwithstanding the limitations contained in the schedule in paragraph (3) (A) the Secretary or his delegate may, under such regulations as he may prescribe, in addition to the losses allowable under paragraphs (1) (A) and (1) (B), allow actual determined losses incurred in the manufacture of gin and vodka where produced in closed systems in a manner similar to that authorized on bonded premises. “(4) Eligible proprietors.— “(A) The term ‘proprietor’ as used in this subsection and in subsection (b) (2) shall, in the case of a corporation, include all affiliated or subsidiary corporations who are qualified during the fiscal year for successive operation of the same bottling premises and who make joint application to the Secretary or his delegate to be treated as one proprietor for the purposes of this subsection and subsection (b) (2) and who comply with such conditions as the Secretary or his delegate may by regulations prescribe. “(B) For the purposes of this subsection and subsection (b) (2) a proprietor of bottling premises of a distilled spirits plant who makes application to the Secretary or his delegate for the withdrawal of distilled spirits from bond on payment of tax for removal to such bottling premises shall be deemed to be the proprietor who withdrew distilled spirits on payment of tax, and the distilled spirits withdrawn pursuant to such application shall be deemed to have been withdrawn by such proprietor on payment of tax, whether or not he was the person who paid the tax. “(5) Applicability.— This subsection shall apply in respect of losses of distilled spirits withdrawn from bond on or after July 1, 1959. This subsection shall also apply in respect of losses, occurring on or after July 1, 1959, and after dumping for rectification or bottling, of distilled spirits withdrawn from bond prior to July 1, 1959, and such spirits shall be considered as having been withdrawn from bond on payment or determination of tax by the proprietor of the bottling premises at which the spirits are dumped tor rectification or bottling. “(d) Distilled Spirits Returned to Bonded Premises.— “(1) Allowance of tax.— Whenever any distilled spirits withdrawn from bonded premises, on or after July 1, 1959, on payment or determination of tax are returned under section 5215 to the bonded premises of a distilled spirits plant, the Secretary or his delegate shall abate, remit, or (without interest) credit or refund the tax imposed under section 5001 (a) (1) on the spirits so returned. “(2) Limitation.— No allowance under paragraph (1) shall be made unless a claim is filed, under such regulations as the Secretary or his delegate may prescribe, by the proprietor of the distilled spirits plant to which the distilled spirits are returned, within 6 months of the date of return; and no claim shall be allowed in respect of any distilled spirits withdrawn from the bonded premises of a distilled spirits plant more than 6 months prior to the date of such return. “(e) Samples for Use by the United States.— The Secretary or his delegate shall, under such regulations as he may prescribe, with-out interest, credit or refund to the proprietor the tax on any samples of distilled spirits removed from the premises of a distilled spirits plant for analysis or testing by the United States. “(f) Distilled Spirits Withdrawn Without Payment of Tax.— The provisions of subsection (a) shall be applicable to loss of distilled spirits occurring during transportation from bonded premises of a distilled spirits plant to— “(1) the port of export, in case of withdrawal under section 5214 (a) (4); “(2) the customs manufacturing bonded warehouse, in case of withdrawal under section 5214 (a) (6); “(3) the vessel or aircraft, in case of withdrawal under section 5214 (a) (7);and “(4) the foreign-trade zone, in case of withdrawal under section 5214 (a) (8). “(g) Other Laws Applicable.— All provisions of law, including penalties, applicable in respect of the internal revenue tax on distilled spirits, shall, insofar as applicable and not inconsistent with subsections (b) (2), (c), and (d), be applicable to the credits or refunds provided for under such subsections to the same extent as if such credits or refunds constituted credits or refunds of such tax. “(h) Cross Reference.— “For provisions relating to allowance for loss in case of wine spirits withdrawn for use in wine production, see section 5373 (b) (3). “SEC. 5009. DRAWBACK. “(a) Drawback on Exportation of Distilled Spirits in Casks or Packages.— On the exportation of distilled spirits in casks or packages containing not less than 20 wine gallons each, filled in internal revenue bond, drawback of the internal revenue tax paid or determined may be allowed, under such regulations, and on the filing of such bonds, reports, returns, and applications, and the keeping of such records, as the Secretary or his delegate may prescribe. The drawback shall be paid or credited in an amount equal to such tax on the quantity of distilled spirits exported, as ascertained prior to exportation by such gauge as the Secretary or his delegate may by regulations prescribe. The drawback shall be paid or credited only after all requirements of law and regulations have been complied with and on the filing, with the Secretary or his delegate, of a proper claim and evidence satisfactory to the Secretary or his delegate that the tax on such distilled spirits has been paid or determined and that the distilled spirits have been exported. “(b) Cross References.— “(1) For provisions relating to drawback on distilled spirits packaged or bottled especially for export, see section 5062 (b). “(2) For provisions relating to drawback on designated nonbeverage products, see sections 5131 through 5134. “(3) For drawback on distilled spirits used in flavoring extracts or medicinal or toilet preparations exported, see section 313 (d) of the Tariff Act of 1930 (46 Stat. 694; 19 U. S. C. 1313). “(4) For drawback on articles removed to foreign-trade zones, see 19 U. S. C. 81c. “(5) For drawback on shipments from the United States to Puerto Rico, the Virgin Islands, Guam, or American Samoa, see section 7653 (c). “Subpart B— Rectification “Sec. 5021. Imposition and rate of tax. “Sec. 5022. Tax on cordials and liqueurs containing wine. “Sec. 5023. Tax on blending of beverage rums or brandies. “Sec. 5024. Definitions. “Sec. 5025. Exemption from rectification tax. “Sec. 5026. Determination and collection of rectification tax. “SEC. 5021. IMPOSITION AND RATE OF TAX. “In addition to the tax imposed by this chapter on distilled spirits and wines, there is hereby imposed (except as otherwise provided in this chapter) a tax of 30 cents on each proof gallon and a proportionate tax at a like rate on all fractional parts of such proof gallon on all distilled spirits or wines rectified, purified, or refined in such manner, and on all mixtures produced in such manner, that the person so rectifying, purifying, refining, or mixing the same is a rectifier (as defined in section 5082). Spirits or wines shall not twice be subjected to tax under this section because of separate acts of rectification, pursuant to approved formula, between the time such spirits or wines are received on the bottling premises and the time they are removed therefrom. “SEC. 5022. TAX ON CORDIALS AND LIQUEURS CONTAINING WINE “On all liqueurs, cordials, or similar compounds produced in the United States and not produced for sale as wine, wine specialties, or cocktails, which contain more than 2 1/2 percent by volume of wine of an alcoholic content in excess of 14 percent by volume, there shall be paid, in lieu of the tax imposed by section 5021, a tax at the rate of $1.92 per wine gallon and a proportionate tax at a like rate on all fractional parts of such wine gallon until July 1, 1959, and on or after July 1, 1959, at the rate of $1.60 per wine gallon and a proportionate tax at a like rate on all fractional parts of such wine gallon. The last sentence of section 5021 shall not be construed to limit the imposition of tax under this section. All other provisions of law applicable to rectification shall apply to the products subject to tax under this sect ion. “SEC. 5023. TAX ON BLENDING OF BEVERAGE RUMS OR BRANDIES. “In the case of rums or fruit brandies mixed or blended pursuant to section 5234 (c), in addition to the tax imposed by this chapter on the production of distilled spirits, there shall, except in the case of such rums or brandies which have been aged in wood at least 2 years at the time of their first blending or mixing, be paid a tax of 30 cents as to each proof gallon (and a proportionate tax at a like rate on all fractional parts of such proof gallon) of rums or brandies so mixed or blended and withdrawn from bonded premises, except when such rums or brandies are withdrawn under section 5214 or section 7510. “SEC. 5021. DEFINITIONS. “(1) For definition of ‘rectifier’, see section 5082. “(2) For definition of ‘products of rectification’ as ‘distilled spirits’ for certain purposes, see section 5002 (a) (6) (B). “(3) For other definitions relating to distilled spirits, see section 5002. “(4) For definitions of general application to this title, see chapter 79. “SEC. 5025. EXEMPTION FROM RECTIFICATION TAX. “(a) Absolute Alcohol.— The process of extraction of water from high-proof distilled spirits for the production of absolute alcohol shall not be deemed to be rectification within the meaning of sections 5081 and 5082, and absolute alcohol shall not be subject to the tax imposed by section 5021, but the production of such absolute alcohol shall be under such regulations as the Secretary or his delegate may prescribe. “(b) Production of Gin and Vodka.— The tax imposed by section 5021 shall not apply to gin produced on bottling premises of distilled spirits plants by the redistillation of a pure spirit over juniper berries and other natural aromatics or to vodka produced on bottling premises of distilled spirits plants from pure spirits in the manner authorized on bonded premises of distilled spirits plants. “(c) Refining Spirits in Course of Original Distillation.— The purifying or refining of distilled spirits, in the course of original and continuous distillation or other original and continuous processing through any material which will not remain incorporated with such spirits when the production thereof is complete shall not be held to be rectification within the meaning of sections 5021, 5081, or 5082, nor shall these sections be held to prohibit such purifying or refining. “(d) Redistillation of Distilled Spirits on Bonded Premises.— Sections 5021, 5081, and 5082 shall not apply to the redistillation of distilled spirits under section 5223. “(e) Mingling of Distilled Spirits.— Sections 5021, 5081, and 5082 shall not apply to— “(1) the mingling on bonded premises of spirits distilled at 190 degrees or more of proof; or “(2) the mingling of distilled spirits on bonded premises, or in the course of removal therefrom, for redistillation, storage, or any other purpose, incident to the requirements of the national defense; or “(3) the mingling in bulk gauging tanks on bonded premises of heterogeneous distilled spirits for immediate removal to bottling premises, exclusively for use in taxable rectification, or in rectification under subsection (f); or “(4) the blending on bonded premises of beverage brandies or rums, under the provisions of section 5234 (c); or “(5) the mingling of homogeneous distilled spirits; or “(6) the mingling on bonded premises of distilled spirits for immediate redistillation, immediate denaturation, or immediate removal from such premises free of tax under section 5214 (a) (1), (2),or (3),or section 7510; or 26 USC 7510. “(7) the mingling on bonded premises of distilled spirits for further storage in bond as authorized by section 5234 (a) (2). “(f) Blending Straight Whiskies, Rums, Fruit Brandies, or Wines.— The taxes imposed by this subpart shall not attach— “(1) to blends made exclusively of two or more pure straight whiskies aged in wood for a period not less than 4 years and without the addition of coloring or flavoring matter or any other substance than pure water and if not reduced below 80 proof; or “(2) to blends made exclusively of two or more pure fruit brandies distilled from the same kind of fruit, aged in wood for a period not less than 2 years and without the addition of coloring or flavoring matter (other than caramel) or any other substance than pure water and if not reduced below 80 proof; or “(3) to the mixing and blending of wines, where such blending is for the sole purpose of perfecting such wines according to commercial standards; or “(4) to blends made exclusively of two or more rums aged in wood for a period not less than 2 years and without the addition of coloring or flavoring matter (other than caramel) or any other substance than pure water and if not reduced below 80 proof. Such blended whiskies, blended rums, and blended fruit brandies shall lie exempt from tax under this subpart only when blended in such tanks and under such conditions and supervision as the Secretary or his delegate may by regulations prescribe. “(g) Addition of Caramel to Brandy or Rum.— The addition of caramel to commercial brandy or rum on the bonded premises of a distilled spirits plant, pursuant to regulations prescribed by the Secretary or his delegate, shall not be deemed to be rectification within the meaning of sections 5021, 5081, and 5082. “(h) Apothecaries.— The taxes imposed by this subpart and by 26 USC 5081–5149. part II of this subchapter shall not be imposed on apothecaries as to wines or distilled spirits which they use exclusively in the preparation or making up of medicines unfit for use for beverage purposes. “(i) Manufacturer Recovering Distilled Spirits for Reuse in Products Unfit for Beverage Purposes.— The taxes imposed by this subpart and by part II of this subchapter shall not be imposed on any manufacturer for recovering distilled spirits, on which the tax has been paid or determined, from dregs or marc of percolation or extraction, or from medicines, medicinal preparations, food products, flavors, or flavoring extracts, which do not meet the manufacturers standards, if such recovered distilled spirits are used by such manufacturer in the manufacture of medicines, medicinal preparations, food products, flavors, or flavoring extracts, which are unfit for use for beverage purposes. “(j) Stabilization of Distilled Spirits.— The removal, on the premises of a distilled spirits plant, of extraneous insoluble materials from distilled spirits, and minor changes in the soluble color or soluble solids of distilled spirits, which occur solely as a result of such filtrations or other physical treatments (which do not involve the addition of any substance which will remain incorporated in the completed product) at the time of, or preparatory to, the bottling of distilled spirits, as may be necessary or desirable to produce a stable product, shall not be deemed to be rectification within the meaning of sections 5021, 5081, and 5082, if such changes do not exceed maximum limitations which the Secretary or his delegate may by regulations provide. “(k) Addition of Tracer Elements.— The authorized addition of tracer elements to distilled spirits under provisions of section 5201 (d) shall not be deemed to be rectification within the meaning of sections 5021, 5081, and 5082. “(l) Cross References.— “(1) For provisions exempting distilled spirits and wines rectified in customs manufacturing bonded warehouses, see section 5523. “(2) For provisions exempting winemakers in the use or treatment of wines or wine spirits, see section 5391. “(3) For provisions exempting the manufacture of volatile fruit-flavor concentrates, see section 5511. “SEC. 5026. DETERMINATION AND COLLECTION OF RECTIFICATION TAX. “(a) Determination of Tax.— “(1) General.— The taxes imposed by sections 5021 and 5022 shall be determined upon the completion of the process of rectification by such means as the Secretary or his delegate shall by regulations prescribe and with the use of such devices and apparatus (including but not limited to storage, gauging, and bottling tanks, and pipelines) as the Secretary or his delegate may by regulations prescribe. “(2) Unauthorized rectification.— In the case of taxable rectification on premises other than premises on which rectification is authorized, the tax imposed by section 5021 or 5022 shall be due and payable at the time of such rectification. “(b) Payment of Tax.— Except as provided in subsection (a) (2), the taxes imposed by sections 5021, 5022, and 5023, shall be paid in accordance with section 5061. “Subpart C— Wines “Sec. 5041. Imposition and rate of tax. “Sec. 5042. Exemption from tax. “Sec. 5043. Collection of taxes on wines. “Sec. 5044. Refund of tax on unmerchantable wine. “Sec. 5045. Cross references. “SEC. 5041. IMPOSITION AND RATE OF TAX. “(a) Imposition.— There is hereby imposed on all wines (including imitation, substandard, or artificial wine, and compounds sold as wine) having not in excess of 24 percent of alcohol by volume, in bond in, produced in, or imported into, the United States, taxes at the rates shown in subsection (b), such taxes to be determined as of the time of removal for consumption or sale. All wines containing more than 24 percent of alcohol by volume shall be classed as distilled spirits and taxed accordingly. Still wines shall include those wines containing not more than 0.256 gram of carbon dioxide per hundred milliliters of wine; except that the Secretary or his delegate may by regulations prescribe such tolerances to this maximum limitation as may be reasonably necessary in good commercial practice. “(b) Rates of Tax.— “(1) On still wines containing not more than 14 percent of alcohol by volume, 17 cents per wine gallon, except that on and after July 1, 1959, the rate snail be 15 cents per wine gallon; “(2) On still wines containing more than 14 percent and not exceeding 21 percent of alcohol by volume, 67 cents per wine gallon, except that on and after July 1, 1959, the rate shall be 60 cents a wine gallon; “(3) On still wines containing more than 21 percent and not exceeding 24 percent of alcohol by volume, $2.25 per wine gallon, except that on and after July 1, 1959, the rate shall be $2.00 per wine gallon; “(4) On champagne and other sparkling wines, $3.40 per wine gallon, except that on and after July 1, 1959, the rate shall be $3.00 per wine gallon; and “(5) On artificially carbonated wines, $2.40 per wine gallon, except that on and after July 1, 1959, the rate shall be $2.00 per wine gallon. “(c) Wine Gallon.— For the purpose of this chapter, the term ‘wine gallon’ means a United States gallon of liquid measure equivalent to the volume of 231 cubic inches. On lesser quantities the tax shall be paid proportionately (fractions of less than one-tenth gallon being converted to the nearest one-tenth gallon, and five-hundredths gallon being converted to the next full one-tenth gallon). “(d) Illegally Produced Wine.— Not withstanding subsection (a), any wine produced in the United States at any place other than the bonded premises provided for in this chapter shall (except as provided in section 5042 in the case of tax-free production) be subject to tax at the rate prescribed in subsection (b) at the time of production and whether or not removed for consumption or sale. “SEC. 5042. EXEMPTION FROM TAX. “(a) Tax-Free Production.— “(1) Cider.— Subject to regulations prescribed by the Secretary or his delegate, the noneffervescent product of the normal alcoholic fermentation of apple juice only, which is produced at a place other than a bonded wine cellar and without the use of preservative methods or materials, and which is sold or offered for sale as cider and not as wine or as a substitute for wine, shall not be subject to tax as wine nor to the provisions of subchapter F. “(2) Family wine.— Subject to regulations prescribed by the Secretary or his delegate, the duly registered head of any family may, without payment of tax, produce for family use and not for sale an amount of wine not exceeding 200 gallons per annum. “(3) Experimental wine.— Subject to regulations prescribed by the Secretary or his delegate, any scientific university, college of learning, or institution of scientific research may produce, receive, blend, treat, and store wine, without payment of tax, for experimental or research use but not for consumption (other than organoleptical tests) or sale, and may receive such wine spirits without payment of tax as may be necessary for such production. “(b) Cross References.— “(1) For provisions relating to exemption of tax on losses of wine (including losses by theft or authorized destruction), see section 5370. “(2) For provisions exempting from tax samples of wine, see section 5372. “(3) For provisions authorizing withdrawals of wine free of tax or without payment of tax, see section 5362. “SEC. 5043. COLLECTION OF TAXES ON WINES. “(a) Persons Liable for Payment.— The taxes on wine provided for in this subpart shall be paid— “(1) Bonded wine cellars.— In the case of wines removed from any bonded wine cellar, by the proprietor of such bonded wine cellar; except that— “(A) in the case of any transfer of wine in bond between bonded wine cellars as authorized under the provisions of section 5362 (b), the liability for payment of the tax shall become the liability of the transferee from the time of removal of the wine from the transferor’s premises, and the transferor shall thereupon be relieved of such liability; and “(B) in the case of any wine withdrawn by a person other than such proprietor without payment of tax as authorized under the provisions of section 5362 (c), the liability for payment of the tax shall become the liability of such person from the time of the removal of the wine from the bonded wine cellar, and such proprietor shall thereupon be relieved of such liability. “(2) Foreign wine.— In the case of foreign wines, by the importer thereof. “(3) Other wines.— Immediately, in the case of any wine produced, imported, received, removed, or possessed otherwise than as authorized by law, by any person producing, importing, receiving, removing, or possessing such wine; and all such persons shall be jointly and severally liable for such tax with each other as well as with any proprietor, transferee, or importer who may be liable for the tax under this subsection. “(b) Payment of Tax.— Except as provided in subsection (a) (3), the taxes on wines shall be paid in accordance with section 5061. “SEC. 5044. REFUND OF TAX ON UNMERCHANTABLE WINE. “(a) General.— In the case of any wine produced in the United States and returned to bond as unmerchantable under section 5361— “(1) any tax imposed by section 5041 shall, if paid, be refunded or credited, without interest, to the proprietor of the bonded wine cellar to which such wine is delivered; or “(2) if any tax so imposed has not been paid, the person liable for the tax may be relieved of liability therefor, under such regulations as the Secretary or his delegate may prescribe. Such regulations may provide that claim for refund or credit under paragraph (1), or relief from liability under paragraph (2), may be made only with respect to minimum quantities specified in such regulations. The burden of proof in all such cases shall lie on the applicant. “(b) Date of Filing.— No claim under subsection (a) shall be allowed unless filed within 6 months after the date of the return of the wine to bond. “(c) Status of Wine Returned to Bond.— All provisions of this chapter applicable to wine in bond on the premises of a bonded wine cellar and to removals thereof shall be applicable to wine returned to bond under the provisions of this section. “SEC. 5045. CROSS REFERENCES. “For provisions relating to the establishment and operation of wineries, see subchapter F, and for penalties pertaining to wine, see subchapter J. “Subpart D— Beer “Sec. 5051. Imposition and rate of tax. “Sec. 5052. Definitions. “Sec. 5053. Exemptions. “Sec. 5054. Determination and collection of tax on beer. “Sec. 5055. Drawback of tax. “Sec. 5056. Refund and credit of tax or relief from liability. “SEC. 5051. IMPOSITION AND RATE OF TAX. “(a) Rate of Tax.— There is hereby imposed on all beer, brewed or produced, and removed for consumption or sale, within the United States, or imported into the United States, a tax of $9 for every barrel containing not more than 31 gallons and at a like rate for any other quantity or for fractional parts of a barrel. On and after July 1, 1959, the tax imposed by this subsection shall be at the rate of in lieu of $9. Where the Secretary or his delegate finds that the revenue will not be endangered thereby, he may by regulations prescribe tolerances for barrels and fractional parts of barrels, and, if such tolerances are prescribed, no assessment shall be made and no tax shall be collected for any excess in any case where the contents of a barrel or a fractional part of a barrel are within the limit of the applicable tolerance prescribed. “(b) Assessment on Materials Used in Production in Case of Fraud.— Nothing contained in this subpart or subchapter G shall be 26 USC 5401–5416. construed to authorize an assessment on the quantity of materials used in producing or purchased for the purpose of producing beer, nor shall the quantity of materials so used or purchased be evidence, for the. purpose of taxation, of the quantity of beer produced; but the tax on all beer shall be paid as provided in section 5054, and not otherwise; except that this subsection shall not apply to cases of fraud, and nothing in this subsection shall have the effect to change the rules of law respecting evidence in any prosecution or suit. “SEC. 5052. DEFINITIONS. “(a) Beer.— For purposes of this chapter (except when used with reference to distilling or distilling material) the term ‘beer’ means beer, ale, porter, stout, and other similar fermented beverages (including sake or similar products) of any name or description containing one-half of 1 percent or more of alcohol by volume, brewed or produced from malt, wholly or in part, or from any substitute therefor. “(b) Gallon.— For purposes of this subpart, the term ‘gallon’ means the liquid measure containing 231 cubic inches. “(c) Removed for Consumption or Sale.— Except as provided for in the case of removal of beer without payment of tax, the term ‘removed for consumption or sale’, for the purposes of this subpart, means— “(1) Sale of beer.— The sale and transfer of possession of beer for consumption at the brewery; or “(2) Removals.— Any removal of beer from the brewery, except that such removal shall not include any beer returned to the brewery on the same day such beer is removed from the brewery. “(d) Brewer.— “For definition of brewer, see section 5092. “SEC. 5053. EXEMPTIONS. “(a) Removals for Export.— Beer may be removed from the brewery, without payment of tax, for export to a foreign country, in such containers and under such regulations, and on the giving of such notices, entries, and bonds and other security, as the Secretary or his delegate may by regulations prescribe. “(b) Removals When Unfit for Beverage Use.— When beer has become sour or damaged, so as to be incapable of use as such, a brewer may remove the same from his brewery without payment of tax, for manufacturing purposes, under such regulations as the Secretary or his delegate may prescribe. “(c) Removals for Laboratory Analysis.— Beer may be removed from the brewery, without payment of tax, for laboratory analysis, subject to such limitations and under such regulations as the Secretary or his delegate may prescribe. “(d) Removal as Supplies for Certain Vessels and Aircraft.— “For exemption as to supplies for certain vessels and aircraft, see section 309 of the Tariff Act of 1930, as amended (19 U. S. C. 1309). “SEC. 5054. DETERMINATION AND COLLECTION OF TAX ON BEER. “(a) Time of Determination.— “(1) Beer produced in the united states.— Except as provided in paragraph (3), the tax imposed by section 5051 on beer produced in the United States shall be determined at the time it is removed for consumption or sale, and shall be paid by the brewer thereof in accordance with section 5061. “(2) Beer imported into the united states.— Except as provided in paragraph (4), the tax imposed by section 5051 on beer imported into the United States shall be determined at the time of the importation thereof, or, if entered into customs custody, at the time of removal from such custody, and shall be paid under such regulations as the Secretary or his delegate shall prescribe. “(3) Illegally produced beer.— The tax on any beer produced in the United States at any place other than a qualified brewery shall be due and payable immediately upon production. “(4) Unlawfully imported beer.— Beer smuggled or brought into the United States unlawfully shall, for purposes of this chapter, be held to be imported into the United States, and the internal revenue tax shall be due and payable at the time of such importation. “(b) Tax on Returned Beer.— Beer which has been removed for consumption or sale and is thereafter returned to the brewery shall be subject to all provisions of this chapter relating to beer prior to removal for consumption or sale, including the tax imposed by section 5051. The tax on any such returned beer which is again removed for consumption or sale shall be determined and paid without respect to the tax which was determined at the time of prior removal of the beer for consumption or sale. “(c) Stamps or Other Devices as Evidence of Payment of Tax.— When the Secretary or his delegate finds it necessary for the protection of the revenue, he may require stamps, or other devices, evidencing the tax or indicating a compliance with the provisions of this chapter, to be affixed to hogsheads, barrels, or kegs of beer at the time of removal. The Secretary or his delegate shall by regulations prescribe the manner by which such stamps or other devices shall be supplied, affixed, and accounted for. “(d) Applicability of Other Provisions of Law.— All administrative and penal provisions of this title, insofar as applicable, shall apply to any tax imposed by section 5051. “SEC. 5055. DRAWBACK OF TAX. “On the exportation of beer, brewed or produced in the United States, the brewer thereof shall be allowed a drawback equal in amount to the tax found to have been paid on such beer, to be paid on submission of such evidence, records and certificates indicating exportation, as the Secretary or his delegate may by regulations prescribe. For the purpose of this section, exportation shall include delivery for use as supplies on the vessels and aircraft described in section 309 of the tariff Act of 1930, as amended (19 U. S. C. 1309). “SEC. 5056. REFUND AND CREDIT OF TAX, OR RELIEF FROM LIABILITY. “(a) Beer Removed From Market.— Any tax paid by any brewer on beer produced in the United States may be refunded or credited to the brewer, without interest, or if the tax has not been paid, the brewer may be relieved of liability therefor, under such regulations as the Secretary or his delegate may prescribe, if such beer is removed from the market and is returned to the brewery or is destroyed under the supervision required by such regulations. “(b) Beer Lost by Fire, Casualty, or Act of God.— Subject to regulations prescribed by the Secretary or his delegate, the tax paid by any brewer on beer produced in the United States may be refunded or credited to the brewer, without interest, or if the tax has not been paid, the brewer may be relieved of liability therefor, if such beer is lost other than by theft, or is destroyed by fire, casualty, or art of God, before the transfer of title thereto to any other person. “(c) Date of Filing.— No claims under this section shall lie allowed unless filed within 6 months after the date of such removal from the market, loss, or destruction, or if the claimant was indemnified by insurance or otherwise in respect of the tax. “Subpart E— General Provisions “Sec. 5061. Method of collecting tax. “Sec. 5062. Refund and drawback in case of exportation. “Sec. 5063. Floor stocks refunds on distilled spirits, wines, cordials, and beer. “Sec. 5064. Losses caused by disaster. “Sec. 5065. Territorial extent of law. “Sec. 5066. Cross reference. “SEC. 5061. METHOD OF COLLECTING TAX. “(a) Collection by Return.— The taxes on distilled spirits, wines, rectified distilled spirits and wines, and beer shall be collected on the basis of a return. The Secretary or his delegate shall, by regulation, prescribe the period or event for which such return shall be filed, the time for filing such return, the information to be shown in such return, and the time for payment of such tax. Notwithstanding the preceding sentences of this subsection, the taxes shall continue to be paid by stamp until the Secretary or his delegate shall by regulations provide for the collection of the taxes on the basis of a return. “(b) Discretion Method of Collection.— Whether or not the method of collecting any tax imposed by this part is specifically provided in this part, any such tax may, under regulations prescribed by the Secretary or his delegate, be collected by stamp, coupon, serially-numbered ticket, or the use of taxstamp machines, or by such other reasonable device or method as may be necessary or helpful in securing collection of the tax. “(c) Applicability of Other Provisions of Law.— All administrative and penalty provisions of this title, insofar as applicable, shall apply to the collection of any tax which the Secretary or his delegate determines or prescribes shall be collected in any manner provided in this section. “(d) Cross Reference.— “For penalty and forfeiture for tampering with a stamp machine, see section 5689. “SEC. 5062. REFUND AND DRAWBACK IN CASE OF EXPORTATION. “(a) Refund.— Under such regulations as the Secretary or his delegate may prescribe, the amount of any internal revenue tax erroneously or illegally collected in respect to exported articles may lie refunded to the exporter of the article, instead of to the manufacturer, if the manufacturer waives any claim for the amount so to be refunded. “(b) Drawback.— On the exportation of distilled spirits or wines manufactured or produced in the United States on which an internal revenue tax has been paid or determined, and which are contained in any cask or package, or in bottles packed in cases or other containers, there shall be allowed, under regulations prescribed by the Secretary or his delegate, a drawback equal in amount to the tax found to have been paid or determined on such distilled spirits or wines. The preceding sentence shall not apply unless such distilled spirits have been packaged or bottled especially for export, or, in the case of distilled spirits originally bottled for domestic use, have been restamped and marked especially for export at the distilled spirits plant where originally bottled and before removal therefrom, under regulations prescribed by the Secretary or his delegate. The Secretary or his delegate is authorized to prescribe regulations governing the determination and payment or crediting of drawback of internal revenue tax on domestic distilled spirits and wines, including the requirement of such notices, bonds, bills of lading, and other evidence indicating payment or determination of tax and exportation as shall be deemed necessary. “SEC. 5063. FLOOR STOCKS REFUNDS ON DISTILLED SPIRITS, WINES, CORDIALS, AND BEER. “(a) General.— With respect to any article upon which tax is imposed under this part, upon which internal revenue tax (including floor stocks tax) at the applicable rate prescribed has been paid or determined, and which, on July 1, 1959, is held by any person and intended for sale or for use in the manufacture or production of any article intended for sale, there shall be credited or refunded to such person (without interest), subject to such regulations as may be prescribed by the Secretary or his delegate, an amount equal to the difference between the tax so paid or determined and the rate made applicable to such articles on and after July 1, 1959, if claim for such credit or refund is tiled with the Secretary or his delegate prior to October 1, 1959, or within 30 days from the promulgation of such regulations, whichever is later. “(b) Limitations on Eligibility for Credit or Refund.— No person shall be entitled to credit or refund under subsection (a), unless such person, for such period or periods both before and after July 1, 1959 (but not extending beyond 1 year thereafter), as the Secretary or his delegate shall by regulations prescribe, makes and keeps, and files with the Secretary or his delegate, such records of inventories, sales, and purchases as may be prescribed in such regulations. “(c) Other Laws Applicable.— All provisions of law, including penalties, applicable in respect of internal revenue taxes on distilled spirits, wines, liqueurs and cordials, imported perfumes containing distilled spirits, and beer shall, insofar as applicable and not inconsistent with this section, be applicable in respect of the credits and refunds provided for in this section to the same extent as if such credits or refunds constituted credits or refunds of such taxes. “SEC. 5064. LOSSES CAUSED BY DISASTER. “(a) Authorization.— Where the President has determined under the Act of September 30, 1950 (42 U. S. C., sec. 1855), that a ‘major disaster’ 64 Stat. 1109. as defined in such Act has occurred in any part of the United States, the Secretary or his delegate shall pay (without interest) an amount equal to the amount of the internal revenue taxes paid or determined and customs duties paid on distilled spirits, wines, rectified products, and beer previously withdrawn, which were lost, rendered unmarketable, or condemned by a duly authorized official by reason of such disaster occurring in such part of the United States after June 30, 1959, if such distilled spirits, wines, rectified products, or beer were held and intended for sale at the time of such disaster. The payments authorized by this section shall be made to the person holding such distilled spirits, wines, rectified products, or beer for sale at the time of such disaster. “(b) Claims.— No claim shall be allowed under this section unless— “(1) filed within 6 months after the date on which the President makes the determination that the disaster referred to in subsection (a) has occurred; and “(2) the claimant furnishes proof to the satisfaction of the Secretary or his delegate that— “(A) he was not indemnified by any valid claim of insurance or otherwise in respect of the tax, or tax and duty, on the distilled spirits, wines, rectified products, or beer covered by the claim; and “(B) he is entitled to payment under this section. Claims under this section shall be filed under such regulations as the Secretary or his delegate shall prescribe. “(c) Destruction of Distilled Spirits, Wines, Rectified Products, or Beer.— When the Secretary or his delegate has made payment under this section in respect of the tax, or tax and duty, on the distilled spirits, wines, rectified products, or beer condemned by a duly authorized official or rendered unmarketable, such distilled spirits, wines, rectified products, or beer shall be destroyed under such supervision as the Secretary or his delegate may prescribe, unless such distilled spirits, wines, rectified products, or beer were previously destroyed under supervision satisfactory to the Secretary or his delegate. “(d) Products of Puerto Rico.— The provisions of this section shall not be applicable in respect of distilled spirits, wines, rectified products, and beer of Puerto Rican manufacture brought into the United States and so lost or rendered unmarketable or condemned. “(e) Other Laws Applicable.— All provisions of law, including penalties, applicable in respect of internal revenue taxes on distilled spirits, wines, rectified products, and beer shall, insofar as applicable and not inconsistent with this section, be applied in respect of the payments provided for in this section to the same extent as if such payments constituted refunds of such taxes. “SEC. 5065. TERRITORIAL EXTENT OF LAW. “The provisions of this part imposing taxes on distilled spirits, wines, and beer shall be held to extend to such articles produced anywhere within the exterior boundaries of the United States, whether the same be within an internal revenue district or not. “SEC. 5066. CROSS REFERENCE. “For general administrative provisions applicable to the assessment, collection, refund, etc., of taxes, see subtitle F. “PART II— OCCUPATIONAL TAX “Subpart A. Rectifier. “Subpart B. Brewer. “Subpart C. Manufacturers of stills. “Subpart D. Wholesale dealers. “Subpart E. Retail dealers. “Subpart F. Nonbeverage domestic drawback claimants. “Subpart G. General provisions. “Subpart A— Rectifier “Sec. 5081. Imposition and rate of tax. “Sec. 5082. Definition of rectifier. “Sec. 5083. Exemptions. “Sec. 5084. Cross references. “SEC. 5081. IMPOSITION AND RATE OF TAX. “Every rectifier of distilled spirits or wines (as defined in section 5082) shall pay a special tax of $220 a year; except that any rectifier of less than 20,000 proof gallons a year shall pay $110 a year. “SEC. 5082. DEFINITION OF RECTIFIER. “Every person who rectifies, purifies, or refines distilled spirits or wines by any process (other than by original and continuous distillation, or original and continuous processing, from mash, wort, wash, or any other substance, through continuous closed vessels and pipes, until the production thereof is complete), and every person who, without rectifying, purifying, or refining distilled spirits, shall by mixing such spirits, wine, or other liquor with any material, manufacture any spurious, imitation, or compound liquors for sale, under the name of whisky, brandy, rum, gin, wine, spirits, cordials, or wine bitters, or any other name, shall be regarded as a rectifier, and as being engaged in the business of rectifying. “SEC. 5083. EXEMPTIONS. “For exemptions from tax under section 5021 or 5081 in case of— “(1) Absolute alcohol, see section 5025 (a). “(2) Production of gin and vodka, see section 5025 (b). “(3) Refining spirits in course of original distillation, see section 5025 (c). “(4) Redistillation of spirits on bonded premises of a distilled spirits plant, see section 5025 (d). “(5) Mingling of distilled spirits on bonded premises of a distilled spirits plant, see section 5025 (e). “(6) Apothecaries, see section 5025 (h). “(7) Manufacturers of chemicals and flavoring extracts, see section 5025 (i). “(8) Distilled spirits and wines rectified in customs manufacturing bonded warehouses, see section 5523. “(9) Blending beverage brandies or rums on bonded premises of a distilled spirits plant, see section 5025 (e) (4). “(10) Blending of straight whiskies, fruit brandies, rums or wines, see section 5025 (f). “(11) Addition of caramel to brandy or rum, see section 5025 (g). “(12) Winemakers’ use or treatment of wines or wine spirits, see section 5391. “(13) Stabilization of distilled spirits, see section 5025 (j). “(14) Authorized addition of tracer elements, see section 5025 (k). “SEC. 5084. CROSS REFERENCES. “(1) For provisions relating to gallonage tax on rectification, see subpart B of part I of this subchapter. “(2) For provisions relating to qualification of distilled spirits plants to engage in rectification, see subchapter B. “(3) For provisions relating to rectifying operations on the premises of distilled spirits plants, see subchapter C. “(4) For penalties, seizures, and forfeitures relating to rectifying and rectified products, see subchapter J and subtitle F. “Subpart B— Brewer “Sec. 5091. Imposition and rate of tax. “Sec. 5092. Definition of brewer. “Sec. 5093. Cross references. “SEC. 5091. IMPOSITION AND RATE OF TAX. “Every brewer shall pay $110 a year in respect of each brewery; except that any brewer of less than 500 barrels a year shall pay the sum of $55 a year. Any beer procured by a brewer in his own hogsheads, barrels, or kegs under the provisions of section 5413 shall be included in calculating the liability to brewers’ special tax of both the brewer who produces the same and the brewer who procures the same. “SEC. 5092. DEFINITION OF BREWER. “Every person who brews or produces beer for sale shall be deemed a brewer. “SEC. 5093. CROSS REFERENCES. “(1) For exemption of brewer from special tax as wholesale and retail dealer, see section 5113 (a). “(2) For provisions relating to liability for special tax for carrying on business in more than one location, see section 5143 (c). “(3) For exemption from special tax in case of sales made on purchaser dealers’ premises, see section 5113 (d). “Subpart C— Manufacturers of Stills “Sec. 5101. Imposition and rate of tax. “Sec. 5102. Definition of manufacturer of stills. “Sec. 5103. Exemptions. “Sec. 5104. Method of payment of tax on stills. “Sec. 5105. Notice of manufacture of and permit to set up still. “Sec. 5106. Export. “SEC. 5101. IMPOSITION AND RATE OF TAX. “Every manufacturer of stills shall pay a special tax of $55 a year, and $22 for each still or condenser for distilling made by him. “SEC. 5102. DEFINITION OF MANUFACTURER OF STILLS. “Any person who manufactures any still or condenser to be used in distilling shall be deemed a manufacturer of stills. “SEC. 5103. EXEMPTIONS. “The taxes imposed by section 5101 shall not apply in respect of stills or condensers manufactured by a proprietor of a distilled spirits plant exclusively for use in his plant or plants. “SEC. 5104. METHOD OF PAYMENT OF TAX ON STILLS. “The tax imposed on stills or condensers by section 5101 shall be paid by stamp, denoting the tax, under such regulations as the Secretary or his delegate may prescribe. “SEC. 5105. NOTICE OF MANUFACTURE OF AND PERMIT TO SET UP STILL “(a) Requirement.— Any person who manufactures any still, boiler, or other vessel to be used for the purpose of distilling shall, before the same is removed from the place of manufacture, notify the Secretary or his delegate, setting forth in writing by whom it is to be used, its capacity, and the time when the Same is to be removed from the place of manufacture; and no such still, boiler, or other vessel shall be set up without the permit in writing of the Secretary or his delegate for that, purpose. The notice required by this section shall be submitted in such form and manner as the Secretary or his delegate may by regulations prescribe. “(b) Penalty.— “(1) For penalty and forfeiture for failure to give notice of manufacture, or for setting up still without permit, see sections 5615 (2) and 5687. “(2) For penalty and forfeiture for failure to register still or distilling apparatus when set up, see sections 5601 (a) (1), 5601 (b)(1), and 5615(1). “SEC. 5106. EXPORT. “(a) Without Payment of Tax.— Under regulations prescribed by the Secretary or his delegate, stills or condensers for distilling may be removed from the place of manufacture for export without payment of the tax imposed thereon by section 5101. “(b) Drawback.— Stills and condensers on which the tax has been paid, and which have not been used, may be exported with the privilege of drawback, under such regulations as the Secretary or his delegate may prescribe. “Subpart D— Wholesale Dealers “Sec. 5111. Imposition and rate of tax. “Sec. 5112. Definitions. “Sec. 5113. Exemptions. “Sec. 5114. Records. “Sec. 5115. Sign required on premises. “Sec. 5116. Packaging distilled spirits for industrial uses. “Sec. 5117. Prohibited purchases by dealers. “SEC. 5111. IMPOSITION AND RATE OF TAX. “(a) Wholesale Dealers in Liquors.— Every wholesale dealer in liquors shall pay a special tax of $255 a year. The Secretary or his delegate may by regulations provide for the issuance of a stamp denoting payment of such special tax as a ‘wholesale dealer in wines’ or a ‘wholesale dealer in wines and beer’ if, as the case may be, wines only, or wines and beer only, are sold by a wholesale dealer in liquors. “(b) Wholesale Dealers in Beer.— Every wholesale dealer in beer shall pay a special tax of $123 a year. “SEC. 5112. DEFINITIONS. “(a) Dealer.— When used in this subpart, subpart E, or subpart G, the term ‘dealer’ means any person who sells, or offers for sale, any distilled spirits, wines, or beer. “(b) Wholesale Dealer in Liquors.— When used in this chapter, the term ‘wholesale dealer in liquors’ means any dealer, other than a wholesale dealer in beer, who sells, or offers for sale, distilled spirits, wines, or beer, to another dealer. “(c) Wholesale Dealer in Beer.— When used in this chapter, the term ‘wholesale dealer in beer’ means a dealer who sells, or offers for sale, beer, but not distilled spirits or wines, to another dealer. “SEC. 5113. EXEMPTIONS. “(a) Sales by Proprietors of Distilled Spirits Plants, Bonded Wine Cellars, or Breweries.— No proprietor of a distilled spirits plant, bonded wine cellar, or brewery, shall be required to pay special tax under section 5111 or section 5121 on account of the sale at his principal business office as designated in writing to the Secretary or his delegate, or at his distilled spirits plant, bonded wine cellar, or brewery, as the case may be, of distilled spirits, wines, or beer, which, at the time of sale, are stored at his distilled spirits plant, bonded wine cellar, or brewery, as the case may be, or had been removed from such premises to a taxpaid storeroom operated in connection therewith and are stored therein. However, no such proprietor shall have more than one place of sale, as to each distilled spirits plant, bonded wine cellar, or brewery, that shall be exempt from special taxes by reason of the sale of distilled spirits, wines, or beer stored at such premises (or removed therefrom and stored as provided in this section), by reason of this subsection. “(b) Sales by Liquor Stores Operated by States, Political Subdivisions, etc.— No liquor store engaged in the business of selling to persons other than dealers, which is operated by a State or Territory, by a political subdivision of a State or Territory or by the District of Columbia, shall be required to pay any special tax imposed under section 5111, by reason of selling distilled spirits, wines, or beer to dealers qualified to do business as such in such State, Territory, subdivision, or District, if such liquor store has paid the applicable special tax imposed under section 5121, and if such State, Territory, political subdivision, or District has paid special tax under section 5111 at its principal place of business. “(c) Casual Sales.— “(1) Sales by creditors, fiduciaries, and officers of court.— No person shall be deemed to be a dealer by reason of the sale of distilled spirits, wines, or beer which have been received by him as security for or in payment of a debt, or as an executor, administrator, or other fiduciary, or which have been levied on by any officer under order or process of any court or magistrate, if such distilled spirits, wines, or beer are sold by such person in one parcel only or at public auction in parcels of not less than 20 wine gallons. “(2) Sales by retiring partners or representatives of deceased partners to incoming or remaining partners.— No person shall be deemed to be a dealer by reason of a sale of distilled spirits, wines, or beer made by such person as a retiring partner or the representative of a deceased partner to the incoming, remaining, or surviving partner or partners of a firm. “(3) Return of liquors for credit, refund, or exchange.— No person shall be deemed to be a dealer by reason of the bona fide return of distilled spirits, wines, or beer to the dealer from whom purchased (or to the successor of the vendor’s business or line of merchandise) for credit, refund, or exchange, and the giving of such credit, refund, or exchange shall not be deemed to be a purchase within the meaning of section 5117. “(d) Dealers Making Sales on Purchaser Dealer’s Premises.— “(1) Wholesale dealers in liquors.— No wholesale dealer in liquors who has paid the special tax as such dealer shall again be required to pay special tax as such dealer on account of sales of wines or beer to wholesale or retail dealers in liquors, or to limited retail dealers, or of beer to wholesale or retail dealers in beer, consummated at the purchaser’s place of business. “(2) Wholesale dealers in beer.— No wholesale dealer in beer who has paid the special tax as such a dealer shall again be required to pay special tax as such dealer on account of sales of beer to wholesale or retail dealers in liquors or beer, or to limited retail dealers, consummated at the purchaser’s place of business. “(e) Sales by Retail Dealers in Liquidation.— No retail dealer in liquors or retail dealer in beer, selling in liquidation his entire stock of liquors in one parcel or in parcels embracing not less than his entire stock of distilled spirits, of wines, or of beer to any other dealer, shall be deemed to be a wholesale dealer in liquors or a wholesale dealer in beer, as the case may be, by reason of such sale or sales. “(f) Sales to Limited Retail Dealers.— “(1) Retail dealers in liquors.— No retail dealer in liquors who has paid special tax as such dealer under section 5121 (a) shall be required to pay special tax under section 5111 on account of the sale at his place of business of wines or beer to limited retail dealers as defined in section 5122 (c). “(2) Retail dealers in beer.— No retail dealer in beer who has paid special tax as such dealer under section 5121 (b) shall be required to pay special tax under section 5111 on account of the sale at his place of business of beer to limited retail dealers as defined in section 5122 (c). “SEC. 5114. RECORDS. “(a) Requirements.— “(1) Distilled spirits.— Every wholesale dealer in liquors who sells distilled spirits to other dealers shall keep daily a record of distilled spirits received and disposed of by him, in such form and at such place and containing such information, and shall submit correct summaries of such records to the Secretary or his delegate at such time and in such form and manner, as the Secretary or his delegate shall by regulations prescribe. Such dealer shall also submit correct extracts from or copies of such records, at such time and in such form and manner as the Secretary or his delegate may by regulations prescribe; however, the Secretary or his delegate may on application by such dealer, in accordance with such regulations, relieve him from this requirement until further notice, whenever the Secretary or his delegate deems that the submission of such extracts or copies serves no useful purpose in law enforcement or in protection of the revenue. “(2) Wines and beer.— Every wholesale dealer in liquors and every wholesale dealer in beer shall provide and keep, at such place as the Secretary or his delegate shall by regulations prescribe, a record in book form of all wines and beer received, showing the quantities thereof and from whom and the dates received, or shall keep all invoices of, and bills for, all wines and beer received. “(b) Exemption of States, Political Subdivisions, Etc.— The provisions of subsection (a) shall not apply to a State or Territory, to a political subdivision of a State or Territory, to the District of Columbia, or to liquor stores operated by any of them, if they maintain and make available for inspection by internal revenue officers such records as will enable such officers to trace all distilled spirits, wines, and beer received, and all distilled spirits disposed of by them. Such States, Territories, subdivisions, District, or liquor stores shall, upon the request of the Secretary or his delegate, furnish him such transcripts, summaries and copies of their records with respect to distilled spirits as he shall require. “(c) Cross References.— “(1) For provisions requiring proprietors of distilled spirits plants to keep records and submit reports of receipts and dispositions of distilled spirits, see section 5207. “(2) For penalty for violation of subsection (a), see section 5603. “(3) For provisions relating to the preservation and inspection of records, and entry of premises for inspection, see section 5146. “SEC. 5115. SIGN REQUIRED ON PREMISES. “(a) Requirements.— Every wholesale dealer in liquors who is required to pay special tax as such dealer shall, in the manner and form prescribed by regulations issued by the Secretary or his dele-gate, place and keep conspicuously on the outside of the place of such business a sign, exhibiting, in plain and legible letters, the name or firm of the wholesale dealer, with the words: ‘wholesale liquor dealer’. The requirements of this subsection will be met by the posting of a sign of the character prescribed herein, but with words conforming to the designation on the dealer’s special tax stamp. “(b) Penalty.— “For penalty for failure to post sign, or for posting sign without paying the special tax, see section 5681. “SEC. 5116. PACKAGING DISTILLED SPIRITS FOR INDUSTRIAL USES. “(a) General.— The Secretary or his delegate may, at his discretion and under such regulations as he may prescribe, authorize a dealer engaging in the business of supplying distilled spirits for industrial uses to package distilled spirits, on which the tax has been paid or determined, for such uses in containers of a capacity in excess of 1 wine gallon and not more than 5 wine gallons. “(b) Cross References.— “(1) For provisions relating to stamps for immediate containers, see section 5205 (a) (2). “(2) For provisions relating to containers of distilled spirits, see section 5206. “SEC. 5117. PROHIBITED PURCHASES BY DEALERS. “(a) General.— It shall be unlawful for any dealer to purchase distilled spirits for resale from any person other than— “(1) a wholesale dealer in liquors who has paid the special tax as such dealer to cover the place where such purchase is made; or “(2) a wholesale dealer in liquors who is exempt, at the place where such purchase is made, from payment of such tax under any provision or this chapter; or “(3) a person who is not required to pay special tax as a whole-sale dealer in liquors. “(b) Penalty and Forfeiture.— “For penalty and forfeiture provisions applicable to violation of subsection (a), see sections 5687 and 7302. “Subpart E— Retail Dealers “Sec. 5121. Imposition and rate of tax. “Sec. 5122. Definitions. “Sec. 5123. Exemptions. “Sec. 5124. Records. “Sec. 5125. Cross references. “SEC. 5121. IMPOSITION AND RATE OF TAX. “(a) Retail Dealers in Liquors.— Every retail dealer in liquors shall pay a special tax of $54 a year. The Secretary or his delegate may by regulations provide for the issuance of a stamp denoting payment or such special tax as— “(1) a ‘retail dealer in wines’ or a ‘retail dealer in wines and beer’ if wines only, or wines and beer only, as the case may be, are sold by a retail dealer in liquors, or “(2) a ‘medicinal spirits dealer’, in the case of a retail drug store or pharmacy making sales of liquors through a duly licensed pharmacist. “(b) Retail Dealers in Beer.— Every retail dealer in beer shall pay a special tax of $24 a year. “(c) Limited Retail Dealers.— Every limited retail dealer shall pay a special tax of $2.20 for each calendar month in which sales are made as such dealer. “SEC. 5122. DEFINITIONS. “(a) Retail Dealer in Liquors.— When used in this chapter, the term ‘retail dealer in liquors’ means any dealer, other than a retail dealer in beer or a limited retail dealer, who sells, or offers for sale, any distilled spirits, wines, or beer, to any person other than a dealer. “(b) Retail Dealer in Beer.— When used in this chapter, the term ‘retail dealer in beer’ means any dealer, other than a limited retail dealer, who sells, or offers for sale, beer, but not distilled spirits or wines, to any person other than a dealer. “(c) Limited Retail Dealer.— When used in this chapter, the term ‘limited retail dealer’ means any fraternal, civic, church, labor, charitable, benevolent, or exservicemen’s organization making sales of beer or wine on the occasion of any kind of entertainment, dance, picnic, bazaar, or festival held by it, or any person making sales of beer or wine to the members, guests, or patrons of bona fide fairs, reunions, picnics, carnivals, or other similar outings, if such organization or person is not otherwise engaged in business as a dealer. “SEC. 5123. EXEMPTIONS. “(a) Wholesale Dealers.— “(1) Wholesale dealers in liquors.— No special tax shall be imposed under section 5121 (a) or (b) on any dealer by reason of the selling, or offering for sale, of distilled spirits, wines, or beer at any location where such dealer is required to pay special tax under section 5111 (a). “(2) Wholesale dealers in beer.— No special tax shall be imposed under section 5121 (b) on any dealer by reason of the selling, or offering for sale, of beer at any location where such dealer is required to pay special tax under section 5111 (b). “(b) Business Conducted in More Than One Location.— “(1) Retail dealers at large.— Any retail dealer in liquors or retailer dealer in beer whose business is such as to require him to travel from place to place in different States of the United States may, under regulations prescribed by the Secretary or his delegate, procure a special tax stamp ‘At Large’ covering his activities throughout the United States with the payment of but one special tax as a retail dealer in liquors or as a retail dealer in beer, as the case may be. “(2) Dealers on trains, aircraft, and boats.— Nothing contained in this chapter shall prevent the issue, under such regulations as the Secretary or his delegate may prescribe, of special tax stamps to— “(A) persons carrying on the business of retail dealers in liquors, or retail dealers in beer, on trains, aircraft, boats or other vessels, engaged in the business of carrying passengers; or “(B) persons carrying on the business of retail dealers in liquors or retail dealers in beer on boats or other vessels operated by them, when such persons operate from a fixed address in a port or harbor and supply exclusively boats or other vessels, or persons thereon, at such port or harbor. “(c) Cross References.— “(1) For exemption of proprietors of distilled spirits plants, bonded wine cellars, and breweries from special tax as dealers, see section 5113 (a). “(2) For provisions relating to sales by creditors, fiduciaries, and officers of courts, see section 5113 (c) (1). “(3) For provisions relating to sales by retiring partners or representatives of deceased partners to incoming or remaining partners, see section 5113 (c) (2). “(4) For provisions relating to return of liquors for credit, refund, or exchange, see section 5113 (c) (3). “(5) For provisions relating to sales by retail dealers in liquidation, see section 5113 (e). “SEC. 5124. RECORDS. “(a) Receipts.— Every retail dealer in liquors and every retail dealer in beer shall provide and keep in his place of business a record in book form of all distilled spirits, wines, and beer received, showing the quantity thereof and from whom and the dates received, or shall keep all invoices of, and bills for, all distilled spirits, wines, and beer received. “(b) Dispositions.— When he deems it necessary for law enforcement purposes or the protection of the revenue, the Secretary or his delegate may by regulations require retail dealers in liquors and retail dealers in beer to keep records of the disposition of distilled spirits, wines, or beer, in such form or manner and of such quantities as the Secretary or his delegate may prescribe. “(c) Cross References.— “For provisions relating to the preservation and inspection of records, and entry of premises for inspection, see section 5146. “SEC. 5125. CROSS REFERENCES. “(1) For provisions relating to prohibited purchases by dealers, see section 5117. “(2) For provisions relating to presumptions of liability as whole-sale dealer in case of sale of 20 wine gallons or more, see section 5691 (b). “Subpart F— Nonbeverage Domestic Drawback Claimants “Sec. 5131. Eligibility and rate of tax. “Sec. 5132. Registration and regulation. “Sec. 5133. Investigation of claims. “Sec. 5134. Drawback. “SEC. 5131. ELIGIBILITY AND RATE OF TAX. “(a) Eligibility for Drawback.— Any person using distilled spirits produced in a domestic registered distillery or industrial alcohol plant and withdrawn from bond, or using distilled spirits withdrawn from the bonded premises of a distilled spirits plant, on which the tax has been determined, in the manufacture or production of medicines, medicinal preparations, food products, flavors, or flavoring extracts, which are unfit for beverage purposes, on payment of a special tax per annum, shall be eligible for drawback at the time when such distilled spirits are used in the manufacture of such products as provided for in this subpart. “(b) Rate of Tax.— The special tax imposed by subsection (a) shall be graduated in amount as follows: (1) for total annual use not exceeding 25 proof gallons, $25 a year; (2) for total annual use not exceeding 50 proof gallons, $50 a year; (3) for total annual use of more than 50 proof gallons, $100 a year. “SEC. 5132. REGISTRATION AND REGULATION. “Every person claiming drawback under this subpart shall register annually with the Secretary or his delegate; keep such books and records as may lie necessary to establish the fact that distilled spirits received by him and on which the tax has been determined were used in the manufacture or production of medicines, medicinal preparations, food products, flavors, or flavoring extracts, which were unfit for use for beverage purposes; and be subject to such rules and regulations in relation thereto as the Secretary or his delegate shall prescribe to secure the Treasury against frauds. “SEC. 5133. INVESTIGATION OF CLAIMS. “For the purpose of ascertaining the correctness of any claim filed under this subpart, the Secretary or his delegate is authorized to examine any books, papers, records, or memoranda bearing upon the matters required to be alleged in the claim, to require the attendance of the person filing the claim or of any officer or employee of such person or the attendance of any other person having knowledge in the premises, to take testimony with reference to any matter covered by the claim, and to administer oaths to any person giving such testimony. “SEC. 5134. DRAWBACK. “(a) Rate of Drawback.— In the case of distilled spirits on which the tax has been paid or determined, and which have been used as provided in this subpart, a drawback shall be allowed on each proof gallon at a rate of $1 less than the rate at which the distilled spirits tax has been paid or determined. “(b) Claims.— Such drawback shall be due and payable Quarterly upon filing of a proper claim with the Secretary or his delegate; except that, where any person entitled to such drawback shall elect in writing to file monthly claims therefor, such drawback shall be due and payable monthly upon filing of a proper claim with the Secretary or his delegate. The Secretary or his delegate may require persons electing to file monthly drawback claims to file with him a bond or other security in such amount and with such conditions as he shall by regulations prescribe. Any such election may be revoked on filing of notice thereof with the Secretary or his delegate. No claim under this subpart shall be allowed unless filed with the Secretary or his delegate within the 3 months next succeeding the quarter in which the distilled spirits covered by the claim were used as provided in this subpart. “Subpart G— General Provisions “Sec. 3141. Registration. “Sec. 5142. Payment of tax. “Sec. 5143. Provisions relating to liability for occupational taxes. “Sec. 5144. Supply of stamps. “Sec. 5145. Application of State laws. “Sec. 5146. Preservation and inspection of records, and entry of premises for inspection. “Sec. 5147. Application of subpart. “Sec. 5148. Cross references. “SEC. 5141. REGISTRATION. “For provisions relating to registration in the case of persons engaged in any trade or business on which a special tax is imposed, see section 7011 (a). “SEC. 5142. PAYMENT OF TAX. “(a) Condition Precedent to Carrying on Business.— No person shall be engaged in or carry on any trade or business subject to tax under this part (except the tax imposed by section 5131) until he has paid the special tax therefor. “(b) Computation.— All special taxes under this part (except the tax imposed by section 5131) shall be imposed as of on the first day of July in each year, or on commencing any trade or business on which such tax is imposed. In the former case the tax shall be reckoned for 1 year, and in the latter case it shall be reckoned proportionately, from the first day of the month in which the liability to a special tax commenced, to and including the 30th day of June following. “(c) How Paid.— “(1) Stamp.— All special taxes imposed by this part shall be paid by stamps denoting the tax. “(2) Assessment.— “For authority of the Secretary or his delegate to make assessments where the special taxes have not been duly paid by stamp at the time and in the manner provided by law, see subtitle F. “SEC. 5143. PROVISIONS RELATING TO LIABILITY FOR OCCUPATIONAL TAXES. “(a) Partners.— Any number of persons doing business in partnership at any one place shall be required to pay but one special tax. “(b) Different Businesses of Same Ownership and Location.— Whenever more than one of the pursuits or occupations described in this part are carried on in the same place by the same person at the same time, except as otherwise provided in this part, the tax shall be paid for each according to the rates severally prescribed. “(c) Businesses in More Than One Location.— “(1) Inability for tax.— The payment of a special tax imposed by this part shall not exempt from an additional special tax the person carrying on a trade or business in any other place than that stated in the register kept in the office of the official in charge of the internal revenue district. “(2) Storage.— Nothing contained in paragraph (1) shall require a special tax for the storage of liquors at a location other than the place where liquors are sold or offered for sale. “(3) Definition of place.— The term ‘place’ as used in this section means the entire office, plant or area of the business in any one location under the same proprietorship; and passageways, streets, highways, rail crossings, waterways, or partitions dividing the premises, shall not be deemed sufficient separation to require additional special tax, if the various divisions are otherwise contiguous. “(d) Death or Change of Location.— Certain persons, other than the person who has paid the special tax under this part for the carrying on of any business at any place, may secure the right to carry on, without incurring additional special tax, the same business at the same place for the remainder of the taxable period for which the special tax was paid. The persons who may secure such right are: “(1) the surviving spouse or child, or executor or administrator or other legal representative, of a deceased taxpayer; “(2) a husband or wife succeeding to the business of his or her living spouse; “(3) a receiver or trustee in bankruptcy, or an assignee for benefit of creditors; and “(4) the partner or partners remaining after death or withdrawal of a member of a partnership. When any person moves to any place other than the place for which special tax was paid for the carrying on of any business, he may secure the right to carry on, without incurring additional special tax, the same business at his new location for the remainder of the taxable period for which the special tax was paid. To secure the right to carry on the business without incurring additional special tax, the successor, or the person relocating his business, must register the succession or relocation with the Secretary or his delegate in accordance with regulations prescribed by the Secretary or his delegate. “(e) Federal Agencies or Instrumentalities.— Any tax imposed by this part shall apply to any agency or instrumentality of the United States unless such agency or instrumentality is granted by statute a specific exemption from such tax. “SEC. 5144. SUPPLY OF STAMPS. “The Secretary or his delegate is required to procure appropriate stamps for the payment of all special taxes imposed by this part, including the tax on stills or condensers; and all provisions of law relating to the preparation and issue of stamps shall, so far as applicable, extend to and include such stamps for special taxes; and the Secretary or his delegate shall have authority to make all needful regulations relative thereto. “SEC. 5145. APPLICATION OF STATE LAWS. “The payment of any tax imposed by this part for carrying on any trade or business shall not be held to exempt any person from any penalty or punishment provided by the laws of any State for carrying on such trade or business within such State, or in any manner to authorize the commencement or continuance of such trade or business contrary to the laws of such State or in places prohibited by municipal law; nor shall the payment of any such tax be held to prohibit any State from placing a duty or tax on the same trade or business, for State or other purposes. “SEC. 5146. PRESERVATION AND INSPECTION OF RECORDS. AND ENTRY OF PREMISES FOR INSPECTION. “(a) Preservation and Inspection of Records.— Any records or other documents required to be kept under this part or regulations issued pursuant thereto shall be preserved by the person required to keep such records or documents, as the Secretary or his delegate may by regulations prescribe, and shall be kept available for inspection by any internal revenue officer during business hours. “(b) Entry of Premises for Inspection.— The Secretary or his delegate may enter during business hours the premises (including places of storage) of any dealer for the purpose of inspecting or examining any records or other documents required to be kept by such dealer under this chapter or regulations issued pursuant thereto and any distilled spirits, wines, or beer kept or stored by such dealer on such premises. “SEC. 5147. APPLICATION OF SUBPART. “The provisions of this subpart shall extend to and apply to the special taxes imposed by the other subparts of this part and to the persons on whom such taxes are imposed. “SEC. 5148. CROSS REFERENCES. “(1) For penalties for willful nonpayment of special taxes, see section 5691. “(2) For penalties applicable to this part generally, see subchapter J. “(3) For penalties and other general and administrative provisions applicable to this part, see subtitle F. “Subchapter B— Qualification Requirements for Distilled Spirits Plants “Sec. 5171. Establishment. “Sec. 5172. Application. “Sec. 5173. Qualification bonds. “Sec. 5174. Withdrawal bonds. “Sec. 5175. Export bonds. “Sec. 5176. New or renewed bonds. “Sec. 5177. Other provisions relating to bonds. “Sec. 5178. Premises of distilled spirits plants. “Sec. 5179. Registration of stills. “Sec. 5180. Signs. “Sec. 5181. Cross references. “SEC. 5171. ESTABLISHMENT. “(a) General Requirements.— Every person shall, before commencing or continuing the business of a distiller, bonded warehouseman, rectifier, or bottler of distilled spirits, and at such other times as the Secretary or his delegate may by regulations prescribe, make application to the Secretary or his delegate for and receive notice of the registration of his plant. No plant shall be registered under this section until the applicant has complied with the requirements of law and regulations in relation to the qualification of such business (or businesses). “(b) Permits.— “(1) Requirements.— Every person required to file application for registration under subsection (a) whose distilling, warehousing, or bottling operations (or any part thereof) are not required to be covered by a basic permit under the Federal Alcohol Administration Act (49 Stat. 978, 27 U. S. C. 203, 204) shall, before commencing any such operations, apply for and obtain a permit under this subsection from the Secretary or his delegate to engage in such operations. Section 5271 (b), (c), (d), (e), (f), (g), and (h), and section 5274 are hereby made applicable to applications, to persons filing applications, and to permits required by or issued under this subsection. “(2) Exceptions for agency of a state or political subdivision.— Paragraph (1) shall not apply to any agency of a State or political subdivision thereof or to any officer or employee of any such agency, and no such agency or officer or employee shall be required to obtain a permit thereunder. “(3) Continuance of business.— Every person required by paragraph (1) to obtain a permit (covering operations not required to be covered by a basic permit under the Federal Alcohol Administration Act) who, on June 30, 1959, is qualified to perform such operations under the internal revenue laws, and who complies with the provisions of this chapter (other than this subsection) relating to qualification of such business or businesses, shall be entitled to continue such operations pending reasonable opportunity to make application for permit, and final action thereon. “(c) Cross References.— “For penalty for failure of a distiller or rectifier to file application for registration as required by this section, see section 5601 (a) (2), and for penalty for the filing of a false application by a distiller, bonded warehouseman, rectifier, or bottler of distilled spirits, see section 5601 (a) (3). “SEC. 5172. APPLICATION. “The application for registration required by section 5171 (a) shall, in such manner and form as the Secretary or his delegate may by regulations prescribe, identify the applicant and persons interested in the business (or businesses) covered by the application, show the nature, location and extent of the premises, show the specific type or types of operations to be conducted on such premises, and show any other information which the Secretary or his delegate may by regulations require for the purpose of carrying out the provisions of this chapter. “SEC. 5173. QUALIFICATION BONDS. “(a) General Provisions.— Every person intending to commence or to continue the business of a distiller, bonded warehouseman, or rectifier, on filing with the Secretary or his delegate an application for registration of his plant, and before commencing or continuing such business, shall file bond in the form prescribed by the Secretary or his delegate, conditioned that he shall faithfully comply with all the provisions of law and regulations relating to the duties and business of a distiller, bonded warehouseman, or rectifier, as the case may lie (including the payment of taxes imposed by this chapter), and shall pay all penalties incurred or fines imposed on him for violation of any of the said provisions. “(b) Distillers Bond.— -Every person intending to commence or continue the business of a distiller shall give bond in a penal sum not less than the amount of tax on spirits that will be produced in his distillery during a period of 15 days, except that such bond shall be in a sum of not less than $5,000 nor more than $100,000. “(1) Conditions of approval.— In addition to the requirements of subsection (a), the distiller’s bond shall be conditioned that he shall not suffer the property, or any part thereof, subject to lien under section 5004 (b) (1) to be encumbered by mortgage, judgment, or other lien during the time in which he shall carry on such business (except that this condition shall not apply during the term of any bond given under subparagraph (C)), and no bond of a distiller shall be approved unless the Secretary or his delegate is satisfied that the situation of the land and buildings which will constitute his bonded premises (as described in his application for registration) is not such as would enable the distiller to defraud the United States, and unless— “(A) the distiller is the owner in fee, unencumbered by any mortgage, judgment, or other lien, of the lot or tract of land subject to lien under sect ion 5004 (b) (1); or “(B) the distiller files with the officer designated for the purpose by the Secretary or his delegate, in connection with his application for registration, the written consent of the owner of the fee, and of any mortgagee, judgment creditor, or other person having a lien thereon, duly acknowledged, that such premises may be used for the purpose of distilling spirits, subject to the provisions of law, and expressly stipulating that the lien of the United States, for taxes on distilled spirits produced thereon and penalties relating thereto, shall have priority of such mortgage, judgment, or other encumbrance, and that in the case of the forfeiture of such premises, or any part thereof, the title to the same shall vest in the United States, discharged from such mortgage, judgment, or other encumbrance; or “(C) the distiller files a bond, approved by the Secretary or his delegate, in the penal sum equal to the appraised value of the property subject to lien under section 5004 (b) (1), except that such bond shall not exceed the sum of $300,000. Such value shall be determined, and such bond shall be executed in such form and with such sureties and filed with the officer designated by the Secretary or his delegate, under such regulations as the Secretary or his delegate shall prescribe. “(2) Cancellation of indemnity bond.— When the liability for which an indemnity bond given under paragraph (1) (C) ceases to exist, such bond may be cancelled upon application to the Secretary or his delegate. “(3) Judicial sale.— In the case of any distillery sold at judicial or other sale in favor of the United States, a bond in lieu of consent under paragraph (1) (B) may be taken at the discretion of the Secretary or his delegate, and the person giving such bond may be allowed to operate such distillery during the existence of the right of redemption from such sale, on complying with all the other provisions of law. “(c) Bonded Warehouseman’s Bonds.— “(1) General requirements.— Every person intending to commence or continue the business of a bonded warehouseman shall give bond in a penal sum not less than the amount of tax on distilled spirits stored on such premises and in transit thereto, except that such bond shall not exceed the sum of $200,000. In addition to the requirements in subsection (a), such bond shall be conditioned— “(A) on the withdrawal of the spirits from storage on bonded premises within the time prescribed for the determination of tax under section 5006 (a) (2), and “(B) on payment of the tax, except as otherwise provided by law, on all spirits withdrawn from storage on the bonded premises. “(2) Exception.— The Secretary or his delegate may by regulations specify bonded warehousing operations, other than the storage of more than 500 casks or packages of distilled spirits in wooden containers, for which a bond in a maximum sum of less than $200,000 will be approved, and in such cases the Secretary or his delegate shall by regulations prescribe the maximum penal sum of such bonds. “(d) Rectifier’s Bond.— Every person intending to commence or continue the business of a rectifier shall give bond in a penal sum not less than the amount of tax the rectifier will be liable to pay in a period of 30 days under sections 5021 and 5022, except that such bond shall not exceed the sum of $100,000, and shall not be less than $1,000. “(e) Combined Operations.— “(1) Distilled spirits plants.— Except as provided in paragraph (2), any person intending to commence or continue business as proprietor of a distilled spirits plant who would otherwise be required to give more than one bond under the provisions of subsections (b) (other than indemnity bonds), (c), and (d), shall, in lieu thereof, give bond in a penal sum equal to the combined penal sums which would have been required under such subsections; but in no case shall the combined operations bond be in a penal sum in excess of $200,000 if all operations are to be conducted on bonded premises, or in excess of $250,000 for the distilled spirits plant. Bonds given under this paragraph shall contain the terms and conditions of the bonds in lieu of which they are given. “(2) Distilled spirits plants and adjacent bonded wine cellars.— Any person intending to commence or continue business as proprietor of a bonded wine cellar and an adjacent distilled spirits plant qualified for the production of distilled spirits shall, in lieu of the bonds which would otherwise be required under the provisions of subsection (b) (other than indemnity bonds), (c), and (d), and section 5354 (other than supplemental bonds to cover additional liability arising as a result of deferral of payment of tax), give bond in a penal sum equal to the combined penal sums which would have been required under such provisions; but in no case shall the combined operations bond be in a penal sum in excess of $150,000 if the distilled spirits plant is qualified solely for the production of distilled spirits, in excess of $250,000 if the distilled spirits plant is qualified only for production and bonded warehousing or for production and rectification and bottling, or in excess of $300,000 for the distilled spirits plant and bonded wine cellar. Bonds given under this paragraph shall contain the terms and conditions of the bonds in lieu or which they are given. “(f) Blanket Bonds.— The Secretary or his delegate may by regulations authorize any person (including, in the case of a corporation, controlled or wholly owned subsidiaries) operating more than one distilled spirits plant in a geographical area designated in regulations prescribed by the Secretary or his delegate to give a blanket bond covering the operation of any two or more of such plants and any bonded wine cellars which are adjacent to such plants and which otherwise could be covered under a combined operations bond as provided for in subsection (e) (2). The penal sum of such blanket bond shall be calculated in accordance with the following table: “Total Penal Sums as Determined under Subsections (b), (e), (d), and (e) Requirement for Penal Sum of Blanket Bond First $300,000 or any part thereof 100%     Next $300,000 or any part thereof 70%     Next $400,000 or any part thereof 50%     Next $1,000,000 or any part thereof 35%     All over $2,000,000 25%     Bonds given under this subsection shall be in lieu of the bonds required under subsections (b) (other than indemnity bonds), (c), (d), and (e), as the case may be, and shall contain the terms and conditions of such bonds. “(g) Liability Under Combined Operations and Blanket Bonds.— The total amount of any bond given under subsection (e) or (f) shall be available for the satisfaction of any liability incurred under the terms or conditions of such bond. “SEC. 5174. WITHDRAWAL BONDS. “(a) Requirements.— No distilled spirits, other than distilled spirits withdrawn under section 5214 or section 7510, shall be withdrawn 26 USC 7510. from bonded premises except on payment of tax unless— “(1) the proprietor of the bonded premises has furnished such bond (in addition to that required in section 5173) to secure payment of the tax on such spirits, under such regulations and conditions, and in such form and penal sum, as the Secretary or his delegate may prescribe; or “(2) the proprietor of a distilled spirits plant authorized to rectify or bottle distilled spirits has— “(A) made application to the Secretary or his delegate to withdraw such spirits and has assumed liability at the receiving plant for payment of the tax thereon; “(B) furnished bond (in addition to any bond required by section 5173) to secure payment of the tax on such spirits, under such regulations and conditions, and in such form and penal sum, as the Secretary or his delegate may prescribe; and “(C) complied with such other requirements as the Secretary or his delegate may by regulations prescribe. “(b) Release of Other Bonds.— When a bond has been filed under subsection (a) and distilled spirits have been withdrawn from bonded premises thereunder, bonds of proprietors covering operations on bonded premises, and bonds given under prior provisions of internal revenue law to cover similar operations, shall no longer cover liability for payment of the tax on such spirits. “SEC. 5175. EXPORT BONDS. “(a) Requirements.— No distilled spirits shall be withdrawn from bonded premises for exportation without payment of tax unless the exporter has furnished bond to cover such withdrawal, under such regulations and conditions, and in such form and penal sum, as the Secretary or his delegate may prescribe. “(b) Exception.— In case of distilled spirits withdrawn for exportation without payment of tax on application of the proprietor of bonded premises, the bond of such proprietor covering such bonded premises shall cover such exportation and subsection (a) shall not e applicable. “(c) Cancellation or Credit of Export Bonds.— The bonds given under subsection (a) shall be cancelled or credited and the bonds liable under subsection (b) credited on the submission of such evidence, records, and certification indicating exportation as the Secretary or his delegate may by regulations prescribe. “SEC. 5176. NEW OR RENEWED BONDS. “(a) General.— New bonds shall be required under sections 5173, 5174, and 5175 in case of insolvency or removal of any surety, and may, at the discretion of the Secretary or his delegate, be required in any other contingency affecting the validity or impairing the efficiency of such bond. “(b) Bonded Warehouseman’s Bonds.— In case the proprietor of a distilled spirits plant fails or refuses— “(1) to give a warehouseman’s bond required under section 5173 (c), or to renew the same, and neglects to immediately withdraw the spirits and pay the tax thereon; or “(2) to withdraw any spirits from storage on bonded premises before the expiration of the time limited in the bond and, except as otherwise provided by law, pay the tax thereon; the Secretary or his delegate shall proceed to collect the tax. “SEC. 5177. OTHER PROVISIONS RELATING TO BONDS. “(a) General Provisions Relating to Bonds.— The provisions of section 5551 shall be applicable to the bonds required by or given under sections 5173, 5174, and 5175. “(b) Cross References.— “(1) For deposit of United States bonds or notes in lieu of sureties, see 6U.S.C. 15. “(2) For penalty and forfeiture for failure or refusal to give bond, or for giving false, forged, or fraudulent bond, or for carrying on the business of a distiller without giving bond, see sections 5601 (a) (4), 5601 (a) (5), 5601 (b) (2), and 5615 (3). “SEC. 5178. PREMISES OF DISTILLED SPIRITS PLANTS. “(a) Location, Construction, and Arrangement.— “(1) General.— “(A) The premises of a distilled spirits plant shall lie as described in the application required by section 5171 (a). The Secretary or his delegate shall prescribe such regulations relating to the location, construction, arrangement, and protection of distilled spirits plants as he deems necessary to facilitate inspection and afford adequate security to the revenue. “(B) No distilled spirits plant for the production of distilled spirits shall be located in any dwelling house, in any shed, yard, or in closure connected with any dwelling house, or on board any vessel or boat, or on premises where beer or wine is made or produced, or liquors of any description are retailed, or on premises where any other business is carried on (except when authorized under subsection (b)). “(C) Notwithstanding any other provision of this chapter relating to distilled spirits plants the Secretary or his delegate may approve the location, construction, arrangement, and method of operation of any establishment which was qualified to operate on the date preceding the effective date of this section if he deems that such location, construe-tion, arrangement, and method of operation will afford adequate security to the revenue. “(2) Production facilities.— “(A) Any person establishing a distilled spirits plant may, as described in his application for registration, provide facilities which may be used for the production of distilled spirits from any source or substance. “(B) The distilling system shall be continuous and closed at all points where potable or readily recoverable spirits are present and the distilling apparatus shall be so designed and constructed and so connected as to prevent the unauthorized removal of such spirits prior to their production gauge. “(C) The Secretary or his delegate is authorized to order and require such identification of, changes of, or additions to, distilling apparatus, connecting pipes, pumps, tanks, or any machinery connected with or used in or on the bonded premises, or require to be put on any of the stills, tubs, pipes, tanks, or other equipment, such fastenings, locks or seals as he may deem necessary to facilitate inspection and afford adequate security to the revenue. “(3) Bonded warehousing facilities.— “(A) Any person establishing a distilled spirits plant for the production of distilled spirits may, as described in his application for registration, establish warehousing facilities on the bonded premises of such plant. “(B) Distilled spirits plants tor the bonded warehousing of distilled spirits elsewhere than as described in subparagraph (A) may be established at the discretion of the Secretary or his delegate, by proprietors referred to in subparagraph (A) or by other persons, under such regulations as the Secretary or his delegate shall prescribe. “(C) Facilities for the storage on bonded premises of distilled spirits in casks, packages, cases, or similar portable approved containers shall be established in a room or building used exclusively for the storage, bottling, or packaging of distilled spirits, and activities related thereto. “(4) Bottling facilities.— “(A) The proprietor of a distilled spirits plant authorized to store distilled spirits in casks, packages, cases, or similar portable approved containers on bonded premises may establish a separate portion of such premises for the bottling in bond of distilled spirits under section 5233 prior to payment or determination or the internal revenue tax. “(B) Facilities for rectification of distilled spirits or wines upon which the tax has been paid or determined, may be established as a separate distilled spirits plant or as a part of a distilled spirits plant qualified for the production or bonded warehousing of distilled spirits. Such facilities, when qualified, may be used for the rectification of distilled spirits or wines, or the Bottling or packaging of rectified or unrectified distilled spirits or wines on which the tax has been paid or determined. “(C) Facilities for bottling or packaging any distilled spirits upon which the tax has been paid or determined (other than bottling facilities established under subparagraph (B)), may be established and maintained only by a State or political subdivision thereof, or by the proprietor of a distilled spirits plant qualified for the production or bonded warehousing of distilled spirits, as a part of such plant or as a separate dis-tilled spirits plant. Such facilities, when qualified, may be used for the bottling or packaging of rectified or unrectified distilled spirits or wines but may not be used for the rectification of distilled spirits or wines. “(D) Bottling premises established under subparagraphs (B) or (C) may not be located on bonded premises, and if the distilled spirits plant contains both bonded premises and bottling premises they shall be separated by such means or in such manner as the Secretary or his delegate may by regulations prescribe. “(5) Denaturing Facilities.— The Secretary or his delegate may by regulations require such arrangement and segregation of denaturing facilities as he deems necessary. “(b) Use of Premises for Other Businesses.— The Secretary or his delegate may authorize the carrying on of such other businesses (not specifically prohibited by section 5601 (a) (6)) on premises of distilled spirits plants, as he finds will not jeopardize the revenue. Such other businesses shall not be carried on until an application to carry on such business has been made to and approved by the Secretary or his delegate. “(c) Cross References.— “(1) For provisions authorizing the Secretary or his delegate to require installation of meters, tanks, and other apparatus, see section 5552. “(2) For penalty for distilling on prohibited premises, see section 5601 (a) (6). “(3) For provisions relating to the bottling of distilled spirits labeled as alcohol, see section 5235. “(4) For provisions relating to the unauthorized use of distilled spirits in any manufacturing process, see section 5601 (a) (9). “SEC. 5179. REGISTRATION OF STILLS. “(a) Requirements.— Every person having in his possession or custody, or under his control, any still or distilling apparatus set up, shall register such still or apparatus with the Secretary or his delegate immediately on its being set up, by subscribing and filing with the Secretary or his delegate a statement, in writing, setting forth the particular place where such still or distilling apparatus is set up, the kind of still and its capacity, the owner thereof, his place of residence, and the purpose for which said still or distilling apparatus has been or is intended to be used (except that stills or distilling apparatus not used or intended to be used for the distillation, redistillation, or recovery of distilled spirits are not required to be registered under this section). “(b) Cross References.— “(1) For penalty and forfeiture provisions relating to unregistered stills, sec sections 5601 (a) (1), 5601 (b) (1), and 5615 (1). “(2) For provisions requiring permit to set up still, boiler or other vessel for distilling, see section 5105. “SEC. 5180. SIGNS. “(a) Requirements.— Every person engaged in distilling, bonded warehousing, rectifying, or bottling of distilled spirits shall place and keep conspicuously on the outside of his place of business a sign showing the name of such person and denoting the business, or businesses, in which engaged. The sign required by this subsection shall be in such form and contain such information as the Secretary or his delegate shall by regulations prescribe. “(b) Penalty.— “For penalty and forfeiture relating to failure to post sign or improperly posting such sign, see section 5681. “SEC. 5181. CROSS REFERENCES. “For provisions requiring payment of special (occupational) tax as rectifier, see section 5081, or as wholesale liquor dealer, see section 5111, or as retail liquor dealer, see section 5121. “Subchapter C— Operation of Distilled Spirits Plants “Part I. General provisions. “Part II. Operations on bonded premises. “Part III. Operations on bottling premises. “PART I— GENERAL PROVISIONS “Sec. 5201. Regulation of operations. “Sec. 5202. Supervision of operations. “Sec. 5203. Entry and examination of premises. “Sec. 5204. Gauging. “Sec. 5205. Stamps. “Sec. 5206. Containers. “Sec. 5207. Records and reports. “SEC. 5201. REGULATION OF OPERATIONS. “(a) General.— Proprietors of distilled spirits plants shall conduct their operations relating to the production, storage, denaturing, rectification, and bottling of distilled spirits, and all other operations authorized to be conducted on the premises of such plants, under such regulations as the Secretary or his delegate shall prescribe. “(b) Distilled Spirits for Industrial Uses.— The regulations of the Secretary or his delegate under this chapter respecting the production, warehousing, denaturing, distribution, sale, export, and use of distilled spirits for industrial purposes shall be such as he deems necessary, advisable, or proper to secure the revenue, to prevent diversion to illegal uses, and to place the distilled spirits industry and other industries using such distilled spirits as a chemical raw material or for other lawful industrial purposes on the highest possible plane of scientific and commercial efficiency and development consistent with the provisions of this chapter. Where nonpotable chemical mixtures containing distilled spirits are produced for transfer to the bonded premises or a distilled spirits plant for completion of processing, the Secretary or his delegate may waive any provision of this chapter with respect to the production of such mixtures, and the processing of such mixtures on the bonded premises shall be deemed to be production of distilled spirits for purposes of this chapter. “(c) Hours of Operations.— The Secretary or his delegate may prescribe regulations relating to hours for distillery operations and to hours for removal of distilled spirits from distilled spirits plants; however, such regulations shall not be more restrictive, as to any operation or function, than the provisions of internal revenue law and regulations relating to such operation or function in effect on the day preceding the effective date of this section. “(d) Identification of Distilled Spirits.— The Secretary or his delegate may provide by regulations for the addition of tracer elements to distilled spirits to facilitate the enforcement of this chapter. Tracer elements to be added to distilled spirits at any distilled spirits plant under provisions of this subsection shall be of such character and in such quantity as the Secretary or his delegate may authorize or require, and such as will not impair the quality of the distilled spirits for their intended use. “SEC. 5202. SUPERVISION OF OPERATIONS. “(a) General.— The operations on the premises of distilled spirits plants shall be conducted under such supervision as the Secretary or his delegate shall by regulation prescribe. The Secretary or his delegate shall assign such number of internal revenue officers to distilled spirits plants as he deems necessary to maintain supervision of the operations conducted on such premises. “(b) Removal of Distilled Spirits From Distilling System.— The removal of distilled spirits from the closed distilling system shall be controlled by Government locks or seals, or by meters or other devices or methods as the Secretary or his delegate may prescribe. “(c) Storage Tanks.— Approved containers for the storage of distilled spirits on bonded premises (other than containers required by subsection (d) to be in a locked room or building or those containing distilled spirits denatured as authorized by law) shall be kept securely closed, and the flow of distilled spirits into and out of such containers shall be controlled by Government locks or seals, or by meters or other devices or methods as the Secretary or his delegate may prescribe. “(a) Storage Rooms or Buildings.— Distilled spirits (other than denatured distilled spirits) on bonded premises in casks, packages, cases, or similar portable approved containers must be stored in a room or building provided as required by section 5178 (a) (3) (C), which room or building shall be in the joint custody of the internal revenue officer assigned to such premises and the proprietor thereof, and shall be kept securely locked with Government locks and at no time be unlocked or opened, or remain open, except when such officer or person who may be designated to act for him is on the premises. Deposits of distilled spirits in, or removals of distilled spirits from, such room or building shall be under such supervision by internal revenue officers as the Secretary or his delegate shall by regulations prescribe. “(e) Denaturation of Distilled Spirits.— The denaturation of distilled spirits on bonded premises shall be conducted under such supervision and controlled by such meters or other devices or methods as the Secretary or his delegate shall prescribe. “(f) Gauging.— The gauge of production of distilled spirits, gauge for determination of the tax imposed under section 5001 (a) (1), and gauge for tax-free removal of other than denatured distilled spirits from bonded premises, shall be made or supervised by internal revenue officers, under such regulations as the Secretary or his delegate shall prescribe. “(g) Bottling in Bond.— The bottling of distilled spirits in bond shall be supervised by the internal revenue officer assigned to the premises in such manner as the Secretary or his delegate shall by regulations prescribe. “SEC. 5203. ENTRY AND EXAMINATION OF PREMISES. “(a) Keeping Premises Accessible.— Every proprietor of a distilled spirits plant shall furnish the Secretary or his delegate such keys ns may be required for internal revenue officers to gain access to the premises and any structures thereon, and such premises shall always be kept accessible to any officer having such keys. “(b) Right of Entry and Examination.— It shall be lawful for any internal revenue officer at all times, as well by night as by day, to enter any distilled spirits plant, or any other premises where distilled spirits are produced or rectified, or structure or place used in connection therewith for storage or other purposes; to make examination of the materials, equipment, and facilities thereon; and make such gauges and inventories as he deems necessary. Whenever any officer, having demanded admittance, and having declared his name and office, is not admitted into such premises by the proprietor or other person having charge thereof, it shall be lawful for such officer, at all times, as well by night as by day, to use such force as is necessary for him to gain entry to such premises. “(c) Furnishing Facilities and Assistance.— On the demand of any internal revenue officer or agent, every proprietor of a distilled spirits plant shall furnish the necessary facilities and assistance to enable the officer or agent to gauge the spirits in any container or to examine any apparatus, equipment, containers, or materials on such premises. Such proprietor snail also, on demand of such officer or agent, open all doors, and open for examination all boxes, packages, and all casks, barrels, and other vessels not under the control of the internal revenue officer in charge. “(d) Authority to Break Up Grounds or Walls.— It shall be lawful for any internal revenue officer, and any person acting in his aid, to break up the ground on any part of a distilled spirits plant or any other premises where distilled spirits are produced or rectified, or any ground adjoining or near to such plant or premises, or any wall or partition thereof, or belonging thereto, or other place, to search for any pipe, cock, private conveyance, or utensil; and, upon finding any such pipe or conveyance leading therefrom or thereto, to break up any ground, house, wall, or other place through or into which such pipe or other conveyance leads, and to break or cut away such pipe or other conveyance, and turn any cock, or to examine whether such pipe or other conveyance conveys or conceals any distilled spirits, mash, wort, or beer, or other liquor, from the sight or view of the officer, so as to prevent or hinder him from taking a true account thereof. “(e) Penalty.— “For penalty for violation of this section, see section 5687. “SEC. 5204. GAUGING. “(a) General.— The Secretary or his delegate may by regulations require the gauging of distilled spirits for such purposes, in addition to those specified in section 5202 (f), as he may deem necessary, and all required gauges shall be made at such times and under such conditions as he may by regulations prescribe. “(b) Gauging Instruments.— For the determination of tax and the prevention and detection of frauds, the Secretary or his delegate may prescribe for use such hydrometers, saccharometers, weighing and gauging instruments, or other means or methods for ascertaining the quantity, gravity, and producing capacity of any mash, wort, or beer used, or to lie used, in the production of distilled spirits, and the strength and quantity of spirits subject to tax. as he may deem necessary; and he may prescribe regulations to secure a uniform and correct system of inspection, weighing, marking, and gauging of spirits. “(c) Gauging, Stamping, Marking and Branding by Proprietors.— The Secretary or his delegate may by regulations require the proprietor of a distilled spirits plant, at the proprietor’s expense and under such supervision as the Secretary or his delegate may require, to do such gauging, stamping, marking, and branding and such mechanical labor pertaining thereto as the Secretary or his delegate deems proper and determines may be done without danger to the revenue. “SEC. 5205. STAMPS. “(a) Stamps for Containers of Distilled Spirits.— “(1) Containers of distilled spirits bottled in bond.— Every container of distilled spirits bottled in bond under section 5233 when filled shall be stamped by a stamp evidencing the bottling of such spirits in bond under the provisions of this paragraph and section 5233. “(2) Containers of other distilled spirits.— No person shall transport, possess, buy, sell, or transfer any distilled spirits, unless the immediate container thereof is stamped by a stamp evidencing the determination of the tax or indicating compliance with the provisions of this chapter. The provisions of this paragraph shall not apply to— “(A) distilled spirits, lawfully withdrawn from bond, placed in containers for immediate consumption on the premises or for preparation for such consumption; “(B) distilled spirits in bond or in customs custody; “(C) distilled spirits, lawfully withdrawn from bond, in immediate containers stamped under other provisions of internal revenue or customs law or regulations issued pursuant thereto; “(D) distilled spirits, lawfully withdrawn from bond, in actual process of rectification, blending, or bottling, or in actual use in processes of manufacture; “(E) distilled spirits on which no internal revenue tax is required to be paid; “(F) distilled spirits lawfully withdrawn from bond and not intended for sale or for use in the manufacture or production of any article intended for sale; or “(G) any regularly established common carrier receiving, transporting, delivering, or holding for transportation or delivery distilled spirits in the ordinary course of its business as a common carrier. “(3) Stamp regulations.— The Secretary or his delegate shall prescribe regulations with respect to the supplying or procuring of stamps required under this subsection or section 5235, the time and manner of applying for, issuing, affixing, and destroying such stamps, the form of such stamps and the information to be shown thereon, applications for the stamps, proof that applicants are entitled to such stamps, and the method of accounting for such stamps, and such other regulations as he may deem necessary for the enforcement of this subsection. In the case of a container of a capacity of 5 wine gallons or less, the stamp shall be affixed in such a manner as to be broken when the container is opened, unless the container is one that cannot again be used after opening. “(b) Stamps for Containers of Distilled Spirits Withdrawn From Bonded Premises on Determination of Tax.— Containers of all distilled spirits withdrawn from bonded premises on determination of tax under section 5006 (a) shall be stamped by a stamp under such regulations as the Secretary or his delegate shall prescribe. This subsection shall not be construed to require stamps on cases of bottled distilled spirits filled and stamped on bonded premises. “(c) Stamps for Containers of Distilled Spirits Withdrawn for Exportation.— “(1) Exportation without payment of tax.— Every container of distilled spirits withdrawn for exportation under section 5214 (a) (4) shall be stamped by a stamp under such regulations as the Secretary or his delegate shall prescribe. This paragraph shall not lie construed to require stamps on cases of bottled distilled spirits filled and stamped on bonded premises. “(2) Exportation with benefit of drawback.— The Secretary or his delegate may require any container of distilled spirits bottled or packaged especially for export with benefit of draw-back to be stamped by a stamp under such regulations as he may prescribe. “(d) Stamps for Containers of 5 Wine Gallons or More of Distilled Spirits Filled on Bottling Premises.— All containers of distilled spirits containing 5 wine gallons or more, which are filled on bottling premises of a distilled spirits plant for removal therefrom, shall be stamped by a stamp under such regulations as the Secretary or his delegate shall prescribe. “(e) Issue for Restamping.— The Secretary or his delegate, under regulations prescribed by him, may authorize restamping of containers of distilled spirits which have been duly stamped but from which the stamps have been lost or destroyed by unavoidable accident. “(f) Accountability.— All stamps relating to distilled spirits shall lie used and accounted for under such regulations as the Secretary or his delegate may prescribe. “(g) Effacement of Stamps, Marks, and Brands on Emptied Containers.— Every person who empties, or causes to be emptied, any immediate container of distilled spirits bearing any stamp, mark, or brand required by law or regulations prescribed pursuant thereto (other than containers stamped under subsection (a) or section 5235) shall at the time of emptying such container efface and obliterate such stamp, mark, or brand, except that the Secretary or his delegate may, by regulations, waive any requirement of this subsection as to the effacement or obliteration of marks or brands (or portions thereof) where he determines that no jeopardy to the revenue will be involved. “(h) Form of Stamp.— Any stamp required by or prescribed pursuant to the provisions of this section or section 5235 may consist of such coupon, serially-numbered ticket, imprint, design, or other form of stamp as the Secretary or his delegate shall by regulations prescribe. “(i) Cross References.— “(1) For general provisions relating to stamps, see chapter 69. “(2) For provisions relating to the stamping, marking, and branding of containers of distilled spirits by proprietors, see section 5204 (c). “(3) For provisions relating to the stamping of bottled alcohol, see section 5235. “(4) For authority of the Secretary or his delegate to prescribe regulations regarding stamps for distilled spirits withdrawn to manufacturing bonded warehouses, see section 5522 (a). “(5) For penalties and forfeitures relating to stamps, marks, and brands, see sections 5604, 5613, 7208, and 7209. “SEC. 5206. CONTAINERS. “(a) Authority To Prescribe.— The Secretary or his delegate shall by regulations prescribe the types or kinds of containers which may be used to contain, store, transfer, convey, remove, or withdraw distilled spirits. “(b) Standards of Fill.— The Secretary or his delegate may by regulations prescribe the standards of fill for approved containers. “(c) Marking, Branding, or Identification.— Containers of distilled spirits (and cases containing bottles or other containers of such spirits) shall be marked, branded, or identified in such manner as the Secretary or his delegate shall by regulations prescribe. “(d) Applicability.— This section shall be applicable exclusively with respect to containers of distilled spirits for industrial use, with respect to containers of distilled spirits of a capacity of more than one gallon for other than industrial use, and with respect to cases containing bottles or other containers of distilled spirits. “(e) Cross References.— “(1) For other provisions relating to regulation of containers of distilled spirits, see section 5301. “(2) For provisions relating to labeling containers of distilled spirits of one gallon or less for nonindustrial uses, see section 5 (e) of the Federal Alcohol Administration Act (27 U. S. C. 205 (e)). “SEC. 5207. RECORDS AND REPORTS. “(a) Records of Distillers and Bonded Warehousemen.— Every distiller and every bonded warehouseman shall keep records in such form and manner as the Secretary or his delegate shall by regulations prescribe of— “(1) the receipt of materials intended for use in the production of distilled spirits, and the use thereof, “(2) the receipt and use of distilled spirits received for redistillation, “(3) the kind and quantity of distilled spirits produced, “(4) the kind and quantity of distilled spirits entered into storage, “(5) the bottling of distilled spirits in bond, “(6) the kind and quantity of distilled spirits removed from bonded premises, and from any taxpaid storeroom operated in connection therewith, and the purpose for which removed, “(7) the kind and quantity of denaturants received and used or otherwise disposed of, “(8) the kind and quantity of distilled spirits denatured, “(9) the kind and quantity of denatured distilled spirits removed, and “(10) such additional information as may by regulations be required. “(b) Records of Rectifiers and Bottlers.— Every rectifier and every bottler of distilled spirits shall keep records in such form and manner as the Secretary or his delegate shall by regulations prescribe of— “(1) all distilled spirits and wines received, “(2) the kind and quantity of distilled spirits and wines rectified and packaged or bottled, or packaged or bottled without rectification, “(3) the kind and quantity of distilled spirits and wines removed from his premises, “(4) the receipt, use, and balance on hand of all stamps required by law or regulations to be used by him, and “(5) such additional information as may by regulations be required. “(c) Reports.— Every person required to keep records under subsection (a) or (b) shall render such reports covering his operations, at such times and in such form and manner and containing such information, as the Secretary or his delegate shall by regulation prescribe. “(d) Preservation and Inspection.— The records required by subsection (a) and (b), and a copy of each report required by subsection (c) shall be kept on the premises where the operations covered by the record are carried on and shall be available for inspection by any internal revenue officer during business hours, and shall be preserved by the person required to keep such records and reports for such period as the Secretary or his delegate shall by regulations prescribe. “(e) Penalty.— “For penalty and forfeiture for refusal or neglect to keep records required under this section, or for false entries therein, see sections 5603 and 5615 (5). “PART II— OPERATIONS ON BONDED PREMISES “Subpart A. General. “Subpart B. Production. “Subpart C. Storage. “Subpart D. Denaturation. “Subpart A— General “Sec. 5211. Production and entry of distilled spirits. “Sec. 5212. Transfer of distilled spirits between bonded premises. “Sec. 5213. Withdrawal of distilled spirits from bonded premises on determination of tax. “Sec. 5214. Withdrawal of distilled spirits from bonded premises free of tax or without payment of tax. “Sec. 5215. Return of tax determined distilled spirits to bonded premises. “Sec. 5216. Regulation of operations. “SEC. 5211. PRODUCTION AND ENTRY OF DISTILLED SPIRITS. “Distilled spirits in the process of production in a distilled spirits plant may be held prior to the production gauge only for so long as is reasonably necessary to complete the process of production. Under such regulations as the Secretary or his delegate shall prescribe, all distilled spirits produced in a distilled spirits plant shall be gauged and a record made of such gauge within a reasonable time after the production thereof has been completed. The proprietor shall, pursuant to such production gauge and in accordance with such regulations as the Secretary or his delegate shall prescribe, make appropriate entry for— “(1) deposit of such spirits in storage on bonded premises; “(2) withdrawal upon determination of tax as authorized by law; “(3) withdrawal under the provisions of section 5214; “(4) transfer for redistillation under the provisions of section 5223; or “(5) immediate denaturation. “SEC. 5212. TRANSFER OF DISTILLED SPIRITS BETWEEN BONDED PREMISES. “Distilled spirits on which the internal revenue tax has not been paid or determined as authorized by law’ may, under such regulations as the Secretary or his delegate shall prescribe, be transferred in bond between bonded premises in any approved container. For the purposes of this chapter, the removal of distilled spirits for transfer in bond between bonded premises shall not be construed to be a withdrawal from bonded premises. “SEC. 5213. WITHDRAWAL OF DISTILLED SPIRITS FROM BONDED PREMISES ON DETERMINATION OF TAX. “On application to the Secretary or his delegate and subject to the provisions of section 5174 (a), distilled spirits may be withdrawn from the bonded premises of a distilled spirits plant on payment or determination of tax thereon, in approved containers, under such regulations as the Secretary or his delegate shall prescribe. “SEC. 5214. WITHDRAWAL OF DISTILLED SPIRITS FROM BONDED PREMISES FREE OF TAX OR WITHOUT PAYMENT OF TAX. “(a) Purposes.— Distilled spirits on which the internal revenue tax has not been paid or determined may, subject to such regulations as the Secretary or his delegate shall prescribe, be withdrawn from the bonded premises of any distilled spirits plant in approved containers— “(1) free of tax after denaturation of such spirits in the manner prescribed by law for— “(A) exportation; “(B) use in the manufacture of ether, chloroform, or other definite chemical substance where such distilled spirits are changed into some other chemical substance and do not appear in the finished product; or “(C) any other use in the arts and industries (except for uses prohibited by section 5273 (b) or (d)) and for fuel, light, and power; or “(2) free of tax by, and for the use of, the United States or any governmental agency thereof, any State or Territory, any political subdivision of a State or Territory, or the District of Columbia, for nonbeverage purposes; or “(3) free of tax for nonbeverage purposes and not for resale or use in the manufacture of any product for sale— “(A) for the use of any educational organization described in section 503 (b) (2) which is exempt from income tax 26 USC 503, 501. under section 501 (a), or for the use of any scientific university or college of learning: “(B) for any laboratory for use exclusively in scientific research; “(C) for use at any hospital, blood bank, or sanitarium (including use in making any analysis or test at such hospital, blood bank, or sanitarium), or at any pathological laboratory exclusively engaged in making analyses, or tests, for hospitals or sanitariums; or “(D) for the use of any clinic operated for charity and not for profit (including use in the compounding of bona fide medicines for treatment outside of such clinics of patients thereof); or “(4) without payment of tax for exportation, after making such application and entries, filing such bonds as are required by section 5175, and complying with such other requirements as may by regulations be prescribed; or “(5) without payment of tax for use in wine production, as authorized by section 5373; or “(6) without payment of tax for transfer to manufacturing bonded warehouses, as authorized by section 5522 (a); or “(7) without payment of tax for use of certain vessels and aircraft, as authorized by law; or “(8) without payment of tax for transfer to foreign-trade zones, as authorized by law; or “(9) free of tax for use as samples in making tests or laboratory analyses. “(b) Cross References.— “(1) For provisions relating to denaturation, see sections 5241 and 5242. “(2) For provisions requiring permit for users of distilled spirits withdrawn free of tax and for users of specially denatured distilled spirits, see section 5271. “(3) For provisions relating to withdrawal of distilled spirits without payment of tax for use of certain vessels and aircraft, as authorized by law. see 19 U. S. C. 1309. “(4) For provisions relating to foreign-trade zones, see 19 U. S. C. 81c. “(5) For provisions authorizing regulations for withdrawal of distilled spirits free of tax for use of the United States, see section 7510. “(6) For provisions authorizing removal of distillates to bonded wine cellars for use in the production of distilling material, see section 5373 (c). “SEC. 5215. RETURN OF TAX DETERMINED DISTILLED SPIRITS TO BONDED PREMISES. “(a) General.— On such application and under such regulations as the Secretary or his delegate may prescribe, distilled spirits withdrawn from bonded premises in bulk containers on or after July 1, 1959, on payment or determination of tax may be returned to the bonded premises of a distilled spirits plant, if such spirits have been found to be unsuitable for the purpose for which intended to be used before any processing thereof and before removal from the original container in which such distilled spirits were withdrawn from bonded premises. Such returned distilled spirits shall immediately be redistilled or denatured, or may, in lieu of redistillation or denaturation, be mingled on bonded premises as authorized in section 5234 (a) (1) (A), (a) (1) (D),or(a) (1) (E). All provisions of this chapter applicable to distilled spirits in bond shall be applicable to distilled spirits returned to bonded premises under the provisions of this section on such return. “(b) Distilled Spirits Withdrawn by Pipeline.— In the case of distilled spirits removed by pipeline, ‘original container in which such distilled spirits were withdrawn from bonded premises’ as used in this section snail mean the bulk tank into which the distilled spirits were originally deposited from pipeline, and the permitted return of the spirits to bonded premises may be made by pipeline or by other approved containers. “(c) Cross Reference.— “For provisions relating to the remission, abatement, credit, or refund of tax on distilled spirits returned to bonded premises under provisions of this section, see section 5008 (d). “SEC. 5216. REGULATION OF OPERATIONS. “For general provisions relating to operations on bonded premises see part I of this subchapter. “Subpart B— Production “Sec. 5221. Commencement, suspension, and resumption of operations. “Sec. 5222. Production, receipt, removal, and use of distilling materials. “Sec. 5223. Redistillation of spirits. “SEC. 5221. COMMENCEMENT, SUSPENSION, AND RESUMPTION OF OPERATIONS. “(a) Commencement, Suspension, and Resumption.— The proprietor of a distilled spirits plant authorized to produce distilled spirits shall not commence production operations until an internal revenue officer has been assigned to the premises. Any proprietor of a distilled spirits plant desiring to suspend production of distilled spirits shall give notice in writing to the Secretary or his delegate, stating when he will suspend such operations. Pursuant to such notice, an internal revenue officer shall take such action as the Secretary or his delegate shall prescribe to prevent the production of distilled spirits. No proprietor, after having given such notice, shall, after the time stated therein, produce distilled spirits on such premises until he again gives notice in writing to the Secretary or his delegate stating the time when he will resume operations. At the time stated in the notice for resuming such operations an internal revenue officer shall take such action as is necessary to permit operations to be resumed. The notices submitted under this section shall be in such form and submitted in such manner as the Secretary or his delegate may by regulations require. Nothing in this section shall apply to suspensions caused by unavoidable accidents; and the Secretary or his delegate shall prescribe regulations to govern such cases of involuntary suspension. “(b) Penalty.— “For penalty and forfeiture for carrying on the business of distiller after having given notice of suspension, see sections 5601 (a) (14) and 5615 (3). “SEC 5222. PRODUCTION, RECEIPT, REMOVAL, AND USE OF DISTILLING MATERIALS. “(a) Production. Removal, and Use.— “(1) No mash, wort, or wash fit for distillation or for the production of distilled spirits shall be made or fermented in any building or on any premises other than on the bonded premises of a distilled spirits plant duly authorized to produce distilled spirits according to law; and no mash, wort, or wash so made or fermented shall lie removed from any such premises before being distilled, except as authorized by the Secretary or his delegate; and no person other than an authorized distiller shall, by distillation or any other process, produce distilled spirits from any mash, wort, wash, or other material. “(2) Nothing in this subsection shall be construed to apply to— “(A) authorized operations performed on the premises of vinegar plants established under part I of subchapter H; 26 USC 5501, 5502. “(B) authorized production and removal of fermented materials produced on authorized brewery or bonded wine cellar premises as provided by law; “(C) products exempt from tax under the provisions of section 5042; or “(D) fermented materials used in the manufacture of vinegar by fermentation. “(b) Receipt.— Under such regulations as the Secretary or his delegate may prescribe, fermented materials to be used in the production of distilled spirits may be received on the bonded premises of a distilled spirits plant authorized to produce distilled spirits as follows— “(1) from the premises of a bonded wine cellar authorized to remove such material by section 5362 (c) (6); “(2) conveyed without payment of tax from contiguous brewery premises where produced; or “(3) cider exempt from tax under the provisions of section 5042 (a) (1). “(c) Processing of Distilled Spirits Containing Extraneous Substances.— The Secretary or his delegate may by regulations provide for the removal from the distilling system, and the addition to the fermented or unfermented distilling material, in the production facilities of a distilled spirits plant, of distilled spirits containing substantial quantities of fusel oil or aldehydes, or other extraneous substances. “(d) Penalty.— “For penalty and forfeiture for unlawful production, removal, or use of material fit for distillation or for the production of distilled spirits, and for penalty and forfeiture for unlawful production of distilled spirits, see sections 5601 (a) (7), 5601 (a) (8), 5601 (b) (3), 5601 (b) (4), and 5615 (4). “SEC. 5223. REDISTILLATION OF SPIRITS. “(a) Spirits on Bonded Premises.— The proprietor of a distilled spirits plant authorized to produce distilled spirits may, under such regulations as the Secretary or his delegate shall prescribe, redistill any distilled spirits which have not been withdrawn from bonded premises. “(b) Distilled Spirits Returned for Redistillation.— Distilled spirits which have been lawfully removed from bonded premises free of tax or without payment of tax may, under such regulations as the Secretary or his delegate may prescribe, be returned for redistillation to the bonded premises of a distilled spirits plant authorized to produce distilled spirits. “(c) Denatured Distilled Spirits.— Distilled spirits recovered by the redistillation of denatured distilled spirits may not be withdrawn from bonded premises except for industrial use or after denaturation thereof in the manner prescribed by law. “(d) Products of Redistillation.— All distilled spirits redistilled on bonded premises subsequent to production gauge shall be treated the same as if such spirits had been originally produced by the redistiller and all provisions of this chapter applicable to the original production of distilled spirits shall be applicable thereto. Any prior obligation as to taxes, liens, and bonds with respect to such distilled spirits shall be extinguished on redistillation. Nothing in this subsection shall be construed as affecting any provision of law relating to the labeling of distilled spirits or as limiting the authority of the Secretary or his delegate to regulate the marking, branding, or identification of distilled spirits redistilled under this section. The processing of distilled spirits, subsequent to production gauge, in the manufacture of vodka in the production facilities of a distilled spirits plant shall be treated for the purposes of this subsection, subsection (a), and sections 5025 (d) and 5215 as redistillation of the spirits. “Subpart C— Storage “Sec. 5231. Entry for deposit in storage. “Sec. 5232. Imported distilled spirits. “Sec. 5233. Bottling of distilled spirits in bond. “Sec. 5234. Mingling and blending of distilled spirits. “Sec. 5235. Bottling of alcohol for industrial purposes. “Sec. 5236. Discontinuance of storage facilities and transfer of distilled spirits. “SEC. 5231. ENTRY FOR DEPOSIT IN STORAGE. “(a) General.— All distilled spirits entered for deposit in storage under section 5211 shall, under such regulations as the Secretary or his delegate shall prescribe, be deposited in storage facilities on the bonded premises designated in the entry for deposit. “(b) Cross Reference.— “For provisions requiring that all distilled spirits entered for deposit be withdrawn within 20 years from date of original entry for deposit, see section 5006 (a) (2). “SEC. 5232. IMPORTED DISTILLED SPIRITS. “Imported distilled spirits of 185 degrees or more of proof (or spirits of any proof imported for any purpose incident to the requirements of the national defense) may, under such regulations as the Secretary or his delegate shall prescribe, be withdrawn from customs custody, and transferred to the bonded premises of a distilled spirits plant, for nonbeverage use, without payment of the internal revenue tax imposed on imported distilled spirits by section 5001. Such spirits may be redistilled or denatured and may, without redistillation or denaturation, be withdrawn for any purpose authorized by this chapter, in the same manner as domestic distilled spirits. “SEC. 5233. BOTTLING OF DISTILLED SPIRITS IN BOND. “(a) General.— Distilled spirits stored on bonded premises which have been duly entered for bottling in bond before determination of tax or for bottling in bond for export, shall be dumped, gauged, bottled, packed, and cased in the manner which the Secretary or his delegate shall by regulations prescribe. Such bottling, packing, and casing shall be conducted in the separate facilities provided therefor under section 5178 (a) (4) (A). “(b) Bottling Requirements.— “(1) The proprietor of a distilled spirits plant who has made entry for withdrawal of distilled spirits for bottling in bond may, under such regulations as the Secretary or his delegate shall prescribe, “(A) remove extraneous insoluble materials, and effect minor changes in the soluble color or soluble solids solely by filtrations or other physical treatments (which do not involve the addition of any substance which will remain incorporated in the completed product), as may be necessary or desirable to produce a stable product, provided such changes shall not exceed maximum limitations prescribed under regulations issued by the Secretary or his delegate, and “(B) reduce the proof of such spirits by the addition of pure water only to 100 proof for spirits for domestic use, or to not less than 80 proof for spirits for export purposes, and “(C) mingle, when dumped for bottling, distilled spirits of the same kind, differing only in proof, produced in the same distilling season by the same distiller at the same distillery. “(2) Nothing in this section shall authorize or permit any mingling of different products, or of the same products of different distilling seasons, or the addition or subtraction of any substance or material or the application of any method or process to alter or change in any way the. original condition or character of the product except as authorized in this section. “(3) Distilled spirits (except gin and vodka for export) shall not be bottled in bond until they have remained in bond in wooden containers for at least 4 years. “(4) Nothing in this section shall authorize the labeling of spirits in bottles contrary to regulations issued pursuant to the Federal Alcohol Administration Act (49 Stat. 977; 27 U. S. (’., chapter 8), or any amendment thereof. “(c) Trademarks on Bottles.— No trademarks shall be put on any bottle unless the real name of the actual bona fide distiller, or the name of the individual, firm, partnership, corporation, or association in whose name the spirits were produced and warehoused, shall also be placed conspicuously on such bottle. “(d) Return of Bottled Distilled Spirits for Rebottling, Relabeling, or Restamping.— Under such regulations as the Secretary or his delegate shall prescribe, distilled spirits which have been bottled under this section and removed from bonded premises may, on application to the Secretary or his delegate, be returned to bonded premises for rebottling, relabeling, or restamping, and tax under section 5001 (a) (1) shall not again be collected on such spirits. “(e) Cross References.— “(1) For provisions relating to stamps and stamping of distilled spirits bottled in bond, see section 5205. “(2) For provisions relating to marking or branding of cases of distilled spirits bottled in bond, see section 5206. “SEC. 5234. MINGLING AND BLENDING OF DISTILLED SPIRITS. “(a) Mingling of Distilled Spirits on Bonded Premises.— “(1) In general.— Under such regulations as the Secretary or his delegate shall prescribe, distilled spirits may be mingled on bonded premises if such spirits— “(A) were distilled at 190 degrees or more of proof; “(B) are heterogeneous and are being dumped for gauging in bulk gauging tanks for immediate removal to bottling premises for use exclusively in taxable rectification or rectification under section 5025 (f); “(C) are homogeneous; “(D) are for immediate denaturation or immediate removal for an authorized tax-free purpose; or “(E) are for immediate redistillation. “(2) Consolidation of packages for further storage in bond.— Under such regulations as the Secretary or his delegate shall prescribe, distilled spirits— “(A) of the same kind, “(B) distilled at the same distillery, “(C) distilled by the same proprietor (under his own or any trade name), and “(D) which have been stored in internal revenue bond in the same kind of cooperage for not less than 4 years (or 2 years in the case of rum or brandy), may, within 8 years of the date of original entry for deposit of the spirits, be mingled on bonded premises for further storage in bond in as many as necessary of the same packages in which the spirits were stored before consolidation. Where distilled spirits produced in different distilling seasons are mingled under this paragraph, the mingled spirits shall consist of not less than 10 percent of spirits of each such season. No spirits mingled under the provisions of this paragraph shall be again mingled under the provisions thereof until at least one year has elapsed since the last prior mingling. For purposes of this chapter, the date of original entry for deposit of the spirits mingled under the provisions of this paragraph shall be the date of original entry for deposit of the youngest spirits contained in the mingled spirits, and the distilling season of such mingled spirits shall be the distilling season of the youngest spirits contained therein. Notwithstanding any other provisions of law, distilled spirits mingled under this paragraph may be bottled and labeled the same as if such spirits had not been so mingled. No statement claiming or implying age in excess of that of the youngest spirits contained in the mingled spirits shall be made on any stamp or label or in any advertisement. “(b) Mingling of Distilled Spirits for National Defense.— Under such regulations as the Secretary or his delegate shall prescribe, distilled spirits may be mingled on bonded premises or in the course of removal therefrom, for any purpose incident to the national defense. “(c) Blending of Beverage Rums or Brandies.— Fruit brandies distilled from the same kind of fruit at not more than 170 degrees of proof may, for the sole purpose of perfecting such brandies according to commercial standards, be mixed or blended with each other, or with any such mixture or blend, on bonded premises. Rums may, for the sole purpose of perfecting them according to commercial standards, be mixed or blended with each other, or with any such mixture or blend, on bonded premises. Such rums or brandies so mixed or blended may be packaged, stored, transported, transferred in bond, withdrawn free of tax, withdrawn upon payment or determination of tax, or be otherwise disposed of, in the same manner as rums or brandies not so mixed or blended. The Secretary or his delegate may make such rules or regulations as he may deem necessary to carry this subsection into effect. “(d) Cross Reference.— “For provisions imposing a tax on the blending of beverage rums or brandies under subsection (c), see section 5023. “SEC. 5235. BOTTLING OF ALCOHOL FOR INDUSTRIAL PURPOSES. “Alcohol for industrial purposes may be bottled, stamped, labeled, and cased on bonded premises of a distilled spirits plant prior to payment or determination of tax, under such regulations as the Secretary or his delegate may prescribe. The provisions of sections 5178 (a) (4) (A), 5205 (a) (1), and 5233 (relating to the bottling of distilled spirits in bond) shall not be applicable to alcohol bottled, stamped, and labeled as such under this section. “SEC. 5236. DISCONTINUANCE OF STORAGE FACILITIES AND TRANSFER OF DISTILLED SPIRITS. “When the Secretary or his delegate finds any facilities for the storage of distilled spirits on bonded premises to be unsafe or unfit for use, or the spirits contained therein subject to great loss or wastage, he may require the discontinuance of the use of such facilities and require the spirits contained therein to be transferred to such other storage facilities as he may designate. Such transfer shall be made at such time and under such supervision as the Secretary or his delegate may require and the expense of the transfer shall be paid by the owner or the warehouseman of the distilled spirits. Whenever the owner of such distilled spirits or the warehouseman fails to make such transfer within the time prescribed, or to pay the just and proper expense of such transfer, as ascertained and determined by the Secretary or his delegate, such distilled spirits may be seized and sold by the Secretary or his delegate in the same manner as goods are sold on distraint for taxes, and the proceeds of such sale shall be applied to the payment of the taxes due thereon and the cost and expenses of such sale and removal, and the balance paid over to the owner of such distilled spirits. “Subpart D— Denaturation “Sec. 5241. Authority to denature. “Sec. 5242. Denaturing materials. “Sec. 5243. Sale of abandoned spirits for denaturation without collection of tax. “Sec. 5244. Cross references. “SEC. 5241. AUTHORITY TO DENATURE. “Under such regulations as the Secretary or his delegate shall prescribe, distilled spirits may be denatured on the bonded premises of any distilled spirits plant operated by a proprietor who is authorized to produce distilled spirits at such plant or on other bonded premises. Any other person operating bonded premises may, at the discretion of the Secretary or his delegate and under such regulations as he may prescribe, be authorized to denature distilled spirits on such bonded premises. Distilled spirits to be denatured under this section shall be of such kind and of such degree of proof as the Secretary or his delegate shall by regulations prescribe. “SEC. 5242. DENATURING MATERIALS. “Methanol or other denaturing materials suitable to the use for which the denatured distilled spirits are intended to be withdrawn shall be used for the denaturation of distilled spirits. Denaturing materials shall be such as to render the spirits with which they are admixed unfit for beverage or internal human medicinal use. The character and the quantity of denaturing materials used shall be as prescribed by the Secretary or his delegate by regulations. “SEC. 5243. SALE OF ABANDONED SPIRITS FOR DENATURATION WITHOUT COLLECTION OF TAX. “Notwithstanding any other provision of law, any distilled spirits abandoned to the United States may be sold, in such cases as the Secretary or his delegate may by regulation provide, to the proprietor of any distilled spirits plant for denaturation, or redistillation and denaturation, without the payment of the internal revenue tax thereon. “SEC. 5244. CROSS REFERENCES. “(1) For provisions authorizing the withdrawal from the bonded premises of a distilled spirits plant of denatured distilled spirits, see section 5214 (a) (1). “(2) For provisions requiring a permit to procure specially denatured distilled spirits, see section 5271. “PART III— OPERATIONS ON BOTTLING PREMISES “Sec. 5251. Notice of Intention to rectify. “Sec. 5252. Regulation of operations. “SEC. 5251. NOTICE OF INTENTION TO RECTIFY. “The Secretary or his delegate may by regulations require the proprietor of any distilled spirits plant authorized to rectify distilled spirits or wines to give notice of his intention to rectify or compound any distilled spirits or wines. Any notice so required shall be in such form, shall be submitted at such time, and shall contain such information as the Secretary or his delegate may by regulations prescribe. “SEC. 5252. REGULATION OF OPERATIONS. “(1) For general provisions relating to operations on bottling premises, see part I of this subchapter. “(2) For provisions relating to bottling and packaging of wines on bottling premises, see section 5363. “Subchapter D— Industrial Use of Distilled Spirits “Sec. 5271. Permits. “Sec. 5272. Bonds. “Sec. 5273. Sale, use and recovery of denatured distilled spirits. “Sec. 5274. Applicability of other laws. “Sec. 5275. Records and reports. “SEC. 5271. PERMITS. “(a) Requirements.— No person shall— “(1) procure or use distilled spirits free of tax under the provisions of section 5214 (a) (2) or (3); or “(2) procure, deal in, or use specially denatured distilled spirits; or “(3) recover specially or completely denatured distilled spirits, until he has filed an application with and received a permit to do so from the Secretary or his delegate. “(b) Form of Application and Permit.— “(1) The application required by subsection (a) shall be in such form, shall be submitted at such times, and shall contain such information, as the Secretary or his delegate shall by regulations prescribe. “(2) Permits under this section shall, under such regulations as the Secretary or his delegate shall prescribe, designate and limit the acts which are permitted, and the place where and time when such acts may be performed. Such permits shall be issued in such form and under such conditions as the Secretary or his delegate may by regulations prescribe. “(c) Disapproval of Application.— Any application submitted under this section may be disapproved and the permit denied if the Secretary or his delegate, after notice and opportunity for hearing, finds that— “(1) in case of an application to withdraw and use distilled spirits free of tax, the applicant is not authorized by law or regulations issued pursuant thereto to withdraw or use such distilled spirits; or “(2) the applicant (including, in the case of a corporation, any officer, director, or principal stockholder, and, in the case of a partnership, a partner) is, by reason of his business experience, financial standing, or trade connections, not likely to maintain operations in compliance with this chapter; or “(3) the applicant has failed to disclose any material information required, or made any false statement as to any material fact, in connection with his application; or “(4) the premises on which it is proposed to conduct the business are not adequate to protect the revenue. “(d) Changes After Issuance of Permit.— With respect to any change relating to the information contained in the application for a permit issued under this section, the Secretary or his delegate may by regulations require the filing of written notice of such change and, where the change affects the terms of the permit, require the filing of an amended application. “(e) Suspension or Revocation.— If, after notice and hearing, the Secretary or his delegate finds that any person holding a permit issued under this section— “(1) has not in good faith complied with the provisions of this chapter or regulations issued thereunder; or “(2) has violated the conditions of such permit; or “(3) has made any false statement as to any material fact in his application therefor; or “(4) has failed to disclose any material information required to be furnished; or “(5) has violated or conspired to violate any law of the United States relating to intoxicating liquor, or has been convicted of any offense under this title punishable as a felony or of any conspiracy to commit such offense; or “(6) is, in the case of any person who has a permit under subsection (a) (1) or (a) (2), by reason of his operations, no longer warranted in procuring or using the distilled spirits or specially denatured distilled spirits authorized by his permit; or “(7) has, in the case of any person who has a permit under subsection (a) (2), manufactured articles which do not correspond to the descriptions and limitations prescribed by law and regulations; or “(8) has not engaged in any of the operations authorized by the permit for a period of more than 2 years; such permit may, in whole or in part, be revoked or be suspended for such period as the Secretary or his delegate deems proper. “(f) Duration of Permits.— Permits issued under this section, unless terminated by the terms of the permit, shall continue in effect until suspended or revoked as provided in this section, or until voluntarily surrendered. “(g) Posting of Permits.— Permits issued under this section, to use distilled spirits free of tax, to deal in or use specially denatured distilled spirits, or to recover specially or completely denatured distilled spirits, shall be kept posted available for inspection on the premises covered by the permit. “(h) Regulations.— The Secretary or his delegate shall prescribe all necessary regulations relating to issuance, denial, suspension, or revocation, of permits under this section, and for the disposition of distilled spirits (including specially denatured distilled spirits) procured under permit pursuant to this section which remain unused when such permit is no longer in effect. “SEC. 5272. BONDS. “(a) Requirements.— Before any permit required by section 5271 (a) is granted, the Secretary or his delegate may require a bond, in such form and amount as he may prescribe, to insure compliance with the terms of the permit and the provisions of this chapter. “(b) Exceptions.— No bond shall be required in the case of permits issued to the United States or any governmental agency thereof, or to the several States and Territories or any political subdivision thereof, or to the District of Columbia. “SEC. 5273. SALE, USE, AND RECOVERY OF DENATURED DISTILLED SPIRITS. “(a) Use of Specially Denatured Distilled Spirits.— Any person using specially denatured distilled spirits in the manufacture of articles shall file such formulas and statements of process, submit such samples, and comply with such other requirements, as the Secretary or his delegate shall by regulations prescribe, and no person shall use specialty denatured distilled spirits in the manufacture or production of any article until approval of the article, formula, and process has been obtained from the Secretary or his delegate. “(b) Internal Medicinal Preparations and Flavoring Extracts.— “(1) Manufacture.— No person shall use denatured distilled spirits in the manufacture of medicinal preparations or flavoring extracts for internal human use where any of the spirits remains in the finished product. “(2) Sale.— No person shall sell or offer for sale for internal human use any medicinal preparations or flavoring extracts manufactured from denatured distilled spirits where any of the spirits remains in the finished product. “(c) Recovery of Spirits for Reuse in Manufacturing.— Manufacturers employing processes in which denatured distilled spirits withdrawn under section 5214 (a) (1) are expressed, evaporated, or otherwise removed, from the articles manufactured shall be permitted to recover such distilled spirits and to have such distilled spirits restored to a condition suitable solely for reuse in manufacturing processes under such regulations as the Secretary or his delegate may prescribe. “(d) Prohibited Withdrawal or Sale.— No person shall withdraw or sell denatured distilled spirits, or sell any article containing denatured distilled spirits for beverage purposes. “(e) Cross References.— “(1) For penalty and forfeiture for unlawful use or concealment of denatured distilled spirits, see section 5607. “(2) For applicability of all provisions of law relating to distilled spirits that are not denatured, including those requiring payment of tax, to denatured distilled spirits or articles produced, withdrawn, sold, transported, or used in violation of law or regulations, see section 5001 (a) (6). “(3) For definition of ‘articles’, see section 5002 (a) (11). “SEC. 5274. APPLICABILITY OF OTHER LAWS. “The provisions, including penalties, of sections 9 and 10 of the 38 Stat. 722. Federal Trade Commission Act (15 U. S. C., secs. 49, 50), as now or hereafter amended, shall apply to the jurisdiction, powers, and duties of the Secretary or his delegate under this subtitle, and to any person (whether or not a corporation) subject to the provisions of this subtitle. “SEC. 5275. RECORDS AND REPORTS. “Every person procuring or using distilled spirits withdrawn under section 5214 (a) (2) or (3), or procuring, dealing in, or using specially denatured distilled spirits, or recovering specially denatured or completely denatured distilled spirits, shall keep such records and file such reports of the receipt and use of distilled spirits withdrawn free of tax, of the receipt, disposition, use, and recovery of denatured distilled spirits, the manufacture and disposition of articles, and such other information as the Secretary or his delegate may by regulations require. The Secretary or his delegate may require any person reprocessing, bottling, or repackaging articles, or dealing in completely denatured distilled spirits or articles, to keep such records, submit such reports, and comply with such other requirements as he may by regulations prescribe. Records required to be kept under this section and a copy of all reports required to be filed shall be preserved as regulations shall prescribe and shall be kept available for inspection by any internal revenue officer during business hours. Such officer may also inspect and take samples of distilled spirits, denatured distilled spirits, or articles (including any substances for use in the manufacture thereof), to which such records or reports relate. “Subchapter E— General Provisions Relating to Distilled Spirits “Part I. Return of materials used in the manufacture or recovery of distilled spirits. “Part II. Regulation of traffic in containers of distilled spirits. “Part III. Miscellaneous provisions. “PART I— RETURN OF MATERIALS USED IN THE MANUFACTURE OR RECOVERY OF DISTILLED SPIRITS “Sec. 5291. General. “SEC. 5291. GENERAL. “(a) Requirement.— Every person disposing of any substance of the character used in the manufacture of distilled spirits, or disposing of denatured distilled spirits or articles from which distilled spirits may be recovered, shall, when required by the Secretary or his delegate, render a correct return, in such form and manner as the Secretary or his delegate may by regulations prescribe, showing the name and address of the person to whom each disposition was made, with such details, as to the quantity so disposed of or other information which the Secretary or his delegate may require as to each such disposition, as will enable the Secretary or his delegate to determine whether all taxes due with respect to any distilled spirits manufactured or recovered from any such substance, denatured distilled spirits, or articles, have been paid. Every person required to render a return under this section shall keep such records as will enable such person to render a correct return. Such records shall be preserved for such period as the Secretary or his delegate shall by regulations prescribe, and shall be kept available for inspection by any internal revenue officer during business hours. “(b) Cross References.— “(1) For the definition of distilled spirits, see section 5002 (a) (6). “(2) For the definition of articles, see section 5002 (a) (11). “(3) For penalty for violation of subsection (a), see section 5605. “PART II— REGULATION OF TRAFFIC IN CONTAINERS OF DISTILLED SPIRITS “Sec. 5301. General. “SEC. 5301. GENERAL. “(a) Requirements.— Whenever in his judgment such action is necessary to protect the revenue, the Secretary or his delegate is authorized, by the regulations prescribed by him and permits issued thereunder if required by him— “(1) to regulate the kind, size, branding, marking, sale, resale, possession, use, and reuse of containers (of a capacity of not more than 5 wine gallons) designed or intended for use for the sale of distilled spirits (within the meaning of such term as it is used in section 5002 (a) (6)) for other than industrial use; and “(2) to require, of persons manufacturing, dealing in, or using any such containers, the submission to such inspection, the keeping of such records, and the filing of such reports as may be deemed by him reasonably necessary in connection therewith. Any requirements imposed under this section shall be in addition to any other requirements imposed by, or pursuant to, law and shall apply as well to persons not liable for tax under the internal revenue laws as to persons so liable. “(b) Disposition.— Every person disposing of containers of the character used for the packaging of distilled spirits shall, when required by the Secretary or his delegate, for protection of the revenue, render a correct return, in such form and manner as the Secretary or his delegate may by regulations prescribe, showing the name and address of the person to whom each disposition was made, with such details as to the quantities so disposed of or other information which the Secretary or his delegate may require as to each such disposition. Every person required to render a return under this section shall keep such records as will enable such person to render a correct return. Such records shall be preserved for such period as the Secretary or his delegate shall by regulations prescribe, and shall be kept available for inspection by any internal revenue officer during business hours. “(c) Refilling of Liquor Bottles.— No person who sells, or offers for sale, distilled spirits, or agent or employee of such person, shall— “(1) place in any liquor bottle any distilled spirits whatsoever other than those contained in such bottle at the time of stamping under the provisions of this chapter; or “(2) possess any liquor bottle in which any distilled spirits have been placed in violation of the provisions of paragraph (1); or “(3) by the addition of any substance whatsoever to any liquor bottle, in any manner alter or increase any portion of the original contents contained in such bottle at the time of stamping under the provisions of this chapter: or “(4) possess any liquor bottle, any portion of the contents of which has been altered or increased in violation of the provisions of paragraph (3); except that the Secretary or his delegate may by regulations authorize the reuse of liquor bottles, under such conditions as he may by regulations prescribe, if the liquor bottles are to be again stamped under the provisions of this chapter. When used in this subsection the term ‘liquor bottle’ shall mean a liquor bottle or other container which has been used for the bottling or packaging of distilled spirits under regulations issued pursuant to subsection (a). “(d) Penalty.— “For penalty for violation of this section, see section 5606. “PART III— MISCELLANEOUS PROVISIONS “Sec. 5311. Detention of containers. “Sec. 5312. Production and use of distilled spirits for experimental research. “Sec. 5313. Withdrawal of distilled spirits from customs custody free of tax for use of the United States. “Sec. 5314. Special applicability of certain provisions. “Sec. 5315. Status of certain distilled spirits on July 1, 1959. “SEC. 5311. DETENTION OF CONTAINERS. “It shall be lawful for any internal revenue officer to detain any container containing, or supposed to contain, distilled spirits, wines, or beer, when he has reason to believe that the tax imposed by law on such distilled spirits, wines, or beer has not been paid or determined as required by law, or that such container is being removed in violation of law: and every such container may be held by him at a safe place until it shall be determined whether the property so detained is liable by law to be proceeded against for forfeiture; but such summary detention shall not continue in any case longer than 72 hours without process of law or intervention of the officer to whom such detention is to be reported. “SEC. 5312. PRODUCTION AND USE OF DISTILLED SPIRITS FOR EXPERIMENTAL RESEARCH. “(a) Scientific Institutions and Colleges of Learning.— Under such regulations as the Secretary or his delegate may prescribe and on the filing of such bonds and applications as he may require, any scientific university, college of learning, or institution of scientific research may produce, receive, blend, treat, test, and store distilled spirits, without payment of tax, for experimental or research use but not for consumption (other than organoleptic tests) or sale, in such quantities as may be reasonably necessary for such purposes. “(b) Experimental Distilled Spirits Plants.— Under such regulations as the Secretary or his delegate may prescribe and on the filing of such bonds and applications as he may require, experimental distilled spirits plants may, at the discretion of the Secretary or his delegate, be established and operated for specific and limited periods of time solely for experimentation in, or development of— “(1) sources of materials from which distilled spirits may be produced; “(2) processes by which distilled spirits may be produced or refined; or “(3) industrial uses of distilled spirits. “(c) Authority To Exempt.— The Secretary or his delegate may by regulations provide for the waiver of any provision of this chapter (other than tins section) to the extent he deems necessary to effectuate the purposes of this section, except that he may not waive the payment of any tax on distilled spirits removed from any such university, college, institution, or plant. “SEC. 5313. WITHDRAWAL OF DISTILLED SPIRITS FROM CUSTOMS CUSTODY FREE OF TAX FOR USE OF THE UNITED STATES. “Distilled spirits may be withdrawn free of tax from customs custody by the United States or any governmental agency thereof for its own use for nonbeverage purposes, under such regulations as may be prescribed by the Secretary or his delegate. “SEC. 5314. SPECIAL APPLICABILITY OF CERTAIN PROVISIONS. “(a) Puerto Rico.— “(1) Applicability.— The provisions of this subsection shall not apply to the Commonwealth of Puerto Rico unless the Legislative Assembly of the Commonwealth of Puerto Rico expressly consents thereto in the manner prescribed in the constitution of the Commonwealth of Puerto Rico for the enactment of a law. “(2) In general.— Distilled spirits for the purposes authorized in section 5214 (a) (2) and (3), denatured distilled spirits, and articles, as described in this paragraph, produced or manufactured in Puerto Rico, may be brought into the United States 26 USC 7652. free of any tax imposed by section 5001 (a) (4) or 7652 (a) (1) for disposal under the same conditions as like spirits, denatured spirits, and articles, produced or manufactured in the United States; and the provisions of this chapter and regulations promulgated thereunder (and all other provisions of the internal revenue laws applicable to the enforcement thereof, including the penalties of special application thereto) relating to the production, bonded warehousing, and denaturation of distilled spirits, to the withdrawal of distilled spirits or denatured distilled spirits, and to the manufacture of articles from denatured distilled spirits, shall, insofar as applicable, extend to and apply in Puerto Rico in respect of— “(A) distilled spirits for shipment to the United States for the purposes authorized in section 5214 (a) (2) and (3); “(B) distilled spirits for denaturation; “(C) denatured distilled spirits for shipment to the United States; “(D) denatured distilled spirits for use in the manufacture of articles for shipment to the United States; and “(E) articles, manufactured from denatured distilled spirits, for shipment to the United States. “(3) Withdrawals authorized by puerto rico.— Distilled spirits (including denatured distilled spirits) may be withdrawn from the bonded premises of a distilled spirits plant in Puerto Rico pursuant to authorization issued under the laws of the Commonwealth of Puerto Rico; such spirits so withdrawn, and products containing such spirits so withdrawn, may not be brought into the United States free of tax. “(4) Costs of administration.— Any expenses incurred by the Treasury Department in connection with the enforcement in Puerto Rico of the provisions of this subtitle and section 7652 (a), and regulations promulgated thereunder, shall be charged against and retained out of taxes collected under this title in respect of commodities of Puerto Rican manufacture brought into the United States. The funds so retained shall be deposited as a reimbursement to the appropriation to which such expenses were originally charged. ‘(b) Virgin Islands.— “(1) In general.— Distilled spirits for the purposes authorized in section 5214 (a) (2) and (3), denatured distilled spirits, and articles, as described in this paragraph, produced or manufactured in the Virgin Islands, may be brought into the United States free of any tax imposed by section 7652 (b) (1) for disposal under the same conditions as like spirits, denatured spirits, and articles, produced or manufactured in the United States; and the provisions of this chapter and regulations promulgated thereunder (and all other provisions of the internal revenue laws applicable to the enforcement thereof, including the penalties of special application thereto) relating to the production, bonded warehousing, and denaturation of distilled spirits, to the withdrawal of distilled spirits or denatured distilled spirits, and to the manufacture of articles from denatured distilled spirits, shall, insofar as applicable, extend to and apply in the Virgin Islands in respect of— “(A) distilled spirits for shipment to the United States for the purposes authorized in section 5214 (a) (2) and (3); “(B) distilled spirits for denaturation; “(C) denatured distilled spirits for shipment to the United States: “(D) denatured distilled spirits for use in the manufacture of articles for shipment to the United States; and “(E) articles, manufactured from denatured distilled spirits, for shipment to the United States. “(2) Advance of funds.— The insular government of the Virgin Islands shall advance to the Treasury of the United States such funds as may be required from time to time by the Secretary or his delegate for the purpose of defraying all expenses incurred by the Treasury Department in connection with the enforcement in the Virgin Islands of paragraph (1) and regulations promulgated thereunder. The funds so advanced shall be deposited in a separate trust fund in the Treasury of the United States and shall be available to the Treasury Department for the purposes of this subsection. “(3) Regulations issued by virgin islands.— The Secretary or his delegate may authorize the Governor of the Virgin Islands, or his duly authorized agents, to issue or adopt such regulations, to approve such bonds, and to issue, suspend, or revoke such permits, as are necessary to carry out the provisions of this subsection. When regulations have been issued or adopted under this paragraph with concurrence of the Secretary or his delegate he may exempt the Virgin Islands from any provisions of law and regulations otherwise made applicable by the provisions of paragraph (1) except that denatured distilled spirits, articles, and distilled spirits for tax-free purposes which are brought into the United States from the Virgin Islands under the provisions of this subsection shall in all respects conform to the requirements of law and regulations imposed on like products of domestic manufacture. “SEC. 5315. STATUS OF CERTAIN DISTILLED SPIRITS ON JULY 1, 1959. “(a) In Registered Distilleries, Fruit Distilleries, and Industrial Alcohol Plants.— All distilled spirits which, at the close of June 30, 1959, are in registered distilleries, registered fruit distilleries, and industrial alcohol plants (including spirits received for redistillation) and which have not been entered for deposit in storage in internal revenue bond or for withdrawal (including transfer or withdrawal for denaturation) as provided by law, shall be treated as if in the process of production in a distilled spirits plant. “(b) Produced at Registered Distilleries, Fruit Distilleries, and Industrial Alcohol Plants.— All distilled spirits produced at registered distilleries, registered fruit distilleries, or industrial alcohol plants, which before July 1, 1959, have been entered for deposit in storage in internal revenue bond (including distilled spirits withdrawn for denaturation), and which immediately prior to such date are in registered distilleries, registered fruit distilleries, industrial alcohol plants, internal revenue bonded warehouses, industrial alcohol bonded warehouses, industrial alcohol denaturing plants, and distillery denaturing bonded warehouses, or in transit thereto, shall be stored, transferred, withdrawn, and used under the same conditions as like distilled spirits or denatured distilled spirits produced in a distilled spirits plant. “(c) Withdrawn From Customs Custody.— All imported distilled spirits which before July 1, 1959, have been withdrawn from customs custody without payment of the internal revenue tax for transfer to an industrial alcohol plant, industrial alcohol bonded warehouse or industrial alcohol denaturing plant, and which immediately prior to such date are in registered distilleries, registered fruit distilleries, industrial alcohol plants, internal revenue bonded warehouses, industrial alcohol bonded warehouses, and industrial alcohol denaturing plants, or in transit thereto, shall be stored, transferred, withdrawn, and used under the same conditions as like spirits withdrawn from customs custody without payment of tax and transferred to the bonded premises of a distilled spirits plant. “(d) Withdrawn Free of Tax.— Distilled spirits which before July 1, 1959, have been withdrawn free of tax for purposes similar to those authorized under section 5214 (a) (1), (a) (2), or (a) (3), as provided by law, by any person holding a permit for such withdrawal, and which immediately prior to such date are lawfully in the possession of, or in transit to, any person holding a permit to procure or use distilled spirits (including specially denatured distilled spirits) free of tax or to deal in or recover specially denatured distilled spirits, shall be treated as if withdrawn from the bonded premises of a distilled spirits plant under the applicable provisions of section 5214 (a) (1), (a) (2), or (a) (3). “(e) Withdrawn for Use in the Production of Wine.— Distilled spirits which before July 1, 1959, have been withdrawn without payment of tax by the proprietor of a bonded wine cellar, as authorized by law, for use in the production of wine, and which before such date had not been used in the production of wine, shall be considered for the purposes of section 5373 the same as if produced in a distilled spirits plant and withdrawn under the provisions of section 5214 (a) (5). “Subchapter F— Bonded and Taxpaid Wine Premises ‘Part I. Establishment. “Part II. Operations. “Part III. Cellar treatment and classification of wine. “Part IV. General. “PART I— ESTABLISHMENT “Sec. 5351. Bonded wine cellar. “Sec. 5352. Taxpaid wine bottling house. “Sec. 5353. Bonded wine warehouse. “Sec. 5354. Bond. “Sec. 5355. General provisions relating to bonds. “Sec. 5356. Application. “Sec. 5357. Premises. “SEC. 5351. BONDED WINE CELLAR. “Any person establishing premises for the production, blending, cellar treatment, storage, bottling, packaging, or repackaging of untaxpaid wine (other than wine produced exempt from tax under section 5042), including the use of wine spirits in wine production, shall, before commencing operations, make application to the Secretary or his delegate and file bond and receive permission to operate. Such premises shall be known as ‘bonded wine cellars’; except that any such premises engaging in production operations may, in the discretion or the Secretary or his delegate, be designated as a ‘bonded winery’. “SEC. 5352. TAXPAID WINE BOTTLING HOUSE. “Any person bottling, packaging, or repackaging taxpaid wines at premises other than the bottling premises of a distilled spirits plant shall, before commencing such operations, make application to the Secretary or his delegate and receive permission to operate. Such premises shall be known as ‘taxpaid wine bottling houses’. “SEC. 5353. BONDED WINE WAREHOUSE. “Any responsible warehouse company or other responsible person may, upon filing application with the Secretary or his delegate and consent of the proprietor and the surety on the bond of any bonded wine cellar, under regulations prescribed by the Secretary or his delegate, establish on such premises facilities for the storage of wines and allied products for credit purposes, to be known as a ‘bonded wine warehouse’. The proprietor of the bonded wine cellar shall remain responsible in all respects for operations in the warehouse and the tax on the wine or wine spirits stored therein. “SEC. 5354. BOND. “The bond for a bonded wine cellar shall be in such form, on such conditions, and with such adequate surety, as regulations issued by the Secretary or his delegate shall prescribe, and shall be in a penal sum not less than the tax on any wine or wine spirits possessed or in transit at any one time, but not less than $1,000 nor more than $50,000; except that where the tax on such wine and on such wine spirits exceeds $250,000, the penal sum of the bond shall be not more than $100,000. Where additional liability arises as a result of deferral of payment of tax payable on any return, the Secretary or his delegate may require the proprietor to file a supplemental bond in such amount as may be necessary to protect the revenue. The liability of any person on any such bond shall apply whether the transaction or operation on which the liability of the proprietor is based occurred on or off the proprietor’s premises. “SEC. 5355. GENERAL PROVISIONS RELATING TO BONDS. “The provisions of section 5551 (relating to bonds) shall be applicable to the bonds required under section 5354. “SEC. 5356. APPLICATION. “The application required by this part shall disclose, as regulations issued by the Secretary or his delegate shall provide, such information as may be necessary to enable the Secretary or his delegate to determine the location and extent of the premises, the type of operations to be conducted on such premises, and whether the operations will be in conformity with law and regulations. “SEC. 5357. PREMISES. “Bonded wine cellar premises, including noncontiguous portions thereof, shall be so located, constructed, and equipped, as to afford adequate protection to the revenue, as regulations prescribed by the Secretary or his delegate may provide. “PART II— OPERATIONS “Sec. 5361. Bonded wine cellar operations. “Sec. 5362. Removals of wine from bonded wine cellars. “Sec. 5363. Taxpaid wine bottling house operations. “Sec. 5364. Standard wine premises. “Sec. 5365. Segregation of operations. “Sec. 5366. Supervision. “Sec. 5367. Records. “Sec. 5368. Gauging, marking, and stamping. “Sec. 5369. Inventories. “Sec. 5370. Losses. “Sec. 5371. Insurance coverage, etc. “Sec. 5372. Sampling. “Sec. 5373. Wine spirits. “SEC. 5361. BONDED WINE CELLAR OPERATIONS. “In addition to the operations described in section 5351, the proprietor of a bonded wine cellar may, subject to regulations prescribed by the Secretary or his delegate, on such premises receive unmerchantable taxpaid wine for return to bond, reconditioning, or destruction; prepare for market and store commercial fruit products and byproducts not taxable as wines; produce or receive distilling material or vinegar stock; produce (with or without added wine spirits, and without added sugar) or receive on standard wine premises only, subject to tax as wine but not for sale or consumption as beverage wine, (1) heavy bodied blending wines and Spanish-type blending sherries, and (2) other wine products made from natural wine for nonbeverage purposes; and such other operations as may be conducted in a manner that will not jeopardize the revenue or conflict with wine operations. “SEC. 5362. REMOVALS OF WINE FROM BONDED WINE CELLARS. “(a) Withdrawals on Determination of Tax.— Wine may be withdrawn from bonded wine cellars on payment or determination of the tax thereon, under such regulations as the Secretary or his delegate shall prescribe. “(b) Transfers of Wine Between Bonded Wine Cellars.— Wine on which the internal revenue tax has not been paid or determined may, under such regulations as the Secretary or his delegate shall prescribe, be transferred in bond between bonded wine cellars. For the purposes of this chapter, the removal of wine for transfer in bond between bonded wine cellars shall not be construed to be a removal for consumption or sale. “(c) Withdrawals of Wine Free of Tax or Without Payment of Tax.— Wine on which the tax has not been paid or determined may, under such regulations and bonds as the Secretary or his delegate may deem necessary to protect the revenue, be withdrawn from bonded wine cellars— “(1) without payment of tax for export by the proprietor or by any authorized exporter; “(2) without payment of tax for transfer to any foreign-trade zone; “(3) without payment of tax for use of certain vessels and aircraft as authorized by law; “(4) without payment of tax for transfer to any class 6 customs manufacturing warehouse; “(5) without payment of tax for use in the production of vinegar; “(6) without payment of tax for use in distillation in any distilled spirits plant authorized to produce distilled spirits; “(7) free of tax for experimental or research purposes by any scientific university, college of learning, or institution of scientific research; “(8) free of tax for use by or for the account of the proprietor or his agents for analysis or testing, organoleptic or otherwise; and “(9) free of tax for use by the United States or any agency thereof, and for use for analysis, testing, research, or experimentation by the governments of the several States and Territories and the District of Columbia or of any political subdivision thereof or by any agency of such governments. No bond shall be required of any such government or agency under this paragraph. “SEC. 5363. TAXPAID WINE BOTTLING HOUSE OPERATIONS. “In addition to the operations described in section 5352. the proprietor of a taxpaid wine bottling house may, subject to regulations issued by the Secretary or his delegate, on such premises mix wine of the same kind and taxable grade to facilitate handling; preserve, filter, or clarify wine: and conduct operations not involving wine where such operations will not jeopardize the revenue or conflict with wine operations. This subchapter shall apply to any wine received on the bottling premises of any distilled spirits plant for bottling, packaging, or repackaging, and to all operations relative thereto. Sections 5021, 5081, and 5082 shall not apply to the mixing or treatment of taxpaid wine under this section. “SEC. 5364. STANDARD WINE PREMISES. “Except as otherwise specifically provided in this subchapter, no proprietor of a bonded wine cellar or taxpaid wine bottling house engaged in producing, receiving, storing or using any standard wine, shall produce, receive, store, or use any wine other than standard wine. The limitation contained in the preceding sentence shall not prohibit the production or receipt of nigh fermentation wines, distilling material, or vinegar stock in any bonded wine cellar. “SEC. 5365. SEGREGATION OF OPERATIONS. “The Secretary or his delegate may require by regulations such segregation of operations within the premises, by partitions or otherwise, as may be necessary to prevent jeopardy to the revenue, to prevent confusion between untaxpaid wine operations and such other operations as are authorized in this subchapter, or to prevent substitution with respect to the several methods of producing effervescent wines. “SEC. 5366. SUPERVISION. “The Secretary or his delegate may by regulations require that operations at a bonded wine cellar or taxpaid wine bottling house be supervised by an internal revenue officer where necessary for the protection of the revenue or for the proper enforcement of this subchapter. “SEC. 5367. RECORDS. “The proprietor of a bonded wine cellar or a taxpaid wine bottling house shall keep such records and file such returns, in such form and containing such information, as the Secretary or his delegate may by regulations provide. “SEC. 5368. GAUGING, MARKING. AND STAMPING. “(a) Gauging and Marking.— All wine or wine spirits shall be locked, sealed, and gauged, and shall be marked, branded, labeled, or otherwise identified, in such manner as the Secretary or his delegate may by regulations prescribe. “(b) Stamping.— Wines shall be removed in such containers (including vessels, vehicles, and pipelines) bearing such marks, labels, and stamps, evidencing compliance with this chapter, as the Secretary or his delegate may by regulations prescribe. “SEC. 5369. INVENTORIES. “Each proprietor of premises subject to the provisions of this subchapter shall take and report such inventories as the Secretary or his delegate may by regulations prescribe. “SEC. 5370. LOSSES. “(a) General.— No tax shall be collected in respect of any wines lost or destroyed while in bond, except that tax shall be collected— “(1) Theft.— In the case of loss by theft, unless the Secretary or his delegate shall find that the theft occurred without connivance, collusion, fraud, or negligence on the part of the pro- prietor or other person responsible for the tax, or the owner, consignor, consignee, bailee, or carrier, or the agents or employees of any of them; and “(2) Voluntary destruction.— In the case of voluntary destruction, unless the wine was destroyed under Government supervision, or on such adequate notice to, and approval by, the Secretary or his delegate as regulations shall provide. “(b) Proof of Loss.— In any case in which the wine is lost or destroyed, whether by theft or otherwise, the Secretary or his delegate may require by regulations the proprietor of the bonded wine cellar or other person liable for the tax to file a claim for relief from the tax and submit proof as to the cause of such loss. In every case where it appears that the loss was by theft, the burden shall be on the proprietor or other person liable for the tax to establish to the satisfaction of the Secretary or his delegate, that such loss did not occur as the result of connivance, collusion, fraud, or negligence on the part of the proprietor, owner, consignor, consignee, bailee, or carrier, or the agents or employees of any of them. “SEC. 5371. INSURANCE COVERAGE, ETC. “Any remission, abatement, refund, or credit of, or other relief from, taxes on wines or wine spirits authorized by law shall be allowed only to the extent that the claimant is not indemnified or recompensed for the tax. “SEC. 5372. SAMPLING. “Under regulations prescribed by the Secretary or his delegate, wine may be utilized in any bonded wine cellar for testing, tasting, or sampling, free of tax. “SEC. 5373. WINE SPIRITS. “(a) In General.— The wine spirits authorized to be used in wine production shall be brandy or wine spirits produced in a distilled spirits plant (with or without the use of water to facilitate extraction and distillation) exclusively from fresh or dried fruit, or their residues, or the wine or wine residue therefrom (except that where, in the production of natural wine, sugar has been used, the wine or the residuum thereof may not be used, if the unfermented sugars therein have been refermented). Such wine spirits shall not be reduced with water from distillation proof, nor be distilled, unless regulations otherwise provide, at less than 140 degrees of proof (except that commercial brandy aged in wood for a period of not less than 2 years, and barreled at not less than 100 degrees of proof, shall be deemed wine spirits for the purpose of this subsection). “(b) Withdrawal of Wine Spirits.— “(1) The proprietor of any bonded wine cellar may withdraw and receive wine spirits without payment of tax from the bonded premises of any distilled spirits plant, or from any bonded wine cellar as provided in paragraph (2), for use in the production of natural wine, for addition to concentrated or unconcentrated juice for use in wine production, or for such other uses as may be authorized in this subchapter. “(2) Wine spirits so withdrawn, and not used in wine production or as otherwise authorized in this subchapter, may, as provided by regulations prescribed by the Secretary or his delegate, be transferred to the bonded premises of any distilled spirits plant or bonded wine cellar, or may be taxpaid and removed as provided by law. “(3) On such use, transfer, or taxpayment, the Secretary or his delegate shall credit the proprietor with the amount of wine spirits so used or transferred or taxpaid and, in addition, with such portion of wine spirits so withdrawn as may have been lost either in transit or on the bonded wine cellar premises, to the extent allowable under section 5008 (a). Where the proprietor has used wine spirits in actual wine production but in violation of the requirements of this subchapter, the Secretary or his delegate shall also extend such credit to the wine spirits so used if the proprietor satisfactorily shows that such wine spirits were not knowingly used in violation of law. “(4) Suitable samples of brandy or wine spirits may, under regulations prescribed by the Secretary or his delegate, be withdrawn free of tax from the bonded premises of any distilled spirits plant, bonded wine cellar, or authorized experimental premises, for analysis or testing. “(c) Distillates Containing Aldehydes.— When the Secretary or his delegate deems such removal and use will not jeopardize the revenue nor unduly increase administrative supervision, distillates containing aldehydes may, under such regulations as the Secretary or his delegate may prescribe, be removed without payment of tax from the bonded premises of a distilled spirits plant to an adjacent bonded wine cellar and used therein in fermentation of wine to be used as distilling material at the distilled spirits plant from which such unfinished distilled spirits were removed. “PART III— CELLAR TREATMENT AND CLASSIFICATION OF WINE “Sec. 5381. Natural wine. “Sec. 5382. Cellar treatment of natural wine. “Sec. 5383. Amelioration and sweetening limitations for natural grape wines. “Sec. 5884. Amelioration and sweetening limitations for natural fruit and berry wines. “Sec. 5385. Specially sweetened natural wines. “Sec. 5386. Special natural wines. “Sec. 5387. Agricultural wines. “Sec. 5388. Designation of wines. “SEC. 5381. NATURAL WINE. “Natural wine is the product of the juice or must of sound, ripe grapes or other sound, ripe fruit, made with such cellar treatment as may be authorized under section 5382 and containing not more than 21 percent by weight of total solids. Any wine conforming to such definition except for having become substandard by reason of its condition shall be deemed not to lie natural wine and shall, unless the condition is corrected, be removed in due course for distillation, destroyed under Government supervision, or transferred to premises in which wines other than natural wine may be stored or used. “SEC. 5382. CELLAR TREATMENT OF NATURAL WINE. “(a) General.— Proper cellar treatment of natural wine constitutes those practices and procedures in the United States and elsewhere, whether historical or newly developed, of using various methods and materials to correct or stabilize the wine, or the fruit juice from which it is made, so as to produce a finished product acceptable in good commercial practice. Where a particular treatment has been used in customary commercial practice, it shall continue to be recognized as a proper cellar treatment in the absence of regulations prescribed by the Secretary or his delegate finding such treatment not to be a proper cellar treatment within the meaning of this subsection. “(b) Specifically Authorized Treatments.— The practices and procedures specifically enumerated in this subsection shall be deemed proper cellar treatment for natural wine: “(1) The preparation and use of pure concentrated or unconcentrated juice or must. Concentrated juice or must reduced with water to its original density or to not less than 22 degrees Brix or unconcentrated juice or must reduced with water to not less than 22 degrees Brix shall be deemed to be juice or must, and shall include such amounts of water to clear crushing equipment as regulations prescribed by the Secretary or his delegate may provide. “(2) The addition to natural wine, or to concentrated or unconcentrated juice or must, from one kind of fruit, of wine spirits (whether or not taxpaid) distilled in the United States from the same kind of fruit; except that (A) the wine, juice, or concentrate shall not have an alcoholic content in excess of 24 percent by volume after the addition of wine spirits, and (B) in the case of still wines, wine spirits may be added only to natural wines of the winemaker’s own production made without added sugar or reserved as provided in sections 5383 (b) and 5384 (b). “(3) Amelioration and sweetening of natural grape wines in accordance with section 5383. “(4) Amelioration and sweetening of natural wines from fruits other than grapes in accordance with section 5384. “(5) In the case of effervescent wines, such preparations for refermentation and for dosage as may be acceptable in good commercial practice, but only if the alcoholic content of the finished product does not exceed 14 percent by volume. “(6) The natural darkening of the sugars or other elements in juice, must, or wine due to storage, concentration, heating processes, or natural oxidation. “(7) The blending of natural wines with each other or with heavy-bodied blending wine or with concentrated or unconcentrated juice, whether or not such juice contains wine spirits, if the wines, juice, or wine spirits are from the same kind of fruit. “(8) Such use of acids to correct natural deficiencies and stabilize the wine as may be acceptable in good commercial practice. “(c) Other Authorized Treatment.— The Secretary or his delegate may by regulations prescribe limitations on the preparation and use of clarifying, stabilizing, preserving, fermenting, and corrective methods or materials, to the extent that such preparation or use is not acceptable in good commercial practice. “SEC. 5383. AMELIORATION AND SWEETENING LIMITATIONS FOR NATURAL GRAPE WINES. “(a) Sweetening of Grape Wines.— Any natural grape wine made under this section may, if not in reserve inventory as hereinafter provided, be sweetened after fermentation and before taxpayment with pure dry sugar if the sugar solids content of the finished wine does not exceed 10 percent of the weight of the wine and the alcoholic content of the finished wine after sweetening is less than 14 percent by volume. “(b) High Acid Wines.— “(1) Any natural grape wine of a winemaker’s own production may, under this subsection, be ameliorated to correct high acid content, and, whether or not ameliorated, may be reserved as herein provided. “(2) To wines produced under this subsection there may be added to the juice or to the wine, or both, before or during fermentation (including wines held pursuant to regulation in intermediate storage for completion of amelioration), ameliorat- ing material consisting of either water, or pure dry sugar, or a combination of water and pure dry sugar, in such total volume as may be necessary to reduce the natural fixed acid content of the mixture of juice and such ameliorating materal to a minimum of 5 parts per thousand (calculated before fermentation and as tartaric acid), but in no event shall the volume of such ameliorating material exceed 35 percent of the total volume of such ameliorated juice (calculated exclusive of pulp). The wine so made shall be transferred to a reserve inventory established as regulation issued by the Secretary or his delegate shall require; except that such wine containing less than 14 percent alcohol by volume after complete fermentation, or after complete fermentation and sweetening, need not be transferred into reserve inventory if all claim to further amelioration is waived. “(3) The wines in the reserve inventory may be sweetened with dry sugar in an amount not exceeding, for the aggregate of the inventory— “(A) the dry sugar equivalent of any volume of authorized ameliorating material not used for wine so transferred, plus “(B) nine-tenths pound of dry sugar for each gallon of wine so transferred and such unused ameliorating material combined. “(4) Wines so reserved may be blended together and sweetened with pure dry sugar to the extent provided in paragraph (3) or with concentrated or unconcentrated grape juice, and may have wine spirits added if such wine contains less than 14 percent of alcohol by volume at the time of such addition (unless wine spirits were previously added). Any wines withdrawn from reserve inventory shall have an alcoholic content of less than 14 percent by volume and a total solids content not exceeding 21 percent by weight, except that, if wine spirits have been added and the alcoholic content is 14 percent by volume or more, the sugar solids content shall not exceed 15 percent by weight. “(5) The winemaker shall maintain and balance for his reserve inventory such accounts as regulations issued by the Secretary or his delegate shall prescribe. “SEC. 5384. AMELIORATION AND SWEETENING LIMITATIONS FOR NATURAL FRUIT AND BERRY WINES. “(a) In General.— To natural wine made from berries or fruit other than grapes, pure dry sugar may be added to the juice in the fermenter, or to the wine after fermentation; but only if such wine has less than 14 percent alcohol by volume after complete fermentation, or after complete fermentation and sweetening, and a total solids content not in excess of 21 percent by weight. “(b) Reserve Fruit and Berry Wines.— “(1) Any natural fruit or berry wine (other than grape wine) of a winemaker’s own production may, if not made under subsection (a) of this section, be ameliorated to correct high acid content, and, whether or not ameliorated, may be reserved as herein provided. Separate reserve inventories shall be established for wines made from each different kind of fruit. “(2) Pure dry sugar may be used in the production of wines under this subsection for the purpose of correcting natural deficiencies. The quantity of sugar so used shall not exceed the quantity which would have been required to adjust the juice, prior to fermentation, to a total solids content of 25 degrees (Brix). Such sugar shall be added prior to the completion of fermentation of the wine. After such addition of the sugar, the wine or juice shall be treated and accounted for as provided in section 5383 (b), covering the production of reserved high acid grape wines, except that— “(A) Natural fixed acid shall be calculated as malic acid for apple wine and as citric acid for other fruit and berry wines, instead of tartaric acid; “(B) Juice adjusted with pure dry sugar as provided in this paragraph shall be treated in the same manner as original natural juice under the provisions of section 5383 (b); “(C) Wines made under this subsection may be withdrawn from reserve inventory with a total solids content of not more than 21 percent by weight, whether or not wine spirits have been added; and “(D) Wines made exclusively from loganberries, currants, or gooseberries, shall be entitled to a volume of ameliorating material not in excess of 60 percent (in lieu of 35 percent). “SEC. 5385. SPECIALLY SWEETENED NATURAL WINES. “(a) Definition.— Specially sweetened natural wine is the product made by adding to natural wine of the winemaker’s own production a sufficient quantity of pure dry sugar, or juice or concentrated juice from the same kind of fruit, separately or in combination, to produce a finished product having a sugar solids content in excess of 15 percent by weight and an alcoholic content of less than 14 percent by volume, and shall include extra sweet kosher wine and similarly heavily sweetened wines. “(b) Blending, Etc.— The winemaker may blend specially sweetened natural wine from the same kind of fruit either before or after the special sweetening, or with additional natural wine or heavy-bodied blending wine from the same kind of fruit in the further production of specially sweetened natural wine only, and may cellar treat any such wines as provided in section 5382 (c). Wine spirits may not be added to specially sweetened natural wine, nor may such wine be blended except to produce a specially sweetened natural wine. “SEC. 5386. SPECIAL NATURAL WINES. “(a) In General.— Special natural wines are the products made, pursuant to a formula approved under this section, from a base of natural wine (including heavy-bodied blending wine) exclusively, with the addition, before, during or after fermentation, of natural herbs, spices, fruit juices, aromatics, essences, and other natural flavorings in such quantities or proportions as to enable such products to be distinguished from any natural wine not so treated, and with or without carbon dioxide naturally or artificially added, and with or without the addition, separately or in combination, of pure dry sugar or a solution of pure dry sugar and water, or caramel. No added wine spirits or alcohol or other spirits shall be used in any wine under this section except as may be contained in the natural wine (including heavy-bodied blending wine) used as a base or except as may be necessary in the production of approved essences or similar approved flavorings. The Brix degree of any solution of pure dry sugar and water used may be limited by regulations prescribed by the Secretary or his delegate in accordance with good commercial practice. “(b) Cellar Treatment.— Special natural wines may be cellar treated as provided in section 5382 (c). “SEC. 5387. AGRICULTURAL WINES. “(a) In General.— Wines made from agricultural products other than the juice of fruit shall be made in accordance with good commercial practice as may be prescribed by the Secretary or his delegate by regulations. Wines made in accordance with such regulations shall be classed as ‘standard agricultural wines’. Wines made under this section may be cellar treated as provided in section 5382 (c). “(b) Limitations.— No wine spirits may be added to wines produced under this section, nor shall any coloring material or herbs or other flavoring material (except hops in the case of honey wine) be used in their production. “(c) Restriction on Blending.— Wines from different agricultural commodities shall not be blended together. “SEC. 5388. DESIGNATION OF WINES. “(a) Standard Wines.— Standard wines may be removed from premises subject to the provisions of this subchapter and be marked, transported, and sold under their proper designation as to kind and origin, or, if there is no such designation known to the trade or consumers, then under a truthful and adequate statement of composition. “(b) Other Wines.— Wines other than standard wines may be removed for consumption or sale and be marked, transported, or sold only under such designation as to kind and origin as adequately describes the true composition of such products and as adequately distinguish them from standard wines, as regulations prescribed by the Secretary or his delegate shall provide. “PART IV— GENERAL “Sec. 5391. Exemption from rectifying and spirits taxes. “Sec. 5392. Definitions. “SEC. 5391. EXEMPTION FROM RECTIFYING AND SPIRITS TAXES. “Notwithstanding any other provision of law, the taxes imposed by sections 5001 and 5021 on distilled spirits generally and on rectified spirits and wines shall not, except as provided in this subchapter, be assessed, levied, or collected from the proprietor of any bonded wine cellar with respect to his use or treatment of wine, or use of wine spirits in wine production, in such premises, nor shall such proprietor, by reason of such treatment or use, be deemed to be a rectifier within the meaning of section 5082; except that, whenever wine or wine spirits are used in violation of this subchapter, the applicable tax imposed by sections 5001 and 5021 shall be collected unless the proprietor satisfactorily shows that such wine or wine spirits were not Knowingly used in violation of law’. “SEC. 5392. DEFINITIONS. “(a) Standard Wine.— For purposes of this subchapter the term ‘standard wine’ means natural wine, specially sweetened natural wine, special natural wine, and standard agricultural wine, produced in accordance with the provisions of sections 5381, 5385, 5386, and 5387, respectively. “(b) Heavy Bodied Blending Wine.— For purposes of this subchapter the term ‘heavy bodied blending wine’ means wine made from fruit without added sugar, and with or without added wine spirits, and conforming to the definition of natural wine in all respects except as to maximum total solids content. “(c) Pure Sugar.— For purposes of this subchapter the term ‘pure sugar’ means pure refined cane or beet sugar, or pure refined anhydrous or monohydrate dextrose sugar, of not less than 95 percent purity calculated on a dry basis. Invert sugar syrup produced from such pure sugar by recognized methods of inversion may be used to prepare any sugar syrup, or solution of water and pure sugar, authorized in this subchapter. “(d) Total Solids.— For purposes of this subchapter the term ‘total solids’, in the ease of wine, means the degrees Brix of the dealcoholized wine. “(e) Same Kind of Fruit.— For purposes of this subchapter the term ‘same kind of fruit’ includes, in the case of grapes, all of the several species and varieties of grapes. In the case of fruits other than grapes, this term includes all of the several species and varieties of any given kind; except that this shall not preclude a more precise identification of the composition of the product for the purpose of its designation. “(f) Own Production.— For purposes of this subchapter the term ‘own production’, when used with reference to wine in a bonded wine cellar, means wine produced by fermentation in the same bonded wine cellar, whether or not produced by a predecessor in interest at such bonded wine cellar. This term may also include, under regulations, wine produced by fermentation in bonded wine cellars owned or controlled by the same or affiliated persons or firms when located within the same State; the term ‘affiliated’ shall be deemed to include any one or more bonded wine cellar proprietors associated as members of any farm cooperative, or any one or more bonded wine cellar proprietors affiliated within the meaning of section 17 (a) (5) of the Federal Alcohol Administration Act, as amended (49 Stat. 990; 27 U.S. C. 211). “Subchapter G— Breweries “Part I. Establishment. “Part II. Operations. “PART I— ESTABLISHMENT “Sec. 5401. Qualifying documents. “Sec. 5402. Definitions. “Sec. 5403. Cross references. “SEC. 5401. QUALIFYING DOCUMENTS. “(a) Notice.— Every brewer shall, before commencing or continuing business, file with the officer designated for that purpose by the Secretary or his delegate a notice in writing, in such form and containing such information as the Secretary or his delegate shall by regulations prescribe as necessary to protect and insure collection of the revenue. “(b) Bonds.— Every brewer, on filing notice as provided by subsection (a) of his intention to commence business, shall execute a bond to the United States in such reasonable penal sum as the Secretary or his delegate shall by regulation prescribe as necessary to protect and insure collection of the revenue. The bond shall be conditioned (1) that the brewer shall pay, or cause to be paid, as herein provided, the tax required by law on all beer, including all beer removed for transfer to the brewery from other breweries owned by him as provided in section 5414; (2) that he shall pay or cause to be paid the tax on all beer removed free of tax for export as provided in section 5053 (a), which beer is not exported or returned to the brewery; and (3) that he shall in all respects faithfully comply, without fraud or evasion, with all requirements of law relating to the production and sale of any beer aforesaid. Once in every 4 years, or whenever required so to do by the Secretary or his delegate, the brewer shall execute a new bond in the penal sum prescribed in pursuance of this section, and conditioned as above provided, which bond shall be in lieu of any former bond or bonds of such brewer in respect to all liabilities accruing after its approval. “SEC. 5402. DEFINITIONS. “(a) Brewery.— The brewery shall consist of the land and buildings described in the brewer’s notice. “(b) Brewer.— “For definition of brewer, see section 5092. “SEC. 5403. CROSS REFERENCES. “(1) For authority of Secretary or his delegate to disapprove brewers’ bonds, see section 5551. “(2) For authority of Secretary to require the installation and use of meters, tanks, and other apparatus, see section 5552. “(3) For deposit of United States bonds or notes in lieu of sureties, see 6 U. S. C. 15. “PART II— OPERATIONS “Sec. 5411. Use of brewery. “Sec. 5412. Removal of beer in containers or by pipeline. “Sec. 5413. Brewers procuring beer from other brewers. “Sec. 5414. Removals from one brewery to another belonging to the same brewer. “Sec. 5415. Records and returns. “Sec. 5416. Definitions of bottle and bottling. “SEC. 5411. USE OF BREWERY. “The brewery shall be used under regulations prescribed by the Secretary or his delegate only for the purpose of producing beer, cereal beverages containing less than one-half of one percent of alcohol by volume, vitamins, ice, malt, malt sirup, and other byproducts; of bottling beer and cereal beverages; of drying spent grain from the brewery; of recovering carbon dioxide and yeast; and of producing and bottling soft drinks; and for such other purposes as the Secretary or his delegate by regulation may find will not jeopardize the revenue. The bottling of beer and cereal beverages shall be conducted only in the brewery bottle house which shall consist of a separate portion of the brewery designated for that purpose. “SEC. 5412. REMOVAL OF BEER IN CONTAINERS OR BY PIPELINE. “Beer may be removed from the brewery for consumption or sale only in hogsheads, barrels, kegs, bottles, and similar containers, marked, branded, or labeled in such manner as the Secretary or his delegate may by regulation require, except that beer may be removed from the brewery by pipeline to contiguous distilled spirits plants under section 5222. “SEC. 5413. BREWERS PROCURING BEER FROM OTHER BREWERS. “A brewer, under such regulations as the Secretary or his delegate shall prescribe, may obtain beer in his own hogsheads, barrels, and kegs, marked with his name and address, from another brewer, with taxpayment thereof to be by the producer in the manner prescribed by section 5054. “SEC. 5414. REMOVALS FROM ONE BREWERY TO ANOTHER BELONGING TO THE SAME BREWER. “Beer may be removed from one brewery to another brewery belonging to the same brewer, without payment of tax. and may be mingled with beer at the receiving brewery, subject to such conditions, including payment of the tax, and in such containers, as the Secretary or his delegate by regulations shall prescribe. The removal from one brewery to another brewery belonging to the same brewer shall be deemed to include any removal from a brewery owned by one corporation to a brewery owned by another corporation when (1) one such corporation owns the controlling interest in the other such corporation, or (2) the controlling interest in each such corporation is owned by the same person or persons. “SEC. 5415. RECORDS AND RETURNS. “(a) Records.— Every brewer shall keep records, in such form and containing such information as the Secretary or his delegate shall prescribe by regulations as necessary for protection of the revenue. These records shall be preserved by the person required to keep such records for such period as the Secretary or his delegate shall by regulations prescribe, and shall be available during business hours for examination and taking of abstracts therefrom by any internal revenue officer. “(b) Returns.— Every brewer shall make true and accurate returns of his operations and transactions in the form, at the times, and for such periods as the Secretary or his delegate shall by regulation prescribe. “SEC. 5416. DEFINITIONS OF BOTTLE AND BOTTLING. “For purposes of this subchapter, the word ‘bottle’ means a bottle, can, or similar container, and the word ‘bottling’ means the filling of bottles, cans, and similar containers. “Subchapter H— Miscellaneous Plants and Warehouses “Part I. Vinegar plants. “Part II. Volatile fruit-flavor concentrate plants. “Part III. Manufacturing bonded warehouses. “PART I— VINEGAR PLANTS “Sec. 5501. Establishment. “Sec. 5502. Qualification. “Sec. 5503. Construction and equipment. “Sec. 5504. Operation. “Sec. 5505. Applicability of provisions of this chapter. “SEC. 5501. ESTABLISHMENT. “Plants for the production of vinegar by the vaporizing process, where distilled spirits of not more than 15 percent of alcohol by volume are to be produced exclusively for use in the manufacture of vinegar on the premises, may be established under this part. “SEC. 5502. QUALIFICATION. “(a) Requirements.— Every person, before commencing the business of manufacturing vinegar by the vaporizing process, and at such other times as the Secretary or his delegate may by regulations prescribe, shall make application to the Secretary or his delegate for the registration of his plant and receive permission to operate. No application required under this section shall be approved until the applicant has complied with all requirements of law, and regulations prescribed by the Secretary or his delegate, in relation to such business. With respect to any change in such business after approval of an application, the Secretary or his delegate may by regulations authorize the filing of written notice of such change or require the filing of an application to make such change. “(b) Form of Application.— The application required by subsection (a) shall be in such form and contain such information as the Secretary or his delegate shall by regulations prescribe to enable him to determine the identity of the applicant, the location and extent of the premises, the type of operations to be conducted on such premises, and whether the operations will be in conformity with law and regulations. “SEC. 5503. CONSTRUCTION AND EQUIPMENT. “Plants established under this part for the manufacture of vinegar by the vaporizing process shall be constructed and equipped in accordance with such regulations as the Secretary or his delegate shall prescribe. “SEC. 5504. OPERATION. “(a) General.— Any manufacturer of vinegar qualified under this part may, under such regulations as the Secretary or his delegate shall prescribe, separate by a vaporizing process the distilled spirits from the mash produced by him, and condense the vapor by introducing it into the water or other liquid used in making vinegar in his plant. “(b) Removals.— No person shall remove, or cause to be removed, from any plant established under this part any vinegar or other fluid or material containing a greater proportion than 2 percent of proof spirits. “(c) Records.— Every person manufacturing vinegar by the vaporizing process shall keep such records and file such reports as the Secretary or his delegate shall by regulations prescribe of the kind and quantity of materials received on his premises and fermented or mashed, the quantity of low wines produced, the quantity of such low wines used in the manufacture of vinegar, the quantity of vinegar produced, the quantity of vinegar removed from the premises, and such other information as may by regulations be required. Such records, and a copy of such reports, shall be preserved as regulations shall prescribe, and shall be kept available for inspection by any internal revenue officer during business hours. “SEC. 5505. APPLICABILITY OF PROVISIONS OF THIS CHAPTER. “(a) Tax.— The taxes imposed by subchapter A shall be applicable to any distilled spirits produced in violation of section 5501 or removed in violation of section 5504 (b). “(b) Prohibited Premises.— Plants established under this part shall not be located on any premises where distilling is prohibited under section 5601 (a) (6). “(c) Entry and Examination of Premises.— The provisions of section 5203 (b), (c), and (d), relating to right of entry and examination, furnishing facilities and assistance, and authority to break up grounds or walls, shall be applicable to all premises established under this part, and to all proprietors thereof, and their workmen or other persons employed by them. “(d) Registration of Stills.— Stills on the premises of plants established under this part shall be registered as provided in section 5179. “(e) Installation of Meters, Tanks, and Other Apparatus.— The provisions of section 5552 relating to the installation of meters, tanks, and other apparatus shall be applicable to plants established under this part. “(f) Assignment of Internal Revenue Officers.— The provisions of section 5553 (a) relating to the assignment of internal revenue officers shall be applicable to plants established under this part. “(g) Authority To Waive Records, Statements, and Returns.— The provisions of section 5555 (b) relating to the authority of the Secretary to waive records, statements, and returns shall be applicable to records, statements, or returns required by this part. “(h) Regulations.— The provisions of section 5556 relating to the prescribing of regulations shall be applicable to this part. “(i) Penalties.— The penalties and forfeitures provided in sections 5601 (a) (1), (6), and (12), 5601 (b) (1), 5603, 5615 (1) and (4), 5686, and 5687 shall be applicable to this part. “(j) Other Provisions.— This chapter (other than this part and the provisions referred to in subsections (a), (b), (c), (d), (e), (f), (g), (h), and (i)) shall not be applicable with respect to plants established or operations conducted under this part. “PART II— VOLATILE FRUIT-FLAVOR CONCENTRATE PLANTS “Sec. 5511. Establishment and operation. “Sec. 5512. Control of products after manufacture. “SEC. 5511. ESTABLISHMENT AND OPERATION. “This chapter (other than sections 5178 (a) (2) (C), 5179, 5203 (b), (c), and (d), and 5552) shall not be applicable with respect to the manufacture, by any process which includes evaporations from the mash or juice of any fruit, of any volatile fruit-flavor concentrate if— “(1) such concentrate, and the mash or juice from which it is produced, contains no more alcohol than is reasonably unavoidable in the manufacture of such concentrate; and “(2) such concentrate is rendered unfit for use as a beverage before removal from the place of manufacture; and “(3) the manufacturer thereof makes such application, keeps such records, renders such reports, files such bonds, and complies with such other requirements with respect to the production, removal, sale, transportation, and use of such concentrate and of the mash or juice from which such concentrate is produced, as the Secretary or his delegate may by regulations prescribe as necessary for the protection of the revenue. “SEC. 5512. CONTROL OF PRODUCTS AFTER MANUFACTURE. “For applicability of all provisions of this chapter pertaining to distilled spirits and wines, including those requiring payment of tax, to volatile fruit-flavor concentrates sold, transported, or used in violation of law or regulations, see section 5001 (a) (7). “PART III— MANUFACTURING BONDED WAREHOUSES “Sec. 5521. Establishment and operation. “Sec. 5522. Withdrawal of distilled spirits to manufacturing bonded warehouses. “Sec. 5523. Special provisions relating to distilled spirits and wines rectified in manufacturing bonded warehouses. “SEC. 5521. ESTABLISHMENT AND OPERATION. “(a) Establishment.— All medicines, preparations, compositions, perfumery, cosmetics, cordials, and other liquors manufactured wholly or in part of domestic spirits, intended for exportation, as provided by law, in order to be manufactured and sold or removed, without being charged with duty and without having a stamp affixed thereto, shall, under such regulations as the Secretary or his delegate may prescribe, be made and manufactured in warehouses similarly constructed to those known and designated in Treasury regulations as bonded warehouses, class six. The manufacturer shall first give satisfactory bonds to the Secretary or his delegate for the faithful observance of all the provisions of law and the regulations as aforesaid, in amount not less than half of that required by the regulations of the Secretary or his delegate from persons allowed bonded warehouses. “(b) Supervision.— All labor performed and services rendered under this section shall be under the supervision of an officer of the customs, and at the expense of the manufacturer. “(c) Materials for Manufacture.— “(1) Exportable free of tax.— Any manufacturer of the articles specified in subsection (a), or of any of them, having such bonded warehouse, shall be at liberty, under such regulations as the Secretary or his delegate may prescribe, to convey therein any materials to be used in such manufacture which are allowed by the provisions of law to be exported free from tax or duty, as well as the necessary materials, implements, packages, vessels, brands, and labels for the preparation, putting up, and export of such manufactured articles; and every article so used shall be exempt from the payment of stamp and excise duty by such manufacturer. Articles and materials so to be used may be transferred from any bonded warehouse under such regulations as the Secretary or his delegate may prescribe, into any bonded warehouse in which such manufacture may be conducted, and may be used in such manufacture, and when so used shall be exempt from stamp and excise duty; and the receipt of the officer in charge shall be received as a voucher for the manufacture of such articles. “(2) Imported materials.— Any materials imported into the United States may, under such regulations as the Secretary or his delegate may prescribe, and under the direction of the proper officer, be removed in original packages from on shipboard, or from the bonded warehouse in which the same may be, into the bonded warehouse in which such manufacture may be carried on, for the purpose of being used in such manufacture, without payment of duties thereon, and may there be used in such manufacture. No article so removed, nor any article manufactured in said bonded warehouse, shall be taken therefrom except for exportation, under the direction of the proper officer having charge thereof, whose certificate, describing the articles by their mark or otherwise, the quantity, the date of importation, and name of vessel, with such additional particulars as may from time to time be required, shall be received by the collector of customs in cancellation of the bond, or return of the amount of foreign import duties. “(d) Removals.— “(1) General.— Such goods, when manufactured in such warehouses, may be removed for exportation under the direction of the proper officer having charge thereof, who shall be designated by the Secretary or his delegate, without being charged with duty and without having a stamp affixed thereto. “(2) Transportation for export.— Any article manufactured in a bonded warehouse established under subsection (a) may be removed therefrom for transportation to a customs bonded warehouse at any port, for the purpose only of being exported there from, under such regulations and on the execution of such bonds or other security as the Secretary or his delegate may prescribe. “SEC. 5522. WITHDRAWAL OF DISTILLED SPIRITS TO MANUFACTURING BONDED WAREHOUSES. “(a) Authorization.— Under such regulations and requirement as to stamps, bonds, and other security as shall be prescribed by the Secretary or his delegate, any manufacturer of medicines, preparations, compositions, perfumery, cosmetics, cordials, and other liquors, for export, manufacturing the same in a duly constituted manufacturing bonded warehouse, shall be authorized to withdraw, from the bonded premises of any distilled spirits plant, so much distilled spirits as he may require for such purpose, without the payment of the internal revenue tax thereon. “(b) Allowance for Loss or Leakage.— “For provisions relating to allowance for loss of distilled spirits withdrawn under subsection (a), see section 5008 (f). “SEC. 5523. SPECIAL PROVISIONS RELATING TO DISTILLED SPIRITS AND WINES RECTIFIED IN MANUFACTURING BONDED WAREHOUSES. “Distilled spirits and wines which are rectified in manufacturing bonded warehouses, class six, and distilled spirits which are reduced in proof and bottled or packaged in such warehouses, shall be deemed to have been manufactured within the meaning of section 311 of the 46 Stat. 691. Tariff Act of 1930 (19 U. S. C. 1311), and may be withdrawn as provided in such section, and likewise for shipment in bond to Puerto Rico, subject to the provisions of such section, and under such regulations as the Secretary or his delegate may prescribe, there to be withdrawn for consumption or be rewarehoused and subsequently withdrawn for consumption. No internal revenue tax shall be imposed on distilled spirits and wines rectified in class six warehouses if such distilled spirits and wines are exported or shipped in accordance with such section 311. No person rectifying distilled spirits or wines in such warehouses shall be subject by reason of such rectification to the payment of special tax as a rectifier. “Subchapter I— Miscellaneous General Provisions “Sec. 5551. General provisions relating to bonds. “Sec. 5552. Installation of meters, tanks, and other apparatus. “Sec. 5553. Supervision of premises and operations. “Sec. 5554. Pilot operations. “Sec. 5555. Records, statements, and returns. “Sec. 5550. Regulations. “Sec. 5557. Officers and agents authorized to investigate, issue search warrants, and prosecute for violations. “Sec. 5558. Authority of enforcement officers. “Sec. 5559. Determinations. “Sec. 5500. Other provisions applicable. “Sec. 5561. Exemptions to meet the requirements of the national defense. “Sec. 5562. Exemptions from certain requirements in cases of disaster. “SEC. 5551. GENERAL PROVISIONS RELATING TO BONDS. “(a) Approval as Condition to Commencing Business.— No individual, firm, partnership, corporation, or association, intending to commence or to continue the business of a distiller, bonded warehouseman, rectifier, brewer, or winemaker, shall commence or continue the business of a distiller, bonded warehouseman, rectifier, brewer, or winemaker until all bonds in respect of such a business, required by any provision of law, have been approved by the Secretary or the officer designated by him. “(b) Disapproval.— The Secretary or any officer designated by him may disapprove any such bond or bonds if the individual, firm, partnership, corporation, or association giving such bond or bonds, or owning, controlling, or actively participating in the management of the business of the individual, firm, partnership, corporation, or association giving such bond or bonds, shall have been previously convicted, in a court of competent jurisdiction, of— “(1) any fraudulent noncompliance with any provision of any law of the United States, if such provision related to internal revenue or customs taxation of distilled spirits, wines, or beer, or if such an offense shall have been compromised with the individual, firm, partnership, corporation, or association on payment of penalties or otherwise, or “(2) any felony under a law of any State, Territory, or the District of Columbia, or the United States, prohibiting the manufacture, sale, importation, or transportation of distilled spirits, wine, beer, or other intoxicating liquor. “(c) Appeal From Disapproval.— In case the disapproval is by an officer designated by the Secretary to approve or disapprove such bonds, the individual, firm, partnership, corporation, or association giving the bond may appeal from such disapproval to the Secretary or an officer designated by him to hear such appeals, and the disapproval of the bond by the Secretary or officer designated to hear such appeals shall be final. “SEC. 5552. INSTALLATION OF METERS, TANKS, AND OTHER APPARATUS. “The Secretary or his delegate is authorized to require at distilled spirits plants, breweries, and at any other premises established pursuant to this chapter as in his judgment may be deemed advisable, the installation of meters, tanks, pipes, or any other apparatus for the purpose of protecting the revenue, and such meters, tanks, and pipes and all necessary labor incident thereto shall be at the expense of the person on whose premises the installation is required. Any such person refusing or neglecting to install such apparatus when so required by the Secretary or his delegate shall not be permitted to conduct business on such premises. “SEC. 5553. SUPERVISION OF PREMISES AND OPERATIONS. “(a) Assignment of Internal Revenue Officers.— The Secretary or his delegate is authorized to assign to any premises established under the provisions of this chapter such number of internal revenue officers as may be deemed necessary. “(b) Functions of Internal Revenue Officer.— When used in this chapter, the term “internal revenue officer assigned to the premises’ means the internal revenue officer assigned by the Secretary or his delegate to duties at premises established and operated under the provisions of this chapter. “SEC. 5554. PILOT OPERATIONS. “For the purpose of facilitating the development and testing of improved methods of governmental supervision (necessary for the protection of the revenue) over distilled spirits plants established under this chapter, the Secretary or his delegate is authorized to waive any regulatory provisions of this chapter for temporary pilot or experimental operations. Nothing in this section shall be construed as authority to waive the filing of any bond or the payment of any tax provided for in this chapter. “SEC. 5555. RECORDS, STATEMENTS, AND RETURNS. “(a) General.— Every person liable to any tax imposed by this chapter, or for the collection thereof, or for the affixing of any stamp required to be affixed by this chapter, shall keep such records, render such statements, make such returns, and comply with such rules and regulations as the Secretary or his delegate may prescribe. “(b) Authority To Waive.— Whenever in this chapter any record is required to be made or kept, or statement or return is required to be made by any person, the Secretary or his delegate may by regulation waive, in whole or in part, such requirement when he deems such requirement to no longer serve a necessary purpose. This subsection shall not be construed as authorizing the waiver of the payment of any tax. “(c) Photographic Copies.— Whenever in this chapter any record is required to be made and preserved by any person, the Secretary or his delegate may by regulations authorize such person to record, copy, or reproduce by any photographic, photostatic, microfilm, micro-card, miniature photographic, or other process, which accurately reproduces or forms a durable medium for so reproducing the orig- inal of such record and to retain such reproduction in lieu of the original. Every person who is authorized to retain such reproduction in lieu of the original shall, under such regulations as the Secretary or his delegate may prescribe, preserve such reproduction in conveniently accessible files and make provision for examining, viewing, and using such reproduction the same as if it were the original. Such reproduction shall be treated and considered for all purposes as though it were the original record and all provisions of law applicable to the original shall be applicable to such reproduction. Such reproduction, or enlargement or facsimile thereof, shall be admissible in evidence in the same manner and under the same conditions as provided for the admission of reproductions, enlargements, or facsimiles of records made in the regular course of business under section 1732 (b) of title 28 of the United States Code. “SEC. 5556. REGULATIONS. “The regulations prescribed by the Secretary or his delegate for enforcement of this chapter may make such distinctions in requirements relating to construction, equipment, or methods of operation as he deems necessary or desirable due to differences in materials or variations in methods used in production, processing, or storage of distilled spirits. “SEC. 5557. OFFICERS AND AGENTS AUTHORIZED TO INVESTIGATE, ISSUE SEARCH WARRANTS, AND PROSECUTE FOR VIOLATIONS. “(a) General.— The Secretary or his delegate shall investigate violations of this subtitle and in any case in which prosecution appears warranted the Secretary or his delegate shall report the violation to the United States Attorney for the district in which such violation was committed, who is hereby charged with the duty of prosecuting the offenders, subject to the direction of the Attorney General, as in the case of other offenses against the laws of the United States; and the Secretary or his delegate may swear out warrants before United States commissioners or other officers or courts authorized to issue warrants for the apprehension of such offenders, and may, subject to the control of such United States Attorney, conduct the prosecution at the committing trial for the purpose of having the offenders held for the action of a grand jury. Section 3041 of title 18 of the United States Code is hereby made applicable in the enforcement of this subtitle. “(b) Cross Reference.— “For provisions relating to the issuance of search warrants, see the Federal Rules of Criminal Procedure. “SEC. 5558. AUTHORITY OF ENFORCEMENT OFFICERS. “For provisions relating to the authority of internal revenue enforcement officers, see section 7608. “SEC. 5559. DETERMINATIONS. “Whenever the Secretary or his delegate is required or authorized, in this chapter, to make or verify any quantitative determination, such determination or verification may be made by actual count, weight, or measurement, or by the application of statistical methods, or by other means, under such regulations as the Secretary or his delegate may prescribe. “SEC. 5560. OTHER PROVISIONS APPLICABLE. “All provisions of subtitle F, insofar as applicable and not inconsistent 26 USC 6001–7852. with the provisions of this subtitle, are hereby extended to and made a part of this subtitle. “SEC. 5561. EXEMPTIONS TO MEET THE REQUIREMENTS OF THE NATIONAL DEFENSE “The Secretary or his delegate may temporarily exempt proprietors of distilled spirits plants from any provision of the internal revenue laws relating to distilled spirits, except those requiring payment of the tax thereon, whenever in his judgment it may seem expedient to do so to meet the requirements of the national defense. Whenever the Secretary or his delegate shall exercise the authority conferred by this section he may prescribe such regulations as may be necessary to accomplish the purpose which caused him to grant the exemption. “SEC. 5562. EXEMPTIONS FROM CERTAIN REQUIREMENTS IN CASES OF DISASTER. “Whenever the Secretary or his delegate finds that it is necessary or desirable, by reason of disaster, to waive provisions of internal revenue law with regard to distilled spirits, he may temporarily exempt proprietors of distilled spirits plants from any provision of the internal revenue laws relating to distilled spirits, except those requiring payment of the tax thereon, to the extent he may deem necessary or desirable. “Subchapter J— Penalties, Seizures, and Forfeitures Relating to Liquors “Part I. Penalty, seizure, and forfeiture provisions applicable to distilling, rectifying, and distilled and rectified products. “Part II. Penalty and forfeiture provisions applicable to wine and wine production. “Part III. Penalty, seizure, and forfeiture provisions applicable to beer and brewing. “Part IV. Penalty, seizure, and forfeiture provisions common to liquors. “Part V. Penalties applicable to occupational taxes. “PART I— PENALTY, SEIZURE, AND FORFEITURE PROVISIONS APPLICABLE TO DISTILLING, RECTIFYING, AND DISTILLED AND RECTIFIED PRODUCTS “Sec. 5601. Criminal penalties. “Sec. 5602. Penalty for tax fraud by distiller. “Sec. 5603. Penalty relating to records, returns, and reports. “Sec. 5604. Penalties relating to stamps, marks, brands, and containers. “Sec. 5605. Penalty relating to return of materials used in the manufacture of distilled spirits, or from which distilled spirits may be recovered. “Sec. 5606. Penalty relating to containers of distilled spirits. “Sec. 5607. Penalty and forfeiture for unlawful use, recovery, or concealment of denatured distilled spirits, or articles. “Sec. 560S. Penalty and forfeiture for fraudulent claims for export drawback or unlawful relanding. “Sec. 5600. Destruction of unregistered stills, distilling apparatus, equipment, and materials. “Sec. 5610. Disposal of forfeited equipment and material for distilling. “Sec. 5611. Release of distillery before Judgment. “Sec. 5612. Forfeiture of taxpaid distilled spirits remaining on bonded premises. “Sec. 5613. Forfeiture of distilled spirits not stamped, marked, or branded as required by law. “Sec. 5614. Burden of proof in cases of seizure of spirits. “Sec. 5615. Property subject to forfeiture. “SEC. 5601. CRIMINAL PENALTIES. “(a) Offenses.— Any person who— “(1) Unregistered stills.— has in his possession or custody, or under his control, any still or distilling apparatus set up which is not registered, as required by section 5179 (a); or “(2) Failure of distiller or rectifier to file application.— engages in the business of a distiller or rectifier without having filed application for and received notice of registration, as required by section 5171 (a); or “(3) False or fraudulent application.— engages, or intends to engage, in the business of distiller, bonded warehouseman, rectifier, or bottler of distilled spirits, and files a false or fraudulent application under section 5171; or “(4) Failure or refusal of distiller or rectifier to give bond.— carries on the business of a distiller or rectifier without having given bond as required by law; or “(5) False, forged, or fraudulent bond.— engages, or intends to engage, in the business of distiller, bonded warehouseman, rectifier, or bottler of distilled spirits, and gives any false, forged, or 26 USC 5171–5217. fraudulent bond, under subchapter B; or “(6) Distilling on prohibited premises.— uses, or possesses with intent to use, any still, boiler, or other utensil for the purpose of producing distilled spirits, or aids or assists therein, or causes or procures the same to be done, in any dwelling house, or in any shed, yard, or inclosure connected with such dwelling house (except as authorized under section 5178 (a) (1) (C)), or on board any vessel or boat, or on any premises where beer or wine is made or produced, or where liquors of any description are retailed, or on premises where any other business is carried on (except when authorized under section 5178 (b)); or “(7) Unlawful production, removal, or use of material fit for production of distilled spirits.— except as otherwise provided in this chapter, makes or ferments mash, wort, or wash, fit for distillation or for the production of distilled spirits, in any building or on any premises other than the designated premises of a distilled spirits plant lawfully qualified to produce distilled spirits, or removes, without authorization by the Secretary or his delegate, any mash, wort, or wash, so made or fermented, from the designated premises of such lawfully qualified plant before being distilled; or “(8) Unlawful production of distilled spirits.— not being a distiller authorized by law to produce distilled spirits, produces distilled spirits by distillation or any other process from any mash, wort, wash, or other material; or “(9) Unauthorized use of distilled spirits in manufacturing processes.— except as otherwise provided in this chapter, uses distilled spirits in any process or manufacture unless such spirits— “(A) have been produced in the United States by a distiller authorized by law to produce distilled spirits and withdrawn in compliance with law; or “(B) have been imported (or otherwise brought into the United States) and withdrawn in compliance with law; or “(10) Unlawful rectifying or bottling.— engages in or carries on the business of a rectifier, or a bottler of distilled spirits— “(A) with intent to defraud the United States of any tax on the distilled spirits rectified or bottled by him; or “(B) with intent to aid, abet, or assist any person or persons in defrauding the United States of the tax on any distilled spirits; or “(11) Unlawful purchase, receipt, rectification, or bottling of distilled spirits.— purchases, receives, rectifies, or bottles any distilled spirits, knowing or having reasonable grounds to believe that any tax due on such spirits has not been paid or determined as required by law; or “(12) Unlawful removal or concealment of distilled spirits.— removes, other than as authorized by law, any distilled spirits on which the tax has not been paid or determined, from the place of manufacture or storage, or from any instrument of transportation, or conceals spirits so removed; or “(13) Creation of fictitious proof.— adds, or causes to be added, any ingredient or substance (other than ingredients or substances authorized by law to be added) to any distilled spirits before the tax is paid thereon, or determined as provided by law, for the purpose of creating fictitious proof; or “(14) Distilling after notice of suspension.— after the time fixed in the notice given under section 5221 (a) to suspend operations as a distiller, carries on the business of a distiller on the premises covered by the notice of suspension, or has mash, wort, or beer on such premises, or on any premises connected therewith, or has in his possession or under his control any mash, wort, or beer, with intent to distill the same on such premises; shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, for each such offense. “(b) Presumptions.— “(1) Unregistered stills.— Whenever on trial for violation of subsection (a) (1) the defendant is shown to have been at the site or place where, and at the time when, a still or distilling apparatus was set up without having been registered, such presence of the defendant shall be deemed sufficient evidence to authorize conviction, unless the defendant explains such presence to the satisfaction of the jury (or of the court when tried without jury). “(2) Failure or refusal of distiller or rectifier to give bond.— Whenever on trial for violation of subsection (a) (4) the defendant is shown to have been at the site or place where, and at the time when, the business of a distiller or rectifier was so engaged in or carried on, such presence of the defendant shall be deemed sufficient evidence to authorize conviction, unless the defendant explains such presence to the satisfaction of the jury (or of the court when tried without jury). “(3) Unlawful production, removal, or use of material fit for production of distilled spirits.— Whenever on trial for violation of subsection (a) (7) the defendant is shown to have been at the place in the building or on the premises where such mash, wort, or wash fit for distillation or the production of distilled spirits, was made or fermented, and at the time such mash, wort, or wash was there possessed, such presence of the defendant shall be deemed sufficient evidence to authorize conviction, unless the defendant explains such presence to the satisfaction of the jury (or of the court when tried without jury). “(4) Unlawful production of distilled spirits.— Whenever on trial for violation of subsection (a) (8) the defendant is shown to have been at the site or place where, and at the time when, such distilled spirits were produced by distillation or any other process from mash, wort, wash, or other material, such presence of the defendant shall be deemed sufficient evidence to authorize conviction, unless the defendant explains such presence to the satisfaction of the jury (or of the court when tried without jury). “SEC. 5602. PENALTY FOR TAX FRAUD BY DISTILLER. “Whenever any person engaged in or carrying on the business of a distiller defrauds, attempts to defraud, or engages in such business with intent to defraud the United States of the tax on the spirits distilled by him, or of any part thereof, he shall be fined not more than $10,000, or imprisoned not more than 5 years, or both. No discontinuance or nolle prosequi of any prosecution under this section shall be allowed without the permission in writing of the Attorney General. “SEC. 5603. PENALTY RELATING TO RECORDS, RETURNS, AND REPORTS. “(a) Fraudulent Non compliance.— Any person required by this 26 USC 5351–5392, 5401–5416. chapter (other than subchapters F and G) or regulations issued pursuant thereto to keep or file any record, return, report, summary, transcript, or other document, who, with intent to defraud the United States, shall— “(1) fail to keep any such document or to make required entries therein; or “(2) make any false entry in such document; or “(3) cancel, alter, or obliterate any part of such document or any entry therein, or destroy any part of such document or any entry therein; or “(4) hinder or obstruct any internal revenue officer from inspecting any such document or taking any abstracts therefrom; or “(5) fail or refuse to preserve or produce any such document, as required by this chapter or regulations issued pursuant thereto; or who shall, with intent to defraud the United States, cause or procure the same to be done, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, for each such offense. “(b) Failure to Comply.— Any person required by this chapter (other than subchapters F and G) or regulations issued pursuant thereto to keep or file any record, return, report, summary, transcript, or other document, who, otherwise than with intent to defraud the United States, shall— “(1) fail to keep any such document or to make required entries therein; or “(2) make any false entry in such document; or “(3) cancel, alter, or obliterate any part of such document or any entry therein, or destroy any part of such document, or any entry therein, except as provided by this title or regulations issued pursuant thereto; or “(4) hinder or obstruct any internal revenue officer from inspecting any such document or taking any abstracts therefrom; or “(5) fail or refuse to preserve or produce any such document, as required by this chapter or regulations issued pursuant thereto; or who shall, otherwise than with intent to defraud the United States, cause or procure the same to be done, shall be fined not more than $1,000, or imprisoned not more than 1 year, or both, for each such offense. “SEC. 5604. PENALTIES RELATING TO STAMPS, MARKS, BRANDS, AND CONTAINERS. “(a) General.— Any person who shall— “(1) transport, possess, buy, sell, or transfer any distilled spirits, required to be stamped under the provisions of section 5205 (a) (2), unless the immediate container thereof has affixed thereto a stamp as required by such section; or “(2) with intent to defraud the United States, empty a container stamped under the provisions of section 5205 (a) (1) or (2) or section 5235 without destroying the stamp thereon as required by section 5205 (a) (3) or regulations prescribed pursuant thereto; or “(3) empty, or cause to be emptied, any distilled spirits from any immediate container (other than a container stamped under section 5205 (a) or section 5235) bearing any stamp, mark, or brand required by law without effacing and obliterating such stamp, mark, or brand as required by section 5205 (g); or “(4) with intent to defraud the United States, falsely make, forge, alter, or counterfeit any stamp required under section 5205 or section 5235; or “(5) use, sell, or have in his possession any forged or fraudulently altered stamp, or counterfeit of any stamp, required under section 5205 or section 5235, or any plate or die used or which may be used in the manufacture thereof; or “(6) with intent to defraud the United States, use, reuse, sell, or have in his possession any stamp required to be destroyed by section 5205 (a) (3) or regulations prescribed pursuant thereto; or “(7) remove any stamp required by law or regulations from any cask or package containing, or which had contained, distilled spirits, without defacing or destroying such stamp at the time of such removal; or “(8) have in his possession any undestroyed or undefaced stamp removed from any cask or package containing, or which had contained, distilled spirits; or “(9) have in his possession any cancelled stamp or any stamp which has been used, or which purports to have been used, upon any cask or package of distilled spirits; or “(10) make, use, sell, or have in his possession any paper in imitation of the paper used in the manufacture of any stamp required under section 5205 or section 5235; or “(11) reuse any stamp required under section 5205 (a) or section 5235, after the same shall have once been affixed to a container as provided in such sections or regulations issued pursuant thereto; or “(12) place any distilled spirits in any bottle, or reuse any bottle for the purpose of containing distilled spirits, which has once been filled and stamped under the provisions of this chapter, without removing and destroying the stamp so previously affixed to such bottle; or “(13) affix any stamp issued pursuant to section 5205 (a) (2) and (3) to any container containing distilled spirits on which any tax due is unpaid or undetermined; or “(14) make any false statement in any application for stamps under section 5205; or “(15) possess any stamp prescribed under section 5205 or section 5235 obtained by him otherwise than as provided by such sections or regulations issued pursuant thereto; or “(18) willfully and unlawfully remove, change, or deface any stamp, mark, brand, label, or seal affixed to any case of distilled spirits, or to any bottle contained therein; or “(17) with intent to defraud the United States, purchase, sell, receive with intent to transport, or transport any empty cask or package having thereon any stamp, mark, or brand required by law to be affixed to any cask or package containing distilled spirits; or “(18) change or alter any stamp, mark, or brand on any cask or package containing distilled spirits, or put into any cask or package spirits of greater strength than is indicated by the inspection-mark thereon, or fraudulently use any cask or package having any inspection-mark or stamp thereon, for the purpose of selling other spirits, or spirits or quantity or quality different from the spirits previously inspected therein; or “(19) affix, or cause to be affixed, to or on any cask or package containing, or intended to contain, distilled spirits, any imitation stamp or other engraved, printed, stamped, or photographed label, device, or token, whether the same be designed as a trade mark, caution notice, caution, or otherwise, and which shall be in the similitude or likeness of, or shall have the resemblance or general appearance of, any internal revenue stamp required by law to be affixed to or upon any cask or package containing distilled spirits; shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, for each such offense. “(b) Officers Authorized To Enforce This Section.— Any officer authorized to enforce any provision of law relating to internal revenue stamps is authorized to enforce this section. “SEC. 5605. PENALTY RELATING TO RETURN OF MATERIALS USED IN THE MANUFACTURE OF DISTILLED SPIRITS, OR FROM WHICH DISTILLED SPIRITS MAY BE RECOVERED. “Any person who willfully violates any provision of section 5291 (a), or of any regulation issued pursuant thereto, and any officer, director, or agent of any such person who knowingly participates in such violation, shall be fined not more than $1,000, or imprisoned not more than 2 years, or both. “SEC. 5606. PENALTY RELATING TO CONTAINERS OF DISTILLED SPIRITS. “Whoever violates any provision of section 5301, or of any regulation issued pursuant thereto, or the terms or conditions of any permit issued pursuant to the authorization contained in such section, and any officer, director, or agent of any corporation who knowingly participates in such violation, shall, upon conviction, be fined not more than $1,000, or imprisoned not more than 1 year, or both, for each such offense. “SEC. 5607. PENALTY AND FORFEITURE FOR UNLAWFUL USE, RECOVERY, OR CONCEALMENT OF DENATURED DISTILLED SPIRITS, OR ARTICLES. “Any person who— “(1) uses denatured distilled spirits withdrawn free of tax under section 5214 (a) (1) in the manufacture of any medicinal preparation or flavoring extract in violation of the provisions of section 5273 (b) (1), or knowingly sells, or offers for sale, any such medicinal preparation or flavoring extract in violation of section 5273 (b) (2): or “(2) knowingly withdraws any denatured distilled spirits free of tax under section 5214 (a) (1) for beverage purposes; or “(3) knowingly sells any denatured distilled spirits withdrawn free of tax under section 5214 (a) (1), or any articles containing such denatured distilled spirits, for beverage purposes; or “(4) recovers or attempts to recover by redistillation or by any other process or means (except as authorized in section 5223 or in section 5273 (c)) any distilled spirits from any denatured distilled spirits withdrawn free of tax under section 5214 (a) (1), or from any articles manufactured therefrom, or knowingly uses, sells, conceals, or otherwise disposes of distilled spirits so recovered or redistilled; shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, for each such offense; and all personal property used in connection with his business, together with the buildings and ground constituting the premises on which such unlawful acts are performed or permitted to be performed shall be forfeited to the United States. “SEC. 5608. PENALTY AND FORFEITURE FOR FRAUDULENT CLAIMS FOR EXPORT DRAWBACK OR UNLAWFUL RELANDING. “(a) Fraudulent Claim for Drawback.— Every person who fraudulently claims, or seeks, or obtains an allowance of drawback on any distilled spirits, or fraudulently claims any greater allowance or drawback than the tax actually paid or determined thereon, shall forfeit and pay to the Government of the United States triple the amount wrongfully and fraudulently sought to be obtained, and shall be imprisoned not more than 5 years; and every owner, agent, or master of any vessel or other person who knowingly aids or abets in the fraudulent collection or fraudulent attempts to collect any drawback upon, or knowingly aids or permits any fraudulent change in the spirits so shipped, shall be fined not more than $5,000, or imprisoned not more than 3 years, or both, and the ship or vessel on board of which such shipment was made or pretended to be made shall be forfeited to the United States, whether a conviction of the master or owner be had or otherwise, and proceedings may be had in admiralty by libel for such forfeiture. “(b) Unlawful Relanding.— Every person who intentionally relands within the jurisdiction of the United States any distilled spirits which have been shipped for exportation under the provisions of this chapter, or who receives such relanded distilled spirits, and every person who aids or abets in such relanding or receiving of such spirits, shall be fined not more than $5,000, or imprisoned not more than 3 years, or both; and all distilled spirits so relanded, together with the vessel from which the same were relanded within the jurisdiction of the United States, and all vessels, vehicles, or aircraft used in relanding and removing such distilled spirits, shall be forfeited to the United States. “SEC. 5609. DESTRUCTION OF UNREGISTERED STILLS, DISTILLING APPARATUS, EQUIPMENT, AND MATERIALS. “(a) General.— In the case of seizure elsewhere than on premises qualified under this chapter of any unregistered still, distilling or fermenting equipment or apparatus, or distilling or fermenting material, for any offense involving forfeiture of the same, where it shall be impracticable to remove the same to a place of safe storage from the place where seized, the seizing officer is authorized to destroy the same. In the case of seizure, other than on premises qualified under this chapter or in transit thereto or therefrom, of any distilled spirits on which the tax has not been paid or determined, for any offense involving forfeiture of the same, the seizing officer is authorized to destroy the distilled spirits forthwith. Any destruction under this subsection shall be in the presence of at least one credible witness. The seizing officer shall make such report of said seizure and destruction and take such samples as the Secretary or his delegate may require. “(b) Claims.— Within 1 year after destruction made pursuant to subsection (a) the owner of, including any person having an interest in, the property so destroyed may make application to the Secretary or his delegate for reimbursement of the value of such property. If the claimant establishes to the satisfaction of the Secretary or his delegate that— “(1) such property had not been used in violation of law; or “(2) any unlawful use of such property had been without his consent or knowledge, the Secretary or his delegate shall make an allowance to such claimant not exceeding the value of the property destroyed. “SEC. 5610. DISPOSAL OF FORFEITED EQUIPMENT AND MATERIAL FOR DISTILLING. “All boilers, stills, or other vessels, tools and implements, used in distilling or rectifying, and forfeited under any of the provisions of this chapter, and all condemned material, together with any engine or other machinery connected therewith, and all empty barrels, and all grain or other material suitable for fermentation or distillation, shall be sold at public auction or otherwise disposed of as the court in which such forfeiture was recovered shall in its discretion direct. “SEC. 5611. RELEASE OF DISTILLERY BEFORE JUDGMENT. “Any distillery or distilling apparatus seized on any premises qualified under this chapter, for any violation of law, may, in the discretion of the court, be released before final judgment to a receiver appointed by the court to operate such distillery or apparatus. Such receiver shall give bond, which shall be approved in open court, with corporate surety, for the full appraised value of all the property seized, to be ascertained by three competent appraisers designated and appointed by the court. Funds obtained from such operation shall be impounded as the court shall direct pending such final judgment. “SEC. 5612. FORFEITURE OF TAXPAID DISTILLED SPIRITS REMAINING ON BONDED PREMISES. “(a) General.— No distilled spirits on which the tax has been paid or determined shall be stored or allowed to remain on the bonded premises of any distilled spirits plant, under the penalty of forfeiture of all spirits so found. “(b) Exceptions.— Subsection (a) shall not apply in the case of— “(1) distilled spirits which have been bottled in bond under section 5233, and which are returned to bonded premises for rebottling, relabeling, or restamping in accordance with the provisions of section 5233 (d); or “(2) distilled spirits in the process of prompt removal from bonded premises on payment or determination of the tax; or “(3) distilled spirits returned to bonded premises in accordance with the provisions of section 5215; or “(4) distilled spirits, held on bonded premises, on which the tax has become payable by operation of law, but on which the tax has not been paid. “SEC. 5613. FORFEITURE OF DISTILLED SPIRITS NOT STAMPED, MARKED, OR BRANDED AS REQUIRED BY LAW. “(a) Unmarked or Unbranded Casks or Packages.— All distilled spirits found in any cask or package required by this chapter or any regulation issued pursuant thereto to bear a mark, brand, or identification, which cask or package is not marked, branded, or identified in compliance with this chapter and regulations issued pursuant thereto, shall be forfeited to the United States. “(b) Unstamped Containers.— All distilled spirits found in any container required by this chapter or any regulations issued pursuant thereto to bear a stamp, which container is not stamped in compliance with this chapter and regulations issued pursuant thereto, shall be forfeited to the United States. “SEC. 5614. BURDEN OF PROOF IN CASES OF SEIZURE OF SPIRITS. “Whenever seizure is made of any distilled spirits found elsewhere than on the premises of a distilled spirits plant, or than in any warehouse authorized by law, or than in the store or place of business of a wholesale liquor dealer, or than in transit from any one of said places; or of any distilled spirits found in any one of the places aforesaid, or in transit therefrom, which have not been received into or sent out therefrom in conformity to law, or in regard to which any of the entries required by law, or regulations issued pursuant thereto, to be made in respect or such spirits, have not been made at the time or in the manner required, or in respect to which any owner or person having possession, control, or charge of said spirits, has omitted to do any act required to be done, or has done or committed any act prohibited in regard to said spirits, the burden of proof shall be upon the claimant of said spirits to show that no fraud has been committed, and that all the requirements of the law in relation to the payment of the tax have been complied with. “SEC. 5615. PROPERTY SUBJECT TO FORFEITURE. “The following property shall be forfeited to the United States: “(1) Unregistered still or distilling apparatus.— Every still or distilling apparatus not registered as required by section 5179, together with all personal property in the possession or custody or under the control of the person required by section 5179 to register the still or distilling apparatus, and found in the building or in any yard or inclosure connected with the building in which such still or distilling apparatus is set up; and “(2) Distilling apparatus removed without notice or set up without permit.— Any still, boiler, or other vessel to be used for the purpose of distilling which is removed without notice having been given as required by section 5105 (a) or which is set up without permit first having been obtained as required by such section; and “(3) Distilling without giving bond or with intent to defraud.— Whenever any person carries on the business of a distiller without having given bond as required by law or gives any false, forged, or fraudulent bond: or engages in or carries on the business of a distiller with intent to defraud the United States of the tax on the distilled spirits distilled by him, or any part thereof; or after the time fixed in the notice declaring his intention to suspend work, filed under section 5221 (a), carries on the business of a distiller on the premises covered by such notice, or has mash, wort, or beer on such premises, or on any premises connected therewith, or has in his possession or under his control any mash, wort, or beer, with intent to distill the same on such premises— “(A) all distilled spirits or wines, and all stills or other apparatus fit or intended to be used for the distillation or rectification of spirits, or for the compounding of liquors, owned by such person, wherever found; and “(B) all distilled spirits, wines, raw materials for the production of distilled spirits, and personal property found in the distillery or in any building, room, yard, or inclosure con- nected therewith and used with or constituting a part of the premises; and “(C) all the right, title, and interest of such person in the lot or tract of land on which the distillery is situated; and “(D) all the right, title, and interest in the lot or tract of land on which the distillery is located of every person who knowingly has suffered or permitted the business of a distiller to be there carried on, or has connived at the same; and “(E) all personal property owned by or in possession of any person who has permitted or suffered any building, yard, or inclosure, or any part thereof, to be used for purposes of ingress or egress to or from the distillery, which shall be found in any such building, yard, or inclosure; and “(F) all the right, title, and interest of every person in any premises used for ingress or egress to or from the distillery who knowingly has suffered or permitted such premises to be used for such ingress or egress; and “(4) Unlawful production and removals from vinegar plants.— “(A) all distilled spirits in excess of 15 percent of alcohol by volume produced on the premises of a vinegar plant; and “(B) all vinegar or other fluid or other material containing a greater proportion than 2 percent of proof spirits removed from any vinegar plant; and “(5) False or omitted entries in records, returns, and reports.— Whenever any person required by section 5207 to keep or file any record, return, report, summary, transcript, or other document, shall, with intent to defraud the United States— “(A) fail to keep any such document or to make required entries therein; or “(B) make any false entry in such document; or “(C) cancel, alter, or obliterate any part of such document, or any entry therein, or destroy any part of such document, or entry therein; or “(D) hinder or obstruct any internal revenue officer from inspecting any such document or taking any abstracts therefrom; or “(E) fail or refuse to preserve or produce any such document, as required by this chapter or regulations issued pursuant thereto; or “(F) permit any of the acts described in the preceding subparagraphs to be performed; all interest of such person in the distillery, bonded warehouse, or rectifying or bottling establishment where such acts or omissions occur, and in the equipment thereon, and in the lot or tract of land on which such distillery, bonded warehouse, or rectifying or bottling establishment stands, and in all personal property on the premises of the distillery, bonded warehouse, or rectifying or bottling establishment where such acts or omissions occur, used in the business there carried on; and “(6) Unlawful removal of distilled spirits.— All distilled spirits on which the tax has not been paid or determined which have been removed, other than as authorized by law, from the place of manufacture, storage, or instrument of transportation; and “(7) Creation of fictitious proof.— All distilled spirits on which the tax has not been paid or determined as provided by law to which any ingredient or substance has been added for the purpose of creating fictitious proof. “PART II— PENALTY AND FORFEITURE PROVISIONS APPLICABLE TO WINE AND WINE PRODUCTION “Sec. 5661. Penalty and forfeiture for violation of laws and regulations relating to wine. “Sec. 5662. Penalty for alteration of wine labels. “Sec. 5663. Cross reference. “SEC. 5661. PENALTY AND FORFEITURE FOR VIOLATION OF LAWS AND REGULATIONS RELATING TO WINE. “(a) Fraudulent Offenses.— Whoever, with intent to defraud the United States, fails to pay any tax imposed upon wine or violates, or fails to comply with, any provision of subchapter F or subpart C of part I of subchapter A, or regulations issued pursuant thereto, or 26 USC 5351–5416, 5041–5045. recovers or attempts to recover any spirits from wine, shall be fined not more than $5,000, or imprisoned not more than 5 years, or both, for each such offense, and all products and materials used in any such violation shall be forfeited to the United States. “(b) Other Offenses.— Any proprietor of premises subject to the provisions of subchapter F, or any employee or agent of such proprietor, or any other person, who otherwise than with intent to defraud the United States violates or fails to comply with any provision of subchapter F or subpart C of part I of subchapter A, or regulations issued pursuant thereto, or who aids or abets in any such violation, shall be fined not more than $1,000, or imprisoned not more than 1 year, or both, for each such offense. “SEC. 5662. PENALTY FOR ALTERATION OF WINE LABELS. “Any person who, without the permission of the Secretary or his delegate, so alters as to materially change the meaning of any stamp, mark, brand, or label required to appear upon any wine upon its removal from premises subject to the provisions of subchapter F, or from customs custody, or who, after such removal, represents any wine, whether in its original containers or otherwise, to be of an identity or origin other than its proper identity or origin as shown by such stamp, mark, brand, or label, or who, directly or indirectly, and whether by manner of packaging or advertising or any other form of representation, represents any still wine to be an effervescent wine or a substitute for an effervescent wine, shall be fined not more than $1,000, or imprisoned not more than 1 year, or both, for each such offense. “SEC. 5663. CROSS REFERENCE. “For penalties of common application pertaining to liquors, including wines, see part IV, and tor penalties for rectified products, see part I. “PART III— PENALTY, SEIZURE. AND FORFEITURE PROVISIONS APPLICABLE TO BEER AND BREWING “Sec. 5671. Penalty and forfeiture for evasion of beer tax and fraudulent noncompliance with requirements. “Sec. 5672. Penalty for failure of brewer to comply with requirements and to keep records and file returns. “Sec. 5673. Forfeiture for flagrant and willful removal of beer without taxpayment. “Sec. 5674. Penalty for unlawful removal of beer. ‘Sec. 5675. Penalty for intentional removal or defacement of brewer’s marks and brands. “Sec. 5676. Penalties relating to beer stamps. “SEC. 5671. PENALTY AND FORFEITURE FOR EVASION OF BEER TAX AND FRAUDULENT NONCOMPLIANCE WITH REQUIREMENTS. “Whoever evades or attempts to evade any tax imposed by section 5051 or 5091, or with intent to defraud the United States fails or refuses to keep and file true and accurate records and returns as required by section 5415 and regulations issued pursuant thereto, shall be fined not more than $5,000, or imprisoned not more than 5 years, or both, for each such offense, and shall forfeit all beer made by him or for him, and all the vessels, utensils, and apparatus used in making the same. “SEC. 5672. PENALTY FOR FAILURE OF BREWER TO COMPLY WITH REQUIREMENTS AND TO KEEP RECORDS AND FILE RETURNS. “Every brewer who, otherwise than with intent to defraud the United States, fails or refuses to keep the records and file the returns required by section 5415 and regulations issued pursuant thereto, or refuses to permit any internal revenue officer to inspect his records in the manner provided, or violates any of the provisions of subchapter 26 USC 5401–5416. G or regulations issued pursuant thereto shall be fined not more than $1,000, or imprisoned not more than 1 year, or both, for each such offense. “SEC. 5673. FORFEITURE FOR FLAGRANT AND WILLFUL REMOVAL OF BEER WITHOUT TAXPAYMENT. “For flagrant and willful removal of taxable beer for consumption or sale, with intent to defraud the United States of the tax thereon, all the right, title, and interest of each person who knowingly has suffered or permitted such removal, or has connived at the same, in the lands and buildings constituting the brewery shall be forfeited by a proceeding in rem in the District Court of the United States having jurisdiction thereof. “SEC. 5674. PENALTY FOR UNLAWFUL REMOVAL OF BEER. “Any brewer or other person who removes or in any way aids in the removal from any brewery of beer without complying with the provisions of this chapter or regulations issued pursuant thereto shall be fined not more than $1,000, or imprisoned not more than 1 year, or both. “SEC. 5675. PENALTY FOR INTENTIONAL REMOVAL OR DEFACEMENT OF BREWER’S MARKS AND BRANDS. “Every person other than the owner, or his agent authorized so to do, who intentionally removes or defaces any mark, brand, or label required by section 5412 and regulations issued pursuant thereto shall be liable to a penalty of $50 for each barrel or other container from which such mark, brand, or label is so removed or defaced. “SEC. 5676. PENALTIES RELATING TO BEER STAMPS. “If stamps or other devices, evidencing the tax on beer or indicating compliance with the provisions of this chapter, are required by the Secretary or his delegate under section 5054, the following paragraphs shall apply— “(1) Penalty for sale, removal, or receipt without proper stamp or device.— Any brewer, or other person who sells, removes, receives, or purchases, or in any way aids in the sale, removal, receipt, or purchase or, any beer contained in any hogshead, barrel, keg, or other container from any brewery upon which the stamp, or device, in case of removal, has not been affixed, or on which a false or fraudulent stamp, or device, in case of removal is affixed with knowledge that it is such, or on which a stamp, or device, in case of removal, once cancelled, is used a second time, shall be fined not more than $1,000, or imprisoned for not more than 1 year, or both. “(2) Penalty for withdrawal from improperly stamped containers or without destroying stamps or devices.— Any person who withdraws or aids in the withdrawal of any beer from any hogshead, barrel, keg, or other container, without destroying or defacing the stamp or device affixed thereon, or withdraws or aids in the withdrawal of any beer from any hogshead, barrel, keg, or other container, upon which the proper stamp or device has not been affixed or on which a false or fraudulent stamp or device is affixed, shall be fined not more than $1,000, or imprisoned not more than 1 year, or both. “(3) Penalty for counterfeiting stamps and devices and trafficking in used stamps or devices.— Every person who makes, sells, or uses any false or counterfeit stamp or device of the kind mentioned in section 5054 or regulations issued pursuant thereto, or who makes, sells, or uses any die for printing or making any such false or counterfeit stamp or device, or who procures the same to be done, and every person who shall remove, or cause to be removed, from any hogshead, barrel, keg or other container of beer, any stamp or device required by regulations issued pursuant to section 5054, with intent to reuse such stamp or device, or who, with intent to defraud the revenue, knowingly uses, or permits to be used, any stamp or device removed from another hogshead, barrel, keg, or other container, or receives, buys, sells, gives away, or has in his possession any such stamp or device so removed, or makes any fraudulent use of any such stamp or device for beer, shall be fined not more than $5,000, or imprisoned not more than 5 years, or both. “(4) Forfeiture of unstamped containers.— The ownership or possession by any person of any beer in hogsheads, barrels, kegs, or other similar containers which do not bear the stamps or devices required by regulations issued pursuant to section 5054 shall render such hogsheads, barrels, kegs, and other similar containers, and the beer contained therein, liable to seizure wherever found and to forfeiture. “(5) Penalty for removal or defacement of stamps, devices, or labels.— Every person who intentionally removes, alters, or defaces any stamp, device, or label required by section 5054 or regulations issued thereunder to be placed on containers of beer, other than in the manner and at the time required by law or regulations issued by the Secretary or his delegate, shall be liable to a fine of not more than $500 for each such container from which the stamp, device, or label is removed, altered, or defaced. “PART IV— PENALTY, SEIZURE. AND FORFEITURE PROVISIONS COMMON TO LIQUORS “Sec. 5681. Penalty relating to signs. “Sec. 5682. Penalty for breaking locks or gaining access. “Sec. 5683. Penalty and forfeiture for removal of liquors under improper brands. “Sec. 5684. Penalties relating to the payment and collection of liquor taxes. “Sec. 5685. Penalty and forfeiture relating to possession of devices for emitting gas, smoke, etc., explosives and firearms, when violating liquor laws. “Sec. 5686. Penalty for having, possessing, or using liquor or property intended to be used in violating provisions of this chapter. “Sec. 5687. Penalty for offenses not specifically covered. “Sec. 5688. Disposition and release of seized property. “Sec. 5689. Penalty and forfeiture for tampering with a stamp machine. “Sec. 5690. Definition of the term ‘person’. “SEC. 5681. PENALTY RELATING TO SIGNS. “(a) Failure to Post Required Sign.— Every person engaged in distilling, warehousing of distilled spirits, rectifying, or bottling of distilled spirits, and every wholesale dealer in liquors, who fails to post the sign required by section 5115 (a) or section 5180 (a) shall be fined not more than $1,000, or imprisoned not more than 1 year, or both. “(b) Posting or Displaying False Sign.— Every person, other than a distiller, warehouseman of distilled spirits, rectifier, or bottler of distilled spirits who has received notice of registration of his plant under the provisions of section 5171 (a), or other than a wholesale dealer in liquors who has paid the special tax (or who is exempt from payment of such special tax by reason of the provisions of section 5113 (a)), who puts up or keeps up any sign indicating that he may lawfully carry on the business of a distiller, bonded warehouseman, rectifier, bottler of distilled spirits, or wholesale dealer in liquors, as the case may be, shall be fined not more than $1,000, or imprisoned not more than 1 year, or both. “(c) Premises Where No Sign Is Placed or Kept.— Every person who works in any distillery, or in any rectifying, distilled spirits bottling, or wholesale liquor establishment, on which no sign required by section 5115 (a) or section 5180 (a) is placed or kept, and every person who knowingly receives at, or carries or conveys any distilled spirits to or from any such distillery, or to or from any such rectifying, distilled spirits bottling, or wholesale liquor establishment, or who knowingly carries or delivers any grain, molasses, or other raw material to any distillery on which said sign is not placed and kept, shall forfeit all vehicles, aircraft, or vessels used in carrying or conveying such property and shall be fined not more than $1,000, or imprisoned not more than 1 year, or both. “(d) Presumption.— Whenever on trial for violation of subsection (c) by working in a distillery or rectifying establishment on which no sign required by section 5180 (a) is placed or kept, the defendant is shown to have been present at such premises, such presence of the defendant shall be deemed sufficient evidence to authorize conviction, unless the defendant explains such presence to the satisfaction of the jury (or of the court when tried without jury). “SEC. 5682. PENALTY FOR BREAKING LOCKS OR GAINING ACCESS. “Every person, who destroys, breaks, injures, or tampers with any lock or seal which may be placed on any room, building, tank, vessel, or apparatus, by any duly authorized internal revenue officer, or opens said lock, seal, room, building, tank, vessel, or apparatus, or in any manner gains access to the contents therein, in the absence of the proper officer, or otherwise than as authorized by law, shall be fined not more than $5,000, or imprisoned not more than 3 years, or both. “SEC. 5683. PENALTY AND FORFEITURE FOR REMOVAL OF LIQUORS UNDER IMPROPER BRANDS. “Whenever any person ships, transports, or removes any distilled spirits, wines, or beer, under any other than the proper name or brand known to the trade as designating the kind and quality of the contents of the casks or packages containing the same, or causes such act to be done, he shall be fined not more than $1,000, or imprisoned not more than 1 year, or both, and shall forfeit such distilled spirits, wines, or beer, and casks or packages. “SEC. 5684. PENALTIES RELATING TO THE PAYMENT AND COLLECTION OF LIQUOR TAXES. “(a) Failure To Pay Tax.— Whoever fails to pay any tax imposed 26 USC 5001–5065. by part I of subchapter A at the time prescribed shall, in addition to any other penalty provided in this title, be liable to a penalty of 5 percent of the tax due but unpaid. “(b) Failure To Make Deposit of Taxes.— Section 6656 relating 26 USC 6656. to failure to make deposit of taxes shall apply to the failure to make any deposit of taxes imposed under part I of subchapter A on the 26 USC 5001–5065. date prescribed therefor, except that the penalty for such failure shall be 5 percent of the amount of the underpayment in lieu of the penalty provided by such section. “(c) Applicability of Section 6659.— The penalties imposed by subsections (a) and (b) shall be assessed, collected, and paid in the same manner as taxes, as provided in section 6659 (a). 26 USC 6659. “(d) Cross References.— “(1) For provisions relating to interest in the case of taxes not paid when due, see section 6601. “(2) For penalty for failure to file tax return, see section 6651. “(3) For additional penalties for failure to pay tax, see section 6653. “(4) For penalty for attempt to evade or defeat any tax imposed by this title, see section 7201. “(5) For penalty for willful failure to file return, supply information, or pay tax, see section 7203. “SEC. 5685. PENALTY AND FORFEITURE RELATING TO POSSESSION OF DEVICES FOR EMITTING GAS, SMOKE, ETC, EXPLOSIVES AND FIREARMS, WHEN VIOLATING LIQUOR LAWS. “(a) Penalty for Possession of Devices For Emitting Gas, Smoke. Etc.— Whoever, when violating any law of the United States, or of any Territory or possession of the United States, or of the District of Columbia, in regard to the manufacture, taxation, or transportation of or traffic in distilled spirits, wines, or beer, or when aiding in any such violation, has in his possession or in his control any device capable of causing emission of gas, smoke, or fumes, and which may be used for the purpose of hindering, delaying, or preventing pursuit or capture, any explosive, or any firearm (as defined in section 5848), except a machine gun, or a shotgun or rifle having a barrel or barrels less than 18 inches in length, shall be fined not more than $5,00(1, or imprisoned not more than 10 years, or both, and all persons engaged in any such violation or in aiding in any such violation shall be held to lie in possession or control of such device, firearm, or explosive. “(b) Penalty for Possession of Machine Gun. Etc.— Whoever, when violating any such law, has in his possession or in his control a machine gun, or any shotgun or rifle having a barrel or barrels less than 18 inches in length, shall be imprisoned not more than 20 years; and all persons engaged in any such violation or in aiding in any such violation shall be held to be in possession and control of such machine gun, shotgun, or rifle. “(c) Forfeiture of Firearms, Devices, Etc.— Every such firearm or device for emitting gas, smoke, or fumes, and every such explosive, machine gun, shotgun, or rifle, in the possession or control of any person when violating any such law, shall be seized and shall be forfeited and disposed of in the manner provided by section 5862. 26 USC 5862. “(d) Definition of Machine Gun.— As used in this section the term ‘machine gun’ means any weapon which shoots, or is designed to shoot, automatically or semiautomatically, more than one shot, without manual reloading, by a single function of the trigger. “SEC. 5686. PENALTY FOR HAVING, POSSESSING, OR USING LIQUOR OR PROPERTY INTENDED TO BE USED IN VIOLATING PROVISIONS OF THIS CHAPTER. “(a) General.— It shall be unlawful to have or possess any liquor or property intended for use in violating any provision of this chapter or regulations issued pursuant thereto, or which has been so used, and every person so having or possessing or using such liquor or property, shall be fined not more than $5,000, or imprisoned not more than 1 year, or both. “(b) Cross Reference.— “For seizure and forfeiture of liquor and property had, possessed, or used in violation of subsection (a), see section 7302. “SEC. 5687. PENALTY FOR OFFENSES NOT SPECIFICALLY COVERED. “Whoever violates any provision of this chapter or regulations issued pursuant thereto, for which a specific criminal penalty is not prescribed by this chapter, shall be fined not more than $1,000, or imprisoned not more than 1 year, or both, for each such offense. “SEC. 5688. DISPOSITION AND RELEASE OF SEIZED PROPERTY. “(a) Forfeiture.— “(1) Delivery.— All distilled spirits, wines, and beer forfeited, summarily or by order of court, under any law of the United States, shall be delivered to the Administrator of General Services to be disposed of as hereinafter provided. “(2) Disposal.— The Administrator of General Services shall dispose of all distilled spirits, wines, and beer which have been delivered to him pursuant to paragraph (1)— “(A) by delivery to such Government agencies as, in his opinion, have a need for such distilled spirits, wines, or beer for medicinal, scientific, or mechanical purposes, or for any other official purpose for which appropriated funds may be expended by a Government agency; or “(B) by gifts to such eleemosynary institutions as, in his opinion, have a need for such distilled spirits, wines, or beer for medicinal purposes; or “(C) by destruction. “(3) Limitation on disposal.— Except as otherwise provided by law, no distilled spirits, wines, or beer which have been seized under any law of the United States may be disposed of in any manner whatsoever except after forfeiture and as provided in this subsection. “(4) Regulations.— The Administrator of General Services is authorized to make all rules and regulations necessary to carry out the provisions of this subsection. “(5) Remission or mitigation of forfeitures.— Nothing in this section shall affect the authority of the Secretary or his delegate, under the customs or internal revenue laws, to remit or mitigate the forfeiture, or alleged forfeiture, of such distilled spirits, wines, or beer, or the authority of the Secretary or his delegate, to compromise any civil or criminal case in respect of such distilled spirits, wines, or beer prior to commencement of suit thereon, or the authority of the Secretary or his delegate to compromise any claim under the customs laws in respect to such distilled spirits, wines, or beer. “(b) Distraint or Judicial Process.— Except as provided in section 5243, all distilled spirits sold by order of court, or under process of distraint, shall be sold subject to tax; and the purchaser shall immediately, and before he takes possession of said spirits, pay the tax thereon, pursuant to the applicable provisions of this chapter and in accordance with regulations to be prescribed by the Secretary or his delegate. “(c) Release of Seized Vessels or Vehicles by Courts.— Notwithstanding any provisions of law relating to the return on bond of any vessel or vehicle seized for the violation of any law of the United States, the court having jurisdiction of the subject matter may, in its discretion and upon good cause shown by the United States, refuse to order such return of any such vessel or vehicle to the claimant thereof. As used in this subsection, the word ‘vessel’ includes every description of watercraft used, or capable of being used, as a means of transportation in water or in water and air; and the word ‘vehicle’ includes every animal and description of carriage or other contrivance used, or capable of being used, as a means of transportation on land or through the air. “SEC. 5689. PENALTY AND FORFEITURE FOR TAMPERING WITH A STAMP MACHINE. “Whoever manufactures, procures, possesses, uses, or tampers with a taxstamp machine which may be required under section 5061 (b) with intent to evade the internal revenue tax imposed on distilled spirits, rectified spirits, wines, or beer, and whoever, with intent to defraud, makes, alters, simulates, or counterfeits any stamp of the character imprinted by such stamp machines, or who procures, possesses, uses, or sells any forged, altered, counterfeited, or simulated tax stamp, or any plate, die, or device intended for use in forging, altering, counterfeiting, or simulating any such stamps, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, and any machine, device, equipment, or materials used in violation of this section shall be forfeited to the United States and after condemnation shall be destroyed. But this provision shall not exclude any other penalty or forfeiture provided by law. “SEC. 5690. DEFINITION OF THE TERM ‘PERSON’. “The term ‘person’, as used in this subchapter, includes an officer or employee of a corporation or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs. “PART V— PENALTIES APPLICABLE TO OCCUPATIONAL TAXES “Sec. 5691. Penalties for nonpayment of special taxes relating to liquors. “Sec. 5692. Penalties relating to posting of special tax stamps. “SEC. 5691. PENALTIES FOR NONPAYMENT OF SPECIAL TAXES RELATING TO LIQUORS. “(a) General.— Any person who shall carry on the business of a brewer, rectifier, wholesale dealer in liquors, retail dealer in liquors, wholesale dealer in beer, retail dealer in beer, limited retail dealer, or manufacturer of stills, and willfully fail to pay the special tax as required by law, shall be fined not more than $5,000, or imprisoned not more than 2 years, or both, for each such offense. “(b) Presumption in Case of the Sale of 20 Wine Gallons or More.— For the purposes of this chapter, the sale, or offer for sale, of distilled spirits, wines, or beer, in quantities of 20 wine gallons or more to the same person at the same time, shall be presumptive evidence that the person making such sale, or offer for sale, is engaged in or carrying on the business of a wholesale dealer in liquors or a wholesale dealer in beer, as the case may be. Such presumption may be overcome by evidence satisfactorily showing that such sale, or offer for sale, was made to a person other than a dealer, as defined in section 5112 (a). “SEC. 5692. PENALTIES RELATING TO POSTING OF SPECIAL TAX STAMPS. “For penalty for failure to post special tax stamps, see section 7273 (a).”

2. 1965

   Excise Tax Reduction Act of 1965

   Pub. L. 89–44 title VIII § 805(a) · 79 Stat. 136

   Struck · 26 U.S.C. § 5008(d)(2)

   Pub. L. 89–44 struck out final clause prohibiting the allowance of a claim in respect to any distilled spirits withdrawn from bonded premises of a distilled spirits plant more than 6 months prior to the date of such return

   Source evidence

   Code amendment note
   Subsec. (d)(2). Pub. L. 89–44 struck out final clause prohibiting the allowance of a claim in respect to any distilled spirits withdrawn from bonded premises of a distilled spirits plant more than 6 months prior to the date of such return.

   Enacted provision · exact public law section
   (a) Return of Distilled Spirits to Bonded Premises.— Section 72 Stat. 1326. 5008(d)(2) (relating to the return of spirits to bonded premises) is amended by striking out “; and no claim shall be allowed in respect to any distilled spirits withdrawn from the bonded premises of a distilled spirits plant more than 6 months prior to the date of such return”.

3. 1968

   Pub. L. 90–630 § 1 · 82 Stat. 1328

   Inserted · 26 U.S.C. § 5008(c)(1)

   Pub. L. 90–630 inserted provisions allowing abatement, remission, and refund if the casualty loss occurs after completion of the packaging but before the spirits have been removed from the premises of the distilled spirits plant to which the spirits were removed from bond

   Source evidence

   Code amendment note
   Subsec. (c)(1). Pub. L. 90–630 inserted provisions allowing abatement, remission, and refund if the casualty loss occurs after completion of the packaging but before the spirits have been removed from the premises of the distilled spirits plant to which the spirits were removed from bond.

   Enacted provision · exact public law section
   (1) by striking out “before the completion of the bottling and casing or other packaging of such spirits for removal from the bottling premises” and inserting in lieu thereof “before removal from the premises”, and

4. 1971

   Pub. L. 91–659 § 2(a) · 84 Stat. 1964

   1. Struck · 26 U.S.C. § 5008(b)(2)

      Pub. L. 91–659, § 2(a), struck out condition that the distilled spirits can be destroyed only before bottling and permitted destruction after completion of bottling so long as the distilled spirits are on the bottling premises

   2. Added · 26 U.S.C. § 5008(b)(2)

      Pub. L. 91–659, § 2(a), added taxes imposed under subpart B of this Part as additional taxes which can be claimed for abatement, remission, credit or refund

   Source evidence

   Code amendment note
   Subsec. (b)(2). Pub. L. 91–659, § 2(a), struck out condition that the distilled spirits can be destroyed only before bottling and permitted destruction after completion of bottling so long as the distilled spirits are on the bottling premises and added taxes imposed under subpart B of this Part as additional taxes which can be claimed for abatement, remission, credit or refund.

   Enacted provision · exact public law section
   (a) (1) The first sentence of section 5008(b)(2) of the Internal Revenue Code of 1954 is amended to read as follows: “Any distilled spirits withdrawn from bond on payment or determination of tax for rectification or bottling may, before removal from the bottling premises of the distilled spirits plant to which removed from bond or after return to such bottling premises, on application to the Secretary or his delegate, be destroyed after such gauge and under such supervision as the Secretary or Ids delegate may by regulations prescribe.” (2) The second sentence of such section 5008(b)(2) is amended 72 Stat. 1314; 79 Stat. 150. by striking out “the tax imposed under section 5001(a)(1)” and inserting hi lieu thereof “the taxes imposed under section 5001(a)(1) or under subpart B or this part”.

5. 1971

   Pub. L. 91–659 § 1 · 84 Stat. 1964

   Added · 26 U.S.C. § 5008(c)(1)(A)

   Pub. L. 91–659, § 1, added cl. (iii)

   Source evidence

   Code amendment note
   Subsec. (c)(1)(A). Pub. L. 91–659, § 1, added cl. (iii).

   Enacted provision · exact public law section
   (1) The first sentence of section 5008(b)(2) of the Internal Revenue Code of 1954 is amended to read as follows: “Any distilled spirits withdrawn from bond on payment or determination of tax for rectification or bottling may, before removal from the bottling premises of the distilled spirits plant to which removed from bond or after return to such bottling premises, on application to the Secretary or his delegate, be destroyed after such gauge and under such supervision as the Secretary or Ids delegate may by regulations prescribe.”

6. 1971

   Pub. L. 91–659 § 2(b) · 84 Stat. 1964

   Changed · 26 U.S.C. § 5008(c)(5)

   Pub. L. 91–659, § 2(b), permits distilled spirits returned to bottling premises to be treated for purposes of the various loss provisions as though they had not been removed from the bottling premises

   Source evidence

   Code amendment note
   Subsec. (c)(5). Pub. L. 91–659, § 2(b), permits distilled spirits returned to bottling premises to be treated for purposes of the various loss provisions as though they had not been removed from the bottling premises.

   Enacted provision · exact public law section
   (b) Section 5008(c)(5) of such Code is amended to read as follows: “(5) Distilled spirits returned to bottling premises.— Distilled spirits withdrawn from bond on payment or determination of tax for rectification or bottling which are removed from bottling premises and subsequently returned to the premises from which removed may be dumped and gauged after such return under such regulations as the Secretary or his delegate may prescribe, and subsequent to such gauge shall be eligible for allowance of loss under this subsection as though they had not been removed from such bottling premises.”

7. 1976

   Fiscal Year Adjustment Act

   Pub. L. 94–273 § 47 · 90 Stat. 375

   Substituted · 26 U.S.C. § 5008(c)(2); 26 U.S.C. § 5008(c)(3)

   Pub. L. 94–273 substituted “computation year” for “fiscal year” wherever appearing

   Source evidence

   Code amendment note
   Subsec. (c)(2), (3). Pub. L. 94–273 substituted “computation year” for “fiscal year” wherever appearing.

   Enacted provision · exact public law section
   Sec. 47. Subsection (c) of section 5008 of the Internal Revenue Code of 1954 (26 U.S.C. 5008(c)) is amended by striking “fiscal year” each place it appears (including in the schedule contained in paragraph (3)(A)) and inserting in lieu thereof “computation year”.

8. 1976

   Pub. L. 94–455 title XIX · 90 Stat. 1520

   1. Inserted · 26 U.S.C. § 5008(b)(1)

      Pub. L. 94–455, §§ 1905(a)(2)(A), 1906(b)(13)(A), inserted “or by section 7652” after “tax imposed by this chapter”

   2. Struck · 26 U.S.C. § 5008(b)(1)

      Pub. L. 94–455, §§ 1905(a)(2)(A), 1906(b)(13)(A), struck out “or his delegate” after “Secretary”

   Source evidence

   Code amendment note
   Subsec. (b)(1). Pub. L. 94–455, §§ 1905(a)(2)(A), 1906(b)(13)(A), inserted “or by section 7652” after “tax imposed by this chapter” and struck out “or his delegate” after “Secretary”.

   Enacted provision · exact public law
   TITLE XIX— REPEAL AND REVISION OF OBSOLETE, RARELY USED, ETC., PROVISIONS OF INTERNAL REVENUE CODE OF 1954 SUBTITLE A— AMENDMENTS OF INTERNAL REVENUE CODE GENERALLY SEC. 1901. AMENDMENTS OF SUBTITLE A; INCOME TAXES. (a) In General.— (1) Amendment of section 2.— Subsection (c) of section 2 (relating to certain married individuals living apart) is amended to read as follows: “(c) Certain Married Individuals Living Apart.— For purposes of this part, an individual shall be treated as not married at the close of the taxable year if such individual is so treated under the provisions of section 143 (b).” (2) Repeal of section 36.— Section 35 (relating to partially tax-exempt interest received by individuals) is repealed. (3) Amendment of section 39.— Section 39 (relating to certain uses of gasoline, special fuels, and lubricating oil) is amended by striking out subsections (b) and (c) and inserting after subsection (a) the following new subsection: “(b) Exception.— Credit shall not be allowed under subsection (a) for any amount payable under section 6421, 6424, or 6427, if a claim for such amount is timely filed and, under section 6421 (i), 6424 (f), or 6427(f), is payable under such section.” (4) Amendments of section 46.— (A) The second sentence of section 46(a)(4), as redesignated by this Act, is amended by striking out “section 408(e)” and inserting in lieu thereof “section 408(f)”. (B) Clause (iii) of section 46(c)(3)(B) (relating to public utility property) is amended by striking out “47 U.S.C., sec. 222(a)(5)” and inserting in lieu thereof “47 U.S.C. 222(a)(5)”. (5) Amendments or section 48.— (A) Section 48(a)(2)(B)(vi) (relating to section 38 property used outside the United States) is amended by striking out “; 43 U.S.C., sec. 1331)” and inserting in lieu thereof “(43 U.S.C. 1331))”. (B) Section 48(a)(2)(B)(viii) is amended by striking out “47 U.S.C., sec. 702” and inserting in lieu thereof “47 U.S.C. 702”. (6) Amendment of section 50a.— The second sentence of section 50A (a)(3) (relating to liability for tax) is amended by 26 USC 50A. striking out “section 408 (e)” and inserting in lieu thereof “section 408(f)”. (7) Repeal of section 51.— Subchapter A of chapter 1 is 26 USC 51. amended by striking out part V (relating to tax surcharge). (8) Amendments op section 62.— Section 62 (relating to definition 26 USC 62. of adjusted gross income) is amended by redesignating paragraph (11), as added by the Act of October 26, 1974 (Public Law 93–483), as paragraph (12). (9) Additional amendment of section 62.— Section 62(12), as redesignated by subparagraph (A) of this paragraph, is amended by striking out “trade or business to the extent” and inserting in lieu thereof “trade or business, to the extent”. (10) Definition of ordinary income.— Part I of subchapter B of chapter 1 (relating to definitions of gross income, adjusted 26 USC 61. gross income, and taxable income) is amended by adding at the end thereof the following new section: “SEC. 64. ORDINARY INCOME DEFINED. “For purposes of this subtitle, the term ‘ordinary income’ includes any gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b). Any gain from the sale or exchange of property which is treated or considered, under other provisions of this subtitle, as ‘ordinary income’ shall be treated as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b).” (11) Definition of ordinary loss.— Part I of subchapter B of chapter 1 (relating to definitions of gross 26 USC 61. income, adjusted gross income, and taxable income) is amended by adding at the end thereof the following new section: “SEC. 65. ORDINARY LOSS DEFINED. “For purposes of this subtitle, the term ‘ordinary loss’ includes any loss from the sale or exchange of property which is not a capital asset. Any loss from the sale or exchange of property which is treated or considered, under other provisions of this subtitle, as ‘ordinary loss’ shall be treated as loss from the sale or exchange of property which is not a capital asset.” (12) Amendment of section 72.— Section 72(d)(1) (relating 26 USC 72. to employees’ annuities) is amended by striking out “(whether or not before January 1, 1954)” and by striking out “(under this paragraph and prior income tax laws)”. (13) Additional amendment of section 72.— Section 72(m)(4)(A) (relating to assignments or pledges) is amended by striking out “an individual retirement amount” and inserting in lieu thereof “an individual retirement account”. (14) Repeal of section 76.— Section 76 (relating to mortgages 26 USC 76. made or obligations issued by joint stock land banks) is repealed. (15) Amendment of section 83.— Section 83(b)(2) (relating 26 USC 83. to election to include the value of restricted property in gross income) is amended by striking out “(or, if later, 30 days after 26 USC 1 note. the date of the enactment of the Tax Reform Act of 1969)”. (16) Amendment of section 101.— Section 101 is amended by 26 USC 101. striking out subsection (f) (relating to effective date of section). (17) Amendments of section 103.— (A) Section 103(a) (relating to tax-exempt interest), as 26 USC 103. amended by this Act, is amended by inserting “and” at the end of paragraph (1), by striking out paragraphs (2) and (3), and by redesignating paragraph (4) as paragraph (2). (B) Section 103 is amended by striking out subsection (b) (relating to certain exceptions) and by redesignating subsections (c), (d), (e) (f), and (g)(as added by this Act) as subsections (b), (c), (d), (e), and (f) respectively. (C) Section 103(b)(1) (relating to industrial development bonds), as redesignated by subparagraph (B) of this paragraph, is amended by inserting “or (2)” after “(a)(1)”. (D) Section 103(c)(2)(A) (relating to definition of arbitrage bonds), as redesignated by subparagraph (B) of this paragraph, is amended by inserting “or (2)” after “(a)(1)”. (E) Section 103(e) (relating to certain cross references) as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(e) Cross References.— “For provisions relating to the taxable status of— “(1) Puerto Rican bonds, see section 3 of the Act of March 2, 1917, as amended (48 U.S.C. 745). “(2) Virgin Islands insular and municipal bonds, see section 1 of the Act of October 27, 1919 (48 U.S.C. 1403). “(3) Certain obligations issued under title I of the Housing Act of 1949, see section 102(g) of title I of such Act (42 U.S.C. 1452(g)).” (18) Amendments of section 104.— (A) Section 104(a)(4) (relating to exclusion of compensation for injuries or sickness) is amended by striking out “;60 Stat. 1021” (B) Section 104(c)(2) as redesignated by section 505 of this Act, is amended to read as follows: “(2) For exclusion of part of disability retirement pay from the application of subsection (a)(4) of this section, see section 1403 of title 10, United States Code (relating to career compensation laws).” (19) Amendment of section 115.— Section 115 (relating to income of States, municipalities, etc.) is amended to read as follows: “SEC. 115. INCOME OF STATES, MUNICIPALITIES, ETC. “Gross income does not include— “(1) income derived from any public utility or the exercise of any essential governmental function and accruing to a State or any political subdivision thereof, or the District of Columbia; or “(2) income accruing to the government of any possession of the United States, or any political subdivision thereof.” (20) Amendment of section 116.— Subsection (a) of section 116 (relating to partial exclusion of dividends received by individuals) is amended by striking out “Effective with respect to any taxable year ending after July 31, 1954, gross income” and inserting in lieu thereof “Gross income”. (21) Amendment of section 124.— Section 124 (relating to cross references to other Acts) is amended to read as follows: “SEC. 124. CROSS REFERENCES TO OTHER ACTS. “(a) For exemption of— “(1) Adjustments of indebtedness under wage earners’ plans, see section 679 of the Bankruptcy Act (11 U.S.C. 1079). “(2) Allowances and expenditures to meet losses sustained by persons serving the United States abroad, due to appreciation of foreign currencies, see section 5943 of title 5, United States Code. “(3) Amounts credited to the Maritime Administration under section 9(b)(6) of the Merchant Ship Sales Act of 1946, see section 9(c)(1) of that Act (50 U.S.C. App. 1742). “(4) Benefits under laws administered by the Veterans’ Administration, see section 3101 of title 38, United States Code. “(5) Earning of ship contractors deposited in special reserve funds, see section 607(d) of the Merchant Marine Act, 1936 (46 U.S.C. 1177). “(6) Income derived from Federal Reserve banks, including capital stock and surplus, see section 7 of the Federal Reserve Act (12 U.S.C. 531). “(7) Railroad retirement annuities and pensions, see section 12 of the Railroad Retirement Act of 1935 (45 U.S.C. 2281). “(8) Railroad unemployment benefits, see section 2(e) of the Railroad Unemployment Insurance Act (45 U.S.C. 352). “(9) Special pensions of persons on Army and Navy medal of honor roll, see 38 U.S.C. 562(a)–(c). “(b) For extension of military income-tax-exemption benefits to commissioned officers of Public Health Service in certain circumstances, see section 212 of the Public Health Service Act (42 U.S.C. 213).” (22) Amendment of section 143.— Section 143 (relating to 26 USC 143. determination of marital status) is amended by striking out “this part” each place it appears and inserting in lieu thereof “this part and part V”. (23) Amendment of section 151.— Section 151 (e)(4)(defining 26 USC 151. student and educational institution) is amended to read as follows: “(4) Student defined.— For purposes of paragraph (1)(B)(ii), the term ‘student’ means an individual who during each of 5 calendar months during the calendar year in which the taxable year of the taxpayer begins— “(A) is a full-time student at an educational organization described in section 170(b)(1)(A)(ii); or “(B) is pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of an educational organization described in section 170(b)(1)(A)(ii) or of a State or political subdivision of a State.” (24) Amendments or section 152.— (A) Section 152(a)(defining dependent) is amended— 26 USC 152. (i) by inserting “or” at the end of paragraph (8), (ii) by striking out “, or” at the end of paragraph (9) and inserting in lieu thereof a period, and (iii) by striking out paragraph (10). (B) Section 152(b)(3) (relating to rules concerning the definition of dependent) is amended to read as follows: “(3) The term ‘dependent’ does not include any individual who “Dependent.” is not a citizen or national of the United States unless such individual is a resident of the United States or of a country contiguous to the United States. The preceding sentence shall not exclude from the definition of ‘dependent’ any child of the tax-payer legally adopted by him, if, for the taxable year of the tax-payer, the child has as his principal place of abode the home of the taxpayer and is a member of the taxpayer’s household, and if the taxpayer is a citizen or national of the United States.” (25) Amendments of section 164.— Section 164(d)(2) (relating 26 USC 164. to apportionment of taxes on real property between the seller and purchaser) is amended by striking out subparagraphs (B) and (C), and by redesignating subparagraph (D) as subparagraph (B). (26) Amendments of section 165.— Section 165 (relating 26 USC 165. to deduction of losses) is amended by striking out subsection (i) (relating to property confiscated by Cuba), and by redesignating subsection (j) as subsection (i). (27) Amendments or section 167.— (A) Section 167 (d) (relating to agreement as to useful life for depreciation) is amended by striking out “after the date of enactment of this title” and inserting in lieu thereof “after August 16, 1954”. (B) Section 167(f)(2)(defining personal property) is amended by striking out “the date of the enactment of the Revenue Act of 1962” and inserting in lieu thereof “October 16, 1962”. (C) Section 167(1)(4)(A) (relating to election as to increased-capacity property) is amended by striking out “within 180 days after the date of the enactment of this subparagraph” and inserting in lieu thereof “before June 29, 1970,”. (28) Amendments of section 170.— (A) (i) Section 170 (relating to charitable deductions) is amended by striking out subsections (f)(6) and (g) (relating to unlimited charitable deductions allowed for taxable years beginning before January 1, 1975), and by redesignating subsections (h), (i), and (j) as subsections (g), (h), and (i), respectively. (ii) Section 170(b)(1) (relating to percentage limitations on deductions for individuals) is amended by striking out subparagraph (C) (relating to unlimited deductions), and by redesignating subparagraphs (D), (E), and (F) as subparagraphs (C), (D), and (E), respectively. (iii) Section 170(b)(1)(A)(vii) is amended by striking out “subparagraph (E)” and inserting in lieu thereof “subparagraph (D)”. (iv) Section 170(b)(1)(B)(ii) is amended by striking out “subparagraph (D)” and inserting in lieu thereof “subparagraph (C)”. (v) Section 170(c) (relating to definition of charitable contribution) is amended by striking out in the last sentence “subsection (h)” and inserting in lieu thereof “subsection (g)”. (vi) Section 170(e)(1)(B)(ii) (relating to certain contributions of ordinary income and capital gain property) is amended by striking out “subsection (b)(1)(E)” and inserting in lieu thereof “subsection (b)(1)(D)”. (B) Section 170(d)(1)(A) (relating to carryover of excess charitable contributions) is amended by striking out “(30 percent, in the case of a contribution year beginning before January 1, 1970)”. (C) Section 170(h) (relating to disallowance of deductions in certain cases), as redesignated by subparagraph (A)(i) of this paragraph, is amended by striking out “64 Stat. 996;”. (D) Section 170(i) (relating to cross references), as redesignated by subparagraph (A)(i) of this paragraph, is amended to read as follows: “(i) Other Cross References.— “(1) Fer charitable contributions of estates and trusts, see section 642(c). “(2) For nondeductibilit; of contributions by common trust funds, see section 584. “(3) For charitable contributions of partners, see section 702. “(4) For charitable contributions of nonresident aliens, see section 873. “(5) For treatment of gifts for benefit of or use in connection with the Naval Academy as gifts to or for use of the United States, see section 6973 of title 10, United States Code. “(6) For treatment of gifts accepted by the Secretary of State under the Foreign Service Act of 1946 as gifts to or for the use of the United States, see section 1021(e) of that Act (22 U.S.C. 809(e)). “(7) For treatment of gifts of money accepted by the Attorney General for credit to the ‘Commissary Funds, Federal Prisons’ as gifts to or for the use of the United States, see section 2 of the Act of May 15, 1952. as amended by the Act of July 9, 1952 (31 U.S.C. 7 25s–4).” (29) Amendments of section 172.— (A) (i) Section 172(b)(1) (relating to years to which loss Ante, p. 1755. may be carried) is amended by striking out subparagraph (E). (ii) Section 172(b)(3) is amended by striking out subparagraphs 26 USC 172. (E) and (F). (B) Section 172(c) (relating to definition of net operating loss) is amended by striking out “(for any taxable year ending after December 31, 1953)”. (C) (i) Section 172 (relating to net operating loss deduction) is amended by striking out subsections (f), (g), and (i), and by redesignating subsections (h), (j), (k), and (1) as subsections (f) , (g). (h), and (i), respectively. (ii) Section 172(b)(1)(C) (relating to regulated transportation corporations) is amended by striking out “subsection (j)(1)” and “subsection (j)”, and inserting in lieu thereof “subsection (g)(1)” and “subsection (g)”, respectively. (iii) Paragraphs (1)(D) and (3)(C)(i) of section 172 Post, p. 1920. (b) (relating to net operating loss carryovers and carry-backs) are each amended by striking out “subsection (k)” and inserting in lieu thereof “subsection (h)”. (iv) Section 172(b)(2) (relating to amount of carrybacks and carryovers) is amended by striking out “subsections (i) and (j)” and inserting in lieu thereof Subsection (g)”. (D) Section 172(e) (relating to law applicable to computations) is amended by striking out the last sentence. (E) Section 172(g)(2) (relating to certain regulated transportation corporations), as redesignated by subparagraph (C) of this paragraph, is amended by striking out paragraph (4). (30) Amendments of sections 174 and 175.— Section 174(a)(2) 26 USC 174, 175. (A)(1) (relating to research and development expenditures) and section 175(d)(1)(A) (relating to soil and water conservation expenditures) are each amended by striking out “the date on which this title is enacted,” and inserting in lieu thereof “August. 16, 1954,”. (31) Repeal of section 187.— Section 187 (relating to rapid 26 USC 187. amortization for certain coal mine safety equipment) is repealed. (32) Amendment of section 219.— Section 219(b)(2)(A)(iv) 26 USC 219. (disqualifying governmental plan participants from contributing to individual retirement accounts, etc.) is amended by striking out “division” and inserting in lieu thereof “subdivision”. (33) Repeat of section 242.— Section 242 (relating to partially 26 USC 242. tax-exempt interest received by corporations) is repealed. (34) Amendments of section 243.— (A) Section 243(a)(2) (relating to the dividends received deduction) is amended by inserting after “Small Business Investment Act of 1958” the following: “(15 U.S.C. 661 and following)”. (B) Section 243(b)(2)(A) (relating to dividends received by a member of an affiliated group) is amended by striking out “(except that in the case of a taxable year of a member beginning in 1963 and ending in 1964, if the election is effective for the taxable year of the common parent corporation which includes the last day of such taxable year of such member, such election shall be effective for such taxable year of such member, if such member consents to such election with respect to such taxable year)”. (35) Amendment of section 247.— Section 247(b)(2) (relating to preferred stock) is amended to read as follows: “(2) Preferred stock.— “(A) In general.— The term ‘preferred stock’ means stock issued before October 1, 1942, which during the whole of the taxable year (or the part of the taxable year after its issue) was stock the dividends in respect of which were cumulative, limited to the same amount, and payable in preference to the payment of dividends on other stock. “(B) Certain stock issued on or after October 1, 1942.— Stock issued on or after October 1, 1942, shall be deemed for purposes of this paragraph to have been issued before October 1, 1942, if it was issued to refund or replace bonds or debentures issued before October 1, 1942, or to refund or replace other preferred stock (including stock which is preferred stock by reason of this subparagraph or subparagraph (D)), but only to the extent that the par or stated value of the new stock does not exceed the par, stated, or face value of the bonds or debentures issued before October 1, 1942, or the other preferred stock, which such new stock is issued to refund or replace. “(C) Determination under regulations.— The determination of whether stock was issued to refund or replace bonds or debentures issued before October 1, 1942, or to refund or replace other preferred stock, shall be made under regulations prescribed by the Secretary. “(D) Issuance of stock.— For purposes of subparagraph (B), issuance of stock includes issuance either by the same or another corporation in a transaction which is a reorganization (as defined in section 368(a)), a transaction to which section 371 (relating to insolvency reorganizations) applies, 26 USC 1081. or a transaction subject to part VI of subchapter 0 (relating to exchanges in SEC. obedience orders), or the respectively corresponding provisions of the Internal Revenue Code of 1939.” (36) Amendment of section 248.— Section 248(c) (relating to organizational expenditures) is amended by striking out “the date of enactment of this title” and inserting in lieu thereof “August 16, 1954”, (37) Amendment of section 265.— Section 265(2) (relating to tax-exempt interest) is amended by striking out “(other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer)”, (38) Amendment of section 269.— Section 269 (relating to 26 USC 269. acquisitions made to evade or avoid income tax) is amended by striking out subsection (c) (relating to presumption in the ease of disproportionate purchase price). (39) Amendment of section 275.— Section 275(a)(1)(C) 26 USC 275. relating to nondeductible taxes) is amended by striking out (“, and corresponding provisions of prior revenue laws”. (40) Amendments of section 281.— (A) Section 281(d)(1)(A) (relating to definition of terminal 26 USC 281. railroad corporation) is amended by inserting after “Interstate Commerce Act” the following: “(49 U.S.C. 1 and following) (B) Section 281 (relating to terminal railroad corporations and their shareholders) is amended by striking out subsection (e) (relating to taxable years ending before October 23, 1962) and by redesignating subsection (f) as subsection (e). (41) Amendment of section 301.— Section 301 (relating to distributions 26 USC 301. of property) is amended by striking out subsection (e) (relating to certain distributions by personal service corporations). (42) Amendments of section 311.— (A) Section 311(d)(1) (relating to appreciated property 26 USC 311. used to redeem stock) is amended by striking out “then again shall be recognized” and inserting in lieu thereof “then a gain shall be recognized”. (B) (i) Section 311(d)(2) (relating to exceptions and limitations) is amended by striking out subparagraph (C) (relating to certain distributions before December 1, 1974) and by redesignating subparagraphs (D), (E), (F), and (G) as subparagraphs (C), (D). (E), and (F), respectively. (ii) The amendments made by clause (i) shall apply only 26 USC 311 note. with respect to distributions after November 30, 1974. (C) Section 311(d)(2)(C), as redesignated by subparagraph (B) of this paragraph, is amended by striking out “26 Stat. 209;” and “38 Stat. 730;”. (43) Amendments of section 312.— (A) Section 312(d)(1) (relating to certain distributions 26 USC 312. of stock and securities) is amended by striking out “this Code” each place it appears and inserting in lieu thereof “this title”. (B) Section 312 (relating to earnings and profits) is amended by striking out subsection (h) (relating to personal service corporations) and by redesignating subsections (i) and (j) as subsections (h) and (i), respectively. (C) Subsection (i) of section 312 (relating to distribution of proceeds of certain loans), as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(i) Distribution of Proceeds of Loan Insured by the United States.— If a corporation distributes property with respect to its stock and if, at the time of distribution— “(1) there, is outstanding a loan to such corporation which was made, guaranteed, or insured by the United States (or by any agency or instrumentality thereof), and “(2) the amount of such loan so outstanding exceeds the adjusted basis of the property constituting security for such loan, then the earnings and profits of the corporation shall be increased by the amount of such excess, and (immediately after the distribution) shall be decreased by the amount of such excess. For purposes of paragraph (2), the adjusted basis of the property at the time of distribution shall be determined without regard to any adjustment under section 1016(a)(2) (relating to adjustment for depreciation, etc.). For purposes of this subsection, a commitment to make, guarantee, or insure a loan shall be treated as the making, guaranteeing, or insuring of a loan.” (D) Section 312(j)(3) (relating to foreign investment companies), as redesignated by subsection (b)(32)(B)(i), is amended to read as follows: “(3) Partial liquidations and redemptions.— If a foreign investment company (as defined in section 1246) distributes amounts in partial liquidation or in a redemption to which section 302(a) or 303 applies, the part of such distribution which is properly chargeable to earnings and profits shall be an amount which is not in excess of the ratable share of the earnings and profits of the company accumulated after February 28, 1913, attributable to the stock so redeemed.” (44) Amendment of section 333.— Section 333(a)(1) (relating to election as to recognition of gain in certain liquidations) is amended by striking out “on or after June 22, 1954”. (45) Amendment of section 334.— Section 334(b)(2)(A) (relating to liquidation of subsidiary) is amended to read as follows: “(A) the distribution is pursuant to a plan of liquidation adopted not more than 2 years after the date of the transaction described in subparagraph (B) (or, in the case of a series of transactions, the date of the last such transaction); and”. (46) Amendments of section 337.— (A) Section 337(a) (relating to nonrecognition of gain or loss on certain liquidations) is amended to read as follows: “(a) General Rule.— If, within the 12month period beginning on the date on which a corporation adopts a plan of complete liquidation, all of the assets of the corporation are distributed in complete liquidation, less assets retained to meet claims, then no gain or loss shall be recognized to such corporation from the sale or exchange by it of property within such 12month period.” (B) The first sentence, of section 337(d) (relating to certain minority stockholders) is amended by striking out “on or after January 1, 1958”. (47) Repeal of section 342.— Section 342 (relating to the liquidation of certain foreign personal holding companies) is repealed. (48) Amendments of section 351.— (A) Section 351(a) (relating to transfer to corporation controlled by transferor) is amended by striking out “(including, in the case of transfers made on or before June 30, 1967, an investment company)”. (B) Section 351(d) (relating to application of June 30, 1967, date) is amended to read as follows: “(d) Exception.— This section shall not apply to a transfer of property to an investment company.” (C) The amendments made by this paragraph shall take effect with respect to transfers of property occurring after the date of the enactment of this Act. (49) Repeal of section 363.— Section 363 (a cross reference to 26 USC 363. other sections) is repealed. (50) Amendments of section 371.— Section 371 (a)(1) (relating 26 USC 371. to certain reorganization exchanges by corporations) is amended— (A) by striking out “49 Stat. 922;” and (B) by striking out “(52 Stat. 883–905; 11 U.S.C., chapter 10) or the corresponding provisions of prior law” and inserting in lieu thereof “(11 U.S.C. 501 and following)”. (51) Amendment of section 372.— Section 372(a) (relating 26 USC 372. to basis in connection with bankruptcy proceedings) is amended by striking out “54 Stat. 709;”. (52) Repeal of section 373.— Section 373 (relating to nonrecognition 26 USC 373. of loss in certain railroad reorganizations) is repealed. (53) Amendment of section 374 .— Section 374(a)(1) (relating 26 USC 374. to non recognition of gain or loss in certain railroad reorganizations) is amended by striking out “49 Stat. 922;”. (54) Amendment of section 381.— Section 381 (c) (relating to 26 USC 381. items carried over in certain corporate acquisitions) is amended by striking out paragraph (20). (55) Repeal of sections 391 through 395.— Subchapter C of 26 USC 391–395. chapter 1 (relating to corporate distributions and adjustments) is amended by striking out part VII (relating to effective dates of subchapter C). (56) Amendments of section 401.— (A) Paragraphs (12) and (13) of section 401(a) (relating 26 USC 401. to requirements for qualification) are each amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (B) Paragraph (15) of section 401(a) is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu 29 USC 1001 note. thereof “September 2, 1974,”. (C) Paragraph (19) of section 401(a) is amended by striking out “enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (D) The last sentence of section 401(a) is amended to read as follows: “Paragraphs (11), (12), (13), (14), (15), (19), and (20) shall apply only in the case of a plan to which section 411 (relating to minimum vesting standards) applies without regard to subsection (e)(2) of such section.” (57) Amendments of section 402.— (A) Section 402(a)(4) (relating to distributions made to 26 USC 402. nonresident alien individuals) is amended by striking out “basic salary” each place it appears therein and inserting in lieu thereof “basic pay”, and by amending the last sentence in such paragraph to read as follows: “In the case of distributions under the civil service retirement laws, the term ‘basic pay’ shall have the meaning provided in section 8331(3) of title 5, United States Code.” (B) Section 402 (relating to taxability of beneficiary of employees’ trusts) is amended by striking out subsection (d) (relating to certain trust agreements made before October 21, 1942), (C) (i) So much of the third sentence of section 402(e)(4) 26 USC 402. (A) (relating to definition of lump sum distributions) as precedes “a distribution of an annuity contract” is amended to read as follows: “Except for purposes of subsection (a)(2) and section 403(a)(2),”. (ii) The amendment made by clause (i) shall apply with respect to distributions or payments made after December 31, 1973, in taxable years beginning after such date. (58) Amendment of section 403.— The last two sentences of section 403(a)(4) (relating to taxation of employee annuities) are amended to read as follows: “For purposes of this title, a transfer described in subparagraph (B)(1) shall be treated as a rollover contribution described in section 408(d)(3). Subparagraph (B)(ii) does not apply in the case of a transfer to an employees’ trust, or annuity plan if any part of a payment described in subparagraph (A) is attributable to an annuity plan under which the employee was an employee within the meaning of section 401(c)(1) at the time contributions were made on his behalf under the plan.” (59) Amendment of section 404.— Section 404 (relating to deduction for contributions to pension plans, etc.) is amended by striking out subsection (d) (relating to carryover of pre–1954 unused deductions). (60) Amendment of section 409.— Section 409(b)(3)(C) (relating to tax-free rollovers of individual retirement bonds) is amended by striking out “section 403(d)(3).” and inserting in lieu thereof “section 408 (d)(3).” (61) Amendments of section 410.— (A) Subparagraphs (C) and (D) of section 410(a)(5) (relating to breaks in service) are each amended by striking out “purposes of subsection (a)(1)” and inserting in lieu thereof “purposes of paragraph (1)”. (B) Paragraph (1)(C) of section 410(c) (relating to application of minimum participation standards) is amended by striking out “the date of the enactment of the Employee 29 USC 1001 note. Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974,”. (C) Paragraph (2) of section 410(c) is amended by striking out “the day before the date of the enactment of this section” and inserting in lieu thereof “September 1, 1974”. (62) Amendments of section 411.— (A) Subsection (a) of section 411 (relating to minimum vesting standards) is amended by striking out “subsection (a)(8)” and inserting in lieu thereof “paragraph (8)”. (B) Subsection (a)(3)(D)(iii) of section 411 is amended— (i) by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and “the date of the enactment of such Act” and inserting in lieu thereof in both such places “September 2, 1974”, and (ii) by striking out “the date of the enactment of the Act” and inserting in lieu thereof “September 2, 1974,”. (C) The heading for subparagraph (C) of section 411 (a)(7) is amended to read as follows: “(C) Repayment of subparagraph (b) distributions.—” (D) Subsection (b)(1)(D)(i) and (e)(1)(C) of section 411 are each amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. 29 USC 1001 note. (E) Subsection (e)(2) of section 411 is amended by striking out “the date before the date of the enactment of the Employee Retirement Income Security Act of 1974” and 26 USC 411. inserting in lieu thereof “September 1, 1974”. (63) Amendments of section 412.— (A) Subsection (h) of section 412 (relating to minimum 26 USC 412. funding standards) is amended by striking out “the day before the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 1, 1974”. (B) Subsection (h)(5) of section 412 is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (64) Amendments of section 414.— (A) The heading for section 414(f) (relating to multi-employer 26 USC 414. plans) is amended to read as follows: ‘(f) Multiemployer Plan.—” (B) Section 414(1) (relating to mergers and consolidations of plans or transfers of plan assets) is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (65) Amendments of section 415.— (A) Section 415(b)(2)(A) (relating to adjustments for 26 USC 415. certain forms of benefits) is amended by striking out “and 409(b)(3)(C)” and inserting in lieu thereof “and 409(b)(3)(C))”. (B) Section 415(b)(2)(B) is amended by striking out “(as defined in section 401(a)(11)(II)(iii))” and inserting in lieu thereof “(as defined in section 401 (a)(11)(G)(iii))”. (66) Amendments of section 453.— (A) Section 453(c)(3) (relating to adjustment in tax for 26 USC 453. amounts previously taxed) is amended by striking out “corresponding provisions of the Internal Revenue Code, of 1939” and inserting in lieu thereof “corresponding provisions of the Internal Revenue Code of 1954”. (B) Section 453(d)(4)(B) (relating to liquidations to which section 337 applies) is amended by striking out “or section 617(d)(1)” and inserting in lieu thereof “, 617(d)” (67) Amendment of section 455.— Section 455(c)(3)(B) 26 USC 455. (relating to prepaid subscription income) is amended by striking out “for his first taxable year (i) which begins after December 31, 1957, and (ii) in which he receives prepaid subscription income in the trade or business” and inserting in lieu thereof “for his first taxable year in which he receives prepaid subscription income in the trade or business”. (68) Amendment of section 458.— Section 456(c)(3)(B) 26 USC 456. (relating to election without consent with respect to treatment of prepaid dues) is amended by striking out “for its first taxable year (i) which begins after December 31, 1960, and (ii)” and inserting in lieu thereof “for its first taxable year”. (69) Amendments of section 461.— (A) Section 461(c) (relating to accrual of real property taxes) is amended by striking out paragraph (2) and by redesignating paragraph (3) as paragraph (2). (B) Section 461(c)(2) (relating to elections without consent), as redesignated by subparagraph (A), is amended by striking out “his first taxable year which begins after December 31, 1953, and ends after the date of enactment of this title in which the taxpayer” and inserting in lieu thereof “his first taxable year in which he”. (70) Amendments of section 481.— (A) Section 481(b) (relating to limitation on tax where substantial adjustments are required by a change in accounting method) is amended by striking out paragraphs (4), (5), and (6) (relating to pre–1954 adjustments). (B) Section 481(b)(1) and (2) are each amended by striking out “, other than the amount of such adjustments to which paragraph (4) or (5) applies,” each place it appears. (71) Amendments of section 508.— (A) Subsections (a) and (b) of section 508 (relating to special rules relating to 501(c)(3) organizations) are each amended by striking out the hist sentence therein. (B) Section 508(e)(2) (relating to special rules for existing private foundations) is amended by striking out subparagraph (A) (relating to taxable years beginning before 1972), by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively, and by striking out “(B)” in subparagraph (B)(as so redesignated) and inserting in lieu thereof “(A)”. (C) Section 508(d)(2)(A) (relating to disallowance of deductions for certain charitable gifts or bequests) is amended by striking out “(e)(2)(B) and (C)” and inserting in lieu thereof “(e)(2)”. (72) Amendments of section 514.— (A) Section 514(c)(1) (relating to definition of acquisition indebtedness) is amended by striking out the comma at the end of subparagraph (C) and all that follows, and inserting in lieu thereof a period. (B) Section 514 (relating to unrelated debt-financed income) is amended by striking out subsection (f) (relating to definition of business lease), by striking out subsection (g) (relating to definition of business lease indebtedness), and by redesignating subsection (h) as subsection (f). (C) Section 514(b)(3)(C)(iii) (relating to definition of debt-financed property) is amended to read as follows: “(iii) shall not apply to property subject to a lease which is a business lease (as defined in this section immediately before the enactment of the Tax Reform Act of 1976).” (D) Section 514(f) (relating to personal property leased with real property), as redesignated by subparagraph (B) of this paragraph, is amended by striking out “and the term ‘premises’ include” and inserting in lieu thereof “includes”. (73) Amendments of section 534.— (A) Section 534(b) (relating to mailing notices of deficiency) is amended by striking out the last sentence, (B) Subsection (e) of section 534 (relating to effective date of section) is repealed. (74) Amendment of section 533.— Section 535(b)(1) (relating 26 USC 535. to adjustments in computing accumulated taxable income) is amended by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 31, 1940)”. (75) Amendments of section 537.— (A) Section 537(b)(2) (relating to definition of excess 26 USC 537. business holdings redemption needs) is amended by striking out “, with respect to taxable years of the corporation ending after May 26, 1969,”. (B) Section 537(b)(4) (relating to inferences as to prior years) is amended by striking out “or (2)”. (76) Amendments of section 542.— (A) Section 542(a)(2) (relating to definition of personal 26 USC 542. holding company) is amended by striking out the last sentence. (B) Section 542(b)(2) (relating to ineligible affiliated group) is amended by striking out “, other than an affiliated group of railroad corporations the common parent of which would be eligible to file a consolidated return under section 141 of the Internal Revenue Code of 1939 prior to its amendment by the Revenue Act of 1942,”. (C) Section 542(c)(2) (relating to financial institutions) is amended by striking out “without regard to subparagraphs (D) and (E) thereof”, (D) Section 542(c)(8) (relating to small business investment companies) is amended by inserting after “Small Business Investment Act of 1958” the following: “(15 U.S.C. 661 and following)”. (77) Amendments of section 545.— (A) Section 545(b)(1) (relating to deduction of taxes in 26 USC 545. computing undistributed personal holding company income) is amended— (i) in the first sentence, by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 31, 1940)”; and (ii) by striking out the last two sentences (relating to deduction of taxes). (B) Section 545(b) (relating to adjustments in computing undistributed personal holding company income) is amended by striking out paragraph (7) (relating to payment of indebtedness incurred before 1934). (C) Section 545(c)(2)(A) (relating to corporations to which special adjustment applies) is amended by striking out “the date of enactment of this subsection” and inserting in lieu thereof “February 26, 1964”. (78) Amendment of section 547.— Section 547 (relating to the 26 USC 547. deduction of deficiency dividends) is amended by striking out subsection (h) (relating to the effective date). ‘ (79) Amendment of section 551.— Section 551(c) (relating to 26 USC 551. foreign personal holding company income tax returns), as redesignated by subsection (b)(1)(F) of this section, is amended by striking out “taxable income, foreign personal holding com-pany,” and inserting in lieu thereof “taxable income, foreign personal holding company income,”. (80) Amendment of section 554.— The first sentence of section 556(b)(1) (relating to deduction of taxes in computing undistributed foreign personal holding company income) is amended by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 1, 1940)”. (81) Amendment of section 584.— Section 564 (relating to dividend carryovers) is amended by striking out subsection (c) (relating to carryovers from pre–1954 years). (82) Repeal of section 583.— Section 583 (relating to deduction of dividends paid on certain preferred stock by banks or trust companies) is repealed. (83) Repeal of section 592.— Section 592 (relating to the deduction by mutual savings banks for repayment of certain loans) is repealed. (84) Amendments of section 593.— (A) Section 593(b)(2) (relating to additions to bad debt reserves for mutual savings banks, etc.) is amended by striking out, in the table in subparagraph (A), the following: “1969 60 percent 1970 57 percent 1971 54 percent 1972 51 percent 1973 49 percent 1974 47 percent 1975 45 percent” (B) Section 593(c) (relating to reserves for mutual savings banks) is amended by striking out paragraphs (2), (3), (4), and (5), by redesignating paragraph (6) as paragraph (3), and by inserting immediately after paragraph (1) the following: “(2) Certain pre-1963 reserves.— Notwithstanding the second sentence of paragraph (1), any amount allocated pursuant to paragraph (5)(as in effect immediately before the enactment of the Tax Reform Act of 1976) during a taxable year beginning before January 1, 1977, to the reserve for losses on qualifying real property loans out of the surplus, undivided profits, and bad debt reserves (determined as of December 31, 1962) attributable to the period before the first taxable year beginning after December 31, 1951, shall not be treated as a reserve for bad debts for any purpose other than determining the amount referred to in subsection (b)(1)(B), and for such purpose such amount shall be treated as remaining in such reserve.” (C) Section 593 is amended by striking out subsection (d) (relating to taxable years beginning in 1962 and ending in 1963), and by redesignating subsections (e) and (f) as subsections (d) and (e),respectively. (D) Section 593(b)(2)(E)(1) is amended by striking out “subsection (f)” and inserting in lien thereof “subsection (e)”- (85) Repeal of section 601.— Subchapter H of chapter 1 relating to 26 USC 601. banking institutions) is amended by striking out part III (relating to special deduction for bank affiliates). (86) Amendments of section 613a.— (A) Section 613A(b)(1)(C) (relating to exemption for 26 USC 613A. certain domestic gas wells) is amended by striking out “within the meaning of section 613(b)(1)(A)”. (B) Section 613A(c)(6)(i) (relating to limitations on percentage depletion in case of oil and gas wells) is amended by striking out “determined with” and inserting in lieu thereof “determined without”. (87) Amendments of section 614.— (A) (i) Section 614(c) (relating to aggregation of mineral 26 USC 614. interests in mines) is amended by striking out paragraph (4) (relating to special rule as to exploration deductions prior to aggregation). (ii) The amendment made by clause (i) shall apply with 26 USC 614 note. respect to elections to form aggregations of operating mineral interests made under section 614(c)(1) of the Internal Revenue Code of 1954 for taxable years beginning after December 31, 1976. (B) The third sentence of section 614(c)(2) (relating to election to treat a single interest as more than one property) is amended to read as follows: “A separate property so formed may, under regulations prescribed by the Secretary, be included as a part of an aggregation in accordance with paragraphs (1) and (3).” (C) Section 614(c)(3) (relating to manner and scope of election) is amended to read as follows: “(3) Manner and scope of election.— The elections provided by paragraphs (1) and (2) shall be made, in accordance with regulations prescribed by the Secretary, not later than the time prescribed for filing the return (including extensions thereof) for the first taxable year— “(A) in which, in the ease of an election under paragraph (1), any expenditure for development or operation in respect of the separate operating mineral interest is made by the taxpayer after the acquisition of such interest, or “(B) in which, in the case of an election under paragraph (2), expenditures for development or operation of more than one mine in respect of a property are made by the taxpayer after the acquisition of the property. An election made under paragraph (1) or (2) for a taxable year shall be binding upon the taxpayer for such year and all subsequent taxable years, except that the Secretary may consent to a different treatment of any interest with respect to which an election has been made.” (88) Repeal or section 615.— Section 615 (relating to deduction 26 USC 615. of pre–1970 exploration expenses) is repealed. (89) Amendment of section 617.— Section 617(a)(2)(B) 26 USC 617. (relating to time and scope of election to deduct certain mining exploration expenditures) is amended by striking out. “may not be revoked after the last day of the third month following the month in which the final regulations issued under the authority of this subsection are published in the Federal Register“, unless” and inserting in lieu thereof “may not be revoked unless”. (90) Repeal of section 632.— Section 632 (relating to tax in 26 USC 632. case of sale of oil and gas properties) is repealed. (91) Amendment of section 691.— Section 691(c)(1)(B) 26 USC 691. (relating to deduction for estate tax) is amended by striking out the last sentence. (92) Amendment of section 692.— The heading of section 692 (relating to income taxes of members of Armed Forces who die in a combat zone) is amended by striking out “ON” the first time it appeals in the section heading and inserting in lieu thereof “OF”. (93) Amendment of section 751.— Section 751(c) (relating to unrealized receivables) is amended by striking out “1254(a), or 1250(a),” and inserting in lieu thereof “1245(a), 1250(a),”. (94) Repeal of section 771.— Part IV of subchapter K of chapter 1 (relating to effective date of subchapter K) is repealed. (95) Amendments of section 802.— (A) Section 802(a)(1) (relating to tax imposed on life insurance companies) is amended by striking out “beginning after December 31, 1957,”. (B) Section 802(a)(2) (relating to alternative tax in case of capital gains) is amended by striking out “beginning after December 31, 1961,”. (C) Section 802(a) is amended by striking out paragraph (3) (relating to special rules for 1959 and 1960). (96) Amendments of section 804.— (A) Section 804(a) is amended by sticking out paragraph (6) (relating to certain exceptions). (B) Section 804(b)(2) (relating to short-term capital gains) is amended by striking out “In the case of a taxable year beginning after December 31, 1958, the” and inserting in lieu thereof “The”. (97) Amendments of section 805.— (A) Section 805(b)(3)(B) (relating to average earnings rate) is amended to read as follows: “(B) Special rule.— For purposes of subparagraph (A), the current earnings rate for tiny taxable year of any company which, for such year, is an insurance company (but not a life insurance company) shall be determined as if this part applied to such company for such year.” (B) Section 805(b)(4)(B) (relating to basis of assets) is amended by striking out “(determined without regard to fair market value on December 31, 1958)”. (C) Section 805(d) (relating to pension plan reserves) is amended to read as follows: “(d) Pension Plan Reserves.— For purposes of this part, the term ‘pension plan reserves’ means that portion of the life insurance reserves which is allocable to contracts— “(1) purchased under contracts entered into with trusts which (as of the time the contracts were entered into) were deemed to be (A), trusts described in section 401(a) and exempt from tax under section 501(a), or (B) trusts exempt from tax under section 185 of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws; “(2) purchased under contracts entered into under plans which (as of the time the, contracts were entered into) were deemed to be plans described in section 403(a), or plans meeting the requirements of paragraphs (3), (4), (5), and (6) of section 165(a) of the Internal Revenue Code of 1939; “(3) provided for employees of the life insurance company under a plan which, for the taxable year, meets the requirements of paragraphs (3), (4), (5), (6), (7), (8), (11), (12), (13), (14), (15), (16), (19), and (20) of section 401(a); “(4) purchased to provide retirement annuities for its employees by an organization which (as of the time the contracts were purchased) was an organization described in section 501(c)(3) which was exempt from tax under section 501(a) or was an organization exempt from tax under section 101(6) of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws, or purchased to provide retirement annuities for employees described in section 403(b)(1)(A)(ii) by an employer which is a State, a political subdivision of a state, or an agency or instrumentality of any one or more of the foregoing; or “(5) purchased under contracts entered into with trusts which (at the time the contracts were entered into) were individual retirement accounts described in section 408(a) or under contracts entered into with individual retirement annuities described in section 408(b).” (98) Amendments of section 809.— (A) Section 809(b) (relating to definition of gain and loss 26 USC 809. from operations) is amended by striking out paragraph (4). (B) (i) Section 809(d) (relating to life insurance company deductions) is amended by striking out paragraph (11) relating to mutualization distributions before 1963), and by redesignating paragraph (12) as paragraph (11). (ii) Section 809(e) is amended by striking out “subsection (d)(12)” and inserting in lieu thereof “subsection (d)(11)”, (C) Section 809 (relating to computation of gain and loss from operations) is amended by striking out subsection (g) (relating to deduction for certain mutualization distributions before 1963). (99) Amendment of section 812.— Section 812(b)(1) (relating 26 USC 812. to years to which operating losses of an insurance company may be carried), other than the last sentence thereof, as added by section 806(d)(1)(A) of this Act, is amended to read as follows: “(1) Years to which loss may be carried.— The loss from operations for any taxable year (hereinafter in this section referred to as the ‘loss year’) shall be— “(A) an operations loss carryback to each of the 3 taxable years preceding the loss year, “(B) an operations loss carryover to each of the 5 taxable years following the loss year, and “(C) subject to subsection (e), if the life insurance company is a new company for the loss year, an operations loss carryover to each of the 3 taxable years following the 5 taxable years described in subparagraph (B).” (100) Amendments of section 817.— Section 817 (relating to 26 USC 817. rules applicable to certain gains and losses) is amended by striking out subsection (c) (relating to treatment of pre–1959 capital losses) and subsection (e) (relating to certain 1958 reinsurance transactions). (101) Amendment of section 818.— Section 818 (relating to 26 USC 818. life insurance accounting provisions) is amended by striking out subsection (e) (relating to certain rules applicable to taxable years 1957, 1958, and 1959). and by redesignating subsections (f) and (g) as subsections (e) and (f), respectively. (102) Amendments of section 819.— (A) The first sentence of section 819(a)(2)(A) (relating 26 USC 819. to definition of minimum figure for foreign life insurance companies) is amended to read as follows: “The minimum figure is the amount determined by multiplying the tax-payer’s total insurance liabilities on United States business by a percentage for the taxable year to be determined and proclaimed by the Secretary.” (B) The second sentence of section 819(a)(2)(A) is amended by striking out “under clause (ii)” and inserting in lieu thereof “under the preceding sentence”. (C) Clause (i) of section 819(b)(2)(B) (relating to distributions pursuant to certain mutualizations) is amended to read as follows: “(i) the minimum figure for 1958 determined under subsection (a)(2)(A) computed by using a percentage of 9 percent in lieu of the percentage determined and proclaimed by the Secretary, or”. (103) Amendments of section 820.— (A) Section 820(c) (relating to optional treatment of certain reinsured policies) is amended by striking out paragraph (6) (relating to reimbursement for 1957 income taxes), and by redesignating paragraph (7) as paragraph (6). (B) The last sentence of section 820(c) is amended by striking out “(5). and (6) and the rules prescribed under paragraph (7)” and inserting in lieu thereof “and (5) and the rules prescribed under paragraph (6)”. (104) Amendments of section 821.— (A) Section 821(a) (relating to imposition of tax on certain mutual insurance companies) is amended by striking out “beginning after December 31, 1963,”. (B) Section 821(c)(1) (relating to alternative tax for certain small insurance companies) is amended by striking out “In the ease of taxable years beginning after December 31, 1963. there is” and inserting in lieu thereof “There is”. (C) Section 821 (relating to tax on certain mutual insurance companies) is amended by striking out subsection (e) (relating to 1962 transitional rules) and by redesignating subsection (f) as subsection (e). (105) Amendments of section 822.— (A) Section 822(c)(5) (relating to deduction of interest) is amended by striking out “(other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer)”. (B) The last sentence of section 822(d)(2) (relating to amortization of premium and accrual of discount) is amended by striking out “For taxable years beginning after December 31, 1962. no accrual” and inserting in lieu thereof “No accrual”. (106) Amendments of section 825.— Section 825(g) (relating to unused loss deduction of certain insurance companies) is amended by striking out paragraph (1) and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (107) Amendment of section 831.— Section 831(a) (relating to tax on certain insurance companies) is amended by striking out “or the taxable income” and inserting in lieu thereof “on the taxable income.” (108) Amendments of section 832.— Paragraphs (1) and (6) of section 832(b)(definitions relating to insurance company taxable income) are each amended by striking out “Convention” and inserting in lieu thereof “Association”. (109) Amendments of section 851.— (A) Section 851(a)(1) (relating 26 USC 851. to definition of regulated investment company) is amended by striking out “54 Stat. 789;”. (B) Section 851(b)(1) (relating to regulated investment companies) is amended by stinking out “which began after December 31, 1941”, (110) Amendments of section 852.— (A) Subparagraph (C) of section 852(b)(3) (relating to 26 USC 852. method of taxation of regulated investment companies and their shareholders) is amended by striking out the third sentence. (B) (i) Section 852(b)(3)(D)(iii) is amended by striking out “by 75 percent of so much of such amounts as equals the amount subject to tax in accordance with section 1201 (a)(1)(A) and by 70 percent (72 percent in the case of a Post, p, 1786. taxable year beginning after December 31, 1969, and before January 1, 1971) of so much of such amounts as equals the amount subject to tax in accordance with section 1201(a)(1)(B) or (2)” and inserting in lieu thereof “by 70 percent of so much of such amounts as equals the amount subject to tax in accordance with section 1201(a)”. (ii) The amendment made by clause (i) shall not be considered 26 USC 852 note. to affect the amount of any increase in the basis of stock under the provisions of section 852(b)(3)(D)(iii) of the Internal Revenue Code of 1954 which is based upon amounts subject to tax under section 1201 of such Code in taxable years beginning before January 1, 1975. (C) Section 852(d) is amended by inserting after “Investment Company Act of 1940” the following: “(15 U.S.C. 80a–l and following)”. (111) Amendments of section 856.— (A) Section 856(c)(1) (relating to real estate investment 26 USC 856. trusts) is amended by striking out “which began after December 31, 1960”. (B) Section 856(c)(6)(D) (relating to definition of other terms) is amended by inserting after “Investment Company Act of 1940, as amended” the following: “(15 U.S.C. 80a–1 and following)”. (112) Amendment of section 857.— Section 857(b)(3)(C) 26 USC 857. (relating to the taxation of capital gains in the case of real estate investment trusts) is amended by striking out the last sentence. (113) Amendments of section 864.— (A) Subsection (a) of section 864 (definitions relating to 26 USC 864. determinations of sources of income) is amended to read as follows: “(a) Produced.— For purposes of this part, the term ‘produced’ “Produced.” includes created, fabricated, manufactured, extracted, processed, cured, or aged.” (B) Clauses (i) and (iii) of section 864(c)(4)(B) and subparagraph (C) of section 864(c)(5) (relating to effectively connected income) are each amended by striking out “sale” each place it appears and inserting in lieu thereof “sale or exchange”. (C) Section 864(c)(4)(B)(iii) (relating to effectively connected income) is amended by striking out “sold” and inserting in lieu thereof “sold or exchanged”. (114) Amendment of section 905.— Section 905(b) (relating to proof of foreign tax credits) is amended by striking out the last sentence (relating to the treatment of certain royalty payments). (115) Amendment of section 911.— Section 911(c) (relating to earned income from sources without the United States) is amended by striking out paragraph (7) (relating to taxable years ending in 1963, 1964, or 1965). (116) Amendment of section 921.— Section 921 (relating to definition of Western Hemisphere Trade Corporation) is amended by striking out the last sentence, (relating to taxable years before 1954). (117) Amendments of section 931.— Section 931 (relating to income from sources within possession) is amended by striking out subsection (h) (relating to certain persons taken as prisoners of war while working in a possession), and by redesignating subsection (i) as subsection (h). (118) Amendment of section 934.— Section 934(b) (relating to gross income received by a corporation from the Virgin Islands) is amended by striking out the last sentence. (119) Amendment of section 951.— Section 951 (a)(1) (relating to treatment, of subpart F income) is amended by striking out “beginning after December 31, 1962”. (120) Repeal of section 972.— Section 972 (relating to consolidation of export trade corporations) is repealed. (121) Amendment of section 1001.— Section 1001(c) (relating to recognition of gain or loss) is amended to read as follows: “(c) Recognition of Gain or Loss.— Except as otherwise provided in this subtitle, the entire amount of the gain or loss, determined under this section, on the sale or exchange of property shall be recognized.” (122) Amendments of section 1015.— (A) Subparagraph (A) of section 1015(d)(1) (relating to increased ‘basis for gift tax paid) is amended by striking out “the date of the enactment of the Technical Amendments Act of 1958” and inserting in lieu thereof “September 2, 1958”. (B) Subparagraph (B) of section 1015(d)(1) is amended by striking out “the date of the enactment of the Technical Amendments Act of 1958” and inserting in lieu thereof “September 2, 1958,”. (123) Amendment of section 1016.— Section 1016(a) (relating to adjustments to basis) is amended by striking out paragraph (19). (124) Amendment of section 1018.— Section 1018 (relating to adjustment of capital structure before September 22, 1938) is amended by striking out “54 Stat. 709;”. (125) Repeal of section 1020.— Section 1020 (relating to election in respect of depreciation allowed before 1952) is repealed. (126) Repeal of section 1022.— (A) Section 1022 (relating to the basis of certain foreign personal holding company stock) is repealed. (B) The repeal made by subparagraph (A) shall apply with respect to stock or securities acquired from a decedent dying after the date of the enactment of this Act. (127) Amendment of section 1024.— Section 1024 (containing cross references) is amended by striking out paragraph (4). (128) Amendments of section 1033.— (A) Section 1033(a) (relating to involuntary conversions) 26 USC 1033. is amended by striking out paragraph (2) and by redesignating paragraph (3) as paragraph (2). (B) Section 1033(a)(2) (relating to conversion into money), as redesignated by subparagraph (A) of this paragraph and as amended by this Act, is amended— (i) by striking out “where disposition occurred after 1950” in the paragraph heading; (ii) by striking out “(g)” each place it appears and inserting in lieu thereof “(h)”; (iii) by striking out “and the disposition of the converted property (as defined in paragraph (2)) occurred after December 31, 1950,” in the text; and (iv) by adding at the end thereof the following new subparagraph: “(E) Definitions.— For purposes of this paragraph— “(i) Control.— The term ‘control’ means the ownership of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote and at least 80 percent of the total number of shares of all other classes of stock of the corporation. “(ii) Disposition of the converted property.— The term ‘disposition of the converted property’ means the destruction, theft, seizure, requisition, or condemnation of the converted property, or the sale or exchange of such property under threat or imminence of requisition or condemnation.” (C) Section 1033 (relating to involuntary conversions) is amended by striking out subsection (b) (relating to certain conversions occurring before 1954) and by redesignating subsections (c), (d), (e), (f), (g), and (h), as subsections (b), (c), (d), (e), (f), and (g), respectively. (D) The first sentence of section 1033(b) (relating to basis of a property acquired through involuntary conversions), as redesignated by subparagraph (G) of this paragraph, is amended by striking out “or (2)” and inserting in lieu thereof “or section 112(f)(2) of the Internal Revenue Code of 1939”. (E) Section 1033(f)(2) (relating to condemnation of real property), as redesignated by subparagraph (C) of this paragraph, is amended to read as follows: “(2) Limitation.— Paragraph (1) shall not apply to the purchase of stock in the acquisition of control of a corporation described in subsection (a)(2)(A).” (F) Section 1033(g)(4) (relating to condemnation of real property), as amended by section 2140(a) of this Act, is amended by striking out “(a)(3)(B)(i)” and inserting in lieu thereof“(a)(2)(B)(i)”. (129) Amendments of section 1034.— (A) Section 1034(a) (relating to gain on sale of residence) 26 USC 1034. is amended by striking out “after December 31, 1953,”. (B) Section 1034(b)(defining adjusted sales price) is amended by striking out paragraph (3) (relating to effective date of subsection (b)). (C) Section 1034(d) (relating to certain limitations) is amended by striking out “or section 112 (n) of the Internal Revenue Code of 1939”. (D) Section 1034(i) (relating to involuntary conversions) is amended to read as follows: “(ii) Special Rule for Condemnation.— In the case of the seizure, requisition, or condemnation of a residence, or the sale or exchange of a residence under threat or imminence thereof, the provisions of this section, in lieu of section 1033 (relating to involuntary conversions), shall be applicable if the taxpayer so elects. If such election is made, such seizure, requisition, or condemnation shall be treated as the sale of the residence. Such election shall he made at such time and in such manner as the Secretary shall prescribe by regulations.” (E) Section 1034(j) (relating to statute of limitations) is amended by striking out “after December 31, 1950,”. (130) Amendment of section 1037.— Section 1037(b)(1) (relating to certain exchanges of United States obligations) is amended by striking out “section 1232(a)(2)(A)” and inserting in lieu thereof “section 1232 (a)(2) (B)”. (131) Amendment of section 1051.— Section 1051 (relating to property acquired before 1929 during affiliation) is amended by striking out the last two sentences. (132) Amendments of section 1081.— (A) Subsection (e) of section 1081 (relating to distributions required by the SEC) is amended to read as follows: “(c) Distribution of Stock or Securities Only.— If there is distributed, in obedience to an order of the Securities and Exchange Commission, to a shareholder in a corporation which is a registered holding company or a majority-owned subsidiary company, stock or securities (other than stock or securities which are nonexempt property), without the surrender by such shareholder of stock or securities in such corporation, no gain to the distributee from the receipt of the stock or securities so distributed shall be recognized.” (B) Section 1081(f) (relating to conditions for application of section) is amended by striking out “Except in the case of a distribution described in subsection (c)(2), the provisions” and inserting in lien thereof “The provisions”, and by striking out “49 Stat. 820;”. (C) Section 1081(g) (relating to applicability of other provisions) is amended by striking out “If a distribution described in subsection (c)(2). or an” and inserting in lieu thereof “If an”, and by striking out the comma after “Commission”. (133) Amendments of section 1083.— (A) Section 1083(a) is amended by striking out “49 Stat. 820;”. (B) Section 1083(b) is amended by striking out “49 Stat. 804;”. (C) Section 1083(e)(4) is amended by striking out “49 Stat. 820;”. (134) Repeal of section 1111.— Part IX of subchapter O of chapter 1 (relating to distributions pursuant to orders enforcing the antitrust laws) is repealed. (135) Amendments of section 1201.— (A) Section 1201(a) (relating to the alternative tax on capital gain) is amended to read as follows: “(a) Corporations.— If for any taxable year a corporation has a net capital gain, then, in lien of the tax imposed by sections 11. 511, 821 (a) or (c) and 831(a), there is hereby imposed a tax (if such tax is less than the tax imposed by such sections) which shall consist of the sum of— “(1) a tax computed on the taxable income reduced by the amount of the net capital gain, at the rates and in the manner as if this subsection had not been enacted, plus “(2) a tax of 30 percent of the net capital gain.” (B) Section 1201(c) (relating to computation of alternative 26 USC 1201. tax) is amended to read as follows: “(c) Computation of Tax Where Capital Gain Exceeds $50,000.— The tax computed for purposes of subsection (b)(3) shall be the amount by which a tax determined under section 1 or 511 on an amount equal to the taxable income (but not less than 50 percent of the net capital gain) for the taxable year exceeds a tax determined under section 1 or 511 on an amount, equal to the sum of (A) the amount subject to tax under subsection (b)(1) plus (B) an amount equal to 50 percent of the sum referred to in subsection (b)(2)(A).” (C) (i) Section 1201 is amended by striking out subsection (d)(defining subsection (d) gain) and by redesignating subsection (e) as subsection (d). (ii) Section 1201(b)(2)(A) (relating to alternative tax on noncorporate taxpayers) is amended by striking out “the amount of the subsection (d) gain” and inserting in lieu thereof “the sum of the long-term capital gains for the taxable year, but not to exceed $50,000 ($25,000 in the case of a married individual filing a separate return)”. (iii) Section 1201(b)(3) is amended by striking out “the amount of the subsection (d) gain” and inserting in lieu thereof “the sum referred to in subparagraph (A)”. (136) Amendments of section 1222.— (A) Paragraph (9) of section 1222 (relating to definition 26 USC 1222. of terms applicable to capital gains and losses) is amended to read as follows: “(9) Capital gain net income.— The term ‘capital gain net income’ means the excess of the gains from sales or exchanges of capital assets over the losses from such sales or exchanges.” (B) Paragraph (11) of section 1222 (relating to definition of terms applicable to capital gains and losses) is amended to read as follows: “(11) Net capital gain.— The term ‘net capital gain’ means “Net capita] gain.” the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such year.” (137) Amendment of section 1233.— Section 1283((3) (relating 26 USC 1233. to certain options to sell) is amended by striking out “the date of enactment of this title” and inserting in lieu thereof “August 16, 1954”. (138) Amendment of section 1237.— Section 1237 (relating 26 USC 1237. to real property subdivided for sale) is amended by striking out subsection (d) (relating to effective date). (139) Repeal of section 1240.— Section 1240 (relating to taxability 26 USC 1240. to employee of certain termination payments) is repealed. (140) Amendment of section 1245.— Section 1245(b)(7)(B) 26 USC 1245. (relating to transfers to tax-exempt organization where property will be used in unrelated business) is amended by striking out “such organization acquiring such property,”. (141) Amendment of section 1246.— Section 1246(f) (relating 26 USC 1246. to gain on foreign investment company stock) is amended by striking out “beginning after December 31, 1962”. (142) Amendment of section 1311.— Paragraphs (2)(A), (2)(B), and (3) of section 1311(b) (relating to mitigation of effect of limitations) are each amended by striking out “Tax Court of the United States” and inserting in lieu thereof “Tax Court”. (143) Repeal of section 1315.— Section 1315 (relating to effective date of part II of subchapter Q of chapter 1) is repealed. (144) Repeal of section 1321.— Part III of subchapter Q of chapter 1 (relating to involuntary liquidation of LIFO inventories) is repealed. (145) Repeal of sections 1331 through 1337.— (A) Part IV of subchapter Q of chapter 1 (relating to war loss recoveries) is repealed. (B) The repeal by subparagraph (A) shall apply with respect to war loss recoveries in taxable years beginning after December 31, 1976. (146) Amendment of section 1341.— Section 1341(b)(2) (relating to claim of right) is amended by striking out the last sentence. (147) Repeal of section 1342.— Section 1342 (relating to computation of tax on certain amounts recovered as a result of a patent infringement suit) is repealed. (148) Repeal of section 134A.— Section 1346 (relating to recovery of unconstitutional Federal taxes) is repealed. (149) Amendments of section 1372.— (A) Section 1372(b)(1) (relating to effect of election under subchapter S) is amended by striking out “(other than the tax imposed by section 1378)” and inserting in lieu thereof “(other than as provided by section 58(d)(2) and by section 1378)”. (B) Section 1372(c) (relating to subchapter S elections by small business corporations) is amended to read as follows: “(c) Where and How Made.— An election under subsection (a) may be made by a small business corporation for any taxable year at any time during the first month of such taxable year, or at any time Regulations. during the month preceding such first month. Such election shall be made in such manner as the Secretary shall prescribe by regulations.” (C) Section 1372 is amended by striking out subsection (g) (relating to certain elections for years beginning before 1961). (150) Amendments of section 1374.— (A) Section 1374(b) (relating to net operating losses of subchapter S corporations) is amended by adding at the end thereof the following new sentence: “The deduction allowed by this subsection shall, for purposes of this chapter, be considered as a deduction attributable to a trade or business carried on by the shareholder.” (B) Subsection (d) of section 1374 (relating to treatment of net operating losses of subchapter S corporations) is repealed. (151) Amendments of section 1375.— (A) The heading of subsection (b) of section 1375 is amended by striking out “Received Credit Not Allowed” and inserting in lieu thereof “Not Treated as Such for Certain Purposes”. (B) Section 1375 (f) (relating to elections as to certain distributions) is amended by striking out paragraph (3). (152) Amendment of section 1378.— Section 1378(b) (relating 26 USC 1378. to the taxation of capital gain in the case of electing small business corporations) is amended by striking out the last sentence. (153) Amendments of section 1388.— (A) Section 1388(c)(2)(B)(i) (relating to patronage 26 USC 1388. dividends) is amended by striking out “the date of the enactment of the Revenue Act of 1962” and inserting in lieu thereof “October 16, 1962”. (B) Section 1388(h)(2)(B)(i) (relating to perunit retain certificates) is amended by striking out “the date of the enactment of Ibis subsection” and inserting in lieu thereof “November 13, 1966”. (154) Amendments of section 1401.— (A) Section 1401(a) (relating to rate of tax on self-employment 26 USC 1401. income) is amended to read as follows: “(a) Old-Age, Survivors, and Disability Insurance.— In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax equal to 7.0 percent of the amount of the self-employment income for such taxable year.” (B) Section 1401(b) (relating to rate of tax on self-employment income for hospital insurance) is amended by striking out paragraphs (1) and (2) and by redesignating paragraphs (3), (4), (5), and (6), as paragraphs (1), (2), (3) and (4), respectively. (155) Amendments of section 1402.— (A) Paragraph (1) of section 1402(b) (relating to definition 26 USC 1402. of self-employment income) is amended to read as follows: “(1) that part of the net earnings from self-employment which is in excess of (i) an amount equal to the contribution and benefit base (as determined under section 230 of the Social Security Act) 42 USC 430. which is effective for the calendar year in which such taxable year begins, minus (ii) the amount of the wages paid to such individual during such taxable years; or”. (B) Section 1402 amended by striking out subsection (g) 26 USC 1402. (relating to treatment of self-employment income for years prior to 1962). and by redesignating subsections (h) and (i) as subsections (g) and (h). respectively. (C) Section 1402(g)(2) (relating to self-employment income, of members of certain religious faiths), as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(2) Time for filing applications.— For purposes of this subsection, an application must be filed on or before the time prescribed for filing the return (including any extension thereof) for the first, taxable year for which the individual has self-employment income (determined without regard to this subsection or subsection (c)(6)), except that an application filed after such date but on or before the last day of the third calendar month following the calendar month in which the taxpayer is first notified in writing by the Secretary that a timely application for an exemption from the tax imposed by this chapter has not been filed by him shall be deemed to be filed timely.” (156) Repeal of section 1465.— Section 1465 (relating to definition 26 USC 1465. of withholding agent) is repealed. (157) Amendments of section 1481.— (A) Section 1481(a)(1)(A) (relating to mitigation of 26 USC 1481. effect of renegotiation of Government contracts) is amended by striking out “within the meaning of the Federal renegotiation act applicable to such transaction” and inserting in lieu thereof “within the meaning of the Renegotiation Act of 1951, as amended (50 U.S.C. App, 1211 and following)”. (B) Section 1481(a)(1) (relating to renegotiation) is amended by striking out subparagraph (D). (C) Subparagraphs (B) and (C) of section 1481(a)(1) are each amended by striking out “applicable Federal renegotiation act” and inserting in lieu thereof “Renegotiation Act of 1951, as amended”. (158) Amendment of section 1551.— Section 1551(a) (relating to disallowance of surtax exemption) is amended by striking out “determined under subjection (d)” and inserting in lieu thereof “determined under subsection (c)”. (159) Amendment of section 1552.— The first sentence of section 1552(a) (relating to earnings and profits of an affiliated group) is amended by striking out “beginning after December 31, 1953, and ending after the date of enactment of this title,”. (b) Conforming and Clerical Amendments.— (1) Amendments conforming to repeal of sections 35 and 242.— (A) Section 36, as amended by this Act, is amended by striking out “sections 32 and 35” and inserting in lieu thereof “section 32”. (B) Section 41(b)(2) is amended by striking out “section 35 (relating to partially tax-exempt interest)”. (C) Section 46(a)(3) is amended by striking out subparagraph (B), by inserting “and” at the end of subparagraph (A), and by redesignating subparagraph (C) as subparagraph (B). (D) Section 50A(a)(3) is amended by striking out subparagraph (B) and redesignating subparagraphs (C), (D), and (E), as subparagraphs (B), (C), and (D), respectively. (E) (i) The heading of paragraph (1) of section 171(a) is amended to read “(1) Taxable bonds.—”. (ii) The heading of paragraph (2) of section 171(a) is amended to read “(2) Tax-exempt bonds.—”, (iii) Section 171(a) is amended by striking out paragraph (3) and by redesignating paragraph (4) as paragraph (3). (iv) Section 171(b)(1)(B)(n) is amended by striking out “subsection (c)(1)(B)” and inserting in lieu thereof “subsection (a)(1)”. (v) So much of section 171(c) as precedes paragraph (2) is amended to read as follows: “(c) Election as to Taxable Bonds.— “(1) Eligibility to elect; bonds with respect to which election permitted.— In the case of bonds the interest on which is not excludable from gross income, this section shall apply only if the taxpayer has so elected.”, (F) (i) Section 551 is amended by striking out subsection (c), and by redesignating subsections (d), (e), (f), and (g), as subsections (c), (d), (e), and (f), respectively. (ii) Section 1016(a)(13) is amended by striking out “section 551(f)” and inserting in lieu thereof “section 551(e)”. (G) Section 584(c)(2) is amended to read as follows: “(2) Dividends received.— The proportionate share of each participant in the amount of dividends received by the common trust fund and to which section 116 applies shall be considered for purposes of such section as having been received by such participant.” (H) (i) Section 642(a) is amended by striking out paragraph 26 USC 642. (1), and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (ii) Section 41(d) is amended by striking out “section 26 USC 41. 642(a)(3)” and inserting in lieu thereof “section 642(a)(2)”. (iii) Section 901(g)(3), as amended by this Act, is 26 USC 901. amended by striking out “section 642(a)(2)” and inserting in lieu thereof “section 642(a)(1)”. (I) (i) Section 702(a) is amended by striking out paragraph 26 USC 702. (7) and by redesignating paragraphs (8) and (9) as paragraphs (7) and (8), respectively. (ii) Section 702(b) is amended by striking out “paragraphs (1) through (8)” and inserting in lieu thereof “paragraphs (1) through (7)”. (iii) Section 1402(a) is amended by striking out “702(a) 26 USC 1402. (9)” each place it appears and inserting in lieu thereof “702 (a)(8)”. (J) (i) Section 804(a) is amended by striking out paragraph 26 USC 804. (3), and by redesignating paragraphs (4) and (5) as paragraphs (3) and (4),respectively. (ii) Section 243(b)(3)(C)(iii), as redesignated by paragraph 26 USC 243. (21)(A) of this subsection, is amended by striking out “sections 804(a)(4)” and inserting in lieu thereof “sections 804(a)(3)”. (iii) Section 804(a)(2) is amended by striking out “paragraph (5)” and inserting in lieu thereof “paragraph (4)”, and by striking out “paragraph (4)” and inserting in lieu thereof “paragraph (3)”. (iv) Section 809(d)(10) is amended by striking out “section 26 USC 809. 804(a)(4)”, and inserting in lieu thereof “section 804(a)(3)”. (v) Section 1561(a)(3) is amended by striking out “sections 26 USC 1561. 804(a)(4)” and inserting in lieu thereof “sections 804 (a)(3)”. (vi) Section 1564(a)(1)(C) is amended by striking out 26 USC 1564. “sections 804(a)(4)” inserting in lieu thereof “sections 804 (a)(3)”. (K) Section 804(a)(2)(A) is amended by striking out clause, (ii). by inserting “and” at the end of clause (i), and by redesignating clause (iii) as clause (ii). (L) (i) Section 809(d)(8)(A) is amended by striking out clause (ii), by inserting “and” at the end of clause (i), and by redesignating clause (iii) as clause (ii). (ii) Section 809(d)(8)(B) is amended by striking out “subparagraph (A)(iii)” and inserting in lieu thereof “subparagraph (A)(ii)”. (M) Sections 804(a)(1),804(a)(2), 809(a)(1),809(b)(1)(A) and 809(b)(2)(A) are each amended by striking out “, partially tax-exempt interest,”. (N) Section 809(e) is amended by striking out paragraph (6), and by redesignating paragraph (7) as paragraph (6). (O) Section 815(b)(2)(A)(iii) is amended by striking out 26 USC 815. “the deduction for partially tax-exempt interest provided 26 USC 242. by section 242 (as modified by section 804(a)(3)),” and by striking out the comma after “809(d)(8)(B))”. (P) Section 822(c)(2) is amended by striking out “partially tax-exempt interest and”. (Q) Section 822(c)(6)(A) is amended by striking out “or to the deduction provided in section 242 for partially tax-exempt interest”. (R) Section 822(c)(7) is amended by striking out “partially tax-exempt interest and to”. (S) Section 822(d)(2) is amended by striking out “, the deduction provided in subsection (c)(1), and the deduction allowed by section 242 (relating to partially tax-exempt interest)” and inserting in lieu thereof “and the deduction provided in subsection (c)(1)”. (T) Section 832(c)(5)(A) is amended by striking out “or to the deductions provided in section 242 for partially tax-exempt interest”. (U) Section 832(c)(12) is amended by striking out “partially tax-exempt interest and to”. (V) Sections 852(b)(1) and 857(b)(1) are each amended by striking out the last sentence. (W) Section 1244(c)(1)(E) is amended by striking out “sections 172,242,243” and inserting in lieu thereof “sections 172, 243”. (X) Section 1402 (a)(2) is amended by striking out “(other than interest described in section 35)”. (Y) Section 1503(b)(3) is amended by striking out subparagraph (C). (Z) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 35. (AA) The table of sections for part VIII of subchapter B of chapter 1 is amended by striking out the item relating to section 242. (2) Amendment conforming to repeal of section 51.— The table of parts for subchapter A of chapter 1 is amended by striking out the item relating to part V. (3) Amendments conforming to auditions of sections 84 and 65.— (A) Paragraphs (1)(C), (5HA), (6)(D), and (12) of section 341(e) are each amended by striking out “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b)” each place it appears and inserting in lieu thereof “ordinary income”. (B) Section 483(f)(3) is amended by striking out “no part of any gain on such” and inserting in lieu thereof “all of the gain, if any, on such” and by striking out “gain from the sale or exchange of a capital asset or property described in section 1231” and inserting in lieu thereof “ordinary income”. (C) Section 707(b)(2) is amended by striking out “as gain from the sale or exchange of property other than a capital asset” and inserting in lieu thereof “as ordinary income”. (D) Paragraphs (1) and (2) of section 735(a) are each amended by striking out “gain or loss from the sale or exchange of property other than a capital asset” and inserting in lieu thereof “as ordinary income or as ordinary loss, as the case may be”. (E) Section 1236 (b) is amended by striking out “loss from 26 USC 1236. the sale or exchange of property which is not a capital asset” and inserting in lieu thereof “ordinary loss”. (F) Sections 1242 and 1243 are each amended by striking 26 USC 1242, 1243. out “a loss from the sale or exchange of property which is not a capital asset” each place it appears and inserting in lieu thereof “an ordinary loss”. (G) Section 1244 is amended by striking out “a loss from 26 USC 1244. the sale or exchange of an asset which is not a capital asset” each place it appears and inserting in lieu thereof “an ordinary loss”. (H) Section 1248(g)(3)(B), as redesignated by this Act, 26 USC 1248. is amended by striking out “gain from the sale of an asset which is not a capital asset” and inserting “ordinary income”. (I) The following provisions are each amended by striking out “gain from the sale or exchange of property which is not a capital asset” each place it appears and inserting in lieu thereof “ordinary income”: sections 341(a). 871(a)(1)(C)(i) and (ii), 881(a)(3)(A) and (B), 996(d)(1) and (2), 1037(b)(1)(A), 1232(a)(2)(A) and (B), 1232(c), 1246(a), and 1385(c)(2)(C). (J) The following provisions are each amended by striking out “gain from the sale of property which is not a capital asset” and inserting in lieu thereof “ordinary income”: sections 306(a)(1)(A),306(a)(1)(B), and 306(f). (K) The following provisions are each amended by striking out “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231” each place it appears and inserting in lieu thereof “ordinary income”: sections 80(c)(1), 163(d)(3) and (5), 613(a), 617 (d)(1). 995(b)(1)(C). 1238, 1245(a)(1), 1249(a), 1250 (f) and (g), 1251 (b)(3)(B), (c)(1), and (c)(2), and 1252(a)(1). (4) Clerical amendments conforming to additions of sections 64 and 65.— (A) The table of sections for part I of subchapter B of chapter 1 is amended by adding at the end thereof the following new items: “Sec. 64. Ordinary income defined. “Sec. 65. Ordinary loss defined.” (B) The heading for part I of subchapter B of chapter 1 is amended by striking out “AND TAXABLE INCOME” and inserting in lieu thereof “TAXABLE INCOME, ETC.” ETC.” (C) The table of parts for subchapter B of chapter 1 is amended by striking out “and taxable income.” in the item relating to part. I and inserting in lieu thereof “taxable income, etc.” (5) Amendment conforming to repeat, of section 70.— The table of sections for part II of subchapter B of chapter 1 is amended by striking out the item relating to section 76. (6) Amendments conforming to amendment of section 103.— (A) Section 6049(b)(2)(A) is amended by striking out 26 USC 6049. “section 103(a)(1) or (3)” and inserting in lieu thereof “section 103(a)”. (B) Section 852(a)(1)(B), as added by this Act, is amended by striking out “section 103(a)(1)” and inserting in lieu thereof “section 103 (a)”. (7) Amendments conforming to amendment of section 143.— (A) (i) Part V of subchapter B of chapter 1 is amended by striking out section 153 (relating to determination of marital status) and by redesignating section 154 as section 153. (ii) The table of sections for part V of subchapter B of chapter 1 is amended by striking out the items relating to sections 153 and 154 and inserting in lieu thereof the following: “Sec. 153. Cross references.”. (B) Section 152(a)(9) is amended by striking out “section 153” and inserting in lieu thereof “section 143”. (C) Section 153, as redesignated by subparagraph (A) of this paragraph, is amended by adding at the end thereof the following new paragraph: “(5) For determination of marital status, see section 143.” (8) Amendments conforming to amendment of section 151.— (A) The following provisions are each amended by striking out “educational institution (as defined in section 151 Q(4))” each place it appears and inserting in lieu thereof educational organization described in section 170(b)(1)(A)(ii)”: sections 117(a)(1)(A), 117(b)(1), 117(b)(2), 152(d), 170(g)(1)(B)(as redesignated by subsection (a)(28) 26 USC 117, 152, 170, 403. (A)(i) of this section!, and 403(b)(1)(A)(ii). (B) Section 103(c)(3)(A), as redesignated by subsection (a)(17) of this section, is amended by striking out “educational institution (within the meaning of section 151(e)(4))” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”, (C) Section 163(b)(1) is amended by striking out “educational institution (as defined in section 151(e)(4)) and which is provided for a student of such institution” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii) and which is provided for a student of such organization”. (D) (i) Subparagraphs (A), (B), and (C) of section 415 (c)(4) are each amended by striking out “educational institution” each place it appears and inserting in lieu thereof “educational organization”. (ii) Subparagraph (D)(ii) of section 415(c)(4) is amended to read as follows: “(ii) For purposes of this paragraph the term ‘educational organization’ means an educational organization described in section 170(b)(1)(A)(ii).” (iii) Section 415(c)(4) is amended by striking out “educational institutions” from the paragraph heading and inserting in lieu thereof “educational organizations”. (E) Section 508(c)(2)(A) is amended to read as follows: “(A) educational organizations described in section 170 (b)(1)(A)(u),and”. (F) Section 512(b)(15)(B), as redesignated by section 1951(b)(8)(A) of this Act, is amended by striking out “edu-cational institution (as defined in section 151(e)(4))” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”. (G) Section 1303(d) is amended by striking out “educational 26 USC 1303. institution (as defined in section 151(e)(4))” each place it appears and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”. (H) Sections 4941(d)(2)(G)(ii) and 4945(g)(1) each 26 USC 4941, 4945. are amended by striking out “educational institution described in section 151(e)(4)” and inserting in lieu thereof “educational organization described in section 170(b)(1)(AHii)”. (9) Amendments conforming to the amendments of section 152.— Section 2(b)(3)(B) is amended by striking out clause (ii), 26 USC 2. by adding “or” at the end of clause (i), and by redesignating clause (ii) as clause (ii). (10) Amendment conforming to the amendment of section 112.— (A) Section 374(e)(2) is amended by striking out “section Ante, p. 296. 172(j)” and inserting in lieu thereof “172(g)”. (B) Section 904(f)(2)(B)(i) and 904(f)(4)(B)(i), as Ante, p. 1624. amended by this Act, are each amended by striking out “section 172(k)(1)” and inserting in lieu thereof “section 172(h)”. (11) Amendments conforming to repeal of section 187.— (A) Section 48(a)(8) (relating to section 38 property) is 26 USC 48. amended by striking out “187,”. (B) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the item relating to section 187. (C) Section 1082(a)(2)(B) (relating to basis for determining gain 26 USC 1082. or loss) is amemled by striking out “187,”. (D) Section 1245(a)(2) (relating to gain from dispositions 26 USC 1245. of certain depreciable property) is amended by striking out “187,” each place it appears. (12) Amendments conforming to the repeal of section 342.— (A) Section 551(f), as redesignated by paragraph (1)(F) 26 USC 551. of this subsection, is amended by striking out paragraph (3). (B) The table of subparts for part II of subchapter C of chapter 1 is amended by striking out the item relating to subpart C and inserting in lieu thereof: “Subpart C. Collapsible corporations,” (C) The table of sections for subpart C of part II of subchapter C of chapter 1 is amended by striking out the item relating to section 342. (D) The heading of subpart C of part II of subchapter C of chapter 1 is amended to read as follows: “Subpart C— Collapsible Corporations”. (13) Amendments conforming to the repeal of section 303.— The table of sections for subpart C of part III of subchapter C of chapter 1 is amended by striking out the item relating to section 363. (14) Amendments conforming to the repeal of section 373.— (A) Section 372(b)(1) is amended by striking out “373 26 USC 372. (b) or”. (B) Section 374(b) is amended to read as follows: “(b) Basis.— “(1) Railroad corporations.— If the property of a railroad corporation, as defined in section 77(m) of the Bankruptcy Act (11 U.S.C. 205 (m)), was acquired after December 31, 1938, in pursuance of an order of the court having jurisdiction of such corporation— “(A) in a receivership proceeding, or “(B) in a proceeding under section 77 of the Bankruptcy Act, and the acquiring corporation is a railroad corporation (as defined in section 77(m) of the Bankruptcy Act) organized or made use of to effectuate a plan of reorganization approved by the court, in such proceeding, the basis shall be the same as it would be in the hands of the railroad corporation whose property was so acquired, increased in the amount of gain recognized under subsection (a)(2) to the transferor on such transfer. “(2) Property acquired by street, suburban, or interurban electric railway corporation.— If the property of any street, suburban, or interurban electric railway corporation engaged as a common carrier in the transportation of persons or property in interstate commerce was acquired after December 31, 1934, in pursuance of an order of the court having jurisdiction of such corporation in a proceeding under section 77 of the Bankruptcy Act (11 U.S.C. 501 and following), and the acquiring corporation is a street, suburban, or interurban electric railway engaged as a common carrier in the transportation of persons or property in interstate commerce, organized or made use of to effectuate a plan of reorganization approved by the court in such proceeding, then, notwithstanding the provisions of section 270 of the Bankruptcy Act (11 U.S.C. (570), the basis shall be the same as it would be in the hands of the corporation whose property was so acquired.” (C) Section 374(c)(8) is amended by striking out “subsection (b)” and inserting in lieu thereof “subsection (b)(1)”. . .. (D) Section 1232(b)(2) is amended by striking out “section 371, 373, or 374” and inserting in lieu thereof “section 371 or 374”. (E) The table of sections for part IV of subchapter C of chapter 1 is amended by striking out the item relating to section 373. (15) Amendment conforming to repeal of sections 391 through 395.— The table of parts for subchapter C of chapter 1 is amended by striking out the item relating to part VII. (16) Amendment conforming to the amendments of section 481.— Section 381 (c) is amended by striking out paragraph (21). (17) Amendment conforming to the amendments of section 545.— Section 381(c)(15) is amended by striking out “subsections (b)(7) and (c)” and inserting in lieu thereof “subsection (c)”. (18) Amendment conforming to the repeal of section 583.— The table of sections for part I of subchapter H of chapter 1 is amended by striking out the item relating to section 583. (19) Amendment conforming to the repeal of section 592.— The table of sections for part II of subchapter H of chapter 1 is amended by striking out the item relating to section 592. (20) Amendments conforming to the repeal of section 601.— (A) Section 535(b) is amended by striking out paragraph 26 USC 535. (8). (B) (i) Section 545(b) is amended by striking out paragraph 26 USC 545. (6), and by redesignating paragraph (8) as paragraph (6). (ii) Section 545(b)(2) is amended by striking out “paragraph (8)” and inserting in lieu thereof “paragraph (6)”. (iii) Section 545(c)(5) is amended by striking out “subsection (b)(8)” and inserting in lieu thereof “subsection (b)(6)”. (C) The table of parts for subchapter H of chapter 1 is amended by striking out the item relating to part III. (21) Amendments conforming to the repeal of section 615.— (A) (i) Section 243(b)(3)(C) is amended— 26 USC 243. (I) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following; “(ii) $400,000 limitation for certain exploration expenditures under section 617(h)(1),”, and (II) by redesignating clauses (iv) and (v) as clauses (iii) and (iv), respectively. (ii) Section 1564(h)(2)(C) is amended by striking out 26 USC 1564. “section 243(b)(3)(C)(v)” and inserting in lieu thereof “243(b)(3)(C)(iv)”. (B) Section 381(c)(10) is amended to read us follows: 26 USC 381. “(10) Treatment of certain mining develops cent and exploration expenses of distributor or transfer or corporation.— The acquiring corporation shall be entitled to deduct, as if it were the distributor or transferor corporation, expenses deferred under section 616 (relating to certain development expenditures) if the distributor or transferor corporation has so elected. For the purpose of applying the limitation provided in section 617(h), if, for any taxable year, the distributor or transferor corporation was allowed a deduction under section 617(a), the acquiring corporation shall be deemed to have been allowed such deduction.” (C) Section 617(h)(1) is amended by striking out “and 26 USC 617. section 615(a) and the amounts which are or have been treated as deferred expenses under section 615(b)” and inserting in lieu thereof “and subsection (a) of section 615 (as in effect before the enactment of the Tax Reform Act of 1976)”. (D) Section 617(h)(3) is amended to read as follows: “(3) Application of paragraph (2)(b).— Paragraph (2) (B) shall apply with respect to nil amounts deducted before the latest such transfer from the individual or corporation to the taxpayer. Paragraph (2)(B) shall apply only if— “(A) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make paragraph (7), (8), (11), (15), (17), (20), or (22) of section 113(a) of the Internal Revenue Code of 1939 apply to such transfer; or “(B) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make section 334(b), 362 (a) and (b), 372(a), 374(b)(1), 1051, or 1082 apply to such transfer.” (E) Section 617 is amended by adding at the end thereof the following new subsection: “(i) Certain Pre-1970 Exploration Expenditures.— If— “(1) the taxpayer receives mineral property in a transaction as a result of which the basis of such property in the hands of the transferee is determined by reference to the basis in the hands of the transferor, “(2) an election made by the transferor under subsection (e) of section 615(e)(as in effect before the enactment of the Tax Reform Act of 1976) applied with respect to expenditures which were made by him and which were properly chargeable to such property, and “(3) the taxpayer has made or makes an election under subsection (a), then in the application of this section with respect to the transferee, the amounts allowed as deductions under such section 615 to the transferor, which (but for the transferor’s election) would be reflected in the adjusted basis of such property in the hands of the transferee, shall be treated as expenditures allowed as deductions under subsection (a) to the transferor.” (F) Section 703 (b) is amended by striking out “under section 615 (relating to pre–1970 exploration expenditures),”. (G) Section 1016 (a) is amended by striking out paragraph (I?)-. (H) The table of sections for part. I of subchapter I of chapter 1 is amended by striking out the item relating to section 615. (22) Amendments conforming to the repeal of section 632.— (A) The table of sections for part III of subchapter I of chapter 1 is amended by striking out the item relating to section 632. (B) Section 5(b) is amended by striking out paragraph (1). (23) Amendment conforming to the repeal of section 771.— The table of parts for’ subchapter K of chapter 1 is amended by striking out the item relating to part IV. (24) Amendment conforming to the amendment of section 802.— Section 815(c)(3)(B) is amended by striking out “(determined without regard to section 802(a)(3))”. (25) Amendment conforming to the amendment of section 812.— Section 844(b)(2) is amended by striking out “section 812(b)(1)(A)(iii)” and inserting in lieu thereof “section 812 (b)(1)(C)”. (26) Amendments conforming to the amendments of section 804.— (A) Paragraphs (5) and (6) of section 861(a) (relating to items treated as income from within United States) are each amended by striking out in the heading “sale” and inserting in lieu thereof “sale or exchange”, and by striking out “sale” in the text and inserting in lieu thereof “sale or exchange”. (B) section 861(e)(1) (relating to income from certain aircraft and vessels) is amended by striking out “sale or other disposition” and inserting in lieu thereof “sale, exchange, or other disposition”. (C) Paragraphs (5) and (6) of section 862(a) (relating to items treated as income from without the United States) 26 USC 863. and paragraphs (2) and (3) of section 863(b) (relating to sources of income) are each amended by striking out “sale” and inserting in lieu thereof “sale or exchange”. (D) Paragraph (2) of section 863(b) (relating to sources 26 USC 863. of income) is amended by striking out “sold” each place it appears and inserting in lieu thereof “sold or exchanged”. (27) Amendments conforming to the repeal of section 972.— (A) Section 970(b)(1) (relating to inclusion of certain 26 USC 970. previously excluded amounts of sub part F income) is amended by striking out “application of section 972” and inserting in lieu thereof “treatment (under section 972 as in effect before the date of the enactment of the Tax Reform Act of 1976) of two or more controlled foreign corporations which are export trade corporations as a single controlled foreign corporation ”. (B) The table of sections for subpart G of part III of subchapter N of chapter 1 is amended by striking out the item relating to section 972. (28) Amendments conforming to the amendment of section 1001.— (A) Subsection (c) of section 331 is amended to read as 26 USC 331. follows: “(c) Cross Reference.— “For general rule for determination of the amount of gain or loss recognized, see section 1001.” (B) (i) Section 1002 (relating to recognition of gain or 26 USC 1002. loss) is repealed. (ii) The table of sections for part I of subchapter 0 of chapter 1 is amended by striking out the item relating to section 1002. (29) Amendments conforming to the repeal of section 1920.— (A) The third sentence of subsection (a) of section 1016 is 26 USC 1016. amended by striking out “under section 1020” and inserting in lieu thereof “under section 1020 (as in effect before the date of the enactment of the Tax Reform Act of 1976)”, Ante, p. 1520; (B) The table of sections for part II of subchapter O of chapter 1 is amended by striking out the item relating to section 1020. (30) Amendments conforming to the repeal of section 1022.— (A) Section 1016(a) is amended— 26 USC 1016. (i) by striking out paragraph (21), and (ii) by redesignating paragraphs (20) and (22) as paragraphs (19) and (20), respectively. (B) The amendment made by subparagraph (A)(i) shall 26 USC 1016 note. apply with respect to stock or securities acquired from a decedent dying after the date of the enactment of this Act. (C) Tho table of sections for part II of subchapter O of chapter 1 is amended by striking out the item relating to section 1022, ~ (31) Amendments conforming to amendments of section 1033.— (A) Section 1250(d)(4)(B) is amended by striking out 26 USC 1250. “1033(a)(3)(A)” and inserting in lieu thereof “1033(a)(2)(A)” (B) Section 1250(d)(4)(C) and (D) are each amended by striking out “1033(a)(3)” and inserting in lieu thereof “1033(a)(2)”. (C) Section 6212(c)(2)(B) is amended by striking out “1033(a)(3)(C) and (D)” and inserting in lieu thereof “1033 (aj (2)(C) and (D)”. (D) Section 6504(4) is amended by Striking out “1033(a)(3)(C) and (D)” and inserting in lieu thereof “1033(a)(2)(C) and (D)”. (E) Sections 1071(b) and 1250(d)(4)(D) are each amended by striking out “1033(c)” and inserting in lieu thereof “1033(b)”. (32) Amendments conforming to the repeal of section 1111.— (A) Section 301 is amended by striking out subsection (f), and by redesignating subsection (g) as subsection (e). (B) (i) Section 312 is amended by striking out subsection (k), and by redesignating subsections (1) and (m) as subsections (j) and (k), respectively, (ii) Section 1246(g) is amended by striking out “312(1)” and inserting in lieu thereof “312 (j)”. (iii) Sections 964(a) and 1248(c)(1) are each amended by striking out “312 (m)(3)” and inserting in lieu thereof “312 (k)” (iv) Subsection (d) of section 1377, as added by this Act, is amended by striking out “312(m)” and inserting in lieu thereof “312(k)”. (C) Section 535(b) is amended by striking out paragraphs (9) and (10). (D) Section 543(a)(1) is amended by inserting “and” at the end of subparagraph (A), and by striking out subparagraphs (B) and (C) and inserting in lieu thereof the following: “(B) interest on amounts set aside in a reserve fund under section 511 or 607 of the Merchant Marine Act, 1936 (46 U.S.C. 1161 or 1177).” (E) Section 545(b) is amended by striking out paragraphs (10) and (11). (F) Section 553(a)(1) is amended to read as follows: “(1) Dividends, etc.— Dividends, interest, royalties, and annuities.” (G) Section 556(b) is amended by striking out paragraphs (7) and (8). (H) Section 561(b) is amended to read as follows: “(b) Special Rules Applicable.— In determining the deduction for dividends paid, the rules provided in section 562 (relating to rules applicable in determining dividends eligible for dividends paid deduction) and section 563 (relating to dividends paid after the close of the taxable year) shall be applicable.” (I) The table of parts for subchapter O of chapter 1 is amended by striking out the item relating to part IX. (33) Amendments conforming to amendment of section 1222.— (A) Section 57(a)(9)(A) is amended by striking out “the amount by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “the net capital gain”. (B) So much of the first sentence of section 57(a)(9)(B) as precedes “by a fraction” is amended to read as follows: “In the case of a corporation having a net capital gain for the taxable year, an amount equal to the product obtained by multiplying the net capital gain”. (C) Section 527(b)(2) is amended by striking out “net 26 USC 527. section 1201 gain” and inserting in lieu thereof “net capital gain”. (D) Sections 535(b)(6) and 545(b)(5) are each amended— 26 USC 535, 545. (1) by striking out from the paragraph heading “Long-term” and inserting in lieu thereof “Net”, (2) by striking out from the text “the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such year” each place it appears and inserting in lieu thereof’ “the net capital gain for the taxable year”, and (3) by striking out from the text “such excess” each place it appears and inserting in lieu thereof “such net capital gain”. (E) Section 802(a)(2) is amended— 26 USC 802. (i) by striking out “the net long-term capital gain of any life insurance company exceeds the net short-term capital loss” and inserting in lieu thereof “any life insurance company has a net capital gain”, and (ii) by striking out “such excess” each place it appears and inserting in lieu thereof “such net capital gain”. (F) Section 804(a)(2) is amended by 26 USC 804. striking out “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (G) Sections 809(b)(1)(B) and 809(b)(2)(B) are each 26 USC 809. amended by striking out “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (H) Section 815(b)(2)(A)(ii) is amended by striking out 26 USC 815. “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (I) Section 852(b)(2)(A) is amended by striking out 26 USC 852. “the excess, if any, of the net long-term capital gain over the net short-term capital loss” and inserting in lieu thereof “the amount of the net capital gain, if any”. (J) (i) Section 852(b)(3)(A) is amended to read as follows: “(A) Imposition of tax.— There is hereby imposed for each taxable year in the case of every regulated investment company a tax, determined as provided in section 1201 (a), on the excess, if any, of the net capital gain over the deduction for dividends paid (as defined in section 561) determined with reference to capital gain dividends only.” (ii) The second sentence of section 852(b)(3)(C) is amended by striking out “excess of the net long-term capital gain over the net short-term capital loss” each place it appears and inserting in lien thereof “net capital gain”. (K) The second sentence of section 857(b)(3)(C) is 26 USC 857. amended by striking out “excess of the net long-term capital gain over the net short-term capital loss” each place it appears and inserting in lieu thereof “net capital gain”. (L) Section 1201(b) is amended by striking out “net section 26 USC 1201. 1201 gain” each place it appears and inserting in lieu thereof “net capital gain”. (M) The first sentence of section 1202 is amended to read as follows: “If for any taxable year, a taxpayer other than a corporation has a net capital gain, 50 percent of the amount of the net capital gain shall be a deduction from gross income.” (N) Sections 381(e)(3)(B), 381(c)(3)(C), 852(d), 4940 (c)(1), and 4940(c)(4) are each amended by striking out “net capital gain” and inserting in lieu thereof “capital gain net income”. (O) Section 1212(a)(1) is amended by striking out “net capital gain” each place it appears and inserting in lieu thereof “capital gain net income”, and by striking out “net capital gains” and inserting in lieu thereof “capital gain net income”. (P) Section 1247(a)(1)(B) is amended by striking out “the excess (determined as if such corporation were a domestic corporation) of the net long-term capital gain over the net short-term capital loss” and inserting in lieu thereof “the amount (determined as if such corporation were a domestic corporation) of the net capital gain”. (Q) (i) Section 1375(a)(1) is amended by striking out “the excess of the corporation’s net long-term capital gain over its short-term capital loss” and inserting in lieu thereof “the corporation’s net capital gain”. (ii) The second sentence of section 1375(a)(1) is amended by striking out “such excess” and inserting in lieu thereof “such net capital gain”. (iii) Section 1375(a)(3) is amended by striking out “the excess of an electing small business corporation’s net long-term capita] gain over its net short-term capital loss” and inserting in lieu thereof “an electing small business corporation’s net capital gain”. (R) The following provisions are each amended by striking out “the excess of the net long-term capital gain over the net short-term capital loss,” and inserting in lieu thereof “the net capital gain”: Sections 1247(a)(2)(A)(i), 1247(a)(2) 26 USC 1247, 1378. (C), 1247(d)(1) and (2). 1378(a)(1), 1378(b)(1), and 1378 (c)(8). (34) Amendment conforming to the repeal of section 1240.— The table of sections of part IV of subchapter P of chapter 1 is amended by striking out the item relating to section 1240. (35) Amendment conforming to the repeal of section 1315.— The table of sections for part II of subchapter Q of chapter 1 is amended by striking out the item relating to section 1315. (36) Amendments conforming to the repeal of section 1321.— (A) Section 472 is amended by striking out subsection (f). (B) Section 6422, as amended by this Act, is amended by striking out paragraph (2), and by redesignating paragraphs (3) through (13) as paragraphs (2) through (12), respectively. (C) Section 6504 is amended by striking out paragraph (1). (D) Section 6515 is amended by striking out paragraph (1). (E) The table of parts for subchapter Q of chapter 1 is amended by striking out the item relating to part III. (37) Amendments conforming to the repeal of sections 1331 through 1337.— (A) The third sentence of section 901(a) is amended by 26 USC 901. striking out “under section 1333 (relating to war loss recoveries) or”. _ . (B) Section 936(a)(2), as added by this Act, is 26 USC 936. amended— (i) by inserting “or” at the end of subparagraph (C), and (ii) by striking out subparagraph (D). (C) Section 6212(c),(2) is amended by striking out subparagraph 26 USC 6212. (D). (D) Section 6515 is amended by striking out paragraph 26 USC 6515. (6). (E) Section 6515, as amended by this Act, is amended by striking out paragraph (2), and by redesignating paragraphs (3), (4), (5), (6), (7), and (8) as paragraphs (1), (2), (3), (4). (5),and (6) respectively. (F) The table of parts tor subchapter Q of chapter 1 is amended by striking out the item relating to part IV. (38) Amendment conforming to the repeal of section 1342.— The table of sections for part V of subchapter Q of chapter 1 is amended by striking out the item relating to section 1342. (39) Amendments conforming to the repeal of section 1340.— (A) The table of sections for part VI of subchapter Q of chapter 1 is amended by striking out the item relating to section 1346. (B) Section 6504 is amended by striking out paragraph Post, p. 1829. (7). (40) Amendment conforming to amendment of section 1372.— Section 58(d)(2) is amended by striking out “, notwithstanding 26 USC 58. the provisions of section 1371(b)(1),” (41) Amendment conforming to the repeal of section 1465.— The table of sections for subchapter C of chapter 3 is amended by striking out the item relating to section 1465. (c) Amendments to Provisions Referring to Territories.— (1) Section 37(f) is amended by striking out “a Territory,”. Ante, p. 1559. 26 USC 105, 273, 454. 26 USC 117. (2) Sections 105(e)(2), 273, and 454(b)(2) are each amended by striking out a Territory.”. (3) Section 117(b)(2)(A)(iv) is amended by striking out “a territory,”. (4) Section 162(a) is amended by striking out “territory”. 26 USC 162. 26 USC 581. (5) Section 581 is amended by striking out “, of any State, or of any Territory” and inserting m lieu thereof “or of any State”, and by striking out “, Territorial,”. (6) Section 801(b)(3) is amended by striking out “or 26 USC 801. Territorial”. (7) Section 861(a)(1) is amended by striking out “, any Territory, 26 USC 861. any political subdivision of a Territory.”. (8) Paragraphs (6) and (7) of section 1014(b) are each 26 USC 1014. amended by striking out “Territory.”. (9) Section 1221 (5) is amended by striking out “or Territory,”. 26 USC 1221. 26 USC 2 note. (d) Effective Date.— Except as otherwise expressly provided in this section, the amendments made by this section shall apply with respect to taxable years beginning after December 31, 1976. The amendments made by subsections (a)(29) and (b)(10) shall apply with respect to taxable years ending after the date of the enactment of this Act. SEC. 1902. AMENDMENTS OF SUBTITLE B; ESTATE AND GIFT TAXES. (a) In General.— (1) Amendments of section 2012.— (A) Section 2012(b) (relating to credit for gift tax) is amended— (i) by Striking out “(b) in applying,” and inserting in lieu thereof “(b) Valuation Reductions.—In applying,”, and (ii) by striking out in paragraphs (2) and (3) “ deduction)—then” and inserting in lieu thereof “deduction), then”. (B) Section 2012(c) (relating to gift by spouse or third party) is amended by striking out “(c) Where the decedent” and inserting in lieu thereof “(c) Where Gift Considered Made One-Half by Spouse.—Where the decedent”. (C) Section 2012(d)(1) (relating to computation of amount of gift tax) is amended by striking out “(d)(1) For purposes of” and inserting in lieu thereof the following: “(d) Computation of Amount of Gift Tax Paid.— “(1) Amount of tax.— For purposes of”. (D) Section 2012(d)(2) (relating to credit for gift tax) is amended by striking out “(2) For purposes” and inserting in lieu thereof: “(2) Amount of gift.—For purposes”., (2) Amendments of section 2013.— Section 2013(d)(3) is amended by striking out “, or the corresponding provision of prior law,”. (3) Amendment of section 2038.— Section 2038 (relating to revocable transfers) is amended by striking out subsection (c) (relating to effect of disability in certain cases). (4) Amendments of section 2055.— (A) Section 2055(b) (relating to powers of appointment) is amended to read as follows: “(b) Powers of Appointment.— Property includible in the decedent’s gross estate under section 2041 (relating to powers of appointment) received by a donee described in this section shall, for purposes of this section, be considered a bequest of such decedent.” (B) Section 2055(f) (relating to cross references) is amended to read as follows: (f) Cross References.— “(1) For option as to time for valuation for purpose of deduction under this section, see section 2032. “(2) For exemption of gifts and bequests to or for the benefit of Library of Congress, see section 5 of the Act of March 3, 1925, as amended (2 U.S.C. 161). “(3) For treatment of gifts and bequests for the benefit of the Office of Naval Records and History as gifts or bequests to or for the use of the United States, see section 7222 of title 10, United States Code. “(4) For treatment of gifts and bequests to or for the benefit of National Park Foundation as gifts or bequests to or for the use of the United States, see section 8 of the Act of December 18, 1967 (16 U.S.C. 191). “(5) For treatment of gifts, devises, or bequests accepted by the Secretary of State under the Foreign Service Act of 1946 as gifts, devices, or bequests to or for the use of the United States, see section 1021(e) of that Act (22 U.S.C. 869(e)) . “(6) For treatment of gifts or bequests of money accepted by the Attorney General for credit to ‘Commissary Funds, Federal Prisons/ as gifts or bequests to or for the use of the United States, see section 2 of the Act of May 15, 1952, as amended by the Act of July 9, 1952 (31 U.S.C. 725s–4). “(7) For payment of tax on gifts and bequests of United States obligations to the United States, see section 24 of the Second Liberty Bond Act (31 U.S.C. 757e), “(8) For treatment of gifts and bequests for benefit of the Naval Academy as gifts or bequests to or for the use of the United States, see section 6973 of title 10, United States Code. _ “(9) For treatment of gifts and bequests for benefit of the Naval Academy Museum as gifts or bequests to or for the use of the United States, see section 6974 of title 10, United States Code. “(10) For exemption of gifts and bequests received by National Archives Trust Fund Board, see section 2308 of title 44, United States Code.” (5) Amendments of section 2100.— (A) Section 2106(a)(2)(F) (relating to cross references 26 USC 2106. concerning the charitable deduction for estate tax purposes) is amended to read as follows: “(F) Cross References.— “(1) For option as to time for valuation for purposes of deduction under this section, see section 2032. “(2) For exemption of certain bequests for the benefit of the United States and for rules of construction for certain bequests, see section 2C55(O.” (B) Section 2106 (relating to taxable estate of nonresidents) is amended by striking out subsection (c) (relating to treatment of United States bonds). (6) Amendment of sections 2107 and 2108.— Section 2107(a) (relating 26 USC 2107, 2108. to estate tax on expatriates) and section 2108(a) (relating to application of pre–1967 estate tax provisions) are each amended by striking out “the date, of enactment of this section” and inserting in lieu thereof “November 13, 1966”. (7) Amendment relating to section 2201.— (A) Section 6(b)(1) of the Act of January 2, 1975 (Public Law 93–597; 88 Stat. 1950) is amended by striking out 26 USC 2201. “Section 2210” and inserting in lieu thereof “Section 2201”. (B) The amendment made by subsection (A) is effective 26 USC 2201 note. 26 USC 2202. July 1, 1973. (8) Repeal of section 2202.— Section 2202 (relating to missionaries in foreign service) is repealed. (9) Amendment of section 2204.— The last sentence of section 2204(b) (relating to the discharge from personal liability of a fiduciary other than the executor) is amended by striking out “has not been” and inserting in lieu thereof 26 USC 2204. “has been”. (10) Amendment of section 2501.— Section 2501(a)(1) (relating 26 USC 2501. to imposition of gift tax) is amended to read as follows: “(1) General rule.— A tax, computed as provided in section 2502, is hereby imposed for each calendar quarter on the transfer of property by gift during such calendar quarter by any individual, resident or nonresident.” (11) Amendment of section 2522.— Subsection (d) of section 26 USC 2522. 2522 (relating to cross references) is amended to read as follows: “(d) Cross Reference.— “For exemption of certain gifts to or for the benefit of the United States and for rules of construction with respect to certain gifts, see section 2055(f).” (12) Amendments to sections referring to territories.— (A) The following provisions are each amended by striking out “Territory,”: sections 2055(a)(1), 2056(c)(2)(B), 26 USC 2055, 2056, 2106. and 2106(a)(2)(A)(i). (B) The following provisions are each amended by striking out “or Territory”: sections 2011(a), 2011(e), and 2053 (C) Section 2016 is amended by striking out “Territory or”. (D) Sections 2522(a)(1) and 2522(b)(1) are. each amended by striking out “Territory,”. (E) Section 2523(f)(1) is amended by striking out “Territory, or”. (b) Conforming and Clerical Amendments.— (1) Amendment conforming to repeal of section 2202.— The table of sections for subchapter C of chapter 11 is amended by striking out the item relating to section 2202. (2) Amendments conforming to amendment of section 2055.— (A) Section 6503, as amended by this Act, is amended by striking out subsection (e), and by redesignating subsections (f), (g) (h), and (i) as subsections (e), (f), (g), and (h), respectively. (B) Section 6167(h)(2) is amended by striking out “section 6503(f)” and inserting in lieu thereof “section 6503(e)”. (c) Effective Dates.— (1) Estate tax amendments.— The amendments made by paragraphs (1) through (10), and paragraphs (14)(A), (B),and (C), of subsection (a), and by subsection (b) shall apply in the case of estates of decedents dying after the date of the enactment of this Act, and the amendment made by paragraph (11) of subsection (a) shall apply in the case of estates of decedents dying after December 31, 1970. (2) Gift tax amendments.— The amendments made by paragraphs (12), (13), and (14)(D) and (E) of subsection (a) shall apply with respect to gifts made after December 31, 1976. SEC. 1903. AMENDMENTS OF SUBTITLE C; EMPLOYMENT TAXES. (a) In General.— (1) Amendments of sections 3101 and 3111.— (A) Section 3101(a) (relating to rate of tax on employees for old-age, survivors, and disability insurance) and section 26 USC 3111. 3111(a) (relating to rate of tax on employers for such insurance) are each amended by striking out paragraphs (1), (2), (3), and (4), and by redesignating paragraphs (5) and (6) as paragraphs (1) and (2), respectively. (B) Section 3101(b) (relating to rate of tax on employees for hospital insurance) and section 3111(b) (relating to rate of tax on employers for such insurance) are each amended by striking out paragraphs (1) and (2), and by redesignating paragraphs (3), (4), (5), and (6) as paragraphs (1), (2), (3), and (4), respectively. (2) Repeal of section 3113.— Section 3113 (relating to application of social security tax on District of Columbia credit unions) is repealed. (3) Amendments of section 3121.— (A) Section 3121(b) (relating to employment) is amended— (i) by striking out “performed after 1936 and prior to 1955 which was employment for purposes of subchapter A of chapter 9 of the Internal Revenue Code of 1939 under the law applicable to the period in which such service was performed, and any service, of whatever nature, performed after 1954” and inserting in lieu thereof “, of whatever nature, performed”, and (ii) by striking out “, in the case of service performed after 1954,”. (B) Section 3121(b)(1) is amended by striking out “65 26 USC 3121. Stat. 119;”. (C) Section 3121(b)(6)(B)(v) is amended by striking out “Secretary of the Treasury” and inserting in lieu thereof “Secretary of Transportation”. (D) Section 3121(g)(3) (relating to agricultural labor) is amended by striking out “46 Stat. 1550, § 3;”. (E) Section 3121(k)(1) (relating to exemption of certain organizations) is amended by striking out subparagraphs (F) and (H) and by redesignating subparagraph (G) as subparagraph (F). (F) Section 3121 (1)(2) (relating to employees of foreign subsidiaries) is amended by striking out “, but in no case prior to January 1, 1955”. (G) Section 3121 (m)(1) (relating to service in the uniformed services) is amended by striking out “after December 1956”. (4) Amendments of section 3122.— The last sentence of section 3122 (relating to Federal service) is amended by striking out 26 USC 3122. “Secretary” each place it appears and inserting in lieu thereof “Secretary of Transportation”. (5) Amendment of section 3123.— Section 3125(c) (relating 26 USC 3125. to returns in the case of Governmental employees in the District of Columbia) is amended by striking out “Commissioners of the District of Columbia or such agents as they may designate” and by inserting in lieu thereof “Mayor of the District of Columbia of such agents as he may designate”. (6) Amendment of section 3201.— Section 3201 (relating to 26 USC 3201. rate of tax on railroad employees) is amended— (A) by striking out “oi the Internal Revenue Code of 1954” each place it appears; (B) by striking out “of such Code”; (C) by striking out “after September 30, 1973, as is” and inserting in lieu thereof “as is”; and (D) by striking out “any month after September 30, 1973” and inserting in lieu thereof “any month”. (7) Amendments of section 3202.— (A) The second sentence of section 3202(a) (relating to 26 USC 3202. reduction of tax by railroad employer) is amended— (i) by striking out “after September 30, 1973,” each place it appears; (ii) by striking out “after September 30, 1973 and the aggregate” and inserting in lieu thereof “and the aggregate” (iii) by striking out “of the Internal Revenue Code of 1954” each place it appears; and (iv) by inserting a comma immediately after “for any month” each place it appears. (B) Section 3202(b) (relating to indemnification of employer) is amended by striking out “made”. (8) Amendments of section 3211.— Section 3211(a) (relating 26 USC 3211. to rate of tax on railroad employee representatives) is amended— (A) by striking out “3111(a), 3111(b)” and inserting in lieu thereof “3111(a), and 3111(b)”; (B) by striking out “of the Internal Revenue Code of 1954” each place it appears; (C) by striking out “rendered by him after September 30, 1973,” and inserting in lieu thereof “rendered by him”; and (D) by striking out “after September 30, 1973”. (9) Amendments of section 3221.— (A) The first sentence of section 3221(a) (relating to rate of tax on railroad employers) is amended— (i) by striking out “after September 30, 1973,” each place it appears; (ii) by striking out “after September 30, 1973: except that” and inserting in lieu thereof “, except that”; (iii) by striking out “after September 30, 1973 of the aggregate” and inserting in lieu thereof “of the aggregate”; (iv) by striking out “of the Internal Revenue Code of 1954” each place it appears; and (v) by inserting a comma before “the tax imposed”. (B) Section 3221(b) (relating to rate of tax on railroad employers) is amended to read as follows: “(b) The rate of tax imposed by subsection (a) shall be increased by the rate of tax imposed with respect to wages by section 3111(a) plus the rate imposed by section 3111(b).” (C) Section 3221(c) (relating to additional railroad retirement tax) is amended— (i) by striking out “(1) at the rate of 2 cents for the period beginning November 1, 1966, and ending March 31, 1970, and (2) commencing April 1, 1970,” and (ii) by striking out “commencing with the quarter beginning April 1, 1970”. (10) Amendments of section 3231.— (A) Section 3231(a)(defining employer) is amended by striking out “44 Stat. 577;”. (B) Section 3231(b)(defining employee) is amended by striking out. “50 Stat. 312;”. (C) Section 3231(e)(defining employee representative) is amended by striking out “44 Stat. 577;”. (D) Section 3231(d)(7)(defining service) is amended by striking out “50 Stat, 308;”. (11) Amendments of section 3301.— Section 3301 (relating to Federal unemployment tax rate) is amended— (A) by striking out “the calendar year 1970 and each calendar year thereafter” and inserting in lieu thereof “each calendar year”, and (B) by striking out the last sentence. (12) Amendments of section 3302.— (A) Section 3302(a) (relating to credits against tax) is amended by striking out “(10month period in the case of October 31, 1972)”. (B) Section 3302(b) (relating to additional credit) is amended— (i) by striking out “(10month period in the case of October 31, 1972)”, and (ii) by striking out “12 or 10month period, as the case may be,” and inserting in lieu thereof “12month period”. (C) (i) Section 3302(c) (relating to limitation on credits 26 USC 3302. against unemployment tax) is amended by striking out paragraph (2) and the unnumbered paragraph immediately following such paragraph (2) (relating to advances made to a State unemployment account before September 13, 1960), and by redesignating paragraphs (3) and (4) as paragraphs (2) and (3),respectively. (ii) Section 3302(c)(2) (relating to advances made to a State unemployment account after September 12, 1960), as redesignated by clause (i) of this subparagraph, is amended by striking out “on or after the date of the enactment of the Employment Security Act of 1960”, and by striking out “paragraphs (1) and (2)” and inserting in lieu thereof “paragraph (1)”. (iii) Section 3302(c)(3) (relating to reductions with respect to certain agreements under the Trade Act of 1974),as redesignated by clause (i) of this subparagraph, is amended by striking out “paragraphs (1), (2), and (3)” and inserting in lieu thereof “paragraphs (1) and (2)”. (iv) Section 3302 (d)(3) (relating to effect of repayment of advances) is amended by striking out “or (3)”. (v) Section 3302(d)(4), (5), and (6) (relating to special rules) are each amended by striking out “subsection (c)(3)” each place it appears and inserting in lieu thereof “subsection (c)(2)”. (vi) Section 3302(d)(7) (relating to determination and certification of percentages) is amended by striking out “subsection (c)(3)(B) or (C)” and inserting in lieu thereof “subsection (c)(2)(B) or (C)”. (D) Section 3302(d) (relating to special rules for credits against the unemployment tax) is amended by striking out paragraph (8)(a cross reference). (13) Amendments to section 3303.— Section 3303 (b) (relating 26 USC 3303. to certification with respect to additional credit allowance) is amended— (A) by striking out “(10month period in the case of October 31, 1972) ” each place it appears, (B) by striking out “12 or 10month period, as the case may be,” each place it appears in paragraphs (1) and (2), and inserting in lieu thereof “12month period”, and (C) by striking out “12 or 10month period, as the case may be,” in paragraph (3) and inserting in lieu thereof “12month period,”. (14) Amendments to section 3304.— (A) Section 3304(a)(3) (relating to requirements) is 26 USC 3304. amended by striking out “49 Stat, 640; 52 Stat. 1104, 1105;”. (B) Section 3304(c) (relating to certification) is amended by striking out “(10month period in the case of October 31, 1972)”. (15) Amendments of section 3305.— (A) Section 3305(g) (relating to vessels operated by 26 USC 3305. general agents of the United States) is amended by striking out “on or after July 1, 1953,”. (B) Section 3305 (h) (relating to certain contributions to States) is amended by striking out “on or after July 1, 1953, and”. (C) Section 3305(j) (relating to denial of credits in certain cases) is amended by striking out “after December 31, 1971,”. (16) Amendments of section 3300.— (A) Section 3306(c)(9) (relating to the exclusion of service performed by certain employees and employee representatives from the definition of employment) is amended by striking out “52 Stat. 1094, 1095;”. (B) Section 3306(c)(18) (relating to the exclusion of certain service performed by nonresident aliens from the definition of employment) is amended by inserting after the “Immigration and Nationality Act, as amended” the following: “(8U.S.C. 1101(a)(15)(F) or (J))”. (C) Section 3306(f) (relating to the definition of an unemployment fund) is amended by striking out “49 Stat. 640; 52 Stat. 1104, 1105;”. . (D) Section 3306(n) (relating to vessels operated by general agents of the United States) is amended by striking out “on or after July 1, 1953,”. (17) Amendment of section 3402.— Section 3402(1)(3)(B) (relating to marital status) is amended by striking out “section 2(b)” and inserting in lieu thereof “section 2 (a)”. (b) Amendment Conforming to the Repeal of Section 3113.— The table of sections for subchapter B of chapter 21 is amended by striking out the item relating to section 3113. (c) Amendments to Profusions Referring to Territories.— Sections 3401(c) and 3404 are each amended by striking out “Territory,” each place it appears. (d) Effective Dates.— The amendments made by this section shall apply with respect to wages paid after December 31, 1976, except that the amendments made to chapter 22 of the Internal Revenue Code of 26 USC 3201. 1954 shall apply with respect to compensation paid for services rendered after December 31, 1976. SEC. 1904. AMENDMENTS OF SUBTITLE D; MISCELLANEOUS EXCISE TAXES. (a) In General.— (1) Amendments of chapter 31.— (A) So much of chapter 31 (relating to retailers excise taxes) as precedes section 4041 is amended to read as follows: “Sec. 4041. Imposition of tax.” (B) Section 4041(g) (relating to exemptions from fuel taxes) is amended to read as follows: “(g) Other Exemptions.— Under regulations prescribed by the Secretary, no tax shall be imposed under this section— “(1) on any liquid sold for use or used as supplies for vessels or aircraft (within the meaning of section 4221(d)(3)); “(2) with respect to the sale of any liquid for the exclusive use of any State, any political subdivision of a State, or the District of Columbia, or with respect to the use by any of the foregoing of any liquid as a fuel; “(3) upon the sale of any liquid for export, or for shipment to a possession of the United States, and in due course so exported or shipped; and “(4) with respect to the sale of any liquid to a nonprofit educational organization for its exclusive use, or with respect to the use by a nonprofit educational organization of any liquid as a fuel. For purposes of paragraph (4), the term ‘nonprofit educational organization’ “Nonprofit educational organization.” means an educational organization described in section 170(h)(1)(A)(ii) which is exempt from income tax under section 501(a). The term also includes a school operated as an activity of an organization described in section 501(c)(3) which is exempt from income tax under section 501(a), if such school normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.” (C) Section 4041 (relating to tax on fuels) is amended by 26 USC 4041. adding at the end thereof the following new subsection: “(i) Sales by United States, Etc.— The taxes imposed by this section shall apply with respect to liquids sold at retail by the United States, or by any agency or instrumentality of the United States, unless sales by such agency or instrumentality are by statute specifically exempted from such taxes.” (D) Chapter 31 is amended by striking out section 4042 (a cross reference) and subchapter F (special provisions 26 USC 4042, 4054–4058. applicable to retailers taxes). (2) Amendments of section 421a.— (A) Section 4216 (relating to definition of price) is 26 USC 4216. amended by redesignating subsections (e), (f), and (g) as subsections (d), (e).and (f), respectively. (B) Paragraphs (3), (4). and (5) of section 4216(b) (relating to constructive sales price) are each amended by striking out “subsections (a) and (f)” each place it appears and inserting in lieu thereof “subsections (a) and (e)”. (3) Amendment of section 4217.— Section 4217(d) (relating 26 USC 4217. to lease treated as sale) is amended by striking out paragraph (4) (relating to certain 1958 transitional rules). (4) Repeal of section 4223.— Section 4223 (relating to floor-stock 26 USC 4226. taxes imposed before 1967) is repealed. (5) Amendment of section 4227.— Section 4227 (relating to 26 USC 4227. cross references) is amended to read as follows: “SEC. 4227. CROSS REFERENCE. “For credit for taxes on tires and inner tubes, see section 6416(c).” (6) Amendment of section 4263.— Section 4253 (relating to 26 USC 4253. exemptions from the tax on communications services) is amended by adding at the end thereof the following new subsections: “(i) State and Local Governmental Exemption.— Under regulations prescribed by the Secretary, no tax shall be imposed under section 4251 upon any payment received for services or facilities furnished to the government of any State, or any political subdivision thereof, or the District of Columbia. “(j) Exemption foe Nonprofit Educational Organizations.— Under regulations prescribed by the Secretary, no tax shall be imposed under section 4251 on any amount paid by a nonprofit educational organization for services or facilities furnished to such organization. For purposes of this subsection, the term ‘nonprofit educational organization’ means an educational “Nonprofit educational organization.” organization described in section 170(b)(1)(A)(ii) which is exempt from income tax under section 501(a). The term also includes a school operated as an activity of an organization described in section 501(c)(3) which is exempt from income tax under section 501(a), if such school normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.” (7) Amendments of section 4201.— (A) Subsections (a) and (b) of section 4261 (relating to tax on transportation of persons by air) are each amended by striking out “which begins after June 30, 1970,”. (B) Section 4261(c) is amended by striking out “and begins after June 30, 1970”. (8) Amendment of section 4271.— Section 4271 (a) (relating to tax on transportation of property by air) is amended by striking out “which begins after June 30, 1970,”. (9) Repeal of section 4292.— Section 4292 (relating to State and local governmental exemption from the tax on communications services) is repealed. (10) Repeal of section 4284.— Section 4294 (relating to exemption of nonprofit educational organizations from the tax on communications services) is repealed. (11) Repeal of section 4295.— Section 4295 (across reference) is repealed. (12) Amendment of of after 34.— Chapter 34 (relating to documentary stamp taxes) is amended to read as follows: “CHAPTER 34— POLICIES ISSUED BY FOREIGN INSURERS “Sec. 4371. Imposition of tax. “Sec. 4372. Definitions. “Sec. 4373. Exemptions. “Sec. 4374. Liability for tax. “SEC. 4371. IMPOSITION OF TAX. “There is hereby imposed, on each policy of insurance, indemnity bond, annuity contract, or policy of reinsurance issued by any foreign insurer or reinsurer, a tax at the following rates: “(1) Casualty insurance and indemnity bonds.— 4 cents on each dollar, or fractional part thereof, of the premium paid on the policy of casualty insurance or the indemnity bond, if issued to or for, or in the name of, an insured as defined in section 4372(d); “(2) Life insurance, sickness and accident policies, and annuity contracts.— 1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of life, sickness, or accident insurance, or annuity contract, unless the insurer is subject to tax under section 819; and “(3) Reinsurance.— 1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of reinsurance covering any of the contracts taxable under paragraph (1) or (2). “SEC. 4372. DEFINITIONS. “(a) Foreign Insurer or Reinsurer.— For purposes of section 4371, the term ‘foreign insurer or reinsurer’ means an insurer or reinsurer who is a nonresident alien individual, or a foreign partnership, or a foreign corporation. The term includes a nonresident alien individual, foreign partnership, or foreign corporation which shall become bound by an obligation of the nature of an indemnity bond. The term does not include a foreign government, or municipal or other corporation exercising the taxing power. “(b) Policy of Casualty Insurance.— For purposes of section 4371(1), the term ‘policy of casualty insurance’ means any policy Ante, p. 1812. (other than li fe) or other instrument by whatever name called whereby a contract of insurance is made, continued, or renewed. “(c) Indemnity Bond.— For purposes of this chapter, the term ‘indemnity bond’ means any instrument by whatever name called whereby an obligation of the nature of an indemnity, fidelity, or surety bond is made, continued, or renewed. The term includes any bond for indemnifying any person who shall have become bound or engaged as surety, and any bond for the due execution or performance of any contract, obligation, or requirement, or the duties of any office or position, and to account for money received by virtue thereof, where a premium is charged for the execution of such bond. “(d) Insured.— For purposes of section 4371 (1), the term ‘insured’ means— “(1) a domestic corporation or partnership, or an individual resident of the United States, against, or with respect to, hazards, risks, losses, or liabilities wholly or partly within the United States, or “(2) a foreign corporation, foreign partnership, or nonresident individual, engaged in a trade or business within the United States, against, or with respect to, hazards, risks, losses, or liabilities within the United States. “(e) Policy of Life, Sickness, or Accident Insurance, or Annuity Contract.— For purposes of section 4371(2), the term ‘policy of life, sickness, or accident insurance, or annuity contract’ means any policy or other instrument by whatever name called whereby a contract of insurance Or an annuity contract is made, continued, or renewed with respect to the life or hazards to the person of a citizen or resident of the United States. “(f) Policy of Reinsurance.— For purposes of section 4371(3), the term ‘policy of reinsurance’ means any policy or other instrument by whatever name called whereby a contract or reinsurance is made, continued, or renewed against, or with respect to, any of the hazards, risks, losses, or liabilities covered by contracts taxable under paragraph (1) or (2) of section 4371. “SEC. 4373. EXEMPTIONS. “The tax imposed by section 4371 shall not apply to— “(1) Domestic agent.— Any policy, indemnity bond, or annuity contract signed or countersigned by an officer or agent of the insurer in a State, or in the District of Columbia, within which such insurer is authorized to do business; or “(2) Indemnity bond.— Any indemnity bond required to be filed by any person to secure payment of any pension, allowance, allotment, relief, or insurance by the United States, or to secure a duplicate for, or the payment of, any bond, note, certificate of indebtedness, war-saving certificate, warrant, or check, issued by the United States. “SEC. 4374. LIABILITY FOR TAX. “The tax imposed by this chapter shall be paid, on the basis of a return, by any person who makes, signs, issues, or sells any of the documents and instruments subject to the tax, or for whose use or benefit the same are made, signed, issued, or sold. The United States or any agency or instrumentality thereof shall not be liable for the tax,” (13) Amendment of section 4493.— (A) Section 4493(b)(1) (relating to certain persons engaged in foreign air commerce) is amended by striking out “beginning on or after July 1, 1970”. (B) Section 4493(b)(2) is amended by striking out the last sentence. (14) Amendment of chapter 37.— So much of chapter 37 as precedes section 4501 (relating to tax on sugar) is amended to read as follows: “CHAPTER 37— SUGAR “Sec. 4501. Imposition of tax. “Sec. 4502. Definitions, “Sec. 4503. Exemptions for sugar manufactured for home consumption.” (15) Repeal of sections 4591 through 4597.— Chapter 38 (relating to import taxes on oleomargarine) is repealed. (16) Repeal of sections 4801 through 4806.— Subchapter B of chapter 39 (relating to tax on white phosphorus matches) is repealed. (17) Repeal of sections 4811 through 4826.— Subchapter C of chapter 39 (relating to tax on unadulterated butter) is repealed. (18) Repeal of sections 4881 through 4886.— Subchapter E of chapter 39 (relating to tax on circulation other than of national banks) is repealed. (19) Amendment of section 4901.— Section 4901 (relating to payment of occupational taxes) is amended by striking out subsection (c). (20) Amendment of section 4905.— Section 4905(a) (relating to liability for occupational taxes in case of death or change of location) is amended by striking out “wife” and inserting in lieu thereof “spouse”. (21) Repeal of section 4911 through 4931.— (A) Chapter 41 (relating to interest equalization tax) is repealed. (B) The repeal made by subparagraph (A) shall apply with respect to acquisitions of stock and debt obligations made after June 30, 1974. (22) Amendments of section 4973.— (A) So much of section 4973(a) (relating to tax on excess contributions) as follows “of any individual,” in paragraph (3) thereof is amended to read as follows: “there is imposed for each taxable year a tax in an amount equal to 6 percent of the amount of the excess contributions to such individual’s accounts, annuities, or bonds (determined as of the close of the taxable year). The amount of such tax for any taxable year shall not exceed 6 percent of the value of the account, annuity, or bond (determined as of the close of the taxable year). in the case of an endowment contract described in section 408(b), the tax imposed by this section does not apply to any amount allocable to life, health, accident, or other insurance under such contract. The tax imposed by this subsection shall be paid by such individual.” (B) Section 4973(c) is amended by striking out “subsection 26 USC 4973. (a)(3)” and inserting in lieu thereof “subsection (a)(2)”. (b) Conforming and Clerical Amendments.— (1) Amendments conforming to amendment of chapter 31.— (A) Section 6416(a)(1) is amended by striking out 26 USC 6416. “(retailers taxes)” and inserting in lieu thereof “(special fuels)”, (B) Section 6416 (e) is amended by striking out “subchapter E of”. (2) Amendment conforming to amendment of section 4216.— Section 6416(b)(1) is amended by striking out “section 4216(f)(2) and (3)” and inserting in lieu thereof “section 4216 (e)(2) and (3)” (3) Amendment conforming to the repeal of section 4226.— The table of sections for subchapter G of chapter 32 is amended by striking out the item relating to section 4226. (4) Amendment conforming to the repeal of sections 4292, 4294, and 4295.— The table of sections for subchaptet E of chapter 33 is amended by striking out the items relating to sections 4292, 4294, and 4295. (5) Amendments conforming to the amendment of chapter 34.— (A) Section 7270 is amended by striking out “the affixing 26 USC 7270. of stamps on insurance policies, etc.” and inserting in lieu thereof “liability for tax on policies issued by foreign insurers”. (B) Section 6808 is amended by striking out paragraph 26 USC 6808. (4). (6) Amendments conforming to the amendment of chapter 37.— (A) Section 7240 is amended by striking out “subchapter 26 USC 7240. A of”. (B) Section 7655(a) is amended— 26 USC 7655. (i) by striking out “Subchapter A of chapter 37” in paragraph (5) and inserting in lieu thereof “Chapter 37”, and (ii) by redesignating paragraph (5) as paragraph (3). (7) Amendments conforming to repeal of sections 4591 through 4597.— (A) Section 6808 is amended by striking out paragraph 26 USC 6808. (7). (B) (i) Section 7234 (relating to violations of laws concerning 26 USC 7234. oleomargarine or adulterated butter operations) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7234. (C) (i) Section 7265 (relating to other offenses concerning 26 USC 7265. oleomargarine or adulterated butter operations) is repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7265. (D) Section 7611(a), as redesignated by this Act, is Ante, p. 1699. amended by striking out paragraph (1). (E) The table of chapters for subtitle D is amended by striking out the item relating to chapter 38, (8) Amendments conforming to repeal of sections 4801 through 4806.— (A) Section 4905(b) is amended to rend as follows: “(b) Registration.— “For registration in case of wagering, see section 1412.” (B) Section 6808 is amended by striking out paragraph (12). (C) Section 7012 is amended by striking out subsection (D) (i) Section 7239 (relating to violations of laws concerning white phosphorus matches) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7239. (E) (i) Sections 7267 and 7274 (relating to offenses and penalties concerning white phosphorus matches) are each repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the items relating to sections 7267 and 7274. (F) Section 7272(b) is amended by striking out “4804” (G) Section 7303 is amended by striking out paragraph (6) (H) (i) Part II of subchapter C of chapter 75 (relating to provisions common to forfeitures) is amended by striking out section 7328 (relating to confiscation of white phosphorus 26 USC 7328, 7329. matches), and by redesignating section 7329 (relating to cross references) as section 7328. (ii) The table of sections for part II of subchapter C of chapter 75 is amended by striking out the last two items and inserting in lieu thereof the following: “Sec. 7328. Cross references.” (9) Amendments conforming to repeat, of sections 4811 through 4826.— (A) Section 6808 (relating to cross references) is amended by striking out paragraph (10). (B) (i) Section 7235 (relating to violations of laws concerning adulterated butter and process or renovated butter) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7235. (C) (i) Section 7264 (relating to offenses concerning renovated or adulterated butter) is repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7264. (D) Section 7303 is amended by striking out paragraphs (3), (4), and (5), and by redesignating paragrapns (7) and (8) as paragraphs (2) and (3), respectively. (E) Section 7611(a), as redesignated by this Act, is amended by striking out paragraph (2) , and by redesignating paragraphs (5) and (6) as paragraphs (1) and (2), respectively. (10) Amendments conforming to the repeal of sections 4911 through 4931.— (A) (i) (I) Section 263, as amended by this Act, is amended 26 USC 263. by striking out subsections (a)(3) and (d) (relating to the allowance of deductions for payment of interest equalization tax), and by redesignating subsections (e), (f), and (g) as subsections (d), (c),and (f), respectively. (II) Section 263(d), as redesignated by clause (i)(I) of this subparagraph, is amended by striking out “subsection (f)” and inserting in lieu thereof “subsection (e)”, (ii) Section 6011 (relating to requirement of return, statement, or 26 USC 6011. list) is amended by striking out subsection (d) (relating to interest equalization tax returns, etc.), and by redesignating subsections (e) and (f) as subsections (c) and (d), respectively. (iii) (I) Section 6076 (relating to time for filing interest 26 USC 6076. equalization tax returns) is repealed. (II) The table of sections for part V of subchapter A of chapter 61 is amended by sticking out the item relating to section 6076. (iv) Section 6611 (relating to interest on overpayments) 26 USC 6611. is amended by striking out subsection (h) (relating to over-payments of interest equalization tax) and by redesignating subsection (i) as subsection (h). (v) Section 6651 (relating to failure to file tax return 26 USC 6651. or to pay tax) is amended by striking out subsection (e) (relating to certain interest equalization tax returns). (vi) (I) Section 6680 (relating to failure to file interest 26 USC 6680. equalization tax returns) is repealed. (II) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6680. (vii) The amendments made by this subparagraph shall 26 USC 263 note. apply with respect to acquisitions of stock or debt obligations made after June 30, 1974, except that the repeal of paragraph (2) of section 6011(d) under clause (ii) shall apply with respect to loans and commitments made after such date. (B) Section 861(a)(1)(G) (relating to income from 26 USC 861. sources within the United States) is amended— (i) by striking out “section 4912(c)” and inserting in lieu thereof “subsection (c) of section 4912 (as in effect before July 1, 1974)”; and (ii) by striking out “section 4912(c)(2)” and inserting in lieu thereof “subsection (c)(2) of such section”. (C) The second sentence of section 1232(b)(2) (relating 26 USC 1232. to the definition of the issue price of bonds and other evidences of indebtedness) is amended by striking out “section 4911” anrl inserting in lieu thereof “section 4911, as in effect before July 1, 1974”. (D) (i) Section 6681 (relating to false equalization tax 26 USC 6681. certificates) is repealed. (ii) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6681. (iii) The amendments made by this subparagraph shall 26 USC 6681 note. apply with respect to actions occurring after June 30, 1974. (E) (i) Section. 6689 (relating to failure by certain foreign 26 USC 6689. issuers and obligors to comply with United States investment equalization tax requirements) is repealed. (ii) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6689. (iii) The amendments made by this subparagraph shall apply with respect to stock or debt obligations issued after June 30, 1974. (F) (i) Section 7241 (relating to penalty for fraudulent equalization tax certificates) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7241. (iii) The amendments made by this subparagraph shall apply with respect to statements and certificates executed after June 30, 1974. (G) The table of chapters for subtitle D is amended by striking out the item relating to chapter 41. (c) Amendment to Provision Referring to Territories.— Section 4482 (c)(1) is amended by striking out “, a Territory of the United States,”. (d) Effective Date.— Except as otherwise provided in this section, the amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. SEC. 1905. AMENDMENTS OF SUBTITLE E; ALCOHOL, TOBACCO, AND CERTAIN OTHER EXCISE TAXES. (a) In General.— (1) Amendment of section 5005.— Section 5005(c)(2) (relating to transfers in bond of distilled spirits) is amended by striking out the last two sentences and inserting in lieu thereof the following: “Such relief from liability shall be effective from the time of removal from the transferor’s bonded premises, or from the time of divestment of interest, whichever is later.” (2) Amendments of section 5008.— (A) Section 5008(b)(1) (relating to abatement, remission, refund, and allowance for loss of destruction of distilled spirits) is amended by inserting immediately after “the tax imposed by this chapter” the following: “or by section 7652”. (B) Section 5008(b)(2) is amended by striking out “the taxes imposed under section 5001(a)(1)” and all that follows and inserting in lieu thereof the following: “the taxes imposed under section 5001(a)(1), under subpart B of this part, or under section 7652 on the spirits so destroyed, to the proprietor of the distilled spirits plant who withdrew the distilled spirits on payment or determination of tax.” (C) Subsections (c)(1) and (d)(1) of section 5008 are each amended by inserting immediately after “under section 5001(a)(1)” the following: “or under section 7652”. (D) Section 5008(d)(1) is amended by striking out “, on or after July 1, 1959,”. (3) Amendment of section 5009.— Section 5009(b)(3) is amended by striking out “46 Stat. 694;”. (4) Amendment of section 5025.— Section 5025 (j) (relating to stabilization of distilled spirits) is amended by striking out “the bottling of distilled spirits,” and inserting in lieu thereof “the bottling of distilled spirits, or preparatory to exportation,”. (5) Amendment of section 5054.— Section 5054 (relating to determination and collection of tax on beer) is amended by striking out subsection (c) (relating to stamps or other devices as evidence of payment of tax) and by redesignating subsection (d) as subsection (c). (6) Amendments of section 5061.— (A) Section 5061(a) (relating to collections of alcohol 26 USC 5061. taxes) is amended by striking out the last sentence. (B) Section 5061(b) (relating to methods of collection) is amended to read as follows: “(b) Exceptions.— Notwithstanding the provisions of subsection (a), any taxes imposed on, or amounts to be paid or collected in respect of, distilled spirits, wines, rectified distilled spirits and wines, and beer under— “(1) section 5001(a)(5), (6),or (7), “(2) section 5006(c) or (d), “(3) section 5026(a)(2), “(4) section 5041 (d), “(5) section5043(a)(3), “(6) section5054(a)(3) or (4),or “(7) section5505(a), shall be immediately due and payable at the time provided by such provisions (or if no specific time for payment is provided, at the time the event referred to in such provision occurs). Such taxes and amounts shall be assessed and collected by the Secretary on the basis of the information available to him in the same manner as taxes payable by return but with respect to which no return has been filed.” (C) Section 5061(c) (relating to applicability of other provisions of law) is amended to read as follows: “(c) Import Duties.— The internal revenue taxes imposed by this part shall be in addition to any import duties unless such duties are specifically designated as being in lieu of internal revenue tax.” (7) Amendment of section 5113.— Section 5113(f)(1) (relating 26 USC 5113. to retail dealers in liquors) is amended by striking out “wines or beer” and inserting in lieu thereof “distilled spirits, wines, or beer”. (8) Amendments of section 5117.— Section 5117 (relating 26 USC 5117. to prohibited purchases by dealers) is amended by redesignating subsection (b) as subsection (c) and by inserting after subsection (a) the fol lowing new subsection: “(b) Limited Retail Dealers.— A limited retail dealer may lawfully purchase distilled spirits for resale from a retail dealer in liquors.” (9) Amendment of section 5121.— Section 5121(c) (relating 26 USC 5121. to limited retail dealers) is amended to read as follows: “(c) Limited Retail Dealers.— Every limited retail dealer shall pay a special tax of $4.50 for each calendar month in which sales are made as such dealer; except that the special tax shall be $2.20 for each calendar month in which only sales of beer or wine are made.” (10) Amendment of section 3122.— Section 5122(c) (relating 26 USC 5122. to definition of limited retail dealer) is amended by striking out “beer or wine” each place it appears and inserting in lieu thereof “distilled spirits, wine, or beer”. (11) Amendment of section 5131.— Section 5131(a) (relating 26 USC 5131. to eligibility for drawback) is amended by striking out “produced in a domestic registered distillery or industrial alcohol plant and withdrawn from bond, or using distilled spirits withdrawn from the bonded premises of a distilled spirits plant,”. (12) Amendment of section 5142.— Section 5142(c) (relating to payment of occupational taxes) is amended to read as follows: “(c) How Paid.— “(1) Payment by return.— The special taxes imposed by this part shall he paid on the basis of a return under such regulations as the Secretary shall prescribe. “(2) Stamp denoting payment of tax.— After receiving a properly executed return and remittance of any special tax imposed by this subpart, the Secretary shall issue to the taxpayer an appropriate stamp as a receipt denoting payment of the tax. This paragraph shall not apply in the case of a return covering liability for a past period.” (13) Amendments of section 5171.— Section 5171(b) (relating to permits for operation of business as distillers, etc.) is amended— (A) in paragraph (1), by striking out “49 Stat. 978;”, and (B) by striking out paragraph (3) (relating to continuance of business after June 30, 1959, pending application for permit). (14) Amendment of section 5174.— Section 5174(a)(2)(A) (relating to withdrawal bonds for distilled spirits) is amended by striking out “such spirits” and inserting in lieu thereof “distilled spirits from bond”. (15) Amendment of section 5232.— Section 5232(a) (relating to transfer of imported distilled spirits) is amended by striking out “and the importer” and inserting in lieu thereof “and the importer, or the person bringing such distilled spirits into the United States,”. (16) Amendment of section 5233.— Section 5233(b)(4) (relating to bottling requirements) is amended by striking out “49 Stat. 977;”. (17) Amendment of section 5234.— The first sentence of section 5234(a)(2) (relating to the mingling of distilled spirits) is amended by striking out “8 years” and inserting in lieu thereof “20 years”. (18) Amendment of section 5314.— Section 5314(a)(2) (relating to application of certain provisions to Puerto Rico) is amended by striking out “section 5001(a)(4)” and inserting in lieu thereof “section 5001(a)(10)”. _ (19) Repeal of section 5315.— Section 5315 (relating to the status of certain distilled spirits on July 1, 1959) is repealed. (20) Amendments of section 5368.— (A) The heading of section 5368 is amended to read as follows: “SEC. 5368. GAUGING AND MARKING.” (B) Section 5368(b) (relating to removal of wines) is amended to read as follows: “(b) Marking.— Wines shall be removed in such containers (including vessels, vehicles, and pipelines) bearing such marks and labels, evidencing compliance with this chapter, as the Secretary may by regulations prescribe.” (21) Amendment of section 5392.— Section 5392(f)(defining own production) is amended by striking out “49 Stat. 990;”. (22) Amendments of section 5601.— Section 5601(b) (relating to presumptions in the case of criminal penalties) is amended to read as follows: “(b) Presumption.— Whenever on trial for violation of subsection (a)(4) the defendant is shown to have been at the site or place where, and at the time when, the business of a distiller or rectifier was so engaged in or carried on, such presence of the defendant shall be deemed sufficient, evidence to authorize conviction, unless the defendant explains such presence, to the satisfaction of the jury (or of the court when tried without jury).” (23) Amendments of section 5685.— (A) Section 5685(a) (relating to penalty for possession 26 USC 5685. of devices for emitting gas, smoke, etc.) is amended by striking out “section 5848” and inserting in lieu thereof “section 5845”. (B) Section 5685(c) (relating to forfeiture of firearms, devices, etc.) is amended by striking out “section 5862” and inserting in lieu thereof “section 5872”. (C) Section 5685(d) (relating to the definition of machine gun) is amended to read as follows: “(d) Definition of Machine Gun.— As used in this section, the term ‘machine gun’ means a machine gun as defined in section 5845(b).” (24) Amendment of section 5701.— Section 5701(e) (relating 26 USC 5701. to imported tobacco products, etc.) is amended by striking out “such articles” and inserting in lieu thereof “such articles, unless such import duties are imposed in lieu of internal revenue tax”. (25) Amendments of section 5703.— (A) Section 5703(a)(2) (relating to transfer of liability 26 USC 5703. for tobacco taxes) is amended by adding at the end thereof the following new sentence: “All provisions of this chapter applicable to tobacco products and cigarette, papers and tubes in bond shall be applicable to such articles returned to bond upon withdrawal from the market or returned to bond after previous removal for a tax-exempt purpose.” (B) The second sentence of section 5703(b) (relating to method of payment of tobacco taxes) is amended by striking out “, except that the taxes shall continue to be paid by stamp until the Secretary or his delegate provides, by regulations, for the payment, of the taxes on the basis of a return”. (C) Section 5703 is amended by striking out subsection (c) (relating to stamps to evidence tobacco taxes) and by redesignating subsections (d) and (e) as subsections (c) and (d), respectively. (26) Amendments of section 3704.— Subsections (c) and (d) of section 5704 (relating to exemptions from tobacco taxes) are 26 USC 5704. each amended by inserting after “to a manufacturer of tobacco products or cigarette papers and tubes” the following: “or to the proprietor of an export warehouse”. (27) Amendment of section 5712.— Section 5712 (relating to 26 USC 5712. application for permit) is amended by striking out the last sentence. (28) Amendments of section 572a.— (A) The heading of section 5723 is amended by striking 26 USC 5723. out “NOTICES, AND STAMPS” and inserting in lieu thereof “AND NOTICES”. (B) Section 5723(b) (relating to marks, and so forth, on packages) is amended to rend as follows: “(b) Marks, Labels, and Notices.— Every package of tobacco products Regulation. or cigarette papers or tubes shall, before removal, bear the marks, labels, and notices, if any, that the Secretary by regulation prescribes.” (b) Conforming and Clerical Amendments.— (1) Amendments conforming to amendment of section 5054.— (A) Section 5676 (relating to beer stamp penalties) is repealed. (B) The table of sections for part III of subchapter J of chapter 51 is amended by striking out the item relating to section 5676. (2) Amendments conforming to amendments of section 5081.— (A) Section 5007(b)(1) is amended by striking out the second sentence. (B) Section 5026(b) is amended by striking out “Except as provided in subsection (a)(2), the taxes” and inserting in lieu thereof “The taxes”. (C) Section 5043(b) is amended by striking out “Except as provided in subsection (a)(3), the taxes” and inserting in lieu thereof “The taxes”. (D) Section 5662 is amended by striking out “stamp,” each place it appears. (E) (i) Section 5689 (relating to penalty and forfeiture for tampering with a stamp machine) is repealed. (ii) The table of sections for part IV of subchapter J of chapter 51 is amended by striking out the item relating to section 5689. (iii) Section 5061 is amended by striking out subsection (d). (3) Amendments conforming to amendment of section 5142.— (A) (i) Section 5104 (relating to method of payment of tax on stills) is repealed. (ii) The table of sections for subpart C of part II of subchapter A of chapter 51 is amended by striking out the item relating to section 5104. (B) Section 5111(a) is amended by striking out the second sentence. (C) Section 5121(a) is amended by striking out the second sentence. (D) (i) Section 5144 (relating to supply of stamps) is repealed. (ii) The table of sections for subpart G of part II of subchapter A of chapter 51 is amended by striking out the item relating to section 5144. (E) Section 5148(3) is amended by striking out “penalties” and inserting in lieu thereof “penalties, authority for assessments,”. (4) Amendment conforming to the repeal of section 5315.— The table of sections for part III of subchapter E of chapter 51 is amended by striking out the item relating to section 5315. (5) Amendment conforming to the amendment of section 5358.— The item relating to section 5368 in the table of sections for part II of subchapter E of chapter 51 is amended to read as follows: “Sec. 5368. Gauging and marking.” (6) Amendments conforming to the amendment of section 5001.— (A) Section 5105 (b)(2) is amended by striking out “, 5601 26 USC 5105. (b)(1),”. (B) Section 5177(b)(2) is amended by striking out “5601 26 USC 5177. (b)(2),” and inserting in lieu thereof “5601 (b),”. (C) Section 5179(b)(1) is amended by striking out “, 5601 26 USC 5179. (b)(1)”. (D) Section 5222(d) is amended by striking out “5601(b) 26 USC 5222. (3), 5601(b)(4)”. (E) Section 5505(i) is amended by striking out “5601(b) 26 USC 5505. (1),”. (7) Amendments conforming to the amendment of section 5723.— (A) Paragraphs (2) and (3) of section 5751(a) are each 26 USC 5751. amended by striking out “notices, and stamps” and inserting in lieu thereof “and notices”. (B) (i) Section 5752 is amended to read as follows: “SEC. 5752. RESTRICTIONS RELATING TO MARKS, LABELS, NOTICES, AND PACKAGES. “No person shall, with intent to defraud the United States, destroy, obliterate, or detach any mark, label, or notice prescribed or authorized, by this chapter or regulations thereunder, to appear on, or be affixed to, any package of tobacco products or cigarette papers or tubes, before such package is emptied.” (ii) Section 5762(a) is amended by striking out paragraphs 26 USC 5762. (8), (7), (8), (9), (10), and (11) and inserting in lieu thereof the following: “(6) Destroying, obliterating, or detaching marks, labels, or notices before packages are emptied.— Violates any provision of section 5752;”. (iii) The item relating to section 5752 in the table of sections for subchapter E of chapter 52 is amended to read as follows: “Sec. 5752. Restrictions relating to marks, labels, notices, and packages.” (C) (i) Section 5763(a)(2) is amended by striking out 26 USC 5763. “notices, and stamps” and inserting in lieu thereof “and notices”. (ii) Section 5763(b) is amended by striking out “internal revenue stamps,”. (D) The item relating to section 5723 in the table of sections for subchapter C of chapter 52 is amended to read as follows: “Sec. 5723. Packages, marks, labels, and notices.” (c) Amendments to Provisions Referring to Territories.— (1) Section 5114(b) is amended by striking out “or Territory” 26 USC 5114. each place it appears and by striking out “Territories,”. (2) Section 5214(a)(2) is amended by striking out “or Territory 26 USC 5214. ” each place it appears. (3) Section 5272(b) is amended by striking out “and 26 USC 5272. Territories”. (4) Section 5362(c)(9) is amended by striking out “and 26 USC 5362. Territories”. (5) Section 5551(b)(2) is amended by striking out “Territory, 26 USC 5551. or”. (6) Section 5685(a) is amended by striking out “Territory 26 USC 5685. or”. (d) Effective Date.— The amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. SEC. 1906. AMENDMENTS OF SUBTITLE F; PROCEDURE AND ADMINISTRATION. (a) In General.— (1) Amendments of section 6013.— (A) Section 6013(b)(2)(C) (relating to petition to the Tax Court) is amended by striking out “of the United States”. (B) The heading of section 6013(d) is amended to read as follows: “(d) Special Rules.—”. (C) Section 6013(d)(1) (relating to joint return after death of one spouse) is amended by striking out “and” at the end of subparagraph (A) and inserting in lieu thereof “or”, and by striking out “and” at the end of the subparagraph (B). (2) Amendment of section 6015.— Section 6015 (relating to declaration of estimated tax by individuals) is amended by striking out subsection (j) (relating to an effective date provision). (3) Amendment of section 6037.— Section 6037 (relating to returns of subchapter S corporations) is amended by striking out “section 1371(a)(2)” and inserting in lieu thereof “section 1371 (b)” (4) Amendment of section 6046.— Section 6046(e) (relating to information as to organization of foreign corporation) is amended to read as follows: “(e) Limitation.— No information shall be required to be furnished under this section with respect to any foreign corporation unless such information was required to be furnished under regulations which have been in effect for at least 90 days before the date on which the United States citizen, resident, or person becomes liable to file a return required under subsection (a).” (5) Amendment of section 6051.— Section 6051(a) (relating to information required to be furnished to employees) is amended by striking out “and” where it appears at the end of paragraph (6). (6) Amendments of section 6065.— Section 6065 (relating to verification of returns) is amended by striking out subsection (b) (relating to verification by oath), and by striking out in subsection (a) the following: “(a) Penalties of Perjury.—”. (7) Repeat, of section 6105.— Section 6105 (relating to compilation of data for certain excess profits tax cases) is repealed. (8) Amendment of section 6111.— Section 6111 (relating to cross references), as redesignated by this Act, is amended to read as follows: “SEC. 6111. CROSS REFERENCE. “For inspection of records, returns, etc., concerning gasoline or lubricating oils, see section 4102.” (9) Amendment of section 6152.— Section 6152(a)(1) (relating to installment payments by corporations) is amended to read as follows: “(1) Corporations.— A corporation subject to the taxes imposed 26 USC 1. by chapter 1 may elect to pay the unpaid amount of such taxes in two equal installments.” (10) Amendments of section bib4.— (A) Section 6154(c)(1)(B) (relating to definition of estimated 26 USC 6154. tax) is amended— (i) by adding “and” after the comma at the end of clause (i), and (ii) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following: “(ii) in the case of a taxable year beginning before January 1, 1977, the amount of the corporation’s temporary estimated tax exemption for such year.” (B) Section 6154(c)(2)(A)(ii) (relating to temporary estimated tax payments) is amended by striking out “clauses (ii) and (iii)” and inserting in lieu thereof “clause (ii)”. (C) Section 6154(c)(2)(B) (relating to estimated tax) is amended by striking out the following: “1968, 1969, 1970, 1971, and 1972 100 percent   1973 80 percent   1974 60 percent”. (D) Section 6154(c) (relating to estimated tax) is amended by striking out paragraph (3) (relating to transitional exemption for taxable years beginning before 1972). (11) Amendments of section 6157.— (A) Section 6157 (relating to payment of Federal unemployment 26 USC 6157. tax) is amended by striking out subsection (c) (relating to special rides for 1970 and 1971), and by redesignating subsection (d) as subsection (c). (B) Section 6157(a) is amended by striking out “subsections (c) and (d)” and inserting in lieu thereof “subsection (c)” (12) Repeal of section 6162.— Section 6162 (relating to payment 26 USC 6162. of tax on gain on liquidation of certain personal holding companies) is repealed. (13) Amendment of section 6205.— Section 6205 (a)(4) (relating 26 USC 6205. to District of Columbia as employer) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (14) Amendment of section 6207.— Section 6207 (relating to 26 USC 6207. cross references) is amended by striking out paragraph (7). (15) Amendment of section 6213.— Section 6213(a) (relating Ante, p. 1698. to time for filing petition with the Tax Court) is amended by striking out “States of the Union and the District of Columbia” and inserting in lieu thereof “United States”. (16) Amendment of section 6215.— Section 6215(b)(5)(a 26 USC 6215. cross reference) is amended by striking out “60 Stat. 48;”. (17) Amendment of section 6302.— Section 6302(b) (relating 26 USC 6302. to collection of certain excise taxes) is amended by striking out “sections 4501 (a) or 4511 of chapter 37, or section 4701 or 4721 of chapter 39” and inserting in lien thereof “section 4501(a) of chapter 37”. (18) Repeal of section 6304.— Section 6304 (relating to a cross 26 USC 6304. reference) is repealed. (19) Amendment of section 6313.— Section 6313 (relating to 26 USC 6313. fractional parts of a cent) is amended by striking out “not payable by stamp”. (20) Amendments of section 6326.— (A) Paragraph (2) of section 6326 (cross references) is amended by striking out “52 Stat. 851;”. (B) Paragraph (3) of section 6326 is amended by striking out “52 Stat. 867” (C) Paragraph (4) of section 6326 is amended by striking out “52 Stat. 867–877;”. (D) Paragraph (5) of section 6326 is amended by striking out “52 Stat. 938;”. (21) Amendment of section 6365.— Section 6365 (b) (relating to definition of governor) is amended by striking out “Commissioner of the District of Columbia” and inserting in lieu thereof “Mayor of the District of Columbia”. (22) Amendment of section 6412.— Section 6412(a) (relating to floor stock refunds) is amended by redesignating paragraphs (2) and (4) as paragraphs (1) and (2), respectively. (23) Amendments of section 6413.— (A) Section 6413(a)(4) (relating to District of Columbia as employer) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (B) (i) Section 6413 (c)(1) (relating to refunds of certain employment taxes) is amended to read as follows: “(1) In General.— If by reason of an employee receiving wages from more than one employer during a calendar year the wages received by him during such year exceed the contribution and benefit base (as determined under section 230 of the Social 42 USC 430. Security Act) which is effective with respect to such year, the employee shall be entitled (subject to the provisions of section 31 (b)) to a credit or refund of any amount of tax, with respect to such wages, imposed by section 3101 or section 3201, or by both such sections, and deducted from the employee’s wages (whether or not paid to the Secretary), which exceeds the tax with respect to the amount of such wages received in such year which is equal “Wages.” to such contribution and benefit base. The term ‘wages’ as used in this paragraph shall, for purposes of this paragraph, include ‘compensation’ as defined in section 3231(e).” (ii) So much of section 6413(c)(2)(A) (relating to Federal employees) as follows “and the term ‘wages’ includes” is amended to read as follows: “for purposes of this subsection the amount, not to exceed an amount equal to the contribution and benefit base (as determined under section 230 of the Social Security Act) for any calendar year with respect to which such contribution and benefit base is effective, determined by each such head or agent as constituting wages paid to an employee.” (iii) The amendments made by clauses (i) and (ii) shall apply with respect to remuneration paid after December 31, 1976. (C) Section 6413(c)(2)(F) (relating to government employees in the District of Columbia) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (D) Section 6418(c)(3) (relating to special refunds) is 26 USC 6413. amended by striking out “after 1967”. (24) Amendments of section 6416.— (A) Section 6416(a)(3) (relating to special rules for 26 USC 6416. refund of overpayment of tax) is amended by redesignating subparagraphs (C) and (D) as subparagraphs (A) and (B), respectively, (B) (i) Section 6416(b)(2) (relating to overpayments of certain excise taxes), as amended by section 2108 of this Act, Post, p. 1904. is amended by striking out subparagraphs (G), (H), (I), and (J), and by redesignating subparagraphs (F), (K), (L), (M), (R), (8), and (T) as subparagraphs (E), (F), (G), (H), (I), (J),and (K),respectively. (ii) The repeals made by clause (i) shall apply with 26 USC 6416 note. respect to the use or resale for use of liquids after December 31, 1976. (25) Repeal of section 6417.— Section 6417 (relating to coconut 26 USC 6417. and palm oil) is repealed. (26) Amendments of section 6420.— (A) Section 6420(b) (relating to time for filing refund 26 USC 6420. claims on gasoline) is amended to read as follows: “(b) Time fob Filing Claims; Period Covered.— Not more than one claim may be filed under this section by any person with respect to gasoline used during his taxable year, and no claim shall be allowed under this section with respect to gasoline used during any taxable year unless filed by such person not later than the time prescribed by law for filing a claim for credit or refund of overpayment of income tax for such taxable year. For purposes of this subsection, a person’s taxable year shall be his taxable year for purposes of subtitle A.” 26 USC 1. (B) Section 6420(e)(1) (relating to application of other laws) is amended by striking out “apply in in respect” and inserting in lieu thereof “apply in respect’”. (C) (i) Section 6420 is amended by striking out subsection (g) (relating to effective date) and by redesignating subsections (h) and (i) as subsections (g) and (h), respectively. (ii) Section 6420(a) is amended by striking out “subsection (h)” and inserting in lieu thereof “subsection (g)”. (D) Section 6420(g) (relating to income tax credit in lieu of gas tax refund), as redesignated by subparagraph (C)(i) of this paragraph, is amended by strikingout “with respect to gasoline used after June 30, 1965,” and “for gasoline used after June 30, 1965”. (27) Amendments of section 6421.— (A) (i) Subsections (a) and (e)(3) of section 6421 (relating 26 USC 6421. to nonhighway use of gasoline) are each amended by striking out “after June 30, 1970,”. (ii) The amendments made by clause (i) shall only 26 USC 6421 note. apply with respect, to gasoline used as a fuel after June 30, 1970. (B) Section 6421(c) (relating to nonhighway use of gasoline) is amended to read as follows: “(c) Time for Filing Claims; Period Covered.— “(1) In general.— Except as provided in paragraph (2), not more than one claim may be filed under subsection (a), and not more than one. claim may be filed under subsection (b), by any person with respect to gasoline used during his taxable year; and no claim shall be allowed under this paragraph with respect to gasoline used during any taxable year unless filed by such person not later than the time prescribed by law for filing a claim for credit or refund of overpayment of income tax for such taxable year. For purposes of this subsection, a person’s taxable year shall be his taxable year for purposes of subtitle A. “(2) Exception.— If $1,000 or more is payable under this section to any person with respect to gasoline used during any of the first three Quarters of his taxable year, a claim may be filed under this section by such person with respect to gasoline used during such quarter. No claim filed under this paragraph shall be allowed unless filed on or before the last day of the first quarter following the quarter for which the claim is filed.” (C) Section 6421(h) (relating to effective dates) is amended by striking out “after June 30, 1956, and”. (D) Section 6421 (i) (relating to income tax credit in lieu of refund) is amended— (i) by striking out, in paragraph (1), “with respect to gasoline used after June 30, 1965,”, (ii) by striking out, in paragraph (2), “subsection (c)(3)(B)” and inserting in lieu thereof “subsection (c)(2)”, and (iii) by striking out, in paragraph (3), “for gasoline used after June 30, 1965.” (28) Amendments of Section 6422.— (A) Paragraph (9) of section 6422 (relating to cross references), as redesignated by section 1901(b)(36)(B), is amended by striking out “60 Stat. 48;”. (B) Paragraph (11) of section 6422, as so redesignated, is amended by striking out “47 Stat. 1516;”. (29) Amendments of section 6423.— (A) Section 6423(b) (relating to filing of refund claim in case of alcohol and tobacco taxes) is amended to read as follows: “(b) Filing of claims.— No credit or refund of any amount to which subsection (a) applies shall be allowed or made unless a claim therefor has been filed by the person who paid the a mount claimed, and unless such claim is filed within the time prescribed by law and in accordance with regulations prescribed by the Secretary. Al] evidence relied upon in support of such claim shall be clearly set forth and submitted with the claim.” (B) Section 6123 is amended by striking out subsection (c) (relating to suits barred on April 30, 1958) and by redesignating subsections (d) and (e) as subsections (c) and (d), respectively. (C) Section 6423 (c) (relating to application of section), as redesignated by subparagraph (B) of this paragraph, is amended by adding “and” at the end of paragraph (1), by striking out “, and” at the end of paragraph (2) and inserting in lieu thereof a period, and by striking out paragraph (3). (30) Amendments of section 6424.— (A) The last sentence of section 6424(b)(1) (relating to refund claims with respect to lubricating oil) is amended by striking out “, except that a person’s first taxable year beginning after December 31, 1965, shall include the period after December 31, 1965, and before tile beginning of such first taxable year”. (B) Section 6424 (relating to lubricating oil not used in highway motor vehicles) is amended by striking out subsection (f) (relating to effective date of section), and by redesignating subsections (g) and (h) as subsections (f) and (g), respectively. (31) Amendments of section 6427.— (A) Subsections (a), (b), and (c) of section 6427 (relating 26 USC 6427. to fuels not used for taxable purposes) are each amended by striking out “, after June 30, 1970,” (B) The amendments made by subparagraph (A) shall 26 USC 6427 note. apply only with respect to fuel used or resold after June 30, 1970. (32) Amendments of section 6504.— (A) Section 6504 (relating to cross references) is amended 26 USC 6504. by striking out paragraphs (13) and (14) and inserting in lieu thereof: “(13) Assessments to recover excessive amounts paid under section 6420 (relating to gasoline used on farms), 6421 (relating to gasoline used for certain nonhighway purposes or by local transit systems), 6424 (relating to lubricating oil not used in highway motor vehicles), or 6427 (relating to fuels not used for taxable purposes) and assessments of civil penalties under section 6675 for excessive claims under section 6420, 6421, 6424, or 6427, see section 6206.” (B) Section 6504, as amended by this Act, Is further amended by redesignating paragraphs (2), (3), (4), (5), (9), (19), (11), (12), (13), and (15) as paragraphs (1), (2), (3), (4), (5), (6), (7), (8), (9), and (10), respectively. (33) Amendments of section 6511.— (A) Section 6511(d)(2)(A)(ii) (relating to net operating 26 USC 6511. loss carryback) is amended by striking out “September 1, 1959, or” and by striking out “, whichever is the later”. (B) Section 6511(d)(5) is amended by striking out “the later of the following dates: (A)”, and by striking out “, or (B) December 31, 1965”. (34) Amendment of section 6601.— Section 6601(h) (relating 26 USC 6601. to interest on estimated tax payments) is amended by striking out “(or section 59 of the Internal Revenue Code of 1939)”. 53 Stat. 32. 26 USC 6654. (35) Amendment of section 6654.— Section 6654 (relating to payment of estimated income tax) is amended by striking out subsection (h) (relating to applicability of section). (36) Amendment of section 6802.— Section 6802(2) (relating 26 USC 6802. to supply and distribution of stamps) is amended by striking out the semicolon at the end and inserting in lieu thereof a period. (37) Amendment of section 6803.— Section 6803 (relating to 26 USC 6803. accounting and safeguarding is amended to read as follows: “SEC. 6803. ACCOUNTING AND SAFEGUARDING. “(a) Bond.— In cases coining within the provisions of paragraph (2) of section 6802, the Secretary may require a bond, with sufficient sureties, in a sum to be fixed by the Secretary, conditioned for the faithful return, whenever so required, of all quantities or amounts undisposed of and for the payment monthly for all quantities or amounts sold or not remaining on hand. “(b) Regulations.— The Secretary may from time to time make such regulations as he may find necessary to insure the safekeeping or prevent the illegal use of all adhesive stamps referred to in paragraph (2) of section 6802.” (38) Amendment of section 6863.— Section 6863(b)(3) (relating to stay of sale of seized property pending Tax Court decision) is amended by striking out subparagraph (C) (relating to effective date). (39) Amendment of section 7012.— Section 7012 (relating to cross references), as amended by section 1904(b)(8)(C) of this Act, is amended to read as follows: “SEC. 7012. CROSS REFERENCES. “(1) For provisions relating to registration in connection with firearms, see sections 5802, 5841, and 5861. “(2) For special rules with respect to registration by persons engaged in receiving wagers, see section 4412. “(3) For provisions relating to registration in relation to the production or importation of gasoline, see section 4101. “(4) For provisions relating to registration in relation to the manufacture or production of lubricating oils, see section 4101. “(5) For penalty for failure to register, see section 7272. “(6) For other penalties for failure to register with respect to wagering, see section 7262.” (40) Amendment of section 7103.— Section 7103 (relating to cross references regarding bonds) is amended by striking out subsection (d). ‘ (41) Amendments of section 7271.— Section 7271 (relating to penalties for offenses concerning stamps) is amended by striking out paragraph (2), and by redesignating paragraphs’ (3) and (4) as paragraphs (2) and (3), respectively. (42) Amendment of section 7272.— Section 7272(b) (relating to cross references) is amended by striking out “4722, 4753,”. (43) Amendments of section 7326.— Section 7326 (relating to disposal of forfeited property) is amended— (A) by striking out “section 5862(b)” and inserting in lieu thereof “section 5872(b)”, and (B) by redesignating subsection (c) as subsection (b). (44) Amendments of section 7422.— Section 7422(c) (relating to suits against collection officers) is amended by striking out “instituted after June 15, 1942,”, and by striking out “where the petition to the Tax Court was filed after such date”. (45) Amendments of section 7428.— (A) Paragraph (1) of section 7428 (cross references), as redesignated by this Act, is amended by striking out “52 Stat, 851;”. (B) Paragraph (2) of such section 7428 is amended by striking out “52 Stat. 867;”. (C) Paragraph (3) of such section 7428 is amended by Striking out “52 Stat. 876–877;”. (D) Paragraph (4) of such section 7428 is amended by striking out “52 Stat. 938;”. (46) Amendments of section 7448.— (A) Subsection (a)(6) of section 7448 (relating to annuities to widows and dependent children of Tax Court judges) is amended— (i) by striking out “The term ‘widow’ means a surviving wife of,” and inserting in lieu thereof “The term ‘surviving spouse’ means a surviving spouse of”; and (ii) by striking out “the mother of issue” and inserting in lieu thereof “a parent of issue”. (B) Section 7448(h) is amended— (i) by striking out “surviving widow or widower” and inserting in lieu thereof “surviving spouse”; (ii) by striking out “such widow” each place it appears and inserting in lieu thereof “such surviving spouse”; (iii) by striking out “a widow” each place it appeal’s and inserting in lieu thereof “a surviving spouse”; (iv) by striking out “widow’s” each place it appears and inserting in lieu thereof “surviving spouse’s”; and (v) by striking out “surviving her” and inserting hi lieu thereof “surviving such spouse”. (C) Sections 7448 (h) and (o) are each amended by striking 26 USC 7448. out “she” and inserting in lieu thereof “such spouse”. (D) Section 7448 (o) is amended by striking out “her” and inserting in lieu thereof “such spouse’s”. (E) Sections 7448 (d), (j), (m), (n), (o), and (q) are each amended by striking out “widow” each place it appears and inserting in lieu thereof “surviving spouse”. (F) The section heading for section 7448 is amended by striking out “WIDOWS” and inserting in lieu thereof “SURVIVING SPOUSES”. (47) Amendments of section 7471.— (A) Subsection (a) of section 7471 (relating to Tax Court 26 USC 7471. employees) is amended by striking out “is authorized in accordance with the civil service laws to appoint, and in accordance with the Classification Act of 1949 (63 Stat. 954; 5 U.S.C. chapter 21), as amended, to fix the compensation of,” and inserting in lieu thereof “is authorized to appoint, in accordance with the provisions of title 5, United States Code, governing appointment in the competitive service, and 5 USC 101 et seq. 5 USC 5101, 5331. to fix the basic pay of, in accordance with chapter 51 and subchapter III of chapter 53 of such title,”. (B) Subsection (b) of section 7471 is amended by striking out “as provided in the Travel Expense Act of 1949 (63 Stat. 166; 5 U.S.C. chapter 16).” and inserting in lieu thereof “as provided in chapter 57 of title 5, United States Code.” 5 USC 5701. 26 USC 7476. (48) Amendment of section 7476.— Section 7476(a) (relating to declaratory judgments) is amended by striking out so much thereof as follows paragraph (2)(B) and inserting in lieu thereof the following: “upon the filing of an appropriate pleading, the Tax Court may make a declaration with respect to such initial qualification or continuing qualification. Any such declaration shall have the force and effect of a decision of the Tax Court, and shall be reviewable, as such.” (49) Amendment of section 7502.— Section 7502(b) (relating 26 USC 7502. to timely mailing treated as timely filing and paying) is amended by striking out “United State Post Office” and inserting in lieu thereof “United States Postal Service”. (50) Amendments of section 7507.— Paragraphs (2) and (3) of section 7507(c) (relating to insolvent hanks) are each amended 26 USC 7507. by striking out “after May 28, 1938,”. (51) Amendments of section 7508.— (A) The heading of section 7508 (relating to time for 26 USC 7508. performing certain acts) is amended by striking out “BY REASON OF WAR” and inserting in lieu thereof “BY REASON OF SERVICE IN COMBAT ZONE”. (B) Section 7508(a) (relating to time to be disregarded) is amended by striking out “States of the Union and the District of Columbia” each place it appears and inserting in lieu thereof “United States”. (52) Amendments of section 7509.— Section 7509 (relating to expenditures incurred by the Post Office Department) is amended— (A) in the section heading, by striking out “POST OFFICE DEPARTMENT” and inserting in lieu thereof “UNITED STATES POSTAL SERVICE”; (B) by striking out “Post Office Department” each place it appears and inserting in lieu thereof “United States Postal Service”; (C) by striking out “such Department” and inserting in lieu thereof “such Service”; and (D) by striking out “, together with the receipts required to be deposited under section 6803(a),”, (53) Amendment or section Tear.— Section 7621 (b) (relating to boundaries of internal revenue districts) is amended to read as follows: “(b) Boundaries.— For the purpose mentioned in subsection (a), the President may subdivide any State or the District of Columbia, or may unite into one district two or more States.” (54) Repeal of section 7G4t.— Subchapter C of chapter 78 (relating to supervision of operations of certain manufacturers) is repealed. (55) Amendments of section 7052.— Section 7652(b)(3) (relating to disposition of internal revenue collections) is amended— (A) by striking out subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B). (B) by striking out “approved emergency relief purposes and essential public projects as provided in subparagraph (B)” and inserting in lieu thereof “emergency relief purposes and essential public projects, with the prior approval of the President or his designated representative”, and (C) by striking out “, including payments under subparagraph (B),”. (56) Amendment of section 7653.— Section 7653(d)(a cross reference) is amended by striking out “c. 512, 64 Stat. 392, section 30;”. (57) Amendments of section 7701.— (A) Section 7701(a)(11) (relating to definitions of Secretary) is amended to read as follows: “(11) Secretary of the treasury and secretary.— “(A) Secretary of the treasury.— The term ‘Secretary of the Treasury’ means the Secretary of the Treasury, personally, and shall not include any delegate of his. “(B) Secretary.— The term ‘Secretary’ means the Secretary or the Treasury or his delegate.”. (B) Section 7701(a)(12)(A) (relating to definition of Secretary or his delegate) is amended to read as follows: “(A) In general.— The term ‘or his delegate’— “(i) when used with reference to the Secretary of the Treasury, means any officer, employee, or agency of the Treasury Department duly authorized by the Secretary of the Treasury directly, or indirectly by one or more redelegations of authority, to perform the function mentioned or described in the context; and “(ii) when used with reference to any other official of the United States, shall be similarly construed.” (58) Amendment of section 7803.— Section 7803 (relating 26 USC 7803. to other personnel) is amended by redesignating subsection (d) as subsection (c). (59) Amendment of section 7809.— Section 7809(a) (relating 26 USC 7809. to deposit of collections) is amended by striking out “4735, 4762,”. (b) Conforming and Clerical Amendments.— (1) Amendment conforming to the repeal of section 6105.— The table of sections for subchapter B of chapter 61 is amended by striking out the item relating to section 6105. (2) Amendment conforming to amendment of section 6111.— The item relating to section 6111 in the table of sections for subchapter B of chapter 61 is amended to read as follows: “Sec. 6111. Cross reference.” (3) Amendments conforming to amendments of section 6154.— (A) Paragraph (1)(B) of section 6655(e) is amended: 26 USC 6655. (i) by adding “and” at the end of clause (i), and (ii) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following: “(ii) in the case of a taxable year beginning before January 1, 1977, the amount of the corporation’s temporary estimated tax exemption for such year.” (B) Paragraph (2)(B) of section 6655(e) is amended by striking out “clauses (ii) and (iii)” and inserting in lieu thereof “clause (ii)”. (C) (i) Section 6655(e) is amended by striking out paragraph (3) and by redesignating paragraph (4) as paragraph (3). (ii) Section 243(b)(3)(C)(iv), as redesignated by section Ante, p. 1797. 1901 (b)(20)(A) of this Act, is amended by striking out “sections 6154(c)(2) and (3)” and inserting in lieu thereof “section 6154(c)(2)”, and by striking out. “sections 6655(e)(2) and (3)” and inserting in lieu thereof “section 6655(e)(2)”. (4) Amendment conforming to the re feat, of section 6162.— The table of sections for subchapter B of chapter 62 is amended by striking out the item relating to section 6162. (5) Amendment conforming to the repeal of section 6304.— The table of sections for subchapter A of chapter 64 is amended by striking out the item relating to section 6304. (6) Amendments conforming to the amendment of section 6416.— (A) Subparagraph (A) of section 6420(c)(3) is amended 26 USC 6420. to read as follows: “(A) by the owner, tenant, or operator of a farm, in connection with cultivating the soil, or in connection with raising or harvesting any agricultural or horticultural commodity, including the raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry, and fur-bearing animals and wildlife, on a farm of which he is the owner, tenant, or operator; except that, if such use is by any person other than the owner, tenant, or operator of such farm, then for purposes of this subparagraph, in applying subsection (a) to this subparagraph, the owner, tenant, or operator of the farm on which gasoline or a liquid taxable under section 26 USC 4041. 4041 issued shall be treated as the user and the ultimate purchaser of such gasoline or liquid;”. (B) The amendments made by subparagraph (A) shall apply with respect to the use of liquids after December 31, 1970. (7) Amendment conforming to the repeal of section 6417.— The table of sections for subchapter B of chapter 65 is amended Ante, p. 1827. by striking out the item relating to section 6417. (8) Amendment conforming to amendment of section 6420.— Section 39(a)(1) is amended by striking out “section 6420(h)” and inserting in lieu thereof “section 6420(g)”. (9) Amendment conforming to amendment of section 6424.— Section 39(a)(3) is amended by striking out “section 6424(g)” Ante, p, 1829. and inserting in lieu thereof “section 6424(f)”. (10) Amendment conforming to amendment of section 7448.— The item relating to section 7448 in the table of sections for part I of subchapter C of chapter 76 is amended to read as follows: “Sec. 7448. Annuities of surviving spouses and dependent children.”. (11) Amendment conforming to amendment of section 7508.— The item relating to section 7508 in the table of sections for chapter 77 is amended to read as follows: “Sec. 7508. Time for performing certain acts postponed by reason of service in combat gone.”. (12) Amendment conforming to amendment of section 7500.— The item relating to section 7509 in the table of sections for chapter 77 is amended to read as follows: “Sec. 7509. Expenditures incurred by the United States Postal Service,”. (13) Amendment conforming to repeal of section 7641.— The table of subchapters for chapter 78 is amended by striking Ante, p. 1832. 26 USC 1 el seq. out the item relating to subchapter C. (A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”. (B) The following provisions are each amended by striking 26 USC 4293, 4483, 5551, 7801, 7802, 9006, 9007. 26 USC 3121, 3303, 3304, 3305, 3306, 9005, 9007, 9010, 9012. 26 USC 31. 26 USC 3304. out “Secretary” each place it appears and inserting in lieu thereof “Secretary of the Treasury”: sections 4293, 4483 (b), 5551, 7801(b). 7802(a), 9006(a), 9006(b), and 9007(d). (C) The following provisions are each amended by striking out “to the Secretary” each place it appears and inserting in lieu thereof “to the Secretary of the Treasury”: sections 3121 (b)(12)(B). 3303(b), 3304(a)(3). 3304(c), 3305(j), 3306(c)(12)(B), 9005(a), 9007(b), 9010(b), and 9012(e)(3). (D) Section 31(b)(1) is amended by striking out “(or his delegate)”. (E) The last sentence of section 3304(c) is amended by striking out “the Secretary shall” and inserting in lieu thereof “the Secretary of Labor shall”. (F) Section 3310(d)(2) is amended by striking out “the 26 USC 3310. Secretary’s action” each place it appears and inserting in lieu thereof “the Secretary of Labor’s action”. (G) Section 3221(a) and 3221(c) are each amended by 26 USC 3221. striking out “of the Treasury” each place it appears. (H) Section 3310(e) is amended by striking out “of 26 USC 3310. the Secretary” and inserting in lieu thereof “of the Secretary of Labor”. (I) Section 4412(c) is amended by striking out “he or his 26 USC 4412. delegate” and inserting in lieu thereof “the Secretary”. (J) Section 5845(f) is amended by striking out “of the 26 USC 5845. Treasury or his delegate”. (K) Section 6402(b) is amended by striking out “(or his 26 USC 6402. delegate)”. (L) Section 7458 is amended by striking out “nor his 26 USC 7458. delegate”. (M) Section 7514 is amended by striking out “functions of 26 USC 7514. the Secretary” and inserting in lieu thereof “functions of the Secretary of the Treasury”. (c) Amendments to Sections Referring to Territories.— (1) Section 6871(a) is amended by striking out “or Territory”. 26 USC 6871. 26 USC 7622. 26 USC 7701. (2) Section 7622(b) is amended by striking out “, Territory,”. (3) Section 7701(a)(4) is amended by striking out “or Territory”. (d) Effective Date.— (1) General rule.— Except as otherwise expressly provided in this section, the amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. (2) Amendments relating to income tax.— The amendments made by this section, when relating to a tax imposed by chapter 26 USC 1, 1401. 1 or chapter 2 of the Internal Revenue Code of 1954, shall take effect with respect to taxable years beginning after December 31, 1976. SEC. 1907. AMENDMENTS OF SUBTITLE G; THE JOINT COMMITTEE ON INTERNAL REVENUE TAXATION. (a) In General.— (1) Amendment of section 8001.— Section 8001 (relating to 26 USC 8001. creation of the Joint Committee) is amended by striking out “Joint Committee on Internal Revenue Taxation” and inserting in lieu thereof “Joint Committee on Taxation”. (2) Amendment of section 8004.— Section 8004 (relating to 26 USC 8004. compensation of staff) is amended by striking out “compensation of a clerk” and inserting in lieu thereof “compensation of the Chief of Staff of the Joint Committee”. (3) Amendment of section 8021.— Section 8021(d) (relating 26 USC 8021. to authority to make expenditures) is amended to read as follows: “(d) To Make Expenditures.— The Joint Committee, or any subcommittee thereof, is authorized to make such expenditures as it deems advisable.”. (4) Amendment of section 8023.— Section 8023(c) (relating 26 USC 8023. to reorganization plans) is amended to read as follows: “(c) Application of Subsections (a) and(b).— Subsections (a) and (b) shall be applied in accordance with their provisions without regard to any reorganization plan becoming effective on, before, or after the date of the enactment of this subsection.”. (5) All references in any other statute, or in any rule, regulation, or order, to the Joint Committee on Internal be venue Taxation shall be considered to be made to the Joint Committee on Taxation. (b) Amendments Conforming to the Amendment of Section 8001.— (1) The heading of subtitle G is amended by striking out “Internal Revenue”, (2) The table of subtitles for the Internal Revenue Code of 1954 is amended by striking out the item relating to subtitle G and inserting in lieu thereof the following: “Subtitle G. The Joint Committee on Taxation.”. (c) Effective Date.— The amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. SEC. 1908. EFFECTIVE DATE OF CERTAIN DEFINITIONS AND DESIGNATIONS For purposes of any amendment made by any provision of this Act (other than this title)— (1) which contains a term the meaning of which is defined in or modified by any provision of this title, and (2) which has an effective date earlier than the effective date of the provision of this title defining or modifying such term, that definition or modification shall be considered to take effect as of such earlier effective date. Subtitle B— Amendments of Code Provisions With Limited Current Application; Repeals and Savings Provisions SEC. 1951. PROVISIONS OF SUBTITLE A (a) References to Internal Revenue Code.— Except as otherwise expressly provided, whenever in this section a reference is made to a section or other provision, the reference shall be considered to be made 26 USC 1. to a section or other provision of the Internal Revenue Code of 1954. (b) Amendments.— (1) Amendment of section 72.— (A) Repeal.— Section 72 (relatinfi to annuities) is amended by striking out subsection (i) (relating to joint and survivor annuities where first annuitant died in 1951, 1952, or 1953). (B) Savings provision.— Notwithstanding subparagraph (A), if the provisions of section 72(i) applied to amounts received in taxable years beginning before January 1, 1977, under an annuity contract, then amounts received under such contract on or after such date shall be treated as if such provisions were not repealed. (2) Amendments of section 108.— (A) Repeal.— Section 108 (relating to income from discharge of indebtedness) is amended by striking out subsection (b) (relating to certain railroad corporations) and by striking out of subsection (a) the following: “(a) Special Rule of Exclusion.—”. (B) Savings provision.— If any discharge, cancellation, 26 USC 108 note. or modification of indebtedness of a railroad corporation occurs in a taxable year beginning after December 31, 1976, pursuant to an order of a court in a proceeding referred to in section 108(b)(A) or (13) which commenced before January 1, 1960, then, notwithstanding the amendments made by subparagraph (A), the provisions of subsection (b) of section 108 shall be considered as not repealed with respect to such discharge, cancellation, or modification of indebtedness. (3) Amendments of section 164.— (A) Repeal.— Section 164 (relating to taxes) is amended 26 USC 164. by striking out subsection (f) (relating to payments for municipal services in atomic energy communities) and by redesignating subsection (g) as subsection (f). (B) Savings provision.— Notwithstanding subparagraph 26 USC 164 note. (A), any amount paid or accrued in a taxable year beginning after December 31, 1976, to the Atomic Energy Commission or its successors for municipal-type services shall be allowed as a deduction under section 164 if such amount would have been deductible by reason of section 164(f)(as in effect for a taxable year ending on December 31, 1976) and if the amount is paid or accrued with respect to real property in a community (within the meaning of section 21 b. of the Atomic Energy Community Act of 1955 (42 U.S.C. 2304 (b))) in which the Commission on December 31, 1976, was rendering municipal-type services for which it received compensation from the owners of property within such community. (4) Repeal of section 168.— (A) Repeal.— Section 168 (relating to amortization of 26 USC 168. emergency facilities) is repealed. (B) Savings provision.— Notwithstanding the repeal 26 USC 168 note. made by subparagraph (A), if a certificate was issued before January 1, 1960, with respect to an emergency facility which is or has been placed in service before the date of the enactment of this Act, the provisions of section 168 shall not, with respect to such facility, be considered repealed. The benefit of deductions by reason of the preceding sentence shall be allowed to estates and trusts in the same manner as in the case of an individual. The allowable deduction shall be apportioned between the income beneficiaries and the fiduciary in accordance with regulations prescribed under section 642(f). (5) Amendment of section 171.— (A) Repeal.— (i) Section 171(b)(1)(B) (relating to amount of 26 USC 171. bond premium) is amended by striking out clause (iii) (relating to certain bonds acquired before 1958). (ii) Section 171(b)(1)(B)(i) is amended by striking out “clause (ii) or (iii) applies,” and inserting in lieu thereof “clause (ii) applies, or”, and by inserting “and” at the end thereof. (iii) Section 171 (b)(1)(B)(ii) is amended by striking out “. or” and inserting “, and” in lieu thereof. (iv) The second sentence in section 171 (b)(2) is amended by striking out “or (iii)”. (B) Savings provision.— Notwithstanding the amendments made by subparagraph (A), in the case of a bond the interest on which is not excludable from gross income— (i) which was issued after January 22, 1951, with a call date not more than 3 years after the date of such issue, and (ii) which was acquired by the taxpayer after January 22, 1954, and before January 1, 1958, the bond premium for a taxable year beginning after December 31, 1975, shall not be determined under section 171(b)(1)(B)(i) but shall be determined with reference to the amount payable on maturity, and if the bond is called before its maturity, the bond premium for the year in which the bond is called shall be determined in accordance with the provisions of section 171 (b)(2). (6) Amendment of section 333.— (A) Repeal.— Section 333 (relating to election as to recognition of gain in certain liquidations) is amended by striking out subsection (g) (relating to the liquidation of certain personal holding companies). (B) Savings provision.— Nothwithstanding subparagraph (A), if any corporation meets all the requirements of section 333(g)(2)(B), as in effect before its repeal by this Act, the liquidation of such corporation shall be treated as if paragraphs (2), (3), and (4) of section 333(g) had not been repealed. (C) Phase-in of 12month holding period requirement.— For purposes of subparagraph (B), the period for holding of stock specified in section 333(g)(2)(A)(u), as in effect before such repeal, shall— (i) in the case of taxable years beginning in 1977, be considered to be “9 months”; and (ii) in the case of taxable years beginning after December 31, 1977, be considered to be “1 year”. (7) Amendment of section 453.— (A) Repeal.— Section 453(b)(2) (relating to limitation on use of installment sales method) is amended to read as follows: “(2) Limitation.— Paragraph (1) shall apply only if in the taxable year of the sale or other disposition— “(A) there are no payments, or “(B) the payments (exclusive of evidences of indebtedness or the purchaser) do not exceed 30 percent of the selling price.”. (B) Savings provision.— Notwithstanding subparagraph (A), in the case of installment payments received during taxable years beginning after December 31, 1976, on account of a sale or other disposition made during a taxable year beginning before January 1, 1954, subsection (b)(1) of section 453 (relating to sales of realty and casual sales of personalty) shall apply only if the income was (by reason of section 53 Stat. 24. 44(b) of the Internal Revenue Code of 1939) returnable on the basis and in the manner prescribed in section 44(a) of such Code. (8) Amendments of section 512.— (A) Repeal.— Section 512(b) (relating to unrelated business 26 USC 512. taxable income) is amended by striking out paragraphs (13) and (14) and by redesignating paragraphs (15), (16), and (17) as paragraphs (13), (14), and (15), respectively. (B) Savings provision.— Notwithstanding subparagraph 26 USC 512 note. (A), income received in a taxable year beginning after December 31, 1975, shall be excluded from gross income in determining unrelated business taxable income, if such income would have been excluded by paragraph (13) or (14) of section 512(b) if received in a taxable year beginning before such date. Any deductions directly connected with income excluded under the preceding sentence in determining unrelated business taxable income shall also be excluded for such purpose. (9) Amendment of section 545.— (A) Repeal.— Section 545(b) (relating to adjustments in 26 USC 545. computing undistributed personal holding company income) is amended by striking out paragraph (9) (relating to deductions on account of certain liens in favor of the United States). (B) Savings provision.— Notwithstanding subparagraph 26 USC 545 note. (A), if any amount was deducted under paragraph (9) of section 545(b) in a taxable year beginning before January 1, 1977, on account of a lien which is satisfied or released in a taxable year beginning on or after such date, the amount so deducted shall be included in income, for purposes of section 545, as provided in the second sentence of such paragraph. Shareholders of any corporation which has amounts included in its income by reason of the preceding sentence may elect to compute the income tax on dividends attributable to amounts so included as provided in the third sentence of such paragraph. (10) Amendments of section 691.— (A) Repeal.— Section 691 (relating to income in respect 26 USC 691. of decedents) is amended by striking out subsection (e) (relating to certain installment obligations transmitted at death) and by redesignating subsection (f) as subsection (e). (B) Savings provision.— Notwithstanding subparagraph 26 USC 691 note. (A), any election made under section 691(e) to have subsection (a)(4) of such section apply in the case of an installment obligation shall continue to be effective with respect to taxable years beginning after December 31, 1976. Section 691(c) shall not apply in respect of any amount included in gross income by reason of the preceding sentence. The liability under bond filed under section 44(d) of the Internal Revenue Code of 1939 (or corresponding provisions of prior law) in 53 Stat. 24. respect of which such an election applies is hereby released with respect to taxable years to which such election applies. (11) Amendments of section 817.— (A) Repeal.— Section 817 is amended by striking out 26 USC 817. subsection (d) (relating to certain gains occurring before 1959). (B) Savings provision.— Notwithstanding subparagraph 26 USC 817 note. (A), any gain in a taxable year beginning after December 31, 1976, from any sale or other disposition of property prior to January 1, 1959, would be excluded or not taken into account for purposes of part 1 of subchapter L of chapter Ante, p. 1839. 1 if subsection (d) of section 817 of such Code were still in effect for such taxable year, such gain shall be excluded for purposes of such part. (12) Repeal of section 1347.— (A) Repeal.— Section 1347 (relating to certain claims filed against the United States before January 1, 1958) is repealed. (B) Savings provision.— Notwithstanding subparagraph (A), if amounts received in a taxable year beginning after December 31, 1976, would have been subject to the provisions of section 1347 if received in a taxable year beginning before such date, the tax imposed by section 1 attributable to such receipt shall be computed as if section 1347 had not been repealed. (13) Repeal of section 1471.— (A) Repeal.— Subchapter A of chapter 4 (relating to recovery of excessive profits on certain Government contracts) is repealed. (B) Savings provision.— If the amount of profit required to be paid into the Treasury under section 2382 or 7300 of title 10, United States Code, is not voluntarily paid, the Secretary of the Treasury or his delegate shall collect the same under the methods employed to collect taxes under subtitle A. All provisions of law (including penalties) applicable with respect to such taxes and not inconsistent with section 2382 or 7300 of title 10 of such Code, shall apply with respect to the assessment, collection, or payment of excess profits to the Treasury as provided in the preceding sentence, and to refunds by the Treasury of overpayments of excess profits into the Treasury. (14) Amendment of section 1481.— (A) Repeal.— Section 1481 (relating to mitigation of effect of renegotiation of Government contracts) is amended by striking out subsection (d) (relating to renegotiation for years prior to 1954). (B) Savings provision.— If, during a taxable year beginning after December 31, 1976, a recovery of excessive profits through renegotiation which relates to profits of a taxable 53 Stat. 1. year subject to the Internal Revenue Code of 1939, the adjustments in respect to such renegotiation shall be made under section 3806 of such Code. (c) Conforming and Clerical Amendments.— (1) Amendment conforming to the amendment of section 1017.— Section 1017 is amended by striking out “section 108(a)” each time it appears therein and inserting in lieu thereof “section 108”. (2) Amendments conforming to repeal of section 168.— (A) Section 1238 is amended by striking out “(relating to amortization deduction of emergency facilities)” and inserting in lieu thereof “(as in effect before its repeal by the Tax Ante, p. 1520. 26 USC 642, 1082. Ante, p. 1837. 26 USC 1245, 1250. Reform Act. of 1976)”. (B) Sections 642(f) and 1082(a)(2)(B) are each amended by striking out “168,”. (C) Sections 1245(a)(2) and 1250(b)(3) are each amended by striking out “168,” each place it appears and inserting in lieu thereof “168 (as in effect before its repeal by the Tax Reform Act of 1976),”. (D) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the item relating to section 168. Ante, p. 1837. (3) Amendments conforming to the repeal of section 1347.— (A) Section 5(b) is amended by striking out paragraph 26 USC 5. (5) and by redesignating paragraphs (2), (3), and (4), as paragraphs (1), (2), and (3), respectively. (B) The table of sections for part VI of subchapter Q of chapter 1 is amended by striking out the item relating to section 1347. Ante, p. 1840. (C) The heading of part VI of subchapter Q of chapter 1 is amended to read as follows: “PART VI— MAXIMUM RATE ON PERSONAL SERVICE INCOME.” (D) The table of parts for subchapter Q of chapter 1 is amended by striking out the item relating to part VI and inserting in lieu thereof the following: “Part VI. Maximum rate on personal service income.” (4) Amendment conforming to the repeal of section 1471.— The table of subchapters for chapter 4 is amended by striking out the item relating to subchapter A. (d) Effective Date.— Except as otherwise expressly provided, the 26 USC 72 note. amendments made by this section shall apply with respect to taxable years beginning after December 31, 1976. SEC. 1952. PROVISIONS OF SUBCHAPTER D OF CHAPTER 39; COTTON FUTURES. (a) Short Title.— This section may be cited as the “United States Cotton Futures Act”. (b) Repeal of Tax on Cotton Futures.— Subchapter D of chapter 39 (relating to tax on cotton futures) is repealed. 26 USC 4851. (c) Definitions.— For purposes of this section— (1) Cotton futures contract.— The term “cotton futures contract” means any contract of sale of cotton for future delivery made at, on, or in any exchange, board of trade, or similar institution or place of bus mess which has been designated a “contract market” by the Commodity Futures Trading Commission pursuant to the Commodity Exchange Act and the term “contract of 7 USC 1. sale” as so used shall be held to include sales, agreements of sale, and agreements to sell. (2) Future delivery.— The term “future delivery” shall not include any cash sale of cotton for deferred shipment or delivery. (3) Person.— The term “person” includes an individual, trust, estate, partnership, association, company, or corporation. (4) Secretary.— The term “Secretary” means the Secretary of Agriculture of the United States. (5) Standards.— The term “standards” means the official cotton standards of the United States established by the Secretary pursuant to the United States Cotton Standards Act, as emended. (d) Bona Fide Spot Markets and Commercial Differences.— (1) Definition.— For purposes of this section, the only markets which shall be considered bona fide spot markets shall be those which the Secretary shall, from time to time, after investigation, determine and designate to be such, and which we shall give public notice. (2) Determination.— In determining, pursuant to the provisions of this section, what markets are bona fide spot markets, the Secretary is directed to consider only markets in “which spot cotton is sold in such volume and under such conditions as customarily to reflect accurately the value of middling cotton and the differences between the prices or values of middling cotton and of other grades of cotton for which standards shall have been established by the Secretary; except that if there are not sufficient places, in the markets of which are made bona fide sales of spot cotton of grades for which standards are established by the Secretary, to enable him to designate at least five spot markets in accordance with subsection (f)(3), he shall, from data as to spot sales collected by him, make rules and regulations for determining the actual commercial differences in the value of spot cotton of the grades established by him as reflected by bona fide sales of spot cotton, of the same or different, grades, in the market selected and designated by him, from time to time, for that purpose, and in that event differences in value of cotton of various grades involved in contracts made pursuant to subsection (f)(1) and (2) shall be determined in compliance with such rules and regulations. It shall be the duty of any person engaged in the business of dealing in cotton, when requested by the Secretary or any agent acting under his instructions, to answer correctly to the best of his knowledge, under oath or otherwise, all questions touching his knowledge of the number of bales, the classification, the price or bona fide price offered, and other trims of purchase or sale, of any cotton involved in any transaction participated in by him, or to produce all books, letters, papers, or documents in his possession or under his control relating to such matter. (3) Withholding information.— Any person engaged in the business of dealing in cotton who shall, within a reasonable time prescribed by the Secretary or any agent acting under his instructions, willfully fail or refuse to answer questions or to produce books, letters, papers, or documents, as required under paragraph (2) of this subsection, or who shall willfully give any answer that is false or misleading, shall, upon conviction thereof, be fined not more than $500. (e) Form and Validity of Cotton Futures Contracts.— Each cotton futures contract shall be a basis grade contract, or a tendered grade contract, or a specific grade contract as specified in subsections (f), (g), or (h) and shall be in writing plainly stating, or evidenced by written memorandum showing, the terms of such contract, including the quantity of the cotton involved and the names and addresses of the seller and buyer in such contract, and shall be signed by the party to be charged, or by his agent in his behalf. No cotton futures contracts which does not conform to such requirements shall be enforceable by, or on behalf of, any party to such contract or his privies. (f) Basis Grade Contracts.— (1) Conditions.— Each basis grade cotton futures contract shall comply with each of the following conditions: (A) Conformity with regulations.— Conform to the regulations made pursuant to this section. (B) Specification of grade, price, and dates of sale and settlement.— Specify the basis grade for the cotton involved in the contract, which shall be one of the grades for which standards are established by the Secretary, except grades prohibited from being delivered on a contract made under this subsection by subparagraph (E), the price per pound at which the cotton of such basis grade is contracted to be bought or sold, the date when the purchase or sale was made, and the month or months in which the contract is to be fulfilled or settled; except that middling shall be deemed the basis £ade incorporated into the contract if no other basis grade specified either in the contract or in the memorandum evidencing the same. (C) Provision for delivery of standard grades only.— Provide that the cotton dealt with therein or delivered thereunder shall be of or within the grades for which standards are established by the Secretary except grades prohibited from being delivered on a contract made under this subsection by subparagraph (E) and no other grade or grades. (D) Provision for settlement on basis of actual commercial differences.— Provide that in case cotton of grade other than the basis grade be tendered or delivered in settlement of such contract, the differences above or below the contract price which the receiver shall pay for such grades other than the basis grade shall be the actual commercial differences, determined as hereinafter provided, (E) Prohibition of delivery of inferior cotton.— Provide that cotton that, because of the presence of extraneous matter of any character, or irregularities or defects, is reduced in value below that of low middling, or cotton that is below the grade of low middling, or, if tinged, cotton that is below the grade of strict middling, or, if yellow stained, cotton that is below the grade of good middling, the grades mentioned being of the official cotton standards of the United States, or cotton that is less than seven-eighths of an inch in length of staple, or cotton of perished staple, or of immature staple, or cotton that is “gin cut” or reginned, or cotton that is “repacked” or “false packed” or “mixed packed” or “water packed”, shall not be delivered on, under, or in settlement of such contract. (F) Provisions for tender in full, notice of delivery date, and certificate of grade.— Provide that all tenders of cotton under such contract shall be the full number of bales involved therein, except that such variations of the number of bales may be permitted as is necessary to bring the total weight of the cotton tendered within the provisions of the contract as to weight; that, on the fifth business day prior to delivery, the person making the tender shall give to the person receiving the same written notice of the date of delivery, and that, on or prior to the date so fixed for delivery, and in advance of final settlement of the contract, the person making the tender shall furnish to the person receiving the same a written notice or certificate stating the grade of each individual bale to be delivered and, by means of marks or numbers, identifying each bale with its grade. (G) Provision for tender and settlement in accordance with government classification.— Provide that all tenders of cotton and settlements therefor under such contract shall be in accordance with the classification thereof made under the regulations of the Secretary by such officer or officers of the Government as shall be designated for the purpose, and the costs of such classification shall be fixed, assessed, col- Regulations. lected, and paid as provided in such regulations. The Secretary is authorized to prescribe regulations for carrying out the purposes of this subparagraph and the certificates of the officers of the Government, as to the classification of any cotton for the purposes of this subparagraph shall be accepted in the courts of the United States in all suits between the parties to such contract, or their privies, as prima facie evidence of the true classification of the cotton involved. (2) Incorporation of conditions in contracts.— The provisions of paragraphs (1)(C), (D), (E), (F), and (G) shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the memorandums evidencing the same, at or prior to the time the same is signed, the phrase “Subject to United States Cotton Futures Act, subsection (f).” (3) Delivery allowances.— For the purpose of this subsection, the differences above or below the contract price which the receiver shall pay for cotton of grades above or below the basic grade in the settlement of a contract of sale for the future delivery of cotton shall be determined by the actual commercial differences in value thereof upon the sixth business day prior to the day fixed, in accordance with paragraph (1)(F), for the delivery of cotton on the contract, established by the sale of spot cotton in the spot markets of not less than five places designated for the purpose from time to time by the Secretary, as such values were established by the sales of spot cotton, in such designated five or more markets. For purposes of this paragraph, such values in the such spot markets shall be based upon the standards for grades of cotton established by the Secretary. Whenever the value Rules and regulations. of one grade is to be determined from the sale or sales of spot cotton of another grade or grades, such value shall be fixed in accordance with rules and regulations which shall be prescribed for the purpose by the Secretary. (g) Tendered Grade Contracts.— (1) Conditions.— Each tendered grade cotton future contract shall comply with each of the following conditions: (A) Compliance with subsection (f).— Comply with all the terms and conditions of subsection (f) not inconsistent with this subsection; and (B) Provision for contingent specific performance.— Provide that, in case cotton of grade or grades other than the basis grade specified in the contract shall be tendered in performance of the contract, the parties to such contract may agree, at the time of the tender, as to the price of the grade or grades so tendered, and that if they shall not then agree as to such price, then, and in that event, the buyer of said contract shall have the right to demand the specific fulfillment of such contract by the actual delivery of cotton of the basis grade named therein and at the price specified for such basis grade in said contract. (2) Incorporation of conditions in contract.— Contracts made in compliance, with this subsection shall be known as “subsection (g) Contracts”. The provisions of this subsection shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the memorandum evidencing the same, at or prior to the time the same is signed, the phrase “Subject to United States Cotton Futures Act, subsection (g)”. (3) Application of subsection.— Nothing in this subsection shall be so construed as to authorize any contract in which, or in the settlement of or in respect to which, any device or arrangement whatever is resorted to, or any agreement is made, for the determination or adjustment of the price of the grade or grades tendered other than the basis grade specified in the contract by any “fixed difference” system, or by arbitration, or by any other method not provided for by this section. (h) Specific Grade Contracts.— (1) Conditions.— Each specific grade cotton futures contract shall comply with each of the following conditions: (A) Conformity with rulesand regulations.— Con form to the rules and regulations made pursuant to this section. (B) Specification of grade, price, dates of sale and delivery.— Specify the grade, type, sample, or description of the cotton involved in the contract, the price per pound at which such cotton is contracted to be bought or sold, the date of the purchase or sale, and the time when shipment or delivery of such cotton is to be made. (C) Prohibition of delivery of other than specified grade.— Provide that cotton of or within the grade or of the type, or according to the sample or description, specified in the contract shall be delivered thereunder, and that no cotton which does not conform to the type, sample, or description, or which is not of or within the grade specified in the contract shall be tendered or delivered thereunder. (D) Provision for specific performance.— Provide that the delivery of cotton under the contract shall not be effected by means of “setoff” or “ring” settlement, but only by the actual transfer of the specified cotton mentioned in the contract. (2) Incorporation of conditions in contract.— The provisions of paragraphs (1)(A), (C). and (D) shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the document or memorandum evidencing the same, at or prior to the time the same is entered into, the words “Subject to United States Cotton Futures Act, subsection (h)”. Ante, p. 1841. (3) Application of subsection.— This subsection shall not be construed to apply to any contract of sale made in compliance with subsection (f) or (g). (i) Liability of Principal for Acts of Agent.— When construing and enforcing the provisions of this section, the act, omission, or failure of any official, agent, or other person acting for or employed by any association, partnership, or corporation within the scope of his employment or office shall, in every case, also be deemed the act, omission, or failure of such association, partnership, or corporation, as well as that of the person. (j) Regulations.— The Secretary is authorized to make such regulations with the force and effect of law as he determines may be necessary to carry out the provisions of this section and the powers vested in him by this section. (k) Validations.— Any person who knowingly violates any regulation made in pursuance of this section, shall, upon conviction thereof be fined not less than $100 nor more than $500, for each violation thereof, in the discretion of the court, and, in case of natural persons, may, in addition be punished by imprisonment for not less than 30 days nor more than 90 days, for each violation, in the discretion of the court except that this subsection shall not apply to violations subject to subsection (d)(3). (l) Applicability to Contracts Prior to Effective Date.— The provisions of this section shall not apply to any cotton futures contract entered into prior to the effective date of this section or to any act or failure to act by any person prior to such effective date and all such prior contracts, acts or failure to act shall continue to be governed by 26 USC 1. the applicable provisions of the Internal Revenue Code of 1954 as in effect prior to the enactment of this section. All designations of bona fide spot markets and all rules and regulations issued by the Secretary pursuant to the applicable provisions of the Internal Revenue Code of 1954 which were in effect on the effective date of this section, shall remain fully effective as designations and regulations under this section until superseded, amended, or terminated by the Secretary. (m) Authorization.— There are authorized to be appropriated such sums as may be necessary to carry out this section. (n) Conforming and Clerical, Amendments.— (1) Section 6808 (relating to cross references) is amended by striking out paragraph (2), and by redesignating paragraphs (3), (6), and (11) as paragraphs (1), (2), and (3), respectively. (2) (A) Section 7233 (relating to failure to pay tax on cotton futures) is repealed. (B) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7233. (3) (A) Section 7263 (relating to penalties concerning cotton futures) is repealed. (B) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7263. (4) (A) Subchapter E of chapter 76 (relating to miscellaneous provisions regarding cotton futures contracts) is repealed. (B) The table of subchapters for chapter 76 is amended by striking out the items relating to subchapter E. (5) Chapter 39 (relating to regulatory taxes) is amended by striking out the chapter heading and the table of subchapters. (6) The table of chapters for subtitle D is amended by striking out the item relating to chapter 39. (o) Effective Date.— The provisions of this section shall take effect on the 90th day after the date of the enactment of this Act.

9. 1976

   Pub. L. 94–455 title XIX · 90 Stat. 1520

   Struck and inserted · 26 U.S.C. § 5008(b)(2)

   Pub. L. 94–455, §§ 1905(a)(2)(B), 1906(b)(13)(A), struck out “or his delegate” after “Secretary” and inserted “, or under section 7652” after “under subpart B of this part”

   Source evidence

   Code amendment note
   Subsec. (b)(2). Pub. L. 94–455, §§ 1905(a)(2)(B), 1906(b)(13)(A), struck out “or his delegate” after “Secretary” and inserted “, or under section 7652” after “under subpart B of this part”.

   Enacted provision · exact public law
   TITLE XIX— REPEAL AND REVISION OF OBSOLETE, RARELY USED, ETC., PROVISIONS OF INTERNAL REVENUE CODE OF 1954 SUBTITLE A— AMENDMENTS OF INTERNAL REVENUE CODE GENERALLY SEC. 1901. AMENDMENTS OF SUBTITLE A; INCOME TAXES. (a) In General.— (1) Amendment of section 2.— Subsection (c) of section 2 (relating to certain married individuals living apart) is amended to read as follows: “(c) Certain Married Individuals Living Apart.— For purposes of this part, an individual shall be treated as not married at the close of the taxable year if such individual is so treated under the provisions of section 143 (b).” (2) Repeal of section 36.— Section 35 (relating to partially tax-exempt interest received by individuals) is repealed. (3) Amendment of section 39.— Section 39 (relating to certain uses of gasoline, special fuels, and lubricating oil) is amended by striking out subsections (b) and (c) and inserting after subsection (a) the following new subsection: “(b) Exception.— Credit shall not be allowed under subsection (a) for any amount payable under section 6421, 6424, or 6427, if a claim for such amount is timely filed and, under section 6421 (i), 6424 (f), or 6427(f), is payable under such section.” (4) Amendments of section 46.— (A) The second sentence of section 46(a)(4), as redesignated by this Act, is amended by striking out “section 408(e)” and inserting in lieu thereof “section 408(f)”. (B) Clause (iii) of section 46(c)(3)(B) (relating to public utility property) is amended by striking out “47 U.S.C., sec. 222(a)(5)” and inserting in lieu thereof “47 U.S.C. 222(a)(5)”. (5) Amendments or section 48.— (A) Section 48(a)(2)(B)(vi) (relating to section 38 property used outside the United States) is amended by striking out “; 43 U.S.C., sec. 1331)” and inserting in lieu thereof “(43 U.S.C. 1331))”. (B) Section 48(a)(2)(B)(viii) is amended by striking out “47 U.S.C., sec. 702” and inserting in lieu thereof “47 U.S.C. 702”. (6) Amendment of section 50a.— The second sentence of section 50A (a)(3) (relating to liability for tax) is amended by 26 USC 50A. striking out “section 408 (e)” and inserting in lieu thereof “section 408(f)”. (7) Repeal of section 51.— Subchapter A of chapter 1 is 26 USC 51. amended by striking out part V (relating to tax surcharge). (8) Amendments op section 62.— Section 62 (relating to definition 26 USC 62. of adjusted gross income) is amended by redesignating paragraph (11), as added by the Act of October 26, 1974 (Public Law 93–483), as paragraph (12). (9) Additional amendment of section 62.— Section 62(12), as redesignated by subparagraph (A) of this paragraph, is amended by striking out “trade or business to the extent” and inserting in lieu thereof “trade or business, to the extent”. (10) Definition of ordinary income.— Part I of subchapter B of chapter 1 (relating to definitions of gross income, adjusted 26 USC 61. gross income, and taxable income) is amended by adding at the end thereof the following new section: “SEC. 64. ORDINARY INCOME DEFINED. “For purposes of this subtitle, the term ‘ordinary income’ includes any gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b). Any gain from the sale or exchange of property which is treated or considered, under other provisions of this subtitle, as ‘ordinary income’ shall be treated as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b).” (11) Definition of ordinary loss.— Part I of subchapter B of chapter 1 (relating to definitions of gross 26 USC 61. income, adjusted gross income, and taxable income) is amended by adding at the end thereof the following new section: “SEC. 65. ORDINARY LOSS DEFINED. “For purposes of this subtitle, the term ‘ordinary loss’ includes any loss from the sale or exchange of property which is not a capital asset. Any loss from the sale or exchange of property which is treated or considered, under other provisions of this subtitle, as ‘ordinary loss’ shall be treated as loss from the sale or exchange of property which is not a capital asset.” (12) Amendment of section 72.— Section 72(d)(1) (relating 26 USC 72. to employees’ annuities) is amended by striking out “(whether or not before January 1, 1954)” and by striking out “(under this paragraph and prior income tax laws)”. (13) Additional amendment of section 72.— Section 72(m)(4)(A) (relating to assignments or pledges) is amended by striking out “an individual retirement amount” and inserting in lieu thereof “an individual retirement account”. (14) Repeal of section 76.— Section 76 (relating to mortgages 26 USC 76. made or obligations issued by joint stock land banks) is repealed. (15) Amendment of section 83.— Section 83(b)(2) (relating 26 USC 83. to election to include the value of restricted property in gross income) is amended by striking out “(or, if later, 30 days after 26 USC 1 note. the date of the enactment of the Tax Reform Act of 1969)”. (16) Amendment of section 101.— Section 101 is amended by 26 USC 101. striking out subsection (f) (relating to effective date of section). (17) Amendments of section 103.— (A) Section 103(a) (relating to tax-exempt interest), as 26 USC 103. amended by this Act, is amended by inserting “and” at the end of paragraph (1), by striking out paragraphs (2) and (3), and by redesignating paragraph (4) as paragraph (2). (B) Section 103 is amended by striking out subsection (b) (relating to certain exceptions) and by redesignating subsections (c), (d), (e) (f), and (g)(as added by this Act) as subsections (b), (c), (d), (e), and (f) respectively. (C) Section 103(b)(1) (relating to industrial development bonds), as redesignated by subparagraph (B) of this paragraph, is amended by inserting “or (2)” after “(a)(1)”. (D) Section 103(c)(2)(A) (relating to definition of arbitrage bonds), as redesignated by subparagraph (B) of this paragraph, is amended by inserting “or (2)” after “(a)(1)”. (E) Section 103(e) (relating to certain cross references) as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(e) Cross References.— “For provisions relating to the taxable status of— “(1) Puerto Rican bonds, see section 3 of the Act of March 2, 1917, as amended (48 U.S.C. 745). “(2) Virgin Islands insular and municipal bonds, see section 1 of the Act of October 27, 1919 (48 U.S.C. 1403). “(3) Certain obligations issued under title I of the Housing Act of 1949, see section 102(g) of title I of such Act (42 U.S.C. 1452(g)).” (18) Amendments of section 104.— (A) Section 104(a)(4) (relating to exclusion of compensation for injuries or sickness) is amended by striking out “;60 Stat. 1021” (B) Section 104(c)(2) as redesignated by section 505 of this Act, is amended to read as follows: “(2) For exclusion of part of disability retirement pay from the application of subsection (a)(4) of this section, see section 1403 of title 10, United States Code (relating to career compensation laws).” (19) Amendment of section 115.— Section 115 (relating to income of States, municipalities, etc.) is amended to read as follows: “SEC. 115. INCOME OF STATES, MUNICIPALITIES, ETC. “Gross income does not include— “(1) income derived from any public utility or the exercise of any essential governmental function and accruing to a State or any political subdivision thereof, or the District of Columbia; or “(2) income accruing to the government of any possession of the United States, or any political subdivision thereof.” (20) Amendment of section 116.— Subsection (a) of section 116 (relating to partial exclusion of dividends received by individuals) is amended by striking out “Effective with respect to any taxable year ending after July 31, 1954, gross income” and inserting in lieu thereof “Gross income”. (21) Amendment of section 124.— Section 124 (relating to cross references to other Acts) is amended to read as follows: “SEC. 124. CROSS REFERENCES TO OTHER ACTS. “(a) For exemption of— “(1) Adjustments of indebtedness under wage earners’ plans, see section 679 of the Bankruptcy Act (11 U.S.C. 1079). “(2) Allowances and expenditures to meet losses sustained by persons serving the United States abroad, due to appreciation of foreign currencies, see section 5943 of title 5, United States Code. “(3) Amounts credited to the Maritime Administration under section 9(b)(6) of the Merchant Ship Sales Act of 1946, see section 9(c)(1) of that Act (50 U.S.C. App. 1742). “(4) Benefits under laws administered by the Veterans’ Administration, see section 3101 of title 38, United States Code. “(5) Earning of ship contractors deposited in special reserve funds, see section 607(d) of the Merchant Marine Act, 1936 (46 U.S.C. 1177). “(6) Income derived from Federal Reserve banks, including capital stock and surplus, see section 7 of the Federal Reserve Act (12 U.S.C. 531). “(7) Railroad retirement annuities and pensions, see section 12 of the Railroad Retirement Act of 1935 (45 U.S.C. 2281). “(8) Railroad unemployment benefits, see section 2(e) of the Railroad Unemployment Insurance Act (45 U.S.C. 352). “(9) Special pensions of persons on Army and Navy medal of honor roll, see 38 U.S.C. 562(a)–(c). “(b) For extension of military income-tax-exemption benefits to commissioned officers of Public Health Service in certain circumstances, see section 212 of the Public Health Service Act (42 U.S.C. 213).” (22) Amendment of section 143.— Section 143 (relating to 26 USC 143. determination of marital status) is amended by striking out “this part” each place it appears and inserting in lieu thereof “this part and part V”. (23) Amendment of section 151.— Section 151 (e)(4)(defining 26 USC 151. student and educational institution) is amended to read as follows: “(4) Student defined.— For purposes of paragraph (1)(B)(ii), the term ‘student’ means an individual who during each of 5 calendar months during the calendar year in which the taxable year of the taxpayer begins— “(A) is a full-time student at an educational organization described in section 170(b)(1)(A)(ii); or “(B) is pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of an educational organization described in section 170(b)(1)(A)(ii) or of a State or political subdivision of a State.” (24) Amendments or section 152.— (A) Section 152(a)(defining dependent) is amended— 26 USC 152. (i) by inserting “or” at the end of paragraph (8), (ii) by striking out “, or” at the end of paragraph (9) and inserting in lieu thereof a period, and (iii) by striking out paragraph (10). (B) Section 152(b)(3) (relating to rules concerning the definition of dependent) is amended to read as follows: “(3) The term ‘dependent’ does not include any individual who “Dependent.” is not a citizen or national of the United States unless such individual is a resident of the United States or of a country contiguous to the United States. The preceding sentence shall not exclude from the definition of ‘dependent’ any child of the tax-payer legally adopted by him, if, for the taxable year of the tax-payer, the child has as his principal place of abode the home of the taxpayer and is a member of the taxpayer’s household, and if the taxpayer is a citizen or national of the United States.” (25) Amendments of section 164.— Section 164(d)(2) (relating 26 USC 164. to apportionment of taxes on real property between the seller and purchaser) is amended by striking out subparagraphs (B) and (C), and by redesignating subparagraph (D) as subparagraph (B). (26) Amendments of section 165.— Section 165 (relating 26 USC 165. to deduction of losses) is amended by striking out subsection (i) (relating to property confiscated by Cuba), and by redesignating subsection (j) as subsection (i). (27) Amendments or section 167.— (A) Section 167 (d) (relating to agreement as to useful life for depreciation) is amended by striking out “after the date of enactment of this title” and inserting in lieu thereof “after August 16, 1954”. (B) Section 167(f)(2)(defining personal property) is amended by striking out “the date of the enactment of the Revenue Act of 1962” and inserting in lieu thereof “October 16, 1962”. (C) Section 167(1)(4)(A) (relating to election as to increased-capacity property) is amended by striking out “within 180 days after the date of the enactment of this subparagraph” and inserting in lieu thereof “before June 29, 1970,”. (28) Amendments of section 170.— (A) (i) Section 170 (relating to charitable deductions) is amended by striking out subsections (f)(6) and (g) (relating to unlimited charitable deductions allowed for taxable years beginning before January 1, 1975), and by redesignating subsections (h), (i), and (j) as subsections (g), (h), and (i), respectively. (ii) Section 170(b)(1) (relating to percentage limitations on deductions for individuals) is amended by striking out subparagraph (C) (relating to unlimited deductions), and by redesignating subparagraphs (D), (E), and (F) as subparagraphs (C), (D), and (E), respectively. (iii) Section 170(b)(1)(A)(vii) is amended by striking out “subparagraph (E)” and inserting in lieu thereof “subparagraph (D)”. (iv) Section 170(b)(1)(B)(ii) is amended by striking out “subparagraph (D)” and inserting in lieu thereof “subparagraph (C)”. (v) Section 170(c) (relating to definition of charitable contribution) is amended by striking out in the last sentence “subsection (h)” and inserting in lieu thereof “subsection (g)”. (vi) Section 170(e)(1)(B)(ii) (relating to certain contributions of ordinary income and capital gain property) is amended by striking out “subsection (b)(1)(E)” and inserting in lieu thereof “subsection (b)(1)(D)”. (B) Section 170(d)(1)(A) (relating to carryover of excess charitable contributions) is amended by striking out “(30 percent, in the case of a contribution year beginning before January 1, 1970)”. (C) Section 170(h) (relating to disallowance of deductions in certain cases), as redesignated by subparagraph (A)(i) of this paragraph, is amended by striking out “64 Stat. 996;”. (D) Section 170(i) (relating to cross references), as redesignated by subparagraph (A)(i) of this paragraph, is amended to read as follows: “(i) Other Cross References.— “(1) Fer charitable contributions of estates and trusts, see section 642(c). “(2) For nondeductibilit; of contributions by common trust funds, see section 584. “(3) For charitable contributions of partners, see section 702. “(4) For charitable contributions of nonresident aliens, see section 873. “(5) For treatment of gifts for benefit of or use in connection with the Naval Academy as gifts to or for use of the United States, see section 6973 of title 10, United States Code. “(6) For treatment of gifts accepted by the Secretary of State under the Foreign Service Act of 1946 as gifts to or for the use of the United States, see section 1021(e) of that Act (22 U.S.C. 809(e)). “(7) For treatment of gifts of money accepted by the Attorney General for credit to the ‘Commissary Funds, Federal Prisons’ as gifts to or for the use of the United States, see section 2 of the Act of May 15, 1952. as amended by the Act of July 9, 1952 (31 U.S.C. 7 25s–4).” (29) Amendments of section 172.— (A) (i) Section 172(b)(1) (relating to years to which loss Ante, p. 1755. may be carried) is amended by striking out subparagraph (E). (ii) Section 172(b)(3) is amended by striking out subparagraphs 26 USC 172. (E) and (F). (B) Section 172(c) (relating to definition of net operating loss) is amended by striking out “(for any taxable year ending after December 31, 1953)”. (C) (i) Section 172 (relating to net operating loss deduction) is amended by striking out subsections (f), (g), and (i), and by redesignating subsections (h), (j), (k), and (1) as subsections (f) , (g). (h), and (i), respectively. (ii) Section 172(b)(1)(C) (relating to regulated transportation corporations) is amended by striking out “subsection (j)(1)” and “subsection (j)”, and inserting in lieu thereof “subsection (g)(1)” and “subsection (g)”, respectively. (iii) Paragraphs (1)(D) and (3)(C)(i) of section 172 Post, p. 1920. (b) (relating to net operating loss carryovers and carry-backs) are each amended by striking out “subsection (k)” and inserting in lieu thereof “subsection (h)”. (iv) Section 172(b)(2) (relating to amount of carrybacks and carryovers) is amended by striking out “subsections (i) and (j)” and inserting in lieu thereof Subsection (g)”. (D) Section 172(e) (relating to law applicable to computations) is amended by striking out the last sentence. (E) Section 172(g)(2) (relating to certain regulated transportation corporations), as redesignated by subparagraph (C) of this paragraph, is amended by striking out paragraph (4). (30) Amendments of sections 174 and 175.— Section 174(a)(2) 26 USC 174, 175. (A)(1) (relating to research and development expenditures) and section 175(d)(1)(A) (relating to soil and water conservation expenditures) are each amended by striking out “the date on which this title is enacted,” and inserting in lieu thereof “August. 16, 1954,”. (31) Repeal of section 187.— Section 187 (relating to rapid 26 USC 187. amortization for certain coal mine safety equipment) is repealed. (32) Amendment of section 219.— Section 219(b)(2)(A)(iv) 26 USC 219. (disqualifying governmental plan participants from contributing to individual retirement accounts, etc.) is amended by striking out “division” and inserting in lieu thereof “subdivision”. (33) Repeat of section 242.— Section 242 (relating to partially 26 USC 242. tax-exempt interest received by corporations) is repealed. (34) Amendments of section 243.— (A) Section 243(a)(2) (relating to the dividends received deduction) is amended by inserting after “Small Business Investment Act of 1958” the following: “(15 U.S.C. 661 and following)”. (B) Section 243(b)(2)(A) (relating to dividends received by a member of an affiliated group) is amended by striking out “(except that in the case of a taxable year of a member beginning in 1963 and ending in 1964, if the election is effective for the taxable year of the common parent corporation which includes the last day of such taxable year of such member, such election shall be effective for such taxable year of such member, if such member consents to such election with respect to such taxable year)”. (35) Amendment of section 247.— Section 247(b)(2) (relating to preferred stock) is amended to read as follows: “(2) Preferred stock.— “(A) In general.— The term ‘preferred stock’ means stock issued before October 1, 1942, which during the whole of the taxable year (or the part of the taxable year after its issue) was stock the dividends in respect of which were cumulative, limited to the same amount, and payable in preference to the payment of dividends on other stock. “(B) Certain stock issued on or after October 1, 1942.— Stock issued on or after October 1, 1942, shall be deemed for purposes of this paragraph to have been issued before October 1, 1942, if it was issued to refund or replace bonds or debentures issued before October 1, 1942, or to refund or replace other preferred stock (including stock which is preferred stock by reason of this subparagraph or subparagraph (D)), but only to the extent that the par or stated value of the new stock does not exceed the par, stated, or face value of the bonds or debentures issued before October 1, 1942, or the other preferred stock, which such new stock is issued to refund or replace. “(C) Determination under regulations.— The determination of whether stock was issued to refund or replace bonds or debentures issued before October 1, 1942, or to refund or replace other preferred stock, shall be made under regulations prescribed by the Secretary. “(D) Issuance of stock.— For purposes of subparagraph (B), issuance of stock includes issuance either by the same or another corporation in a transaction which is a reorganization (as defined in section 368(a)), a transaction to which section 371 (relating to insolvency reorganizations) applies, 26 USC 1081. or a transaction subject to part VI of subchapter 0 (relating to exchanges in SEC. obedience orders), or the respectively corresponding provisions of the Internal Revenue Code of 1939.” (36) Amendment of section 248.— Section 248(c) (relating to organizational expenditures) is amended by striking out “the date of enactment of this title” and inserting in lieu thereof “August 16, 1954”, (37) Amendment of section 265.— Section 265(2) (relating to tax-exempt interest) is amended by striking out “(other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer)”, (38) Amendment of section 269.— Section 269 (relating to 26 USC 269. acquisitions made to evade or avoid income tax) is amended by striking out subsection (c) (relating to presumption in the ease of disproportionate purchase price). (39) Amendment of section 275.— Section 275(a)(1)(C) 26 USC 275. relating to nondeductible taxes) is amended by striking out (“, and corresponding provisions of prior revenue laws”. (40) Amendments of section 281.— (A) Section 281(d)(1)(A) (relating to definition of terminal 26 USC 281. railroad corporation) is amended by inserting after “Interstate Commerce Act” the following: “(49 U.S.C. 1 and following) (B) Section 281 (relating to terminal railroad corporations and their shareholders) is amended by striking out subsection (e) (relating to taxable years ending before October 23, 1962) and by redesignating subsection (f) as subsection (e). (41) Amendment of section 301.— Section 301 (relating to distributions 26 USC 301. of property) is amended by striking out subsection (e) (relating to certain distributions by personal service corporations). (42) Amendments of section 311.— (A) Section 311(d)(1) (relating to appreciated property 26 USC 311. used to redeem stock) is amended by striking out “then again shall be recognized” and inserting in lieu thereof “then a gain shall be recognized”. (B) (i) Section 311(d)(2) (relating to exceptions and limitations) is amended by striking out subparagraph (C) (relating to certain distributions before December 1, 1974) and by redesignating subparagraphs (D), (E), (F), and (G) as subparagraphs (C), (D). (E), and (F), respectively. (ii) The amendments made by clause (i) shall apply only 26 USC 311 note. with respect to distributions after November 30, 1974. (C) Section 311(d)(2)(C), as redesignated by subparagraph (B) of this paragraph, is amended by striking out “26 Stat. 209;” and “38 Stat. 730;”. (43) Amendments of section 312.— (A) Section 312(d)(1) (relating to certain distributions 26 USC 312. of stock and securities) is amended by striking out “this Code” each place it appears and inserting in lieu thereof “this title”. (B) Section 312 (relating to earnings and profits) is amended by striking out subsection (h) (relating to personal service corporations) and by redesignating subsections (i) and (j) as subsections (h) and (i), respectively. (C) Subsection (i) of section 312 (relating to distribution of proceeds of certain loans), as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(i) Distribution of Proceeds of Loan Insured by the United States.— If a corporation distributes property with respect to its stock and if, at the time of distribution— “(1) there, is outstanding a loan to such corporation which was made, guaranteed, or insured by the United States (or by any agency or instrumentality thereof), and “(2) the amount of such loan so outstanding exceeds the adjusted basis of the property constituting security for such loan, then the earnings and profits of the corporation shall be increased by the amount of such excess, and (immediately after the distribution) shall be decreased by the amount of such excess. For purposes of paragraph (2), the adjusted basis of the property at the time of distribution shall be determined without regard to any adjustment under section 1016(a)(2) (relating to adjustment for depreciation, etc.). For purposes of this subsection, a commitment to make, guarantee, or insure a loan shall be treated as the making, guaranteeing, or insuring of a loan.” (D) Section 312(j)(3) (relating to foreign investment companies), as redesignated by subsection (b)(32)(B)(i), is amended to read as follows: “(3) Partial liquidations and redemptions.— If a foreign investment company (as defined in section 1246) distributes amounts in partial liquidation or in a redemption to which section 302(a) or 303 applies, the part of such distribution which is properly chargeable to earnings and profits shall be an amount which is not in excess of the ratable share of the earnings and profits of the company accumulated after February 28, 1913, attributable to the stock so redeemed.” (44) Amendment of section 333.— Section 333(a)(1) (relating to election as to recognition of gain in certain liquidations) is amended by striking out “on or after June 22, 1954”. (45) Amendment of section 334.— Section 334(b)(2)(A) (relating to liquidation of subsidiary) is amended to read as follows: “(A) the distribution is pursuant to a plan of liquidation adopted not more than 2 years after the date of the transaction described in subparagraph (B) (or, in the case of a series of transactions, the date of the last such transaction); and”. (46) Amendments of section 337.— (A) Section 337(a) (relating to nonrecognition of gain or loss on certain liquidations) is amended to read as follows: “(a) General Rule.— If, within the 12month period beginning on the date on which a corporation adopts a plan of complete liquidation, all of the assets of the corporation are distributed in complete liquidation, less assets retained to meet claims, then no gain or loss shall be recognized to such corporation from the sale or exchange by it of property within such 12month period.” (B) The first sentence, of section 337(d) (relating to certain minority stockholders) is amended by striking out “on or after January 1, 1958”. (47) Repeal of section 342.— Section 342 (relating to the liquidation of certain foreign personal holding companies) is repealed. (48) Amendments of section 351.— (A) Section 351(a) (relating to transfer to corporation controlled by transferor) is amended by striking out “(including, in the case of transfers made on or before June 30, 1967, an investment company)”. (B) Section 351(d) (relating to application of June 30, 1967, date) is amended to read as follows: “(d) Exception.— This section shall not apply to a transfer of property to an investment company.” (C) The amendments made by this paragraph shall take effect with respect to transfers of property occurring after the date of the enactment of this Act. (49) Repeal of section 363.— Section 363 (a cross reference to 26 USC 363. other sections) is repealed. (50) Amendments of section 371.— Section 371 (a)(1) (relating 26 USC 371. to certain reorganization exchanges by corporations) is amended— (A) by striking out “49 Stat. 922;” and (B) by striking out “(52 Stat. 883–905; 11 U.S.C., chapter 10) or the corresponding provisions of prior law” and inserting in lieu thereof “(11 U.S.C. 501 and following)”. (51) Amendment of section 372.— Section 372(a) (relating 26 USC 372. to basis in connection with bankruptcy proceedings) is amended by striking out “54 Stat. 709;”. (52) Repeal of section 373.— Section 373 (relating to nonrecognition 26 USC 373. of loss in certain railroad reorganizations) is repealed. (53) Amendment of section 374 .— Section 374(a)(1) (relating 26 USC 374. to non recognition of gain or loss in certain railroad reorganizations) is amended by striking out “49 Stat. 922;”. (54) Amendment of section 381.— Section 381 (c) (relating to 26 USC 381. items carried over in certain corporate acquisitions) is amended by striking out paragraph (20). (55) Repeal of sections 391 through 395.— Subchapter C of 26 USC 391–395. chapter 1 (relating to corporate distributions and adjustments) is amended by striking out part VII (relating to effective dates of subchapter C). (56) Amendments of section 401.— (A) Paragraphs (12) and (13) of section 401(a) (relating 26 USC 401. to requirements for qualification) are each amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (B) Paragraph (15) of section 401(a) is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu 29 USC 1001 note. thereof “September 2, 1974,”. (C) Paragraph (19) of section 401(a) is amended by striking out “enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (D) The last sentence of section 401(a) is amended to read as follows: “Paragraphs (11), (12), (13), (14), (15), (19), and (20) shall apply only in the case of a plan to which section 411 (relating to minimum vesting standards) applies without regard to subsection (e)(2) of such section.” (57) Amendments of section 402.— (A) Section 402(a)(4) (relating to distributions made to 26 USC 402. nonresident alien individuals) is amended by striking out “basic salary” each place it appears therein and inserting in lieu thereof “basic pay”, and by amending the last sentence in such paragraph to read as follows: “In the case of distributions under the civil service retirement laws, the term ‘basic pay’ shall have the meaning provided in section 8331(3) of title 5, United States Code.” (B) Section 402 (relating to taxability of beneficiary of employees’ trusts) is amended by striking out subsection (d) (relating to certain trust agreements made before October 21, 1942), (C) (i) So much of the third sentence of section 402(e)(4) 26 USC 402. (A) (relating to definition of lump sum distributions) as precedes “a distribution of an annuity contract” is amended to read as follows: “Except for purposes of subsection (a)(2) and section 403(a)(2),”. (ii) The amendment made by clause (i) shall apply with respect to distributions or payments made after December 31, 1973, in taxable years beginning after such date. (58) Amendment of section 403.— The last two sentences of section 403(a)(4) (relating to taxation of employee annuities) are amended to read as follows: “For purposes of this title, a transfer described in subparagraph (B)(1) shall be treated as a rollover contribution described in section 408(d)(3). Subparagraph (B)(ii) does not apply in the case of a transfer to an employees’ trust, or annuity plan if any part of a payment described in subparagraph (A) is attributable to an annuity plan under which the employee was an employee within the meaning of section 401(c)(1) at the time contributions were made on his behalf under the plan.” (59) Amendment of section 404.— Section 404 (relating to deduction for contributions to pension plans, etc.) is amended by striking out subsection (d) (relating to carryover of pre–1954 unused deductions). (60) Amendment of section 409.— Section 409(b)(3)(C) (relating to tax-free rollovers of individual retirement bonds) is amended by striking out “section 403(d)(3).” and inserting in lieu thereof “section 408 (d)(3).” (61) Amendments of section 410.— (A) Subparagraphs (C) and (D) of section 410(a)(5) (relating to breaks in service) are each amended by striking out “purposes of subsection (a)(1)” and inserting in lieu thereof “purposes of paragraph (1)”. (B) Paragraph (1)(C) of section 410(c) (relating to application of minimum participation standards) is amended by striking out “the date of the enactment of the Employee 29 USC 1001 note. Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974,”. (C) Paragraph (2) of section 410(c) is amended by striking out “the day before the date of the enactment of this section” and inserting in lieu thereof “September 1, 1974”. (62) Amendments of section 411.— (A) Subsection (a) of section 411 (relating to minimum vesting standards) is amended by striking out “subsection (a)(8)” and inserting in lieu thereof “paragraph (8)”. (B) Subsection (a)(3)(D)(iii) of section 411 is amended— (i) by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and “the date of the enactment of such Act” and inserting in lieu thereof in both such places “September 2, 1974”, and (ii) by striking out “the date of the enactment of the Act” and inserting in lieu thereof “September 2, 1974,”. (C) The heading for subparagraph (C) of section 411 (a)(7) is amended to read as follows: “(C) Repayment of subparagraph (b) distributions.—” (D) Subsection (b)(1)(D)(i) and (e)(1)(C) of section 411 are each amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. 29 USC 1001 note. (E) Subsection (e)(2) of section 411 is amended by striking out “the date before the date of the enactment of the Employee Retirement Income Security Act of 1974” and 26 USC 411. inserting in lieu thereof “September 1, 1974”. (63) Amendments of section 412.— (A) Subsection (h) of section 412 (relating to minimum 26 USC 412. funding standards) is amended by striking out “the day before the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 1, 1974”. (B) Subsection (h)(5) of section 412 is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (64) Amendments of section 414.— (A) The heading for section 414(f) (relating to multi-employer 26 USC 414. plans) is amended to read as follows: ‘(f) Multiemployer Plan.—” (B) Section 414(1) (relating to mergers and consolidations of plans or transfers of plan assets) is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (65) Amendments of section 415.— (A) Section 415(b)(2)(A) (relating to adjustments for 26 USC 415. certain forms of benefits) is amended by striking out “and 409(b)(3)(C)” and inserting in lieu thereof “and 409(b)(3)(C))”. (B) Section 415(b)(2)(B) is amended by striking out “(as defined in section 401(a)(11)(II)(iii))” and inserting in lieu thereof “(as defined in section 401 (a)(11)(G)(iii))”. (66) Amendments of section 453.— (A) Section 453(c)(3) (relating to adjustment in tax for 26 USC 453. amounts previously taxed) is amended by striking out “corresponding provisions of the Internal Revenue Code, of 1939” and inserting in lieu thereof “corresponding provisions of the Internal Revenue Code of 1954”. (B) Section 453(d)(4)(B) (relating to liquidations to which section 337 applies) is amended by striking out “or section 617(d)(1)” and inserting in lieu thereof “, 617(d)” (67) Amendment of section 455.— Section 455(c)(3)(B) 26 USC 455. (relating to prepaid subscription income) is amended by striking out “for his first taxable year (i) which begins after December 31, 1957, and (ii) in which he receives prepaid subscription income in the trade or business” and inserting in lieu thereof “for his first taxable year in which he receives prepaid subscription income in the trade or business”. (68) Amendment of section 458.— Section 456(c)(3)(B) 26 USC 456. (relating to election without consent with respect to treatment of prepaid dues) is amended by striking out “for its first taxable year (i) which begins after December 31, 1960, and (ii)” and inserting in lieu thereof “for its first taxable year”. (69) Amendments of section 461.— (A) Section 461(c) (relating to accrual of real property taxes) is amended by striking out paragraph (2) and by redesignating paragraph (3) as paragraph (2). (B) Section 461(c)(2) (relating to elections without consent), as redesignated by subparagraph (A), is amended by striking out “his first taxable year which begins after December 31, 1953, and ends after the date of enactment of this title in which the taxpayer” and inserting in lieu thereof “his first taxable year in which he”. (70) Amendments of section 481.— (A) Section 481(b) (relating to limitation on tax where substantial adjustments are required by a change in accounting method) is amended by striking out paragraphs (4), (5), and (6) (relating to pre–1954 adjustments). (B) Section 481(b)(1) and (2) are each amended by striking out “, other than the amount of such adjustments to which paragraph (4) or (5) applies,” each place it appears. (71) Amendments of section 508.— (A) Subsections (a) and (b) of section 508 (relating to special rules relating to 501(c)(3) organizations) are each amended by striking out the hist sentence therein. (B) Section 508(e)(2) (relating to special rules for existing private foundations) is amended by striking out subparagraph (A) (relating to taxable years beginning before 1972), by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively, and by striking out “(B)” in subparagraph (B)(as so redesignated) and inserting in lieu thereof “(A)”. (C) Section 508(d)(2)(A) (relating to disallowance of deductions for certain charitable gifts or bequests) is amended by striking out “(e)(2)(B) and (C)” and inserting in lieu thereof “(e)(2)”. (72) Amendments of section 514.— (A) Section 514(c)(1) (relating to definition of acquisition indebtedness) is amended by striking out the comma at the end of subparagraph (C) and all that follows, and inserting in lieu thereof a period. (B) Section 514 (relating to unrelated debt-financed income) is amended by striking out subsection (f) (relating to definition of business lease), by striking out subsection (g) (relating to definition of business lease indebtedness), and by redesignating subsection (h) as subsection (f). (C) Section 514(b)(3)(C)(iii) (relating to definition of debt-financed property) is amended to read as follows: “(iii) shall not apply to property subject to a lease which is a business lease (as defined in this section immediately before the enactment of the Tax Reform Act of 1976).” (D) Section 514(f) (relating to personal property leased with real property), as redesignated by subparagraph (B) of this paragraph, is amended by striking out “and the term ‘premises’ include” and inserting in lieu thereof “includes”. (73) Amendments of section 534.— (A) Section 534(b) (relating to mailing notices of deficiency) is amended by striking out the last sentence, (B) Subsection (e) of section 534 (relating to effective date of section) is repealed. (74) Amendment of section 533.— Section 535(b)(1) (relating 26 USC 535. to adjustments in computing accumulated taxable income) is amended by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 31, 1940)”. (75) Amendments of section 537.— (A) Section 537(b)(2) (relating to definition of excess 26 USC 537. business holdings redemption needs) is amended by striking out “, with respect to taxable years of the corporation ending after May 26, 1969,”. (B) Section 537(b)(4) (relating to inferences as to prior years) is amended by striking out “or (2)”. (76) Amendments of section 542.— (A) Section 542(a)(2) (relating to definition of personal 26 USC 542. holding company) is amended by striking out the last sentence. (B) Section 542(b)(2) (relating to ineligible affiliated group) is amended by striking out “, other than an affiliated group of railroad corporations the common parent of which would be eligible to file a consolidated return under section 141 of the Internal Revenue Code of 1939 prior to its amendment by the Revenue Act of 1942,”. (C) Section 542(c)(2) (relating to financial institutions) is amended by striking out “without regard to subparagraphs (D) and (E) thereof”, (D) Section 542(c)(8) (relating to small business investment companies) is amended by inserting after “Small Business Investment Act of 1958” the following: “(15 U.S.C. 661 and following)”. (77) Amendments of section 545.— (A) Section 545(b)(1) (relating to deduction of taxes in 26 USC 545. computing undistributed personal holding company income) is amended— (i) in the first sentence, by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 31, 1940)”; and (ii) by striking out the last two sentences (relating to deduction of taxes). (B) Section 545(b) (relating to adjustments in computing undistributed personal holding company income) is amended by striking out paragraph (7) (relating to payment of indebtedness incurred before 1934). (C) Section 545(c)(2)(A) (relating to corporations to which special adjustment applies) is amended by striking out “the date of enactment of this subsection” and inserting in lieu thereof “February 26, 1964”. (78) Amendment of section 547.— Section 547 (relating to the 26 USC 547. deduction of deficiency dividends) is amended by striking out subsection (h) (relating to the effective date). ‘ (79) Amendment of section 551.— Section 551(c) (relating to 26 USC 551. foreign personal holding company income tax returns), as redesignated by subsection (b)(1)(F) of this section, is amended by striking out “taxable income, foreign personal holding com-pany,” and inserting in lieu thereof “taxable income, foreign personal holding company income,”. (80) Amendment of section 554.— The first sentence of section 556(b)(1) (relating to deduction of taxes in computing undistributed foreign personal holding company income) is amended by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 1, 1940)”. (81) Amendment of section 584.— Section 564 (relating to dividend carryovers) is amended by striking out subsection (c) (relating to carryovers from pre–1954 years). (82) Repeal of section 583.— Section 583 (relating to deduction of dividends paid on certain preferred stock by banks or trust companies) is repealed. (83) Repeal of section 592.— Section 592 (relating to the deduction by mutual savings banks for repayment of certain loans) is repealed. (84) Amendments of section 593.— (A) Section 593(b)(2) (relating to additions to bad debt reserves for mutual savings banks, etc.) is amended by striking out, in the table in subparagraph (A), the following: “1969 60 percent 1970 57 percent 1971 54 percent 1972 51 percent 1973 49 percent 1974 47 percent 1975 45 percent” (B) Section 593(c) (relating to reserves for mutual savings banks) is amended by striking out paragraphs (2), (3), (4), and (5), by redesignating paragraph (6) as paragraph (3), and by inserting immediately after paragraph (1) the following: “(2) Certain pre-1963 reserves.— Notwithstanding the second sentence of paragraph (1), any amount allocated pursuant to paragraph (5)(as in effect immediately before the enactment of the Tax Reform Act of 1976) during a taxable year beginning before January 1, 1977, to the reserve for losses on qualifying real property loans out of the surplus, undivided profits, and bad debt reserves (determined as of December 31, 1962) attributable to the period before the first taxable year beginning after December 31, 1951, shall not be treated as a reserve for bad debts for any purpose other than determining the amount referred to in subsection (b)(1)(B), and for such purpose such amount shall be treated as remaining in such reserve.” (C) Section 593 is amended by striking out subsection (d) (relating to taxable years beginning in 1962 and ending in 1963), and by redesignating subsections (e) and (f) as subsections (d) and (e),respectively. (D) Section 593(b)(2)(E)(1) is amended by striking out “subsection (f)” and inserting in lien thereof “subsection (e)”- (85) Repeal of section 601.— Subchapter H of chapter 1 relating to 26 USC 601. banking institutions) is amended by striking out part III (relating to special deduction for bank affiliates). (86) Amendments of section 613a.— (A) Section 613A(b)(1)(C) (relating to exemption for 26 USC 613A. certain domestic gas wells) is amended by striking out “within the meaning of section 613(b)(1)(A)”. (B) Section 613A(c)(6)(i) (relating to limitations on percentage depletion in case of oil and gas wells) is amended by striking out “determined with” and inserting in lieu thereof “determined without”. (87) Amendments of section 614.— (A) (i) Section 614(c) (relating to aggregation of mineral 26 USC 614. interests in mines) is amended by striking out paragraph (4) (relating to special rule as to exploration deductions prior to aggregation). (ii) The amendment made by clause (i) shall apply with 26 USC 614 note. respect to elections to form aggregations of operating mineral interests made under section 614(c)(1) of the Internal Revenue Code of 1954 for taxable years beginning after December 31, 1976. (B) The third sentence of section 614(c)(2) (relating to election to treat a single interest as more than one property) is amended to read as follows: “A separate property so formed may, under regulations prescribed by the Secretary, be included as a part of an aggregation in accordance with paragraphs (1) and (3).” (C) Section 614(c)(3) (relating to manner and scope of election) is amended to read as follows: “(3) Manner and scope of election.— The elections provided by paragraphs (1) and (2) shall be made, in accordance with regulations prescribed by the Secretary, not later than the time prescribed for filing the return (including extensions thereof) for the first taxable year— “(A) in which, in the ease of an election under paragraph (1), any expenditure for development or operation in respect of the separate operating mineral interest is made by the taxpayer after the acquisition of such interest, or “(B) in which, in the case of an election under paragraph (2), expenditures for development or operation of more than one mine in respect of a property are made by the taxpayer after the acquisition of the property. An election made under paragraph (1) or (2) for a taxable year shall be binding upon the taxpayer for such year and all subsequent taxable years, except that the Secretary may consent to a different treatment of any interest with respect to which an election has been made.” (88) Repeal or section 615.— Section 615 (relating to deduction 26 USC 615. of pre–1970 exploration expenses) is repealed. (89) Amendment of section 617.— Section 617(a)(2)(B) 26 USC 617. (relating to time and scope of election to deduct certain mining exploration expenditures) is amended by striking out. “may not be revoked after the last day of the third month following the month in which the final regulations issued under the authority of this subsection are published in the Federal Register“, unless” and inserting in lieu thereof “may not be revoked unless”. (90) Repeal of section 632.— Section 632 (relating to tax in 26 USC 632. case of sale of oil and gas properties) is repealed. (91) Amendment of section 691.— Section 691(c)(1)(B) 26 USC 691. (relating to deduction for estate tax) is amended by striking out the last sentence. (92) Amendment of section 692.— The heading of section 692 (relating to income taxes of members of Armed Forces who die in a combat zone) is amended by striking out “ON” the first time it appeals in the section heading and inserting in lieu thereof “OF”. (93) Amendment of section 751.— Section 751(c) (relating to unrealized receivables) is amended by striking out “1254(a), or 1250(a),” and inserting in lieu thereof “1245(a), 1250(a),”. (94) Repeal of section 771.— Part IV of subchapter K of chapter 1 (relating to effective date of subchapter K) is repealed. (95) Amendments of section 802.— (A) Section 802(a)(1) (relating to tax imposed on life insurance companies) is amended by striking out “beginning after December 31, 1957,”. (B) Section 802(a)(2) (relating to alternative tax in case of capital gains) is amended by striking out “beginning after December 31, 1961,”. (C) Section 802(a) is amended by striking out paragraph (3) (relating to special rules for 1959 and 1960). (96) Amendments of section 804.— (A) Section 804(a) is amended by sticking out paragraph (6) (relating to certain exceptions). (B) Section 804(b)(2) (relating to short-term capital gains) is amended by striking out “In the case of a taxable year beginning after December 31, 1958, the” and inserting in lieu thereof “The”. (97) Amendments of section 805.— (A) Section 805(b)(3)(B) (relating to average earnings rate) is amended to read as follows: “(B) Special rule.— For purposes of subparagraph (A), the current earnings rate for tiny taxable year of any company which, for such year, is an insurance company (but not a life insurance company) shall be determined as if this part applied to such company for such year.” (B) Section 805(b)(4)(B) (relating to basis of assets) is amended by striking out “(determined without regard to fair market value on December 31, 1958)”. (C) Section 805(d) (relating to pension plan reserves) is amended to read as follows: “(d) Pension Plan Reserves.— For purposes of this part, the term ‘pension plan reserves’ means that portion of the life insurance reserves which is allocable to contracts— “(1) purchased under contracts entered into with trusts which (as of the time the contracts were entered into) were deemed to be (A), trusts described in section 401(a) and exempt from tax under section 501(a), or (B) trusts exempt from tax under section 185 of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws; “(2) purchased under contracts entered into under plans which (as of the time the, contracts were entered into) were deemed to be plans described in section 403(a), or plans meeting the requirements of paragraphs (3), (4), (5), and (6) of section 165(a) of the Internal Revenue Code of 1939; “(3) provided for employees of the life insurance company under a plan which, for the taxable year, meets the requirements of paragraphs (3), (4), (5), (6), (7), (8), (11), (12), (13), (14), (15), (16), (19), and (20) of section 401(a); “(4) purchased to provide retirement annuities for its employees by an organization which (as of the time the contracts were purchased) was an organization described in section 501(c)(3) which was exempt from tax under section 501(a) or was an organization exempt from tax under section 101(6) of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws, or purchased to provide retirement annuities for employees described in section 403(b)(1)(A)(ii) by an employer which is a State, a political subdivision of a state, or an agency or instrumentality of any one or more of the foregoing; or “(5) purchased under contracts entered into with trusts which (at the time the contracts were entered into) were individual retirement accounts described in section 408(a) or under contracts entered into with individual retirement annuities described in section 408(b).” (98) Amendments of section 809.— (A) Section 809(b) (relating to definition of gain and loss 26 USC 809. from operations) is amended by striking out paragraph (4). (B) (i) Section 809(d) (relating to life insurance company deductions) is amended by striking out paragraph (11) relating to mutualization distributions before 1963), and by redesignating paragraph (12) as paragraph (11). (ii) Section 809(e) is amended by striking out “subsection (d)(12)” and inserting in lieu thereof “subsection (d)(11)”, (C) Section 809 (relating to computation of gain and loss from operations) is amended by striking out subsection (g) (relating to deduction for certain mutualization distributions before 1963). (99) Amendment of section 812.— Section 812(b)(1) (relating 26 USC 812. to years to which operating losses of an insurance company may be carried), other than the last sentence thereof, as added by section 806(d)(1)(A) of this Act, is amended to read as follows: “(1) Years to which loss may be carried.— The loss from operations for any taxable year (hereinafter in this section referred to as the ‘loss year’) shall be— “(A) an operations loss carryback to each of the 3 taxable years preceding the loss year, “(B) an operations loss carryover to each of the 5 taxable years following the loss year, and “(C) subject to subsection (e), if the life insurance company is a new company for the loss year, an operations loss carryover to each of the 3 taxable years following the 5 taxable years described in subparagraph (B).” (100) Amendments of section 817.— Section 817 (relating to 26 USC 817. rules applicable to certain gains and losses) is amended by striking out subsection (c) (relating to treatment of pre–1959 capital losses) and subsection (e) (relating to certain 1958 reinsurance transactions). (101) Amendment of section 818.— Section 818 (relating to 26 USC 818. life insurance accounting provisions) is amended by striking out subsection (e) (relating to certain rules applicable to taxable years 1957, 1958, and 1959). and by redesignating subsections (f) and (g) as subsections (e) and (f), respectively. (102) Amendments of section 819.— (A) The first sentence of section 819(a)(2)(A) (relating 26 USC 819. to definition of minimum figure for foreign life insurance companies) is amended to read as follows: “The minimum figure is the amount determined by multiplying the tax-payer’s total insurance liabilities on United States business by a percentage for the taxable year to be determined and proclaimed by the Secretary.” (B) The second sentence of section 819(a)(2)(A) is amended by striking out “under clause (ii)” and inserting in lieu thereof “under the preceding sentence”. (C) Clause (i) of section 819(b)(2)(B) (relating to distributions pursuant to certain mutualizations) is amended to read as follows: “(i) the minimum figure for 1958 determined under subsection (a)(2)(A) computed by using a percentage of 9 percent in lieu of the percentage determined and proclaimed by the Secretary, or”. (103) Amendments of section 820.— (A) Section 820(c) (relating to optional treatment of certain reinsured policies) is amended by striking out paragraph (6) (relating to reimbursement for 1957 income taxes), and by redesignating paragraph (7) as paragraph (6). (B) The last sentence of section 820(c) is amended by striking out “(5). and (6) and the rules prescribed under paragraph (7)” and inserting in lieu thereof “and (5) and the rules prescribed under paragraph (6)”. (104) Amendments of section 821.— (A) Section 821(a) (relating to imposition of tax on certain mutual insurance companies) is amended by striking out “beginning after December 31, 1963,”. (B) Section 821(c)(1) (relating to alternative tax for certain small insurance companies) is amended by striking out “In the ease of taxable years beginning after December 31, 1963. there is” and inserting in lieu thereof “There is”. (C) Section 821 (relating to tax on certain mutual insurance companies) is amended by striking out subsection (e) (relating to 1962 transitional rules) and by redesignating subsection (f) as subsection (e). (105) Amendments of section 822.— (A) Section 822(c)(5) (relating to deduction of interest) is amended by striking out “(other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer)”. (B) The last sentence of section 822(d)(2) (relating to amortization of premium and accrual of discount) is amended by striking out “For taxable years beginning after December 31, 1962. no accrual” and inserting in lieu thereof “No accrual”. (106) Amendments of section 825.— Section 825(g) (relating to unused loss deduction of certain insurance companies) is amended by striking out paragraph (1) and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (107) Amendment of section 831.— Section 831(a) (relating to tax on certain insurance companies) is amended by striking out “or the taxable income” and inserting in lieu thereof “on the taxable income.” (108) Amendments of section 832.— Paragraphs (1) and (6) of section 832(b)(definitions relating to insurance company taxable income) are each amended by striking out “Convention” and inserting in lieu thereof “Association”. (109) Amendments of section 851.— (A) Section 851(a)(1) (relating 26 USC 851. to definition of regulated investment company) is amended by striking out “54 Stat. 789;”. (B) Section 851(b)(1) (relating to regulated investment companies) is amended by stinking out “which began after December 31, 1941”, (110) Amendments of section 852.— (A) Subparagraph (C) of section 852(b)(3) (relating to 26 USC 852. method of taxation of regulated investment companies and their shareholders) is amended by striking out the third sentence. (B) (i) Section 852(b)(3)(D)(iii) is amended by striking out “by 75 percent of so much of such amounts as equals the amount subject to tax in accordance with section 1201 (a)(1)(A) and by 70 percent (72 percent in the case of a Post, p, 1786. taxable year beginning after December 31, 1969, and before January 1, 1971) of so much of such amounts as equals the amount subject to tax in accordance with section 1201(a)(1)(B) or (2)” and inserting in lieu thereof “by 70 percent of so much of such amounts as equals the amount subject to tax in accordance with section 1201(a)”. (ii) The amendment made by clause (i) shall not be considered 26 USC 852 note. to affect the amount of any increase in the basis of stock under the provisions of section 852(b)(3)(D)(iii) of the Internal Revenue Code of 1954 which is based upon amounts subject to tax under section 1201 of such Code in taxable years beginning before January 1, 1975. (C) Section 852(d) is amended by inserting after “Investment Company Act of 1940” the following: “(15 U.S.C. 80a–l and following)”. (111) Amendments of section 856.— (A) Section 856(c)(1) (relating to real estate investment 26 USC 856. trusts) is amended by striking out “which began after December 31, 1960”. (B) Section 856(c)(6)(D) (relating to definition of other terms) is amended by inserting after “Investment Company Act of 1940, as amended” the following: “(15 U.S.C. 80a–1 and following)”. (112) Amendment of section 857.— Section 857(b)(3)(C) 26 USC 857. (relating to the taxation of capital gains in the case of real estate investment trusts) is amended by striking out the last sentence. (113) Amendments of section 864.— (A) Subsection (a) of section 864 (definitions relating to 26 USC 864. determinations of sources of income) is amended to read as follows: “(a) Produced.— For purposes of this part, the term ‘produced’ “Produced.” includes created, fabricated, manufactured, extracted, processed, cured, or aged.” (B) Clauses (i) and (iii) of section 864(c)(4)(B) and subparagraph (C) of section 864(c)(5) (relating to effectively connected income) are each amended by striking out “sale” each place it appears and inserting in lieu thereof “sale or exchange”. (C) Section 864(c)(4)(B)(iii) (relating to effectively connected income) is amended by striking out “sold” and inserting in lieu thereof “sold or exchanged”. (114) Amendment of section 905.— Section 905(b) (relating to proof of foreign tax credits) is amended by striking out the last sentence (relating to the treatment of certain royalty payments). (115) Amendment of section 911.— Section 911(c) (relating to earned income from sources without the United States) is amended by striking out paragraph (7) (relating to taxable years ending in 1963, 1964, or 1965). (116) Amendment of section 921.— Section 921 (relating to definition of Western Hemisphere Trade Corporation) is amended by striking out the last sentence, (relating to taxable years before 1954). (117) Amendments of section 931.— Section 931 (relating to income from sources within possession) is amended by striking out subsection (h) (relating to certain persons taken as prisoners of war while working in a possession), and by redesignating subsection (i) as subsection (h). (118) Amendment of section 934.— Section 934(b) (relating to gross income received by a corporation from the Virgin Islands) is amended by striking out the last sentence. (119) Amendment of section 951.— Section 951 (a)(1) (relating to treatment, of subpart F income) is amended by striking out “beginning after December 31, 1962”. (120) Repeal of section 972.— Section 972 (relating to consolidation of export trade corporations) is repealed. (121) Amendment of section 1001.— Section 1001(c) (relating to recognition of gain or loss) is amended to read as follows: “(c) Recognition of Gain or Loss.— Except as otherwise provided in this subtitle, the entire amount of the gain or loss, determined under this section, on the sale or exchange of property shall be recognized.” (122) Amendments of section 1015.— (A) Subparagraph (A) of section 1015(d)(1) (relating to increased ‘basis for gift tax paid) is amended by striking out “the date of the enactment of the Technical Amendments Act of 1958” and inserting in lieu thereof “September 2, 1958”. (B) Subparagraph (B) of section 1015(d)(1) is amended by striking out “the date of the enactment of the Technical Amendments Act of 1958” and inserting in lieu thereof “September 2, 1958,”. (123) Amendment of section 1016.— Section 1016(a) (relating to adjustments to basis) is amended by striking out paragraph (19). (124) Amendment of section 1018.— Section 1018 (relating to adjustment of capital structure before September 22, 1938) is amended by striking out “54 Stat. 709;”. (125) Repeal of section 1020.— Section 1020 (relating to election in respect of depreciation allowed before 1952) is repealed. (126) Repeal of section 1022.— (A) Section 1022 (relating to the basis of certain foreign personal holding company stock) is repealed. (B) The repeal made by subparagraph (A) shall apply with respect to stock or securities acquired from a decedent dying after the date of the enactment of this Act. (127) Amendment of section 1024.— Section 1024 (containing cross references) is amended by striking out paragraph (4). (128) Amendments of section 1033.— (A) Section 1033(a) (relating to involuntary conversions) 26 USC 1033. is amended by striking out paragraph (2) and by redesignating paragraph (3) as paragraph (2). (B) Section 1033(a)(2) (relating to conversion into money), as redesignated by subparagraph (A) of this paragraph and as amended by this Act, is amended— (i) by striking out “where disposition occurred after 1950” in the paragraph heading; (ii) by striking out “(g)” each place it appears and inserting in lieu thereof “(h)”; (iii) by striking out “and the disposition of the converted property (as defined in paragraph (2)) occurred after December 31, 1950,” in the text; and (iv) by adding at the end thereof the following new subparagraph: “(E) Definitions.— For purposes of this paragraph— “(i) Control.— The term ‘control’ means the ownership of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote and at least 80 percent of the total number of shares of all other classes of stock of the corporation. “(ii) Disposition of the converted property.— The term ‘disposition of the converted property’ means the destruction, theft, seizure, requisition, or condemnation of the converted property, or the sale or exchange of such property under threat or imminence of requisition or condemnation.” (C) Section 1033 (relating to involuntary conversions) is amended by striking out subsection (b) (relating to certain conversions occurring before 1954) and by redesignating subsections (c), (d), (e), (f), (g), and (h), as subsections (b), (c), (d), (e), (f), and (g), respectively. (D) The first sentence of section 1033(b) (relating to basis of a property acquired through involuntary conversions), as redesignated by subparagraph (G) of this paragraph, is amended by striking out “or (2)” and inserting in lieu thereof “or section 112(f)(2) of the Internal Revenue Code of 1939”. (E) Section 1033(f)(2) (relating to condemnation of real property), as redesignated by subparagraph (C) of this paragraph, is amended to read as follows: “(2) Limitation.— Paragraph (1) shall not apply to the purchase of stock in the acquisition of control of a corporation described in subsection (a)(2)(A).” (F) Section 1033(g)(4) (relating to condemnation of real property), as amended by section 2140(a) of this Act, is amended by striking out “(a)(3)(B)(i)” and inserting in lieu thereof“(a)(2)(B)(i)”. (129) Amendments of section 1034.— (A) Section 1034(a) (relating to gain on sale of residence) 26 USC 1034. is amended by striking out “after December 31, 1953,”. (B) Section 1034(b)(defining adjusted sales price) is amended by striking out paragraph (3) (relating to effective date of subsection (b)). (C) Section 1034(d) (relating to certain limitations) is amended by striking out “or section 112 (n) of the Internal Revenue Code of 1939”. (D) Section 1034(i) (relating to involuntary conversions) is amended to read as follows: “(ii) Special Rule for Condemnation.— In the case of the seizure, requisition, or condemnation of a residence, or the sale or exchange of a residence under threat or imminence thereof, the provisions of this section, in lieu of section 1033 (relating to involuntary conversions), shall be applicable if the taxpayer so elects. If such election is made, such seizure, requisition, or condemnation shall be treated as the sale of the residence. Such election shall he made at such time and in such manner as the Secretary shall prescribe by regulations.” (E) Section 1034(j) (relating to statute of limitations) is amended by striking out “after December 31, 1950,”. (130) Amendment of section 1037.— Section 1037(b)(1) (relating to certain exchanges of United States obligations) is amended by striking out “section 1232(a)(2)(A)” and inserting in lieu thereof “section 1232 (a)(2) (B)”. (131) Amendment of section 1051.— Section 1051 (relating to property acquired before 1929 during affiliation) is amended by striking out the last two sentences. (132) Amendments of section 1081.— (A) Subsection (e) of section 1081 (relating to distributions required by the SEC) is amended to read as follows: “(c) Distribution of Stock or Securities Only.— If there is distributed, in obedience to an order of the Securities and Exchange Commission, to a shareholder in a corporation which is a registered holding company or a majority-owned subsidiary company, stock or securities (other than stock or securities which are nonexempt property), without the surrender by such shareholder of stock or securities in such corporation, no gain to the distributee from the receipt of the stock or securities so distributed shall be recognized.” (B) Section 1081(f) (relating to conditions for application of section) is amended by striking out “Except in the case of a distribution described in subsection (c)(2), the provisions” and inserting in lien thereof “The provisions”, and by striking out “49 Stat. 820;”. (C) Section 1081(g) (relating to applicability of other provisions) is amended by striking out “If a distribution described in subsection (c)(2). or an” and inserting in lieu thereof “If an”, and by striking out the comma after “Commission”. (133) Amendments of section 1083.— (A) Section 1083(a) is amended by striking out “49 Stat. 820;”. (B) Section 1083(b) is amended by striking out “49 Stat. 804;”. (C) Section 1083(e)(4) is amended by striking out “49 Stat. 820;”. (134) Repeal of section 1111.— Part IX of subchapter O of chapter 1 (relating to distributions pursuant to orders enforcing the antitrust laws) is repealed. (135) Amendments of section 1201.— (A) Section 1201(a) (relating to the alternative tax on capital gain) is amended to read as follows: “(a) Corporations.— If for any taxable year a corporation has a net capital gain, then, in lien of the tax imposed by sections 11. 511, 821 (a) or (c) and 831(a), there is hereby imposed a tax (if such tax is less than the tax imposed by such sections) which shall consist of the sum of— “(1) a tax computed on the taxable income reduced by the amount of the net capital gain, at the rates and in the manner as if this subsection had not been enacted, plus “(2) a tax of 30 percent of the net capital gain.” (B) Section 1201(c) (relating to computation of alternative 26 USC 1201. tax) is amended to read as follows: “(c) Computation of Tax Where Capital Gain Exceeds $50,000.— The tax computed for purposes of subsection (b)(3) shall be the amount by which a tax determined under section 1 or 511 on an amount equal to the taxable income (but not less than 50 percent of the net capital gain) for the taxable year exceeds a tax determined under section 1 or 511 on an amount, equal to the sum of (A) the amount subject to tax under subsection (b)(1) plus (B) an amount equal to 50 percent of the sum referred to in subsection (b)(2)(A).” (C) (i) Section 1201 is amended by striking out subsection (d)(defining subsection (d) gain) and by redesignating subsection (e) as subsection (d). (ii) Section 1201(b)(2)(A) (relating to alternative tax on noncorporate taxpayers) is amended by striking out “the amount of the subsection (d) gain” and inserting in lieu thereof “the sum of the long-term capital gains for the taxable year, but not to exceed $50,000 ($25,000 in the case of a married individual filing a separate return)”. (iii) Section 1201(b)(3) is amended by striking out “the amount of the subsection (d) gain” and inserting in lieu thereof “the sum referred to in subparagraph (A)”. (136) Amendments of section 1222.— (A) Paragraph (9) of section 1222 (relating to definition 26 USC 1222. of terms applicable to capital gains and losses) is amended to read as follows: “(9) Capital gain net income.— The term ‘capital gain net income’ means the excess of the gains from sales or exchanges of capital assets over the losses from such sales or exchanges.” (B) Paragraph (11) of section 1222 (relating to definition of terms applicable to capital gains and losses) is amended to read as follows: “(11) Net capital gain.— The term ‘net capital gain’ means “Net capita] gain.” the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such year.” (137) Amendment of section 1233.— Section 1283((3) (relating 26 USC 1233. to certain options to sell) is amended by striking out “the date of enactment of this title” and inserting in lieu thereof “August 16, 1954”. (138) Amendment of section 1237.— Section 1237 (relating 26 USC 1237. to real property subdivided for sale) is amended by striking out subsection (d) (relating to effective date). (139) Repeal of section 1240.— Section 1240 (relating to taxability 26 USC 1240. to employee of certain termination payments) is repealed. (140) Amendment of section 1245.— Section 1245(b)(7)(B) 26 USC 1245. (relating to transfers to tax-exempt organization where property will be used in unrelated business) is amended by striking out “such organization acquiring such property,”. (141) Amendment of section 1246.— Section 1246(f) (relating 26 USC 1246. to gain on foreign investment company stock) is amended by striking out “beginning after December 31, 1962”. (142) Amendment of section 1311.— Paragraphs (2)(A), (2)(B), and (3) of section 1311(b) (relating to mitigation of effect of limitations) are each amended by striking out “Tax Court of the United States” and inserting in lieu thereof “Tax Court”. (143) Repeal of section 1315.— Section 1315 (relating to effective date of part II of subchapter Q of chapter 1) is repealed. (144) Repeal of section 1321.— Part III of subchapter Q of chapter 1 (relating to involuntary liquidation of LIFO inventories) is repealed. (145) Repeal of sections 1331 through 1337.— (A) Part IV of subchapter Q of chapter 1 (relating to war loss recoveries) is repealed. (B) The repeal by subparagraph (A) shall apply with respect to war loss recoveries in taxable years beginning after December 31, 1976. (146) Amendment of section 1341.— Section 1341(b)(2) (relating to claim of right) is amended by striking out the last sentence. (147) Repeal of section 1342.— Section 1342 (relating to computation of tax on certain amounts recovered as a result of a patent infringement suit) is repealed. (148) Repeal of section 134A.— Section 1346 (relating to recovery of unconstitutional Federal taxes) is repealed. (149) Amendments of section 1372.— (A) Section 1372(b)(1) (relating to effect of election under subchapter S) is amended by striking out “(other than the tax imposed by section 1378)” and inserting in lieu thereof “(other than as provided by section 58(d)(2) and by section 1378)”. (B) Section 1372(c) (relating to subchapter S elections by small business corporations) is amended to read as follows: “(c) Where and How Made.— An election under subsection (a) may be made by a small business corporation for any taxable year at any time during the first month of such taxable year, or at any time Regulations. during the month preceding such first month. Such election shall be made in such manner as the Secretary shall prescribe by regulations.” (C) Section 1372 is amended by striking out subsection (g) (relating to certain elections for years beginning before 1961). (150) Amendments of section 1374.— (A) Section 1374(b) (relating to net operating losses of subchapter S corporations) is amended by adding at the end thereof the following new sentence: “The deduction allowed by this subsection shall, for purposes of this chapter, be considered as a deduction attributable to a trade or business carried on by the shareholder.” (B) Subsection (d) of section 1374 (relating to treatment of net operating losses of subchapter S corporations) is repealed. (151) Amendments of section 1375.— (A) The heading of subsection (b) of section 1375 is amended by striking out “Received Credit Not Allowed” and inserting in lieu thereof “Not Treated as Such for Certain Purposes”. (B) Section 1375 (f) (relating to elections as to certain distributions) is amended by striking out paragraph (3). (152) Amendment of section 1378.— Section 1378(b) (relating 26 USC 1378. to the taxation of capital gain in the case of electing small business corporations) is amended by striking out the last sentence. (153) Amendments of section 1388.— (A) Section 1388(c)(2)(B)(i) (relating to patronage 26 USC 1388. dividends) is amended by striking out “the date of the enactment of the Revenue Act of 1962” and inserting in lieu thereof “October 16, 1962”. (B) Section 1388(h)(2)(B)(i) (relating to perunit retain certificates) is amended by striking out “the date of the enactment of Ibis subsection” and inserting in lieu thereof “November 13, 1966”. (154) Amendments of section 1401.— (A) Section 1401(a) (relating to rate of tax on self-employment 26 USC 1401. income) is amended to read as follows: “(a) Old-Age, Survivors, and Disability Insurance.— In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax equal to 7.0 percent of the amount of the self-employment income for such taxable year.” (B) Section 1401(b) (relating to rate of tax on self-employment income for hospital insurance) is amended by striking out paragraphs (1) and (2) and by redesignating paragraphs (3), (4), (5), and (6), as paragraphs (1), (2), (3) and (4), respectively. (155) Amendments of section 1402.— (A) Paragraph (1) of section 1402(b) (relating to definition 26 USC 1402. of self-employment income) is amended to read as follows: “(1) that part of the net earnings from self-employment which is in excess of (i) an amount equal to the contribution and benefit base (as determined under section 230 of the Social Security Act) 42 USC 430. which is effective for the calendar year in which such taxable year begins, minus (ii) the amount of the wages paid to such individual during such taxable years; or”. (B) Section 1402 amended by striking out subsection (g) 26 USC 1402. (relating to treatment of self-employment income for years prior to 1962). and by redesignating subsections (h) and (i) as subsections (g) and (h). respectively. (C) Section 1402(g)(2) (relating to self-employment income, of members of certain religious faiths), as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(2) Time for filing applications.— For purposes of this subsection, an application must be filed on or before the time prescribed for filing the return (including any extension thereof) for the first, taxable year for which the individual has self-employment income (determined without regard to this subsection or subsection (c)(6)), except that an application filed after such date but on or before the last day of the third calendar month following the calendar month in which the taxpayer is first notified in writing by the Secretary that a timely application for an exemption from the tax imposed by this chapter has not been filed by him shall be deemed to be filed timely.” (156) Repeal of section 1465.— Section 1465 (relating to definition 26 USC 1465. of withholding agent) is repealed. (157) Amendments of section 1481.— (A) Section 1481(a)(1)(A) (relating to mitigation of 26 USC 1481. effect of renegotiation of Government contracts) is amended by striking out “within the meaning of the Federal renegotiation act applicable to such transaction” and inserting in lieu thereof “within the meaning of the Renegotiation Act of 1951, as amended (50 U.S.C. App, 1211 and following)”. (B) Section 1481(a)(1) (relating to renegotiation) is amended by striking out subparagraph (D). (C) Subparagraphs (B) and (C) of section 1481(a)(1) are each amended by striking out “applicable Federal renegotiation act” and inserting in lieu thereof “Renegotiation Act of 1951, as amended”. (158) Amendment of section 1551.— Section 1551(a) (relating to disallowance of surtax exemption) is amended by striking out “determined under subjection (d)” and inserting in lieu thereof “determined under subsection (c)”. (159) Amendment of section 1552.— The first sentence of section 1552(a) (relating to earnings and profits of an affiliated group) is amended by striking out “beginning after December 31, 1953, and ending after the date of enactment of this title,”. (b) Conforming and Clerical Amendments.— (1) Amendments conforming to repeal of sections 35 and 242.— (A) Section 36, as amended by this Act, is amended by striking out “sections 32 and 35” and inserting in lieu thereof “section 32”. (B) Section 41(b)(2) is amended by striking out “section 35 (relating to partially tax-exempt interest)”. (C) Section 46(a)(3) is amended by striking out subparagraph (B), by inserting “and” at the end of subparagraph (A), and by redesignating subparagraph (C) as subparagraph (B). (D) Section 50A(a)(3) is amended by striking out subparagraph (B) and redesignating subparagraphs (C), (D), and (E), as subparagraphs (B), (C), and (D), respectively. (E) (i) The heading of paragraph (1) of section 171(a) is amended to read “(1) Taxable bonds.—”. (ii) The heading of paragraph (2) of section 171(a) is amended to read “(2) Tax-exempt bonds.—”, (iii) Section 171(a) is amended by striking out paragraph (3) and by redesignating paragraph (4) as paragraph (3). (iv) Section 171(b)(1)(B)(n) is amended by striking out “subsection (c)(1)(B)” and inserting in lieu thereof “subsection (a)(1)”. (v) So much of section 171(c) as precedes paragraph (2) is amended to read as follows: “(c) Election as to Taxable Bonds.— “(1) Eligibility to elect; bonds with respect to which election permitted.— In the case of bonds the interest on which is not excludable from gross income, this section shall apply only if the taxpayer has so elected.”, (F) (i) Section 551 is amended by striking out subsection (c), and by redesignating subsections (d), (e), (f), and (g), as subsections (c), (d), (e), and (f), respectively. (ii) Section 1016(a)(13) is amended by striking out “section 551(f)” and inserting in lieu thereof “section 551(e)”. (G) Section 584(c)(2) is amended to read as follows: “(2) Dividends received.— The proportionate share of each participant in the amount of dividends received by the common trust fund and to which section 116 applies shall be considered for purposes of such section as having been received by such participant.” (H) (i) Section 642(a) is amended by striking out paragraph 26 USC 642. (1), and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (ii) Section 41(d) is amended by striking out “section 26 USC 41. 642(a)(3)” and inserting in lieu thereof “section 642(a)(2)”. (iii) Section 901(g)(3), as amended by this Act, is 26 USC 901. amended by striking out “section 642(a)(2)” and inserting in lieu thereof “section 642(a)(1)”. (I) (i) Section 702(a) is amended by striking out paragraph 26 USC 702. (7) and by redesignating paragraphs (8) and (9) as paragraphs (7) and (8), respectively. (ii) Section 702(b) is amended by striking out “paragraphs (1) through (8)” and inserting in lieu thereof “paragraphs (1) through (7)”. (iii) Section 1402(a) is amended by striking out “702(a) 26 USC 1402. (9)” each place it appears and inserting in lieu thereof “702 (a)(8)”. (J) (i) Section 804(a) is amended by striking out paragraph 26 USC 804. (3), and by redesignating paragraphs (4) and (5) as paragraphs (3) and (4),respectively. (ii) Section 243(b)(3)(C)(iii), as redesignated by paragraph 26 USC 243. (21)(A) of this subsection, is amended by striking out “sections 804(a)(4)” and inserting in lieu thereof “sections 804(a)(3)”. (iii) Section 804(a)(2) is amended by striking out “paragraph (5)” and inserting in lieu thereof “paragraph (4)”, and by striking out “paragraph (4)” and inserting in lieu thereof “paragraph (3)”. (iv) Section 809(d)(10) is amended by striking out “section 26 USC 809. 804(a)(4)”, and inserting in lieu thereof “section 804(a)(3)”. (v) Section 1561(a)(3) is amended by striking out “sections 26 USC 1561. 804(a)(4)” and inserting in lieu thereof “sections 804 (a)(3)”. (vi) Section 1564(a)(1)(C) is amended by striking out 26 USC 1564. “sections 804(a)(4)” inserting in lieu thereof “sections 804 (a)(3)”. (K) Section 804(a)(2)(A) is amended by striking out clause, (ii). by inserting “and” at the end of clause (i), and by redesignating clause (iii) as clause (ii). (L) (i) Section 809(d)(8)(A) is amended by striking out clause (ii), by inserting “and” at the end of clause (i), and by redesignating clause (iii) as clause (ii). (ii) Section 809(d)(8)(B) is amended by striking out “subparagraph (A)(iii)” and inserting in lieu thereof “subparagraph (A)(ii)”. (M) Sections 804(a)(1),804(a)(2), 809(a)(1),809(b)(1)(A) and 809(b)(2)(A) are each amended by striking out “, partially tax-exempt interest,”. (N) Section 809(e) is amended by striking out paragraph (6), and by redesignating paragraph (7) as paragraph (6). (O) Section 815(b)(2)(A)(iii) is amended by striking out 26 USC 815. “the deduction for partially tax-exempt interest provided 26 USC 242. by section 242 (as modified by section 804(a)(3)),” and by striking out the comma after “809(d)(8)(B))”. (P) Section 822(c)(2) is amended by striking out “partially tax-exempt interest and”. (Q) Section 822(c)(6)(A) is amended by striking out “or to the deduction provided in section 242 for partially tax-exempt interest”. (R) Section 822(c)(7) is amended by striking out “partially tax-exempt interest and to”. (S) Section 822(d)(2) is amended by striking out “, the deduction provided in subsection (c)(1), and the deduction allowed by section 242 (relating to partially tax-exempt interest)” and inserting in lieu thereof “and the deduction provided in subsection (c)(1)”. (T) Section 832(c)(5)(A) is amended by striking out “or to the deductions provided in section 242 for partially tax-exempt interest”. (U) Section 832(c)(12) is amended by striking out “partially tax-exempt interest and to”. (V) Sections 852(b)(1) and 857(b)(1) are each amended by striking out the last sentence. (W) Section 1244(c)(1)(E) is amended by striking out “sections 172,242,243” and inserting in lieu thereof “sections 172, 243”. (X) Section 1402 (a)(2) is amended by striking out “(other than interest described in section 35)”. (Y) Section 1503(b)(3) is amended by striking out subparagraph (C). (Z) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 35. (AA) The table of sections for part VIII of subchapter B of chapter 1 is amended by striking out the item relating to section 242. (2) Amendment conforming to repeal of section 51.— The table of parts for subchapter A of chapter 1 is amended by striking out the item relating to part V. (3) Amendments conforming to auditions of sections 84 and 65.— (A) Paragraphs (1)(C), (5HA), (6)(D), and (12) of section 341(e) are each amended by striking out “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b)” each place it appears and inserting in lieu thereof “ordinary income”. (B) Section 483(f)(3) is amended by striking out “no part of any gain on such” and inserting in lieu thereof “all of the gain, if any, on such” and by striking out “gain from the sale or exchange of a capital asset or property described in section 1231” and inserting in lieu thereof “ordinary income”. (C) Section 707(b)(2) is amended by striking out “as gain from the sale or exchange of property other than a capital asset” and inserting in lieu thereof “as ordinary income”. (D) Paragraphs (1) and (2) of section 735(a) are each amended by striking out “gain or loss from the sale or exchange of property other than a capital asset” and inserting in lieu thereof “as ordinary income or as ordinary loss, as the case may be”. (E) Section 1236 (b) is amended by striking out “loss from 26 USC 1236. the sale or exchange of property which is not a capital asset” and inserting in lieu thereof “ordinary loss”. (F) Sections 1242 and 1243 are each amended by striking 26 USC 1242, 1243. out “a loss from the sale or exchange of property which is not a capital asset” each place it appears and inserting in lieu thereof “an ordinary loss”. (G) Section 1244 is amended by striking out “a loss from 26 USC 1244. the sale or exchange of an asset which is not a capital asset” each place it appears and inserting in lieu thereof “an ordinary loss”. (H) Section 1248(g)(3)(B), as redesignated by this Act, 26 USC 1248. is amended by striking out “gain from the sale of an asset which is not a capital asset” and inserting “ordinary income”. (I) The following provisions are each amended by striking out “gain from the sale or exchange of property which is not a capital asset” each place it appears and inserting in lieu thereof “ordinary income”: sections 341(a). 871(a)(1)(C)(i) and (ii), 881(a)(3)(A) and (B), 996(d)(1) and (2), 1037(b)(1)(A), 1232(a)(2)(A) and (B), 1232(c), 1246(a), and 1385(c)(2)(C). (J) The following provisions are each amended by striking out “gain from the sale of property which is not a capital asset” and inserting in lieu thereof “ordinary income”: sections 306(a)(1)(A),306(a)(1)(B), and 306(f). (K) The following provisions are each amended by striking out “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231” each place it appears and inserting in lieu thereof “ordinary income”: sections 80(c)(1), 163(d)(3) and (5), 613(a), 617 (d)(1). 995(b)(1)(C). 1238, 1245(a)(1), 1249(a), 1250 (f) and (g), 1251 (b)(3)(B), (c)(1), and (c)(2), and 1252(a)(1). (4) Clerical amendments conforming to additions of sections 64 and 65.— (A) The table of sections for part I of subchapter B of chapter 1 is amended by adding at the end thereof the following new items: “Sec. 64. Ordinary income defined. “Sec. 65. Ordinary loss defined.” (B) The heading for part I of subchapter B of chapter 1 is amended by striking out “AND TAXABLE INCOME” and inserting in lieu thereof “TAXABLE INCOME, ETC.” ETC.” (C) The table of parts for subchapter B of chapter 1 is amended by striking out “and taxable income.” in the item relating to part. I and inserting in lieu thereof “taxable income, etc.” (5) Amendment conforming to repeat, of section 70.— The table of sections for part II of subchapter B of chapter 1 is amended by striking out the item relating to section 76. (6) Amendments conforming to amendment of section 103.— (A) Section 6049(b)(2)(A) is amended by striking out 26 USC 6049. “section 103(a)(1) or (3)” and inserting in lieu thereof “section 103(a)”. (B) Section 852(a)(1)(B), as added by this Act, is amended by striking out “section 103(a)(1)” and inserting in lieu thereof “section 103 (a)”. (7) Amendments conforming to amendment of section 143.— (A) (i) Part V of subchapter B of chapter 1 is amended by striking out section 153 (relating to determination of marital status) and by redesignating section 154 as section 153. (ii) The table of sections for part V of subchapter B of chapter 1 is amended by striking out the items relating to sections 153 and 154 and inserting in lieu thereof the following: “Sec. 153. Cross references.”. (B) Section 152(a)(9) is amended by striking out “section 153” and inserting in lieu thereof “section 143”. (C) Section 153, as redesignated by subparagraph (A) of this paragraph, is amended by adding at the end thereof the following new paragraph: “(5) For determination of marital status, see section 143.” (8) Amendments conforming to amendment of section 151.— (A) The following provisions are each amended by striking out “educational institution (as defined in section 151 Q(4))” each place it appears and inserting in lieu thereof educational organization described in section 170(b)(1)(A)(ii)”: sections 117(a)(1)(A), 117(b)(1), 117(b)(2), 152(d), 170(g)(1)(B)(as redesignated by subsection (a)(28) 26 USC 117, 152, 170, 403. (A)(i) of this section!, and 403(b)(1)(A)(ii). (B) Section 103(c)(3)(A), as redesignated by subsection (a)(17) of this section, is amended by striking out “educational institution (within the meaning of section 151(e)(4))” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”, (C) Section 163(b)(1) is amended by striking out “educational institution (as defined in section 151(e)(4)) and which is provided for a student of such institution” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii) and which is provided for a student of such organization”. (D) (i) Subparagraphs (A), (B), and (C) of section 415 (c)(4) are each amended by striking out “educational institution” each place it appears and inserting in lieu thereof “educational organization”. (ii) Subparagraph (D)(ii) of section 415(c)(4) is amended to read as follows: “(ii) For purposes of this paragraph the term ‘educational organization’ means an educational organization described in section 170(b)(1)(A)(ii).” (iii) Section 415(c)(4) is amended by striking out “educational institutions” from the paragraph heading and inserting in lieu thereof “educational organizations”. (E) Section 508(c)(2)(A) is amended to read as follows: “(A) educational organizations described in section 170 (b)(1)(A)(u),and”. (F) Section 512(b)(15)(B), as redesignated by section 1951(b)(8)(A) of this Act, is amended by striking out “edu-cational institution (as defined in section 151(e)(4))” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”. (G) Section 1303(d) is amended by striking out “educational 26 USC 1303. institution (as defined in section 151(e)(4))” each place it appears and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”. (H) Sections 4941(d)(2)(G)(ii) and 4945(g)(1) each 26 USC 4941, 4945. are amended by striking out “educational institution described in section 151(e)(4)” and inserting in lieu thereof “educational organization described in section 170(b)(1)(AHii)”. (9) Amendments conforming to the amendments of section 152.— Section 2(b)(3)(B) is amended by striking out clause (ii), 26 USC 2. by adding “or” at the end of clause (i), and by redesignating clause (ii) as clause (ii). (10) Amendment conforming to the amendment of section 112.— (A) Section 374(e)(2) is amended by striking out “section Ante, p. 296. 172(j)” and inserting in lieu thereof “172(g)”. (B) Section 904(f)(2)(B)(i) and 904(f)(4)(B)(i), as Ante, p. 1624. amended by this Act, are each amended by striking out “section 172(k)(1)” and inserting in lieu thereof “section 172(h)”. (11) Amendments conforming to repeal of section 187.— (A) Section 48(a)(8) (relating to section 38 property) is 26 USC 48. amended by striking out “187,”. (B) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the item relating to section 187. (C) Section 1082(a)(2)(B) (relating to basis for determining gain 26 USC 1082. or loss) is amemled by striking out “187,”. (D) Section 1245(a)(2) (relating to gain from dispositions 26 USC 1245. of certain depreciable property) is amended by striking out “187,” each place it appears. (12) Amendments conforming to the repeal of section 342.— (A) Section 551(f), as redesignated by paragraph (1)(F) 26 USC 551. of this subsection, is amended by striking out paragraph (3). (B) The table of subparts for part II of subchapter C of chapter 1 is amended by striking out the item relating to subpart C and inserting in lieu thereof: “Subpart C. Collapsible corporations,” (C) The table of sections for subpart C of part II of subchapter C of chapter 1 is amended by striking out the item relating to section 342. (D) The heading of subpart C of part II of subchapter C of chapter 1 is amended to read as follows: “Subpart C— Collapsible Corporations”. (13) Amendments conforming to the repeal of section 303.— The table of sections for subpart C of part III of subchapter C of chapter 1 is amended by striking out the item relating to section 363. (14) Amendments conforming to the repeal of section 373.— (A) Section 372(b)(1) is amended by striking out “373 26 USC 372. (b) or”. (B) Section 374(b) is amended to read as follows: “(b) Basis.— “(1) Railroad corporations.— If the property of a railroad corporation, as defined in section 77(m) of the Bankruptcy Act (11 U.S.C. 205 (m)), was acquired after December 31, 1938, in pursuance of an order of the court having jurisdiction of such corporation— “(A) in a receivership proceeding, or “(B) in a proceeding under section 77 of the Bankruptcy Act, and the acquiring corporation is a railroad corporation (as defined in section 77(m) of the Bankruptcy Act) organized or made use of to effectuate a plan of reorganization approved by the court, in such proceeding, the basis shall be the same as it would be in the hands of the railroad corporation whose property was so acquired, increased in the amount of gain recognized under subsection (a)(2) to the transferor on such transfer. “(2) Property acquired by street, suburban, or interurban electric railway corporation.— If the property of any street, suburban, or interurban electric railway corporation engaged as a common carrier in the transportation of persons or property in interstate commerce was acquired after December 31, 1934, in pursuance of an order of the court having jurisdiction of such corporation in a proceeding under section 77 of the Bankruptcy Act (11 U.S.C. 501 and following), and the acquiring corporation is a street, suburban, or interurban electric railway engaged as a common carrier in the transportation of persons or property in interstate commerce, organized or made use of to effectuate a plan of reorganization approved by the court in such proceeding, then, notwithstanding the provisions of section 270 of the Bankruptcy Act (11 U.S.C. (570), the basis shall be the same as it would be in the hands of the corporation whose property was so acquired.” (C) Section 374(c)(8) is amended by striking out “subsection (b)” and inserting in lieu thereof “subsection (b)(1)”. . .. (D) Section 1232(b)(2) is amended by striking out “section 371, 373, or 374” and inserting in lieu thereof “section 371 or 374”. (E) The table of sections for part IV of subchapter C of chapter 1 is amended by striking out the item relating to section 373. (15) Amendment conforming to repeal of sections 391 through 395.— The table of parts for subchapter C of chapter 1 is amended by striking out the item relating to part VII. (16) Amendment conforming to the amendments of section 481.— Section 381 (c) is amended by striking out paragraph (21). (17) Amendment conforming to the amendments of section 545.— Section 381(c)(15) is amended by striking out “subsections (b)(7) and (c)” and inserting in lieu thereof “subsection (c)”. (18) Amendment conforming to the repeal of section 583.— The table of sections for part I of subchapter H of chapter 1 is amended by striking out the item relating to section 583. (19) Amendment conforming to the repeal of section 592.— The table of sections for part II of subchapter H of chapter 1 is amended by striking out the item relating to section 592. (20) Amendments conforming to the repeal of section 601.— (A) Section 535(b) is amended by striking out paragraph 26 USC 535. (8). (B) (i) Section 545(b) is amended by striking out paragraph 26 USC 545. (6), and by redesignating paragraph (8) as paragraph (6). (ii) Section 545(b)(2) is amended by striking out “paragraph (8)” and inserting in lieu thereof “paragraph (6)”. (iii) Section 545(c)(5) is amended by striking out “subsection (b)(8)” and inserting in lieu thereof “subsection (b)(6)”. (C) The table of parts for subchapter H of chapter 1 is amended by striking out the item relating to part III. (21) Amendments conforming to the repeal of section 615.— (A) (i) Section 243(b)(3)(C) is amended— 26 USC 243. (I) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following; “(ii) $400,000 limitation for certain exploration expenditures under section 617(h)(1),”, and (II) by redesignating clauses (iv) and (v) as clauses (iii) and (iv), respectively. (ii) Section 1564(h)(2)(C) is amended by striking out 26 USC 1564. “section 243(b)(3)(C)(v)” and inserting in lieu thereof “243(b)(3)(C)(iv)”. (B) Section 381(c)(10) is amended to read us follows: 26 USC 381. “(10) Treatment of certain mining develops cent and exploration expenses of distributor or transfer or corporation.— The acquiring corporation shall be entitled to deduct, as if it were the distributor or transferor corporation, expenses deferred under section 616 (relating to certain development expenditures) if the distributor or transferor corporation has so elected. For the purpose of applying the limitation provided in section 617(h), if, for any taxable year, the distributor or transferor corporation was allowed a deduction under section 617(a), the acquiring corporation shall be deemed to have been allowed such deduction.” (C) Section 617(h)(1) is amended by striking out “and 26 USC 617. section 615(a) and the amounts which are or have been treated as deferred expenses under section 615(b)” and inserting in lieu thereof “and subsection (a) of section 615 (as in effect before the enactment of the Tax Reform Act of 1976)”. (D) Section 617(h)(3) is amended to read as follows: “(3) Application of paragraph (2)(b).— Paragraph (2) (B) shall apply with respect to nil amounts deducted before the latest such transfer from the individual or corporation to the taxpayer. Paragraph (2)(B) shall apply only if— “(A) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make paragraph (7), (8), (11), (15), (17), (20), or (22) of section 113(a) of the Internal Revenue Code of 1939 apply to such transfer; or “(B) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make section 334(b), 362 (a) and (b), 372(a), 374(b)(1), 1051, or 1082 apply to such transfer.” (E) Section 617 is amended by adding at the end thereof the following new subsection: “(i) Certain Pre-1970 Exploration Expenditures.— If— “(1) the taxpayer receives mineral property in a transaction as a result of which the basis of such property in the hands of the transferee is determined by reference to the basis in the hands of the transferor, “(2) an election made by the transferor under subsection (e) of section 615(e)(as in effect before the enactment of the Tax Reform Act of 1976) applied with respect to expenditures which were made by him and which were properly chargeable to such property, and “(3) the taxpayer has made or makes an election under subsection (a), then in the application of this section with respect to the transferee, the amounts allowed as deductions under such section 615 to the transferor, which (but for the transferor’s election) would be reflected in the adjusted basis of such property in the hands of the transferee, shall be treated as expenditures allowed as deductions under subsection (a) to the transferor.” (F) Section 703 (b) is amended by striking out “under section 615 (relating to pre–1970 exploration expenditures),”. (G) Section 1016 (a) is amended by striking out paragraph (I?)-. (H) The table of sections for part. I of subchapter I of chapter 1 is amended by striking out the item relating to section 615. (22) Amendments conforming to the repeal of section 632.— (A) The table of sections for part III of subchapter I of chapter 1 is amended by striking out the item relating to section 632. (B) Section 5(b) is amended by striking out paragraph (1). (23) Amendment conforming to the repeal of section 771.— The table of parts for’ subchapter K of chapter 1 is amended by striking out the item relating to part IV. (24) Amendment conforming to the amendment of section 802.— Section 815(c)(3)(B) is amended by striking out “(determined without regard to section 802(a)(3))”. (25) Amendment conforming to the amendment of section 812.— Section 844(b)(2) is amended by striking out “section 812(b)(1)(A)(iii)” and inserting in lieu thereof “section 812 (b)(1)(C)”. (26) Amendments conforming to the amendments of section 804.— (A) Paragraphs (5) and (6) of section 861(a) (relating to items treated as income from within United States) are each amended by striking out in the heading “sale” and inserting in lieu thereof “sale or exchange”, and by striking out “sale” in the text and inserting in lieu thereof “sale or exchange”. (B) section 861(e)(1) (relating to income from certain aircraft and vessels) is amended by striking out “sale or other disposition” and inserting in lieu thereof “sale, exchange, or other disposition”. (C) Paragraphs (5) and (6) of section 862(a) (relating to items treated as income from without the United States) 26 USC 863. and paragraphs (2) and (3) of section 863(b) (relating to sources of income) are each amended by striking out “sale” and inserting in lieu thereof “sale or exchange”. (D) Paragraph (2) of section 863(b) (relating to sources 26 USC 863. of income) is amended by striking out “sold” each place it appears and inserting in lieu thereof “sold or exchanged”. (27) Amendments conforming to the repeal of section 972.— (A) Section 970(b)(1) (relating to inclusion of certain 26 USC 970. previously excluded amounts of sub part F income) is amended by striking out “application of section 972” and inserting in lieu thereof “treatment (under section 972 as in effect before the date of the enactment of the Tax Reform Act of 1976) of two or more controlled foreign corporations which are export trade corporations as a single controlled foreign corporation ”. (B) The table of sections for subpart G of part III of subchapter N of chapter 1 is amended by striking out the item relating to section 972. (28) Amendments conforming to the amendment of section 1001.— (A) Subsection (c) of section 331 is amended to read as 26 USC 331. follows: “(c) Cross Reference.— “For general rule for determination of the amount of gain or loss recognized, see section 1001.” (B) (i) Section 1002 (relating to recognition of gain or 26 USC 1002. loss) is repealed. (ii) The table of sections for part I of subchapter 0 of chapter 1 is amended by striking out the item relating to section 1002. (29) Amendments conforming to the repeal of section 1920.— (A) The third sentence of subsection (a) of section 1016 is 26 USC 1016. amended by striking out “under section 1020” and inserting in lieu thereof “under section 1020 (as in effect before the date of the enactment of the Tax Reform Act of 1976)”, Ante, p. 1520; (B) The table of sections for part II of subchapter O of chapter 1 is amended by striking out the item relating to section 1020. (30) Amendments conforming to the repeal of section 1022.— (A) Section 1016(a) is amended— 26 USC 1016. (i) by striking out paragraph (21), and (ii) by redesignating paragraphs (20) and (22) as paragraphs (19) and (20), respectively. (B) The amendment made by subparagraph (A)(i) shall 26 USC 1016 note. apply with respect to stock or securities acquired from a decedent dying after the date of the enactment of this Act. (C) Tho table of sections for part II of subchapter O of chapter 1 is amended by striking out the item relating to section 1022, ~ (31) Amendments conforming to amendments of section 1033.— (A) Section 1250(d)(4)(B) is amended by striking out 26 USC 1250. “1033(a)(3)(A)” and inserting in lieu thereof “1033(a)(2)(A)” (B) Section 1250(d)(4)(C) and (D) are each amended by striking out “1033(a)(3)” and inserting in lieu thereof “1033(a)(2)”. (C) Section 6212(c)(2)(B) is amended by striking out “1033(a)(3)(C) and (D)” and inserting in lieu thereof “1033 (aj (2)(C) and (D)”. (D) Section 6504(4) is amended by Striking out “1033(a)(3)(C) and (D)” and inserting in lieu thereof “1033(a)(2)(C) and (D)”. (E) Sections 1071(b) and 1250(d)(4)(D) are each amended by striking out “1033(c)” and inserting in lieu thereof “1033(b)”. (32) Amendments conforming to the repeal of section 1111.— (A) Section 301 is amended by striking out subsection (f), and by redesignating subsection (g) as subsection (e). (B) (i) Section 312 is amended by striking out subsection (k), and by redesignating subsections (1) and (m) as subsections (j) and (k), respectively, (ii) Section 1246(g) is amended by striking out “312(1)” and inserting in lieu thereof “312 (j)”. (iii) Sections 964(a) and 1248(c)(1) are each amended by striking out “312 (m)(3)” and inserting in lieu thereof “312 (k)” (iv) Subsection (d) of section 1377, as added by this Act, is amended by striking out “312(m)” and inserting in lieu thereof “312(k)”. (C) Section 535(b) is amended by striking out paragraphs (9) and (10). (D) Section 543(a)(1) is amended by inserting “and” at the end of subparagraph (A), and by striking out subparagraphs (B) and (C) and inserting in lieu thereof the following: “(B) interest on amounts set aside in a reserve fund under section 511 or 607 of the Merchant Marine Act, 1936 (46 U.S.C. 1161 or 1177).” (E) Section 545(b) is amended by striking out paragraphs (10) and (11). (F) Section 553(a)(1) is amended to read as follows: “(1) Dividends, etc.— Dividends, interest, royalties, and annuities.” (G) Section 556(b) is amended by striking out paragraphs (7) and (8). (H) Section 561(b) is amended to read as follows: “(b) Special Rules Applicable.— In determining the deduction for dividends paid, the rules provided in section 562 (relating to rules applicable in determining dividends eligible for dividends paid deduction) and section 563 (relating to dividends paid after the close of the taxable year) shall be applicable.” (I) The table of parts for subchapter O of chapter 1 is amended by striking out the item relating to part IX. (33) Amendments conforming to amendment of section 1222.— (A) Section 57(a)(9)(A) is amended by striking out “the amount by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “the net capital gain”. (B) So much of the first sentence of section 57(a)(9)(B) as precedes “by a fraction” is amended to read as follows: “In the case of a corporation having a net capital gain for the taxable year, an amount equal to the product obtained by multiplying the net capital gain”. (C) Section 527(b)(2) is amended by striking out “net 26 USC 527. section 1201 gain” and inserting in lieu thereof “net capital gain”. (D) Sections 535(b)(6) and 545(b)(5) are each amended— 26 USC 535, 545. (1) by striking out from the paragraph heading “Long-term” and inserting in lieu thereof “Net”, (2) by striking out from the text “the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such year” each place it appears and inserting in lieu thereof’ “the net capital gain for the taxable year”, and (3) by striking out from the text “such excess” each place it appears and inserting in lieu thereof “such net capital gain”. (E) Section 802(a)(2) is amended— 26 USC 802. (i) by striking out “the net long-term capital gain of any life insurance company exceeds the net short-term capital loss” and inserting in lieu thereof “any life insurance company has a net capital gain”, and (ii) by striking out “such excess” each place it appears and inserting in lieu thereof “such net capital gain”. (F) Section 804(a)(2) is amended by 26 USC 804. striking out “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (G) Sections 809(b)(1)(B) and 809(b)(2)(B) are each 26 USC 809. amended by striking out “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (H) Section 815(b)(2)(A)(ii) is amended by striking out 26 USC 815. “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (I) Section 852(b)(2)(A) is amended by striking out 26 USC 852. “the excess, if any, of the net long-term capital gain over the net short-term capital loss” and inserting in lieu thereof “the amount of the net capital gain, if any”. (J) (i) Section 852(b)(3)(A) is amended to read as follows: “(A) Imposition of tax.— There is hereby imposed for each taxable year in the case of every regulated investment company a tax, determined as provided in section 1201 (a), on the excess, if any, of the net capital gain over the deduction for dividends paid (as defined in section 561) determined with reference to capital gain dividends only.” (ii) The second sentence of section 852(b)(3)(C) is amended by striking out “excess of the net long-term capital gain over the net short-term capital loss” each place it appears and inserting in lien thereof “net capital gain”. (K) The second sentence of section 857(b)(3)(C) is 26 USC 857. amended by striking out “excess of the net long-term capital gain over the net short-term capital loss” each place it appears and inserting in lieu thereof “net capital gain”. (L) Section 1201(b) is amended by striking out “net section 26 USC 1201. 1201 gain” each place it appears and inserting in lieu thereof “net capital gain”. (M) The first sentence of section 1202 is amended to read as follows: “If for any taxable year, a taxpayer other than a corporation has a net capital gain, 50 percent of the amount of the net capital gain shall be a deduction from gross income.” (N) Sections 381(e)(3)(B), 381(c)(3)(C), 852(d), 4940 (c)(1), and 4940(c)(4) are each amended by striking out “net capital gain” and inserting in lieu thereof “capital gain net income”. (O) Section 1212(a)(1) is amended by striking out “net capital gain” each place it appears and inserting in lieu thereof “capital gain net income”, and by striking out “net capital gains” and inserting in lieu thereof “capital gain net income”. (P) Section 1247(a)(1)(B) is amended by striking out “the excess (determined as if such corporation were a domestic corporation) of the net long-term capital gain over the net short-term capital loss” and inserting in lieu thereof “the amount (determined as if such corporation were a domestic corporation) of the net capital gain”. (Q) (i) Section 1375(a)(1) is amended by striking out “the excess of the corporation’s net long-term capital gain over its short-term capital loss” and inserting in lieu thereof “the corporation’s net capital gain”. (ii) The second sentence of section 1375(a)(1) is amended by striking out “such excess” and inserting in lieu thereof “such net capital gain”. (iii) Section 1375(a)(3) is amended by striking out “the excess of an electing small business corporation’s net long-term capita] gain over its net short-term capital loss” and inserting in lieu thereof “an electing small business corporation’s net capital gain”. (R) The following provisions are each amended by striking out “the excess of the net long-term capital gain over the net short-term capital loss,” and inserting in lieu thereof “the net capital gain”: Sections 1247(a)(2)(A)(i), 1247(a)(2) 26 USC 1247, 1378. (C), 1247(d)(1) and (2). 1378(a)(1), 1378(b)(1), and 1378 (c)(8). (34) Amendment conforming to the repeal of section 1240.— The table of sections of part IV of subchapter P of chapter 1 is amended by striking out the item relating to section 1240. (35) Amendment conforming to the repeal of section 1315.— The table of sections for part II of subchapter Q of chapter 1 is amended by striking out the item relating to section 1315. (36) Amendments conforming to the repeal of section 1321.— (A) Section 472 is amended by striking out subsection (f). (B) Section 6422, as amended by this Act, is amended by striking out paragraph (2), and by redesignating paragraphs (3) through (13) as paragraphs (2) through (12), respectively. (C) Section 6504 is amended by striking out paragraph (1). (D) Section 6515 is amended by striking out paragraph (1). (E) The table of parts for subchapter Q of chapter 1 is amended by striking out the item relating to part III. (37) Amendments conforming to the repeal of sections 1331 through 1337.— (A) The third sentence of section 901(a) is amended by 26 USC 901. striking out “under section 1333 (relating to war loss recoveries) or”. _ . (B) Section 936(a)(2), as added by this Act, is 26 USC 936. amended— (i) by inserting “or” at the end of subparagraph (C), and (ii) by striking out subparagraph (D). (C) Section 6212(c),(2) is amended by striking out subparagraph 26 USC 6212. (D). (D) Section 6515 is amended by striking out paragraph 26 USC 6515. (6). (E) Section 6515, as amended by this Act, is amended by striking out paragraph (2), and by redesignating paragraphs (3), (4), (5), (6), (7), and (8) as paragraphs (1), (2), (3), (4). (5),and (6) respectively. (F) The table of parts tor subchapter Q of chapter 1 is amended by striking out the item relating to part IV. (38) Amendment conforming to the repeal of section 1342.— The table of sections for part V of subchapter Q of chapter 1 is amended by striking out the item relating to section 1342. (39) Amendments conforming to the repeal of section 1340.— (A) The table of sections for part VI of subchapter Q of chapter 1 is amended by striking out the item relating to section 1346. (B) Section 6504 is amended by striking out paragraph Post, p. 1829. (7). (40) Amendment conforming to amendment of section 1372.— Section 58(d)(2) is amended by striking out “, notwithstanding 26 USC 58. the provisions of section 1371(b)(1),” (41) Amendment conforming to the repeal of section 1465.— The table of sections for subchapter C of chapter 3 is amended by striking out the item relating to section 1465. (c) Amendments to Provisions Referring to Territories.— (1) Section 37(f) is amended by striking out “a Territory,”. Ante, p. 1559. 26 USC 105, 273, 454. 26 USC 117. (2) Sections 105(e)(2), 273, and 454(b)(2) are each amended by striking out a Territory.”. (3) Section 117(b)(2)(A)(iv) is amended by striking out “a territory,”. (4) Section 162(a) is amended by striking out “territory”. 26 USC 162. 26 USC 581. (5) Section 581 is amended by striking out “, of any State, or of any Territory” and inserting m lieu thereof “or of any State”, and by striking out “, Territorial,”. (6) Section 801(b)(3) is amended by striking out “or 26 USC 801. Territorial”. (7) Section 861(a)(1) is amended by striking out “, any Territory, 26 USC 861. any political subdivision of a Territory.”. (8) Paragraphs (6) and (7) of section 1014(b) are each 26 USC 1014. amended by striking out “Territory.”. (9) Section 1221 (5) is amended by striking out “or Territory,”. 26 USC 1221. 26 USC 2 note. (d) Effective Date.— Except as otherwise expressly provided in this section, the amendments made by this section shall apply with respect to taxable years beginning after December 31, 1976. The amendments made by subsections (a)(29) and (b)(10) shall apply with respect to taxable years ending after the date of the enactment of this Act. SEC. 1902. AMENDMENTS OF SUBTITLE B; ESTATE AND GIFT TAXES. (a) In General.— (1) Amendments of section 2012.— (A) Section 2012(b) (relating to credit for gift tax) is amended— (i) by Striking out “(b) in applying,” and inserting in lieu thereof “(b) Valuation Reductions.—In applying,”, and (ii) by striking out in paragraphs (2) and (3) “ deduction)—then” and inserting in lieu thereof “deduction), then”. (B) Section 2012(c) (relating to gift by spouse or third party) is amended by striking out “(c) Where the decedent” and inserting in lieu thereof “(c) Where Gift Considered Made One-Half by Spouse.—Where the decedent”. (C) Section 2012(d)(1) (relating to computation of amount of gift tax) is amended by striking out “(d)(1) For purposes of” and inserting in lieu thereof the following: “(d) Computation of Amount of Gift Tax Paid.— “(1) Amount of tax.— For purposes of”. (D) Section 2012(d)(2) (relating to credit for gift tax) is amended by striking out “(2) For purposes” and inserting in lieu thereof: “(2) Amount of gift.—For purposes”., (2) Amendments of section 2013.— Section 2013(d)(3) is amended by striking out “, or the corresponding provision of prior law,”. (3) Amendment of section 2038.— Section 2038 (relating to revocable transfers) is amended by striking out subsection (c) (relating to effect of disability in certain cases). (4) Amendments of section 2055.— (A) Section 2055(b) (relating to powers of appointment) is amended to read as follows: “(b) Powers of Appointment.— Property includible in the decedent’s gross estate under section 2041 (relating to powers of appointment) received by a donee described in this section shall, for purposes of this section, be considered a bequest of such decedent.” (B) Section 2055(f) (relating to cross references) is amended to read as follows: (f) Cross References.— “(1) For option as to time for valuation for purpose of deduction under this section, see section 2032. “(2) For exemption of gifts and bequests to or for the benefit of Library of Congress, see section 5 of the Act of March 3, 1925, as amended (2 U.S.C. 161). “(3) For treatment of gifts and bequests for the benefit of the Office of Naval Records and History as gifts or bequests to or for the use of the United States, see section 7222 of title 10, United States Code. “(4) For treatment of gifts and bequests to or for the benefit of National Park Foundation as gifts or bequests to or for the use of the United States, see section 8 of the Act of December 18, 1967 (16 U.S.C. 191). “(5) For treatment of gifts, devises, or bequests accepted by the Secretary of State under the Foreign Service Act of 1946 as gifts, devices, or bequests to or for the use of the United States, see section 1021(e) of that Act (22 U.S.C. 869(e)) . “(6) For treatment of gifts or bequests of money accepted by the Attorney General for credit to ‘Commissary Funds, Federal Prisons/ as gifts or bequests to or for the use of the United States, see section 2 of the Act of May 15, 1952, as amended by the Act of July 9, 1952 (31 U.S.C. 725s–4). “(7) For payment of tax on gifts and bequests of United States obligations to the United States, see section 24 of the Second Liberty Bond Act (31 U.S.C. 757e), “(8) For treatment of gifts and bequests for benefit of the Naval Academy as gifts or bequests to or for the use of the United States, see section 6973 of title 10, United States Code. _ “(9) For treatment of gifts and bequests for benefit of the Naval Academy Museum as gifts or bequests to or for the use of the United States, see section 6974 of title 10, United States Code. “(10) For exemption of gifts and bequests received by National Archives Trust Fund Board, see section 2308 of title 44, United States Code.” (5) Amendments of section 2100.— (A) Section 2106(a)(2)(F) (relating to cross references 26 USC 2106. concerning the charitable deduction for estate tax purposes) is amended to read as follows: “(F) Cross References.— “(1) For option as to time for valuation for purposes of deduction under this section, see section 2032. “(2) For exemption of certain bequests for the benefit of the United States and for rules of construction for certain bequests, see section 2C55(O.” (B) Section 2106 (relating to taxable estate of nonresidents) is amended by striking out subsection (c) (relating to treatment of United States bonds). (6) Amendment of sections 2107 and 2108.— Section 2107(a) (relating 26 USC 2107, 2108. to estate tax on expatriates) and section 2108(a) (relating to application of pre–1967 estate tax provisions) are each amended by striking out “the date, of enactment of this section” and inserting in lieu thereof “November 13, 1966”. (7) Amendment relating to section 2201.— (A) Section 6(b)(1) of the Act of January 2, 1975 (Public Law 93–597; 88 Stat. 1950) is amended by striking out 26 USC 2201. “Section 2210” and inserting in lieu thereof “Section 2201”. (B) The amendment made by subsection (A) is effective 26 USC 2201 note. 26 USC 2202. July 1, 1973. (8) Repeal of section 2202.— Section 2202 (relating to missionaries in foreign service) is repealed. (9) Amendment of section 2204.— The last sentence of section 2204(b) (relating to the discharge from personal liability of a fiduciary other than the executor) is amended by striking out “has not been” and inserting in lieu thereof 26 USC 2204. “has been”. (10) Amendment of section 2501.— Section 2501(a)(1) (relating 26 USC 2501. to imposition of gift tax) is amended to read as follows: “(1) General rule.— A tax, computed as provided in section 2502, is hereby imposed for each calendar quarter on the transfer of property by gift during such calendar quarter by any individual, resident or nonresident.” (11) Amendment of section 2522.— Subsection (d) of section 26 USC 2522. 2522 (relating to cross references) is amended to read as follows: “(d) Cross Reference.— “For exemption of certain gifts to or for the benefit of the United States and for rules of construction with respect to certain gifts, see section 2055(f).” (12) Amendments to sections referring to territories.— (A) The following provisions are each amended by striking out “Territory,”: sections 2055(a)(1), 2056(c)(2)(B), 26 USC 2055, 2056, 2106. and 2106(a)(2)(A)(i). (B) The following provisions are each amended by striking out “or Territory”: sections 2011(a), 2011(e), and 2053 (C) Section 2016 is amended by striking out “Territory or”. (D) Sections 2522(a)(1) and 2522(b)(1) are. each amended by striking out “Territory,”. (E) Section 2523(f)(1) is amended by striking out “Territory, or”. (b) Conforming and Clerical Amendments.— (1) Amendment conforming to repeal of section 2202.— The table of sections for subchapter C of chapter 11 is amended by striking out the item relating to section 2202. (2) Amendments conforming to amendment of section 2055.— (A) Section 6503, as amended by this Act, is amended by striking out subsection (e), and by redesignating subsections (f), (g) (h), and (i) as subsections (e), (f), (g), and (h), respectively. (B) Section 6167(h)(2) is amended by striking out “section 6503(f)” and inserting in lieu thereof “section 6503(e)”. (c) Effective Dates.— (1) Estate tax amendments.— The amendments made by paragraphs (1) through (10), and paragraphs (14)(A), (B),and (C), of subsection (a), and by subsection (b) shall apply in the case of estates of decedents dying after the date of the enactment of this Act, and the amendment made by paragraph (11) of subsection (a) shall apply in the case of estates of decedents dying after December 31, 1970. (2) Gift tax amendments.— The amendments made by paragraphs (12), (13), and (14)(D) and (E) of subsection (a) shall apply with respect to gifts made after December 31, 1976. SEC. 1903. AMENDMENTS OF SUBTITLE C; EMPLOYMENT TAXES. (a) In General.— (1) Amendments of sections 3101 and 3111.— (A) Section 3101(a) (relating to rate of tax on employees for old-age, survivors, and disability insurance) and section 26 USC 3111. 3111(a) (relating to rate of tax on employers for such insurance) are each amended by striking out paragraphs (1), (2), (3), and (4), and by redesignating paragraphs (5) and (6) as paragraphs (1) and (2), respectively. (B) Section 3101(b) (relating to rate of tax on employees for hospital insurance) and section 3111(b) (relating to rate of tax on employers for such insurance) are each amended by striking out paragraphs (1) and (2), and by redesignating paragraphs (3), (4), (5), and (6) as paragraphs (1), (2), (3), and (4), respectively. (2) Repeal of section 3113.— Section 3113 (relating to application of social security tax on District of Columbia credit unions) is repealed. (3) Amendments of section 3121.— (A) Section 3121(b) (relating to employment) is amended— (i) by striking out “performed after 1936 and prior to 1955 which was employment for purposes of subchapter A of chapter 9 of the Internal Revenue Code of 1939 under the law applicable to the period in which such service was performed, and any service, of whatever nature, performed after 1954” and inserting in lieu thereof “, of whatever nature, performed”, and (ii) by striking out “, in the case of service performed after 1954,”. (B) Section 3121(b)(1) is amended by striking out “65 26 USC 3121. Stat. 119;”. (C) Section 3121(b)(6)(B)(v) is amended by striking out “Secretary of the Treasury” and inserting in lieu thereof “Secretary of Transportation”. (D) Section 3121(g)(3) (relating to agricultural labor) is amended by striking out “46 Stat. 1550, § 3;”. (E) Section 3121(k)(1) (relating to exemption of certain organizations) is amended by striking out subparagraphs (F) and (H) and by redesignating subparagraph (G) as subparagraph (F). (F) Section 3121 (1)(2) (relating to employees of foreign subsidiaries) is amended by striking out “, but in no case prior to January 1, 1955”. (G) Section 3121 (m)(1) (relating to service in the uniformed services) is amended by striking out “after December 1956”. (4) Amendments of section 3122.— The last sentence of section 3122 (relating to Federal service) is amended by striking out 26 USC 3122. “Secretary” each place it appears and inserting in lieu thereof “Secretary of Transportation”. (5) Amendment of section 3123.— Section 3125(c) (relating 26 USC 3125. to returns in the case of Governmental employees in the District of Columbia) is amended by striking out “Commissioners of the District of Columbia or such agents as they may designate” and by inserting in lieu thereof “Mayor of the District of Columbia of such agents as he may designate”. (6) Amendment of section 3201.— Section 3201 (relating to 26 USC 3201. rate of tax on railroad employees) is amended— (A) by striking out “oi the Internal Revenue Code of 1954” each place it appears; (B) by striking out “of such Code”; (C) by striking out “after September 30, 1973, as is” and inserting in lieu thereof “as is”; and (D) by striking out “any month after September 30, 1973” and inserting in lieu thereof “any month”. (7) Amendments of section 3202.— (A) The second sentence of section 3202(a) (relating to 26 USC 3202. reduction of tax by railroad employer) is amended— (i) by striking out “after September 30, 1973,” each place it appears; (ii) by striking out “after September 30, 1973 and the aggregate” and inserting in lieu thereof “and the aggregate” (iii) by striking out “of the Internal Revenue Code of 1954” each place it appears; and (iv) by inserting a comma immediately after “for any month” each place it appears. (B) Section 3202(b) (relating to indemnification of employer) is amended by striking out “made”. (8) Amendments of section 3211.— Section 3211(a) (relating 26 USC 3211. to rate of tax on railroad employee representatives) is amended— (A) by striking out “3111(a), 3111(b)” and inserting in lieu thereof “3111(a), and 3111(b)”; (B) by striking out “of the Internal Revenue Code of 1954” each place it appears; (C) by striking out “rendered by him after September 30, 1973,” and inserting in lieu thereof “rendered by him”; and (D) by striking out “after September 30, 1973”. (9) Amendments of section 3221.— (A) The first sentence of section 3221(a) (relating to rate of tax on railroad employers) is amended— (i) by striking out “after September 30, 1973,” each place it appears; (ii) by striking out “after September 30, 1973: except that” and inserting in lieu thereof “, except that”; (iii) by striking out “after September 30, 1973 of the aggregate” and inserting in lieu thereof “of the aggregate”; (iv) by striking out “of the Internal Revenue Code of 1954” each place it appears; and (v) by inserting a comma before “the tax imposed”. (B) Section 3221(b) (relating to rate of tax on railroad employers) is amended to read as follows: “(b) The rate of tax imposed by subsection (a) shall be increased by the rate of tax imposed with respect to wages by section 3111(a) plus the rate imposed by section 3111(b).” (C) Section 3221(c) (relating to additional railroad retirement tax) is amended— (i) by striking out “(1) at the rate of 2 cents for the period beginning November 1, 1966, and ending March 31, 1970, and (2) commencing April 1, 1970,” and (ii) by striking out “commencing with the quarter beginning April 1, 1970”. (10) Amendments of section 3231.— (A) Section 3231(a)(defining employer) is amended by striking out “44 Stat. 577;”. (B) Section 3231(b)(defining employee) is amended by striking out. “50 Stat. 312;”. (C) Section 3231(e)(defining employee representative) is amended by striking out “44 Stat. 577;”. (D) Section 3231(d)(7)(defining service) is amended by striking out “50 Stat, 308;”. (11) Amendments of section 3301.— Section 3301 (relating to Federal unemployment tax rate) is amended— (A) by striking out “the calendar year 1970 and each calendar year thereafter” and inserting in lieu thereof “each calendar year”, and (B) by striking out the last sentence. (12) Amendments of section 3302.— (A) Section 3302(a) (relating to credits against tax) is amended by striking out “(10month period in the case of October 31, 1972)”. (B) Section 3302(b) (relating to additional credit) is amended— (i) by striking out “(10month period in the case of October 31, 1972)”, and (ii) by striking out “12 or 10month period, as the case may be,” and inserting in lieu thereof “12month period”. (C) (i) Section 3302(c) (relating to limitation on credits 26 USC 3302. against unemployment tax) is amended by striking out paragraph (2) and the unnumbered paragraph immediately following such paragraph (2) (relating to advances made to a State unemployment account before September 13, 1960), and by redesignating paragraphs (3) and (4) as paragraphs (2) and (3),respectively. (ii) Section 3302(c)(2) (relating to advances made to a State unemployment account after September 12, 1960), as redesignated by clause (i) of this subparagraph, is amended by striking out “on or after the date of the enactment of the Employment Security Act of 1960”, and by striking out “paragraphs (1) and (2)” and inserting in lieu thereof “paragraph (1)”. (iii) Section 3302(c)(3) (relating to reductions with respect to certain agreements under the Trade Act of 1974),as redesignated by clause (i) of this subparagraph, is amended by striking out “paragraphs (1), (2), and (3)” and inserting in lieu thereof “paragraphs (1) and (2)”. (iv) Section 3302 (d)(3) (relating to effect of repayment of advances) is amended by striking out “or (3)”. (v) Section 3302(d)(4), (5), and (6) (relating to special rules) are each amended by striking out “subsection (c)(3)” each place it appears and inserting in lieu thereof “subsection (c)(2)”. (vi) Section 3302(d)(7) (relating to determination and certification of percentages) is amended by striking out “subsection (c)(3)(B) or (C)” and inserting in lieu thereof “subsection (c)(2)(B) or (C)”. (D) Section 3302(d) (relating to special rules for credits against the unemployment tax) is amended by striking out paragraph (8)(a cross reference). (13) Amendments to section 3303.— Section 3303 (b) (relating 26 USC 3303. to certification with respect to additional credit allowance) is amended— (A) by striking out “(10month period in the case of October 31, 1972) ” each place it appears, (B) by striking out “12 or 10month period, as the case may be,” each place it appears in paragraphs (1) and (2), and inserting in lieu thereof “12month period”, and (C) by striking out “12 or 10month period, as the case may be,” in paragraph (3) and inserting in lieu thereof “12month period,”. (14) Amendments to section 3304.— (A) Section 3304(a)(3) (relating to requirements) is 26 USC 3304. amended by striking out “49 Stat, 640; 52 Stat. 1104, 1105;”. (B) Section 3304(c) (relating to certification) is amended by striking out “(10month period in the case of October 31, 1972)”. (15) Amendments of section 3305.— (A) Section 3305(g) (relating to vessels operated by 26 USC 3305. general agents of the United States) is amended by striking out “on or after July 1, 1953,”. (B) Section 3305 (h) (relating to certain contributions to States) is amended by striking out “on or after July 1, 1953, and”. (C) Section 3305(j) (relating to denial of credits in certain cases) is amended by striking out “after December 31, 1971,”. (16) Amendments of section 3300.— (A) Section 3306(c)(9) (relating to the exclusion of service performed by certain employees and employee representatives from the definition of employment) is amended by striking out “52 Stat. 1094, 1095;”. (B) Section 3306(c)(18) (relating to the exclusion of certain service performed by nonresident aliens from the definition of employment) is amended by inserting after the “Immigration and Nationality Act, as amended” the following: “(8U.S.C. 1101(a)(15)(F) or (J))”. (C) Section 3306(f) (relating to the definition of an unemployment fund) is amended by striking out “49 Stat. 640; 52 Stat. 1104, 1105;”. . (D) Section 3306(n) (relating to vessels operated by general agents of the United States) is amended by striking out “on or after July 1, 1953,”. (17) Amendment of section 3402.— Section 3402(1)(3)(B) (relating to marital status) is amended by striking out “section 2(b)” and inserting in lieu thereof “section 2 (a)”. (b) Amendment Conforming to the Repeal of Section 3113.— The table of sections for subchapter B of chapter 21 is amended by striking out the item relating to section 3113. (c) Amendments to Profusions Referring to Territories.— Sections 3401(c) and 3404 are each amended by striking out “Territory,” each place it appears. (d) Effective Dates.— The amendments made by this section shall apply with respect to wages paid after December 31, 1976, except that the amendments made to chapter 22 of the Internal Revenue Code of 26 USC 3201. 1954 shall apply with respect to compensation paid for services rendered after December 31, 1976. SEC. 1904. AMENDMENTS OF SUBTITLE D; MISCELLANEOUS EXCISE TAXES. (a) In General.— (1) Amendments of chapter 31.— (A) So much of chapter 31 (relating to retailers excise taxes) as precedes section 4041 is amended to read as follows: “Sec. 4041. Imposition of tax.” (B) Section 4041(g) (relating to exemptions from fuel taxes) is amended to read as follows: “(g) Other Exemptions.— Under regulations prescribed by the Secretary, no tax shall be imposed under this section— “(1) on any liquid sold for use or used as supplies for vessels or aircraft (within the meaning of section 4221(d)(3)); “(2) with respect to the sale of any liquid for the exclusive use of any State, any political subdivision of a State, or the District of Columbia, or with respect to the use by any of the foregoing of any liquid as a fuel; “(3) upon the sale of any liquid for export, or for shipment to a possession of the United States, and in due course so exported or shipped; and “(4) with respect to the sale of any liquid to a nonprofit educational organization for its exclusive use, or with respect to the use by a nonprofit educational organization of any liquid as a fuel. For purposes of paragraph (4), the term ‘nonprofit educational organization’ “Nonprofit educational organization.” means an educational organization described in section 170(h)(1)(A)(ii) which is exempt from income tax under section 501(a). The term also includes a school operated as an activity of an organization described in section 501(c)(3) which is exempt from income tax under section 501(a), if such school normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.” (C) Section 4041 (relating to tax on fuels) is amended by 26 USC 4041. adding at the end thereof the following new subsection: “(i) Sales by United States, Etc.— The taxes imposed by this section shall apply with respect to liquids sold at retail by the United States, or by any agency or instrumentality of the United States, unless sales by such agency or instrumentality are by statute specifically exempted from such taxes.” (D) Chapter 31 is amended by striking out section 4042 (a cross reference) and subchapter F (special provisions 26 USC 4042, 4054–4058. applicable to retailers taxes). (2) Amendments of section 421a.— (A) Section 4216 (relating to definition of price) is 26 USC 4216. amended by redesignating subsections (e), (f), and (g) as subsections (d), (e).and (f), respectively. (B) Paragraphs (3), (4). and (5) of section 4216(b) (relating to constructive sales price) are each amended by striking out “subsections (a) and (f)” each place it appears and inserting in lieu thereof “subsections (a) and (e)”. (3) Amendment of section 4217.— Section 4217(d) (relating 26 USC 4217. to lease treated as sale) is amended by striking out paragraph (4) (relating to certain 1958 transitional rules). (4) Repeal of section 4223.— Section 4223 (relating to floor-stock 26 USC 4226. taxes imposed before 1967) is repealed. (5) Amendment of section 4227.— Section 4227 (relating to 26 USC 4227. cross references) is amended to read as follows: “SEC. 4227. CROSS REFERENCE. “For credit for taxes on tires and inner tubes, see section 6416(c).” (6) Amendment of section 4263.— Section 4253 (relating to 26 USC 4253. exemptions from the tax on communications services) is amended by adding at the end thereof the following new subsections: “(i) State and Local Governmental Exemption.— Under regulations prescribed by the Secretary, no tax shall be imposed under section 4251 upon any payment received for services or facilities furnished to the government of any State, or any political subdivision thereof, or the District of Columbia. “(j) Exemption foe Nonprofit Educational Organizations.— Under regulations prescribed by the Secretary, no tax shall be imposed under section 4251 on any amount paid by a nonprofit educational organization for services or facilities furnished to such organization. For purposes of this subsection, the term ‘nonprofit educational organization’ means an educational “Nonprofit educational organization.” organization described in section 170(b)(1)(A)(ii) which is exempt from income tax under section 501(a). The term also includes a school operated as an activity of an organization described in section 501(c)(3) which is exempt from income tax under section 501(a), if such school normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.” (7) Amendments of section 4201.— (A) Subsections (a) and (b) of section 4261 (relating to tax on transportation of persons by air) are each amended by striking out “which begins after June 30, 1970,”. (B) Section 4261(c) is amended by striking out “and begins after June 30, 1970”. (8) Amendment of section 4271.— Section 4271 (a) (relating to tax on transportation of property by air) is amended by striking out “which begins after June 30, 1970,”. (9) Repeal of section 4292.— Section 4292 (relating to State and local governmental exemption from the tax on communications services) is repealed. (10) Repeal of section 4284.— Section 4294 (relating to exemption of nonprofit educational organizations from the tax on communications services) is repealed. (11) Repeal of section 4295.— Section 4295 (across reference) is repealed. (12) Amendment of of after 34.— Chapter 34 (relating to documentary stamp taxes) is amended to read as follows: “CHAPTER 34— POLICIES ISSUED BY FOREIGN INSURERS “Sec. 4371. Imposition of tax. “Sec. 4372. Definitions. “Sec. 4373. Exemptions. “Sec. 4374. Liability for tax. “SEC. 4371. IMPOSITION OF TAX. “There is hereby imposed, on each policy of insurance, indemnity bond, annuity contract, or policy of reinsurance issued by any foreign insurer or reinsurer, a tax at the following rates: “(1) Casualty insurance and indemnity bonds.— 4 cents on each dollar, or fractional part thereof, of the premium paid on the policy of casualty insurance or the indemnity bond, if issued to or for, or in the name of, an insured as defined in section 4372(d); “(2) Life insurance, sickness and accident policies, and annuity contracts.— 1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of life, sickness, or accident insurance, or annuity contract, unless the insurer is subject to tax under section 819; and “(3) Reinsurance.— 1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of reinsurance covering any of the contracts taxable under paragraph (1) or (2). “SEC. 4372. DEFINITIONS. “(a) Foreign Insurer or Reinsurer.— For purposes of section 4371, the term ‘foreign insurer or reinsurer’ means an insurer or reinsurer who is a nonresident alien individual, or a foreign partnership, or a foreign corporation. The term includes a nonresident alien individual, foreign partnership, or foreign corporation which shall become bound by an obligation of the nature of an indemnity bond. The term does not include a foreign government, or municipal or other corporation exercising the taxing power. “(b) Policy of Casualty Insurance.— For purposes of section 4371(1), the term ‘policy of casualty insurance’ means any policy Ante, p. 1812. (other than li fe) or other instrument by whatever name called whereby a contract of insurance is made, continued, or renewed. “(c) Indemnity Bond.— For purposes of this chapter, the term ‘indemnity bond’ means any instrument by whatever name called whereby an obligation of the nature of an indemnity, fidelity, or surety bond is made, continued, or renewed. The term includes any bond for indemnifying any person who shall have become bound or engaged as surety, and any bond for the due execution or performance of any contract, obligation, or requirement, or the duties of any office or position, and to account for money received by virtue thereof, where a premium is charged for the execution of such bond. “(d) Insured.— For purposes of section 4371 (1), the term ‘insured’ means— “(1) a domestic corporation or partnership, or an individual resident of the United States, against, or with respect to, hazards, risks, losses, or liabilities wholly or partly within the United States, or “(2) a foreign corporation, foreign partnership, or nonresident individual, engaged in a trade or business within the United States, against, or with respect to, hazards, risks, losses, or liabilities within the United States. “(e) Policy of Life, Sickness, or Accident Insurance, or Annuity Contract.— For purposes of section 4371(2), the term ‘policy of life, sickness, or accident insurance, or annuity contract’ means any policy or other instrument by whatever name called whereby a contract of insurance Or an annuity contract is made, continued, or renewed with respect to the life or hazards to the person of a citizen or resident of the United States. “(f) Policy of Reinsurance.— For purposes of section 4371(3), the term ‘policy of reinsurance’ means any policy or other instrument by whatever name called whereby a contract or reinsurance is made, continued, or renewed against, or with respect to, any of the hazards, risks, losses, or liabilities covered by contracts taxable under paragraph (1) or (2) of section 4371. “SEC. 4373. EXEMPTIONS. “The tax imposed by section 4371 shall not apply to— “(1) Domestic agent.— Any policy, indemnity bond, or annuity contract signed or countersigned by an officer or agent of the insurer in a State, or in the District of Columbia, within which such insurer is authorized to do business; or “(2) Indemnity bond.— Any indemnity bond required to be filed by any person to secure payment of any pension, allowance, allotment, relief, or insurance by the United States, or to secure a duplicate for, or the payment of, any bond, note, certificate of indebtedness, war-saving certificate, warrant, or check, issued by the United States. “SEC. 4374. LIABILITY FOR TAX. “The tax imposed by this chapter shall be paid, on the basis of a return, by any person who makes, signs, issues, or sells any of the documents and instruments subject to the tax, or for whose use or benefit the same are made, signed, issued, or sold. The United States or any agency or instrumentality thereof shall not be liable for the tax,” (13) Amendment of section 4493.— (A) Section 4493(b)(1) (relating to certain persons engaged in foreign air commerce) is amended by striking out “beginning on or after July 1, 1970”. (B) Section 4493(b)(2) is amended by striking out the last sentence. (14) Amendment of chapter 37.— So much of chapter 37 as precedes section 4501 (relating to tax on sugar) is amended to read as follows: “CHAPTER 37— SUGAR “Sec. 4501. Imposition of tax. “Sec. 4502. Definitions, “Sec. 4503. Exemptions for sugar manufactured for home consumption.” (15) Repeal of sections 4591 through 4597.— Chapter 38 (relating to import taxes on oleomargarine) is repealed. (16) Repeal of sections 4801 through 4806.— Subchapter B of chapter 39 (relating to tax on white phosphorus matches) is repealed. (17) Repeal of sections 4811 through 4826.— Subchapter C of chapter 39 (relating to tax on unadulterated butter) is repealed. (18) Repeal of sections 4881 through 4886.— Subchapter E of chapter 39 (relating to tax on circulation other than of national banks) is repealed. (19) Amendment of section 4901.— Section 4901 (relating to payment of occupational taxes) is amended by striking out subsection (c). (20) Amendment of section 4905.— Section 4905(a) (relating to liability for occupational taxes in case of death or change of location) is amended by striking out “wife” and inserting in lieu thereof “spouse”. (21) Repeal of section 4911 through 4931.— (A) Chapter 41 (relating to interest equalization tax) is repealed. (B) The repeal made by subparagraph (A) shall apply with respect to acquisitions of stock and debt obligations made after June 30, 1974. (22) Amendments of section 4973.— (A) So much of section 4973(a) (relating to tax on excess contributions) as follows “of any individual,” in paragraph (3) thereof is amended to read as follows: “there is imposed for each taxable year a tax in an amount equal to 6 percent of the amount of the excess contributions to such individual’s accounts, annuities, or bonds (determined as of the close of the taxable year). The amount of such tax for any taxable year shall not exceed 6 percent of the value of the account, annuity, or bond (determined as of the close of the taxable year). in the case of an endowment contract described in section 408(b), the tax imposed by this section does not apply to any amount allocable to life, health, accident, or other insurance under such contract. The tax imposed by this subsection shall be paid by such individual.” (B) Section 4973(c) is amended by striking out “subsection 26 USC 4973. (a)(3)” and inserting in lieu thereof “subsection (a)(2)”. (b) Conforming and Clerical Amendments.— (1) Amendments conforming to amendment of chapter 31.— (A) Section 6416(a)(1) is amended by striking out 26 USC 6416. “(retailers taxes)” and inserting in lieu thereof “(special fuels)”, (B) Section 6416 (e) is amended by striking out “subchapter E of”. (2) Amendment conforming to amendment of section 4216.— Section 6416(b)(1) is amended by striking out “section 4216(f)(2) and (3)” and inserting in lieu thereof “section 4216 (e)(2) and (3)” (3) Amendment conforming to the repeal of section 4226.— The table of sections for subchapter G of chapter 32 is amended by striking out the item relating to section 4226. (4) Amendment conforming to the repeal of sections 4292, 4294, and 4295.— The table of sections for subchaptet E of chapter 33 is amended by striking out the items relating to sections 4292, 4294, and 4295. (5) Amendments conforming to the amendment of chapter 34.— (A) Section 7270 is amended by striking out “the affixing 26 USC 7270. of stamps on insurance policies, etc.” and inserting in lieu thereof “liability for tax on policies issued by foreign insurers”. (B) Section 6808 is amended by striking out paragraph 26 USC 6808. (4). (6) Amendments conforming to the amendment of chapter 37.— (A) Section 7240 is amended by striking out “subchapter 26 USC 7240. A of”. (B) Section 7655(a) is amended— 26 USC 7655. (i) by striking out “Subchapter A of chapter 37” in paragraph (5) and inserting in lieu thereof “Chapter 37”, and (ii) by redesignating paragraph (5) as paragraph (3). (7) Amendments conforming to repeal of sections 4591 through 4597.— (A) Section 6808 is amended by striking out paragraph 26 USC 6808. (7). (B) (i) Section 7234 (relating to violations of laws concerning 26 USC 7234. oleomargarine or adulterated butter operations) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7234. (C) (i) Section 7265 (relating to other offenses concerning 26 USC 7265. oleomargarine or adulterated butter operations) is repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7265. (D) Section 7611(a), as redesignated by this Act, is Ante, p. 1699. amended by striking out paragraph (1). (E) The table of chapters for subtitle D is amended by striking out the item relating to chapter 38, (8) Amendments conforming to repeal of sections 4801 through 4806.— (A) Section 4905(b) is amended to rend as follows: “(b) Registration.— “For registration in case of wagering, see section 1412.” (B) Section 6808 is amended by striking out paragraph (12). (C) Section 7012 is amended by striking out subsection (D) (i) Section 7239 (relating to violations of laws concerning white phosphorus matches) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7239. (E) (i) Sections 7267 and 7274 (relating to offenses and penalties concerning white phosphorus matches) are each repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the items relating to sections 7267 and 7274. (F) Section 7272(b) is amended by striking out “4804” (G) Section 7303 is amended by striking out paragraph (6) (H) (i) Part II of subchapter C of chapter 75 (relating to provisions common to forfeitures) is amended by striking out section 7328 (relating to confiscation of white phosphorus 26 USC 7328, 7329. matches), and by redesignating section 7329 (relating to cross references) as section 7328. (ii) The table of sections for part II of subchapter C of chapter 75 is amended by striking out the last two items and inserting in lieu thereof the following: “Sec. 7328. Cross references.” (9) Amendments conforming to repeat, of sections 4811 through 4826.— (A) Section 6808 (relating to cross references) is amended by striking out paragraph (10). (B) (i) Section 7235 (relating to violations of laws concerning adulterated butter and process or renovated butter) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7235. (C) (i) Section 7264 (relating to offenses concerning renovated or adulterated butter) is repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7264. (D) Section 7303 is amended by striking out paragraphs (3), (4), and (5), and by redesignating paragrapns (7) and (8) as paragraphs (2) and (3), respectively. (E) Section 7611(a), as redesignated by this Act, is amended by striking out paragraph (2) , and by redesignating paragraphs (5) and (6) as paragraphs (1) and (2), respectively. (10) Amendments conforming to the repeal of sections 4911 through 4931.— (A) (i) (I) Section 263, as amended by this Act, is amended 26 USC 263. by striking out subsections (a)(3) and (d) (relating to the allowance of deductions for payment of interest equalization tax), and by redesignating subsections (e), (f), and (g) as subsections (d), (c),and (f), respectively. (II) Section 263(d), as redesignated by clause (i)(I) of this subparagraph, is amended by striking out “subsection (f)” and inserting in lieu thereof “subsection (e)”, (ii) Section 6011 (relating to requirement of return, statement, or 26 USC 6011. list) is amended by striking out subsection (d) (relating to interest equalization tax returns, etc.), and by redesignating subsections (e) and (f) as subsections (c) and (d), respectively. (iii) (I) Section 6076 (relating to time for filing interest 26 USC 6076. equalization tax returns) is repealed. (II) The table of sections for part V of subchapter A of chapter 61 is amended by sticking out the item relating to section 6076. (iv) Section 6611 (relating to interest on overpayments) 26 USC 6611. is amended by striking out subsection (h) (relating to over-payments of interest equalization tax) and by redesignating subsection (i) as subsection (h). (v) Section 6651 (relating to failure to file tax return 26 USC 6651. or to pay tax) is amended by striking out subsection (e) (relating to certain interest equalization tax returns). (vi) (I) Section 6680 (relating to failure to file interest 26 USC 6680. equalization tax returns) is repealed. (II) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6680. (vii) The amendments made by this subparagraph shall 26 USC 263 note. apply with respect to acquisitions of stock or debt obligations made after June 30, 1974, except that the repeal of paragraph (2) of section 6011(d) under clause (ii) shall apply with respect to loans and commitments made after such date. (B) Section 861(a)(1)(G) (relating to income from 26 USC 861. sources within the United States) is amended— (i) by striking out “section 4912(c)” and inserting in lieu thereof “subsection (c) of section 4912 (as in effect before July 1, 1974)”; and (ii) by striking out “section 4912(c)(2)” and inserting in lieu thereof “subsection (c)(2) of such section”. (C) The second sentence of section 1232(b)(2) (relating 26 USC 1232. to the definition of the issue price of bonds and other evidences of indebtedness) is amended by striking out “section 4911” anrl inserting in lieu thereof “section 4911, as in effect before July 1, 1974”. (D) (i) Section 6681 (relating to false equalization tax 26 USC 6681. certificates) is repealed. (ii) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6681. (iii) The amendments made by this subparagraph shall 26 USC 6681 note. apply with respect to actions occurring after June 30, 1974. (E) (i) Section. 6689 (relating to failure by certain foreign 26 USC 6689. issuers and obligors to comply with United States investment equalization tax requirements) is repealed. (ii) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6689. (iii) The amendments made by this subparagraph shall apply with respect to stock or debt obligations issued after June 30, 1974. (F) (i) Section 7241 (relating to penalty for fraudulent equalization tax certificates) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7241. (iii) The amendments made by this subparagraph shall apply with respect to statements and certificates executed after June 30, 1974. (G) The table of chapters for subtitle D is amended by striking out the item relating to chapter 41. (c) Amendment to Provision Referring to Territories.— Section 4482 (c)(1) is amended by striking out “, a Territory of the United States,”. (d) Effective Date.— Except as otherwise provided in this section, the amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. SEC. 1905. AMENDMENTS OF SUBTITLE E; ALCOHOL, TOBACCO, AND CERTAIN OTHER EXCISE TAXES. (a) In General.— (1) Amendment of section 5005.— Section 5005(c)(2) (relating to transfers in bond of distilled spirits) is amended by striking out the last two sentences and inserting in lieu thereof the following: “Such relief from liability shall be effective from the time of removal from the transferor’s bonded premises, or from the time of divestment of interest, whichever is later.” (2) Amendments of section 5008.— (A) Section 5008(b)(1) (relating to abatement, remission, refund, and allowance for loss of destruction of distilled spirits) is amended by inserting immediately after “the tax imposed by this chapter” the following: “or by section 7652”. (B) Section 5008(b)(2) is amended by striking out “the taxes imposed under section 5001(a)(1)” and all that follows and inserting in lieu thereof the following: “the taxes imposed under section 5001(a)(1), under subpart B of this part, or under section 7652 on the spirits so destroyed, to the proprietor of the distilled spirits plant who withdrew the distilled spirits on payment or determination of tax.” (C) Subsections (c)(1) and (d)(1) of section 5008 are each amended by inserting immediately after “under section 5001(a)(1)” the following: “or under section 7652”. (D) Section 5008(d)(1) is amended by striking out “, on or after July 1, 1959,”. (3) Amendment of section 5009.— Section 5009(b)(3) is amended by striking out “46 Stat. 694;”. (4) Amendment of section 5025.— Section 5025 (j) (relating to stabilization of distilled spirits) is amended by striking out “the bottling of distilled spirits,” and inserting in lieu thereof “the bottling of distilled spirits, or preparatory to exportation,”. (5) Amendment of section 5054.— Section 5054 (relating to determination and collection of tax on beer) is amended by striking out subsection (c) (relating to stamps or other devices as evidence of payment of tax) and by redesignating subsection (d) as subsection (c). (6) Amendments of section 5061.— (A) Section 5061(a) (relating to collections of alcohol 26 USC 5061. taxes) is amended by striking out the last sentence. (B) Section 5061(b) (relating to methods of collection) is amended to read as follows: “(b) Exceptions.— Notwithstanding the provisions of subsection (a), any taxes imposed on, or amounts to be paid or collected in respect of, distilled spirits, wines, rectified distilled spirits and wines, and beer under— “(1) section 5001(a)(5), (6),or (7), “(2) section 5006(c) or (d), “(3) section 5026(a)(2), “(4) section 5041 (d), “(5) section5043(a)(3), “(6) section5054(a)(3) or (4),or “(7) section5505(a), shall be immediately due and payable at the time provided by such provisions (or if no specific time for payment is provided, at the time the event referred to in such provision occurs). Such taxes and amounts shall be assessed and collected by the Secretary on the basis of the information available to him in the same manner as taxes payable by return but with respect to which no return has been filed.” (C) Section 5061(c) (relating to applicability of other provisions of law) is amended to read as follows: “(c) Import Duties.— The internal revenue taxes imposed by this part shall be in addition to any import duties unless such duties are specifically designated as being in lieu of internal revenue tax.” (7) Amendment of section 5113.— Section 5113(f)(1) (relating 26 USC 5113. to retail dealers in liquors) is amended by striking out “wines or beer” and inserting in lieu thereof “distilled spirits, wines, or beer”. (8) Amendments of section 5117.— Section 5117 (relating 26 USC 5117. to prohibited purchases by dealers) is amended by redesignating subsection (b) as subsection (c) and by inserting after subsection (a) the fol lowing new subsection: “(b) Limited Retail Dealers.— A limited retail dealer may lawfully purchase distilled spirits for resale from a retail dealer in liquors.” (9) Amendment of section 5121.— Section 5121(c) (relating 26 USC 5121. to limited retail dealers) is amended to read as follows: “(c) Limited Retail Dealers.— Every limited retail dealer shall pay a special tax of $4.50 for each calendar month in which sales are made as such dealer; except that the special tax shall be $2.20 for each calendar month in which only sales of beer or wine are made.” (10) Amendment of section 3122.— Section 5122(c) (relating 26 USC 5122. to definition of limited retail dealer) is amended by striking out “beer or wine” each place it appears and inserting in lieu thereof “distilled spirits, wine, or beer”. (11) Amendment of section 5131.— Section 5131(a) (relating 26 USC 5131. to eligibility for drawback) is amended by striking out “produced in a domestic registered distillery or industrial alcohol plant and withdrawn from bond, or using distilled spirits withdrawn from the bonded premises of a distilled spirits plant,”. (12) Amendment of section 5142.— Section 5142(c) (relating to payment of occupational taxes) is amended to read as follows: “(c) How Paid.— “(1) Payment by return.— The special taxes imposed by this part shall he paid on the basis of a return under such regulations as the Secretary shall prescribe. “(2) Stamp denoting payment of tax.— After receiving a properly executed return and remittance of any special tax imposed by this subpart, the Secretary shall issue to the taxpayer an appropriate stamp as a receipt denoting payment of the tax. This paragraph shall not apply in the case of a return covering liability for a past period.” (13) Amendments of section 5171.— Section 5171(b) (relating to permits for operation of business as distillers, etc.) is amended— (A) in paragraph (1), by striking out “49 Stat. 978;”, and (B) by striking out paragraph (3) (relating to continuance of business after June 30, 1959, pending application for permit). (14) Amendment of section 5174.— Section 5174(a)(2)(A) (relating to withdrawal bonds for distilled spirits) is amended by striking out “such spirits” and inserting in lieu thereof “distilled spirits from bond”. (15) Amendment of section 5232.— Section 5232(a) (relating to transfer of imported distilled spirits) is amended by striking out “and the importer” and inserting in lieu thereof “and the importer, or the person bringing such distilled spirits into the United States,”. (16) Amendment of section 5233.— Section 5233(b)(4) (relating to bottling requirements) is amended by striking out “49 Stat. 977;”. (17) Amendment of section 5234.— The first sentence of section 5234(a)(2) (relating to the mingling of distilled spirits) is amended by striking out “8 years” and inserting in lieu thereof “20 years”. (18) Amendment of section 5314.— Section 5314(a)(2) (relating to application of certain provisions to Puerto Rico) is amended by striking out “section 5001(a)(4)” and inserting in lieu thereof “section 5001(a)(10)”. _ (19) Repeal of section 5315.— Section 5315 (relating to the status of certain distilled spirits on July 1, 1959) is repealed. (20) Amendments of section 5368.— (A) The heading of section 5368 is amended to read as follows: “SEC. 5368. GAUGING AND MARKING.” (B) Section 5368(b) (relating to removal of wines) is amended to read as follows: “(b) Marking.— Wines shall be removed in such containers (including vessels, vehicles, and pipelines) bearing such marks and labels, evidencing compliance with this chapter, as the Secretary may by regulations prescribe.” (21) Amendment of section 5392.— Section 5392(f)(defining own production) is amended by striking out “49 Stat. 990;”. (22) Amendments of section 5601.— Section 5601(b) (relating to presumptions in the case of criminal penalties) is amended to read as follows: “(b) Presumption.— Whenever on trial for violation of subsection (a)(4) the defendant is shown to have been at the site or place where, and at the time when, the business of a distiller or rectifier was so engaged in or carried on, such presence of the defendant shall be deemed sufficient, evidence to authorize conviction, unless the defendant explains such presence, to the satisfaction of the jury (or of the court when tried without jury).” (23) Amendments of section 5685.— (A) Section 5685(a) (relating to penalty for possession 26 USC 5685. of devices for emitting gas, smoke, etc.) is amended by striking out “section 5848” and inserting in lieu thereof “section 5845”. (B) Section 5685(c) (relating to forfeiture of firearms, devices, etc.) is amended by striking out “section 5862” and inserting in lieu thereof “section 5872”. (C) Section 5685(d) (relating to the definition of machine gun) is amended to read as follows: “(d) Definition of Machine Gun.— As used in this section, the term ‘machine gun’ means a machine gun as defined in section 5845(b).” (24) Amendment of section 5701.— Section 5701(e) (relating 26 USC 5701. to imported tobacco products, etc.) is amended by striking out “such articles” and inserting in lieu thereof “such articles, unless such import duties are imposed in lieu of internal revenue tax”. (25) Amendments of section 5703.— (A) Section 5703(a)(2) (relating to transfer of liability 26 USC 5703. for tobacco taxes) is amended by adding at the end thereof the following new sentence: “All provisions of this chapter applicable to tobacco products and cigarette, papers and tubes in bond shall be applicable to such articles returned to bond upon withdrawal from the market or returned to bond after previous removal for a tax-exempt purpose.” (B) The second sentence of section 5703(b) (relating to method of payment of tobacco taxes) is amended by striking out “, except that the taxes shall continue to be paid by stamp until the Secretary or his delegate provides, by regulations, for the payment, of the taxes on the basis of a return”. (C) Section 5703 is amended by striking out subsection (c) (relating to stamps to evidence tobacco taxes) and by redesignating subsections (d) and (e) as subsections (c) and (d), respectively. (26) Amendments of section 3704.— Subsections (c) and (d) of section 5704 (relating to exemptions from tobacco taxes) are 26 USC 5704. each amended by inserting after “to a manufacturer of tobacco products or cigarette papers and tubes” the following: “or to the proprietor of an export warehouse”. (27) Amendment of section 5712.— Section 5712 (relating to 26 USC 5712. application for permit) is amended by striking out the last sentence. (28) Amendments of section 572a.— (A) The heading of section 5723 is amended by striking 26 USC 5723. out “NOTICES, AND STAMPS” and inserting in lieu thereof “AND NOTICES”. (B) Section 5723(b) (relating to marks, and so forth, on packages) is amended to rend as follows: “(b) Marks, Labels, and Notices.— Every package of tobacco products Regulation. or cigarette papers or tubes shall, before removal, bear the marks, labels, and notices, if any, that the Secretary by regulation prescribes.” (b) Conforming and Clerical Amendments.— (1) Amendments conforming to amendment of section 5054.— (A) Section 5676 (relating to beer stamp penalties) is repealed. (B) The table of sections for part III of subchapter J of chapter 51 is amended by striking out the item relating to section 5676. (2) Amendments conforming to amendments of section 5081.— (A) Section 5007(b)(1) is amended by striking out the second sentence. (B) Section 5026(b) is amended by striking out “Except as provided in subsection (a)(2), the taxes” and inserting in lieu thereof “The taxes”. (C) Section 5043(b) is amended by striking out “Except as provided in subsection (a)(3), the taxes” and inserting in lieu thereof “The taxes”. (D) Section 5662 is amended by striking out “stamp,” each place it appears. (E) (i) Section 5689 (relating to penalty and forfeiture for tampering with a stamp machine) is repealed. (ii) The table of sections for part IV of subchapter J of chapter 51 is amended by striking out the item relating to section 5689. (iii) Section 5061 is amended by striking out subsection (d). (3) Amendments conforming to amendment of section 5142.— (A) (i) Section 5104 (relating to method of payment of tax on stills) is repealed. (ii) The table of sections for subpart C of part II of subchapter A of chapter 51 is amended by striking out the item relating to section 5104. (B) Section 5111(a) is amended by striking out the second sentence. (C) Section 5121(a) is amended by striking out the second sentence. (D) (i) Section 5144 (relating to supply of stamps) is repealed. (ii) The table of sections for subpart G of part II of subchapter A of chapter 51 is amended by striking out the item relating to section 5144. (E) Section 5148(3) is amended by striking out “penalties” and inserting in lieu thereof “penalties, authority for assessments,”. (4) Amendment conforming to the repeal of section 5315.— The table of sections for part III of subchapter E of chapter 51 is amended by striking out the item relating to section 5315. (5) Amendment conforming to the amendment of section 5358.— The item relating to section 5368 in the table of sections for part II of subchapter E of chapter 51 is amended to read as follows: “Sec. 5368. Gauging and marking.” (6) Amendments conforming to the amendment of section 5001.— (A) Section 5105 (b)(2) is amended by striking out “, 5601 26 USC 5105. (b)(1),”. (B) Section 5177(b)(2) is amended by striking out “5601 26 USC 5177. (b)(2),” and inserting in lieu thereof “5601 (b),”. (C) Section 5179(b)(1) is amended by striking out “, 5601 26 USC 5179. (b)(1)”. (D) Section 5222(d) is amended by striking out “5601(b) 26 USC 5222. (3), 5601(b)(4)”. (E) Section 5505(i) is amended by striking out “5601(b) 26 USC 5505. (1),”. (7) Amendments conforming to the amendment of section 5723.— (A) Paragraphs (2) and (3) of section 5751(a) are each 26 USC 5751. amended by striking out “notices, and stamps” and inserting in lieu thereof “and notices”. (B) (i) Section 5752 is amended to read as follows: “SEC. 5752. RESTRICTIONS RELATING TO MARKS, LABELS, NOTICES, AND PACKAGES. “No person shall, with intent to defraud the United States, destroy, obliterate, or detach any mark, label, or notice prescribed or authorized, by this chapter or regulations thereunder, to appear on, or be affixed to, any package of tobacco products or cigarette papers or tubes, before such package is emptied.” (ii) Section 5762(a) is amended by striking out paragraphs 26 USC 5762. (8), (7), (8), (9), (10), and (11) and inserting in lieu thereof the following: “(6) Destroying, obliterating, or detaching marks, labels, or notices before packages are emptied.— Violates any provision of section 5752;”. (iii) The item relating to section 5752 in the table of sections for subchapter E of chapter 52 is amended to read as follows: “Sec. 5752. Restrictions relating to marks, labels, notices, and packages.” (C) (i) Section 5763(a)(2) is amended by striking out 26 USC 5763. “notices, and stamps” and inserting in lieu thereof “and notices”. (ii) Section 5763(b) is amended by striking out “internal revenue stamps,”. (D) The item relating to section 5723 in the table of sections for subchapter C of chapter 52 is amended to read as follows: “Sec. 5723. Packages, marks, labels, and notices.” (c) Amendments to Provisions Referring to Territories.— (1) Section 5114(b) is amended by striking out “or Territory” 26 USC 5114. each place it appears and by striking out “Territories,”. (2) Section 5214(a)(2) is amended by striking out “or Territory 26 USC 5214. ” each place it appears. (3) Section 5272(b) is amended by striking out “and 26 USC 5272. Territories”. (4) Section 5362(c)(9) is amended by striking out “and 26 USC 5362. Territories”. (5) Section 5551(b)(2) is amended by striking out “Territory, 26 USC 5551. or”. (6) Section 5685(a) is amended by striking out “Territory 26 USC 5685. or”. (d) Effective Date.— The amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. SEC. 1906. AMENDMENTS OF SUBTITLE F; PROCEDURE AND ADMINISTRATION. (a) In General.— (1) Amendments of section 6013.— (A) Section 6013(b)(2)(C) (relating to petition to the Tax Court) is amended by striking out “of the United States”. (B) The heading of section 6013(d) is amended to read as follows: “(d) Special Rules.—”. (C) Section 6013(d)(1) (relating to joint return after death of one spouse) is amended by striking out “and” at the end of subparagraph (A) and inserting in lieu thereof “or”, and by striking out “and” at the end of the subparagraph (B). (2) Amendment of section 6015.— Section 6015 (relating to declaration of estimated tax by individuals) is amended by striking out subsection (j) (relating to an effective date provision). (3) Amendment of section 6037.— Section 6037 (relating to returns of subchapter S corporations) is amended by striking out “section 1371(a)(2)” and inserting in lieu thereof “section 1371 (b)” (4) Amendment of section 6046.— Section 6046(e) (relating to information as to organization of foreign corporation) is amended to read as follows: “(e) Limitation.— No information shall be required to be furnished under this section with respect to any foreign corporation unless such information was required to be furnished under regulations which have been in effect for at least 90 days before the date on which the United States citizen, resident, or person becomes liable to file a return required under subsection (a).” (5) Amendment of section 6051.— Section 6051(a) (relating to information required to be furnished to employees) is amended by striking out “and” where it appears at the end of paragraph (6). (6) Amendments of section 6065.— Section 6065 (relating to verification of returns) is amended by striking out subsection (b) (relating to verification by oath), and by striking out in subsection (a) the following: “(a) Penalties of Perjury.—”. (7) Repeat, of section 6105.— Section 6105 (relating to compilation of data for certain excess profits tax cases) is repealed. (8) Amendment of section 6111.— Section 6111 (relating to cross references), as redesignated by this Act, is amended to read as follows: “SEC. 6111. CROSS REFERENCE. “For inspection of records, returns, etc., concerning gasoline or lubricating oils, see section 4102.” (9) Amendment of section 6152.— Section 6152(a)(1) (relating to installment payments by corporations) is amended to read as follows: “(1) Corporations.— A corporation subject to the taxes imposed 26 USC 1. by chapter 1 may elect to pay the unpaid amount of such taxes in two equal installments.” (10) Amendments of section bib4.— (A) Section 6154(c)(1)(B) (relating to definition of estimated 26 USC 6154. tax) is amended— (i) by adding “and” after the comma at the end of clause (i), and (ii) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following: “(ii) in the case of a taxable year beginning before January 1, 1977, the amount of the corporation’s temporary estimated tax exemption for such year.” (B) Section 6154(c)(2)(A)(ii) (relating to temporary estimated tax payments) is amended by striking out “clauses (ii) and (iii)” and inserting in lieu thereof “clause (ii)”. (C) Section 6154(c)(2)(B) (relating to estimated tax) is amended by striking out the following: “1968, 1969, 1970, 1971, and 1972 100 percent   1973 80 percent   1974 60 percent”. (D) Section 6154(c) (relating to estimated tax) is amended by striking out paragraph (3) (relating to transitional exemption for taxable years beginning before 1972). (11) Amendments of section 6157.— (A) Section 6157 (relating to payment of Federal unemployment 26 USC 6157. tax) is amended by striking out subsection (c) (relating to special rides for 1970 and 1971), and by redesignating subsection (d) as subsection (c). (B) Section 6157(a) is amended by striking out “subsections (c) and (d)” and inserting in lieu thereof “subsection (c)” (12) Repeal of section 6162.— Section 6162 (relating to payment 26 USC 6162. of tax on gain on liquidation of certain personal holding companies) is repealed. (13) Amendment of section 6205.— Section 6205 (a)(4) (relating 26 USC 6205. to District of Columbia as employer) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (14) Amendment of section 6207.— Section 6207 (relating to 26 USC 6207. cross references) is amended by striking out paragraph (7). (15) Amendment of section 6213.— Section 6213(a) (relating Ante, p. 1698. to time for filing petition with the Tax Court) is amended by striking out “States of the Union and the District of Columbia” and inserting in lieu thereof “United States”. (16) Amendment of section 6215.— Section 6215(b)(5)(a 26 USC 6215. cross reference) is amended by striking out “60 Stat. 48;”. (17) Amendment of section 6302.— Section 6302(b) (relating 26 USC 6302. to collection of certain excise taxes) is amended by striking out “sections 4501 (a) or 4511 of chapter 37, or section 4701 or 4721 of chapter 39” and inserting in lien thereof “section 4501(a) of chapter 37”. (18) Repeal of section 6304.— Section 6304 (relating to a cross 26 USC 6304. reference) is repealed. (19) Amendment of section 6313.— Section 6313 (relating to 26 USC 6313. fractional parts of a cent) is amended by striking out “not payable by stamp”. (20) Amendments of section 6326.— (A) Paragraph (2) of section 6326 (cross references) is amended by striking out “52 Stat. 851;”. (B) Paragraph (3) of section 6326 is amended by striking out “52 Stat. 867” (C) Paragraph (4) of section 6326 is amended by striking out “52 Stat. 867–877;”. (D) Paragraph (5) of section 6326 is amended by striking out “52 Stat. 938;”. (21) Amendment of section 6365.— Section 6365 (b) (relating to definition of governor) is amended by striking out “Commissioner of the District of Columbia” and inserting in lieu thereof “Mayor of the District of Columbia”. (22) Amendment of section 6412.— Section 6412(a) (relating to floor stock refunds) is amended by redesignating paragraphs (2) and (4) as paragraphs (1) and (2), respectively. (23) Amendments of section 6413.— (A) Section 6413(a)(4) (relating to District of Columbia as employer) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (B) (i) Section 6413 (c)(1) (relating to refunds of certain employment taxes) is amended to read as follows: “(1) In General.— If by reason of an employee receiving wages from more than one employer during a calendar year the wages received by him during such year exceed the contribution and benefit base (as determined under section 230 of the Social 42 USC 430. Security Act) which is effective with respect to such year, the employee shall be entitled (subject to the provisions of section 31 (b)) to a credit or refund of any amount of tax, with respect to such wages, imposed by section 3101 or section 3201, or by both such sections, and deducted from the employee’s wages (whether or not paid to the Secretary), which exceeds the tax with respect to the amount of such wages received in such year which is equal “Wages.” to such contribution and benefit base. The term ‘wages’ as used in this paragraph shall, for purposes of this paragraph, include ‘compensation’ as defined in section 3231(e).” (ii) So much of section 6413(c)(2)(A) (relating to Federal employees) as follows “and the term ‘wages’ includes” is amended to read as follows: “for purposes of this subsection the amount, not to exceed an amount equal to the contribution and benefit base (as determined under section 230 of the Social Security Act) for any calendar year with respect to which such contribution and benefit base is effective, determined by each such head or agent as constituting wages paid to an employee.” (iii) The amendments made by clauses (i) and (ii) shall apply with respect to remuneration paid after December 31, 1976. (C) Section 6413(c)(2)(F) (relating to government employees in the District of Columbia) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (D) Section 6418(c)(3) (relating to special refunds) is 26 USC 6413. amended by striking out “after 1967”. (24) Amendments of section 6416.— (A) Section 6416(a)(3) (relating to special rules for 26 USC 6416. refund of overpayment of tax) is amended by redesignating subparagraphs (C) and (D) as subparagraphs (A) and (B), respectively, (B) (i) Section 6416(b)(2) (relating to overpayments of certain excise taxes), as amended by section 2108 of this Act, Post, p. 1904. is amended by striking out subparagraphs (G), (H), (I), and (J), and by redesignating subparagraphs (F), (K), (L), (M), (R), (8), and (T) as subparagraphs (E), (F), (G), (H), (I), (J),and (K),respectively. (ii) The repeals made by clause (i) shall apply with 26 USC 6416 note. respect to the use or resale for use of liquids after December 31, 1976. (25) Repeal of section 6417.— Section 6417 (relating to coconut 26 USC 6417. and palm oil) is repealed. (26) Amendments of section 6420.— (A) Section 6420(b) (relating to time for filing refund 26 USC 6420. claims on gasoline) is amended to read as follows: “(b) Time fob Filing Claims; Period Covered.— Not more than one claim may be filed under this section by any person with respect to gasoline used during his taxable year, and no claim shall be allowed under this section with respect to gasoline used during any taxable year unless filed by such person not later than the time prescribed by law for filing a claim for credit or refund of overpayment of income tax for such taxable year. For purposes of this subsection, a person’s taxable year shall be his taxable year for purposes of subtitle A.” 26 USC 1. (B) Section 6420(e)(1) (relating to application of other laws) is amended by striking out “apply in in respect” and inserting in lieu thereof “apply in respect’”. (C) (i) Section 6420 is amended by striking out subsection (g) (relating to effective date) and by redesignating subsections (h) and (i) as subsections (g) and (h), respectively. (ii) Section 6420(a) is amended by striking out “subsection (h)” and inserting in lieu thereof “subsection (g)”. (D) Section 6420(g) (relating to income tax credit in lieu of gas tax refund), as redesignated by subparagraph (C)(i) of this paragraph, is amended by strikingout “with respect to gasoline used after June 30, 1965,” and “for gasoline used after June 30, 1965”. (27) Amendments of section 6421.— (A) (i) Subsections (a) and (e)(3) of section 6421 (relating 26 USC 6421. to nonhighway use of gasoline) are each amended by striking out “after June 30, 1970,”. (ii) The amendments made by clause (i) shall only 26 USC 6421 note. apply with respect, to gasoline used as a fuel after June 30, 1970. (B) Section 6421(c) (relating to nonhighway use of gasoline) is amended to read as follows: “(c) Time for Filing Claims; Period Covered.— “(1) In general.— Except as provided in paragraph (2), not more than one claim may be filed under subsection (a), and not more than one. claim may be filed under subsection (b), by any person with respect to gasoline used during his taxable year; and no claim shall be allowed under this paragraph with respect to gasoline used during any taxable year unless filed by such person not later than the time prescribed by law for filing a claim for credit or refund of overpayment of income tax for such taxable year. For purposes of this subsection, a person’s taxable year shall be his taxable year for purposes of subtitle A. “(2) Exception.— If $1,000 or more is payable under this section to any person with respect to gasoline used during any of the first three Quarters of his taxable year, a claim may be filed under this section by such person with respect to gasoline used during such quarter. No claim filed under this paragraph shall be allowed unless filed on or before the last day of the first quarter following the quarter for which the claim is filed.” (C) Section 6421(h) (relating to effective dates) is amended by striking out “after June 30, 1956, and”. (D) Section 6421 (i) (relating to income tax credit in lieu of refund) is amended— (i) by striking out, in paragraph (1), “with respect to gasoline used after June 30, 1965,”, (ii) by striking out, in paragraph (2), “subsection (c)(3)(B)” and inserting in lieu thereof “subsection (c)(2)”, and (iii) by striking out, in paragraph (3), “for gasoline used after June 30, 1965.” (28) Amendments of Section 6422.— (A) Paragraph (9) of section 6422 (relating to cross references), as redesignated by section 1901(b)(36)(B), is amended by striking out “60 Stat. 48;”. (B) Paragraph (11) of section 6422, as so redesignated, is amended by striking out “47 Stat. 1516;”. (29) Amendments of section 6423.— (A) Section 6423(b) (relating to filing of refund claim in case of alcohol and tobacco taxes) is amended to read as follows: “(b) Filing of claims.— No credit or refund of any amount to which subsection (a) applies shall be allowed or made unless a claim therefor has been filed by the person who paid the a mount claimed, and unless such claim is filed within the time prescribed by law and in accordance with regulations prescribed by the Secretary. Al] evidence relied upon in support of such claim shall be clearly set forth and submitted with the claim.” (B) Section 6123 is amended by striking out subsection (c) (relating to suits barred on April 30, 1958) and by redesignating subsections (d) and (e) as subsections (c) and (d), respectively. (C) Section 6423 (c) (relating to application of section), as redesignated by subparagraph (B) of this paragraph, is amended by adding “and” at the end of paragraph (1), by striking out “, and” at the end of paragraph (2) and inserting in lieu thereof a period, and by striking out paragraph (3). (30) Amendments of section 6424.— (A) The last sentence of section 6424(b)(1) (relating to refund claims with respect to lubricating oil) is amended by striking out “, except that a person’s first taxable year beginning after December 31, 1965, shall include the period after December 31, 1965, and before tile beginning of such first taxable year”. (B) Section 6424 (relating to lubricating oil not used in highway motor vehicles) is amended by striking out subsection (f) (relating to effective date of section), and by redesignating subsections (g) and (h) as subsections (f) and (g), respectively. (31) Amendments of section 6427.— (A) Subsections (a), (b), and (c) of section 6427 (relating 26 USC 6427. to fuels not used for taxable purposes) are each amended by striking out “, after June 30, 1970,” (B) The amendments made by subparagraph (A) shall 26 USC 6427 note. apply only with respect to fuel used or resold after June 30, 1970. (32) Amendments of section 6504.— (A) Section 6504 (relating to cross references) is amended 26 USC 6504. by striking out paragraphs (13) and (14) and inserting in lieu thereof: “(13) Assessments to recover excessive amounts paid under section 6420 (relating to gasoline used on farms), 6421 (relating to gasoline used for certain nonhighway purposes or by local transit systems), 6424 (relating to lubricating oil not used in highway motor vehicles), or 6427 (relating to fuels not used for taxable purposes) and assessments of civil penalties under section 6675 for excessive claims under section 6420, 6421, 6424, or 6427, see section 6206.” (B) Section 6504, as amended by this Act, Is further amended by redesignating paragraphs (2), (3), (4), (5), (9), (19), (11), (12), (13), and (15) as paragraphs (1), (2), (3), (4), (5), (6), (7), (8), (9), and (10), respectively. (33) Amendments of section 6511.— (A) Section 6511(d)(2)(A)(ii) (relating to net operating 26 USC 6511. loss carryback) is amended by striking out “September 1, 1959, or” and by striking out “, whichever is the later”. (B) Section 6511(d)(5) is amended by striking out “the later of the following dates: (A)”, and by striking out “, or (B) December 31, 1965”. (34) Amendment of section 6601.— Section 6601(h) (relating 26 USC 6601. to interest on estimated tax payments) is amended by striking out “(or section 59 of the Internal Revenue Code of 1939)”. 53 Stat. 32. 26 USC 6654. (35) Amendment of section 6654.— Section 6654 (relating to payment of estimated income tax) is amended by striking out subsection (h) (relating to applicability of section). (36) Amendment of section 6802.— Section 6802(2) (relating 26 USC 6802. to supply and distribution of stamps) is amended by striking out the semicolon at the end and inserting in lieu thereof a period. (37) Amendment of section 6803.— Section 6803 (relating to 26 USC 6803. accounting and safeguarding is amended to read as follows: “SEC. 6803. ACCOUNTING AND SAFEGUARDING. “(a) Bond.— In cases coining within the provisions of paragraph (2) of section 6802, the Secretary may require a bond, with sufficient sureties, in a sum to be fixed by the Secretary, conditioned for the faithful return, whenever so required, of all quantities or amounts undisposed of and for the payment monthly for all quantities or amounts sold or not remaining on hand. “(b) Regulations.— The Secretary may from time to time make such regulations as he may find necessary to insure the safekeeping or prevent the illegal use of all adhesive stamps referred to in paragraph (2) of section 6802.” (38) Amendment of section 6863.— Section 6863(b)(3) (relating to stay of sale of seized property pending Tax Court decision) is amended by striking out subparagraph (C) (relating to effective date). (39) Amendment of section 7012.— Section 7012 (relating to cross references), as amended by section 1904(b)(8)(C) of this Act, is amended to read as follows: “SEC. 7012. CROSS REFERENCES. “(1) For provisions relating to registration in connection with firearms, see sections 5802, 5841, and 5861. “(2) For special rules with respect to registration by persons engaged in receiving wagers, see section 4412. “(3) For provisions relating to registration in relation to the production or importation of gasoline, see section 4101. “(4) For provisions relating to registration in relation to the manufacture or production of lubricating oils, see section 4101. “(5) For penalty for failure to register, see section 7272. “(6) For other penalties for failure to register with respect to wagering, see section 7262.” (40) Amendment of section 7103.— Section 7103 (relating to cross references regarding bonds) is amended by striking out subsection (d). ‘ (41) Amendments of section 7271.— Section 7271 (relating to penalties for offenses concerning stamps) is amended by striking out paragraph (2), and by redesignating paragraphs’ (3) and (4) as paragraphs (2) and (3), respectively. (42) Amendment of section 7272.— Section 7272(b) (relating to cross references) is amended by striking out “4722, 4753,”. (43) Amendments of section 7326.— Section 7326 (relating to disposal of forfeited property) is amended— (A) by striking out “section 5862(b)” and inserting in lieu thereof “section 5872(b)”, and (B) by redesignating subsection (c) as subsection (b). (44) Amendments of section 7422.— Section 7422(c) (relating to suits against collection officers) is amended by striking out “instituted after June 15, 1942,”, and by striking out “where the petition to the Tax Court was filed after such date”. (45) Amendments of section 7428.— (A) Paragraph (1) of section 7428 (cross references), as redesignated by this Act, is amended by striking out “52 Stat, 851;”. (B) Paragraph (2) of such section 7428 is amended by striking out “52 Stat. 867;”. (C) Paragraph (3) of such section 7428 is amended by Striking out “52 Stat. 876–877;”. (D) Paragraph (4) of such section 7428 is amended by striking out “52 Stat. 938;”. (46) Amendments of section 7448.— (A) Subsection (a)(6) of section 7448 (relating to annuities to widows and dependent children of Tax Court judges) is amended— (i) by striking out “The term ‘widow’ means a surviving wife of,” and inserting in lieu thereof “The term ‘surviving spouse’ means a surviving spouse of”; and (ii) by striking out “the mother of issue” and inserting in lieu thereof “a parent of issue”. (B) Section 7448(h) is amended— (i) by striking out “surviving widow or widower” and inserting in lieu thereof “surviving spouse”; (ii) by striking out “such widow” each place it appears and inserting in lieu thereof “such surviving spouse”; (iii) by striking out “a widow” each place it appeal’s and inserting in lieu thereof “a surviving spouse”; (iv) by striking out “widow’s” each place it appears and inserting in lieu thereof “surviving spouse’s”; and (v) by striking out “surviving her” and inserting hi lieu thereof “surviving such spouse”. (C) Sections 7448 (h) and (o) are each amended by striking 26 USC 7448. out “she” and inserting in lieu thereof “such spouse”. (D) Section 7448 (o) is amended by striking out “her” and inserting in lieu thereof “such spouse’s”. (E) Sections 7448 (d), (j), (m), (n), (o), and (q) are each amended by striking out “widow” each place it appears and inserting in lieu thereof “surviving spouse”. (F) The section heading for section 7448 is amended by striking out “WIDOWS” and inserting in lieu thereof “SURVIVING SPOUSES”. (47) Amendments of section 7471.— (A) Subsection (a) of section 7471 (relating to Tax Court 26 USC 7471. employees) is amended by striking out “is authorized in accordance with the civil service laws to appoint, and in accordance with the Classification Act of 1949 (63 Stat. 954; 5 U.S.C. chapter 21), as amended, to fix the compensation of,” and inserting in lieu thereof “is authorized to appoint, in accordance with the provisions of title 5, United States Code, governing appointment in the competitive service, and 5 USC 101 et seq. 5 USC 5101, 5331. to fix the basic pay of, in accordance with chapter 51 and subchapter III of chapter 53 of such title,”. (B) Subsection (b) of section 7471 is amended by striking out “as provided in the Travel Expense Act of 1949 (63 Stat. 166; 5 U.S.C. chapter 16).” and inserting in lieu thereof “as provided in chapter 57 of title 5, United States Code.” 5 USC 5701. 26 USC 7476. (48) Amendment of section 7476.— Section 7476(a) (relating to declaratory judgments) is amended by striking out so much thereof as follows paragraph (2)(B) and inserting in lieu thereof the following: “upon the filing of an appropriate pleading, the Tax Court may make a declaration with respect to such initial qualification or continuing qualification. Any such declaration shall have the force and effect of a decision of the Tax Court, and shall be reviewable, as such.” (49) Amendment of section 7502.— Section 7502(b) (relating 26 USC 7502. to timely mailing treated as timely filing and paying) is amended by striking out “United State Post Office” and inserting in lieu thereof “United States Postal Service”. (50) Amendments of section 7507.— Paragraphs (2) and (3) of section 7507(c) (relating to insolvent hanks) are each amended 26 USC 7507. by striking out “after May 28, 1938,”. (51) Amendments of section 7508.— (A) The heading of section 7508 (relating to time for 26 USC 7508. performing certain acts) is amended by striking out “BY REASON OF WAR” and inserting in lieu thereof “BY REASON OF SERVICE IN COMBAT ZONE”. (B) Section 7508(a) (relating to time to be disregarded) is amended by striking out “States of the Union and the District of Columbia” each place it appears and inserting in lieu thereof “United States”. (52) Amendments of section 7509.— Section 7509 (relating to expenditures incurred by the Post Office Department) is amended— (A) in the section heading, by striking out “POST OFFICE DEPARTMENT” and inserting in lieu thereof “UNITED STATES POSTAL SERVICE”; (B) by striking out “Post Office Department” each place it appears and inserting in lieu thereof “United States Postal Service”; (C) by striking out “such Department” and inserting in lieu thereof “such Service”; and (D) by striking out “, together with the receipts required to be deposited under section 6803(a),”, (53) Amendment or section Tear.— Section 7621 (b) (relating to boundaries of internal revenue districts) is amended to read as follows: “(b) Boundaries.— For the purpose mentioned in subsection (a), the President may subdivide any State or the District of Columbia, or may unite into one district two or more States.” (54) Repeal of section 7G4t.— Subchapter C of chapter 78 (relating to supervision of operations of certain manufacturers) is repealed. (55) Amendments of section 7052.— Section 7652(b)(3) (relating to disposition of internal revenue collections) is amended— (A) by striking out subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B). (B) by striking out “approved emergency relief purposes and essential public projects as provided in subparagraph (B)” and inserting in lieu thereof “emergency relief purposes and essential public projects, with the prior approval of the President or his designated representative”, and (C) by striking out “, including payments under subparagraph (B),”. (56) Amendment of section 7653.— Section 7653(d)(a cross reference) is amended by striking out “c. 512, 64 Stat. 392, section 30;”. (57) Amendments of section 7701.— (A) Section 7701(a)(11) (relating to definitions of Secretary) is amended to read as follows: “(11) Secretary of the treasury and secretary.— “(A) Secretary of the treasury.— The term ‘Secretary of the Treasury’ means the Secretary of the Treasury, personally, and shall not include any delegate of his. “(B) Secretary.— The term ‘Secretary’ means the Secretary or the Treasury or his delegate.”. (B) Section 7701(a)(12)(A) (relating to definition of Secretary or his delegate) is amended to read as follows: “(A) In general.— The term ‘or his delegate’— “(i) when used with reference to the Secretary of the Treasury, means any officer, employee, or agency of the Treasury Department duly authorized by the Secretary of the Treasury directly, or indirectly by one or more redelegations of authority, to perform the function mentioned or described in the context; and “(ii) when used with reference to any other official of the United States, shall be similarly construed.” (58) Amendment of section 7803.— Section 7803 (relating 26 USC 7803. to other personnel) is amended by redesignating subsection (d) as subsection (c). (59) Amendment of section 7809.— Section 7809(a) (relating 26 USC 7809. to deposit of collections) is amended by striking out “4735, 4762,”. (b) Conforming and Clerical Amendments.— (1) Amendment conforming to the repeal of section 6105.— The table of sections for subchapter B of chapter 61 is amended by striking out the item relating to section 6105. (2) Amendment conforming to amendment of section 6111.— The item relating to section 6111 in the table of sections for subchapter B of chapter 61 is amended to read as follows: “Sec. 6111. Cross reference.” (3) Amendments conforming to amendments of section 6154.— (A) Paragraph (1)(B) of section 6655(e) is amended: 26 USC 6655. (i) by adding “and” at the end of clause (i), and (ii) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following: “(ii) in the case of a taxable year beginning before January 1, 1977, the amount of the corporation’s temporary estimated tax exemption for such year.” (B) Paragraph (2)(B) of section 6655(e) is amended by striking out “clauses (ii) and (iii)” and inserting in lieu thereof “clause (ii)”. (C) (i) Section 6655(e) is amended by striking out paragraph (3) and by redesignating paragraph (4) as paragraph (3). (ii) Section 243(b)(3)(C)(iv), as redesignated by section Ante, p. 1797. 1901 (b)(20)(A) of this Act, is amended by striking out “sections 6154(c)(2) and (3)” and inserting in lieu thereof “section 6154(c)(2)”, and by striking out. “sections 6655(e)(2) and (3)” and inserting in lieu thereof “section 6655(e)(2)”. (4) Amendment conforming to the re feat, of section 6162.— The table of sections for subchapter B of chapter 62 is amended by striking out the item relating to section 6162. (5) Amendment conforming to the repeal of section 6304.— The table of sections for subchapter A of chapter 64 is amended by striking out the item relating to section 6304. (6) Amendments conforming to the amendment of section 6416.— (A) Subparagraph (A) of section 6420(c)(3) is amended 26 USC 6420. to read as follows: “(A) by the owner, tenant, or operator of a farm, in connection with cultivating the soil, or in connection with raising or harvesting any agricultural or horticultural commodity, including the raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry, and fur-bearing animals and wildlife, on a farm of which he is the owner, tenant, or operator; except that, if such use is by any person other than the owner, tenant, or operator of such farm, then for purposes of this subparagraph, in applying subsection (a) to this subparagraph, the owner, tenant, or operator of the farm on which gasoline or a liquid taxable under section 26 USC 4041. 4041 issued shall be treated as the user and the ultimate purchaser of such gasoline or liquid;”. (B) The amendments made by subparagraph (A) shall apply with respect to the use of liquids after December 31, 1970. (7) Amendment conforming to the repeal of section 6417.— The table of sections for subchapter B of chapter 65 is amended Ante, p. 1827. by striking out the item relating to section 6417. (8) Amendment conforming to amendment of section 6420.— Section 39(a)(1) is amended by striking out “section 6420(h)” and inserting in lieu thereof “section 6420(g)”. (9) Amendment conforming to amendment of section 6424.— Section 39(a)(3) is amended by striking out “section 6424(g)” Ante, p, 1829. and inserting in lieu thereof “section 6424(f)”. (10) Amendment conforming to amendment of section 7448.— The item relating to section 7448 in the table of sections for part I of subchapter C of chapter 76 is amended to read as follows: “Sec. 7448. Annuities of surviving spouses and dependent children.”. (11) Amendment conforming to amendment of section 7508.— The item relating to section 7508 in the table of sections for chapter 77 is amended to read as follows: “Sec. 7508. Time for performing certain acts postponed by reason of service in combat gone.”. (12) Amendment conforming to amendment of section 7500.— The item relating to section 7509 in the table of sections for chapter 77 is amended to read as follows: “Sec. 7509. Expenditures incurred by the United States Postal Service,”. (13) Amendment conforming to repeal of section 7641.— The table of subchapters for chapter 78 is amended by striking Ante, p. 1832. 26 USC 1 el seq. out the item relating to subchapter C. (A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”. (B) The following provisions are each amended by striking 26 USC 4293, 4483, 5551, 7801, 7802, 9006, 9007. 26 USC 3121, 3303, 3304, 3305, 3306, 9005, 9007, 9010, 9012. 26 USC 31. 26 USC 3304. out “Secretary” each place it appears and inserting in lieu thereof “Secretary of the Treasury”: sections 4293, 4483 (b), 5551, 7801(b). 7802(a), 9006(a), 9006(b), and 9007(d). (C) The following provisions are each amended by striking out “to the Secretary” each place it appears and inserting in lieu thereof “to the Secretary of the Treasury”: sections 3121 (b)(12)(B). 3303(b), 3304(a)(3). 3304(c), 3305(j), 3306(c)(12)(B), 9005(a), 9007(b), 9010(b), and 9012(e)(3). (D) Section 31(b)(1) is amended by striking out “(or his delegate)”. (E) The last sentence of section 3304(c) is amended by striking out “the Secretary shall” and inserting in lieu thereof “the Secretary of Labor shall”. (F) Section 3310(d)(2) is amended by striking out “the 26 USC 3310. Secretary’s action” each place it appears and inserting in lieu thereof “the Secretary of Labor’s action”. (G) Section 3221(a) and 3221(c) are each amended by 26 USC 3221. striking out “of the Treasury” each place it appears. (H) Section 3310(e) is amended by striking out “of 26 USC 3310. the Secretary” and inserting in lieu thereof “of the Secretary of Labor”. (I) Section 4412(c) is amended by striking out “he or his 26 USC 4412. delegate” and inserting in lieu thereof “the Secretary”. (J) Section 5845(f) is amended by striking out “of the 26 USC 5845. Treasury or his delegate”. (K) Section 6402(b) is amended by striking out “(or his 26 USC 6402. delegate)”. (L) Section 7458 is amended by striking out “nor his 26 USC 7458. delegate”. (M) Section 7514 is amended by striking out “functions of 26 USC 7514. the Secretary” and inserting in lieu thereof “functions of the Secretary of the Treasury”. (c) Amendments to Sections Referring to Territories.— (1) Section 6871(a) is amended by striking out “or Territory”. 26 USC 6871. 26 USC 7622. 26 USC 7701. (2) Section 7622(b) is amended by striking out “, Territory,”. (3) Section 7701(a)(4) is amended by striking out “or Territory”. (d) Effective Date.— (1) General rule.— Except as otherwise expressly provided in this section, the amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. (2) Amendments relating to income tax.— The amendments made by this section, when relating to a tax imposed by chapter 26 USC 1, 1401. 1 or chapter 2 of the Internal Revenue Code of 1954, shall take effect with respect to taxable years beginning after December 31, 1976. SEC. 1907. AMENDMENTS OF SUBTITLE G; THE JOINT COMMITTEE ON INTERNAL REVENUE TAXATION. (a) In General.— (1) Amendment of section 8001.— Section 8001 (relating to 26 USC 8001. creation of the Joint Committee) is amended by striking out “Joint Committee on Internal Revenue Taxation” and inserting in lieu thereof “Joint Committee on Taxation”. (2) Amendment of section 8004.— Section 8004 (relating to 26 USC 8004. compensation of staff) is amended by striking out “compensation of a clerk” and inserting in lieu thereof “compensation of the Chief of Staff of the Joint Committee”. (3) Amendment of section 8021.— Section 8021(d) (relating 26 USC 8021. to authority to make expenditures) is amended to read as follows: “(d) To Make Expenditures.— The Joint Committee, or any subcommittee thereof, is authorized to make such expenditures as it deems advisable.”. (4) Amendment of section 8023.— Section 8023(c) (relating 26 USC 8023. to reorganization plans) is amended to read as follows: “(c) Application of Subsections (a) and(b).— Subsections (a) and (b) shall be applied in accordance with their provisions without regard to any reorganization plan becoming effective on, before, or after the date of the enactment of this subsection.”. (5) All references in any other statute, or in any rule, regulation, or order, to the Joint Committee on Internal be venue Taxation shall be considered to be made to the Joint Committee on Taxation. (b) Amendments Conforming to the Amendment of Section 8001.— (1) The heading of subtitle G is amended by striking out “Internal Revenue”, (2) The table of subtitles for the Internal Revenue Code of 1954 is amended by striking out the item relating to subtitle G and inserting in lieu thereof the following: “Subtitle G. The Joint Committee on Taxation.”. (c) Effective Date.— The amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. SEC. 1908. EFFECTIVE DATE OF CERTAIN DEFINITIONS AND DESIGNATIONS For purposes of any amendment made by any provision of this Act (other than this title)— (1) which contains a term the meaning of which is defined in or modified by any provision of this title, and (2) which has an effective date earlier than the effective date of the provision of this title defining or modifying such term, that definition or modification shall be considered to take effect as of such earlier effective date. Subtitle B— Amendments of Code Provisions With Limited Current Application; Repeals and Savings Provisions SEC. 1951. PROVISIONS OF SUBTITLE A (a) References to Internal Revenue Code.— Except as otherwise expressly provided, whenever in this section a reference is made to a section or other provision, the reference shall be considered to be made 26 USC 1. to a section or other provision of the Internal Revenue Code of 1954. (b) Amendments.— (1) Amendment of section 72.— (A) Repeal.— Section 72 (relatinfi to annuities) is amended by striking out subsection (i) (relating to joint and survivor annuities where first annuitant died in 1951, 1952, or 1953). (B) Savings provision.— Notwithstanding subparagraph (A), if the provisions of section 72(i) applied to amounts received in taxable years beginning before January 1, 1977, under an annuity contract, then amounts received under such contract on or after such date shall be treated as if such provisions were not repealed. (2) Amendments of section 108.— (A) Repeal.— Section 108 (relating to income from discharge of indebtedness) is amended by striking out subsection (b) (relating to certain railroad corporations) and by striking out of subsection (a) the following: “(a) Special Rule of Exclusion.—”. (B) Savings provision.— If any discharge, cancellation, 26 USC 108 note. or modification of indebtedness of a railroad corporation occurs in a taxable year beginning after December 31, 1976, pursuant to an order of a court in a proceeding referred to in section 108(b)(A) or (13) which commenced before January 1, 1960, then, notwithstanding the amendments made by subparagraph (A), the provisions of subsection (b) of section 108 shall be considered as not repealed with respect to such discharge, cancellation, or modification of indebtedness. (3) Amendments of section 164.— (A) Repeal.— Section 164 (relating to taxes) is amended 26 USC 164. by striking out subsection (f) (relating to payments for municipal services in atomic energy communities) and by redesignating subsection (g) as subsection (f). (B) Savings provision.— Notwithstanding subparagraph 26 USC 164 note. (A), any amount paid or accrued in a taxable year beginning after December 31, 1976, to the Atomic Energy Commission or its successors for municipal-type services shall be allowed as a deduction under section 164 if such amount would have been deductible by reason of section 164(f)(as in effect for a taxable year ending on December 31, 1976) and if the amount is paid or accrued with respect to real property in a community (within the meaning of section 21 b. of the Atomic Energy Community Act of 1955 (42 U.S.C. 2304 (b))) in which the Commission on December 31, 1976, was rendering municipal-type services for which it received compensation from the owners of property within such community. (4) Repeal of section 168.— (A) Repeal.— Section 168 (relating to amortization of 26 USC 168. emergency facilities) is repealed. (B) Savings provision.— Notwithstanding the repeal 26 USC 168 note. made by subparagraph (A), if a certificate was issued before January 1, 1960, with respect to an emergency facility which is or has been placed in service before the date of the enactment of this Act, the provisions of section 168 shall not, with respect to such facility, be considered repealed. The benefit of deductions by reason of the preceding sentence shall be allowed to estates and trusts in the same manner as in the case of an individual. The allowable deduction shall be apportioned between the income beneficiaries and the fiduciary in accordance with regulations prescribed under section 642(f). (5) Amendment of section 171.— (A) Repeal.— (i) Section 171(b)(1)(B) (relating to amount of 26 USC 171. bond premium) is amended by striking out clause (iii) (relating to certain bonds acquired before 1958). (ii) Section 171(b)(1)(B)(i) is amended by striking out “clause (ii) or (iii) applies,” and inserting in lieu thereof “clause (ii) applies, or”, and by inserting “and” at the end thereof. (iii) Section 171 (b)(1)(B)(ii) is amended by striking out “. or” and inserting “, and” in lieu thereof. (iv) The second sentence in section 171 (b)(2) is amended by striking out “or (iii)”. (B) Savings provision.— Notwithstanding the amendments made by subparagraph (A), in the case of a bond the interest on which is not excludable from gross income— (i) which was issued after January 22, 1951, with a call date not more than 3 years after the date of such issue, and (ii) which was acquired by the taxpayer after January 22, 1954, and before January 1, 1958, the bond premium for a taxable year beginning after December 31, 1975, shall not be determined under section 171(b)(1)(B)(i) but shall be determined with reference to the amount payable on maturity, and if the bond is called before its maturity, the bond premium for the year in which the bond is called shall be determined in accordance with the provisions of section 171 (b)(2). (6) Amendment of section 333.— (A) Repeal.— Section 333 (relating to election as to recognition of gain in certain liquidations) is amended by striking out subsection (g) (relating to the liquidation of certain personal holding companies). (B) Savings provision.— Nothwithstanding subparagraph (A), if any corporation meets all the requirements of section 333(g)(2)(B), as in effect before its repeal by this Act, the liquidation of such corporation shall be treated as if paragraphs (2), (3), and (4) of section 333(g) had not been repealed. (C) Phase-in of 12month holding period requirement.— For purposes of subparagraph (B), the period for holding of stock specified in section 333(g)(2)(A)(u), as in effect before such repeal, shall— (i) in the case of taxable years beginning in 1977, be considered to be “9 months”; and (ii) in the case of taxable years beginning after December 31, 1977, be considered to be “1 year”. (7) Amendment of section 453.— (A) Repeal.— Section 453(b)(2) (relating to limitation on use of installment sales method) is amended to read as follows: “(2) Limitation.— Paragraph (1) shall apply only if in the taxable year of the sale or other disposition— “(A) there are no payments, or “(B) the payments (exclusive of evidences of indebtedness or the purchaser) do not exceed 30 percent of the selling price.”. (B) Savings provision.— Notwithstanding subparagraph (A), in the case of installment payments received during taxable years beginning after December 31, 1976, on account of a sale or other disposition made during a taxable year beginning before January 1, 1954, subsection (b)(1) of section 453 (relating to sales of realty and casual sales of personalty) shall apply only if the income was (by reason of section 53 Stat. 24. 44(b) of the Internal Revenue Code of 1939) returnable on the basis and in the manner prescribed in section 44(a) of such Code. (8) Amendments of section 512.— (A) Repeal.— Section 512(b) (relating to unrelated business 26 USC 512. taxable income) is amended by striking out paragraphs (13) and (14) and by redesignating paragraphs (15), (16), and (17) as paragraphs (13), (14), and (15), respectively. (B) Savings provision.— Notwithstanding subparagraph 26 USC 512 note. (A), income received in a taxable year beginning after December 31, 1975, shall be excluded from gross income in determining unrelated business taxable income, if such income would have been excluded by paragraph (13) or (14) of section 512(b) if received in a taxable year beginning before such date. Any deductions directly connected with income excluded under the preceding sentence in determining unrelated business taxable income shall also be excluded for such purpose. (9) Amendment of section 545.— (A) Repeal.— Section 545(b) (relating to adjustments in 26 USC 545. computing undistributed personal holding company income) is amended by striking out paragraph (9) (relating to deductions on account of certain liens in favor of the United States). (B) Savings provision.— Notwithstanding subparagraph 26 USC 545 note. (A), if any amount was deducted under paragraph (9) of section 545(b) in a taxable year beginning before January 1, 1977, on account of a lien which is satisfied or released in a taxable year beginning on or after such date, the amount so deducted shall be included in income, for purposes of section 545, as provided in the second sentence of such paragraph. Shareholders of any corporation which has amounts included in its income by reason of the preceding sentence may elect to compute the income tax on dividends attributable to amounts so included as provided in the third sentence of such paragraph. (10) Amendments of section 691.— (A) Repeal.— Section 691 (relating to income in respect 26 USC 691. of decedents) is amended by striking out subsection (e) (relating to certain installment obligations transmitted at death) and by redesignating subsection (f) as subsection (e). (B) Savings provision.— Notwithstanding subparagraph 26 USC 691 note. (A), any election made under section 691(e) to have subsection (a)(4) of such section apply in the case of an installment obligation shall continue to be effective with respect to taxable years beginning after December 31, 1976. Section 691(c) shall not apply in respect of any amount included in gross income by reason of the preceding sentence. The liability under bond filed under section 44(d) of the Internal Revenue Code of 1939 (or corresponding provisions of prior law) in 53 Stat. 24. respect of which such an election applies is hereby released with respect to taxable years to which such election applies. (11) Amendments of section 817.— (A) Repeal.— Section 817 is amended by striking out 26 USC 817. subsection (d) (relating to certain gains occurring before 1959). (B) Savings provision.— Notwithstanding subparagraph 26 USC 817 note. (A), any gain in a taxable year beginning after December 31, 1976, from any sale or other disposition of property prior to January 1, 1959, would be excluded or not taken into account for purposes of part 1 of subchapter L of chapter Ante, p. 1839. 1 if subsection (d) of section 817 of such Code were still in effect for such taxable year, such gain shall be excluded for purposes of such part. (12) Repeal of section 1347.— (A) Repeal.— Section 1347 (relating to certain claims filed against the United States before January 1, 1958) is repealed. (B) Savings provision.— Notwithstanding subparagraph (A), if amounts received in a taxable year beginning after December 31, 1976, would have been subject to the provisions of section 1347 if received in a taxable year beginning before such date, the tax imposed by section 1 attributable to such receipt shall be computed as if section 1347 had not been repealed. (13) Repeal of section 1471.— (A) Repeal.— Subchapter A of chapter 4 (relating to recovery of excessive profits on certain Government contracts) is repealed. (B) Savings provision.— If the amount of profit required to be paid into the Treasury under section 2382 or 7300 of title 10, United States Code, is not voluntarily paid, the Secretary of the Treasury or his delegate shall collect the same under the methods employed to collect taxes under subtitle A. All provisions of law (including penalties) applicable with respect to such taxes and not inconsistent with section 2382 or 7300 of title 10 of such Code, shall apply with respect to the assessment, collection, or payment of excess profits to the Treasury as provided in the preceding sentence, and to refunds by the Treasury of overpayments of excess profits into the Treasury. (14) Amendment of section 1481.— (A) Repeal.— Section 1481 (relating to mitigation of effect of renegotiation of Government contracts) is amended by striking out subsection (d) (relating to renegotiation for years prior to 1954). (B) Savings provision.— If, during a taxable year beginning after December 31, 1976, a recovery of excessive profits through renegotiation which relates to profits of a taxable 53 Stat. 1. year subject to the Internal Revenue Code of 1939, the adjustments in respect to such renegotiation shall be made under section 3806 of such Code. (c) Conforming and Clerical Amendments.— (1) Amendment conforming to the amendment of section 1017.— Section 1017 is amended by striking out “section 108(a)” each time it appears therein and inserting in lieu thereof “section 108”. (2) Amendments conforming to repeal of section 168.— (A) Section 1238 is amended by striking out “(relating to amortization deduction of emergency facilities)” and inserting in lieu thereof “(as in effect before its repeal by the Tax Ante, p. 1520. 26 USC 642, 1082. Ante, p. 1837. 26 USC 1245, 1250. Reform Act. of 1976)”. (B) Sections 642(f) and 1082(a)(2)(B) are each amended by striking out “168,”. (C) Sections 1245(a)(2) and 1250(b)(3) are each amended by striking out “168,” each place it appears and inserting in lieu thereof “168 (as in effect before its repeal by the Tax Reform Act of 1976),”. (D) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the item relating to section 168. Ante, p. 1837. (3) Amendments conforming to the repeal of section 1347.— (A) Section 5(b) is amended by striking out paragraph 26 USC 5. (5) and by redesignating paragraphs (2), (3), and (4), as paragraphs (1), (2), and (3), respectively. (B) The table of sections for part VI of subchapter Q of chapter 1 is amended by striking out the item relating to section 1347. Ante, p. 1840. (C) The heading of part VI of subchapter Q of chapter 1 is amended to read as follows: “PART VI— MAXIMUM RATE ON PERSONAL SERVICE INCOME.” (D) The table of parts for subchapter Q of chapter 1 is amended by striking out the item relating to part VI and inserting in lieu thereof the following: “Part VI. Maximum rate on personal service income.” (4) Amendment conforming to the repeal of section 1471.— The table of subchapters for chapter 4 is amended by striking out the item relating to subchapter A. (d) Effective Date.— Except as otherwise expressly provided, the 26 USC 72 note. amendments made by this section shall apply with respect to taxable years beginning after December 31, 1976. SEC. 1952. PROVISIONS OF SUBCHAPTER D OF CHAPTER 39; COTTON FUTURES. (a) Short Title.— This section may be cited as the “United States Cotton Futures Act”. (b) Repeal of Tax on Cotton Futures.— Subchapter D of chapter 39 (relating to tax on cotton futures) is repealed. 26 USC 4851. (c) Definitions.— For purposes of this section— (1) Cotton futures contract.— The term “cotton futures contract” means any contract of sale of cotton for future delivery made at, on, or in any exchange, board of trade, or similar institution or place of bus mess which has been designated a “contract market” by the Commodity Futures Trading Commission pursuant to the Commodity Exchange Act and the term “contract of 7 USC 1. sale” as so used shall be held to include sales, agreements of sale, and agreements to sell. (2) Future delivery.— The term “future delivery” shall not include any cash sale of cotton for deferred shipment or delivery. (3) Person.— The term “person” includes an individual, trust, estate, partnership, association, company, or corporation. (4) Secretary.— The term “Secretary” means the Secretary of Agriculture of the United States. (5) Standards.— The term “standards” means the official cotton standards of the United States established by the Secretary pursuant to the United States Cotton Standards Act, as emended. (d) Bona Fide Spot Markets and Commercial Differences.— (1) Definition.— For purposes of this section, the only markets which shall be considered bona fide spot markets shall be those which the Secretary shall, from time to time, after investigation, determine and designate to be such, and which we shall give public notice. (2) Determination.— In determining, pursuant to the provisions of this section, what markets are bona fide spot markets, the Secretary is directed to consider only markets in “which spot cotton is sold in such volume and under such conditions as customarily to reflect accurately the value of middling cotton and the differences between the prices or values of middling cotton and of other grades of cotton for which standards shall have been established by the Secretary; except that if there are not sufficient places, in the markets of which are made bona fide sales of spot cotton of grades for which standards are established by the Secretary, to enable him to designate at least five spot markets in accordance with subsection (f)(3), he shall, from data as to spot sales collected by him, make rules and regulations for determining the actual commercial differences in the value of spot cotton of the grades established by him as reflected by bona fide sales of spot cotton, of the same or different, grades, in the market selected and designated by him, from time to time, for that purpose, and in that event differences in value of cotton of various grades involved in contracts made pursuant to subsection (f)(1) and (2) shall be determined in compliance with such rules and regulations. It shall be the duty of any person engaged in the business of dealing in cotton, when requested by the Secretary or any agent acting under his instructions, to answer correctly to the best of his knowledge, under oath or otherwise, all questions touching his knowledge of the number of bales, the classification, the price or bona fide price offered, and other trims of purchase or sale, of any cotton involved in any transaction participated in by him, or to produce all books, letters, papers, or documents in his possession or under his control relating to such matter. (3) Withholding information.— Any person engaged in the business of dealing in cotton who shall, within a reasonable time prescribed by the Secretary or any agent acting under his instructions, willfully fail or refuse to answer questions or to produce books, letters, papers, or documents, as required under paragraph (2) of this subsection, or who shall willfully give any answer that is false or misleading, shall, upon conviction thereof, be fined not more than $500. (e) Form and Validity of Cotton Futures Contracts.— Each cotton futures contract shall be a basis grade contract, or a tendered grade contract, or a specific grade contract as specified in subsections (f), (g), or (h) and shall be in writing plainly stating, or evidenced by written memorandum showing, the terms of such contract, including the quantity of the cotton involved and the names and addresses of the seller and buyer in such contract, and shall be signed by the party to be charged, or by his agent in his behalf. No cotton futures contracts which does not conform to such requirements shall be enforceable by, or on behalf of, any party to such contract or his privies. (f) Basis Grade Contracts.— (1) Conditions.— Each basis grade cotton futures contract shall comply with each of the following conditions: (A) Conformity with regulations.— Conform to the regulations made pursuant to this section. (B) Specification of grade, price, and dates of sale and settlement.— Specify the basis grade for the cotton involved in the contract, which shall be one of the grades for which standards are established by the Secretary, except grades prohibited from being delivered on a contract made under this subsection by subparagraph (E), the price per pound at which the cotton of such basis grade is contracted to be bought or sold, the date when the purchase or sale was made, and the month or months in which the contract is to be fulfilled or settled; except that middling shall be deemed the basis £ade incorporated into the contract if no other basis grade specified either in the contract or in the memorandum evidencing the same. (C) Provision for delivery of standard grades only.— Provide that the cotton dealt with therein or delivered thereunder shall be of or within the grades for which standards are established by the Secretary except grades prohibited from being delivered on a contract made under this subsection by subparagraph (E) and no other grade or grades. (D) Provision for settlement on basis of actual commercial differences.— Provide that in case cotton of grade other than the basis grade be tendered or delivered in settlement of such contract, the differences above or below the contract price which the receiver shall pay for such grades other than the basis grade shall be the actual commercial differences, determined as hereinafter provided, (E) Prohibition of delivery of inferior cotton.— Provide that cotton that, because of the presence of extraneous matter of any character, or irregularities or defects, is reduced in value below that of low middling, or cotton that is below the grade of low middling, or, if tinged, cotton that is below the grade of strict middling, or, if yellow stained, cotton that is below the grade of good middling, the grades mentioned being of the official cotton standards of the United States, or cotton that is less than seven-eighths of an inch in length of staple, or cotton of perished staple, or of immature staple, or cotton that is “gin cut” or reginned, or cotton that is “repacked” or “false packed” or “mixed packed” or “water packed”, shall not be delivered on, under, or in settlement of such contract. (F) Provisions for tender in full, notice of delivery date, and certificate of grade.— Provide that all tenders of cotton under such contract shall be the full number of bales involved therein, except that such variations of the number of bales may be permitted as is necessary to bring the total weight of the cotton tendered within the provisions of the contract as to weight; that, on the fifth business day prior to delivery, the person making the tender shall give to the person receiving the same written notice of the date of delivery, and that, on or prior to the date so fixed for delivery, and in advance of final settlement of the contract, the person making the tender shall furnish to the person receiving the same a written notice or certificate stating the grade of each individual bale to be delivered and, by means of marks or numbers, identifying each bale with its grade. (G) Provision for tender and settlement in accordance with government classification.— Provide that all tenders of cotton and settlements therefor under such contract shall be in accordance with the classification thereof made under the regulations of the Secretary by such officer or officers of the Government as shall be designated for the purpose, and the costs of such classification shall be fixed, assessed, col- Regulations. lected, and paid as provided in such regulations. The Secretary is authorized to prescribe regulations for carrying out the purposes of this subparagraph and the certificates of the officers of the Government, as to the classification of any cotton for the purposes of this subparagraph shall be accepted in the courts of the United States in all suits between the parties to such contract, or their privies, as prima facie evidence of the true classification of the cotton involved. (2) Incorporation of conditions in contracts.— The provisions of paragraphs (1)(C), (D), (E), (F), and (G) shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the memorandums evidencing the same, at or prior to the time the same is signed, the phrase “Subject to United States Cotton Futures Act, subsection (f).” (3) Delivery allowances.— For the purpose of this subsection, the differences above or below the contract price which the receiver shall pay for cotton of grades above or below the basic grade in the settlement of a contract of sale for the future delivery of cotton shall be determined by the actual commercial differences in value thereof upon the sixth business day prior to the day fixed, in accordance with paragraph (1)(F), for the delivery of cotton on the contract, established by the sale of spot cotton in the spot markets of not less than five places designated for the purpose from time to time by the Secretary, as such values were established by the sales of spot cotton, in such designated five or more markets. For purposes of this paragraph, such values in the such spot markets shall be based upon the standards for grades of cotton established by the Secretary. Whenever the value Rules and regulations. of one grade is to be determined from the sale or sales of spot cotton of another grade or grades, such value shall be fixed in accordance with rules and regulations which shall be prescribed for the purpose by the Secretary. (g) Tendered Grade Contracts.— (1) Conditions.— Each tendered grade cotton future contract shall comply with each of the following conditions: (A) Compliance with subsection (f).— Comply with all the terms and conditions of subsection (f) not inconsistent with this subsection; and (B) Provision for contingent specific performance.— Provide that, in case cotton of grade or grades other than the basis grade specified in the contract shall be tendered in performance of the contract, the parties to such contract may agree, at the time of the tender, as to the price of the grade or grades so tendered, and that if they shall not then agree as to such price, then, and in that event, the buyer of said contract shall have the right to demand the specific fulfillment of such contract by the actual delivery of cotton of the basis grade named therein and at the price specified for such basis grade in said contract. (2) Incorporation of conditions in contract.— Contracts made in compliance, with this subsection shall be known as “subsection (g) Contracts”. The provisions of this subsection shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the memorandum evidencing the same, at or prior to the time the same is signed, the phrase “Subject to United States Cotton Futures Act, subsection (g)”. (3) Application of subsection.— Nothing in this subsection shall be so construed as to authorize any contract in which, or in the settlement of or in respect to which, any device or arrangement whatever is resorted to, or any agreement is made, for the determination or adjustment of the price of the grade or grades tendered other than the basis grade specified in the contract by any “fixed difference” system, or by arbitration, or by any other method not provided for by this section. (h) Specific Grade Contracts.— (1) Conditions.— Each specific grade cotton futures contract shall comply with each of the following conditions: (A) Conformity with rulesand regulations.— Con form to the rules and regulations made pursuant to this section. (B) Specification of grade, price, dates of sale and delivery.— Specify the grade, type, sample, or description of the cotton involved in the contract, the price per pound at which such cotton is contracted to be bought or sold, the date of the purchase or sale, and the time when shipment or delivery of such cotton is to be made. (C) Prohibition of delivery of other than specified grade.— Provide that cotton of or within the grade or of the type, or according to the sample or description, specified in the contract shall be delivered thereunder, and that no cotton which does not conform to the type, sample, or description, or which is not of or within the grade specified in the contract shall be tendered or delivered thereunder. (D) Provision for specific performance.— Provide that the delivery of cotton under the contract shall not be effected by means of “setoff” or “ring” settlement, but only by the actual transfer of the specified cotton mentioned in the contract. (2) Incorporation of conditions in contract.— The provisions of paragraphs (1)(A), (C). and (D) shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the document or memorandum evidencing the same, at or prior to the time the same is entered into, the words “Subject to United States Cotton Futures Act, subsection (h)”. Ante, p. 1841. (3) Application of subsection.— This subsection shall not be construed to apply to any contract of sale made in compliance with subsection (f) or (g). (i) Liability of Principal for Acts of Agent.— When construing and enforcing the provisions of this section, the act, omission, or failure of any official, agent, or other person acting for or employed by any association, partnership, or corporation within the scope of his employment or office shall, in every case, also be deemed the act, omission, or failure of such association, partnership, or corporation, as well as that of the person. (j) Regulations.— The Secretary is authorized to make such regulations with the force and effect of law as he determines may be necessary to carry out the provisions of this section and the powers vested in him by this section. (k) Validations.— Any person who knowingly violates any regulation made in pursuance of this section, shall, upon conviction thereof be fined not less than $100 nor more than $500, for each violation thereof, in the discretion of the court, and, in case of natural persons, may, in addition be punished by imprisonment for not less than 30 days nor more than 90 days, for each violation, in the discretion of the court except that this subsection shall not apply to violations subject to subsection (d)(3). (l) Applicability to Contracts Prior to Effective Date.— The provisions of this section shall not apply to any cotton futures contract entered into prior to the effective date of this section or to any act or failure to act by any person prior to such effective date and all such prior contracts, acts or failure to act shall continue to be governed by 26 USC 1. the applicable provisions of the Internal Revenue Code of 1954 as in effect prior to the enactment of this section. All designations of bona fide spot markets and all rules and regulations issued by the Secretary pursuant to the applicable provisions of the Internal Revenue Code of 1954 which were in effect on the effective date of this section, shall remain fully effective as designations and regulations under this section until superseded, amended, or terminated by the Secretary. (m) Authorization.— There are authorized to be appropriated such sums as may be necessary to carry out this section. (n) Conforming and Clerical, Amendments.— (1) Section 6808 (relating to cross references) is amended by striking out paragraph (2), and by redesignating paragraphs (3), (6), and (11) as paragraphs (1), (2), and (3), respectively. (2) (A) Section 7233 (relating to failure to pay tax on cotton futures) is repealed. (B) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7233. (3) (A) Section 7263 (relating to penalties concerning cotton futures) is repealed. (B) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7263. (4) (A) Subchapter E of chapter 76 (relating to miscellaneous provisions regarding cotton futures contracts) is repealed. (B) The table of subchapters for chapter 76 is amended by striking out the items relating to subchapter E. (5) Chapter 39 (relating to regulatory taxes) is amended by striking out the chapter heading and the table of subchapters. (6) The table of chapters for subtitle D is amended by striking out the item relating to chapter 39. (o) Effective Date.— The provisions of this section shall take effect on the 90th day after the date of the enactment of this Act.

10. 1976

    Pub. L. 94–455 title XIX · 90 Stat. 1520

    Struck and inserted · 26 U.S.C. § 5008(c)(1)

    Pub. L. 94–455, §§ 1905(a)(2)(C), 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing and inserted “or under section 7652” after “under section 5001(a)(1)”

    Source evidence

    Code amendment note
    Subsec. (c)(1). Pub. L. 94–455, §§ 1905(a)(2)(C), 1906(b)(13)(A), struck out “or his delegate” after “Secretary” wherever appearing and inserted “or under section 7652” after “under section 5001(a)(1)”.

    Enacted provision · exact public law
    TITLE XIX— REPEAL AND REVISION OF OBSOLETE, RARELY USED, ETC., PROVISIONS OF INTERNAL REVENUE CODE OF 1954 SUBTITLE A— AMENDMENTS OF INTERNAL REVENUE CODE GENERALLY SEC. 1901. AMENDMENTS OF SUBTITLE A; INCOME TAXES. (a) In General.— (1) Amendment of section 2.— Subsection (c) of section 2 (relating to certain married individuals living apart) is amended to read as follows: “(c) Certain Married Individuals Living Apart.— For purposes of this part, an individual shall be treated as not married at the close of the taxable year if such individual is so treated under the provisions of section 143 (b).” (2) Repeal of section 36.— Section 35 (relating to partially tax-exempt interest received by individuals) is repealed. (3) Amendment of section 39.— Section 39 (relating to certain uses of gasoline, special fuels, and lubricating oil) is amended by striking out subsections (b) and (c) and inserting after subsection (a) the following new subsection: “(b) Exception.— Credit shall not be allowed under subsection (a) for any amount payable under section 6421, 6424, or 6427, if a claim for such amount is timely filed and, under section 6421 (i), 6424 (f), or 6427(f), is payable under such section.” (4) Amendments of section 46.— (A) The second sentence of section 46(a)(4), as redesignated by this Act, is amended by striking out “section 408(e)” and inserting in lieu thereof “section 408(f)”. (B) Clause (iii) of section 46(c)(3)(B) (relating to public utility property) is amended by striking out “47 U.S.C., sec. 222(a)(5)” and inserting in lieu thereof “47 U.S.C. 222(a)(5)”. (5) Amendments or section 48.— (A) Section 48(a)(2)(B)(vi) (relating to section 38 property used outside the United States) is amended by striking out “; 43 U.S.C., sec. 1331)” and inserting in lieu thereof “(43 U.S.C. 1331))”. (B) Section 48(a)(2)(B)(viii) is amended by striking out “47 U.S.C., sec. 702” and inserting in lieu thereof “47 U.S.C. 702”. (6) Amendment of section 50a.— The second sentence of section 50A (a)(3) (relating to liability for tax) is amended by 26 USC 50A. striking out “section 408 (e)” and inserting in lieu thereof “section 408(f)”. (7) Repeal of section 51.— Subchapter A of chapter 1 is 26 USC 51. amended by striking out part V (relating to tax surcharge). (8) Amendments op section 62.— Section 62 (relating to definition 26 USC 62. of adjusted gross income) is amended by redesignating paragraph (11), as added by the Act of October 26, 1974 (Public Law 93–483), as paragraph (12). (9) Additional amendment of section 62.— Section 62(12), as redesignated by subparagraph (A) of this paragraph, is amended by striking out “trade or business to the extent” and inserting in lieu thereof “trade or business, to the extent”. (10) Definition of ordinary income.— Part I of subchapter B of chapter 1 (relating to definitions of gross income, adjusted 26 USC 61. gross income, and taxable income) is amended by adding at the end thereof the following new section: “SEC. 64. ORDINARY INCOME DEFINED. “For purposes of this subtitle, the term ‘ordinary income’ includes any gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b). Any gain from the sale or exchange of property which is treated or considered, under other provisions of this subtitle, as ‘ordinary income’ shall be treated as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b).” (11) Definition of ordinary loss.— Part I of subchapter B of chapter 1 (relating to definitions of gross 26 USC 61. income, adjusted gross income, and taxable income) is amended by adding at the end thereof the following new section: “SEC. 65. ORDINARY LOSS DEFINED. “For purposes of this subtitle, the term ‘ordinary loss’ includes any loss from the sale or exchange of property which is not a capital asset. Any loss from the sale or exchange of property which is treated or considered, under other provisions of this subtitle, as ‘ordinary loss’ shall be treated as loss from the sale or exchange of property which is not a capital asset.” (12) Amendment of section 72.— Section 72(d)(1) (relating 26 USC 72. to employees’ annuities) is amended by striking out “(whether or not before January 1, 1954)” and by striking out “(under this paragraph and prior income tax laws)”. (13) Additional amendment of section 72.— Section 72(m)(4)(A) (relating to assignments or pledges) is amended by striking out “an individual retirement amount” and inserting in lieu thereof “an individual retirement account”. (14) Repeal of section 76.— Section 76 (relating to mortgages 26 USC 76. made or obligations issued by joint stock land banks) is repealed. (15) Amendment of section 83.— Section 83(b)(2) (relating 26 USC 83. to election to include the value of restricted property in gross income) is amended by striking out “(or, if later, 30 days after 26 USC 1 note. the date of the enactment of the Tax Reform Act of 1969)”. (16) Amendment of section 101.— Section 101 is amended by 26 USC 101. striking out subsection (f) (relating to effective date of section). (17) Amendments of section 103.— (A) Section 103(a) (relating to tax-exempt interest), as 26 USC 103. amended by this Act, is amended by inserting “and” at the end of paragraph (1), by striking out paragraphs (2) and (3), and by redesignating paragraph (4) as paragraph (2). (B) Section 103 is amended by striking out subsection (b) (relating to certain exceptions) and by redesignating subsections (c), (d), (e) (f), and (g)(as added by this Act) as subsections (b), (c), (d), (e), and (f) respectively. (C) Section 103(b)(1) (relating to industrial development bonds), as redesignated by subparagraph (B) of this paragraph, is amended by inserting “or (2)” after “(a)(1)”. (D) Section 103(c)(2)(A) (relating to definition of arbitrage bonds), as redesignated by subparagraph (B) of this paragraph, is amended by inserting “or (2)” after “(a)(1)”. (E) Section 103(e) (relating to certain cross references) as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(e) Cross References.— “For provisions relating to the taxable status of— “(1) Puerto Rican bonds, see section 3 of the Act of March 2, 1917, as amended (48 U.S.C. 745). “(2) Virgin Islands insular and municipal bonds, see section 1 of the Act of October 27, 1919 (48 U.S.C. 1403). “(3) Certain obligations issued under title I of the Housing Act of 1949, see section 102(g) of title I of such Act (42 U.S.C. 1452(g)).” (18) Amendments of section 104.— (A) Section 104(a)(4) (relating to exclusion of compensation for injuries or sickness) is amended by striking out “;60 Stat. 1021” (B) Section 104(c)(2) as redesignated by section 505 of this Act, is amended to read as follows: “(2) For exclusion of part of disability retirement pay from the application of subsection (a)(4) of this section, see section 1403 of title 10, United States Code (relating to career compensation laws).” (19) Amendment of section 115.— Section 115 (relating to income of States, municipalities, etc.) is amended to read as follows: “SEC. 115. INCOME OF STATES, MUNICIPALITIES, ETC. “Gross income does not include— “(1) income derived from any public utility or the exercise of any essential governmental function and accruing to a State or any political subdivision thereof, or the District of Columbia; or “(2) income accruing to the government of any possession of the United States, or any political subdivision thereof.” (20) Amendment of section 116.— Subsection (a) of section 116 (relating to partial exclusion of dividends received by individuals) is amended by striking out “Effective with respect to any taxable year ending after July 31, 1954, gross income” and inserting in lieu thereof “Gross income”. (21) Amendment of section 124.— Section 124 (relating to cross references to other Acts) is amended to read as follows: “SEC. 124. CROSS REFERENCES TO OTHER ACTS. “(a) For exemption of— “(1) Adjustments of indebtedness under wage earners’ plans, see section 679 of the Bankruptcy Act (11 U.S.C. 1079). “(2) Allowances and expenditures to meet losses sustained by persons serving the United States abroad, due to appreciation of foreign currencies, see section 5943 of title 5, United States Code. “(3) Amounts credited to the Maritime Administration under section 9(b)(6) of the Merchant Ship Sales Act of 1946, see section 9(c)(1) of that Act (50 U.S.C. App. 1742). “(4) Benefits under laws administered by the Veterans’ Administration, see section 3101 of title 38, United States Code. “(5) Earning of ship contractors deposited in special reserve funds, see section 607(d) of the Merchant Marine Act, 1936 (46 U.S.C. 1177). “(6) Income derived from Federal Reserve banks, including capital stock and surplus, see section 7 of the Federal Reserve Act (12 U.S.C. 531). “(7) Railroad retirement annuities and pensions, see section 12 of the Railroad Retirement Act of 1935 (45 U.S.C. 2281). “(8) Railroad unemployment benefits, see section 2(e) of the Railroad Unemployment Insurance Act (45 U.S.C. 352). “(9) Special pensions of persons on Army and Navy medal of honor roll, see 38 U.S.C. 562(a)–(c). “(b) For extension of military income-tax-exemption benefits to commissioned officers of Public Health Service in certain circumstances, see section 212 of the Public Health Service Act (42 U.S.C. 213).” (22) Amendment of section 143.— Section 143 (relating to 26 USC 143. determination of marital status) is amended by striking out “this part” each place it appears and inserting in lieu thereof “this part and part V”. (23) Amendment of section 151.— Section 151 (e)(4)(defining 26 USC 151. student and educational institution) is amended to read as follows: “(4) Student defined.— For purposes of paragraph (1)(B)(ii), the term ‘student’ means an individual who during each of 5 calendar months during the calendar year in which the taxable year of the taxpayer begins— “(A) is a full-time student at an educational organization described in section 170(b)(1)(A)(ii); or “(B) is pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of an educational organization described in section 170(b)(1)(A)(ii) or of a State or political subdivision of a State.” (24) Amendments or section 152.— (A) Section 152(a)(defining dependent) is amended— 26 USC 152. (i) by inserting “or” at the end of paragraph (8), (ii) by striking out “, or” at the end of paragraph (9) and inserting in lieu thereof a period, and (iii) by striking out paragraph (10). (B) Section 152(b)(3) (relating to rules concerning the definition of dependent) is amended to read as follows: “(3) The term ‘dependent’ does not include any individual who “Dependent.” is not a citizen or national of the United States unless such individual is a resident of the United States or of a country contiguous to the United States. The preceding sentence shall not exclude from the definition of ‘dependent’ any child of the tax-payer legally adopted by him, if, for the taxable year of the tax-payer, the child has as his principal place of abode the home of the taxpayer and is a member of the taxpayer’s household, and if the taxpayer is a citizen or national of the United States.” (25) Amendments of section 164.— Section 164(d)(2) (relating 26 USC 164. to apportionment of taxes on real property between the seller and purchaser) is amended by striking out subparagraphs (B) and (C), and by redesignating subparagraph (D) as subparagraph (B). (26) Amendments of section 165.— Section 165 (relating 26 USC 165. to deduction of losses) is amended by striking out subsection (i) (relating to property confiscated by Cuba), and by redesignating subsection (j) as subsection (i). (27) Amendments or section 167.— (A) Section 167 (d) (relating to agreement as to useful life for depreciation) is amended by striking out “after the date of enactment of this title” and inserting in lieu thereof “after August 16, 1954”. (B) Section 167(f)(2)(defining personal property) is amended by striking out “the date of the enactment of the Revenue Act of 1962” and inserting in lieu thereof “October 16, 1962”. (C) Section 167(1)(4)(A) (relating to election as to increased-capacity property) is amended by striking out “within 180 days after the date of the enactment of this subparagraph” and inserting in lieu thereof “before June 29, 1970,”. (28) Amendments of section 170.— (A) (i) Section 170 (relating to charitable deductions) is amended by striking out subsections (f)(6) and (g) (relating to unlimited charitable deductions allowed for taxable years beginning before January 1, 1975), and by redesignating subsections (h), (i), and (j) as subsections (g), (h), and (i), respectively. (ii) Section 170(b)(1) (relating to percentage limitations on deductions for individuals) is amended by striking out subparagraph (C) (relating to unlimited deductions), and by redesignating subparagraphs (D), (E), and (F) as subparagraphs (C), (D), and (E), respectively. (iii) Section 170(b)(1)(A)(vii) is amended by striking out “subparagraph (E)” and inserting in lieu thereof “subparagraph (D)”. (iv) Section 170(b)(1)(B)(ii) is amended by striking out “subparagraph (D)” and inserting in lieu thereof “subparagraph (C)”. (v) Section 170(c) (relating to definition of charitable contribution) is amended by striking out in the last sentence “subsection (h)” and inserting in lieu thereof “subsection (g)”. (vi) Section 170(e)(1)(B)(ii) (relating to certain contributions of ordinary income and capital gain property) is amended by striking out “subsection (b)(1)(E)” and inserting in lieu thereof “subsection (b)(1)(D)”. (B) Section 170(d)(1)(A) (relating to carryover of excess charitable contributions) is amended by striking out “(30 percent, in the case of a contribution year beginning before January 1, 1970)”. (C) Section 170(h) (relating to disallowance of deductions in certain cases), as redesignated by subparagraph (A)(i) of this paragraph, is amended by striking out “64 Stat. 996;”. (D) Section 170(i) (relating to cross references), as redesignated by subparagraph (A)(i) of this paragraph, is amended to read as follows: “(i) Other Cross References.— “(1) Fer charitable contributions of estates and trusts, see section 642(c). “(2) For nondeductibilit; of contributions by common trust funds, see section 584. “(3) For charitable contributions of partners, see section 702. “(4) For charitable contributions of nonresident aliens, see section 873. “(5) For treatment of gifts for benefit of or use in connection with the Naval Academy as gifts to or for use of the United States, see section 6973 of title 10, United States Code. “(6) For treatment of gifts accepted by the Secretary of State under the Foreign Service Act of 1946 as gifts to or for the use of the United States, see section 1021(e) of that Act (22 U.S.C. 809(e)). “(7) For treatment of gifts of money accepted by the Attorney General for credit to the ‘Commissary Funds, Federal Prisons’ as gifts to or for the use of the United States, see section 2 of the Act of May 15, 1952. as amended by the Act of July 9, 1952 (31 U.S.C. 7 25s–4).” (29) Amendments of section 172.— (A) (i) Section 172(b)(1) (relating to years to which loss Ante, p. 1755. may be carried) is amended by striking out subparagraph (E). (ii) Section 172(b)(3) is amended by striking out subparagraphs 26 USC 172. (E) and (F). (B) Section 172(c) (relating to definition of net operating loss) is amended by striking out “(for any taxable year ending after December 31, 1953)”. (C) (i) Section 172 (relating to net operating loss deduction) is amended by striking out subsections (f), (g), and (i), and by redesignating subsections (h), (j), (k), and (1) as subsections (f) , (g). (h), and (i), respectively. (ii) Section 172(b)(1)(C) (relating to regulated transportation corporations) is amended by striking out “subsection (j)(1)” and “subsection (j)”, and inserting in lieu thereof “subsection (g)(1)” and “subsection (g)”, respectively. (iii) Paragraphs (1)(D) and (3)(C)(i) of section 172 Post, p. 1920. (b) (relating to net operating loss carryovers and carry-backs) are each amended by striking out “subsection (k)” and inserting in lieu thereof “subsection (h)”. (iv) Section 172(b)(2) (relating to amount of carrybacks and carryovers) is amended by striking out “subsections (i) and (j)” and inserting in lieu thereof Subsection (g)”. (D) Section 172(e) (relating to law applicable to computations) is amended by striking out the last sentence. (E) Section 172(g)(2) (relating to certain regulated transportation corporations), as redesignated by subparagraph (C) of this paragraph, is amended by striking out paragraph (4). (30) Amendments of sections 174 and 175.— Section 174(a)(2) 26 USC 174, 175. (A)(1) (relating to research and development expenditures) and section 175(d)(1)(A) (relating to soil and water conservation expenditures) are each amended by striking out “the date on which this title is enacted,” and inserting in lieu thereof “August. 16, 1954,”. (31) Repeal of section 187.— Section 187 (relating to rapid 26 USC 187. amortization for certain coal mine safety equipment) is repealed. (32) Amendment of section 219.— Section 219(b)(2)(A)(iv) 26 USC 219. (disqualifying governmental plan participants from contributing to individual retirement accounts, etc.) is amended by striking out “division” and inserting in lieu thereof “subdivision”. (33) Repeat of section 242.— Section 242 (relating to partially 26 USC 242. tax-exempt interest received by corporations) is repealed. (34) Amendments of section 243.— (A) Section 243(a)(2) (relating to the dividends received deduction) is amended by inserting after “Small Business Investment Act of 1958” the following: “(15 U.S.C. 661 and following)”. (B) Section 243(b)(2)(A) (relating to dividends received by a member of an affiliated group) is amended by striking out “(except that in the case of a taxable year of a member beginning in 1963 and ending in 1964, if the election is effective for the taxable year of the common parent corporation which includes the last day of such taxable year of such member, such election shall be effective for such taxable year of such member, if such member consents to such election with respect to such taxable year)”. (35) Amendment of section 247.— Section 247(b)(2) (relating to preferred stock) is amended to read as follows: “(2) Preferred stock.— “(A) In general.— The term ‘preferred stock’ means stock issued before October 1, 1942, which during the whole of the taxable year (or the part of the taxable year after its issue) was stock the dividends in respect of which were cumulative, limited to the same amount, and payable in preference to the payment of dividends on other stock. “(B) Certain stock issued on or after October 1, 1942.— Stock issued on or after October 1, 1942, shall be deemed for purposes of this paragraph to have been issued before October 1, 1942, if it was issued to refund or replace bonds or debentures issued before October 1, 1942, or to refund or replace other preferred stock (including stock which is preferred stock by reason of this subparagraph or subparagraph (D)), but only to the extent that the par or stated value of the new stock does not exceed the par, stated, or face value of the bonds or debentures issued before October 1, 1942, or the other preferred stock, which such new stock is issued to refund or replace. “(C) Determination under regulations.— The determination of whether stock was issued to refund or replace bonds or debentures issued before October 1, 1942, or to refund or replace other preferred stock, shall be made under regulations prescribed by the Secretary. “(D) Issuance of stock.— For purposes of subparagraph (B), issuance of stock includes issuance either by the same or another corporation in a transaction which is a reorganization (as defined in section 368(a)), a transaction to which section 371 (relating to insolvency reorganizations) applies, 26 USC 1081. or a transaction subject to part VI of subchapter 0 (relating to exchanges in SEC. obedience orders), or the respectively corresponding provisions of the Internal Revenue Code of 1939.” (36) Amendment of section 248.— Section 248(c) (relating to organizational expenditures) is amended by striking out “the date of enactment of this title” and inserting in lieu thereof “August 16, 1954”, (37) Amendment of section 265.— Section 265(2) (relating to tax-exempt interest) is amended by striking out “(other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer)”, (38) Amendment of section 269.— Section 269 (relating to 26 USC 269. acquisitions made to evade or avoid income tax) is amended by striking out subsection (c) (relating to presumption in the ease of disproportionate purchase price). (39) Amendment of section 275.— Section 275(a)(1)(C) 26 USC 275. relating to nondeductible taxes) is amended by striking out (“, and corresponding provisions of prior revenue laws”. (40) Amendments of section 281.— (A) Section 281(d)(1)(A) (relating to definition of terminal 26 USC 281. railroad corporation) is amended by inserting after “Interstate Commerce Act” the following: “(49 U.S.C. 1 and following) (B) Section 281 (relating to terminal railroad corporations and their shareholders) is amended by striking out subsection (e) (relating to taxable years ending before October 23, 1962) and by redesignating subsection (f) as subsection (e). (41) Amendment of section 301.— Section 301 (relating to distributions 26 USC 301. of property) is amended by striking out subsection (e) (relating to certain distributions by personal service corporations). (42) Amendments of section 311.— (A) Section 311(d)(1) (relating to appreciated property 26 USC 311. used to redeem stock) is amended by striking out “then again shall be recognized” and inserting in lieu thereof “then a gain shall be recognized”. (B) (i) Section 311(d)(2) (relating to exceptions and limitations) is amended by striking out subparagraph (C) (relating to certain distributions before December 1, 1974) and by redesignating subparagraphs (D), (E), (F), and (G) as subparagraphs (C), (D). (E), and (F), respectively. (ii) The amendments made by clause (i) shall apply only 26 USC 311 note. with respect to distributions after November 30, 1974. (C) Section 311(d)(2)(C), as redesignated by subparagraph (B) of this paragraph, is amended by striking out “26 Stat. 209;” and “38 Stat. 730;”. (43) Amendments of section 312.— (A) Section 312(d)(1) (relating to certain distributions 26 USC 312. of stock and securities) is amended by striking out “this Code” each place it appears and inserting in lieu thereof “this title”. (B) Section 312 (relating to earnings and profits) is amended by striking out subsection (h) (relating to personal service corporations) and by redesignating subsections (i) and (j) as subsections (h) and (i), respectively. (C) Subsection (i) of section 312 (relating to distribution of proceeds of certain loans), as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(i) Distribution of Proceeds of Loan Insured by the United States.— If a corporation distributes property with respect to its stock and if, at the time of distribution— “(1) there, is outstanding a loan to such corporation which was made, guaranteed, or insured by the United States (or by any agency or instrumentality thereof), and “(2) the amount of such loan so outstanding exceeds the adjusted basis of the property constituting security for such loan, then the earnings and profits of the corporation shall be increased by the amount of such excess, and (immediately after the distribution) shall be decreased by the amount of such excess. For purposes of paragraph (2), the adjusted basis of the property at the time of distribution shall be determined without regard to any adjustment under section 1016(a)(2) (relating to adjustment for depreciation, etc.). For purposes of this subsection, a commitment to make, guarantee, or insure a loan shall be treated as the making, guaranteeing, or insuring of a loan.” (D) Section 312(j)(3) (relating to foreign investment companies), as redesignated by subsection (b)(32)(B)(i), is amended to read as follows: “(3) Partial liquidations and redemptions.— If a foreign investment company (as defined in section 1246) distributes amounts in partial liquidation or in a redemption to which section 302(a) or 303 applies, the part of such distribution which is properly chargeable to earnings and profits shall be an amount which is not in excess of the ratable share of the earnings and profits of the company accumulated after February 28, 1913, attributable to the stock so redeemed.” (44) Amendment of section 333.— Section 333(a)(1) (relating to election as to recognition of gain in certain liquidations) is amended by striking out “on or after June 22, 1954”. (45) Amendment of section 334.— Section 334(b)(2)(A) (relating to liquidation of subsidiary) is amended to read as follows: “(A) the distribution is pursuant to a plan of liquidation adopted not more than 2 years after the date of the transaction described in subparagraph (B) (or, in the case of a series of transactions, the date of the last such transaction); and”. (46) Amendments of section 337.— (A) Section 337(a) (relating to nonrecognition of gain or loss on certain liquidations) is amended to read as follows: “(a) General Rule.— If, within the 12month period beginning on the date on which a corporation adopts a plan of complete liquidation, all of the assets of the corporation are distributed in complete liquidation, less assets retained to meet claims, then no gain or loss shall be recognized to such corporation from the sale or exchange by it of property within such 12month period.” (B) The first sentence, of section 337(d) (relating to certain minority stockholders) is amended by striking out “on or after January 1, 1958”. (47) Repeal of section 342.— Section 342 (relating to the liquidation of certain foreign personal holding companies) is repealed. (48) Amendments of section 351.— (A) Section 351(a) (relating to transfer to corporation controlled by transferor) is amended by striking out “(including, in the case of transfers made on or before June 30, 1967, an investment company)”. (B) Section 351(d) (relating to application of June 30, 1967, date) is amended to read as follows: “(d) Exception.— This section shall not apply to a transfer of property to an investment company.” (C) The amendments made by this paragraph shall take effect with respect to transfers of property occurring after the date of the enactment of this Act. (49) Repeal of section 363.— Section 363 (a cross reference to 26 USC 363. other sections) is repealed. (50) Amendments of section 371.— Section 371 (a)(1) (relating 26 USC 371. to certain reorganization exchanges by corporations) is amended— (A) by striking out “49 Stat. 922;” and (B) by striking out “(52 Stat. 883–905; 11 U.S.C., chapter 10) or the corresponding provisions of prior law” and inserting in lieu thereof “(11 U.S.C. 501 and following)”. (51) Amendment of section 372.— Section 372(a) (relating 26 USC 372. to basis in connection with bankruptcy proceedings) is amended by striking out “54 Stat. 709;”. (52) Repeal of section 373.— Section 373 (relating to nonrecognition 26 USC 373. of loss in certain railroad reorganizations) is repealed. (53) Amendment of section 374 .— Section 374(a)(1) (relating 26 USC 374. to non recognition of gain or loss in certain railroad reorganizations) is amended by striking out “49 Stat. 922;”. (54) Amendment of section 381.— Section 381 (c) (relating to 26 USC 381. items carried over in certain corporate acquisitions) is amended by striking out paragraph (20). (55) Repeal of sections 391 through 395.— Subchapter C of 26 USC 391–395. chapter 1 (relating to corporate distributions and adjustments) is amended by striking out part VII (relating to effective dates of subchapter C). (56) Amendments of section 401.— (A) Paragraphs (12) and (13) of section 401(a) (relating 26 USC 401. to requirements for qualification) are each amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (B) Paragraph (15) of section 401(a) is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu 29 USC 1001 note. thereof “September 2, 1974,”. (C) Paragraph (19) of section 401(a) is amended by striking out “enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (D) The last sentence of section 401(a) is amended to read as follows: “Paragraphs (11), (12), (13), (14), (15), (19), and (20) shall apply only in the case of a plan to which section 411 (relating to minimum vesting standards) applies without regard to subsection (e)(2) of such section.” (57) Amendments of section 402.— (A) Section 402(a)(4) (relating to distributions made to 26 USC 402. nonresident alien individuals) is amended by striking out “basic salary” each place it appears therein and inserting in lieu thereof “basic pay”, and by amending the last sentence in such paragraph to read as follows: “In the case of distributions under the civil service retirement laws, the term ‘basic pay’ shall have the meaning provided in section 8331(3) of title 5, United States Code.” (B) Section 402 (relating to taxability of beneficiary of employees’ trusts) is amended by striking out subsection (d) (relating to certain trust agreements made before October 21, 1942), (C) (i) So much of the third sentence of section 402(e)(4) 26 USC 402. (A) (relating to definition of lump sum distributions) as precedes “a distribution of an annuity contract” is amended to read as follows: “Except for purposes of subsection (a)(2) and section 403(a)(2),”. (ii) The amendment made by clause (i) shall apply with respect to distributions or payments made after December 31, 1973, in taxable years beginning after such date. (58) Amendment of section 403.— The last two sentences of section 403(a)(4) (relating to taxation of employee annuities) are amended to read as follows: “For purposes of this title, a transfer described in subparagraph (B)(1) shall be treated as a rollover contribution described in section 408(d)(3). Subparagraph (B)(ii) does not apply in the case of a transfer to an employees’ trust, or annuity plan if any part of a payment described in subparagraph (A) is attributable to an annuity plan under which the employee was an employee within the meaning of section 401(c)(1) at the time contributions were made on his behalf under the plan.” (59) Amendment of section 404.— Section 404 (relating to deduction for contributions to pension plans, etc.) is amended by striking out subsection (d) (relating to carryover of pre–1954 unused deductions). (60) Amendment of section 409.— Section 409(b)(3)(C) (relating to tax-free rollovers of individual retirement bonds) is amended by striking out “section 403(d)(3).” and inserting in lieu thereof “section 408 (d)(3).” (61) Amendments of section 410.— (A) Subparagraphs (C) and (D) of section 410(a)(5) (relating to breaks in service) are each amended by striking out “purposes of subsection (a)(1)” and inserting in lieu thereof “purposes of paragraph (1)”. (B) Paragraph (1)(C) of section 410(c) (relating to application of minimum participation standards) is amended by striking out “the date of the enactment of the Employee 29 USC 1001 note. Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974,”. (C) Paragraph (2) of section 410(c) is amended by striking out “the day before the date of the enactment of this section” and inserting in lieu thereof “September 1, 1974”. (62) Amendments of section 411.— (A) Subsection (a) of section 411 (relating to minimum vesting standards) is amended by striking out “subsection (a)(8)” and inserting in lieu thereof “paragraph (8)”. (B) Subsection (a)(3)(D)(iii) of section 411 is amended— (i) by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and “the date of the enactment of such Act” and inserting in lieu thereof in both such places “September 2, 1974”, and (ii) by striking out “the date of the enactment of the Act” and inserting in lieu thereof “September 2, 1974,”. (C) The heading for subparagraph (C) of section 411 (a)(7) is amended to read as follows: “(C) Repayment of subparagraph (b) distributions.—” (D) Subsection (b)(1)(D)(i) and (e)(1)(C) of section 411 are each amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. 29 USC 1001 note. (E) Subsection (e)(2) of section 411 is amended by striking out “the date before the date of the enactment of the Employee Retirement Income Security Act of 1974” and 26 USC 411. inserting in lieu thereof “September 1, 1974”. (63) Amendments of section 412.— (A) Subsection (h) of section 412 (relating to minimum 26 USC 412. funding standards) is amended by striking out “the day before the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 1, 1974”. (B) Subsection (h)(5) of section 412 is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (64) Amendments of section 414.— (A) The heading for section 414(f) (relating to multi-employer 26 USC 414. plans) is amended to read as follows: ‘(f) Multiemployer Plan.—” (B) Section 414(1) (relating to mergers and consolidations of plans or transfers of plan assets) is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (65) Amendments of section 415.— (A) Section 415(b)(2)(A) (relating to adjustments for 26 USC 415. certain forms of benefits) is amended by striking out “and 409(b)(3)(C)” and inserting in lieu thereof “and 409(b)(3)(C))”. (B) Section 415(b)(2)(B) is amended by striking out “(as defined in section 401(a)(11)(II)(iii))” and inserting in lieu thereof “(as defined in section 401 (a)(11)(G)(iii))”. (66) Amendments of section 453.— (A) Section 453(c)(3) (relating to adjustment in tax for 26 USC 453. amounts previously taxed) is amended by striking out “corresponding provisions of the Internal Revenue Code, of 1939” and inserting in lieu thereof “corresponding provisions of the Internal Revenue Code of 1954”. (B) Section 453(d)(4)(B) (relating to liquidations to which section 337 applies) is amended by striking out “or section 617(d)(1)” and inserting in lieu thereof “, 617(d)” (67) Amendment of section 455.— Section 455(c)(3)(B) 26 USC 455. (relating to prepaid subscription income) is amended by striking out “for his first taxable year (i) which begins after December 31, 1957, and (ii) in which he receives prepaid subscription income in the trade or business” and inserting in lieu thereof “for his first taxable year in which he receives prepaid subscription income in the trade or business”. (68) Amendment of section 458.— Section 456(c)(3)(B) 26 USC 456. (relating to election without consent with respect to treatment of prepaid dues) is amended by striking out “for its first taxable year (i) which begins after December 31, 1960, and (ii)” and inserting in lieu thereof “for its first taxable year”. (69) Amendments of section 461.— (A) Section 461(c) (relating to accrual of real property taxes) is amended by striking out paragraph (2) and by redesignating paragraph (3) as paragraph (2). (B) Section 461(c)(2) (relating to elections without consent), as redesignated by subparagraph (A), is amended by striking out “his first taxable year which begins after December 31, 1953, and ends after the date of enactment of this title in which the taxpayer” and inserting in lieu thereof “his first taxable year in which he”. (70) Amendments of section 481.— (A) Section 481(b) (relating to limitation on tax where substantial adjustments are required by a change in accounting method) is amended by striking out paragraphs (4), (5), and (6) (relating to pre–1954 adjustments). (B) Section 481(b)(1) and (2) are each amended by striking out “, other than the amount of such adjustments to which paragraph (4) or (5) applies,” each place it appears. (71) Amendments of section 508.— (A) Subsections (a) and (b) of section 508 (relating to special rules relating to 501(c)(3) organizations) are each amended by striking out the hist sentence therein. (B) Section 508(e)(2) (relating to special rules for existing private foundations) is amended by striking out subparagraph (A) (relating to taxable years beginning before 1972), by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively, and by striking out “(B)” in subparagraph (B)(as so redesignated) and inserting in lieu thereof “(A)”. (C) Section 508(d)(2)(A) (relating to disallowance of deductions for certain charitable gifts or bequests) is amended by striking out “(e)(2)(B) and (C)” and inserting in lieu thereof “(e)(2)”. (72) Amendments of section 514.— (A) Section 514(c)(1) (relating to definition of acquisition indebtedness) is amended by striking out the comma at the end of subparagraph (C) and all that follows, and inserting in lieu thereof a period. (B) Section 514 (relating to unrelated debt-financed income) is amended by striking out subsection (f) (relating to definition of business lease), by striking out subsection (g) (relating to definition of business lease indebtedness), and by redesignating subsection (h) as subsection (f). (C) Section 514(b)(3)(C)(iii) (relating to definition of debt-financed property) is amended to read as follows: “(iii) shall not apply to property subject to a lease which is a business lease (as defined in this section immediately before the enactment of the Tax Reform Act of 1976).” (D) Section 514(f) (relating to personal property leased with real property), as redesignated by subparagraph (B) of this paragraph, is amended by striking out “and the term ‘premises’ include” and inserting in lieu thereof “includes”. (73) Amendments of section 534.— (A) Section 534(b) (relating to mailing notices of deficiency) is amended by striking out the last sentence, (B) Subsection (e) of section 534 (relating to effective date of section) is repealed. (74) Amendment of section 533.— Section 535(b)(1) (relating 26 USC 535. to adjustments in computing accumulated taxable income) is amended by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 31, 1940)”. (75) Amendments of section 537.— (A) Section 537(b)(2) (relating to definition of excess 26 USC 537. business holdings redemption needs) is amended by striking out “, with respect to taxable years of the corporation ending after May 26, 1969,”. (B) Section 537(b)(4) (relating to inferences as to prior years) is amended by striking out “or (2)”. (76) Amendments of section 542.— (A) Section 542(a)(2) (relating to definition of personal 26 USC 542. holding company) is amended by striking out the last sentence. (B) Section 542(b)(2) (relating to ineligible affiliated group) is amended by striking out “, other than an affiliated group of railroad corporations the common parent of which would be eligible to file a consolidated return under section 141 of the Internal Revenue Code of 1939 prior to its amendment by the Revenue Act of 1942,”. (C) Section 542(c)(2) (relating to financial institutions) is amended by striking out “without regard to subparagraphs (D) and (E) thereof”, (D) Section 542(c)(8) (relating to small business investment companies) is amended by inserting after “Small Business Investment Act of 1958” the following: “(15 U.S.C. 661 and following)”. (77) Amendments of section 545.— (A) Section 545(b)(1) (relating to deduction of taxes in 26 USC 545. computing undistributed personal holding company income) is amended— (i) in the first sentence, by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 31, 1940)”; and (ii) by striking out the last two sentences (relating to deduction of taxes). (B) Section 545(b) (relating to adjustments in computing undistributed personal holding company income) is amended by striking out paragraph (7) (relating to payment of indebtedness incurred before 1934). (C) Section 545(c)(2)(A) (relating to corporations to which special adjustment applies) is amended by striking out “the date of enactment of this subsection” and inserting in lieu thereof “February 26, 1964”. (78) Amendment of section 547.— Section 547 (relating to the 26 USC 547. deduction of deficiency dividends) is amended by striking out subsection (h) (relating to the effective date). ‘ (79) Amendment of section 551.— Section 551(c) (relating to 26 USC 551. foreign personal holding company income tax returns), as redesignated by subsection (b)(1)(F) of this section, is amended by striking out “taxable income, foreign personal holding com-pany,” and inserting in lieu thereof “taxable income, foreign personal holding company income,”. (80) Amendment of section 554.— The first sentence of section 556(b)(1) (relating to deduction of taxes in computing undistributed foreign personal holding company income) is amended by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 1, 1940)”. (81) Amendment of section 584.— Section 564 (relating to dividend carryovers) is amended by striking out subsection (c) (relating to carryovers from pre–1954 years). (82) Repeal of section 583.— Section 583 (relating to deduction of dividends paid on certain preferred stock by banks or trust companies) is repealed. (83) Repeal of section 592.— Section 592 (relating to the deduction by mutual savings banks for repayment of certain loans) is repealed. (84) Amendments of section 593.— (A) Section 593(b)(2) (relating to additions to bad debt reserves for mutual savings banks, etc.) is amended by striking out, in the table in subparagraph (A), the following: “1969 60 percent 1970 57 percent 1971 54 percent 1972 51 percent 1973 49 percent 1974 47 percent 1975 45 percent” (B) Section 593(c) (relating to reserves for mutual savings banks) is amended by striking out paragraphs (2), (3), (4), and (5), by redesignating paragraph (6) as paragraph (3), and by inserting immediately after paragraph (1) the following: “(2) Certain pre-1963 reserves.— Notwithstanding the second sentence of paragraph (1), any amount allocated pursuant to paragraph (5)(as in effect immediately before the enactment of the Tax Reform Act of 1976) during a taxable year beginning before January 1, 1977, to the reserve for losses on qualifying real property loans out of the surplus, undivided profits, and bad debt reserves (determined as of December 31, 1962) attributable to the period before the first taxable year beginning after December 31, 1951, shall not be treated as a reserve for bad debts for any purpose other than determining the amount referred to in subsection (b)(1)(B), and for such purpose such amount shall be treated as remaining in such reserve.” (C) Section 593 is amended by striking out subsection (d) (relating to taxable years beginning in 1962 and ending in 1963), and by redesignating subsections (e) and (f) as subsections (d) and (e),respectively. (D) Section 593(b)(2)(E)(1) is amended by striking out “subsection (f)” and inserting in lien thereof “subsection (e)”- (85) Repeal of section 601.— Subchapter H of chapter 1 relating to 26 USC 601. banking institutions) is amended by striking out part III (relating to special deduction for bank affiliates). (86) Amendments of section 613a.— (A) Section 613A(b)(1)(C) (relating to exemption for 26 USC 613A. certain domestic gas wells) is amended by striking out “within the meaning of section 613(b)(1)(A)”. (B) Section 613A(c)(6)(i) (relating to limitations on percentage depletion in case of oil and gas wells) is amended by striking out “determined with” and inserting in lieu thereof “determined without”. (87) Amendments of section 614.— (A) (i) Section 614(c) (relating to aggregation of mineral 26 USC 614. interests in mines) is amended by striking out paragraph (4) (relating to special rule as to exploration deductions prior to aggregation). (ii) The amendment made by clause (i) shall apply with 26 USC 614 note. respect to elections to form aggregations of operating mineral interests made under section 614(c)(1) of the Internal Revenue Code of 1954 for taxable years beginning after December 31, 1976. (B) The third sentence of section 614(c)(2) (relating to election to treat a single interest as more than one property) is amended to read as follows: “A separate property so formed may, under regulations prescribed by the Secretary, be included as a part of an aggregation in accordance with paragraphs (1) and (3).” (C) Section 614(c)(3) (relating to manner and scope of election) is amended to read as follows: “(3) Manner and scope of election.— The elections provided by paragraphs (1) and (2) shall be made, in accordance with regulations prescribed by the Secretary, not later than the time prescribed for filing the return (including extensions thereof) for the first taxable year— “(A) in which, in the ease of an election under paragraph (1), any expenditure for development or operation in respect of the separate operating mineral interest is made by the taxpayer after the acquisition of such interest, or “(B) in which, in the case of an election under paragraph (2), expenditures for development or operation of more than one mine in respect of a property are made by the taxpayer after the acquisition of the property. An election made under paragraph (1) or (2) for a taxable year shall be binding upon the taxpayer for such year and all subsequent taxable years, except that the Secretary may consent to a different treatment of any interest with respect to which an election has been made.” (88) Repeal or section 615.— Section 615 (relating to deduction 26 USC 615. of pre–1970 exploration expenses) is repealed. (89) Amendment of section 617.— Section 617(a)(2)(B) 26 USC 617. (relating to time and scope of election to deduct certain mining exploration expenditures) is amended by striking out. “may not be revoked after the last day of the third month following the month in which the final regulations issued under the authority of this subsection are published in the Federal Register“, unless” and inserting in lieu thereof “may not be revoked unless”. (90) Repeal of section 632.— Section 632 (relating to tax in 26 USC 632. case of sale of oil and gas properties) is repealed. (91) Amendment of section 691.— Section 691(c)(1)(B) 26 USC 691. (relating to deduction for estate tax) is amended by striking out the last sentence. (92) Amendment of section 692.— The heading of section 692 (relating to income taxes of members of Armed Forces who die in a combat zone) is amended by striking out “ON” the first time it appeals in the section heading and inserting in lieu thereof “OF”. (93) Amendment of section 751.— Section 751(c) (relating to unrealized receivables) is amended by striking out “1254(a), or 1250(a),” and inserting in lieu thereof “1245(a), 1250(a),”. (94) Repeal of section 771.— Part IV of subchapter K of chapter 1 (relating to effective date of subchapter K) is repealed. (95) Amendments of section 802.— (A) Section 802(a)(1) (relating to tax imposed on life insurance companies) is amended by striking out “beginning after December 31, 1957,”. (B) Section 802(a)(2) (relating to alternative tax in case of capital gains) is amended by striking out “beginning after December 31, 1961,”. (C) Section 802(a) is amended by striking out paragraph (3) (relating to special rules for 1959 and 1960). (96) Amendments of section 804.— (A) Section 804(a) is amended by sticking out paragraph (6) (relating to certain exceptions). (B) Section 804(b)(2) (relating to short-term capital gains) is amended by striking out “In the case of a taxable year beginning after December 31, 1958, the” and inserting in lieu thereof “The”. (97) Amendments of section 805.— (A) Section 805(b)(3)(B) (relating to average earnings rate) is amended to read as follows: “(B) Special rule.— For purposes of subparagraph (A), the current earnings rate for tiny taxable year of any company which, for such year, is an insurance company (but not a life insurance company) shall be determined as if this part applied to such company for such year.” (B) Section 805(b)(4)(B) (relating to basis of assets) is amended by striking out “(determined without regard to fair market value on December 31, 1958)”. (C) Section 805(d) (relating to pension plan reserves) is amended to read as follows: “(d) Pension Plan Reserves.— For purposes of this part, the term ‘pension plan reserves’ means that portion of the life insurance reserves which is allocable to contracts— “(1) purchased under contracts entered into with trusts which (as of the time the contracts were entered into) were deemed to be (A), trusts described in section 401(a) and exempt from tax under section 501(a), or (B) trusts exempt from tax under section 185 of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws; “(2) purchased under contracts entered into under plans which (as of the time the, contracts were entered into) were deemed to be plans described in section 403(a), or plans meeting the requirements of paragraphs (3), (4), (5), and (6) of section 165(a) of the Internal Revenue Code of 1939; “(3) provided for employees of the life insurance company under a plan which, for the taxable year, meets the requirements of paragraphs (3), (4), (5), (6), (7), (8), (11), (12), (13), (14), (15), (16), (19), and (20) of section 401(a); “(4) purchased to provide retirement annuities for its employees by an organization which (as of the time the contracts were purchased) was an organization described in section 501(c)(3) which was exempt from tax under section 501(a) or was an organization exempt from tax under section 101(6) of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws, or purchased to provide retirement annuities for employees described in section 403(b)(1)(A)(ii) by an employer which is a State, a political subdivision of a state, or an agency or instrumentality of any one or more of the foregoing; or “(5) purchased under contracts entered into with trusts which (at the time the contracts were entered into) were individual retirement accounts described in section 408(a) or under contracts entered into with individual retirement annuities described in section 408(b).” (98) Amendments of section 809.— (A) Section 809(b) (relating to definition of gain and loss 26 USC 809. from operations) is amended by striking out paragraph (4). (B) (i) Section 809(d) (relating to life insurance company deductions) is amended by striking out paragraph (11) relating to mutualization distributions before 1963), and by redesignating paragraph (12) as paragraph (11). (ii) Section 809(e) is amended by striking out “subsection (d)(12)” and inserting in lieu thereof “subsection (d)(11)”, (C) Section 809 (relating to computation of gain and loss from operations) is amended by striking out subsection (g) (relating to deduction for certain mutualization distributions before 1963). (99) Amendment of section 812.— Section 812(b)(1) (relating 26 USC 812. to years to which operating losses of an insurance company may be carried), other than the last sentence thereof, as added by section 806(d)(1)(A) of this Act, is amended to read as follows: “(1) Years to which loss may be carried.— The loss from operations for any taxable year (hereinafter in this section referred to as the ‘loss year’) shall be— “(A) an operations loss carryback to each of the 3 taxable years preceding the loss year, “(B) an operations loss carryover to each of the 5 taxable years following the loss year, and “(C) subject to subsection (e), if the life insurance company is a new company for the loss year, an operations loss carryover to each of the 3 taxable years following the 5 taxable years described in subparagraph (B).” (100) Amendments of section 817.— Section 817 (relating to 26 USC 817. rules applicable to certain gains and losses) is amended by striking out subsection (c) (relating to treatment of pre–1959 capital losses) and subsection (e) (relating to certain 1958 reinsurance transactions). (101) Amendment of section 818.— Section 818 (relating to 26 USC 818. life insurance accounting provisions) is amended by striking out subsection (e) (relating to certain rules applicable to taxable years 1957, 1958, and 1959). and by redesignating subsections (f) and (g) as subsections (e) and (f), respectively. (102) Amendments of section 819.— (A) The first sentence of section 819(a)(2)(A) (relating 26 USC 819. to definition of minimum figure for foreign life insurance companies) is amended to read as follows: “The minimum figure is the amount determined by multiplying the tax-payer’s total insurance liabilities on United States business by a percentage for the taxable year to be determined and proclaimed by the Secretary.” (B) The second sentence of section 819(a)(2)(A) is amended by striking out “under clause (ii)” and inserting in lieu thereof “under the preceding sentence”. (C) Clause (i) of section 819(b)(2)(B) (relating to distributions pursuant to certain mutualizations) is amended to read as follows: “(i) the minimum figure for 1958 determined under subsection (a)(2)(A) computed by using a percentage of 9 percent in lieu of the percentage determined and proclaimed by the Secretary, or”. (103) Amendments of section 820.— (A) Section 820(c) (relating to optional treatment of certain reinsured policies) is amended by striking out paragraph (6) (relating to reimbursement for 1957 income taxes), and by redesignating paragraph (7) as paragraph (6). (B) The last sentence of section 820(c) is amended by striking out “(5). and (6) and the rules prescribed under paragraph (7)” and inserting in lieu thereof “and (5) and the rules prescribed under paragraph (6)”. (104) Amendments of section 821.— (A) Section 821(a) (relating to imposition of tax on certain mutual insurance companies) is amended by striking out “beginning after December 31, 1963,”. (B) Section 821(c)(1) (relating to alternative tax for certain small insurance companies) is amended by striking out “In the ease of taxable years beginning after December 31, 1963. there is” and inserting in lieu thereof “There is”. (C) Section 821 (relating to tax on certain mutual insurance companies) is amended by striking out subsection (e) (relating to 1962 transitional rules) and by redesignating subsection (f) as subsection (e). (105) Amendments of section 822.— (A) Section 822(c)(5) (relating to deduction of interest) is amended by striking out “(other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer)”. (B) The last sentence of section 822(d)(2) (relating to amortization of premium and accrual of discount) is amended by striking out “For taxable years beginning after December 31, 1962. no accrual” and inserting in lieu thereof “No accrual”. (106) Amendments of section 825.— Section 825(g) (relating to unused loss deduction of certain insurance companies) is amended by striking out paragraph (1) and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (107) Amendment of section 831.— Section 831(a) (relating to tax on certain insurance companies) is amended by striking out “or the taxable income” and inserting in lieu thereof “on the taxable income.” (108) Amendments of section 832.— Paragraphs (1) and (6) of section 832(b)(definitions relating to insurance company taxable income) are each amended by striking out “Convention” and inserting in lieu thereof “Association”. (109) Amendments of section 851.— (A) Section 851(a)(1) (relating 26 USC 851. to definition of regulated investment company) is amended by striking out “54 Stat. 789;”. (B) Section 851(b)(1) (relating to regulated investment companies) is amended by stinking out “which began after December 31, 1941”, (110) Amendments of section 852.— (A) Subparagraph (C) of section 852(b)(3) (relating to 26 USC 852. method of taxation of regulated investment companies and their shareholders) is amended by striking out the third sentence. (B) (i) Section 852(b)(3)(D)(iii) is amended by striking out “by 75 percent of so much of such amounts as equals the amount subject to tax in accordance with section 1201 (a)(1)(A) and by 70 percent (72 percent in the case of a Post, p, 1786. taxable year beginning after December 31, 1969, and before January 1, 1971) of so much of such amounts as equals the amount subject to tax in accordance with section 1201(a)(1)(B) or (2)” and inserting in lieu thereof “by 70 percent of so much of such amounts as equals the amount subject to tax in accordance with section 1201(a)”. (ii) The amendment made by clause (i) shall not be considered 26 USC 852 note. to affect the amount of any increase in the basis of stock under the provisions of section 852(b)(3)(D)(iii) of the Internal Revenue Code of 1954 which is based upon amounts subject to tax under section 1201 of such Code in taxable years beginning before January 1, 1975. (C) Section 852(d) is amended by inserting after “Investment Company Act of 1940” the following: “(15 U.S.C. 80a–l and following)”. (111) Amendments of section 856.— (A) Section 856(c)(1) (relating to real estate investment 26 USC 856. trusts) is amended by striking out “which began after December 31, 1960”. (B) Section 856(c)(6)(D) (relating to definition of other terms) is amended by inserting after “Investment Company Act of 1940, as amended” the following: “(15 U.S.C. 80a–1 and following)”. (112) Amendment of section 857.— Section 857(b)(3)(C) 26 USC 857. (relating to the taxation of capital gains in the case of real estate investment trusts) is amended by striking out the last sentence. (113) Amendments of section 864.— (A) Subsection (a) of section 864 (definitions relating to 26 USC 864. determinations of sources of income) is amended to read as follows: “(a) Produced.— For purposes of this part, the term ‘produced’ “Produced.” includes created, fabricated, manufactured, extracted, processed, cured, or aged.” (B) Clauses (i) and (iii) of section 864(c)(4)(B) and subparagraph (C) of section 864(c)(5) (relating to effectively connected income) are each amended by striking out “sale” each place it appears and inserting in lieu thereof “sale or exchange”. (C) Section 864(c)(4)(B)(iii) (relating to effectively connected income) is amended by striking out “sold” and inserting in lieu thereof “sold or exchanged”. (114) Amendment of section 905.— Section 905(b) (relating to proof of foreign tax credits) is amended by striking out the last sentence (relating to the treatment of certain royalty payments). (115) Amendment of section 911.— Section 911(c) (relating to earned income from sources without the United States) is amended by striking out paragraph (7) (relating to taxable years ending in 1963, 1964, or 1965). (116) Amendment of section 921.— Section 921 (relating to definition of Western Hemisphere Trade Corporation) is amended by striking out the last sentence, (relating to taxable years before 1954). (117) Amendments of section 931.— Section 931 (relating to income from sources within possession) is amended by striking out subsection (h) (relating to certain persons taken as prisoners of war while working in a possession), and by redesignating subsection (i) as subsection (h). (118) Amendment of section 934.— Section 934(b) (relating to gross income received by a corporation from the Virgin Islands) is amended by striking out the last sentence. (119) Amendment of section 951.— Section 951 (a)(1) (relating to treatment, of subpart F income) is amended by striking out “beginning after December 31, 1962”. (120) Repeal of section 972.— Section 972 (relating to consolidation of export trade corporations) is repealed. (121) Amendment of section 1001.— Section 1001(c) (relating to recognition of gain or loss) is amended to read as follows: “(c) Recognition of Gain or Loss.— Except as otherwise provided in this subtitle, the entire amount of the gain or loss, determined under this section, on the sale or exchange of property shall be recognized.” (122) Amendments of section 1015.— (A) Subparagraph (A) of section 1015(d)(1) (relating to increased ‘basis for gift tax paid) is amended by striking out “the date of the enactment of the Technical Amendments Act of 1958” and inserting in lieu thereof “September 2, 1958”. (B) Subparagraph (B) of section 1015(d)(1) is amended by striking out “the date of the enactment of the Technical Amendments Act of 1958” and inserting in lieu thereof “September 2, 1958,”. (123) Amendment of section 1016.— Section 1016(a) (relating to adjustments to basis) is amended by striking out paragraph (19). (124) Amendment of section 1018.— Section 1018 (relating to adjustment of capital structure before September 22, 1938) is amended by striking out “54 Stat. 709;”. (125) Repeal of section 1020.— Section 1020 (relating to election in respect of depreciation allowed before 1952) is repealed. (126) Repeal of section 1022.— (A) Section 1022 (relating to the basis of certain foreign personal holding company stock) is repealed. (B) The repeal made by subparagraph (A) shall apply with respect to stock or securities acquired from a decedent dying after the date of the enactment of this Act. (127) Amendment of section 1024.— Section 1024 (containing cross references) is amended by striking out paragraph (4). (128) Amendments of section 1033.— (A) Section 1033(a) (relating to involuntary conversions) 26 USC 1033. is amended by striking out paragraph (2) and by redesignating paragraph (3) as paragraph (2). (B) Section 1033(a)(2) (relating to conversion into money), as redesignated by subparagraph (A) of this paragraph and as amended by this Act, is amended— (i) by striking out “where disposition occurred after 1950” in the paragraph heading; (ii) by striking out “(g)” each place it appears and inserting in lieu thereof “(h)”; (iii) by striking out “and the disposition of the converted property (as defined in paragraph (2)) occurred after December 31, 1950,” in the text; and (iv) by adding at the end thereof the following new subparagraph: “(E) Definitions.— For purposes of this paragraph— “(i) Control.— The term ‘control’ means the ownership of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote and at least 80 percent of the total number of shares of all other classes of stock of the corporation. “(ii) Disposition of the converted property.— The term ‘disposition of the converted property’ means the destruction, theft, seizure, requisition, or condemnation of the converted property, or the sale or exchange of such property under threat or imminence of requisition or condemnation.” (C) Section 1033 (relating to involuntary conversions) is amended by striking out subsection (b) (relating to certain conversions occurring before 1954) and by redesignating subsections (c), (d), (e), (f), (g), and (h), as subsections (b), (c), (d), (e), (f), and (g), respectively. (D) The first sentence of section 1033(b) (relating to basis of a property acquired through involuntary conversions), as redesignated by subparagraph (G) of this paragraph, is amended by striking out “or (2)” and inserting in lieu thereof “or section 112(f)(2) of the Internal Revenue Code of 1939”. (E) Section 1033(f)(2) (relating to condemnation of real property), as redesignated by subparagraph (C) of this paragraph, is amended to read as follows: “(2) Limitation.— Paragraph (1) shall not apply to the purchase of stock in the acquisition of control of a corporation described in subsection (a)(2)(A).” (F) Section 1033(g)(4) (relating to condemnation of real property), as amended by section 2140(a) of this Act, is amended by striking out “(a)(3)(B)(i)” and inserting in lieu thereof“(a)(2)(B)(i)”. (129) Amendments of section 1034.— (A) Section 1034(a) (relating to gain on sale of residence) 26 USC 1034. is amended by striking out “after December 31, 1953,”. (B) Section 1034(b)(defining adjusted sales price) is amended by striking out paragraph (3) (relating to effective date of subsection (b)). (C) Section 1034(d) (relating to certain limitations) is amended by striking out “or section 112 (n) of the Internal Revenue Code of 1939”. (D) Section 1034(i) (relating to involuntary conversions) is amended to read as follows: “(ii) Special Rule for Condemnation.— In the case of the seizure, requisition, or condemnation of a residence, or the sale or exchange of a residence under threat or imminence thereof, the provisions of this section, in lieu of section 1033 (relating to involuntary conversions), shall be applicable if the taxpayer so elects. If such election is made, such seizure, requisition, or condemnation shall be treated as the sale of the residence. Such election shall he made at such time and in such manner as the Secretary shall prescribe by regulations.” (E) Section 1034(j) (relating to statute of limitations) is amended by striking out “after December 31, 1950,”. (130) Amendment of section 1037.— Section 1037(b)(1) (relating to certain exchanges of United States obligations) is amended by striking out “section 1232(a)(2)(A)” and inserting in lieu thereof “section 1232 (a)(2) (B)”. (131) Amendment of section 1051.— Section 1051 (relating to property acquired before 1929 during affiliation) is amended by striking out the last two sentences. (132) Amendments of section 1081.— (A) Subsection (e) of section 1081 (relating to distributions required by the SEC) is amended to read as follows: “(c) Distribution of Stock or Securities Only.— If there is distributed, in obedience to an order of the Securities and Exchange Commission, to a shareholder in a corporation which is a registered holding company or a majority-owned subsidiary company, stock or securities (other than stock or securities which are nonexempt property), without the surrender by such shareholder of stock or securities in such corporation, no gain to the distributee from the receipt of the stock or securities so distributed shall be recognized.” (B) Section 1081(f) (relating to conditions for application of section) is amended by striking out “Except in the case of a distribution described in subsection (c)(2), the provisions” and inserting in lien thereof “The provisions”, and by striking out “49 Stat. 820;”. (C) Section 1081(g) (relating to applicability of other provisions) is amended by striking out “If a distribution described in subsection (c)(2). or an” and inserting in lieu thereof “If an”, and by striking out the comma after “Commission”. (133) Amendments of section 1083.— (A) Section 1083(a) is amended by striking out “49 Stat. 820;”. (B) Section 1083(b) is amended by striking out “49 Stat. 804;”. (C) Section 1083(e)(4) is amended by striking out “49 Stat. 820;”. (134) Repeal of section 1111.— Part IX of subchapter O of chapter 1 (relating to distributions pursuant to orders enforcing the antitrust laws) is repealed. (135) Amendments of section 1201.— (A) Section 1201(a) (relating to the alternative tax on capital gain) is amended to read as follows: “(a) Corporations.— If for any taxable year a corporation has a net capital gain, then, in lien of the tax imposed by sections 11. 511, 821 (a) or (c) and 831(a), there is hereby imposed a tax (if such tax is less than the tax imposed by such sections) which shall consist of the sum of— “(1) a tax computed on the taxable income reduced by the amount of the net capital gain, at the rates and in the manner as if this subsection had not been enacted, plus “(2) a tax of 30 percent of the net capital gain.” (B) Section 1201(c) (relating to computation of alternative 26 USC 1201. tax) is amended to read as follows: “(c) Computation of Tax Where Capital Gain Exceeds $50,000.— The tax computed for purposes of subsection (b)(3) shall be the amount by which a tax determined under section 1 or 511 on an amount equal to the taxable income (but not less than 50 percent of the net capital gain) for the taxable year exceeds a tax determined under section 1 or 511 on an amount, equal to the sum of (A) the amount subject to tax under subsection (b)(1) plus (B) an amount equal to 50 percent of the sum referred to in subsection (b)(2)(A).” (C) (i) Section 1201 is amended by striking out subsection (d)(defining subsection (d) gain) and by redesignating subsection (e) as subsection (d). (ii) Section 1201(b)(2)(A) (relating to alternative tax on noncorporate taxpayers) is amended by striking out “the amount of the subsection (d) gain” and inserting in lieu thereof “the sum of the long-term capital gains for the taxable year, but not to exceed $50,000 ($25,000 in the case of a married individual filing a separate return)”. (iii) Section 1201(b)(3) is amended by striking out “the amount of the subsection (d) gain” and inserting in lieu thereof “the sum referred to in subparagraph (A)”. (136) Amendments of section 1222.— (A) Paragraph (9) of section 1222 (relating to definition 26 USC 1222. of terms applicable to capital gains and losses) is amended to read as follows: “(9) Capital gain net income.— The term ‘capital gain net income’ means the excess of the gains from sales or exchanges of capital assets over the losses from such sales or exchanges.” (B) Paragraph (11) of section 1222 (relating to definition of terms applicable to capital gains and losses) is amended to read as follows: “(11) Net capital gain.— The term ‘net capital gain’ means “Net capita] gain.” the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such year.” (137) Amendment of section 1233.— Section 1283((3) (relating 26 USC 1233. to certain options to sell) is amended by striking out “the date of enactment of this title” and inserting in lieu thereof “August 16, 1954”. (138) Amendment of section 1237.— Section 1237 (relating 26 USC 1237. to real property subdivided for sale) is amended by striking out subsection (d) (relating to effective date). (139) Repeal of section 1240.— Section 1240 (relating to taxability 26 USC 1240. to employee of certain termination payments) is repealed. (140) Amendment of section 1245.— Section 1245(b)(7)(B) 26 USC 1245. (relating to transfers to tax-exempt organization where property will be used in unrelated business) is amended by striking out “such organization acquiring such property,”. (141) Amendment of section 1246.— Section 1246(f) (relating 26 USC 1246. to gain on foreign investment company stock) is amended by striking out “beginning after December 31, 1962”. (142) Amendment of section 1311.— Paragraphs (2)(A), (2)(B), and (3) of section 1311(b) (relating to mitigation of effect of limitations) are each amended by striking out “Tax Court of the United States” and inserting in lieu thereof “Tax Court”. (143) Repeal of section 1315.— Section 1315 (relating to effective date of part II of subchapter Q of chapter 1) is repealed. (144) Repeal of section 1321.— Part III of subchapter Q of chapter 1 (relating to involuntary liquidation of LIFO inventories) is repealed. (145) Repeal of sections 1331 through 1337.— (A) Part IV of subchapter Q of chapter 1 (relating to war loss recoveries) is repealed. (B) The repeal by subparagraph (A) shall apply with respect to war loss recoveries in taxable years beginning after December 31, 1976. (146) Amendment of section 1341.— Section 1341(b)(2) (relating to claim of right) is amended by striking out the last sentence. (147) Repeal of section 1342.— Section 1342 (relating to computation of tax on certain amounts recovered as a result of a patent infringement suit) is repealed. (148) Repeal of section 134A.— Section 1346 (relating to recovery of unconstitutional Federal taxes) is repealed. (149) Amendments of section 1372.— (A) Section 1372(b)(1) (relating to effect of election under subchapter S) is amended by striking out “(other than the tax imposed by section 1378)” and inserting in lieu thereof “(other than as provided by section 58(d)(2) and by section 1378)”. (B) Section 1372(c) (relating to subchapter S elections by small business corporations) is amended to read as follows: “(c) Where and How Made.— An election under subsection (a) may be made by a small business corporation for any taxable year at any time during the first month of such taxable year, or at any time Regulations. during the month preceding such first month. Such election shall be made in such manner as the Secretary shall prescribe by regulations.” (C) Section 1372 is amended by striking out subsection (g) (relating to certain elections for years beginning before 1961). (150) Amendments of section 1374.— (A) Section 1374(b) (relating to net operating losses of subchapter S corporations) is amended by adding at the end thereof the following new sentence: “The deduction allowed by this subsection shall, for purposes of this chapter, be considered as a deduction attributable to a trade or business carried on by the shareholder.” (B) Subsection (d) of section 1374 (relating to treatment of net operating losses of subchapter S corporations) is repealed. (151) Amendments of section 1375.— (A) The heading of subsection (b) of section 1375 is amended by striking out “Received Credit Not Allowed” and inserting in lieu thereof “Not Treated as Such for Certain Purposes”. (B) Section 1375 (f) (relating to elections as to certain distributions) is amended by striking out paragraph (3). (152) Amendment of section 1378.— Section 1378(b) (relating 26 USC 1378. to the taxation of capital gain in the case of electing small business corporations) is amended by striking out the last sentence. (153) Amendments of section 1388.— (A) Section 1388(c)(2)(B)(i) (relating to patronage 26 USC 1388. dividends) is amended by striking out “the date of the enactment of the Revenue Act of 1962” and inserting in lieu thereof “October 16, 1962”. (B) Section 1388(h)(2)(B)(i) (relating to perunit retain certificates) is amended by striking out “the date of the enactment of Ibis subsection” and inserting in lieu thereof “November 13, 1966”. (154) Amendments of section 1401.— (A) Section 1401(a) (relating to rate of tax on self-employment 26 USC 1401. income) is amended to read as follows: “(a) Old-Age, Survivors, and Disability Insurance.— In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax equal to 7.0 percent of the amount of the self-employment income for such taxable year.” (B) Section 1401(b) (relating to rate of tax on self-employment income for hospital insurance) is amended by striking out paragraphs (1) and (2) and by redesignating paragraphs (3), (4), (5), and (6), as paragraphs (1), (2), (3) and (4), respectively. (155) Amendments of section 1402.— (A) Paragraph (1) of section 1402(b) (relating to definition 26 USC 1402. of self-employment income) is amended to read as follows: “(1) that part of the net earnings from self-employment which is in excess of (i) an amount equal to the contribution and benefit base (as determined under section 230 of the Social Security Act) 42 USC 430. which is effective for the calendar year in which such taxable year begins, minus (ii) the amount of the wages paid to such individual during such taxable years; or”. (B) Section 1402 amended by striking out subsection (g) 26 USC 1402. (relating to treatment of self-employment income for years prior to 1962). and by redesignating subsections (h) and (i) as subsections (g) and (h). respectively. (C) Section 1402(g)(2) (relating to self-employment income, of members of certain religious faiths), as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(2) Time for filing applications.— For purposes of this subsection, an application must be filed on or before the time prescribed for filing the return (including any extension thereof) for the first, taxable year for which the individual has self-employment income (determined without regard to this subsection or subsection (c)(6)), except that an application filed after such date but on or before the last day of the third calendar month following the calendar month in which the taxpayer is first notified in writing by the Secretary that a timely application for an exemption from the tax imposed by this chapter has not been filed by him shall be deemed to be filed timely.” (156) Repeal of section 1465.— Section 1465 (relating to definition 26 USC 1465. of withholding agent) is repealed. (157) Amendments of section 1481.— (A) Section 1481(a)(1)(A) (relating to mitigation of 26 USC 1481. effect of renegotiation of Government contracts) is amended by striking out “within the meaning of the Federal renegotiation act applicable to such transaction” and inserting in lieu thereof “within the meaning of the Renegotiation Act of 1951, as amended (50 U.S.C. App, 1211 and following)”. (B) Section 1481(a)(1) (relating to renegotiation) is amended by striking out subparagraph (D). (C) Subparagraphs (B) and (C) of section 1481(a)(1) are each amended by striking out “applicable Federal renegotiation act” and inserting in lieu thereof “Renegotiation Act of 1951, as amended”. (158) Amendment of section 1551.— Section 1551(a) (relating to disallowance of surtax exemption) is amended by striking out “determined under subjection (d)” and inserting in lieu thereof “determined under subsection (c)”. (159) Amendment of section 1552.— The first sentence of section 1552(a) (relating to earnings and profits of an affiliated group) is amended by striking out “beginning after December 31, 1953, and ending after the date of enactment of this title,”. (b) Conforming and Clerical Amendments.— (1) Amendments conforming to repeal of sections 35 and 242.— (A) Section 36, as amended by this Act, is amended by striking out “sections 32 and 35” and inserting in lieu thereof “section 32”. (B) Section 41(b)(2) is amended by striking out “section 35 (relating to partially tax-exempt interest)”. (C) Section 46(a)(3) is amended by striking out subparagraph (B), by inserting “and” at the end of subparagraph (A), and by redesignating subparagraph (C) as subparagraph (B). (D) Section 50A(a)(3) is amended by striking out subparagraph (B) and redesignating subparagraphs (C), (D), and (E), as subparagraphs (B), (C), and (D), respectively. (E) (i) The heading of paragraph (1) of section 171(a) is amended to read “(1) Taxable bonds.—”. (ii) The heading of paragraph (2) of section 171(a) is amended to read “(2) Tax-exempt bonds.—”, (iii) Section 171(a) is amended by striking out paragraph (3) and by redesignating paragraph (4) as paragraph (3). (iv) Section 171(b)(1)(B)(n) is amended by striking out “subsection (c)(1)(B)” and inserting in lieu thereof “subsection (a)(1)”. (v) So much of section 171(c) as precedes paragraph (2) is amended to read as follows: “(c) Election as to Taxable Bonds.— “(1) Eligibility to elect; bonds with respect to which election permitted.— In the case of bonds the interest on which is not excludable from gross income, this section shall apply only if the taxpayer has so elected.”, (F) (i) Section 551 is amended by striking out subsection (c), and by redesignating subsections (d), (e), (f), and (g), as subsections (c), (d), (e), and (f), respectively. (ii) Section 1016(a)(13) is amended by striking out “section 551(f)” and inserting in lieu thereof “section 551(e)”. (G) Section 584(c)(2) is amended to read as follows: “(2) Dividends received.— The proportionate share of each participant in the amount of dividends received by the common trust fund and to which section 116 applies shall be considered for purposes of such section as having been received by such participant.” (H) (i) Section 642(a) is amended by striking out paragraph 26 USC 642. (1), and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (ii) Section 41(d) is amended by striking out “section 26 USC 41. 642(a)(3)” and inserting in lieu thereof “section 642(a)(2)”. (iii) Section 901(g)(3), as amended by this Act, is 26 USC 901. amended by striking out “section 642(a)(2)” and inserting in lieu thereof “section 642(a)(1)”. (I) (i) Section 702(a) is amended by striking out paragraph 26 USC 702. (7) and by redesignating paragraphs (8) and (9) as paragraphs (7) and (8), respectively. (ii) Section 702(b) is amended by striking out “paragraphs (1) through (8)” and inserting in lieu thereof “paragraphs (1) through (7)”. (iii) Section 1402(a) is amended by striking out “702(a) 26 USC 1402. (9)” each place it appears and inserting in lieu thereof “702 (a)(8)”. (J) (i) Section 804(a) is amended by striking out paragraph 26 USC 804. (3), and by redesignating paragraphs (4) and (5) as paragraphs (3) and (4),respectively. (ii) Section 243(b)(3)(C)(iii), as redesignated by paragraph 26 USC 243. (21)(A) of this subsection, is amended by striking out “sections 804(a)(4)” and inserting in lieu thereof “sections 804(a)(3)”. (iii) Section 804(a)(2) is amended by striking out “paragraph (5)” and inserting in lieu thereof “paragraph (4)”, and by striking out “paragraph (4)” and inserting in lieu thereof “paragraph (3)”. (iv) Section 809(d)(10) is amended by striking out “section 26 USC 809. 804(a)(4)”, and inserting in lieu thereof “section 804(a)(3)”. (v) Section 1561(a)(3) is amended by striking out “sections 26 USC 1561. 804(a)(4)” and inserting in lieu thereof “sections 804 (a)(3)”. (vi) Section 1564(a)(1)(C) is amended by striking out 26 USC 1564. “sections 804(a)(4)” inserting in lieu thereof “sections 804 (a)(3)”. (K) Section 804(a)(2)(A) is amended by striking out clause, (ii). by inserting “and” at the end of clause (i), and by redesignating clause (iii) as clause (ii). (L) (i) Section 809(d)(8)(A) is amended by striking out clause (ii), by inserting “and” at the end of clause (i), and by redesignating clause (iii) as clause (ii). (ii) Section 809(d)(8)(B) is amended by striking out “subparagraph (A)(iii)” and inserting in lieu thereof “subparagraph (A)(ii)”. (M) Sections 804(a)(1),804(a)(2), 809(a)(1),809(b)(1)(A) and 809(b)(2)(A) are each amended by striking out “, partially tax-exempt interest,”. (N) Section 809(e) is amended by striking out paragraph (6), and by redesignating paragraph (7) as paragraph (6). (O) Section 815(b)(2)(A)(iii) is amended by striking out 26 USC 815. “the deduction for partially tax-exempt interest provided 26 USC 242. by section 242 (as modified by section 804(a)(3)),” and by striking out the comma after “809(d)(8)(B))”. (P) Section 822(c)(2) is amended by striking out “partially tax-exempt interest and”. (Q) Section 822(c)(6)(A) is amended by striking out “or to the deduction provided in section 242 for partially tax-exempt interest”. (R) Section 822(c)(7) is amended by striking out “partially tax-exempt interest and to”. (S) Section 822(d)(2) is amended by striking out “, the deduction provided in subsection (c)(1), and the deduction allowed by section 242 (relating to partially tax-exempt interest)” and inserting in lieu thereof “and the deduction provided in subsection (c)(1)”. (T) Section 832(c)(5)(A) is amended by striking out “or to the deductions provided in section 242 for partially tax-exempt interest”. (U) Section 832(c)(12) is amended by striking out “partially tax-exempt interest and to”. (V) Sections 852(b)(1) and 857(b)(1) are each amended by striking out the last sentence. (W) Section 1244(c)(1)(E) is amended by striking out “sections 172,242,243” and inserting in lieu thereof “sections 172, 243”. (X) Section 1402 (a)(2) is amended by striking out “(other than interest described in section 35)”. (Y) Section 1503(b)(3) is amended by striking out subparagraph (C). (Z) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 35. (AA) The table of sections for part VIII of subchapter B of chapter 1 is amended by striking out the item relating to section 242. (2) Amendment conforming to repeal of section 51.— The table of parts for subchapter A of chapter 1 is amended by striking out the item relating to part V. (3) Amendments conforming to auditions of sections 84 and 65.— (A) Paragraphs (1)(C), (5HA), (6)(D), and (12) of section 341(e) are each amended by striking out “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b)” each place it appears and inserting in lieu thereof “ordinary income”. (B) Section 483(f)(3) is amended by striking out “no part of any gain on such” and inserting in lieu thereof “all of the gain, if any, on such” and by striking out “gain from the sale or exchange of a capital asset or property described in section 1231” and inserting in lieu thereof “ordinary income”. (C) Section 707(b)(2) is amended by striking out “as gain from the sale or exchange of property other than a capital asset” and inserting in lieu thereof “as ordinary income”. (D) Paragraphs (1) and (2) of section 735(a) are each amended by striking out “gain or loss from the sale or exchange of property other than a capital asset” and inserting in lieu thereof “as ordinary income or as ordinary loss, as the case may be”. (E) Section 1236 (b) is amended by striking out “loss from 26 USC 1236. the sale or exchange of property which is not a capital asset” and inserting in lieu thereof “ordinary loss”. (F) Sections 1242 and 1243 are each amended by striking 26 USC 1242, 1243. out “a loss from the sale or exchange of property which is not a capital asset” each place it appears and inserting in lieu thereof “an ordinary loss”. (G) Section 1244 is amended by striking out “a loss from 26 USC 1244. the sale or exchange of an asset which is not a capital asset” each place it appears and inserting in lieu thereof “an ordinary loss”. (H) Section 1248(g)(3)(B), as redesignated by this Act, 26 USC 1248. is amended by striking out “gain from the sale of an asset which is not a capital asset” and inserting “ordinary income”. (I) The following provisions are each amended by striking out “gain from the sale or exchange of property which is not a capital asset” each place it appears and inserting in lieu thereof “ordinary income”: sections 341(a). 871(a)(1)(C)(i) and (ii), 881(a)(3)(A) and (B), 996(d)(1) and (2), 1037(b)(1)(A), 1232(a)(2)(A) and (B), 1232(c), 1246(a), and 1385(c)(2)(C). (J) The following provisions are each amended by striking out “gain from the sale of property which is not a capital asset” and inserting in lieu thereof “ordinary income”: sections 306(a)(1)(A),306(a)(1)(B), and 306(f). (K) The following provisions are each amended by striking out “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231” each place it appears and inserting in lieu thereof “ordinary income”: sections 80(c)(1), 163(d)(3) and (5), 613(a), 617 (d)(1). 995(b)(1)(C). 1238, 1245(a)(1), 1249(a), 1250 (f) and (g), 1251 (b)(3)(B), (c)(1), and (c)(2), and 1252(a)(1). (4) Clerical amendments conforming to additions of sections 64 and 65.— (A) The table of sections for part I of subchapter B of chapter 1 is amended by adding at the end thereof the following new items: “Sec. 64. Ordinary income defined. “Sec. 65. Ordinary loss defined.” (B) The heading for part I of subchapter B of chapter 1 is amended by striking out “AND TAXABLE INCOME” and inserting in lieu thereof “TAXABLE INCOME, ETC.” ETC.” (C) The table of parts for subchapter B of chapter 1 is amended by striking out “and taxable income.” in the item relating to part. I and inserting in lieu thereof “taxable income, etc.” (5) Amendment conforming to repeat, of section 70.— The table of sections for part II of subchapter B of chapter 1 is amended by striking out the item relating to section 76. (6) Amendments conforming to amendment of section 103.— (A) Section 6049(b)(2)(A) is amended by striking out 26 USC 6049. “section 103(a)(1) or (3)” and inserting in lieu thereof “section 103(a)”. (B) Section 852(a)(1)(B), as added by this Act, is amended by striking out “section 103(a)(1)” and inserting in lieu thereof “section 103 (a)”. (7) Amendments conforming to amendment of section 143.— (A) (i) Part V of subchapter B of chapter 1 is amended by striking out section 153 (relating to determination of marital status) and by redesignating section 154 as section 153. (ii) The table of sections for part V of subchapter B of chapter 1 is amended by striking out the items relating to sections 153 and 154 and inserting in lieu thereof the following: “Sec. 153. Cross references.”. (B) Section 152(a)(9) is amended by striking out “section 153” and inserting in lieu thereof “section 143”. (C) Section 153, as redesignated by subparagraph (A) of this paragraph, is amended by adding at the end thereof the following new paragraph: “(5) For determination of marital status, see section 143.” (8) Amendments conforming to amendment of section 151.— (A) The following provisions are each amended by striking out “educational institution (as defined in section 151 Q(4))” each place it appears and inserting in lieu thereof educational organization described in section 170(b)(1)(A)(ii)”: sections 117(a)(1)(A), 117(b)(1), 117(b)(2), 152(d), 170(g)(1)(B)(as redesignated by subsection (a)(28) 26 USC 117, 152, 170, 403. (A)(i) of this section!, and 403(b)(1)(A)(ii). (B) Section 103(c)(3)(A), as redesignated by subsection (a)(17) of this section, is amended by striking out “educational institution (within the meaning of section 151(e)(4))” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”, (C) Section 163(b)(1) is amended by striking out “educational institution (as defined in section 151(e)(4)) and which is provided for a student of such institution” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii) and which is provided for a student of such organization”. (D) (i) Subparagraphs (A), (B), and (C) of section 415 (c)(4) are each amended by striking out “educational institution” each place it appears and inserting in lieu thereof “educational organization”. (ii) Subparagraph (D)(ii) of section 415(c)(4) is amended to read as follows: “(ii) For purposes of this paragraph the term ‘educational organization’ means an educational organization described in section 170(b)(1)(A)(ii).” (iii) Section 415(c)(4) is amended by striking out “educational institutions” from the paragraph heading and inserting in lieu thereof “educational organizations”. (E) Section 508(c)(2)(A) is amended to read as follows: “(A) educational organizations described in section 170 (b)(1)(A)(u),and”. (F) Section 512(b)(15)(B), as redesignated by section 1951(b)(8)(A) of this Act, is amended by striking out “edu-cational institution (as defined in section 151(e)(4))” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”. (G) Section 1303(d) is amended by striking out “educational 26 USC 1303. institution (as defined in section 151(e)(4))” each place it appears and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”. (H) Sections 4941(d)(2)(G)(ii) and 4945(g)(1) each 26 USC 4941, 4945. are amended by striking out “educational institution described in section 151(e)(4)” and inserting in lieu thereof “educational organization described in section 170(b)(1)(AHii)”. (9) Amendments conforming to the amendments of section 152.— Section 2(b)(3)(B) is amended by striking out clause (ii), 26 USC 2. by adding “or” at the end of clause (i), and by redesignating clause (ii) as clause (ii). (10) Amendment conforming to the amendment of section 112.— (A) Section 374(e)(2) is amended by striking out “section Ante, p. 296. 172(j)” and inserting in lieu thereof “172(g)”. (B) Section 904(f)(2)(B)(i) and 904(f)(4)(B)(i), as Ante, p. 1624. amended by this Act, are each amended by striking out “section 172(k)(1)” and inserting in lieu thereof “section 172(h)”. (11) Amendments conforming to repeal of section 187.— (A) Section 48(a)(8) (relating to section 38 property) is 26 USC 48. amended by striking out “187,”. (B) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the item relating to section 187. (C) Section 1082(a)(2)(B) (relating to basis for determining gain 26 USC 1082. or loss) is amemled by striking out “187,”. (D) Section 1245(a)(2) (relating to gain from dispositions 26 USC 1245. of certain depreciable property) is amended by striking out “187,” each place it appears. (12) Amendments conforming to the repeal of section 342.— (A) Section 551(f), as redesignated by paragraph (1)(F) 26 USC 551. of this subsection, is amended by striking out paragraph (3). (B) The table of subparts for part II of subchapter C of chapter 1 is amended by striking out the item relating to subpart C and inserting in lieu thereof: “Subpart C. Collapsible corporations,” (C) The table of sections for subpart C of part II of subchapter C of chapter 1 is amended by striking out the item relating to section 342. (D) The heading of subpart C of part II of subchapter C of chapter 1 is amended to read as follows: “Subpart C— Collapsible Corporations”. (13) Amendments conforming to the repeal of section 303.— The table of sections for subpart C of part III of subchapter C of chapter 1 is amended by striking out the item relating to section 363. (14) Amendments conforming to the repeal of section 373.— (A) Section 372(b)(1) is amended by striking out “373 26 USC 372. (b) or”. (B) Section 374(b) is amended to read as follows: “(b) Basis.— “(1) Railroad corporations.— If the property of a railroad corporation, as defined in section 77(m) of the Bankruptcy Act (11 U.S.C. 205 (m)), was acquired after December 31, 1938, in pursuance of an order of the court having jurisdiction of such corporation— “(A) in a receivership proceeding, or “(B) in a proceeding under section 77 of the Bankruptcy Act, and the acquiring corporation is a railroad corporation (as defined in section 77(m) of the Bankruptcy Act) organized or made use of to effectuate a plan of reorganization approved by the court, in such proceeding, the basis shall be the same as it would be in the hands of the railroad corporation whose property was so acquired, increased in the amount of gain recognized under subsection (a)(2) to the transferor on such transfer. “(2) Property acquired by street, suburban, or interurban electric railway corporation.— If the property of any street, suburban, or interurban electric railway corporation engaged as a common carrier in the transportation of persons or property in interstate commerce was acquired after December 31, 1934, in pursuance of an order of the court having jurisdiction of such corporation in a proceeding under section 77 of the Bankruptcy Act (11 U.S.C. 501 and following), and the acquiring corporation is a street, suburban, or interurban electric railway engaged as a common carrier in the transportation of persons or property in interstate commerce, organized or made use of to effectuate a plan of reorganization approved by the court in such proceeding, then, notwithstanding the provisions of section 270 of the Bankruptcy Act (11 U.S.C. (570), the basis shall be the same as it would be in the hands of the corporation whose property was so acquired.” (C) Section 374(c)(8) is amended by striking out “subsection (b)” and inserting in lieu thereof “subsection (b)(1)”. . .. (D) Section 1232(b)(2) is amended by striking out “section 371, 373, or 374” and inserting in lieu thereof “section 371 or 374”. (E) The table of sections for part IV of subchapter C of chapter 1 is amended by striking out the item relating to section 373. (15) Amendment conforming to repeal of sections 391 through 395.— The table of parts for subchapter C of chapter 1 is amended by striking out the item relating to part VII. (16) Amendment conforming to the amendments of section 481.— Section 381 (c) is amended by striking out paragraph (21). (17) Amendment conforming to the amendments of section 545.— Section 381(c)(15) is amended by striking out “subsections (b)(7) and (c)” and inserting in lieu thereof “subsection (c)”. (18) Amendment conforming to the repeal of section 583.— The table of sections for part I of subchapter H of chapter 1 is amended by striking out the item relating to section 583. (19) Amendment conforming to the repeal of section 592.— The table of sections for part II of subchapter H of chapter 1 is amended by striking out the item relating to section 592. (20) Amendments conforming to the repeal of section 601.— (A) Section 535(b) is amended by striking out paragraph 26 USC 535. (8). (B) (i) Section 545(b) is amended by striking out paragraph 26 USC 545. (6), and by redesignating paragraph (8) as paragraph (6). (ii) Section 545(b)(2) is amended by striking out “paragraph (8)” and inserting in lieu thereof “paragraph (6)”. (iii) Section 545(c)(5) is amended by striking out “subsection (b)(8)” and inserting in lieu thereof “subsection (b)(6)”. (C) The table of parts for subchapter H of chapter 1 is amended by striking out the item relating to part III. (21) Amendments conforming to the repeal of section 615.— (A) (i) Section 243(b)(3)(C) is amended— 26 USC 243. (I) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following; “(ii) $400,000 limitation for certain exploration expenditures under section 617(h)(1),”, and (II) by redesignating clauses (iv) and (v) as clauses (iii) and (iv), respectively. (ii) Section 1564(h)(2)(C) is amended by striking out 26 USC 1564. “section 243(b)(3)(C)(v)” and inserting in lieu thereof “243(b)(3)(C)(iv)”. (B) Section 381(c)(10) is amended to read us follows: 26 USC 381. “(10) Treatment of certain mining develops cent and exploration expenses of distributor or transfer or corporation.— The acquiring corporation shall be entitled to deduct, as if it were the distributor or transferor corporation, expenses deferred under section 616 (relating to certain development expenditures) if the distributor or transferor corporation has so elected. For the purpose of applying the limitation provided in section 617(h), if, for any taxable year, the distributor or transferor corporation was allowed a deduction under section 617(a), the acquiring corporation shall be deemed to have been allowed such deduction.” (C) Section 617(h)(1) is amended by striking out “and 26 USC 617. section 615(a) and the amounts which are or have been treated as deferred expenses under section 615(b)” and inserting in lieu thereof “and subsection (a) of section 615 (as in effect before the enactment of the Tax Reform Act of 1976)”. (D) Section 617(h)(3) is amended to read as follows: “(3) Application of paragraph (2)(b).— Paragraph (2) (B) shall apply with respect to nil amounts deducted before the latest such transfer from the individual or corporation to the taxpayer. Paragraph (2)(B) shall apply only if— “(A) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make paragraph (7), (8), (11), (15), (17), (20), or (22) of section 113(a) of the Internal Revenue Code of 1939 apply to such transfer; or “(B) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make section 334(b), 362 (a) and (b), 372(a), 374(b)(1), 1051, or 1082 apply to such transfer.” (E) Section 617 is amended by adding at the end thereof the following new subsection: “(i) Certain Pre-1970 Exploration Expenditures.— If— “(1) the taxpayer receives mineral property in a transaction as a result of which the basis of such property in the hands of the transferee is determined by reference to the basis in the hands of the transferor, “(2) an election made by the transferor under subsection (e) of section 615(e)(as in effect before the enactment of the Tax Reform Act of 1976) applied with respect to expenditures which were made by him and which were properly chargeable to such property, and “(3) the taxpayer has made or makes an election under subsection (a), then in the application of this section with respect to the transferee, the amounts allowed as deductions under such section 615 to the transferor, which (but for the transferor’s election) would be reflected in the adjusted basis of such property in the hands of the transferee, shall be treated as expenditures allowed as deductions under subsection (a) to the transferor.” (F) Section 703 (b) is amended by striking out “under section 615 (relating to pre–1970 exploration expenditures),”. (G) Section 1016 (a) is amended by striking out paragraph (I?)-. (H) The table of sections for part. I of subchapter I of chapter 1 is amended by striking out the item relating to section 615. (22) Amendments conforming to the repeal of section 632.— (A) The table of sections for part III of subchapter I of chapter 1 is amended by striking out the item relating to section 632. (B) Section 5(b) is amended by striking out paragraph (1). (23) Amendment conforming to the repeal of section 771.— The table of parts for’ subchapter K of chapter 1 is amended by striking out the item relating to part IV. (24) Amendment conforming to the amendment of section 802.— Section 815(c)(3)(B) is amended by striking out “(determined without regard to section 802(a)(3))”. (25) Amendment conforming to the amendment of section 812.— Section 844(b)(2) is amended by striking out “section 812(b)(1)(A)(iii)” and inserting in lieu thereof “section 812 (b)(1)(C)”. (26) Amendments conforming to the amendments of section 804.— (A) Paragraphs (5) and (6) of section 861(a) (relating to items treated as income from within United States) are each amended by striking out in the heading “sale” and inserting in lieu thereof “sale or exchange”, and by striking out “sale” in the text and inserting in lieu thereof “sale or exchange”. (B) section 861(e)(1) (relating to income from certain aircraft and vessels) is amended by striking out “sale or other disposition” and inserting in lieu thereof “sale, exchange, or other disposition”. (C) Paragraphs (5) and (6) of section 862(a) (relating to items treated as income from without the United States) 26 USC 863. and paragraphs (2) and (3) of section 863(b) (relating to sources of income) are each amended by striking out “sale” and inserting in lieu thereof “sale or exchange”. (D) Paragraph (2) of section 863(b) (relating to sources 26 USC 863. of income) is amended by striking out “sold” each place it appears and inserting in lieu thereof “sold or exchanged”. (27) Amendments conforming to the repeal of section 972.— (A) Section 970(b)(1) (relating to inclusion of certain 26 USC 970. previously excluded amounts of sub part F income) is amended by striking out “application of section 972” and inserting in lieu thereof “treatment (under section 972 as in effect before the date of the enactment of the Tax Reform Act of 1976) of two or more controlled foreign corporations which are export trade corporations as a single controlled foreign corporation ”. (B) The table of sections for subpart G of part III of subchapter N of chapter 1 is amended by striking out the item relating to section 972. (28) Amendments conforming to the amendment of section 1001.— (A) Subsection (c) of section 331 is amended to read as 26 USC 331. follows: “(c) Cross Reference.— “For general rule for determination of the amount of gain or loss recognized, see section 1001.” (B) (i) Section 1002 (relating to recognition of gain or 26 USC 1002. loss) is repealed. (ii) The table of sections for part I of subchapter 0 of chapter 1 is amended by striking out the item relating to section 1002. (29) Amendments conforming to the repeal of section 1920.— (A) The third sentence of subsection (a) of section 1016 is 26 USC 1016. amended by striking out “under section 1020” and inserting in lieu thereof “under section 1020 (as in effect before the date of the enactment of the Tax Reform Act of 1976)”, Ante, p. 1520; (B) The table of sections for part II of subchapter O of chapter 1 is amended by striking out the item relating to section 1020. (30) Amendments conforming to the repeal of section 1022.— (A) Section 1016(a) is amended— 26 USC 1016. (i) by striking out paragraph (21), and (ii) by redesignating paragraphs (20) and (22) as paragraphs (19) and (20), respectively. (B) The amendment made by subparagraph (A)(i) shall 26 USC 1016 note. apply with respect to stock or securities acquired from a decedent dying after the date of the enactment of this Act. (C) Tho table of sections for part II of subchapter O of chapter 1 is amended by striking out the item relating to section 1022, ~ (31) Amendments conforming to amendments of section 1033.— (A) Section 1250(d)(4)(B) is amended by striking out 26 USC 1250. “1033(a)(3)(A)” and inserting in lieu thereof “1033(a)(2)(A)” (B) Section 1250(d)(4)(C) and (D) are each amended by striking out “1033(a)(3)” and inserting in lieu thereof “1033(a)(2)”. (C) Section 6212(c)(2)(B) is amended by striking out “1033(a)(3)(C) and (D)” and inserting in lieu thereof “1033 (aj (2)(C) and (D)”. (D) Section 6504(4) is amended by Striking out “1033(a)(3)(C) and (D)” and inserting in lieu thereof “1033(a)(2)(C) and (D)”. (E) Sections 1071(b) and 1250(d)(4)(D) are each amended by striking out “1033(c)” and inserting in lieu thereof “1033(b)”. (32) Amendments conforming to the repeal of section 1111.— (A) Section 301 is amended by striking out subsection (f), and by redesignating subsection (g) as subsection (e). (B) (i) Section 312 is amended by striking out subsection (k), and by redesignating subsections (1) and (m) as subsections (j) and (k), respectively, (ii) Section 1246(g) is amended by striking out “312(1)” and inserting in lieu thereof “312 (j)”. (iii) Sections 964(a) and 1248(c)(1) are each amended by striking out “312 (m)(3)” and inserting in lieu thereof “312 (k)” (iv) Subsection (d) of section 1377, as added by this Act, is amended by striking out “312(m)” and inserting in lieu thereof “312(k)”. (C) Section 535(b) is amended by striking out paragraphs (9) and (10). (D) Section 543(a)(1) is amended by inserting “and” at the end of subparagraph (A), and by striking out subparagraphs (B) and (C) and inserting in lieu thereof the following: “(B) interest on amounts set aside in a reserve fund under section 511 or 607 of the Merchant Marine Act, 1936 (46 U.S.C. 1161 or 1177).” (E) Section 545(b) is amended by striking out paragraphs (10) and (11). (F) Section 553(a)(1) is amended to read as follows: “(1) Dividends, etc.— Dividends, interest, royalties, and annuities.” (G) Section 556(b) is amended by striking out paragraphs (7) and (8). (H) Section 561(b) is amended to read as follows: “(b) Special Rules Applicable.— In determining the deduction for dividends paid, the rules provided in section 562 (relating to rules applicable in determining dividends eligible for dividends paid deduction) and section 563 (relating to dividends paid after the close of the taxable year) shall be applicable.” (I) The table of parts for subchapter O of chapter 1 is amended by striking out the item relating to part IX. (33) Amendments conforming to amendment of section 1222.— (A) Section 57(a)(9)(A) is amended by striking out “the amount by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “the net capital gain”. (B) So much of the first sentence of section 57(a)(9)(B) as precedes “by a fraction” is amended to read as follows: “In the case of a corporation having a net capital gain for the taxable year, an amount equal to the product obtained by multiplying the net capital gain”. (C) Section 527(b)(2) is amended by striking out “net 26 USC 527. section 1201 gain” and inserting in lieu thereof “net capital gain”. (D) Sections 535(b)(6) and 545(b)(5) are each amended— 26 USC 535, 545. (1) by striking out from the paragraph heading “Long-term” and inserting in lieu thereof “Net”, (2) by striking out from the text “the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such year” each place it appears and inserting in lieu thereof’ “the net capital gain for the taxable year”, and (3) by striking out from the text “such excess” each place it appears and inserting in lieu thereof “such net capital gain”. (E) Section 802(a)(2) is amended— 26 USC 802. (i) by striking out “the net long-term capital gain of any life insurance company exceeds the net short-term capital loss” and inserting in lieu thereof “any life insurance company has a net capital gain”, and (ii) by striking out “such excess” each place it appears and inserting in lieu thereof “such net capital gain”. (F) Section 804(a)(2) is amended by 26 USC 804. striking out “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (G) Sections 809(b)(1)(B) and 809(b)(2)(B) are each 26 USC 809. amended by striking out “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (H) Section 815(b)(2)(A)(ii) is amended by striking out 26 USC 815. “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (I) Section 852(b)(2)(A) is amended by striking out 26 USC 852. “the excess, if any, of the net long-term capital gain over the net short-term capital loss” and inserting in lieu thereof “the amount of the net capital gain, if any”. (J) (i) Section 852(b)(3)(A) is amended to read as follows: “(A) Imposition of tax.— There is hereby imposed for each taxable year in the case of every regulated investment company a tax, determined as provided in section 1201 (a), on the excess, if any, of the net capital gain over the deduction for dividends paid (as defined in section 561) determined with reference to capital gain dividends only.” (ii) The second sentence of section 852(b)(3)(C) is amended by striking out “excess of the net long-term capital gain over the net short-term capital loss” each place it appears and inserting in lien thereof “net capital gain”. (K) The second sentence of section 857(b)(3)(C) is 26 USC 857. amended by striking out “excess of the net long-term capital gain over the net short-term capital loss” each place it appears and inserting in lieu thereof “net capital gain”. (L) Section 1201(b) is amended by striking out “net section 26 USC 1201. 1201 gain” each place it appears and inserting in lieu thereof “net capital gain”. (M) The first sentence of section 1202 is amended to read as follows: “If for any taxable year, a taxpayer other than a corporation has a net capital gain, 50 percent of the amount of the net capital gain shall be a deduction from gross income.” (N) Sections 381(e)(3)(B), 381(c)(3)(C), 852(d), 4940 (c)(1), and 4940(c)(4) are each amended by striking out “net capital gain” and inserting in lieu thereof “capital gain net income”. (O) Section 1212(a)(1) is amended by striking out “net capital gain” each place it appears and inserting in lieu thereof “capital gain net income”, and by striking out “net capital gains” and inserting in lieu thereof “capital gain net income”. (P) Section 1247(a)(1)(B) is amended by striking out “the excess (determined as if such corporation were a domestic corporation) of the net long-term capital gain over the net short-term capital loss” and inserting in lieu thereof “the amount (determined as if such corporation were a domestic corporation) of the net capital gain”. (Q) (i) Section 1375(a)(1) is amended by striking out “the excess of the corporation’s net long-term capital gain over its short-term capital loss” and inserting in lieu thereof “the corporation’s net capital gain”. (ii) The second sentence of section 1375(a)(1) is amended by striking out “such excess” and inserting in lieu thereof “such net capital gain”. (iii) Section 1375(a)(3) is amended by striking out “the excess of an electing small business corporation’s net long-term capita] gain over its net short-term capital loss” and inserting in lieu thereof “an electing small business corporation’s net capital gain”. (R) The following provisions are each amended by striking out “the excess of the net long-term capital gain over the net short-term capital loss,” and inserting in lieu thereof “the net capital gain”: Sections 1247(a)(2)(A)(i), 1247(a)(2) 26 USC 1247, 1378. (C), 1247(d)(1) and (2). 1378(a)(1), 1378(b)(1), and 1378 (c)(8). (34) Amendment conforming to the repeal of section 1240.— The table of sections of part IV of subchapter P of chapter 1 is amended by striking out the item relating to section 1240. (35) Amendment conforming to the repeal of section 1315.— The table of sections for part II of subchapter Q of chapter 1 is amended by striking out the item relating to section 1315. (36) Amendments conforming to the repeal of section 1321.— (A) Section 472 is amended by striking out subsection (f). (B) Section 6422, as amended by this Act, is amended by striking out paragraph (2), and by redesignating paragraphs (3) through (13) as paragraphs (2) through (12), respectively. (C) Section 6504 is amended by striking out paragraph (1). (D) Section 6515 is amended by striking out paragraph (1). (E) The table of parts for subchapter Q of chapter 1 is amended by striking out the item relating to part III. (37) Amendments conforming to the repeal of sections 1331 through 1337.— (A) The third sentence of section 901(a) is amended by 26 USC 901. striking out “under section 1333 (relating to war loss recoveries) or”. _ . (B) Section 936(a)(2), as added by this Act, is 26 USC 936. amended— (i) by inserting “or” at the end of subparagraph (C), and (ii) by striking out subparagraph (D). (C) Section 6212(c),(2) is amended by striking out subparagraph 26 USC 6212. (D). (D) Section 6515 is amended by striking out paragraph 26 USC 6515. (6). (E) Section 6515, as amended by this Act, is amended by striking out paragraph (2), and by redesignating paragraphs (3), (4), (5), (6), (7), and (8) as paragraphs (1), (2), (3), (4). (5),and (6) respectively. (F) The table of parts tor subchapter Q of chapter 1 is amended by striking out the item relating to part IV. (38) Amendment conforming to the repeal of section 1342.— The table of sections for part V of subchapter Q of chapter 1 is amended by striking out the item relating to section 1342. (39) Amendments conforming to the repeal of section 1340.— (A) The table of sections for part VI of subchapter Q of chapter 1 is amended by striking out the item relating to section 1346. (B) Section 6504 is amended by striking out paragraph Post, p. 1829. (7). (40) Amendment conforming to amendment of section 1372.— Section 58(d)(2) is amended by striking out “, notwithstanding 26 USC 58. the provisions of section 1371(b)(1),” (41) Amendment conforming to the repeal of section 1465.— The table of sections for subchapter C of chapter 3 is amended by striking out the item relating to section 1465. (c) Amendments to Provisions Referring to Territories.— (1) Section 37(f) is amended by striking out “a Territory,”. Ante, p. 1559. 26 USC 105, 273, 454. 26 USC 117. (2) Sections 105(e)(2), 273, and 454(b)(2) are each amended by striking out a Territory.”. (3) Section 117(b)(2)(A)(iv) is amended by striking out “a territory,”. (4) Section 162(a) is amended by striking out “territory”. 26 USC 162. 26 USC 581. (5) Section 581 is amended by striking out “, of any State, or of any Territory” and inserting m lieu thereof “or of any State”, and by striking out “, Territorial,”. (6) Section 801(b)(3) is amended by striking out “or 26 USC 801. Territorial”. (7) Section 861(a)(1) is amended by striking out “, any Territory, 26 USC 861. any political subdivision of a Territory.”. (8) Paragraphs (6) and (7) of section 1014(b) are each 26 USC 1014. amended by striking out “Territory.”. (9) Section 1221 (5) is amended by striking out “or Territory,”. 26 USC 1221. 26 USC 2 note. (d) Effective Date.— Except as otherwise expressly provided in this section, the amendments made by this section shall apply with respect to taxable years beginning after December 31, 1976. The amendments made by subsections (a)(29) and (b)(10) shall apply with respect to taxable years ending after the date of the enactment of this Act. SEC. 1902. AMENDMENTS OF SUBTITLE B; ESTATE AND GIFT TAXES. (a) In General.— (1) Amendments of section 2012.— (A) Section 2012(b) (relating to credit for gift tax) is amended— (i) by Striking out “(b) in applying,” and inserting in lieu thereof “(b) Valuation Reductions.—In applying,”, and (ii) by striking out in paragraphs (2) and (3) “ deduction)—then” and inserting in lieu thereof “deduction), then”. (B) Section 2012(c) (relating to gift by spouse or third party) is amended by striking out “(c) Where the decedent” and inserting in lieu thereof “(c) Where Gift Considered Made One-Half by Spouse.—Where the decedent”. (C) Section 2012(d)(1) (relating to computation of amount of gift tax) is amended by striking out “(d)(1) For purposes of” and inserting in lieu thereof the following: “(d) Computation of Amount of Gift Tax Paid.— “(1) Amount of tax.— For purposes of”. (D) Section 2012(d)(2) (relating to credit for gift tax) is amended by striking out “(2) For purposes” and inserting in lieu thereof: “(2) Amount of gift.—For purposes”., (2) Amendments of section 2013.— Section 2013(d)(3) is amended by striking out “, or the corresponding provision of prior law,”. (3) Amendment of section 2038.— Section 2038 (relating to revocable transfers) is amended by striking out subsection (c) (relating to effect of disability in certain cases). (4) Amendments of section 2055.— (A) Section 2055(b) (relating to powers of appointment) is amended to read as follows: “(b) Powers of Appointment.— Property includible in the decedent’s gross estate under section 2041 (relating to powers of appointment) received by a donee described in this section shall, for purposes of this section, be considered a bequest of such decedent.” (B) Section 2055(f) (relating to cross references) is amended to read as follows: (f) Cross References.— “(1) For option as to time for valuation for purpose of deduction under this section, see section 2032. “(2) For exemption of gifts and bequests to or for the benefit of Library of Congress, see section 5 of the Act of March 3, 1925, as amended (2 U.S.C. 161). “(3) For treatment of gifts and bequests for the benefit of the Office of Naval Records and History as gifts or bequests to or for the use of the United States, see section 7222 of title 10, United States Code. “(4) For treatment of gifts and bequests to or for the benefit of National Park Foundation as gifts or bequests to or for the use of the United States, see section 8 of the Act of December 18, 1967 (16 U.S.C. 191). “(5) For treatment of gifts, devises, or bequests accepted by the Secretary of State under the Foreign Service Act of 1946 as gifts, devices, or bequests to or for the use of the United States, see section 1021(e) of that Act (22 U.S.C. 869(e)) . “(6) For treatment of gifts or bequests of money accepted by the Attorney General for credit to ‘Commissary Funds, Federal Prisons/ as gifts or bequests to or for the use of the United States, see section 2 of the Act of May 15, 1952, as amended by the Act of July 9, 1952 (31 U.S.C. 725s–4). “(7) For payment of tax on gifts and bequests of United States obligations to the United States, see section 24 of the Second Liberty Bond Act (31 U.S.C. 757e), “(8) For treatment of gifts and bequests for benefit of the Naval Academy as gifts or bequests to or for the use of the United States, see section 6973 of title 10, United States Code. _ “(9) For treatment of gifts and bequests for benefit of the Naval Academy Museum as gifts or bequests to or for the use of the United States, see section 6974 of title 10, United States Code. “(10) For exemption of gifts and bequests received by National Archives Trust Fund Board, see section 2308 of title 44, United States Code.” (5) Amendments of section 2100.— (A) Section 2106(a)(2)(F) (relating to cross references 26 USC 2106. concerning the charitable deduction for estate tax purposes) is amended to read as follows: “(F) Cross References.— “(1) For option as to time for valuation for purposes of deduction under this section, see section 2032. “(2) For exemption of certain bequests for the benefit of the United States and for rules of construction for certain bequests, see section 2C55(O.” (B) Section 2106 (relating to taxable estate of nonresidents) is amended by striking out subsection (c) (relating to treatment of United States bonds). (6) Amendment of sections 2107 and 2108.— Section 2107(a) (relating 26 USC 2107, 2108. to estate tax on expatriates) and section 2108(a) (relating to application of pre–1967 estate tax provisions) are each amended by striking out “the date, of enactment of this section” and inserting in lieu thereof “November 13, 1966”. (7) Amendment relating to section 2201.— (A) Section 6(b)(1) of the Act of January 2, 1975 (Public Law 93–597; 88 Stat. 1950) is amended by striking out 26 USC 2201. “Section 2210” and inserting in lieu thereof “Section 2201”. (B) The amendment made by subsection (A) is effective 26 USC 2201 note. 26 USC 2202. July 1, 1973. (8) Repeal of section 2202.— Section 2202 (relating to missionaries in foreign service) is repealed. (9) Amendment of section 2204.— The last sentence of section 2204(b) (relating to the discharge from personal liability of a fiduciary other than the executor) is amended by striking out “has not been” and inserting in lieu thereof 26 USC 2204. “has been”. (10) Amendment of section 2501.— Section 2501(a)(1) (relating 26 USC 2501. to imposition of gift tax) is amended to read as follows: “(1) General rule.— A tax, computed as provided in section 2502, is hereby imposed for each calendar quarter on the transfer of property by gift during such calendar quarter by any individual, resident or nonresident.” (11) Amendment of section 2522.— Subsection (d) of section 26 USC 2522. 2522 (relating to cross references) is amended to read as follows: “(d) Cross Reference.— “For exemption of certain gifts to or for the benefit of the United States and for rules of construction with respect to certain gifts, see section 2055(f).” (12) Amendments to sections referring to territories.— (A) The following provisions are each amended by striking out “Territory,”: sections 2055(a)(1), 2056(c)(2)(B), 26 USC 2055, 2056, 2106. and 2106(a)(2)(A)(i). (B) The following provisions are each amended by striking out “or Territory”: sections 2011(a), 2011(e), and 2053 (C) Section 2016 is amended by striking out “Territory or”. (D) Sections 2522(a)(1) and 2522(b)(1) are. each amended by striking out “Territory,”. (E) Section 2523(f)(1) is amended by striking out “Territory, or”. (b) Conforming and Clerical Amendments.— (1) Amendment conforming to repeal of section 2202.— The table of sections for subchapter C of chapter 11 is amended by striking out the item relating to section 2202. (2) Amendments conforming to amendment of section 2055.— (A) Section 6503, as amended by this Act, is amended by striking out subsection (e), and by redesignating subsections (f), (g) (h), and (i) as subsections (e), (f), (g), and (h), respectively. (B) Section 6167(h)(2) is amended by striking out “section 6503(f)” and inserting in lieu thereof “section 6503(e)”. (c) Effective Dates.— (1) Estate tax amendments.— The amendments made by paragraphs (1) through (10), and paragraphs (14)(A), (B),and (C), of subsection (a), and by subsection (b) shall apply in the case of estates of decedents dying after the date of the enactment of this Act, and the amendment made by paragraph (11) of subsection (a) shall apply in the case of estates of decedents dying after December 31, 1970. (2) Gift tax amendments.— The amendments made by paragraphs (12), (13), and (14)(D) and (E) of subsection (a) shall apply with respect to gifts made after December 31, 1976. SEC. 1903. AMENDMENTS OF SUBTITLE C; EMPLOYMENT TAXES. (a) In General.— (1) Amendments of sections 3101 and 3111.— (A) Section 3101(a) (relating to rate of tax on employees for old-age, survivors, and disability insurance) and section 26 USC 3111. 3111(a) (relating to rate of tax on employers for such insurance) are each amended by striking out paragraphs (1), (2), (3), and (4), and by redesignating paragraphs (5) and (6) as paragraphs (1) and (2), respectively. (B) Section 3101(b) (relating to rate of tax on employees for hospital insurance) and section 3111(b) (relating to rate of tax on employers for such insurance) are each amended by striking out paragraphs (1) and (2), and by redesignating paragraphs (3), (4), (5), and (6) as paragraphs (1), (2), (3), and (4), respectively. (2) Repeal of section 3113.— Section 3113 (relating to application of social security tax on District of Columbia credit unions) is repealed. (3) Amendments of section 3121.— (A) Section 3121(b) (relating to employment) is amended— (i) by striking out “performed after 1936 and prior to 1955 which was employment for purposes of subchapter A of chapter 9 of the Internal Revenue Code of 1939 under the law applicable to the period in which such service was performed, and any service, of whatever nature, performed after 1954” and inserting in lieu thereof “, of whatever nature, performed”, and (ii) by striking out “, in the case of service performed after 1954,”. (B) Section 3121(b)(1) is amended by striking out “65 26 USC 3121. Stat. 119;”. (C) Section 3121(b)(6)(B)(v) is amended by striking out “Secretary of the Treasury” and inserting in lieu thereof “Secretary of Transportation”. (D) Section 3121(g)(3) (relating to agricultural labor) is amended by striking out “46 Stat. 1550, § 3;”. (E) Section 3121(k)(1) (relating to exemption of certain organizations) is amended by striking out subparagraphs (F) and (H) and by redesignating subparagraph (G) as subparagraph (F). (F) Section 3121 (1)(2) (relating to employees of foreign subsidiaries) is amended by striking out “, but in no case prior to January 1, 1955”. (G) Section 3121 (m)(1) (relating to service in the uniformed services) is amended by striking out “after December 1956”. (4) Amendments of section 3122.— The last sentence of section 3122 (relating to Federal service) is amended by striking out 26 USC 3122. “Secretary” each place it appears and inserting in lieu thereof “Secretary of Transportation”. (5) Amendment of section 3123.— Section 3125(c) (relating 26 USC 3125. to returns in the case of Governmental employees in the District of Columbia) is amended by striking out “Commissioners of the District of Columbia or such agents as they may designate” and by inserting in lieu thereof “Mayor of the District of Columbia of such agents as he may designate”. (6) Amendment of section 3201.— Section 3201 (relating to 26 USC 3201. rate of tax on railroad employees) is amended— (A) by striking out “oi the Internal Revenue Code of 1954” each place it appears; (B) by striking out “of such Code”; (C) by striking out “after September 30, 1973, as is” and inserting in lieu thereof “as is”; and (D) by striking out “any month after September 30, 1973” and inserting in lieu thereof “any month”. (7) Amendments of section 3202.— (A) The second sentence of section 3202(a) (relating to 26 USC 3202. reduction of tax by railroad employer) is amended— (i) by striking out “after September 30, 1973,” each place it appears; (ii) by striking out “after September 30, 1973 and the aggregate” and inserting in lieu thereof “and the aggregate” (iii) by striking out “of the Internal Revenue Code of 1954” each place it appears; and (iv) by inserting a comma immediately after “for any month” each place it appears. (B) Section 3202(b) (relating to indemnification of employer) is amended by striking out “made”. (8) Amendments of section 3211.— Section 3211(a) (relating 26 USC 3211. to rate of tax on railroad employee representatives) is amended— (A) by striking out “3111(a), 3111(b)” and inserting in lieu thereof “3111(a), and 3111(b)”; (B) by striking out “of the Internal Revenue Code of 1954” each place it appears; (C) by striking out “rendered by him after September 30, 1973,” and inserting in lieu thereof “rendered by him”; and (D) by striking out “after September 30, 1973”. (9) Amendments of section 3221.— (A) The first sentence of section 3221(a) (relating to rate of tax on railroad employers) is amended— (i) by striking out “after September 30, 1973,” each place it appears; (ii) by striking out “after September 30, 1973: except that” and inserting in lieu thereof “, except that”; (iii) by striking out “after September 30, 1973 of the aggregate” and inserting in lieu thereof “of the aggregate”; (iv) by striking out “of the Internal Revenue Code of 1954” each place it appears; and (v) by inserting a comma before “the tax imposed”. (B) Section 3221(b) (relating to rate of tax on railroad employers) is amended to read as follows: “(b) The rate of tax imposed by subsection (a) shall be increased by the rate of tax imposed with respect to wages by section 3111(a) plus the rate imposed by section 3111(b).” (C) Section 3221(c) (relating to additional railroad retirement tax) is amended— (i) by striking out “(1) at the rate of 2 cents for the period beginning November 1, 1966, and ending March 31, 1970, and (2) commencing April 1, 1970,” and (ii) by striking out “commencing with the quarter beginning April 1, 1970”. (10) Amendments of section 3231.— (A) Section 3231(a)(defining employer) is amended by striking out “44 Stat. 577;”. (B) Section 3231(b)(defining employee) is amended by striking out. “50 Stat. 312;”. (C) Section 3231(e)(defining employee representative) is amended by striking out “44 Stat. 577;”. (D) Section 3231(d)(7)(defining service) is amended by striking out “50 Stat, 308;”. (11) Amendments of section 3301.— Section 3301 (relating to Federal unemployment tax rate) is amended— (A) by striking out “the calendar year 1970 and each calendar year thereafter” and inserting in lieu thereof “each calendar year”, and (B) by striking out the last sentence. (12) Amendments of section 3302.— (A) Section 3302(a) (relating to credits against tax) is amended by striking out “(10month period in the case of October 31, 1972)”. (B) Section 3302(b) (relating to additional credit) is amended— (i) by striking out “(10month period in the case of October 31, 1972)”, and (ii) by striking out “12 or 10month period, as the case may be,” and inserting in lieu thereof “12month period”. (C) (i) Section 3302(c) (relating to limitation on credits 26 USC 3302. against unemployment tax) is amended by striking out paragraph (2) and the unnumbered paragraph immediately following such paragraph (2) (relating to advances made to a State unemployment account before September 13, 1960), and by redesignating paragraphs (3) and (4) as paragraphs (2) and (3),respectively. (ii) Section 3302(c)(2) (relating to advances made to a State unemployment account after September 12, 1960), as redesignated by clause (i) of this subparagraph, is amended by striking out “on or after the date of the enactment of the Employment Security Act of 1960”, and by striking out “paragraphs (1) and (2)” and inserting in lieu thereof “paragraph (1)”. (iii) Section 3302(c)(3) (relating to reductions with respect to certain agreements under the Trade Act of 1974),as redesignated by clause (i) of this subparagraph, is amended by striking out “paragraphs (1), (2), and (3)” and inserting in lieu thereof “paragraphs (1) and (2)”. (iv) Section 3302 (d)(3) (relating to effect of repayment of advances) is amended by striking out “or (3)”. (v) Section 3302(d)(4), (5), and (6) (relating to special rules) are each amended by striking out “subsection (c)(3)” each place it appears and inserting in lieu thereof “subsection (c)(2)”. (vi) Section 3302(d)(7) (relating to determination and certification of percentages) is amended by striking out “subsection (c)(3)(B) or (C)” and inserting in lieu thereof “subsection (c)(2)(B) or (C)”. (D) Section 3302(d) (relating to special rules for credits against the unemployment tax) is amended by striking out paragraph (8)(a cross reference). (13) Amendments to section 3303.— Section 3303 (b) (relating 26 USC 3303. to certification with respect to additional credit allowance) is amended— (A) by striking out “(10month period in the case of October 31, 1972) ” each place it appears, (B) by striking out “12 or 10month period, as the case may be,” each place it appears in paragraphs (1) and (2), and inserting in lieu thereof “12month period”, and (C) by striking out “12 or 10month period, as the case may be,” in paragraph (3) and inserting in lieu thereof “12month period,”. (14) Amendments to section 3304.— (A) Section 3304(a)(3) (relating to requirements) is 26 USC 3304. amended by striking out “49 Stat, 640; 52 Stat. 1104, 1105;”. (B) Section 3304(c) (relating to certification) is amended by striking out “(10month period in the case of October 31, 1972)”. (15) Amendments of section 3305.— (A) Section 3305(g) (relating to vessels operated by 26 USC 3305. general agents of the United States) is amended by striking out “on or after July 1, 1953,”. (B) Section 3305 (h) (relating to certain contributions to States) is amended by striking out “on or after July 1, 1953, and”. (C) Section 3305(j) (relating to denial of credits in certain cases) is amended by striking out “after December 31, 1971,”. (16) Amendments of section 3300.— (A) Section 3306(c)(9) (relating to the exclusion of service performed by certain employees and employee representatives from the definition of employment) is amended by striking out “52 Stat. 1094, 1095;”. (B) Section 3306(c)(18) (relating to the exclusion of certain service performed by nonresident aliens from the definition of employment) is amended by inserting after the “Immigration and Nationality Act, as amended” the following: “(8U.S.C. 1101(a)(15)(F) or (J))”. (C) Section 3306(f) (relating to the definition of an unemployment fund) is amended by striking out “49 Stat. 640; 52 Stat. 1104, 1105;”. . (D) Section 3306(n) (relating to vessels operated by general agents of the United States) is amended by striking out “on or after July 1, 1953,”. (17) Amendment of section 3402.— Section 3402(1)(3)(B) (relating to marital status) is amended by striking out “section 2(b)” and inserting in lieu thereof “section 2 (a)”. (b) Amendment Conforming to the Repeal of Section 3113.— The table of sections for subchapter B of chapter 21 is amended by striking out the item relating to section 3113. (c) Amendments to Profusions Referring to Territories.— Sections 3401(c) and 3404 are each amended by striking out “Territory,” each place it appears. (d) Effective Dates.— The amendments made by this section shall apply with respect to wages paid after December 31, 1976, except that the amendments made to chapter 22 of the Internal Revenue Code of 26 USC 3201. 1954 shall apply with respect to compensation paid for services rendered after December 31, 1976. SEC. 1904. AMENDMENTS OF SUBTITLE D; MISCELLANEOUS EXCISE TAXES. (a) In General.— (1) Amendments of chapter 31.— (A) So much of chapter 31 (relating to retailers excise taxes) as precedes section 4041 is amended to read as follows: “Sec. 4041. Imposition of tax.” (B) Section 4041(g) (relating to exemptions from fuel taxes) is amended to read as follows: “(g) Other Exemptions.— Under regulations prescribed by the Secretary, no tax shall be imposed under this section— “(1) on any liquid sold for use or used as supplies for vessels or aircraft (within the meaning of section 4221(d)(3)); “(2) with respect to the sale of any liquid for the exclusive use of any State, any political subdivision of a State, or the District of Columbia, or with respect to the use by any of the foregoing of any liquid as a fuel; “(3) upon the sale of any liquid for export, or for shipment to a possession of the United States, and in due course so exported or shipped; and “(4) with respect to the sale of any liquid to a nonprofit educational organization for its exclusive use, or with respect to the use by a nonprofit educational organization of any liquid as a fuel. For purposes of paragraph (4), the term ‘nonprofit educational organization’ “Nonprofit educational organization.” means an educational organization described in section 170(h)(1)(A)(ii) which is exempt from income tax under section 501(a). The term also includes a school operated as an activity of an organization described in section 501(c)(3) which is exempt from income tax under section 501(a), if such school normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.” (C) Section 4041 (relating to tax on fuels) is amended by 26 USC 4041. adding at the end thereof the following new subsection: “(i) Sales by United States, Etc.— The taxes imposed by this section shall apply with respect to liquids sold at retail by the United States, or by any agency or instrumentality of the United States, unless sales by such agency or instrumentality are by statute specifically exempted from such taxes.” (D) Chapter 31 is amended by striking out section 4042 (a cross reference) and subchapter F (special provisions 26 USC 4042, 4054–4058. applicable to retailers taxes). (2) Amendments of section 421a.— (A) Section 4216 (relating to definition of price) is 26 USC 4216. amended by redesignating subsections (e), (f), and (g) as subsections (d), (e).and (f), respectively. (B) Paragraphs (3), (4). and (5) of section 4216(b) (relating to constructive sales price) are each amended by striking out “subsections (a) and (f)” each place it appears and inserting in lieu thereof “subsections (a) and (e)”. (3) Amendment of section 4217.— Section 4217(d) (relating 26 USC 4217. to lease treated as sale) is amended by striking out paragraph (4) (relating to certain 1958 transitional rules). (4) Repeal of section 4223.— Section 4223 (relating to floor-stock 26 USC 4226. taxes imposed before 1967) is repealed. (5) Amendment of section 4227.— Section 4227 (relating to 26 USC 4227. cross references) is amended to read as follows: “SEC. 4227. CROSS REFERENCE. “For credit for taxes on tires and inner tubes, see section 6416(c).” (6) Amendment of section 4263.— Section 4253 (relating to 26 USC 4253. exemptions from the tax on communications services) is amended by adding at the end thereof the following new subsections: “(i) State and Local Governmental Exemption.— Under regulations prescribed by the Secretary, no tax shall be imposed under section 4251 upon any payment received for services or facilities furnished to the government of any State, or any political subdivision thereof, or the District of Columbia. “(j) Exemption foe Nonprofit Educational Organizations.— Under regulations prescribed by the Secretary, no tax shall be imposed under section 4251 on any amount paid by a nonprofit educational organization for services or facilities furnished to such organization. For purposes of this subsection, the term ‘nonprofit educational organization’ means an educational “Nonprofit educational organization.” organization described in section 170(b)(1)(A)(ii) which is exempt from income tax under section 501(a). The term also includes a school operated as an activity of an organization described in section 501(c)(3) which is exempt from income tax under section 501(a), if such school normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.” (7) Amendments of section 4201.— (A) Subsections (a) and (b) of section 4261 (relating to tax on transportation of persons by air) are each amended by striking out “which begins after June 30, 1970,”. (B) Section 4261(c) is amended by striking out “and begins after June 30, 1970”. (8) Amendment of section 4271.— Section 4271 (a) (relating to tax on transportation of property by air) is amended by striking out “which begins after June 30, 1970,”. (9) Repeal of section 4292.— Section 4292 (relating to State and local governmental exemption from the tax on communications services) is repealed. (10) Repeal of section 4284.— Section 4294 (relating to exemption of nonprofit educational organizations from the tax on communications services) is repealed. (11) Repeal of section 4295.— Section 4295 (across reference) is repealed. (12) Amendment of of after 34.— Chapter 34 (relating to documentary stamp taxes) is amended to read as follows: “CHAPTER 34— POLICIES ISSUED BY FOREIGN INSURERS “Sec. 4371. Imposition of tax. “Sec. 4372. Definitions. “Sec. 4373. Exemptions. “Sec. 4374. Liability for tax. “SEC. 4371. IMPOSITION OF TAX. “There is hereby imposed, on each policy of insurance, indemnity bond, annuity contract, or policy of reinsurance issued by any foreign insurer or reinsurer, a tax at the following rates: “(1) Casualty insurance and indemnity bonds.— 4 cents on each dollar, or fractional part thereof, of the premium paid on the policy of casualty insurance or the indemnity bond, if issued to or for, or in the name of, an insured as defined in section 4372(d); “(2) Life insurance, sickness and accident policies, and annuity contracts.— 1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of life, sickness, or accident insurance, or annuity contract, unless the insurer is subject to tax under section 819; and “(3) Reinsurance.— 1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of reinsurance covering any of the contracts taxable under paragraph (1) or (2). “SEC. 4372. DEFINITIONS. “(a) Foreign Insurer or Reinsurer.— For purposes of section 4371, the term ‘foreign insurer or reinsurer’ means an insurer or reinsurer who is a nonresident alien individual, or a foreign partnership, or a foreign corporation. The term includes a nonresident alien individual, foreign partnership, or foreign corporation which shall become bound by an obligation of the nature of an indemnity bond. The term does not include a foreign government, or municipal or other corporation exercising the taxing power. “(b) Policy of Casualty Insurance.— For purposes of section 4371(1), the term ‘policy of casualty insurance’ means any policy Ante, p. 1812. (other than li fe) or other instrument by whatever name called whereby a contract of insurance is made, continued, or renewed. “(c) Indemnity Bond.— For purposes of this chapter, the term ‘indemnity bond’ means any instrument by whatever name called whereby an obligation of the nature of an indemnity, fidelity, or surety bond is made, continued, or renewed. The term includes any bond for indemnifying any person who shall have become bound or engaged as surety, and any bond for the due execution or performance of any contract, obligation, or requirement, or the duties of any office or position, and to account for money received by virtue thereof, where a premium is charged for the execution of such bond. “(d) Insured.— For purposes of section 4371 (1), the term ‘insured’ means— “(1) a domestic corporation or partnership, or an individual resident of the United States, against, or with respect to, hazards, risks, losses, or liabilities wholly or partly within the United States, or “(2) a foreign corporation, foreign partnership, or nonresident individual, engaged in a trade or business within the United States, against, or with respect to, hazards, risks, losses, or liabilities within the United States. “(e) Policy of Life, Sickness, or Accident Insurance, or Annuity Contract.— For purposes of section 4371(2), the term ‘policy of life, sickness, or accident insurance, or annuity contract’ means any policy or other instrument by whatever name called whereby a contract of insurance Or an annuity contract is made, continued, or renewed with respect to the life or hazards to the person of a citizen or resident of the United States. “(f) Policy of Reinsurance.— For purposes of section 4371(3), the term ‘policy of reinsurance’ means any policy or other instrument by whatever name called whereby a contract or reinsurance is made, continued, or renewed against, or with respect to, any of the hazards, risks, losses, or liabilities covered by contracts taxable under paragraph (1) or (2) of section 4371. “SEC. 4373. EXEMPTIONS. “The tax imposed by section 4371 shall not apply to— “(1) Domestic agent.— Any policy, indemnity bond, or annuity contract signed or countersigned by an officer or agent of the insurer in a State, or in the District of Columbia, within which such insurer is authorized to do business; or “(2) Indemnity bond.— Any indemnity bond required to be filed by any person to secure payment of any pension, allowance, allotment, relief, or insurance by the United States, or to secure a duplicate for, or the payment of, any bond, note, certificate of indebtedness, war-saving certificate, warrant, or check, issued by the United States. “SEC. 4374. LIABILITY FOR TAX. “The tax imposed by this chapter shall be paid, on the basis of a return, by any person who makes, signs, issues, or sells any of the documents and instruments subject to the tax, or for whose use or benefit the same are made, signed, issued, or sold. The United States or any agency or instrumentality thereof shall not be liable for the tax,” (13) Amendment of section 4493.— (A) Section 4493(b)(1) (relating to certain persons engaged in foreign air commerce) is amended by striking out “beginning on or after July 1, 1970”. (B) Section 4493(b)(2) is amended by striking out the last sentence. (14) Amendment of chapter 37.— So much of chapter 37 as precedes section 4501 (relating to tax on sugar) is amended to read as follows: “CHAPTER 37— SUGAR “Sec. 4501. Imposition of tax. “Sec. 4502. Definitions, “Sec. 4503. Exemptions for sugar manufactured for home consumption.” (15) Repeal of sections 4591 through 4597.— Chapter 38 (relating to import taxes on oleomargarine) is repealed. (16) Repeal of sections 4801 through 4806.— Subchapter B of chapter 39 (relating to tax on white phosphorus matches) is repealed. (17) Repeal of sections 4811 through 4826.— Subchapter C of chapter 39 (relating to tax on unadulterated butter) is repealed. (18) Repeal of sections 4881 through 4886.— Subchapter E of chapter 39 (relating to tax on circulation other than of national banks) is repealed. (19) Amendment of section 4901.— Section 4901 (relating to payment of occupational taxes) is amended by striking out subsection (c). (20) Amendment of section 4905.— Section 4905(a) (relating to liability for occupational taxes in case of death or change of location) is amended by striking out “wife” and inserting in lieu thereof “spouse”. (21) Repeal of section 4911 through 4931.— (A) Chapter 41 (relating to interest equalization tax) is repealed. (B) The repeal made by subparagraph (A) shall apply with respect to acquisitions of stock and debt obligations made after June 30, 1974. (22) Amendments of section 4973.— (A) So much of section 4973(a) (relating to tax on excess contributions) as follows “of any individual,” in paragraph (3) thereof is amended to read as follows: “there is imposed for each taxable year a tax in an amount equal to 6 percent of the amount of the excess contributions to such individual’s accounts, annuities, or bonds (determined as of the close of the taxable year). The amount of such tax for any taxable year shall not exceed 6 percent of the value of the account, annuity, or bond (determined as of the close of the taxable year). in the case of an endowment contract described in section 408(b), the tax imposed by this section does not apply to any amount allocable to life, health, accident, or other insurance under such contract. The tax imposed by this subsection shall be paid by such individual.” (B) Section 4973(c) is amended by striking out “subsection 26 USC 4973. (a)(3)” and inserting in lieu thereof “subsection (a)(2)”. (b) Conforming and Clerical Amendments.— (1) Amendments conforming to amendment of chapter 31.— (A) Section 6416(a)(1) is amended by striking out 26 USC 6416. “(retailers taxes)” and inserting in lieu thereof “(special fuels)”, (B) Section 6416 (e) is amended by striking out “subchapter E of”. (2) Amendment conforming to amendment of section 4216.— Section 6416(b)(1) is amended by striking out “section 4216(f)(2) and (3)” and inserting in lieu thereof “section 4216 (e)(2) and (3)” (3) Amendment conforming to the repeal of section 4226.— The table of sections for subchapter G of chapter 32 is amended by striking out the item relating to section 4226. (4) Amendment conforming to the repeal of sections 4292, 4294, and 4295.— The table of sections for subchaptet E of chapter 33 is amended by striking out the items relating to sections 4292, 4294, and 4295. (5) Amendments conforming to the amendment of chapter 34.— (A) Section 7270 is amended by striking out “the affixing 26 USC 7270. of stamps on insurance policies, etc.” and inserting in lieu thereof “liability for tax on policies issued by foreign insurers”. (B) Section 6808 is amended by striking out paragraph 26 USC 6808. (4). (6) Amendments conforming to the amendment of chapter 37.— (A) Section 7240 is amended by striking out “subchapter 26 USC 7240. A of”. (B) Section 7655(a) is amended— 26 USC 7655. (i) by striking out “Subchapter A of chapter 37” in paragraph (5) and inserting in lieu thereof “Chapter 37”, and (ii) by redesignating paragraph (5) as paragraph (3). (7) Amendments conforming to repeal of sections 4591 through 4597.— (A) Section 6808 is amended by striking out paragraph 26 USC 6808. (7). (B) (i) Section 7234 (relating to violations of laws concerning 26 USC 7234. oleomargarine or adulterated butter operations) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7234. (C) (i) Section 7265 (relating to other offenses concerning 26 USC 7265. oleomargarine or adulterated butter operations) is repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7265. (D) Section 7611(a), as redesignated by this Act, is Ante, p. 1699. amended by striking out paragraph (1). (E) The table of chapters for subtitle D is amended by striking out the item relating to chapter 38, (8) Amendments conforming to repeal of sections 4801 through 4806.— (A) Section 4905(b) is amended to rend as follows: “(b) Registration.— “For registration in case of wagering, see section 1412.” (B) Section 6808 is amended by striking out paragraph (12). (C) Section 7012 is amended by striking out subsection (D) (i) Section 7239 (relating to violations of laws concerning white phosphorus matches) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7239. (E) (i) Sections 7267 and 7274 (relating to offenses and penalties concerning white phosphorus matches) are each repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the items relating to sections 7267 and 7274. (F) Section 7272(b) is amended by striking out “4804” (G) Section 7303 is amended by striking out paragraph (6) (H) (i) Part II of subchapter C of chapter 75 (relating to provisions common to forfeitures) is amended by striking out section 7328 (relating to confiscation of white phosphorus 26 USC 7328, 7329. matches), and by redesignating section 7329 (relating to cross references) as section 7328. (ii) The table of sections for part II of subchapter C of chapter 75 is amended by striking out the last two items and inserting in lieu thereof the following: “Sec. 7328. Cross references.” (9) Amendments conforming to repeat, of sections 4811 through 4826.— (A) Section 6808 (relating to cross references) is amended by striking out paragraph (10). (B) (i) Section 7235 (relating to violations of laws concerning adulterated butter and process or renovated butter) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7235. (C) (i) Section 7264 (relating to offenses concerning renovated or adulterated butter) is repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7264. (D) Section 7303 is amended by striking out paragraphs (3), (4), and (5), and by redesignating paragrapns (7) and (8) as paragraphs (2) and (3), respectively. (E) Section 7611(a), as redesignated by this Act, is amended by striking out paragraph (2) , and by redesignating paragraphs (5) and (6) as paragraphs (1) and (2), respectively. (10) Amendments conforming to the repeal of sections 4911 through 4931.— (A) (i) (I) Section 263, as amended by this Act, is amended 26 USC 263. by striking out subsections (a)(3) and (d) (relating to the allowance of deductions for payment of interest equalization tax), and by redesignating subsections (e), (f), and (g) as subsections (d), (c),and (f), respectively. (II) Section 263(d), as redesignated by clause (i)(I) of this subparagraph, is amended by striking out “subsection (f)” and inserting in lieu thereof “subsection (e)”, (ii) Section 6011 (relating to requirement of return, statement, or 26 USC 6011. list) is amended by striking out subsection (d) (relating to interest equalization tax returns, etc.), and by redesignating subsections (e) and (f) as subsections (c) and (d), respectively. (iii) (I) Section 6076 (relating to time for filing interest 26 USC 6076. equalization tax returns) is repealed. (II) The table of sections for part V of subchapter A of chapter 61 is amended by sticking out the item relating to section 6076. (iv) Section 6611 (relating to interest on overpayments) 26 USC 6611. is amended by striking out subsection (h) (relating to over-payments of interest equalization tax) and by redesignating subsection (i) as subsection (h). (v) Section 6651 (relating to failure to file tax return 26 USC 6651. or to pay tax) is amended by striking out subsection (e) (relating to certain interest equalization tax returns). (vi) (I) Section 6680 (relating to failure to file interest 26 USC 6680. equalization tax returns) is repealed. (II) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6680. (vii) The amendments made by this subparagraph shall 26 USC 263 note. apply with respect to acquisitions of stock or debt obligations made after June 30, 1974, except that the repeal of paragraph (2) of section 6011(d) under clause (ii) shall apply with respect to loans and commitments made after such date. (B) Section 861(a)(1)(G) (relating to income from 26 USC 861. sources within the United States) is amended— (i) by striking out “section 4912(c)” and inserting in lieu thereof “subsection (c) of section 4912 (as in effect before July 1, 1974)”; and (ii) by striking out “section 4912(c)(2)” and inserting in lieu thereof “subsection (c)(2) of such section”. (C) The second sentence of section 1232(b)(2) (relating 26 USC 1232. to the definition of the issue price of bonds and other evidences of indebtedness) is amended by striking out “section 4911” anrl inserting in lieu thereof “section 4911, as in effect before July 1, 1974”. (D) (i) Section 6681 (relating to false equalization tax 26 USC 6681. certificates) is repealed. (ii) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6681. (iii) The amendments made by this subparagraph shall 26 USC 6681 note. apply with respect to actions occurring after June 30, 1974. (E) (i) Section. 6689 (relating to failure by certain foreign 26 USC 6689. issuers and obligors to comply with United States investment equalization tax requirements) is repealed. (ii) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6689. (iii) The amendments made by this subparagraph shall apply with respect to stock or debt obligations issued after June 30, 1974. (F) (i) Section 7241 (relating to penalty for fraudulent equalization tax certificates) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7241. (iii) The amendments made by this subparagraph shall apply with respect to statements and certificates executed after June 30, 1974. (G) The table of chapters for subtitle D is amended by striking out the item relating to chapter 41. (c) Amendment to Provision Referring to Territories.— Section 4482 (c)(1) is amended by striking out “, a Territory of the United States,”. (d) Effective Date.— Except as otherwise provided in this section, the amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. SEC. 1905. AMENDMENTS OF SUBTITLE E; ALCOHOL, TOBACCO, AND CERTAIN OTHER EXCISE TAXES. (a) In General.— (1) Amendment of section 5005.— Section 5005(c)(2) (relating to transfers in bond of distilled spirits) is amended by striking out the last two sentences and inserting in lieu thereof the following: “Such relief from liability shall be effective from the time of removal from the transferor’s bonded premises, or from the time of divestment of interest, whichever is later.” (2) Amendments of section 5008.— (A) Section 5008(b)(1) (relating to abatement, remission, refund, and allowance for loss of destruction of distilled spirits) is amended by inserting immediately after “the tax imposed by this chapter” the following: “or by section 7652”. (B) Section 5008(b)(2) is amended by striking out “the taxes imposed under section 5001(a)(1)” and all that follows and inserting in lieu thereof the following: “the taxes imposed under section 5001(a)(1), under subpart B of this part, or under section 7652 on the spirits so destroyed, to the proprietor of the distilled spirits plant who withdrew the distilled spirits on payment or determination of tax.” (C) Subsections (c)(1) and (d)(1) of section 5008 are each amended by inserting immediately after “under section 5001(a)(1)” the following: “or under section 7652”. (D) Section 5008(d)(1) is amended by striking out “, on or after July 1, 1959,”. (3) Amendment of section 5009.— Section 5009(b)(3) is amended by striking out “46 Stat. 694;”. (4) Amendment of section 5025.— Section 5025 (j) (relating to stabilization of distilled spirits) is amended by striking out “the bottling of distilled spirits,” and inserting in lieu thereof “the bottling of distilled spirits, or preparatory to exportation,”. (5) Amendment of section 5054.— Section 5054 (relating to determination and collection of tax on beer) is amended by striking out subsection (c) (relating to stamps or other devices as evidence of payment of tax) and by redesignating subsection (d) as subsection (c). (6) Amendments of section 5061.— (A) Section 5061(a) (relating to collections of alcohol 26 USC 5061. taxes) is amended by striking out the last sentence. (B) Section 5061(b) (relating to methods of collection) is amended to read as follows: “(b) Exceptions.— Notwithstanding the provisions of subsection (a), any taxes imposed on, or amounts to be paid or collected in respect of, distilled spirits, wines, rectified distilled spirits and wines, and beer under— “(1) section 5001(a)(5), (6),or (7), “(2) section 5006(c) or (d), “(3) section 5026(a)(2), “(4) section 5041 (d), “(5) section5043(a)(3), “(6) section5054(a)(3) or (4),or “(7) section5505(a), shall be immediately due and payable at the time provided by such provisions (or if no specific time for payment is provided, at the time the event referred to in such provision occurs). Such taxes and amounts shall be assessed and collected by the Secretary on the basis of the information available to him in the same manner as taxes payable by return but with respect to which no return has been filed.” (C) Section 5061(c) (relating to applicability of other provisions of law) is amended to read as follows: “(c) Import Duties.— The internal revenue taxes imposed by this part shall be in addition to any import duties unless such duties are specifically designated as being in lieu of internal revenue tax.” (7) Amendment of section 5113.— Section 5113(f)(1) (relating 26 USC 5113. to retail dealers in liquors) is amended by striking out “wines or beer” and inserting in lieu thereof “distilled spirits, wines, or beer”. (8) Amendments of section 5117.— Section 5117 (relating 26 USC 5117. to prohibited purchases by dealers) is amended by redesignating subsection (b) as subsection (c) and by inserting after subsection (a) the fol lowing new subsection: “(b) Limited Retail Dealers.— A limited retail dealer may lawfully purchase distilled spirits for resale from a retail dealer in liquors.” (9) Amendment of section 5121.— Section 5121(c) (relating 26 USC 5121. to limited retail dealers) is amended to read as follows: “(c) Limited Retail Dealers.— Every limited retail dealer shall pay a special tax of $4.50 for each calendar month in which sales are made as such dealer; except that the special tax shall be $2.20 for each calendar month in which only sales of beer or wine are made.” (10) Amendment of section 3122.— Section 5122(c) (relating 26 USC 5122. to definition of limited retail dealer) is amended by striking out “beer or wine” each place it appears and inserting in lieu thereof “distilled spirits, wine, or beer”. (11) Amendment of section 5131.— Section 5131(a) (relating 26 USC 5131. to eligibility for drawback) is amended by striking out “produced in a domestic registered distillery or industrial alcohol plant and withdrawn from bond, or using distilled spirits withdrawn from the bonded premises of a distilled spirits plant,”. (12) Amendment of section 5142.— Section 5142(c) (relating to payment of occupational taxes) is amended to read as follows: “(c) How Paid.— “(1) Payment by return.— The special taxes imposed by this part shall he paid on the basis of a return under such regulations as the Secretary shall prescribe. “(2) Stamp denoting payment of tax.— After receiving a properly executed return and remittance of any special tax imposed by this subpart, the Secretary shall issue to the taxpayer an appropriate stamp as a receipt denoting payment of the tax. This paragraph shall not apply in the case of a return covering liability for a past period.” (13) Amendments of section 5171.— Section 5171(b) (relating to permits for operation of business as distillers, etc.) is amended— (A) in paragraph (1), by striking out “49 Stat. 978;”, and (B) by striking out paragraph (3) (relating to continuance of business after June 30, 1959, pending application for permit). (14) Amendment of section 5174.— Section 5174(a)(2)(A) (relating to withdrawal bonds for distilled spirits) is amended by striking out “such spirits” and inserting in lieu thereof “distilled spirits from bond”. (15) Amendment of section 5232.— Section 5232(a) (relating to transfer of imported distilled spirits) is amended by striking out “and the importer” and inserting in lieu thereof “and the importer, or the person bringing such distilled spirits into the United States,”. (16) Amendment of section 5233.— Section 5233(b)(4) (relating to bottling requirements) is amended by striking out “49 Stat. 977;”. (17) Amendment of section 5234.— The first sentence of section 5234(a)(2) (relating to the mingling of distilled spirits) is amended by striking out “8 years” and inserting in lieu thereof “20 years”. (18) Amendment of section 5314.— Section 5314(a)(2) (relating to application of certain provisions to Puerto Rico) is amended by striking out “section 5001(a)(4)” and inserting in lieu thereof “section 5001(a)(10)”. _ (19) Repeal of section 5315.— Section 5315 (relating to the status of certain distilled spirits on July 1, 1959) is repealed. (20) Amendments of section 5368.— (A) The heading of section 5368 is amended to read as follows: “SEC. 5368. GAUGING AND MARKING.” (B) Section 5368(b) (relating to removal of wines) is amended to read as follows: “(b) Marking.— Wines shall be removed in such containers (including vessels, vehicles, and pipelines) bearing such marks and labels, evidencing compliance with this chapter, as the Secretary may by regulations prescribe.” (21) Amendment of section 5392.— Section 5392(f)(defining own production) is amended by striking out “49 Stat. 990;”. (22) Amendments of section 5601.— Section 5601(b) (relating to presumptions in the case of criminal penalties) is amended to read as follows: “(b) Presumption.— Whenever on trial for violation of subsection (a)(4) the defendant is shown to have been at the site or place where, and at the time when, the business of a distiller or rectifier was so engaged in or carried on, such presence of the defendant shall be deemed sufficient, evidence to authorize conviction, unless the defendant explains such presence, to the satisfaction of the jury (or of the court when tried without jury).” (23) Amendments of section 5685.— (A) Section 5685(a) (relating to penalty for possession 26 USC 5685. of devices for emitting gas, smoke, etc.) is amended by striking out “section 5848” and inserting in lieu thereof “section 5845”. (B) Section 5685(c) (relating to forfeiture of firearms, devices, etc.) is amended by striking out “section 5862” and inserting in lieu thereof “section 5872”. (C) Section 5685(d) (relating to the definition of machine gun) is amended to read as follows: “(d) Definition of Machine Gun.— As used in this section, the term ‘machine gun’ means a machine gun as defined in section 5845(b).” (24) Amendment of section 5701.— Section 5701(e) (relating 26 USC 5701. to imported tobacco products, etc.) is amended by striking out “such articles” and inserting in lieu thereof “such articles, unless such import duties are imposed in lieu of internal revenue tax”. (25) Amendments of section 5703.— (A) Section 5703(a)(2) (relating to transfer of liability 26 USC 5703. for tobacco taxes) is amended by adding at the end thereof the following new sentence: “All provisions of this chapter applicable to tobacco products and cigarette, papers and tubes in bond shall be applicable to such articles returned to bond upon withdrawal from the market or returned to bond after previous removal for a tax-exempt purpose.” (B) The second sentence of section 5703(b) (relating to method of payment of tobacco taxes) is amended by striking out “, except that the taxes shall continue to be paid by stamp until the Secretary or his delegate provides, by regulations, for the payment, of the taxes on the basis of a return”. (C) Section 5703 is amended by striking out subsection (c) (relating to stamps to evidence tobacco taxes) and by redesignating subsections (d) and (e) as subsections (c) and (d), respectively. (26) Amendments of section 3704.— Subsections (c) and (d) of section 5704 (relating to exemptions from tobacco taxes) are 26 USC 5704. each amended by inserting after “to a manufacturer of tobacco products or cigarette papers and tubes” the following: “or to the proprietor of an export warehouse”. (27) Amendment of section 5712.— Section 5712 (relating to 26 USC 5712. application for permit) is amended by striking out the last sentence. (28) Amendments of section 572a.— (A) The heading of section 5723 is amended by striking 26 USC 5723. out “NOTICES, AND STAMPS” and inserting in lieu thereof “AND NOTICES”. (B) Section 5723(b) (relating to marks, and so forth, on packages) is amended to rend as follows: “(b) Marks, Labels, and Notices.— Every package of tobacco products Regulation. or cigarette papers or tubes shall, before removal, bear the marks, labels, and notices, if any, that the Secretary by regulation prescribes.” (b) Conforming and Clerical Amendments.— (1) Amendments conforming to amendment of section 5054.— (A) Section 5676 (relating to beer stamp penalties) is repealed. (B) The table of sections for part III of subchapter J of chapter 51 is amended by striking out the item relating to section 5676. (2) Amendments conforming to amendments of section 5081.— (A) Section 5007(b)(1) is amended by striking out the second sentence. (B) Section 5026(b) is amended by striking out “Except as provided in subsection (a)(2), the taxes” and inserting in lieu thereof “The taxes”. (C) Section 5043(b) is amended by striking out “Except as provided in subsection (a)(3), the taxes” and inserting in lieu thereof “The taxes”. (D) Section 5662 is amended by striking out “stamp,” each place it appears. (E) (i) Section 5689 (relating to penalty and forfeiture for tampering with a stamp machine) is repealed. (ii) The table of sections for part IV of subchapter J of chapter 51 is amended by striking out the item relating to section 5689. (iii) Section 5061 is amended by striking out subsection (d). (3) Amendments conforming to amendment of section 5142.— (A) (i) Section 5104 (relating to method of payment of tax on stills) is repealed. (ii) The table of sections for subpart C of part II of subchapter A of chapter 51 is amended by striking out the item relating to section 5104. (B) Section 5111(a) is amended by striking out the second sentence. (C) Section 5121(a) is amended by striking out the second sentence. (D) (i) Section 5144 (relating to supply of stamps) is repealed. (ii) The table of sections for subpart G of part II of subchapter A of chapter 51 is amended by striking out the item relating to section 5144. (E) Section 5148(3) is amended by striking out “penalties” and inserting in lieu thereof “penalties, authority for assessments,”. (4) Amendment conforming to the repeal of section 5315.— The table of sections for part III of subchapter E of chapter 51 is amended by striking out the item relating to section 5315. (5) Amendment conforming to the amendment of section 5358.— The item relating to section 5368 in the table of sections for part II of subchapter E of chapter 51 is amended to read as follows: “Sec. 5368. Gauging and marking.” (6) Amendments conforming to the amendment of section 5001.— (A) Section 5105 (b)(2) is amended by striking out “, 5601 26 USC 5105. (b)(1),”. (B) Section 5177(b)(2) is amended by striking out “5601 26 USC 5177. (b)(2),” and inserting in lieu thereof “5601 (b),”. (C) Section 5179(b)(1) is amended by striking out “, 5601 26 USC 5179. (b)(1)”. (D) Section 5222(d) is amended by striking out “5601(b) 26 USC 5222. (3), 5601(b)(4)”. (E) Section 5505(i) is amended by striking out “5601(b) 26 USC 5505. (1),”. (7) Amendments conforming to the amendment of section 5723.— (A) Paragraphs (2) and (3) of section 5751(a) are each 26 USC 5751. amended by striking out “notices, and stamps” and inserting in lieu thereof “and notices”. (B) (i) Section 5752 is amended to read as follows: “SEC. 5752. RESTRICTIONS RELATING TO MARKS, LABELS, NOTICES, AND PACKAGES. “No person shall, with intent to defraud the United States, destroy, obliterate, or detach any mark, label, or notice prescribed or authorized, by this chapter or regulations thereunder, to appear on, or be affixed to, any package of tobacco products or cigarette papers or tubes, before such package is emptied.” (ii) Section 5762(a) is amended by striking out paragraphs 26 USC 5762. (8), (7), (8), (9), (10), and (11) and inserting in lieu thereof the following: “(6) Destroying, obliterating, or detaching marks, labels, or notices before packages are emptied.— Violates any provision of section 5752;”. (iii) The item relating to section 5752 in the table of sections for subchapter E of chapter 52 is amended to read as follows: “Sec. 5752. Restrictions relating to marks, labels, notices, and packages.” (C) (i) Section 5763(a)(2) is amended by striking out 26 USC 5763. “notices, and stamps” and inserting in lieu thereof “and notices”. (ii) Section 5763(b) is amended by striking out “internal revenue stamps,”. (D) The item relating to section 5723 in the table of sections for subchapter C of chapter 52 is amended to read as follows: “Sec. 5723. Packages, marks, labels, and notices.” (c) Amendments to Provisions Referring to Territories.— (1) Section 5114(b) is amended by striking out “or Territory” 26 USC 5114. each place it appears and by striking out “Territories,”. (2) Section 5214(a)(2) is amended by striking out “or Territory 26 USC 5214. ” each place it appears. (3) Section 5272(b) is amended by striking out “and 26 USC 5272. Territories”. (4) Section 5362(c)(9) is amended by striking out “and 26 USC 5362. Territories”. (5) Section 5551(b)(2) is amended by striking out “Territory, 26 USC 5551. or”. (6) Section 5685(a) is amended by striking out “Territory 26 USC 5685. or”. (d) Effective Date.— The amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. SEC. 1906. AMENDMENTS OF SUBTITLE F; PROCEDURE AND ADMINISTRATION. (a) In General.— (1) Amendments of section 6013.— (A) Section 6013(b)(2)(C) (relating to petition to the Tax Court) is amended by striking out “of the United States”. (B) The heading of section 6013(d) is amended to read as follows: “(d) Special Rules.—”. (C) Section 6013(d)(1) (relating to joint return after death of one spouse) is amended by striking out “and” at the end of subparagraph (A) and inserting in lieu thereof “or”, and by striking out “and” at the end of the subparagraph (B). (2) Amendment of section 6015.— Section 6015 (relating to declaration of estimated tax by individuals) is amended by striking out subsection (j) (relating to an effective date provision). (3) Amendment of section 6037.— Section 6037 (relating to returns of subchapter S corporations) is amended by striking out “section 1371(a)(2)” and inserting in lieu thereof “section 1371 (b)” (4) Amendment of section 6046.— Section 6046(e) (relating to information as to organization of foreign corporation) is amended to read as follows: “(e) Limitation.— No information shall be required to be furnished under this section with respect to any foreign corporation unless such information was required to be furnished under regulations which have been in effect for at least 90 days before the date on which the United States citizen, resident, or person becomes liable to file a return required under subsection (a).” (5) Amendment of section 6051.— Section 6051(a) (relating to information required to be furnished to employees) is amended by striking out “and” where it appears at the end of paragraph (6). (6) Amendments of section 6065.— Section 6065 (relating to verification of returns) is amended by striking out subsection (b) (relating to verification by oath), and by striking out in subsection (a) the following: “(a) Penalties of Perjury.—”. (7) Repeat, of section 6105.— Section 6105 (relating to compilation of data for certain excess profits tax cases) is repealed. (8) Amendment of section 6111.— Section 6111 (relating to cross references), as redesignated by this Act, is amended to read as follows: “SEC. 6111. CROSS REFERENCE. “For inspection of records, returns, etc., concerning gasoline or lubricating oils, see section 4102.” (9) Amendment of section 6152.— Section 6152(a)(1) (relating to installment payments by corporations) is amended to read as follows: “(1) Corporations.— A corporation subject to the taxes imposed 26 USC 1. by chapter 1 may elect to pay the unpaid amount of such taxes in two equal installments.” (10) Amendments of section bib4.— (A) Section 6154(c)(1)(B) (relating to definition of estimated 26 USC 6154. tax) is amended— (i) by adding “and” after the comma at the end of clause (i), and (ii) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following: “(ii) in the case of a taxable year beginning before January 1, 1977, the amount of the corporation’s temporary estimated tax exemption for such year.” (B) Section 6154(c)(2)(A)(ii) (relating to temporary estimated tax payments) is amended by striking out “clauses (ii) and (iii)” and inserting in lieu thereof “clause (ii)”. (C) Section 6154(c)(2)(B) (relating to estimated tax) is amended by striking out the following: “1968, 1969, 1970, 1971, and 1972 100 percent   1973 80 percent   1974 60 percent”. (D) Section 6154(c) (relating to estimated tax) is amended by striking out paragraph (3) (relating to transitional exemption for taxable years beginning before 1972). (11) Amendments of section 6157.— (A) Section 6157 (relating to payment of Federal unemployment 26 USC 6157. tax) is amended by striking out subsection (c) (relating to special rides for 1970 and 1971), and by redesignating subsection (d) as subsection (c). (B) Section 6157(a) is amended by striking out “subsections (c) and (d)” and inserting in lieu thereof “subsection (c)” (12) Repeal of section 6162.— Section 6162 (relating to payment 26 USC 6162. of tax on gain on liquidation of certain personal holding companies) is repealed. (13) Amendment of section 6205.— Section 6205 (a)(4) (relating 26 USC 6205. to District of Columbia as employer) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (14) Amendment of section 6207.— Section 6207 (relating to 26 USC 6207. cross references) is amended by striking out paragraph (7). (15) Amendment of section 6213.— Section 6213(a) (relating Ante, p. 1698. to time for filing petition with the Tax Court) is amended by striking out “States of the Union and the District of Columbia” and inserting in lieu thereof “United States”. (16) Amendment of section 6215.— Section 6215(b)(5)(a 26 USC 6215. cross reference) is amended by striking out “60 Stat. 48;”. (17) Amendment of section 6302.— Section 6302(b) (relating 26 USC 6302. to collection of certain excise taxes) is amended by striking out “sections 4501 (a) or 4511 of chapter 37, or section 4701 or 4721 of chapter 39” and inserting in lien thereof “section 4501(a) of chapter 37”. (18) Repeal of section 6304.— Section 6304 (relating to a cross 26 USC 6304. reference) is repealed. (19) Amendment of section 6313.— Section 6313 (relating to 26 USC 6313. fractional parts of a cent) is amended by striking out “not payable by stamp”. (20) Amendments of section 6326.— (A) Paragraph (2) of section 6326 (cross references) is amended by striking out “52 Stat. 851;”. (B) Paragraph (3) of section 6326 is amended by striking out “52 Stat. 867” (C) Paragraph (4) of section 6326 is amended by striking out “52 Stat. 867–877;”. (D) Paragraph (5) of section 6326 is amended by striking out “52 Stat. 938;”. (21) Amendment of section 6365.— Section 6365 (b) (relating to definition of governor) is amended by striking out “Commissioner of the District of Columbia” and inserting in lieu thereof “Mayor of the District of Columbia”. (22) Amendment of section 6412.— Section 6412(a) (relating to floor stock refunds) is amended by redesignating paragraphs (2) and (4) as paragraphs (1) and (2), respectively. (23) Amendments of section 6413.— (A) Section 6413(a)(4) (relating to District of Columbia as employer) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (B) (i) Section 6413 (c)(1) (relating to refunds of certain employment taxes) is amended to read as follows: “(1) In General.— If by reason of an employee receiving wages from more than one employer during a calendar year the wages received by him during such year exceed the contribution and benefit base (as determined under section 230 of the Social 42 USC 430. Security Act) which is effective with respect to such year, the employee shall be entitled (subject to the provisions of section 31 (b)) to a credit or refund of any amount of tax, with respect to such wages, imposed by section 3101 or section 3201, or by both such sections, and deducted from the employee’s wages (whether or not paid to the Secretary), which exceeds the tax with respect to the amount of such wages received in such year which is equal “Wages.” to such contribution and benefit base. The term ‘wages’ as used in this paragraph shall, for purposes of this paragraph, include ‘compensation’ as defined in section 3231(e).” (ii) So much of section 6413(c)(2)(A) (relating to Federal employees) as follows “and the term ‘wages’ includes” is amended to read as follows: “for purposes of this subsection the amount, not to exceed an amount equal to the contribution and benefit base (as determined under section 230 of the Social Security Act) for any calendar year with respect to which such contribution and benefit base is effective, determined by each such head or agent as constituting wages paid to an employee.” (iii) The amendments made by clauses (i) and (ii) shall apply with respect to remuneration paid after December 31, 1976. (C) Section 6413(c)(2)(F) (relating to government employees in the District of Columbia) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (D) Section 6418(c)(3) (relating to special refunds) is 26 USC 6413. amended by striking out “after 1967”. (24) Amendments of section 6416.— (A) Section 6416(a)(3) (relating to special rules for 26 USC 6416. refund of overpayment of tax) is amended by redesignating subparagraphs (C) and (D) as subparagraphs (A) and (B), respectively, (B) (i) Section 6416(b)(2) (relating to overpayments of certain excise taxes), as amended by section 2108 of this Act, Post, p. 1904. is amended by striking out subparagraphs (G), (H), (I), and (J), and by redesignating subparagraphs (F), (K), (L), (M), (R), (8), and (T) as subparagraphs (E), (F), (G), (H), (I), (J),and (K),respectively. (ii) The repeals made by clause (i) shall apply with 26 USC 6416 note. respect to the use or resale for use of liquids after December 31, 1976. (25) Repeal of section 6417.— Section 6417 (relating to coconut 26 USC 6417. and palm oil) is repealed. (26) Amendments of section 6420.— (A) Section 6420(b) (relating to time for filing refund 26 USC 6420. claims on gasoline) is amended to read as follows: “(b) Time fob Filing Claims; Period Covered.— Not more than one claim may be filed under this section by any person with respect to gasoline used during his taxable year, and no claim shall be allowed under this section with respect to gasoline used during any taxable year unless filed by such person not later than the time prescribed by law for filing a claim for credit or refund of overpayment of income tax for such taxable year. For purposes of this subsection, a person’s taxable year shall be his taxable year for purposes of subtitle A.” 26 USC 1. (B) Section 6420(e)(1) (relating to application of other laws) is amended by striking out “apply in in respect” and inserting in lieu thereof “apply in respect’”. (C) (i) Section 6420 is amended by striking out subsection (g) (relating to effective date) and by redesignating subsections (h) and (i) as subsections (g) and (h), respectively. (ii) Section 6420(a) is amended by striking out “subsection (h)” and inserting in lieu thereof “subsection (g)”. (D) Section 6420(g) (relating to income tax credit in lieu of gas tax refund), as redesignated by subparagraph (C)(i) of this paragraph, is amended by strikingout “with respect to gasoline used after June 30, 1965,” and “for gasoline used after June 30, 1965”. (27) Amendments of section 6421.— (A) (i) Subsections (a) and (e)(3) of section 6421 (relating 26 USC 6421. to nonhighway use of gasoline) are each amended by striking out “after June 30, 1970,”. (ii) The amendments made by clause (i) shall only 26 USC 6421 note. apply with respect, to gasoline used as a fuel after June 30, 1970. (B) Section 6421(c) (relating to nonhighway use of gasoline) is amended to read as follows: “(c) Time for Filing Claims; Period Covered.— “(1) In general.— Except as provided in paragraph (2), not more than one claim may be filed under subsection (a), and not more than one. claim may be filed under subsection (b), by any person with respect to gasoline used during his taxable year; and no claim shall be allowed under this paragraph with respect to gasoline used during any taxable year unless filed by such person not later than the time prescribed by law for filing a claim for credit or refund of overpayment of income tax for such taxable year. For purposes of this subsection, a person’s taxable year shall be his taxable year for purposes of subtitle A. “(2) Exception.— If $1,000 or more is payable under this section to any person with respect to gasoline used during any of the first three Quarters of his taxable year, a claim may be filed under this section by such person with respect to gasoline used during such quarter. No claim filed under this paragraph shall be allowed unless filed on or before the last day of the first quarter following the quarter for which the claim is filed.” (C) Section 6421(h) (relating to effective dates) is amended by striking out “after June 30, 1956, and”. (D) Section 6421 (i) (relating to income tax credit in lieu of refund) is amended— (i) by striking out, in paragraph (1), “with respect to gasoline used after June 30, 1965,”, (ii) by striking out, in paragraph (2), “subsection (c)(3)(B)” and inserting in lieu thereof “subsection (c)(2)”, and (iii) by striking out, in paragraph (3), “for gasoline used after June 30, 1965.” (28) Amendments of Section 6422.— (A) Paragraph (9) of section 6422 (relating to cross references), as redesignated by section 1901(b)(36)(B), is amended by striking out “60 Stat. 48;”. (B) Paragraph (11) of section 6422, as so redesignated, is amended by striking out “47 Stat. 1516;”. (29) Amendments of section 6423.— (A) Section 6423(b) (relating to filing of refund claim in case of alcohol and tobacco taxes) is amended to read as follows: “(b) Filing of claims.— No credit or refund of any amount to which subsection (a) applies shall be allowed or made unless a claim therefor has been filed by the person who paid the a mount claimed, and unless such claim is filed within the time prescribed by law and in accordance with regulations prescribed by the Secretary. Al] evidence relied upon in support of such claim shall be clearly set forth and submitted with the claim.” (B) Section 6123 is amended by striking out subsection (c) (relating to suits barred on April 30, 1958) and by redesignating subsections (d) and (e) as subsections (c) and (d), respectively. (C) Section 6423 (c) (relating to application of section), as redesignated by subparagraph (B) of this paragraph, is amended by adding “and” at the end of paragraph (1), by striking out “, and” at the end of paragraph (2) and inserting in lieu thereof a period, and by striking out paragraph (3). (30) Amendments of section 6424.— (A) The last sentence of section 6424(b)(1) (relating to refund claims with respect to lubricating oil) is amended by striking out “, except that a person’s first taxable year beginning after December 31, 1965, shall include the period after December 31, 1965, and before tile beginning of such first taxable year”. (B) Section 6424 (relating to lubricating oil not used in highway motor vehicles) is amended by striking out subsection (f) (relating to effective date of section), and by redesignating subsections (g) and (h) as subsections (f) and (g), respectively. (31) Amendments of section 6427.— (A) Subsections (a), (b), and (c) of section 6427 (relating 26 USC 6427. to fuels not used for taxable purposes) are each amended by striking out “, after June 30, 1970,” (B) The amendments made by subparagraph (A) shall 26 USC 6427 note. apply only with respect to fuel used or resold after June 30, 1970. (32) Amendments of section 6504.— (A) Section 6504 (relating to cross references) is amended 26 USC 6504. by striking out paragraphs (13) and (14) and inserting in lieu thereof: “(13) Assessments to recover excessive amounts paid under section 6420 (relating to gasoline used on farms), 6421 (relating to gasoline used for certain nonhighway purposes or by local transit systems), 6424 (relating to lubricating oil not used in highway motor vehicles), or 6427 (relating to fuels not used for taxable purposes) and assessments of civil penalties under section 6675 for excessive claims under section 6420, 6421, 6424, or 6427, see section 6206.” (B) Section 6504, as amended by this Act, Is further amended by redesignating paragraphs (2), (3), (4), (5), (9), (19), (11), (12), (13), and (15) as paragraphs (1), (2), (3), (4), (5), (6), (7), (8), (9), and (10), respectively. (33) Amendments of section 6511.— (A) Section 6511(d)(2)(A)(ii) (relating to net operating 26 USC 6511. loss carryback) is amended by striking out “September 1, 1959, or” and by striking out “, whichever is the later”. (B) Section 6511(d)(5) is amended by striking out “the later of the following dates: (A)”, and by striking out “, or (B) December 31, 1965”. (34) Amendment of section 6601.— Section 6601(h) (relating 26 USC 6601. to interest on estimated tax payments) is amended by striking out “(or section 59 of the Internal Revenue Code of 1939)”. 53 Stat. 32. 26 USC 6654. (35) Amendment of section 6654.— Section 6654 (relating to payment of estimated income tax) is amended by striking out subsection (h) (relating to applicability of section). (36) Amendment of section 6802.— Section 6802(2) (relating 26 USC 6802. to supply and distribution of stamps) is amended by striking out the semicolon at the end and inserting in lieu thereof a period. (37) Amendment of section 6803.— Section 6803 (relating to 26 USC 6803. accounting and safeguarding is amended to read as follows: “SEC. 6803. ACCOUNTING AND SAFEGUARDING. “(a) Bond.— In cases coining within the provisions of paragraph (2) of section 6802, the Secretary may require a bond, with sufficient sureties, in a sum to be fixed by the Secretary, conditioned for the faithful return, whenever so required, of all quantities or amounts undisposed of and for the payment monthly for all quantities or amounts sold or not remaining on hand. “(b) Regulations.— The Secretary may from time to time make such regulations as he may find necessary to insure the safekeeping or prevent the illegal use of all adhesive stamps referred to in paragraph (2) of section 6802.” (38) Amendment of section 6863.— Section 6863(b)(3) (relating to stay of sale of seized property pending Tax Court decision) is amended by striking out subparagraph (C) (relating to effective date). (39) Amendment of section 7012.— Section 7012 (relating to cross references), as amended by section 1904(b)(8)(C) of this Act, is amended to read as follows: “SEC. 7012. CROSS REFERENCES. “(1) For provisions relating to registration in connection with firearms, see sections 5802, 5841, and 5861. “(2) For special rules with respect to registration by persons engaged in receiving wagers, see section 4412. “(3) For provisions relating to registration in relation to the production or importation of gasoline, see section 4101. “(4) For provisions relating to registration in relation to the manufacture or production of lubricating oils, see section 4101. “(5) For penalty for failure to register, see section 7272. “(6) For other penalties for failure to register with respect to wagering, see section 7262.” (40) Amendment of section 7103.— Section 7103 (relating to cross references regarding bonds) is amended by striking out subsection (d). ‘ (41) Amendments of section 7271.— Section 7271 (relating to penalties for offenses concerning stamps) is amended by striking out paragraph (2), and by redesignating paragraphs’ (3) and (4) as paragraphs (2) and (3), respectively. (42) Amendment of section 7272.— Section 7272(b) (relating to cross references) is amended by striking out “4722, 4753,”. (43) Amendments of section 7326.— Section 7326 (relating to disposal of forfeited property) is amended— (A) by striking out “section 5862(b)” and inserting in lieu thereof “section 5872(b)”, and (B) by redesignating subsection (c) as subsection (b). (44) Amendments of section 7422.— Section 7422(c) (relating to suits against collection officers) is amended by striking out “instituted after June 15, 1942,”, and by striking out “where the petition to the Tax Court was filed after such date”. (45) Amendments of section 7428.— (A) Paragraph (1) of section 7428 (cross references), as redesignated by this Act, is amended by striking out “52 Stat, 851;”. (B) Paragraph (2) of such section 7428 is amended by striking out “52 Stat. 867;”. (C) Paragraph (3) of such section 7428 is amended by Striking out “52 Stat. 876–877;”. (D) Paragraph (4) of such section 7428 is amended by striking out “52 Stat. 938;”. (46) Amendments of section 7448.— (A) Subsection (a)(6) of section 7448 (relating to annuities to widows and dependent children of Tax Court judges) is amended— (i) by striking out “The term ‘widow’ means a surviving wife of,” and inserting in lieu thereof “The term ‘surviving spouse’ means a surviving spouse of”; and (ii) by striking out “the mother of issue” and inserting in lieu thereof “a parent of issue”. (B) Section 7448(h) is amended— (i) by striking out “surviving widow or widower” and inserting in lieu thereof “surviving spouse”; (ii) by striking out “such widow” each place it appears and inserting in lieu thereof “such surviving spouse”; (iii) by striking out “a widow” each place it appeal’s and inserting in lieu thereof “a surviving spouse”; (iv) by striking out “widow’s” each place it appears and inserting in lieu thereof “surviving spouse’s”; and (v) by striking out “surviving her” and inserting hi lieu thereof “surviving such spouse”. (C) Sections 7448 (h) and (o) are each amended by striking 26 USC 7448. out “she” and inserting in lieu thereof “such spouse”. (D) Section 7448 (o) is amended by striking out “her” and inserting in lieu thereof “such spouse’s”. (E) Sections 7448 (d), (j), (m), (n), (o), and (q) are each amended by striking out “widow” each place it appears and inserting in lieu thereof “surviving spouse”. (F) The section heading for section 7448 is amended by striking out “WIDOWS” and inserting in lieu thereof “SURVIVING SPOUSES”. (47) Amendments of section 7471.— (A) Subsection (a) of section 7471 (relating to Tax Court 26 USC 7471. employees) is amended by striking out “is authorized in accordance with the civil service laws to appoint, and in accordance with the Classification Act of 1949 (63 Stat. 954; 5 U.S.C. chapter 21), as amended, to fix the compensation of,” and inserting in lieu thereof “is authorized to appoint, in accordance with the provisions of title 5, United States Code, governing appointment in the competitive service, and 5 USC 101 et seq. 5 USC 5101, 5331. to fix the basic pay of, in accordance with chapter 51 and subchapter III of chapter 53 of such title,”. (B) Subsection (b) of section 7471 is amended by striking out “as provided in the Travel Expense Act of 1949 (63 Stat. 166; 5 U.S.C. chapter 16).” and inserting in lieu thereof “as provided in chapter 57 of title 5, United States Code.” 5 USC 5701. 26 USC 7476. (48) Amendment of section 7476.— Section 7476(a) (relating to declaratory judgments) is amended by striking out so much thereof as follows paragraph (2)(B) and inserting in lieu thereof the following: “upon the filing of an appropriate pleading, the Tax Court may make a declaration with respect to such initial qualification or continuing qualification. Any such declaration shall have the force and effect of a decision of the Tax Court, and shall be reviewable, as such.” (49) Amendment of section 7502.— Section 7502(b) (relating 26 USC 7502. to timely mailing treated as timely filing and paying) is amended by striking out “United State Post Office” and inserting in lieu thereof “United States Postal Service”. (50) Amendments of section 7507.— Paragraphs (2) and (3) of section 7507(c) (relating to insolvent hanks) are each amended 26 USC 7507. by striking out “after May 28, 1938,”. (51) Amendments of section 7508.— (A) The heading of section 7508 (relating to time for 26 USC 7508. performing certain acts) is amended by striking out “BY REASON OF WAR” and inserting in lieu thereof “BY REASON OF SERVICE IN COMBAT ZONE”. (B) Section 7508(a) (relating to time to be disregarded) is amended by striking out “States of the Union and the District of Columbia” each place it appears and inserting in lieu thereof “United States”. (52) Amendments of section 7509.— Section 7509 (relating to expenditures incurred by the Post Office Department) is amended— (A) in the section heading, by striking out “POST OFFICE DEPARTMENT” and inserting in lieu thereof “UNITED STATES POSTAL SERVICE”; (B) by striking out “Post Office Department” each place it appears and inserting in lieu thereof “United States Postal Service”; (C) by striking out “such Department” and inserting in lieu thereof “such Service”; and (D) by striking out “, together with the receipts required to be deposited under section 6803(a),”, (53) Amendment or section Tear.— Section 7621 (b) (relating to boundaries of internal revenue districts) is amended to read as follows: “(b) Boundaries.— For the purpose mentioned in subsection (a), the President may subdivide any State or the District of Columbia, or may unite into one district two or more States.” (54) Repeal of section 7G4t.— Subchapter C of chapter 78 (relating to supervision of operations of certain manufacturers) is repealed. (55) Amendments of section 7052.— Section 7652(b)(3) (relating to disposition of internal revenue collections) is amended— (A) by striking out subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B). (B) by striking out “approved emergency relief purposes and essential public projects as provided in subparagraph (B)” and inserting in lieu thereof “emergency relief purposes and essential public projects, with the prior approval of the President or his designated representative”, and (C) by striking out “, including payments under subparagraph (B),”. (56) Amendment of section 7653.— Section 7653(d)(a cross reference) is amended by striking out “c. 512, 64 Stat. 392, section 30;”. (57) Amendments of section 7701.— (A) Section 7701(a)(11) (relating to definitions of Secretary) is amended to read as follows: “(11) Secretary of the treasury and secretary.— “(A) Secretary of the treasury.— The term ‘Secretary of the Treasury’ means the Secretary of the Treasury, personally, and shall not include any delegate of his. “(B) Secretary.— The term ‘Secretary’ means the Secretary or the Treasury or his delegate.”. (B) Section 7701(a)(12)(A) (relating to definition of Secretary or his delegate) is amended to read as follows: “(A) In general.— The term ‘or his delegate’— “(i) when used with reference to the Secretary of the Treasury, means any officer, employee, or agency of the Treasury Department duly authorized by the Secretary of the Treasury directly, or indirectly by one or more redelegations of authority, to perform the function mentioned or described in the context; and “(ii) when used with reference to any other official of the United States, shall be similarly construed.” (58) Amendment of section 7803.— Section 7803 (relating 26 USC 7803. to other personnel) is amended by redesignating subsection (d) as subsection (c). (59) Amendment of section 7809.— Section 7809(a) (relating 26 USC 7809. to deposit of collections) is amended by striking out “4735, 4762,”. (b) Conforming and Clerical Amendments.— (1) Amendment conforming to the repeal of section 6105.— The table of sections for subchapter B of chapter 61 is amended by striking out the item relating to section 6105. (2) Amendment conforming to amendment of section 6111.— The item relating to section 6111 in the table of sections for subchapter B of chapter 61 is amended to read as follows: “Sec. 6111. Cross reference.” (3) Amendments conforming to amendments of section 6154.— (A) Paragraph (1)(B) of section 6655(e) is amended: 26 USC 6655. (i) by adding “and” at the end of clause (i), and (ii) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following: “(ii) in the case of a taxable year beginning before January 1, 1977, the amount of the corporation’s temporary estimated tax exemption for such year.” (B) Paragraph (2)(B) of section 6655(e) is amended by striking out “clauses (ii) and (iii)” and inserting in lieu thereof “clause (ii)”. (C) (i) Section 6655(e) is amended by striking out paragraph (3) and by redesignating paragraph (4) as paragraph (3). (ii) Section 243(b)(3)(C)(iv), as redesignated by section Ante, p. 1797. 1901 (b)(20)(A) of this Act, is amended by striking out “sections 6154(c)(2) and (3)” and inserting in lieu thereof “section 6154(c)(2)”, and by striking out. “sections 6655(e)(2) and (3)” and inserting in lieu thereof “section 6655(e)(2)”. (4) Amendment conforming to the re feat, of section 6162.— The table of sections for subchapter B of chapter 62 is amended by striking out the item relating to section 6162. (5) Amendment conforming to the repeal of section 6304.— The table of sections for subchapter A of chapter 64 is amended by striking out the item relating to section 6304. (6) Amendments conforming to the amendment of section 6416.— (A) Subparagraph (A) of section 6420(c)(3) is amended 26 USC 6420. to read as follows: “(A) by the owner, tenant, or operator of a farm, in connection with cultivating the soil, or in connection with raising or harvesting any agricultural or horticultural commodity, including the raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry, and fur-bearing animals and wildlife, on a farm of which he is the owner, tenant, or operator; except that, if such use is by any person other than the owner, tenant, or operator of such farm, then for purposes of this subparagraph, in applying subsection (a) to this subparagraph, the owner, tenant, or operator of the farm on which gasoline or a liquid taxable under section 26 USC 4041. 4041 issued shall be treated as the user and the ultimate purchaser of such gasoline or liquid;”. (B) The amendments made by subparagraph (A) shall apply with respect to the use of liquids after December 31, 1970. (7) Amendment conforming to the repeal of section 6417.— The table of sections for subchapter B of chapter 65 is amended Ante, p. 1827. by striking out the item relating to section 6417. (8) Amendment conforming to amendment of section 6420.— Section 39(a)(1) is amended by striking out “section 6420(h)” and inserting in lieu thereof “section 6420(g)”. (9) Amendment conforming to amendment of section 6424.— Section 39(a)(3) is amended by striking out “section 6424(g)” Ante, p, 1829. and inserting in lieu thereof “section 6424(f)”. (10) Amendment conforming to amendment of section 7448.— The item relating to section 7448 in the table of sections for part I of subchapter C of chapter 76 is amended to read as follows: “Sec. 7448. Annuities of surviving spouses and dependent children.”. (11) Amendment conforming to amendment of section 7508.— The item relating to section 7508 in the table of sections for chapter 77 is amended to read as follows: “Sec. 7508. Time for performing certain acts postponed by reason of service in combat gone.”. (12) Amendment conforming to amendment of section 7500.— The item relating to section 7509 in the table of sections for chapter 77 is amended to read as follows: “Sec. 7509. Expenditures incurred by the United States Postal Service,”. (13) Amendment conforming to repeal of section 7641.— The table of subchapters for chapter 78 is amended by striking Ante, p. 1832. 26 USC 1 el seq. out the item relating to subchapter C. (A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”. (B) The following provisions are each amended by striking 26 USC 4293, 4483, 5551, 7801, 7802, 9006, 9007. 26 USC 3121, 3303, 3304, 3305, 3306, 9005, 9007, 9010, 9012. 26 USC 31. 26 USC 3304. out “Secretary” each place it appears and inserting in lieu thereof “Secretary of the Treasury”: sections 4293, 4483 (b), 5551, 7801(b). 7802(a), 9006(a), 9006(b), and 9007(d). (C) The following provisions are each amended by striking out “to the Secretary” each place it appears and inserting in lieu thereof “to the Secretary of the Treasury”: sections 3121 (b)(12)(B). 3303(b), 3304(a)(3). 3304(c), 3305(j), 3306(c)(12)(B), 9005(a), 9007(b), 9010(b), and 9012(e)(3). (D) Section 31(b)(1) is amended by striking out “(or his delegate)”. (E) The last sentence of section 3304(c) is amended by striking out “the Secretary shall” and inserting in lieu thereof “the Secretary of Labor shall”. (F) Section 3310(d)(2) is amended by striking out “the 26 USC 3310. Secretary’s action” each place it appears and inserting in lieu thereof “the Secretary of Labor’s action”. (G) Section 3221(a) and 3221(c) are each amended by 26 USC 3221. striking out “of the Treasury” each place it appears. (H) Section 3310(e) is amended by striking out “of 26 USC 3310. the Secretary” and inserting in lieu thereof “of the Secretary of Labor”. (I) Section 4412(c) is amended by striking out “he or his 26 USC 4412. delegate” and inserting in lieu thereof “the Secretary”. (J) Section 5845(f) is amended by striking out “of the 26 USC 5845. Treasury or his delegate”. (K) Section 6402(b) is amended by striking out “(or his 26 USC 6402. delegate)”. (L) Section 7458 is amended by striking out “nor his 26 USC 7458. delegate”. (M) Section 7514 is amended by striking out “functions of 26 USC 7514. the Secretary” and inserting in lieu thereof “functions of the Secretary of the Treasury”. (c) Amendments to Sections Referring to Territories.— (1) Section 6871(a) is amended by striking out “or Territory”. 26 USC 6871. 26 USC 7622. 26 USC 7701. (2) Section 7622(b) is amended by striking out “, Territory,”. (3) Section 7701(a)(4) is amended by striking out “or Territory”. (d) Effective Date.— (1) General rule.— Except as otherwise expressly provided in this section, the amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. (2) Amendments relating to income tax.— The amendments made by this section, when relating to a tax imposed by chapter 26 USC 1, 1401. 1 or chapter 2 of the Internal Revenue Code of 1954, shall take effect with respect to taxable years beginning after December 31, 1976. SEC. 1907. AMENDMENTS OF SUBTITLE G; THE JOINT COMMITTEE ON INTERNAL REVENUE TAXATION. (a) In General.— (1) Amendment of section 8001.— Section 8001 (relating to 26 USC 8001. creation of the Joint Committee) is amended by striking out “Joint Committee on Internal Revenue Taxation” and inserting in lieu thereof “Joint Committee on Taxation”. (2) Amendment of section 8004.— Section 8004 (relating to 26 USC 8004. compensation of staff) is amended by striking out “compensation of a clerk” and inserting in lieu thereof “compensation of the Chief of Staff of the Joint Committee”. (3) Amendment of section 8021.— Section 8021(d) (relating 26 USC 8021. to authority to make expenditures) is amended to read as follows: “(d) To Make Expenditures.— The Joint Committee, or any subcommittee thereof, is authorized to make such expenditures as it deems advisable.”. (4) Amendment of section 8023.— Section 8023(c) (relating 26 USC 8023. to reorganization plans) is amended to read as follows: “(c) Application of Subsections (a) and(b).— Subsections (a) and (b) shall be applied in accordance with their provisions without regard to any reorganization plan becoming effective on, before, or after the date of the enactment of this subsection.”. (5) All references in any other statute, or in any rule, regulation, or order, to the Joint Committee on Internal be venue Taxation shall be considered to be made to the Joint Committee on Taxation. (b) Amendments Conforming to the Amendment of Section 8001.— (1) The heading of subtitle G is amended by striking out “Internal Revenue”, (2) The table of subtitles for the Internal Revenue Code of 1954 is amended by striking out the item relating to subtitle G and inserting in lieu thereof the following: “Subtitle G. The Joint Committee on Taxation.”. (c) Effective Date.— The amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. SEC. 1908. EFFECTIVE DATE OF CERTAIN DEFINITIONS AND DESIGNATIONS For purposes of any amendment made by any provision of this Act (other than this title)— (1) which contains a term the meaning of which is defined in or modified by any provision of this title, and (2) which has an effective date earlier than the effective date of the provision of this title defining or modifying such term, that definition or modification shall be considered to take effect as of such earlier effective date. Subtitle B— Amendments of Code Provisions With Limited Current Application; Repeals and Savings Provisions SEC. 1951. PROVISIONS OF SUBTITLE A (a) References to Internal Revenue Code.— Except as otherwise expressly provided, whenever in this section a reference is made to a section or other provision, the reference shall be considered to be made 26 USC 1. to a section or other provision of the Internal Revenue Code of 1954. (b) Amendments.— (1) Amendment of section 72.— (A) Repeal.— Section 72 (relatinfi to annuities) is amended by striking out subsection (i) (relating to joint and survivor annuities where first annuitant died in 1951, 1952, or 1953). (B) Savings provision.— Notwithstanding subparagraph (A), if the provisions of section 72(i) applied to amounts received in taxable years beginning before January 1, 1977, under an annuity contract, then amounts received under such contract on or after such date shall be treated as if such provisions were not repealed. (2) Amendments of section 108.— (A) Repeal.— Section 108 (relating to income from discharge of indebtedness) is amended by striking out subsection (b) (relating to certain railroad corporations) and by striking out of subsection (a) the following: “(a) Special Rule of Exclusion.—”. (B) Savings provision.— If any discharge, cancellation, 26 USC 108 note. or modification of indebtedness of a railroad corporation occurs in a taxable year beginning after December 31, 1976, pursuant to an order of a court in a proceeding referred to in section 108(b)(A) or (13) which commenced before January 1, 1960, then, notwithstanding the amendments made by subparagraph (A), the provisions of subsection (b) of section 108 shall be considered as not repealed with respect to such discharge, cancellation, or modification of indebtedness. (3) Amendments of section 164.— (A) Repeal.— Section 164 (relating to taxes) is amended 26 USC 164. by striking out subsection (f) (relating to payments for municipal services in atomic energy communities) and by redesignating subsection (g) as subsection (f). (B) Savings provision.— Notwithstanding subparagraph 26 USC 164 note. (A), any amount paid or accrued in a taxable year beginning after December 31, 1976, to the Atomic Energy Commission or its successors for municipal-type services shall be allowed as a deduction under section 164 if such amount would have been deductible by reason of section 164(f)(as in effect for a taxable year ending on December 31, 1976) and if the amount is paid or accrued with respect to real property in a community (within the meaning of section 21 b. of the Atomic Energy Community Act of 1955 (42 U.S.C. 2304 (b))) in which the Commission on December 31, 1976, was rendering municipal-type services for which it received compensation from the owners of property within such community. (4) Repeal of section 168.— (A) Repeal.— Section 168 (relating to amortization of 26 USC 168. emergency facilities) is repealed. (B) Savings provision.— Notwithstanding the repeal 26 USC 168 note. made by subparagraph (A), if a certificate was issued before January 1, 1960, with respect to an emergency facility which is or has been placed in service before the date of the enactment of this Act, the provisions of section 168 shall not, with respect to such facility, be considered repealed. The benefit of deductions by reason of the preceding sentence shall be allowed to estates and trusts in the same manner as in the case of an individual. The allowable deduction shall be apportioned between the income beneficiaries and the fiduciary in accordance with regulations prescribed under section 642(f). (5) Amendment of section 171.— (A) Repeal.— (i) Section 171(b)(1)(B) (relating to amount of 26 USC 171. bond premium) is amended by striking out clause (iii) (relating to certain bonds acquired before 1958). (ii) Section 171(b)(1)(B)(i) is amended by striking out “clause (ii) or (iii) applies,” and inserting in lieu thereof “clause (ii) applies, or”, and by inserting “and” at the end thereof. (iii) Section 171 (b)(1)(B)(ii) is amended by striking out “. or” and inserting “, and” in lieu thereof. (iv) The second sentence in section 171 (b)(2) is amended by striking out “or (iii)”. (B) Savings provision.— Notwithstanding the amendments made by subparagraph (A), in the case of a bond the interest on which is not excludable from gross income— (i) which was issued after January 22, 1951, with a call date not more than 3 years after the date of such issue, and (ii) which was acquired by the taxpayer after January 22, 1954, and before January 1, 1958, the bond premium for a taxable year beginning after December 31, 1975, shall not be determined under section 171(b)(1)(B)(i) but shall be determined with reference to the amount payable on maturity, and if the bond is called before its maturity, the bond premium for the year in which the bond is called shall be determined in accordance with the provisions of section 171 (b)(2). (6) Amendment of section 333.— (A) Repeal.— Section 333 (relating to election as to recognition of gain in certain liquidations) is amended by striking out subsection (g) (relating to the liquidation of certain personal holding companies). (B) Savings provision.— Nothwithstanding subparagraph (A), if any corporation meets all the requirements of section 333(g)(2)(B), as in effect before its repeal by this Act, the liquidation of such corporation shall be treated as if paragraphs (2), (3), and (4) of section 333(g) had not been repealed. (C) Phase-in of 12month holding period requirement.— For purposes of subparagraph (B), the period for holding of stock specified in section 333(g)(2)(A)(u), as in effect before such repeal, shall— (i) in the case of taxable years beginning in 1977, be considered to be “9 months”; and (ii) in the case of taxable years beginning after December 31, 1977, be considered to be “1 year”. (7) Amendment of section 453.— (A) Repeal.— Section 453(b)(2) (relating to limitation on use of installment sales method) is amended to read as follows: “(2) Limitation.— Paragraph (1) shall apply only if in the taxable year of the sale or other disposition— “(A) there are no payments, or “(B) the payments (exclusive of evidences of indebtedness or the purchaser) do not exceed 30 percent of the selling price.”. (B) Savings provision.— Notwithstanding subparagraph (A), in the case of installment payments received during taxable years beginning after December 31, 1976, on account of a sale or other disposition made during a taxable year beginning before January 1, 1954, subsection (b)(1) of section 453 (relating to sales of realty and casual sales of personalty) shall apply only if the income was (by reason of section 53 Stat. 24. 44(b) of the Internal Revenue Code of 1939) returnable on the basis and in the manner prescribed in section 44(a) of such Code. (8) Amendments of section 512.— (A) Repeal.— Section 512(b) (relating to unrelated business 26 USC 512. taxable income) is amended by striking out paragraphs (13) and (14) and by redesignating paragraphs (15), (16), and (17) as paragraphs (13), (14), and (15), respectively. (B) Savings provision.— Notwithstanding subparagraph 26 USC 512 note. (A), income received in a taxable year beginning after December 31, 1975, shall be excluded from gross income in determining unrelated business taxable income, if such income would have been excluded by paragraph (13) or (14) of section 512(b) if received in a taxable year beginning before such date. Any deductions directly connected with income excluded under the preceding sentence in determining unrelated business taxable income shall also be excluded for such purpose. (9) Amendment of section 545.— (A) Repeal.— Section 545(b) (relating to adjustments in 26 USC 545. computing undistributed personal holding company income) is amended by striking out paragraph (9) (relating to deductions on account of certain liens in favor of the United States). (B) Savings provision.— Notwithstanding subparagraph 26 USC 545 note. (A), if any amount was deducted under paragraph (9) of section 545(b) in a taxable year beginning before January 1, 1977, on account of a lien which is satisfied or released in a taxable year beginning on or after such date, the amount so deducted shall be included in income, for purposes of section 545, as provided in the second sentence of such paragraph. Shareholders of any corporation which has amounts included in its income by reason of the preceding sentence may elect to compute the income tax on dividends attributable to amounts so included as provided in the third sentence of such paragraph. (10) Amendments of section 691.— (A) Repeal.— Section 691 (relating to income in respect 26 USC 691. of decedents) is amended by striking out subsection (e) (relating to certain installment obligations transmitted at death) and by redesignating subsection (f) as subsection (e). (B) Savings provision.— Notwithstanding subparagraph 26 USC 691 note. (A), any election made under section 691(e) to have subsection (a)(4) of such section apply in the case of an installment obligation shall continue to be effective with respect to taxable years beginning after December 31, 1976. Section 691(c) shall not apply in respect of any amount included in gross income by reason of the preceding sentence. The liability under bond filed under section 44(d) of the Internal Revenue Code of 1939 (or corresponding provisions of prior law) in 53 Stat. 24. respect of which such an election applies is hereby released with respect to taxable years to which such election applies. (11) Amendments of section 817.— (A) Repeal.— Section 817 is amended by striking out 26 USC 817. subsection (d) (relating to certain gains occurring before 1959). (B) Savings provision.— Notwithstanding subparagraph 26 USC 817 note. (A), any gain in a taxable year beginning after December 31, 1976, from any sale or other disposition of property prior to January 1, 1959, would be excluded or not taken into account for purposes of part 1 of subchapter L of chapter Ante, p. 1839. 1 if subsection (d) of section 817 of such Code were still in effect for such taxable year, such gain shall be excluded for purposes of such part. (12) Repeal of section 1347.— (A) Repeal.— Section 1347 (relating to certain claims filed against the United States before January 1, 1958) is repealed. (B) Savings provision.— Notwithstanding subparagraph (A), if amounts received in a taxable year beginning after December 31, 1976, would have been subject to the provisions of section 1347 if received in a taxable year beginning before such date, the tax imposed by section 1 attributable to such receipt shall be computed as if section 1347 had not been repealed. (13) Repeal of section 1471.— (A) Repeal.— Subchapter A of chapter 4 (relating to recovery of excessive profits on certain Government contracts) is repealed. (B) Savings provision.— If the amount of profit required to be paid into the Treasury under section 2382 or 7300 of title 10, United States Code, is not voluntarily paid, the Secretary of the Treasury or his delegate shall collect the same under the methods employed to collect taxes under subtitle A. All provisions of law (including penalties) applicable with respect to such taxes and not inconsistent with section 2382 or 7300 of title 10 of such Code, shall apply with respect to the assessment, collection, or payment of excess profits to the Treasury as provided in the preceding sentence, and to refunds by the Treasury of overpayments of excess profits into the Treasury. (14) Amendment of section 1481.— (A) Repeal.— Section 1481 (relating to mitigation of effect of renegotiation of Government contracts) is amended by striking out subsection (d) (relating to renegotiation for years prior to 1954). (B) Savings provision.— If, during a taxable year beginning after December 31, 1976, a recovery of excessive profits through renegotiation which relates to profits of a taxable 53 Stat. 1. year subject to the Internal Revenue Code of 1939, the adjustments in respect to such renegotiation shall be made under section 3806 of such Code. (c) Conforming and Clerical Amendments.— (1) Amendment conforming to the amendment of section 1017.— Section 1017 is amended by striking out “section 108(a)” each time it appears therein and inserting in lieu thereof “section 108”. (2) Amendments conforming to repeal of section 168.— (A) Section 1238 is amended by striking out “(relating to amortization deduction of emergency facilities)” and inserting in lieu thereof “(as in effect before its repeal by the Tax Ante, p. 1520. 26 USC 642, 1082. Ante, p. 1837. 26 USC 1245, 1250. Reform Act. of 1976)”. (B) Sections 642(f) and 1082(a)(2)(B) are each amended by striking out “168,”. (C) Sections 1245(a)(2) and 1250(b)(3) are each amended by striking out “168,” each place it appears and inserting in lieu thereof “168 (as in effect before its repeal by the Tax Reform Act of 1976),”. (D) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the item relating to section 168. Ante, p. 1837. (3) Amendments conforming to the repeal of section 1347.— (A) Section 5(b) is amended by striking out paragraph 26 USC 5. (5) and by redesignating paragraphs (2), (3), and (4), as paragraphs (1), (2), and (3), respectively. (B) The table of sections for part VI of subchapter Q of chapter 1 is amended by striking out the item relating to section 1347. Ante, p. 1840. (C) The heading of part VI of subchapter Q of chapter 1 is amended to read as follows: “PART VI— MAXIMUM RATE ON PERSONAL SERVICE INCOME.” (D) The table of parts for subchapter Q of chapter 1 is amended by striking out the item relating to part VI and inserting in lieu thereof the following: “Part VI. Maximum rate on personal service income.” (4) Amendment conforming to the repeal of section 1471.— The table of subchapters for chapter 4 is amended by striking out the item relating to subchapter A. (d) Effective Date.— Except as otherwise expressly provided, the 26 USC 72 note. amendments made by this section shall apply with respect to taxable years beginning after December 31, 1976. SEC. 1952. PROVISIONS OF SUBCHAPTER D OF CHAPTER 39; COTTON FUTURES. (a) Short Title.— This section may be cited as the “United States Cotton Futures Act”. (b) Repeal of Tax on Cotton Futures.— Subchapter D of chapter 39 (relating to tax on cotton futures) is repealed. 26 USC 4851. (c) Definitions.— For purposes of this section— (1) Cotton futures contract.— The term “cotton futures contract” means any contract of sale of cotton for future delivery made at, on, or in any exchange, board of trade, or similar institution or place of bus mess which has been designated a “contract market” by the Commodity Futures Trading Commission pursuant to the Commodity Exchange Act and the term “contract of 7 USC 1. sale” as so used shall be held to include sales, agreements of sale, and agreements to sell. (2) Future delivery.— The term “future delivery” shall not include any cash sale of cotton for deferred shipment or delivery. (3) Person.— The term “person” includes an individual, trust, estate, partnership, association, company, or corporation. (4) Secretary.— The term “Secretary” means the Secretary of Agriculture of the United States. (5) Standards.— The term “standards” means the official cotton standards of the United States established by the Secretary pursuant to the United States Cotton Standards Act, as emended. (d) Bona Fide Spot Markets and Commercial Differences.— (1) Definition.— For purposes of this section, the only markets which shall be considered bona fide spot markets shall be those which the Secretary shall, from time to time, after investigation, determine and designate to be such, and which we shall give public notice. (2) Determination.— In determining, pursuant to the provisions of this section, what markets are bona fide spot markets, the Secretary is directed to consider only markets in “which spot cotton is sold in such volume and under such conditions as customarily to reflect accurately the value of middling cotton and the differences between the prices or values of middling cotton and of other grades of cotton for which standards shall have been established by the Secretary; except that if there are not sufficient places, in the markets of which are made bona fide sales of spot cotton of grades for which standards are established by the Secretary, to enable him to designate at least five spot markets in accordance with subsection (f)(3), he shall, from data as to spot sales collected by him, make rules and regulations for determining the actual commercial differences in the value of spot cotton of the grades established by him as reflected by bona fide sales of spot cotton, of the same or different, grades, in the market selected and designated by him, from time to time, for that purpose, and in that event differences in value of cotton of various grades involved in contracts made pursuant to subsection (f)(1) and (2) shall be determined in compliance with such rules and regulations. It shall be the duty of any person engaged in the business of dealing in cotton, when requested by the Secretary or any agent acting under his instructions, to answer correctly to the best of his knowledge, under oath or otherwise, all questions touching his knowledge of the number of bales, the classification, the price or bona fide price offered, and other trims of purchase or sale, of any cotton involved in any transaction participated in by him, or to produce all books, letters, papers, or documents in his possession or under his control relating to such matter. (3) Withholding information.— Any person engaged in the business of dealing in cotton who shall, within a reasonable time prescribed by the Secretary or any agent acting under his instructions, willfully fail or refuse to answer questions or to produce books, letters, papers, or documents, as required under paragraph (2) of this subsection, or who shall willfully give any answer that is false or misleading, shall, upon conviction thereof, be fined not more than $500. (e) Form and Validity of Cotton Futures Contracts.— Each cotton futures contract shall be a basis grade contract, or a tendered grade contract, or a specific grade contract as specified in subsections (f), (g), or (h) and shall be in writing plainly stating, or evidenced by written memorandum showing, the terms of such contract, including the quantity of the cotton involved and the names and addresses of the seller and buyer in such contract, and shall be signed by the party to be charged, or by his agent in his behalf. No cotton futures contracts which does not conform to such requirements shall be enforceable by, or on behalf of, any party to such contract or his privies. (f) Basis Grade Contracts.— (1) Conditions.— Each basis grade cotton futures contract shall comply with each of the following conditions: (A) Conformity with regulations.— Conform to the regulations made pursuant to this section. (B) Specification of grade, price, and dates of sale and settlement.— Specify the basis grade for the cotton involved in the contract, which shall be one of the grades for which standards are established by the Secretary, except grades prohibited from being delivered on a contract made under this subsection by subparagraph (E), the price per pound at which the cotton of such basis grade is contracted to be bought or sold, the date when the purchase or sale was made, and the month or months in which the contract is to be fulfilled or settled; except that middling shall be deemed the basis £ade incorporated into the contract if no other basis grade specified either in the contract or in the memorandum evidencing the same. (C) Provision for delivery of standard grades only.— Provide that the cotton dealt with therein or delivered thereunder shall be of or within the grades for which standards are established by the Secretary except grades prohibited from being delivered on a contract made under this subsection by subparagraph (E) and no other grade or grades. (D) Provision for settlement on basis of actual commercial differences.— Provide that in case cotton of grade other than the basis grade be tendered or delivered in settlement of such contract, the differences above or below the contract price which the receiver shall pay for such grades other than the basis grade shall be the actual commercial differences, determined as hereinafter provided, (E) Prohibition of delivery of inferior cotton.— Provide that cotton that, because of the presence of extraneous matter of any character, or irregularities or defects, is reduced in value below that of low middling, or cotton that is below the grade of low middling, or, if tinged, cotton that is below the grade of strict middling, or, if yellow stained, cotton that is below the grade of good middling, the grades mentioned being of the official cotton standards of the United States, or cotton that is less than seven-eighths of an inch in length of staple, or cotton of perished staple, or of immature staple, or cotton that is “gin cut” or reginned, or cotton that is “repacked” or “false packed” or “mixed packed” or “water packed”, shall not be delivered on, under, or in settlement of such contract. (F) Provisions for tender in full, notice of delivery date, and certificate of grade.— Provide that all tenders of cotton under such contract shall be the full number of bales involved therein, except that such variations of the number of bales may be permitted as is necessary to bring the total weight of the cotton tendered within the provisions of the contract as to weight; that, on the fifth business day prior to delivery, the person making the tender shall give to the person receiving the same written notice of the date of delivery, and that, on or prior to the date so fixed for delivery, and in advance of final settlement of the contract, the person making the tender shall furnish to the person receiving the same a written notice or certificate stating the grade of each individual bale to be delivered and, by means of marks or numbers, identifying each bale with its grade. (G) Provision for tender and settlement in accordance with government classification.— Provide that all tenders of cotton and settlements therefor under such contract shall be in accordance with the classification thereof made under the regulations of the Secretary by such officer or officers of the Government as shall be designated for the purpose, and the costs of such classification shall be fixed, assessed, col- Regulations. lected, and paid as provided in such regulations. The Secretary is authorized to prescribe regulations for carrying out the purposes of this subparagraph and the certificates of the officers of the Government, as to the classification of any cotton for the purposes of this subparagraph shall be accepted in the courts of the United States in all suits between the parties to such contract, or their privies, as prima facie evidence of the true classification of the cotton involved. (2) Incorporation of conditions in contracts.— The provisions of paragraphs (1)(C), (D), (E), (F), and (G) shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the memorandums evidencing the same, at or prior to the time the same is signed, the phrase “Subject to United States Cotton Futures Act, subsection (f).” (3) Delivery allowances.— For the purpose of this subsection, the differences above or below the contract price which the receiver shall pay for cotton of grades above or below the basic grade in the settlement of a contract of sale for the future delivery of cotton shall be determined by the actual commercial differences in value thereof upon the sixth business day prior to the day fixed, in accordance with paragraph (1)(F), for the delivery of cotton on the contract, established by the sale of spot cotton in the spot markets of not less than five places designated for the purpose from time to time by the Secretary, as such values were established by the sales of spot cotton, in such designated five or more markets. For purposes of this paragraph, such values in the such spot markets shall be based upon the standards for grades of cotton established by the Secretary. Whenever the value Rules and regulations. of one grade is to be determined from the sale or sales of spot cotton of another grade or grades, such value shall be fixed in accordance with rules and regulations which shall be prescribed for the purpose by the Secretary. (g) Tendered Grade Contracts.— (1) Conditions.— Each tendered grade cotton future contract shall comply with each of the following conditions: (A) Compliance with subsection (f).— Comply with all the terms and conditions of subsection (f) not inconsistent with this subsection; and (B) Provision for contingent specific performance.— Provide that, in case cotton of grade or grades other than the basis grade specified in the contract shall be tendered in performance of the contract, the parties to such contract may agree, at the time of the tender, as to the price of the grade or grades so tendered, and that if they shall not then agree as to such price, then, and in that event, the buyer of said contract shall have the right to demand the specific fulfillment of such contract by the actual delivery of cotton of the basis grade named therein and at the price specified for such basis grade in said contract. (2) Incorporation of conditions in contract.— Contracts made in compliance, with this subsection shall be known as “subsection (g) Contracts”. The provisions of this subsection shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the memorandum evidencing the same, at or prior to the time the same is signed, the phrase “Subject to United States Cotton Futures Act, subsection (g)”. (3) Application of subsection.— Nothing in this subsection shall be so construed as to authorize any contract in which, or in the settlement of or in respect to which, any device or arrangement whatever is resorted to, or any agreement is made, for the determination or adjustment of the price of the grade or grades tendered other than the basis grade specified in the contract by any “fixed difference” system, or by arbitration, or by any other method not provided for by this section. (h) Specific Grade Contracts.— (1) Conditions.— Each specific grade cotton futures contract shall comply with each of the following conditions: (A) Conformity with rulesand regulations.— Con form to the rules and regulations made pursuant to this section. (B) Specification of grade, price, dates of sale and delivery.— Specify the grade, type, sample, or description of the cotton involved in the contract, the price per pound at which such cotton is contracted to be bought or sold, the date of the purchase or sale, and the time when shipment or delivery of such cotton is to be made. (C) Prohibition of delivery of other than specified grade.— Provide that cotton of or within the grade or of the type, or according to the sample or description, specified in the contract shall be delivered thereunder, and that no cotton which does not conform to the type, sample, or description, or which is not of or within the grade specified in the contract shall be tendered or delivered thereunder. (D) Provision for specific performance.— Provide that the delivery of cotton under the contract shall not be effected by means of “setoff” or “ring” settlement, but only by the actual transfer of the specified cotton mentioned in the contract. (2) Incorporation of conditions in contract.— The provisions of paragraphs (1)(A), (C). and (D) shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the document or memorandum evidencing the same, at or prior to the time the same is entered into, the words “Subject to United States Cotton Futures Act, subsection (h)”. Ante, p. 1841. (3) Application of subsection.— This subsection shall not be construed to apply to any contract of sale made in compliance with subsection (f) or (g). (i) Liability of Principal for Acts of Agent.— When construing and enforcing the provisions of this section, the act, omission, or failure of any official, agent, or other person acting for or employed by any association, partnership, or corporation within the scope of his employment or office shall, in every case, also be deemed the act, omission, or failure of such association, partnership, or corporation, as well as that of the person. (j) Regulations.— The Secretary is authorized to make such regulations with the force and effect of law as he determines may be necessary to carry out the provisions of this section and the powers vested in him by this section. (k) Validations.— Any person who knowingly violates any regulation made in pursuance of this section, shall, upon conviction thereof be fined not less than $100 nor more than $500, for each violation thereof, in the discretion of the court, and, in case of natural persons, may, in addition be punished by imprisonment for not less than 30 days nor more than 90 days, for each violation, in the discretion of the court except that this subsection shall not apply to violations subject to subsection (d)(3). (l) Applicability to Contracts Prior to Effective Date.— The provisions of this section shall not apply to any cotton futures contract entered into prior to the effective date of this section or to any act or failure to act by any person prior to such effective date and all such prior contracts, acts or failure to act shall continue to be governed by 26 USC 1. the applicable provisions of the Internal Revenue Code of 1954 as in effect prior to the enactment of this section. All designations of bona fide spot markets and all rules and regulations issued by the Secretary pursuant to the applicable provisions of the Internal Revenue Code of 1954 which were in effect on the effective date of this section, shall remain fully effective as designations and regulations under this section until superseded, amended, or terminated by the Secretary. (m) Authorization.— There are authorized to be appropriated such sums as may be necessary to carry out this section. (n) Conforming and Clerical, Amendments.— (1) Section 6808 (relating to cross references) is amended by striking out paragraph (2), and by redesignating paragraphs (3), (6), and (11) as paragraphs (1), (2), and (3), respectively. (2) (A) Section 7233 (relating to failure to pay tax on cotton futures) is repealed. (B) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7233. (3) (A) Section 7263 (relating to penalties concerning cotton futures) is repealed. (B) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7263. (4) (A) Subchapter E of chapter 76 (relating to miscellaneous provisions regarding cotton futures contracts) is repealed. (B) The table of subchapters for chapter 76 is amended by striking out the items relating to subchapter E. (5) Chapter 39 (relating to regulatory taxes) is amended by striking out the chapter heading and the table of subchapters. (6) The table of chapters for subtitle D is amended by striking out the item relating to chapter 39. (o) Effective Date.— The provisions of this section shall take effect on the 90th day after the date of the enactment of this Act.

11. 1976

    Pub. L. 94–455 § 1906(b)(13)(A) · 90 Stat. 1520

    Struck · 26 U.S.C. § 5008(c)(5)

    Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”

    Source evidence

    Code amendment note
    Subsec. (c)(5). Pub. L. 94–455, § 1906(b)(13)(A), struck out “or his delegate” after “Secretary”.

    Enacted provision · exact public law section
    (A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”.

12. 1976

    Pub. L. 94–455 title XIX · 90 Stat. 1520

    Struck and inserted · 26 U.S.C. § 5008(d)(1)

    Pub. L. 94–455, §§ 1905(a)(2)(C), (D), 1906(b)(13)(A), struck out “on or after July 1, 1959,” after “from bonded premises,” and “or his delegate” after “Secretary” and inserted “or under section 7652” after “under section 5001(a)(1)”

    Source evidence

    Code amendment note
    Subsec. (d)(1). Pub. L. 94–455, §§ 1905(a)(2)(C), (D), 1906(b)(13)(A), struck out “on or after July 1, 1959,” after “from bonded premises,” and “or his delegate” after “Secretary” and inserted “or under section 7652” after “under section 5001(a)(1)”.

    Enacted provision · exact public law
    TITLE XIX— REPEAL AND REVISION OF OBSOLETE, RARELY USED, ETC., PROVISIONS OF INTERNAL REVENUE CODE OF 1954 SUBTITLE A— AMENDMENTS OF INTERNAL REVENUE CODE GENERALLY SEC. 1901. AMENDMENTS OF SUBTITLE A; INCOME TAXES. (a) In General.— (1) Amendment of section 2.— Subsection (c) of section 2 (relating to certain married individuals living apart) is amended to read as follows: “(c) Certain Married Individuals Living Apart.— For purposes of this part, an individual shall be treated as not married at the close of the taxable year if such individual is so treated under the provisions of section 143 (b).” (2) Repeal of section 36.— Section 35 (relating to partially tax-exempt interest received by individuals) is repealed. (3) Amendment of section 39.— Section 39 (relating to certain uses of gasoline, special fuels, and lubricating oil) is amended by striking out subsections (b) and (c) and inserting after subsection (a) the following new subsection: “(b) Exception.— Credit shall not be allowed under subsection (a) for any amount payable under section 6421, 6424, or 6427, if a claim for such amount is timely filed and, under section 6421 (i), 6424 (f), or 6427(f), is payable under such section.” (4) Amendments of section 46.— (A) The second sentence of section 46(a)(4), as redesignated by this Act, is amended by striking out “section 408(e)” and inserting in lieu thereof “section 408(f)”. (B) Clause (iii) of section 46(c)(3)(B) (relating to public utility property) is amended by striking out “47 U.S.C., sec. 222(a)(5)” and inserting in lieu thereof “47 U.S.C. 222(a)(5)”. (5) Amendments or section 48.— (A) Section 48(a)(2)(B)(vi) (relating to section 38 property used outside the United States) is amended by striking out “; 43 U.S.C., sec. 1331)” and inserting in lieu thereof “(43 U.S.C. 1331))”. (B) Section 48(a)(2)(B)(viii) is amended by striking out “47 U.S.C., sec. 702” and inserting in lieu thereof “47 U.S.C. 702”. (6) Amendment of section 50a.— The second sentence of section 50A (a)(3) (relating to liability for tax) is amended by 26 USC 50A. striking out “section 408 (e)” and inserting in lieu thereof “section 408(f)”. (7) Repeal of section 51.— Subchapter A of chapter 1 is 26 USC 51. amended by striking out part V (relating to tax surcharge). (8) Amendments op section 62.— Section 62 (relating to definition 26 USC 62. of adjusted gross income) is amended by redesignating paragraph (11), as added by the Act of October 26, 1974 (Public Law 93–483), as paragraph (12). (9) Additional amendment of section 62.— Section 62(12), as redesignated by subparagraph (A) of this paragraph, is amended by striking out “trade or business to the extent” and inserting in lieu thereof “trade or business, to the extent”. (10) Definition of ordinary income.— Part I of subchapter B of chapter 1 (relating to definitions of gross income, adjusted 26 USC 61. gross income, and taxable income) is amended by adding at the end thereof the following new section: “SEC. 64. ORDINARY INCOME DEFINED. “For purposes of this subtitle, the term ‘ordinary income’ includes any gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b). Any gain from the sale or exchange of property which is treated or considered, under other provisions of this subtitle, as ‘ordinary income’ shall be treated as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b).” (11) Definition of ordinary loss.— Part I of subchapter B of chapter 1 (relating to definitions of gross 26 USC 61. income, adjusted gross income, and taxable income) is amended by adding at the end thereof the following new section: “SEC. 65. ORDINARY LOSS DEFINED. “For purposes of this subtitle, the term ‘ordinary loss’ includes any loss from the sale or exchange of property which is not a capital asset. Any loss from the sale or exchange of property which is treated or considered, under other provisions of this subtitle, as ‘ordinary loss’ shall be treated as loss from the sale or exchange of property which is not a capital asset.” (12) Amendment of section 72.— Section 72(d)(1) (relating 26 USC 72. to employees’ annuities) is amended by striking out “(whether or not before January 1, 1954)” and by striking out “(under this paragraph and prior income tax laws)”. (13) Additional amendment of section 72.— Section 72(m)(4)(A) (relating to assignments or pledges) is amended by striking out “an individual retirement amount” and inserting in lieu thereof “an individual retirement account”. (14) Repeal of section 76.— Section 76 (relating to mortgages 26 USC 76. made or obligations issued by joint stock land banks) is repealed. (15) Amendment of section 83.— Section 83(b)(2) (relating 26 USC 83. to election to include the value of restricted property in gross income) is amended by striking out “(or, if later, 30 days after 26 USC 1 note. the date of the enactment of the Tax Reform Act of 1969)”. (16) Amendment of section 101.— Section 101 is amended by 26 USC 101. striking out subsection (f) (relating to effective date of section). (17) Amendments of section 103.— (A) Section 103(a) (relating to tax-exempt interest), as 26 USC 103. amended by this Act, is amended by inserting “and” at the end of paragraph (1), by striking out paragraphs (2) and (3), and by redesignating paragraph (4) as paragraph (2). (B) Section 103 is amended by striking out subsection (b) (relating to certain exceptions) and by redesignating subsections (c), (d), (e) (f), and (g)(as added by this Act) as subsections (b), (c), (d), (e), and (f) respectively. (C) Section 103(b)(1) (relating to industrial development bonds), as redesignated by subparagraph (B) of this paragraph, is amended by inserting “or (2)” after “(a)(1)”. (D) Section 103(c)(2)(A) (relating to definition of arbitrage bonds), as redesignated by subparagraph (B) of this paragraph, is amended by inserting “or (2)” after “(a)(1)”. (E) Section 103(e) (relating to certain cross references) as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(e) Cross References.— “For provisions relating to the taxable status of— “(1) Puerto Rican bonds, see section 3 of the Act of March 2, 1917, as amended (48 U.S.C. 745). “(2) Virgin Islands insular and municipal bonds, see section 1 of the Act of October 27, 1919 (48 U.S.C. 1403). “(3) Certain obligations issued under title I of the Housing Act of 1949, see section 102(g) of title I of such Act (42 U.S.C. 1452(g)).” (18) Amendments of section 104.— (A) Section 104(a)(4) (relating to exclusion of compensation for injuries or sickness) is amended by striking out “;60 Stat. 1021” (B) Section 104(c)(2) as redesignated by section 505 of this Act, is amended to read as follows: “(2) For exclusion of part of disability retirement pay from the application of subsection (a)(4) of this section, see section 1403 of title 10, United States Code (relating to career compensation laws).” (19) Amendment of section 115.— Section 115 (relating to income of States, municipalities, etc.) is amended to read as follows: “SEC. 115. INCOME OF STATES, MUNICIPALITIES, ETC. “Gross income does not include— “(1) income derived from any public utility or the exercise of any essential governmental function and accruing to a State or any political subdivision thereof, or the District of Columbia; or “(2) income accruing to the government of any possession of the United States, or any political subdivision thereof.” (20) Amendment of section 116.— Subsection (a) of section 116 (relating to partial exclusion of dividends received by individuals) is amended by striking out “Effective with respect to any taxable year ending after July 31, 1954, gross income” and inserting in lieu thereof “Gross income”. (21) Amendment of section 124.— Section 124 (relating to cross references to other Acts) is amended to read as follows: “SEC. 124. CROSS REFERENCES TO OTHER ACTS. “(a) For exemption of— “(1) Adjustments of indebtedness under wage earners’ plans, see section 679 of the Bankruptcy Act (11 U.S.C. 1079). “(2) Allowances and expenditures to meet losses sustained by persons serving the United States abroad, due to appreciation of foreign currencies, see section 5943 of title 5, United States Code. “(3) Amounts credited to the Maritime Administration under section 9(b)(6) of the Merchant Ship Sales Act of 1946, see section 9(c)(1) of that Act (50 U.S.C. App. 1742). “(4) Benefits under laws administered by the Veterans’ Administration, see section 3101 of title 38, United States Code. “(5) Earning of ship contractors deposited in special reserve funds, see section 607(d) of the Merchant Marine Act, 1936 (46 U.S.C. 1177). “(6) Income derived from Federal Reserve banks, including capital stock and surplus, see section 7 of the Federal Reserve Act (12 U.S.C. 531). “(7) Railroad retirement annuities and pensions, see section 12 of the Railroad Retirement Act of 1935 (45 U.S.C. 2281). “(8) Railroad unemployment benefits, see section 2(e) of the Railroad Unemployment Insurance Act (45 U.S.C. 352). “(9) Special pensions of persons on Army and Navy medal of honor roll, see 38 U.S.C. 562(a)–(c). “(b) For extension of military income-tax-exemption benefits to commissioned officers of Public Health Service in certain circumstances, see section 212 of the Public Health Service Act (42 U.S.C. 213).” (22) Amendment of section 143.— Section 143 (relating to 26 USC 143. determination of marital status) is amended by striking out “this part” each place it appears and inserting in lieu thereof “this part and part V”. (23) Amendment of section 151.— Section 151 (e)(4)(defining 26 USC 151. student and educational institution) is amended to read as follows: “(4) Student defined.— For purposes of paragraph (1)(B)(ii), the term ‘student’ means an individual who during each of 5 calendar months during the calendar year in which the taxable year of the taxpayer begins— “(A) is a full-time student at an educational organization described in section 170(b)(1)(A)(ii); or “(B) is pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of an educational organization described in section 170(b)(1)(A)(ii) or of a State or political subdivision of a State.” (24) Amendments or section 152.— (A) Section 152(a)(defining dependent) is amended— 26 USC 152. (i) by inserting “or” at the end of paragraph (8), (ii) by striking out “, or” at the end of paragraph (9) and inserting in lieu thereof a period, and (iii) by striking out paragraph (10). (B) Section 152(b)(3) (relating to rules concerning the definition of dependent) is amended to read as follows: “(3) The term ‘dependent’ does not include any individual who “Dependent.” is not a citizen or national of the United States unless such individual is a resident of the United States or of a country contiguous to the United States. The preceding sentence shall not exclude from the definition of ‘dependent’ any child of the tax-payer legally adopted by him, if, for the taxable year of the tax-payer, the child has as his principal place of abode the home of the taxpayer and is a member of the taxpayer’s household, and if the taxpayer is a citizen or national of the United States.” (25) Amendments of section 164.— Section 164(d)(2) (relating 26 USC 164. to apportionment of taxes on real property between the seller and purchaser) is amended by striking out subparagraphs (B) and (C), and by redesignating subparagraph (D) as subparagraph (B). (26) Amendments of section 165.— Section 165 (relating 26 USC 165. to deduction of losses) is amended by striking out subsection (i) (relating to property confiscated by Cuba), and by redesignating subsection (j) as subsection (i). (27) Amendments or section 167.— (A) Section 167 (d) (relating to agreement as to useful life for depreciation) is amended by striking out “after the date of enactment of this title” and inserting in lieu thereof “after August 16, 1954”. (B) Section 167(f)(2)(defining personal property) is amended by striking out “the date of the enactment of the Revenue Act of 1962” and inserting in lieu thereof “October 16, 1962”. (C) Section 167(1)(4)(A) (relating to election as to increased-capacity property) is amended by striking out “within 180 days after the date of the enactment of this subparagraph” and inserting in lieu thereof “before June 29, 1970,”. (28) Amendments of section 170.— (A) (i) Section 170 (relating to charitable deductions) is amended by striking out subsections (f)(6) and (g) (relating to unlimited charitable deductions allowed for taxable years beginning before January 1, 1975), and by redesignating subsections (h), (i), and (j) as subsections (g), (h), and (i), respectively. (ii) Section 170(b)(1) (relating to percentage limitations on deductions for individuals) is amended by striking out subparagraph (C) (relating to unlimited deductions), and by redesignating subparagraphs (D), (E), and (F) as subparagraphs (C), (D), and (E), respectively. (iii) Section 170(b)(1)(A)(vii) is amended by striking out “subparagraph (E)” and inserting in lieu thereof “subparagraph (D)”. (iv) Section 170(b)(1)(B)(ii) is amended by striking out “subparagraph (D)” and inserting in lieu thereof “subparagraph (C)”. (v) Section 170(c) (relating to definition of charitable contribution) is amended by striking out in the last sentence “subsection (h)” and inserting in lieu thereof “subsection (g)”. (vi) Section 170(e)(1)(B)(ii) (relating to certain contributions of ordinary income and capital gain property) is amended by striking out “subsection (b)(1)(E)” and inserting in lieu thereof “subsection (b)(1)(D)”. (B) Section 170(d)(1)(A) (relating to carryover of excess charitable contributions) is amended by striking out “(30 percent, in the case of a contribution year beginning before January 1, 1970)”. (C) Section 170(h) (relating to disallowance of deductions in certain cases), as redesignated by subparagraph (A)(i) of this paragraph, is amended by striking out “64 Stat. 996;”. (D) Section 170(i) (relating to cross references), as redesignated by subparagraph (A)(i) of this paragraph, is amended to read as follows: “(i) Other Cross References.— “(1) Fer charitable contributions of estates and trusts, see section 642(c). “(2) For nondeductibilit; of contributions by common trust funds, see section 584. “(3) For charitable contributions of partners, see section 702. “(4) For charitable contributions of nonresident aliens, see section 873. “(5) For treatment of gifts for benefit of or use in connection with the Naval Academy as gifts to or for use of the United States, see section 6973 of title 10, United States Code. “(6) For treatment of gifts accepted by the Secretary of State under the Foreign Service Act of 1946 as gifts to or for the use of the United States, see section 1021(e) of that Act (22 U.S.C. 809(e)). “(7) For treatment of gifts of money accepted by the Attorney General for credit to the ‘Commissary Funds, Federal Prisons’ as gifts to or for the use of the United States, see section 2 of the Act of May 15, 1952. as amended by the Act of July 9, 1952 (31 U.S.C. 7 25s–4).” (29) Amendments of section 172.— (A) (i) Section 172(b)(1) (relating to years to which loss Ante, p. 1755. may be carried) is amended by striking out subparagraph (E). (ii) Section 172(b)(3) is amended by striking out subparagraphs 26 USC 172. (E) and (F). (B) Section 172(c) (relating to definition of net operating loss) is amended by striking out “(for any taxable year ending after December 31, 1953)”. (C) (i) Section 172 (relating to net operating loss deduction) is amended by striking out subsections (f), (g), and (i), and by redesignating subsections (h), (j), (k), and (1) as subsections (f) , (g). (h), and (i), respectively. (ii) Section 172(b)(1)(C) (relating to regulated transportation corporations) is amended by striking out “subsection (j)(1)” and “subsection (j)”, and inserting in lieu thereof “subsection (g)(1)” and “subsection (g)”, respectively. (iii) Paragraphs (1)(D) and (3)(C)(i) of section 172 Post, p. 1920. (b) (relating to net operating loss carryovers and carry-backs) are each amended by striking out “subsection (k)” and inserting in lieu thereof “subsection (h)”. (iv) Section 172(b)(2) (relating to amount of carrybacks and carryovers) is amended by striking out “subsections (i) and (j)” and inserting in lieu thereof Subsection (g)”. (D) Section 172(e) (relating to law applicable to computations) is amended by striking out the last sentence. (E) Section 172(g)(2) (relating to certain regulated transportation corporations), as redesignated by subparagraph (C) of this paragraph, is amended by striking out paragraph (4). (30) Amendments of sections 174 and 175.— Section 174(a)(2) 26 USC 174, 175. (A)(1) (relating to research and development expenditures) and section 175(d)(1)(A) (relating to soil and water conservation expenditures) are each amended by striking out “the date on which this title is enacted,” and inserting in lieu thereof “August. 16, 1954,”. (31) Repeal of section 187.— Section 187 (relating to rapid 26 USC 187. amortization for certain coal mine safety equipment) is repealed. (32) Amendment of section 219.— Section 219(b)(2)(A)(iv) 26 USC 219. (disqualifying governmental plan participants from contributing to individual retirement accounts, etc.) is amended by striking out “division” and inserting in lieu thereof “subdivision”. (33) Repeat of section 242.— Section 242 (relating to partially 26 USC 242. tax-exempt interest received by corporations) is repealed. (34) Amendments of section 243.— (A) Section 243(a)(2) (relating to the dividends received deduction) is amended by inserting after “Small Business Investment Act of 1958” the following: “(15 U.S.C. 661 and following)”. (B) Section 243(b)(2)(A) (relating to dividends received by a member of an affiliated group) is amended by striking out “(except that in the case of a taxable year of a member beginning in 1963 and ending in 1964, if the election is effective for the taxable year of the common parent corporation which includes the last day of such taxable year of such member, such election shall be effective for such taxable year of such member, if such member consents to such election with respect to such taxable year)”. (35) Amendment of section 247.— Section 247(b)(2) (relating to preferred stock) is amended to read as follows: “(2) Preferred stock.— “(A) In general.— The term ‘preferred stock’ means stock issued before October 1, 1942, which during the whole of the taxable year (or the part of the taxable year after its issue) was stock the dividends in respect of which were cumulative, limited to the same amount, and payable in preference to the payment of dividends on other stock. “(B) Certain stock issued on or after October 1, 1942.— Stock issued on or after October 1, 1942, shall be deemed for purposes of this paragraph to have been issued before October 1, 1942, if it was issued to refund or replace bonds or debentures issued before October 1, 1942, or to refund or replace other preferred stock (including stock which is preferred stock by reason of this subparagraph or subparagraph (D)), but only to the extent that the par or stated value of the new stock does not exceed the par, stated, or face value of the bonds or debentures issued before October 1, 1942, or the other preferred stock, which such new stock is issued to refund or replace. “(C) Determination under regulations.— The determination of whether stock was issued to refund or replace bonds or debentures issued before October 1, 1942, or to refund or replace other preferred stock, shall be made under regulations prescribed by the Secretary. “(D) Issuance of stock.— For purposes of subparagraph (B), issuance of stock includes issuance either by the same or another corporation in a transaction which is a reorganization (as defined in section 368(a)), a transaction to which section 371 (relating to insolvency reorganizations) applies, 26 USC 1081. or a transaction subject to part VI of subchapter 0 (relating to exchanges in SEC. obedience orders), or the respectively corresponding provisions of the Internal Revenue Code of 1939.” (36) Amendment of section 248.— Section 248(c) (relating to organizational expenditures) is amended by striking out “the date of enactment of this title” and inserting in lieu thereof “August 16, 1954”, (37) Amendment of section 265.— Section 265(2) (relating to tax-exempt interest) is amended by striking out “(other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer)”, (38) Amendment of section 269.— Section 269 (relating to 26 USC 269. acquisitions made to evade or avoid income tax) is amended by striking out subsection (c) (relating to presumption in the ease of disproportionate purchase price). (39) Amendment of section 275.— Section 275(a)(1)(C) 26 USC 275. relating to nondeductible taxes) is amended by striking out (“, and corresponding provisions of prior revenue laws”. (40) Amendments of section 281.— (A) Section 281(d)(1)(A) (relating to definition of terminal 26 USC 281. railroad corporation) is amended by inserting after “Interstate Commerce Act” the following: “(49 U.S.C. 1 and following) (B) Section 281 (relating to terminal railroad corporations and their shareholders) is amended by striking out subsection (e) (relating to taxable years ending before October 23, 1962) and by redesignating subsection (f) as subsection (e). (41) Amendment of section 301.— Section 301 (relating to distributions 26 USC 301. of property) is amended by striking out subsection (e) (relating to certain distributions by personal service corporations). (42) Amendments of section 311.— (A) Section 311(d)(1) (relating to appreciated property 26 USC 311. used to redeem stock) is amended by striking out “then again shall be recognized” and inserting in lieu thereof “then a gain shall be recognized”. (B) (i) Section 311(d)(2) (relating to exceptions and limitations) is amended by striking out subparagraph (C) (relating to certain distributions before December 1, 1974) and by redesignating subparagraphs (D), (E), (F), and (G) as subparagraphs (C), (D). (E), and (F), respectively. (ii) The amendments made by clause (i) shall apply only 26 USC 311 note. with respect to distributions after November 30, 1974. (C) Section 311(d)(2)(C), as redesignated by subparagraph (B) of this paragraph, is amended by striking out “26 Stat. 209;” and “38 Stat. 730;”. (43) Amendments of section 312.— (A) Section 312(d)(1) (relating to certain distributions 26 USC 312. of stock and securities) is amended by striking out “this Code” each place it appears and inserting in lieu thereof “this title”. (B) Section 312 (relating to earnings and profits) is amended by striking out subsection (h) (relating to personal service corporations) and by redesignating subsections (i) and (j) as subsections (h) and (i), respectively. (C) Subsection (i) of section 312 (relating to distribution of proceeds of certain loans), as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(i) Distribution of Proceeds of Loan Insured by the United States.— If a corporation distributes property with respect to its stock and if, at the time of distribution— “(1) there, is outstanding a loan to such corporation which was made, guaranteed, or insured by the United States (or by any agency or instrumentality thereof), and “(2) the amount of such loan so outstanding exceeds the adjusted basis of the property constituting security for such loan, then the earnings and profits of the corporation shall be increased by the amount of such excess, and (immediately after the distribution) shall be decreased by the amount of such excess. For purposes of paragraph (2), the adjusted basis of the property at the time of distribution shall be determined without regard to any adjustment under section 1016(a)(2) (relating to adjustment for depreciation, etc.). For purposes of this subsection, a commitment to make, guarantee, or insure a loan shall be treated as the making, guaranteeing, or insuring of a loan.” (D) Section 312(j)(3) (relating to foreign investment companies), as redesignated by subsection (b)(32)(B)(i), is amended to read as follows: “(3) Partial liquidations and redemptions.— If a foreign investment company (as defined in section 1246) distributes amounts in partial liquidation or in a redemption to which section 302(a) or 303 applies, the part of such distribution which is properly chargeable to earnings and profits shall be an amount which is not in excess of the ratable share of the earnings and profits of the company accumulated after February 28, 1913, attributable to the stock so redeemed.” (44) Amendment of section 333.— Section 333(a)(1) (relating to election as to recognition of gain in certain liquidations) is amended by striking out “on or after June 22, 1954”. (45) Amendment of section 334.— Section 334(b)(2)(A) (relating to liquidation of subsidiary) is amended to read as follows: “(A) the distribution is pursuant to a plan of liquidation adopted not more than 2 years after the date of the transaction described in subparagraph (B) (or, in the case of a series of transactions, the date of the last such transaction); and”. (46) Amendments of section 337.— (A) Section 337(a) (relating to nonrecognition of gain or loss on certain liquidations) is amended to read as follows: “(a) General Rule.— If, within the 12month period beginning on the date on which a corporation adopts a plan of complete liquidation, all of the assets of the corporation are distributed in complete liquidation, less assets retained to meet claims, then no gain or loss shall be recognized to such corporation from the sale or exchange by it of property within such 12month period.” (B) The first sentence, of section 337(d) (relating to certain minority stockholders) is amended by striking out “on or after January 1, 1958”. (47) Repeal of section 342.— Section 342 (relating to the liquidation of certain foreign personal holding companies) is repealed. (48) Amendments of section 351.— (A) Section 351(a) (relating to transfer to corporation controlled by transferor) is amended by striking out “(including, in the case of transfers made on or before June 30, 1967, an investment company)”. (B) Section 351(d) (relating to application of June 30, 1967, date) is amended to read as follows: “(d) Exception.— This section shall not apply to a transfer of property to an investment company.” (C) The amendments made by this paragraph shall take effect with respect to transfers of property occurring after the date of the enactment of this Act. (49) Repeal of section 363.— Section 363 (a cross reference to 26 USC 363. other sections) is repealed. (50) Amendments of section 371.— Section 371 (a)(1) (relating 26 USC 371. to certain reorganization exchanges by corporations) is amended— (A) by striking out “49 Stat. 922;” and (B) by striking out “(52 Stat. 883–905; 11 U.S.C., chapter 10) or the corresponding provisions of prior law” and inserting in lieu thereof “(11 U.S.C. 501 and following)”. (51) Amendment of section 372.— Section 372(a) (relating 26 USC 372. to basis in connection with bankruptcy proceedings) is amended by striking out “54 Stat. 709;”. (52) Repeal of section 373.— Section 373 (relating to nonrecognition 26 USC 373. of loss in certain railroad reorganizations) is repealed. (53) Amendment of section 374 .— Section 374(a)(1) (relating 26 USC 374. to non recognition of gain or loss in certain railroad reorganizations) is amended by striking out “49 Stat. 922;”. (54) Amendment of section 381.— Section 381 (c) (relating to 26 USC 381. items carried over in certain corporate acquisitions) is amended by striking out paragraph (20). (55) Repeal of sections 391 through 395.— Subchapter C of 26 USC 391–395. chapter 1 (relating to corporate distributions and adjustments) is amended by striking out part VII (relating to effective dates of subchapter C). (56) Amendments of section 401.— (A) Paragraphs (12) and (13) of section 401(a) (relating 26 USC 401. to requirements for qualification) are each amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (B) Paragraph (15) of section 401(a) is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu 29 USC 1001 note. thereof “September 2, 1974,”. (C) Paragraph (19) of section 401(a) is amended by striking out “enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (D) The last sentence of section 401(a) is amended to read as follows: “Paragraphs (11), (12), (13), (14), (15), (19), and (20) shall apply only in the case of a plan to which section 411 (relating to minimum vesting standards) applies without regard to subsection (e)(2) of such section.” (57) Amendments of section 402.— (A) Section 402(a)(4) (relating to distributions made to 26 USC 402. nonresident alien individuals) is amended by striking out “basic salary” each place it appears therein and inserting in lieu thereof “basic pay”, and by amending the last sentence in such paragraph to read as follows: “In the case of distributions under the civil service retirement laws, the term ‘basic pay’ shall have the meaning provided in section 8331(3) of title 5, United States Code.” (B) Section 402 (relating to taxability of beneficiary of employees’ trusts) is amended by striking out subsection (d) (relating to certain trust agreements made before October 21, 1942), (C) (i) So much of the third sentence of section 402(e)(4) 26 USC 402. (A) (relating to definition of lump sum distributions) as precedes “a distribution of an annuity contract” is amended to read as follows: “Except for purposes of subsection (a)(2) and section 403(a)(2),”. (ii) The amendment made by clause (i) shall apply with respect to distributions or payments made after December 31, 1973, in taxable years beginning after such date. (58) Amendment of section 403.— The last two sentences of section 403(a)(4) (relating to taxation of employee annuities) are amended to read as follows: “For purposes of this title, a transfer described in subparagraph (B)(1) shall be treated as a rollover contribution described in section 408(d)(3). Subparagraph (B)(ii) does not apply in the case of a transfer to an employees’ trust, or annuity plan if any part of a payment described in subparagraph (A) is attributable to an annuity plan under which the employee was an employee within the meaning of section 401(c)(1) at the time contributions were made on his behalf under the plan.” (59) Amendment of section 404.— Section 404 (relating to deduction for contributions to pension plans, etc.) is amended by striking out subsection (d) (relating to carryover of pre–1954 unused deductions). (60) Amendment of section 409.— Section 409(b)(3)(C) (relating to tax-free rollovers of individual retirement bonds) is amended by striking out “section 403(d)(3).” and inserting in lieu thereof “section 408 (d)(3).” (61) Amendments of section 410.— (A) Subparagraphs (C) and (D) of section 410(a)(5) (relating to breaks in service) are each amended by striking out “purposes of subsection (a)(1)” and inserting in lieu thereof “purposes of paragraph (1)”. (B) Paragraph (1)(C) of section 410(c) (relating to application of minimum participation standards) is amended by striking out “the date of the enactment of the Employee 29 USC 1001 note. Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974,”. (C) Paragraph (2) of section 410(c) is amended by striking out “the day before the date of the enactment of this section” and inserting in lieu thereof “September 1, 1974”. (62) Amendments of section 411.— (A) Subsection (a) of section 411 (relating to minimum vesting standards) is amended by striking out “subsection (a)(8)” and inserting in lieu thereof “paragraph (8)”. (B) Subsection (a)(3)(D)(iii) of section 411 is amended— (i) by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and “the date of the enactment of such Act” and inserting in lieu thereof in both such places “September 2, 1974”, and (ii) by striking out “the date of the enactment of the Act” and inserting in lieu thereof “September 2, 1974,”. (C) The heading for subparagraph (C) of section 411 (a)(7) is amended to read as follows: “(C) Repayment of subparagraph (b) distributions.—” (D) Subsection (b)(1)(D)(i) and (e)(1)(C) of section 411 are each amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. 29 USC 1001 note. (E) Subsection (e)(2) of section 411 is amended by striking out “the date before the date of the enactment of the Employee Retirement Income Security Act of 1974” and 26 USC 411. inserting in lieu thereof “September 1, 1974”. (63) Amendments of section 412.— (A) Subsection (h) of section 412 (relating to minimum 26 USC 412. funding standards) is amended by striking out “the day before the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 1, 1974”. (B) Subsection (h)(5) of section 412 is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (64) Amendments of section 414.— (A) The heading for section 414(f) (relating to multi-employer 26 USC 414. plans) is amended to read as follows: ‘(f) Multiemployer Plan.—” (B) Section 414(1) (relating to mergers and consolidations of plans or transfers of plan assets) is amended by striking out “the date of the enactment of the Employee Retirement Income Security Act of 1974” and inserting in lieu thereof “September 2, 1974”. (65) Amendments of section 415.— (A) Section 415(b)(2)(A) (relating to adjustments for 26 USC 415. certain forms of benefits) is amended by striking out “and 409(b)(3)(C)” and inserting in lieu thereof “and 409(b)(3)(C))”. (B) Section 415(b)(2)(B) is amended by striking out “(as defined in section 401(a)(11)(II)(iii))” and inserting in lieu thereof “(as defined in section 401 (a)(11)(G)(iii))”. (66) Amendments of section 453.— (A) Section 453(c)(3) (relating to adjustment in tax for 26 USC 453. amounts previously taxed) is amended by striking out “corresponding provisions of the Internal Revenue Code, of 1939” and inserting in lieu thereof “corresponding provisions of the Internal Revenue Code of 1954”. (B) Section 453(d)(4)(B) (relating to liquidations to which section 337 applies) is amended by striking out “or section 617(d)(1)” and inserting in lieu thereof “, 617(d)” (67) Amendment of section 455.— Section 455(c)(3)(B) 26 USC 455. (relating to prepaid subscription income) is amended by striking out “for his first taxable year (i) which begins after December 31, 1957, and (ii) in which he receives prepaid subscription income in the trade or business” and inserting in lieu thereof “for his first taxable year in which he receives prepaid subscription income in the trade or business”. (68) Amendment of section 458.— Section 456(c)(3)(B) 26 USC 456. (relating to election without consent with respect to treatment of prepaid dues) is amended by striking out “for its first taxable year (i) which begins after December 31, 1960, and (ii)” and inserting in lieu thereof “for its first taxable year”. (69) Amendments of section 461.— (A) Section 461(c) (relating to accrual of real property taxes) is amended by striking out paragraph (2) and by redesignating paragraph (3) as paragraph (2). (B) Section 461(c)(2) (relating to elections without consent), as redesignated by subparagraph (A), is amended by striking out “his first taxable year which begins after December 31, 1953, and ends after the date of enactment of this title in which the taxpayer” and inserting in lieu thereof “his first taxable year in which he”. (70) Amendments of section 481.— (A) Section 481(b) (relating to limitation on tax where substantial adjustments are required by a change in accounting method) is amended by striking out paragraphs (4), (5), and (6) (relating to pre–1954 adjustments). (B) Section 481(b)(1) and (2) are each amended by striking out “, other than the amount of such adjustments to which paragraph (4) or (5) applies,” each place it appears. (71) Amendments of section 508.— (A) Subsections (a) and (b) of section 508 (relating to special rules relating to 501(c)(3) organizations) are each amended by striking out the hist sentence therein. (B) Section 508(e)(2) (relating to special rules for existing private foundations) is amended by striking out subparagraph (A) (relating to taxable years beginning before 1972), by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively, and by striking out “(B)” in subparagraph (B)(as so redesignated) and inserting in lieu thereof “(A)”. (C) Section 508(d)(2)(A) (relating to disallowance of deductions for certain charitable gifts or bequests) is amended by striking out “(e)(2)(B) and (C)” and inserting in lieu thereof “(e)(2)”. (72) Amendments of section 514.— (A) Section 514(c)(1) (relating to definition of acquisition indebtedness) is amended by striking out the comma at the end of subparagraph (C) and all that follows, and inserting in lieu thereof a period. (B) Section 514 (relating to unrelated debt-financed income) is amended by striking out subsection (f) (relating to definition of business lease), by striking out subsection (g) (relating to definition of business lease indebtedness), and by redesignating subsection (h) as subsection (f). (C) Section 514(b)(3)(C)(iii) (relating to definition of debt-financed property) is amended to read as follows: “(iii) shall not apply to property subject to a lease which is a business lease (as defined in this section immediately before the enactment of the Tax Reform Act of 1976).” (D) Section 514(f) (relating to personal property leased with real property), as redesignated by subparagraph (B) of this paragraph, is amended by striking out “and the term ‘premises’ include” and inserting in lieu thereof “includes”. (73) Amendments of section 534.— (A) Section 534(b) (relating to mailing notices of deficiency) is amended by striking out the last sentence, (B) Subsection (e) of section 534 (relating to effective date of section) is repealed. (74) Amendment of section 533.— Section 535(b)(1) (relating 26 USC 535. to adjustments in computing accumulated taxable income) is amended by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 31, 1940)”. (75) Amendments of section 537.— (A) Section 537(b)(2) (relating to definition of excess 26 USC 537. business holdings redemption needs) is amended by striking out “, with respect to taxable years of the corporation ending after May 26, 1969,”. (B) Section 537(b)(4) (relating to inferences as to prior years) is amended by striking out “or (2)”. (76) Amendments of section 542.— (A) Section 542(a)(2) (relating to definition of personal 26 USC 542. holding company) is amended by striking out the last sentence. (B) Section 542(b)(2) (relating to ineligible affiliated group) is amended by striking out “, other than an affiliated group of railroad corporations the common parent of which would be eligible to file a consolidated return under section 141 of the Internal Revenue Code of 1939 prior to its amendment by the Revenue Act of 1942,”. (C) Section 542(c)(2) (relating to financial institutions) is amended by striking out “without regard to subparagraphs (D) and (E) thereof”, (D) Section 542(c)(8) (relating to small business investment companies) is amended by inserting after “Small Business Investment Act of 1958” the following: “(15 U.S.C. 661 and following)”. (77) Amendments of section 545.— (A) Section 545(b)(1) (relating to deduction of taxes in 26 USC 545. computing undistributed personal holding company income) is amended— (i) in the first sentence, by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 31, 1940)”; and (ii) by striking out the last two sentences (relating to deduction of taxes). (B) Section 545(b) (relating to adjustments in computing undistributed personal holding company income) is amended by striking out paragraph (7) (relating to payment of indebtedness incurred before 1934). (C) Section 545(c)(2)(A) (relating to corporations to which special adjustment applies) is amended by striking out “the date of enactment of this subsection” and inserting in lieu thereof “February 26, 1964”. (78) Amendment of section 547.— Section 547 (relating to the 26 USC 547. deduction of deficiency dividends) is amended by striking out subsection (h) (relating to the effective date). ‘ (79) Amendment of section 551.— Section 551(c) (relating to 26 USC 551. foreign personal holding company income tax returns), as redesignated by subsection (b)(1)(F) of this section, is amended by striking out “taxable income, foreign personal holding com-pany,” and inserting in lieu thereof “taxable income, foreign personal holding company income,”. (80) Amendment of section 554.— The first sentence of section 556(b)(1) (relating to deduction of taxes in computing undistributed foreign personal holding company income) is amended by striking out “(other than the excess profits tax imposed by subchapter E of chapter 2 of the Internal Revenue Code of 1939 for taxable years beginning after December 1, 1940)”. (81) Amendment of section 584.— Section 564 (relating to dividend carryovers) is amended by striking out subsection (c) (relating to carryovers from pre–1954 years). (82) Repeal of section 583.— Section 583 (relating to deduction of dividends paid on certain preferred stock by banks or trust companies) is repealed. (83) Repeal of section 592.— Section 592 (relating to the deduction by mutual savings banks for repayment of certain loans) is repealed. (84) Amendments of section 593.— (A) Section 593(b)(2) (relating to additions to bad debt reserves for mutual savings banks, etc.) is amended by striking out, in the table in subparagraph (A), the following: “1969 60 percent 1970 57 percent 1971 54 percent 1972 51 percent 1973 49 percent 1974 47 percent 1975 45 percent” (B) Section 593(c) (relating to reserves for mutual savings banks) is amended by striking out paragraphs (2), (3), (4), and (5), by redesignating paragraph (6) as paragraph (3), and by inserting immediately after paragraph (1) the following: “(2) Certain pre-1963 reserves.— Notwithstanding the second sentence of paragraph (1), any amount allocated pursuant to paragraph (5)(as in effect immediately before the enactment of the Tax Reform Act of 1976) during a taxable year beginning before January 1, 1977, to the reserve for losses on qualifying real property loans out of the surplus, undivided profits, and bad debt reserves (determined as of December 31, 1962) attributable to the period before the first taxable year beginning after December 31, 1951, shall not be treated as a reserve for bad debts for any purpose other than determining the amount referred to in subsection (b)(1)(B), and for such purpose such amount shall be treated as remaining in such reserve.” (C) Section 593 is amended by striking out subsection (d) (relating to taxable years beginning in 1962 and ending in 1963), and by redesignating subsections (e) and (f) as subsections (d) and (e),respectively. (D) Section 593(b)(2)(E)(1) is amended by striking out “subsection (f)” and inserting in lien thereof “subsection (e)”- (85) Repeal of section 601.— Subchapter H of chapter 1 relating to 26 USC 601. banking institutions) is amended by striking out part III (relating to special deduction for bank affiliates). (86) Amendments of section 613a.— (A) Section 613A(b)(1)(C) (relating to exemption for 26 USC 613A. certain domestic gas wells) is amended by striking out “within the meaning of section 613(b)(1)(A)”. (B) Section 613A(c)(6)(i) (relating to limitations on percentage depletion in case of oil and gas wells) is amended by striking out “determined with” and inserting in lieu thereof “determined without”. (87) Amendments of section 614.— (A) (i) Section 614(c) (relating to aggregation of mineral 26 USC 614. interests in mines) is amended by striking out paragraph (4) (relating to special rule as to exploration deductions prior to aggregation). (ii) The amendment made by clause (i) shall apply with 26 USC 614 note. respect to elections to form aggregations of operating mineral interests made under section 614(c)(1) of the Internal Revenue Code of 1954 for taxable years beginning after December 31, 1976. (B) The third sentence of section 614(c)(2) (relating to election to treat a single interest as more than one property) is amended to read as follows: “A separate property so formed may, under regulations prescribed by the Secretary, be included as a part of an aggregation in accordance with paragraphs (1) and (3).” (C) Section 614(c)(3) (relating to manner and scope of election) is amended to read as follows: “(3) Manner and scope of election.— The elections provided by paragraphs (1) and (2) shall be made, in accordance with regulations prescribed by the Secretary, not later than the time prescribed for filing the return (including extensions thereof) for the first taxable year— “(A) in which, in the ease of an election under paragraph (1), any expenditure for development or operation in respect of the separate operating mineral interest is made by the taxpayer after the acquisition of such interest, or “(B) in which, in the case of an election under paragraph (2), expenditures for development or operation of more than one mine in respect of a property are made by the taxpayer after the acquisition of the property. An election made under paragraph (1) or (2) for a taxable year shall be binding upon the taxpayer for such year and all subsequent taxable years, except that the Secretary may consent to a different treatment of any interest with respect to which an election has been made.” (88) Repeal or section 615.— Section 615 (relating to deduction 26 USC 615. of pre–1970 exploration expenses) is repealed. (89) Amendment of section 617.— Section 617(a)(2)(B) 26 USC 617. (relating to time and scope of election to deduct certain mining exploration expenditures) is amended by striking out. “may not be revoked after the last day of the third month following the month in which the final regulations issued under the authority of this subsection are published in the Federal Register“, unless” and inserting in lieu thereof “may not be revoked unless”. (90) Repeal of section 632.— Section 632 (relating to tax in 26 USC 632. case of sale of oil and gas properties) is repealed. (91) Amendment of section 691.— Section 691(c)(1)(B) 26 USC 691. (relating to deduction for estate tax) is amended by striking out the last sentence. (92) Amendment of section 692.— The heading of section 692 (relating to income taxes of members of Armed Forces who die in a combat zone) is amended by striking out “ON” the first time it appeals in the section heading and inserting in lieu thereof “OF”. (93) Amendment of section 751.— Section 751(c) (relating to unrealized receivables) is amended by striking out “1254(a), or 1250(a),” and inserting in lieu thereof “1245(a), 1250(a),”. (94) Repeal of section 771.— Part IV of subchapter K of chapter 1 (relating to effective date of subchapter K) is repealed. (95) Amendments of section 802.— (A) Section 802(a)(1) (relating to tax imposed on life insurance companies) is amended by striking out “beginning after December 31, 1957,”. (B) Section 802(a)(2) (relating to alternative tax in case of capital gains) is amended by striking out “beginning after December 31, 1961,”. (C) Section 802(a) is amended by striking out paragraph (3) (relating to special rules for 1959 and 1960). (96) Amendments of section 804.— (A) Section 804(a) is amended by sticking out paragraph (6) (relating to certain exceptions). (B) Section 804(b)(2) (relating to short-term capital gains) is amended by striking out “In the case of a taxable year beginning after December 31, 1958, the” and inserting in lieu thereof “The”. (97) Amendments of section 805.— (A) Section 805(b)(3)(B) (relating to average earnings rate) is amended to read as follows: “(B) Special rule.— For purposes of subparagraph (A), the current earnings rate for tiny taxable year of any company which, for such year, is an insurance company (but not a life insurance company) shall be determined as if this part applied to such company for such year.” (B) Section 805(b)(4)(B) (relating to basis of assets) is amended by striking out “(determined without regard to fair market value on December 31, 1958)”. (C) Section 805(d) (relating to pension plan reserves) is amended to read as follows: “(d) Pension Plan Reserves.— For purposes of this part, the term ‘pension plan reserves’ means that portion of the life insurance reserves which is allocable to contracts— “(1) purchased under contracts entered into with trusts which (as of the time the contracts were entered into) were deemed to be (A), trusts described in section 401(a) and exempt from tax under section 501(a), or (B) trusts exempt from tax under section 185 of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws; “(2) purchased under contracts entered into under plans which (as of the time the, contracts were entered into) were deemed to be plans described in section 403(a), or plans meeting the requirements of paragraphs (3), (4), (5), and (6) of section 165(a) of the Internal Revenue Code of 1939; “(3) provided for employees of the life insurance company under a plan which, for the taxable year, meets the requirements of paragraphs (3), (4), (5), (6), (7), (8), (11), (12), (13), (14), (15), (16), (19), and (20) of section 401(a); “(4) purchased to provide retirement annuities for its employees by an organization which (as of the time the contracts were purchased) was an organization described in section 501(c)(3) which was exempt from tax under section 501(a) or was an organization exempt from tax under section 101(6) of the Internal Revenue Code of 1939 or the corresponding provisions of prior revenue laws, or purchased to provide retirement annuities for employees described in section 403(b)(1)(A)(ii) by an employer which is a State, a political subdivision of a state, or an agency or instrumentality of any one or more of the foregoing; or “(5) purchased under contracts entered into with trusts which (at the time the contracts were entered into) were individual retirement accounts described in section 408(a) or under contracts entered into with individual retirement annuities described in section 408(b).” (98) Amendments of section 809.— (A) Section 809(b) (relating to definition of gain and loss 26 USC 809. from operations) is amended by striking out paragraph (4). (B) (i) Section 809(d) (relating to life insurance company deductions) is amended by striking out paragraph (11) relating to mutualization distributions before 1963), and by redesignating paragraph (12) as paragraph (11). (ii) Section 809(e) is amended by striking out “subsection (d)(12)” and inserting in lieu thereof “subsection (d)(11)”, (C) Section 809 (relating to computation of gain and loss from operations) is amended by striking out subsection (g) (relating to deduction for certain mutualization distributions before 1963). (99) Amendment of section 812.— Section 812(b)(1) (relating 26 USC 812. to years to which operating losses of an insurance company may be carried), other than the last sentence thereof, as added by section 806(d)(1)(A) of this Act, is amended to read as follows: “(1) Years to which loss may be carried.— The loss from operations for any taxable year (hereinafter in this section referred to as the ‘loss year’) shall be— “(A) an operations loss carryback to each of the 3 taxable years preceding the loss year, “(B) an operations loss carryover to each of the 5 taxable years following the loss year, and “(C) subject to subsection (e), if the life insurance company is a new company for the loss year, an operations loss carryover to each of the 3 taxable years following the 5 taxable years described in subparagraph (B).” (100) Amendments of section 817.— Section 817 (relating to 26 USC 817. rules applicable to certain gains and losses) is amended by striking out subsection (c) (relating to treatment of pre–1959 capital losses) and subsection (e) (relating to certain 1958 reinsurance transactions). (101) Amendment of section 818.— Section 818 (relating to 26 USC 818. life insurance accounting provisions) is amended by striking out subsection (e) (relating to certain rules applicable to taxable years 1957, 1958, and 1959). and by redesignating subsections (f) and (g) as subsections (e) and (f), respectively. (102) Amendments of section 819.— (A) The first sentence of section 819(a)(2)(A) (relating 26 USC 819. to definition of minimum figure for foreign life insurance companies) is amended to read as follows: “The minimum figure is the amount determined by multiplying the tax-payer’s total insurance liabilities on United States business by a percentage for the taxable year to be determined and proclaimed by the Secretary.” (B) The second sentence of section 819(a)(2)(A) is amended by striking out “under clause (ii)” and inserting in lieu thereof “under the preceding sentence”. (C) Clause (i) of section 819(b)(2)(B) (relating to distributions pursuant to certain mutualizations) is amended to read as follows: “(i) the minimum figure for 1958 determined under subsection (a)(2)(A) computed by using a percentage of 9 percent in lieu of the percentage determined and proclaimed by the Secretary, or”. (103) Amendments of section 820.— (A) Section 820(c) (relating to optional treatment of certain reinsured policies) is amended by striking out paragraph (6) (relating to reimbursement for 1957 income taxes), and by redesignating paragraph (7) as paragraph (6). (B) The last sentence of section 820(c) is amended by striking out “(5). and (6) and the rules prescribed under paragraph (7)” and inserting in lieu thereof “and (5) and the rules prescribed under paragraph (6)”. (104) Amendments of section 821.— (A) Section 821(a) (relating to imposition of tax on certain mutual insurance companies) is amended by striking out “beginning after December 31, 1963,”. (B) Section 821(c)(1) (relating to alternative tax for certain small insurance companies) is amended by striking out “In the ease of taxable years beginning after December 31, 1963. there is” and inserting in lieu thereof “There is”. (C) Section 821 (relating to tax on certain mutual insurance companies) is amended by striking out subsection (e) (relating to 1962 transitional rules) and by redesignating subsection (f) as subsection (e). (105) Amendments of section 822.— (A) Section 822(c)(5) (relating to deduction of interest) is amended by striking out “(other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer)”. (B) The last sentence of section 822(d)(2) (relating to amortization of premium and accrual of discount) is amended by striking out “For taxable years beginning after December 31, 1962. no accrual” and inserting in lieu thereof “No accrual”. (106) Amendments of section 825.— Section 825(g) (relating to unused loss deduction of certain insurance companies) is amended by striking out paragraph (1) and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (107) Amendment of section 831.— Section 831(a) (relating to tax on certain insurance companies) is amended by striking out “or the taxable income” and inserting in lieu thereof “on the taxable income.” (108) Amendments of section 832.— Paragraphs (1) and (6) of section 832(b)(definitions relating to insurance company taxable income) are each amended by striking out “Convention” and inserting in lieu thereof “Association”. (109) Amendments of section 851.— (A) Section 851(a)(1) (relating 26 USC 851. to definition of regulated investment company) is amended by striking out “54 Stat. 789;”. (B) Section 851(b)(1) (relating to regulated investment companies) is amended by stinking out “which began after December 31, 1941”, (110) Amendments of section 852.— (A) Subparagraph (C) of section 852(b)(3) (relating to 26 USC 852. method of taxation of regulated investment companies and their shareholders) is amended by striking out the third sentence. (B) (i) Section 852(b)(3)(D)(iii) is amended by striking out “by 75 percent of so much of such amounts as equals the amount subject to tax in accordance with section 1201 (a)(1)(A) and by 70 percent (72 percent in the case of a Post, p, 1786. taxable year beginning after December 31, 1969, and before January 1, 1971) of so much of such amounts as equals the amount subject to tax in accordance with section 1201(a)(1)(B) or (2)” and inserting in lieu thereof “by 70 percent of so much of such amounts as equals the amount subject to tax in accordance with section 1201(a)”. (ii) The amendment made by clause (i) shall not be considered 26 USC 852 note. to affect the amount of any increase in the basis of stock under the provisions of section 852(b)(3)(D)(iii) of the Internal Revenue Code of 1954 which is based upon amounts subject to tax under section 1201 of such Code in taxable years beginning before January 1, 1975. (C) Section 852(d) is amended by inserting after “Investment Company Act of 1940” the following: “(15 U.S.C. 80a–l and following)”. (111) Amendments of section 856.— (A) Section 856(c)(1) (relating to real estate investment 26 USC 856. trusts) is amended by striking out “which began after December 31, 1960”. (B) Section 856(c)(6)(D) (relating to definition of other terms) is amended by inserting after “Investment Company Act of 1940, as amended” the following: “(15 U.S.C. 80a–1 and following)”. (112) Amendment of section 857.— Section 857(b)(3)(C) 26 USC 857. (relating to the taxation of capital gains in the case of real estate investment trusts) is amended by striking out the last sentence. (113) Amendments of section 864.— (A) Subsection (a) of section 864 (definitions relating to 26 USC 864. determinations of sources of income) is amended to read as follows: “(a) Produced.— For purposes of this part, the term ‘produced’ “Produced.” includes created, fabricated, manufactured, extracted, processed, cured, or aged.” (B) Clauses (i) and (iii) of section 864(c)(4)(B) and subparagraph (C) of section 864(c)(5) (relating to effectively connected income) are each amended by striking out “sale” each place it appears and inserting in lieu thereof “sale or exchange”. (C) Section 864(c)(4)(B)(iii) (relating to effectively connected income) is amended by striking out “sold” and inserting in lieu thereof “sold or exchanged”. (114) Amendment of section 905.— Section 905(b) (relating to proof of foreign tax credits) is amended by striking out the last sentence (relating to the treatment of certain royalty payments). (115) Amendment of section 911.— Section 911(c) (relating to earned income from sources without the United States) is amended by striking out paragraph (7) (relating to taxable years ending in 1963, 1964, or 1965). (116) Amendment of section 921.— Section 921 (relating to definition of Western Hemisphere Trade Corporation) is amended by striking out the last sentence, (relating to taxable years before 1954). (117) Amendments of section 931.— Section 931 (relating to income from sources within possession) is amended by striking out subsection (h) (relating to certain persons taken as prisoners of war while working in a possession), and by redesignating subsection (i) as subsection (h). (118) Amendment of section 934.— Section 934(b) (relating to gross income received by a corporation from the Virgin Islands) is amended by striking out the last sentence. (119) Amendment of section 951.— Section 951 (a)(1) (relating to treatment, of subpart F income) is amended by striking out “beginning after December 31, 1962”. (120) Repeal of section 972.— Section 972 (relating to consolidation of export trade corporations) is repealed. (121) Amendment of section 1001.— Section 1001(c) (relating to recognition of gain or loss) is amended to read as follows: “(c) Recognition of Gain or Loss.— Except as otherwise provided in this subtitle, the entire amount of the gain or loss, determined under this section, on the sale or exchange of property shall be recognized.” (122) Amendments of section 1015.— (A) Subparagraph (A) of section 1015(d)(1) (relating to increased ‘basis for gift tax paid) is amended by striking out “the date of the enactment of the Technical Amendments Act of 1958” and inserting in lieu thereof “September 2, 1958”. (B) Subparagraph (B) of section 1015(d)(1) is amended by striking out “the date of the enactment of the Technical Amendments Act of 1958” and inserting in lieu thereof “September 2, 1958,”. (123) Amendment of section 1016.— Section 1016(a) (relating to adjustments to basis) is amended by striking out paragraph (19). (124) Amendment of section 1018.— Section 1018 (relating to adjustment of capital structure before September 22, 1938) is amended by striking out “54 Stat. 709;”. (125) Repeal of section 1020.— Section 1020 (relating to election in respect of depreciation allowed before 1952) is repealed. (126) Repeal of section 1022.— (A) Section 1022 (relating to the basis of certain foreign personal holding company stock) is repealed. (B) The repeal made by subparagraph (A) shall apply with respect to stock or securities acquired from a decedent dying after the date of the enactment of this Act. (127) Amendment of section 1024.— Section 1024 (containing cross references) is amended by striking out paragraph (4). (128) Amendments of section 1033.— (A) Section 1033(a) (relating to involuntary conversions) 26 USC 1033. is amended by striking out paragraph (2) and by redesignating paragraph (3) as paragraph (2). (B) Section 1033(a)(2) (relating to conversion into money), as redesignated by subparagraph (A) of this paragraph and as amended by this Act, is amended— (i) by striking out “where disposition occurred after 1950” in the paragraph heading; (ii) by striking out “(g)” each place it appears and inserting in lieu thereof “(h)”; (iii) by striking out “and the disposition of the converted property (as defined in paragraph (2)) occurred after December 31, 1950,” in the text; and (iv) by adding at the end thereof the following new subparagraph: “(E) Definitions.— For purposes of this paragraph— “(i) Control.— The term ‘control’ means the ownership of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote and at least 80 percent of the total number of shares of all other classes of stock of the corporation. “(ii) Disposition of the converted property.— The term ‘disposition of the converted property’ means the destruction, theft, seizure, requisition, or condemnation of the converted property, or the sale or exchange of such property under threat or imminence of requisition or condemnation.” (C) Section 1033 (relating to involuntary conversions) is amended by striking out subsection (b) (relating to certain conversions occurring before 1954) and by redesignating subsections (c), (d), (e), (f), (g), and (h), as subsections (b), (c), (d), (e), (f), and (g), respectively. (D) The first sentence of section 1033(b) (relating to basis of a property acquired through involuntary conversions), as redesignated by subparagraph (G) of this paragraph, is amended by striking out “or (2)” and inserting in lieu thereof “or section 112(f)(2) of the Internal Revenue Code of 1939”. (E) Section 1033(f)(2) (relating to condemnation of real property), as redesignated by subparagraph (C) of this paragraph, is amended to read as follows: “(2) Limitation.— Paragraph (1) shall not apply to the purchase of stock in the acquisition of control of a corporation described in subsection (a)(2)(A).” (F) Section 1033(g)(4) (relating to condemnation of real property), as amended by section 2140(a) of this Act, is amended by striking out “(a)(3)(B)(i)” and inserting in lieu thereof“(a)(2)(B)(i)”. (129) Amendments of section 1034.— (A) Section 1034(a) (relating to gain on sale of residence) 26 USC 1034. is amended by striking out “after December 31, 1953,”. (B) Section 1034(b)(defining adjusted sales price) is amended by striking out paragraph (3) (relating to effective date of subsection (b)). (C) Section 1034(d) (relating to certain limitations) is amended by striking out “or section 112 (n) of the Internal Revenue Code of 1939”. (D) Section 1034(i) (relating to involuntary conversions) is amended to read as follows: “(ii) Special Rule for Condemnation.— In the case of the seizure, requisition, or condemnation of a residence, or the sale or exchange of a residence under threat or imminence thereof, the provisions of this section, in lieu of section 1033 (relating to involuntary conversions), shall be applicable if the taxpayer so elects. If such election is made, such seizure, requisition, or condemnation shall be treated as the sale of the residence. Such election shall he made at such time and in such manner as the Secretary shall prescribe by regulations.” (E) Section 1034(j) (relating to statute of limitations) is amended by striking out “after December 31, 1950,”. (130) Amendment of section 1037.— Section 1037(b)(1) (relating to certain exchanges of United States obligations) is amended by striking out “section 1232(a)(2)(A)” and inserting in lieu thereof “section 1232 (a)(2) (B)”. (131) Amendment of section 1051.— Section 1051 (relating to property acquired before 1929 during affiliation) is amended by striking out the last two sentences. (132) Amendments of section 1081.— (A) Subsection (e) of section 1081 (relating to distributions required by the SEC) is amended to read as follows: “(c) Distribution of Stock or Securities Only.— If there is distributed, in obedience to an order of the Securities and Exchange Commission, to a shareholder in a corporation which is a registered holding company or a majority-owned subsidiary company, stock or securities (other than stock or securities which are nonexempt property), without the surrender by such shareholder of stock or securities in such corporation, no gain to the distributee from the receipt of the stock or securities so distributed shall be recognized.” (B) Section 1081(f) (relating to conditions for application of section) is amended by striking out “Except in the case of a distribution described in subsection (c)(2), the provisions” and inserting in lien thereof “The provisions”, and by striking out “49 Stat. 820;”. (C) Section 1081(g) (relating to applicability of other provisions) is amended by striking out “If a distribution described in subsection (c)(2). or an” and inserting in lieu thereof “If an”, and by striking out the comma after “Commission”. (133) Amendments of section 1083.— (A) Section 1083(a) is amended by striking out “49 Stat. 820;”. (B) Section 1083(b) is amended by striking out “49 Stat. 804;”. (C) Section 1083(e)(4) is amended by striking out “49 Stat. 820;”. (134) Repeal of section 1111.— Part IX of subchapter O of chapter 1 (relating to distributions pursuant to orders enforcing the antitrust laws) is repealed. (135) Amendments of section 1201.— (A) Section 1201(a) (relating to the alternative tax on capital gain) is amended to read as follows: “(a) Corporations.— If for any taxable year a corporation has a net capital gain, then, in lien of the tax imposed by sections 11. 511, 821 (a) or (c) and 831(a), there is hereby imposed a tax (if such tax is less than the tax imposed by such sections) which shall consist of the sum of— “(1) a tax computed on the taxable income reduced by the amount of the net capital gain, at the rates and in the manner as if this subsection had not been enacted, plus “(2) a tax of 30 percent of the net capital gain.” (B) Section 1201(c) (relating to computation of alternative 26 USC 1201. tax) is amended to read as follows: “(c) Computation of Tax Where Capital Gain Exceeds $50,000.— The tax computed for purposes of subsection (b)(3) shall be the amount by which a tax determined under section 1 or 511 on an amount equal to the taxable income (but not less than 50 percent of the net capital gain) for the taxable year exceeds a tax determined under section 1 or 511 on an amount, equal to the sum of (A) the amount subject to tax under subsection (b)(1) plus (B) an amount equal to 50 percent of the sum referred to in subsection (b)(2)(A).” (C) (i) Section 1201 is amended by striking out subsection (d)(defining subsection (d) gain) and by redesignating subsection (e) as subsection (d). (ii) Section 1201(b)(2)(A) (relating to alternative tax on noncorporate taxpayers) is amended by striking out “the amount of the subsection (d) gain” and inserting in lieu thereof “the sum of the long-term capital gains for the taxable year, but not to exceed $50,000 ($25,000 in the case of a married individual filing a separate return)”. (iii) Section 1201(b)(3) is amended by striking out “the amount of the subsection (d) gain” and inserting in lieu thereof “the sum referred to in subparagraph (A)”. (136) Amendments of section 1222.— (A) Paragraph (9) of section 1222 (relating to definition 26 USC 1222. of terms applicable to capital gains and losses) is amended to read as follows: “(9) Capital gain net income.— The term ‘capital gain net income’ means the excess of the gains from sales or exchanges of capital assets over the losses from such sales or exchanges.” (B) Paragraph (11) of section 1222 (relating to definition of terms applicable to capital gains and losses) is amended to read as follows: “(11) Net capital gain.— The term ‘net capital gain’ means “Net capita] gain.” the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such year.” (137) Amendment of section 1233.— Section 1283((3) (relating 26 USC 1233. to certain options to sell) is amended by striking out “the date of enactment of this title” and inserting in lieu thereof “August 16, 1954”. (138) Amendment of section 1237.— Section 1237 (relating 26 USC 1237. to real property subdivided for sale) is amended by striking out subsection (d) (relating to effective date). (139) Repeal of section 1240.— Section 1240 (relating to taxability 26 USC 1240. to employee of certain termination payments) is repealed. (140) Amendment of section 1245.— Section 1245(b)(7)(B) 26 USC 1245. (relating to transfers to tax-exempt organization where property will be used in unrelated business) is amended by striking out “such organization acquiring such property,”. (141) Amendment of section 1246.— Section 1246(f) (relating 26 USC 1246. to gain on foreign investment company stock) is amended by striking out “beginning after December 31, 1962”. (142) Amendment of section 1311.— Paragraphs (2)(A), (2)(B), and (3) of section 1311(b) (relating to mitigation of effect of limitations) are each amended by striking out “Tax Court of the United States” and inserting in lieu thereof “Tax Court”. (143) Repeal of section 1315.— Section 1315 (relating to effective date of part II of subchapter Q of chapter 1) is repealed. (144) Repeal of section 1321.— Part III of subchapter Q of chapter 1 (relating to involuntary liquidation of LIFO inventories) is repealed. (145) Repeal of sections 1331 through 1337.— (A) Part IV of subchapter Q of chapter 1 (relating to war loss recoveries) is repealed. (B) The repeal by subparagraph (A) shall apply with respect to war loss recoveries in taxable years beginning after December 31, 1976. (146) Amendment of section 1341.— Section 1341(b)(2) (relating to claim of right) is amended by striking out the last sentence. (147) Repeal of section 1342.— Section 1342 (relating to computation of tax on certain amounts recovered as a result of a patent infringement suit) is repealed. (148) Repeal of section 134A.— Section 1346 (relating to recovery of unconstitutional Federal taxes) is repealed. (149) Amendments of section 1372.— (A) Section 1372(b)(1) (relating to effect of election under subchapter S) is amended by striking out “(other than the tax imposed by section 1378)” and inserting in lieu thereof “(other than as provided by section 58(d)(2) and by section 1378)”. (B) Section 1372(c) (relating to subchapter S elections by small business corporations) is amended to read as follows: “(c) Where and How Made.— An election under subsection (a) may be made by a small business corporation for any taxable year at any time during the first month of such taxable year, or at any time Regulations. during the month preceding such first month. Such election shall be made in such manner as the Secretary shall prescribe by regulations.” (C) Section 1372 is amended by striking out subsection (g) (relating to certain elections for years beginning before 1961). (150) Amendments of section 1374.— (A) Section 1374(b) (relating to net operating losses of subchapter S corporations) is amended by adding at the end thereof the following new sentence: “The deduction allowed by this subsection shall, for purposes of this chapter, be considered as a deduction attributable to a trade or business carried on by the shareholder.” (B) Subsection (d) of section 1374 (relating to treatment of net operating losses of subchapter S corporations) is repealed. (151) Amendments of section 1375.— (A) The heading of subsection (b) of section 1375 is amended by striking out “Received Credit Not Allowed” and inserting in lieu thereof “Not Treated as Such for Certain Purposes”. (B) Section 1375 (f) (relating to elections as to certain distributions) is amended by striking out paragraph (3). (152) Amendment of section 1378.— Section 1378(b) (relating 26 USC 1378. to the taxation of capital gain in the case of electing small business corporations) is amended by striking out the last sentence. (153) Amendments of section 1388.— (A) Section 1388(c)(2)(B)(i) (relating to patronage 26 USC 1388. dividends) is amended by striking out “the date of the enactment of the Revenue Act of 1962” and inserting in lieu thereof “October 16, 1962”. (B) Section 1388(h)(2)(B)(i) (relating to perunit retain certificates) is amended by striking out “the date of the enactment of Ibis subsection” and inserting in lieu thereof “November 13, 1966”. (154) Amendments of section 1401.— (A) Section 1401(a) (relating to rate of tax on self-employment 26 USC 1401. income) is amended to read as follows: “(a) Old-Age, Survivors, and Disability Insurance.— In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax equal to 7.0 percent of the amount of the self-employment income for such taxable year.” (B) Section 1401(b) (relating to rate of tax on self-employment income for hospital insurance) is amended by striking out paragraphs (1) and (2) and by redesignating paragraphs (3), (4), (5), and (6), as paragraphs (1), (2), (3) and (4), respectively. (155) Amendments of section 1402.— (A) Paragraph (1) of section 1402(b) (relating to definition 26 USC 1402. of self-employment income) is amended to read as follows: “(1) that part of the net earnings from self-employment which is in excess of (i) an amount equal to the contribution and benefit base (as determined under section 230 of the Social Security Act) 42 USC 430. which is effective for the calendar year in which such taxable year begins, minus (ii) the amount of the wages paid to such individual during such taxable years; or”. (B) Section 1402 amended by striking out subsection (g) 26 USC 1402. (relating to treatment of self-employment income for years prior to 1962). and by redesignating subsections (h) and (i) as subsections (g) and (h). respectively. (C) Section 1402(g)(2) (relating to self-employment income, of members of certain religious faiths), as redesignated by subparagraph (B) of this paragraph, is amended to read as follows: “(2) Time for filing applications.— For purposes of this subsection, an application must be filed on or before the time prescribed for filing the return (including any extension thereof) for the first, taxable year for which the individual has self-employment income (determined without regard to this subsection or subsection (c)(6)), except that an application filed after such date but on or before the last day of the third calendar month following the calendar month in which the taxpayer is first notified in writing by the Secretary that a timely application for an exemption from the tax imposed by this chapter has not been filed by him shall be deemed to be filed timely.” (156) Repeal of section 1465.— Section 1465 (relating to definition 26 USC 1465. of withholding agent) is repealed. (157) Amendments of section 1481.— (A) Section 1481(a)(1)(A) (relating to mitigation of 26 USC 1481. effect of renegotiation of Government contracts) is amended by striking out “within the meaning of the Federal renegotiation act applicable to such transaction” and inserting in lieu thereof “within the meaning of the Renegotiation Act of 1951, as amended (50 U.S.C. App, 1211 and following)”. (B) Section 1481(a)(1) (relating to renegotiation) is amended by striking out subparagraph (D). (C) Subparagraphs (B) and (C) of section 1481(a)(1) are each amended by striking out “applicable Federal renegotiation act” and inserting in lieu thereof “Renegotiation Act of 1951, as amended”. (158) Amendment of section 1551.— Section 1551(a) (relating to disallowance of surtax exemption) is amended by striking out “determined under subjection (d)” and inserting in lieu thereof “determined under subsection (c)”. (159) Amendment of section 1552.— The first sentence of section 1552(a) (relating to earnings and profits of an affiliated group) is amended by striking out “beginning after December 31, 1953, and ending after the date of enactment of this title,”. (b) Conforming and Clerical Amendments.— (1) Amendments conforming to repeal of sections 35 and 242.— (A) Section 36, as amended by this Act, is amended by striking out “sections 32 and 35” and inserting in lieu thereof “section 32”. (B) Section 41(b)(2) is amended by striking out “section 35 (relating to partially tax-exempt interest)”. (C) Section 46(a)(3) is amended by striking out subparagraph (B), by inserting “and” at the end of subparagraph (A), and by redesignating subparagraph (C) as subparagraph (B). (D) Section 50A(a)(3) is amended by striking out subparagraph (B) and redesignating subparagraphs (C), (D), and (E), as subparagraphs (B), (C), and (D), respectively. (E) (i) The heading of paragraph (1) of section 171(a) is amended to read “(1) Taxable bonds.—”. (ii) The heading of paragraph (2) of section 171(a) is amended to read “(2) Tax-exempt bonds.—”, (iii) Section 171(a) is amended by striking out paragraph (3) and by redesignating paragraph (4) as paragraph (3). (iv) Section 171(b)(1)(B)(n) is amended by striking out “subsection (c)(1)(B)” and inserting in lieu thereof “subsection (a)(1)”. (v) So much of section 171(c) as precedes paragraph (2) is amended to read as follows: “(c) Election as to Taxable Bonds.— “(1) Eligibility to elect; bonds with respect to which election permitted.— In the case of bonds the interest on which is not excludable from gross income, this section shall apply only if the taxpayer has so elected.”, (F) (i) Section 551 is amended by striking out subsection (c), and by redesignating subsections (d), (e), (f), and (g), as subsections (c), (d), (e), and (f), respectively. (ii) Section 1016(a)(13) is amended by striking out “section 551(f)” and inserting in lieu thereof “section 551(e)”. (G) Section 584(c)(2) is amended to read as follows: “(2) Dividends received.— The proportionate share of each participant in the amount of dividends received by the common trust fund and to which section 116 applies shall be considered for purposes of such section as having been received by such participant.” (H) (i) Section 642(a) is amended by striking out paragraph 26 USC 642. (1), and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (ii) Section 41(d) is amended by striking out “section 26 USC 41. 642(a)(3)” and inserting in lieu thereof “section 642(a)(2)”. (iii) Section 901(g)(3), as amended by this Act, is 26 USC 901. amended by striking out “section 642(a)(2)” and inserting in lieu thereof “section 642(a)(1)”. (I) (i) Section 702(a) is amended by striking out paragraph 26 USC 702. (7) and by redesignating paragraphs (8) and (9) as paragraphs (7) and (8), respectively. (ii) Section 702(b) is amended by striking out “paragraphs (1) through (8)” and inserting in lieu thereof “paragraphs (1) through (7)”. (iii) Section 1402(a) is amended by striking out “702(a) 26 USC 1402. (9)” each place it appears and inserting in lieu thereof “702 (a)(8)”. (J) (i) Section 804(a) is amended by striking out paragraph 26 USC 804. (3), and by redesignating paragraphs (4) and (5) as paragraphs (3) and (4),respectively. (ii) Section 243(b)(3)(C)(iii), as redesignated by paragraph 26 USC 243. (21)(A) of this subsection, is amended by striking out “sections 804(a)(4)” and inserting in lieu thereof “sections 804(a)(3)”. (iii) Section 804(a)(2) is amended by striking out “paragraph (5)” and inserting in lieu thereof “paragraph (4)”, and by striking out “paragraph (4)” and inserting in lieu thereof “paragraph (3)”. (iv) Section 809(d)(10) is amended by striking out “section 26 USC 809. 804(a)(4)”, and inserting in lieu thereof “section 804(a)(3)”. (v) Section 1561(a)(3) is amended by striking out “sections 26 USC 1561. 804(a)(4)” and inserting in lieu thereof “sections 804 (a)(3)”. (vi) Section 1564(a)(1)(C) is amended by striking out 26 USC 1564. “sections 804(a)(4)” inserting in lieu thereof “sections 804 (a)(3)”. (K) Section 804(a)(2)(A) is amended by striking out clause, (ii). by inserting “and” at the end of clause (i), and by redesignating clause (iii) as clause (ii). (L) (i) Section 809(d)(8)(A) is amended by striking out clause (ii), by inserting “and” at the end of clause (i), and by redesignating clause (iii) as clause (ii). (ii) Section 809(d)(8)(B) is amended by striking out “subparagraph (A)(iii)” and inserting in lieu thereof “subparagraph (A)(ii)”. (M) Sections 804(a)(1),804(a)(2), 809(a)(1),809(b)(1)(A) and 809(b)(2)(A) are each amended by striking out “, partially tax-exempt interest,”. (N) Section 809(e) is amended by striking out paragraph (6), and by redesignating paragraph (7) as paragraph (6). (O) Section 815(b)(2)(A)(iii) is amended by striking out 26 USC 815. “the deduction for partially tax-exempt interest provided 26 USC 242. by section 242 (as modified by section 804(a)(3)),” and by striking out the comma after “809(d)(8)(B))”. (P) Section 822(c)(2) is amended by striking out “partially tax-exempt interest and”. (Q) Section 822(c)(6)(A) is amended by striking out “or to the deduction provided in section 242 for partially tax-exempt interest”. (R) Section 822(c)(7) is amended by striking out “partially tax-exempt interest and to”. (S) Section 822(d)(2) is amended by striking out “, the deduction provided in subsection (c)(1), and the deduction allowed by section 242 (relating to partially tax-exempt interest)” and inserting in lieu thereof “and the deduction provided in subsection (c)(1)”. (T) Section 832(c)(5)(A) is amended by striking out “or to the deductions provided in section 242 for partially tax-exempt interest”. (U) Section 832(c)(12) is amended by striking out “partially tax-exempt interest and to”. (V) Sections 852(b)(1) and 857(b)(1) are each amended by striking out the last sentence. (W) Section 1244(c)(1)(E) is amended by striking out “sections 172,242,243” and inserting in lieu thereof “sections 172, 243”. (X) Section 1402 (a)(2) is amended by striking out “(other than interest described in section 35)”. (Y) Section 1503(b)(3) is amended by striking out subparagraph (C). (Z) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking out the item relating to section 35. (AA) The table of sections for part VIII of subchapter B of chapter 1 is amended by striking out the item relating to section 242. (2) Amendment conforming to repeal of section 51.— The table of parts for subchapter A of chapter 1 is amended by striking out the item relating to part V. (3) Amendments conforming to auditions of sections 84 and 65.— (A) Paragraphs (1)(C), (5HA), (6)(D), and (12) of section 341(e) are each amended by striking out “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231(b)” each place it appears and inserting in lieu thereof “ordinary income”. (B) Section 483(f)(3) is amended by striking out “no part of any gain on such” and inserting in lieu thereof “all of the gain, if any, on such” and by striking out “gain from the sale or exchange of a capital asset or property described in section 1231” and inserting in lieu thereof “ordinary income”. (C) Section 707(b)(2) is amended by striking out “as gain from the sale or exchange of property other than a capital asset” and inserting in lieu thereof “as ordinary income”. (D) Paragraphs (1) and (2) of section 735(a) are each amended by striking out “gain or loss from the sale or exchange of property other than a capital asset” and inserting in lieu thereof “as ordinary income or as ordinary loss, as the case may be”. (E) Section 1236 (b) is amended by striking out “loss from 26 USC 1236. the sale or exchange of property which is not a capital asset” and inserting in lieu thereof “ordinary loss”. (F) Sections 1242 and 1243 are each amended by striking 26 USC 1242, 1243. out “a loss from the sale or exchange of property which is not a capital asset” each place it appears and inserting in lieu thereof “an ordinary loss”. (G) Section 1244 is amended by striking out “a loss from 26 USC 1244. the sale or exchange of an asset which is not a capital asset” each place it appears and inserting in lieu thereof “an ordinary loss”. (H) Section 1248(g)(3)(B), as redesignated by this Act, 26 USC 1248. is amended by striking out “gain from the sale of an asset which is not a capital asset” and inserting “ordinary income”. (I) The following provisions are each amended by striking out “gain from the sale or exchange of property which is not a capital asset” each place it appears and inserting in lieu thereof “ordinary income”: sections 341(a). 871(a)(1)(C)(i) and (ii), 881(a)(3)(A) and (B), 996(d)(1) and (2), 1037(b)(1)(A), 1232(a)(2)(A) and (B), 1232(c), 1246(a), and 1385(c)(2)(C). (J) The following provisions are each amended by striking out “gain from the sale of property which is not a capital asset” and inserting in lieu thereof “ordinary income”: sections 306(a)(1)(A),306(a)(1)(B), and 306(f). (K) The following provisions are each amended by striking out “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231” each place it appears and inserting in lieu thereof “ordinary income”: sections 80(c)(1), 163(d)(3) and (5), 613(a), 617 (d)(1). 995(b)(1)(C). 1238, 1245(a)(1), 1249(a), 1250 (f) and (g), 1251 (b)(3)(B), (c)(1), and (c)(2), and 1252(a)(1). (4) Clerical amendments conforming to additions of sections 64 and 65.— (A) The table of sections for part I of subchapter B of chapter 1 is amended by adding at the end thereof the following new items: “Sec. 64. Ordinary income defined. “Sec. 65. Ordinary loss defined.” (B) The heading for part I of subchapter B of chapter 1 is amended by striking out “AND TAXABLE INCOME” and inserting in lieu thereof “TAXABLE INCOME, ETC.” ETC.” (C) The table of parts for subchapter B of chapter 1 is amended by striking out “and taxable income.” in the item relating to part. I and inserting in lieu thereof “taxable income, etc.” (5) Amendment conforming to repeat, of section 70.— The table of sections for part II of subchapter B of chapter 1 is amended by striking out the item relating to section 76. (6) Amendments conforming to amendment of section 103.— (A) Section 6049(b)(2)(A) is amended by striking out 26 USC 6049. “section 103(a)(1) or (3)” and inserting in lieu thereof “section 103(a)”. (B) Section 852(a)(1)(B), as added by this Act, is amended by striking out “section 103(a)(1)” and inserting in lieu thereof “section 103 (a)”. (7) Amendments conforming to amendment of section 143.— (A) (i) Part V of subchapter B of chapter 1 is amended by striking out section 153 (relating to determination of marital status) and by redesignating section 154 as section 153. (ii) The table of sections for part V of subchapter B of chapter 1 is amended by striking out the items relating to sections 153 and 154 and inserting in lieu thereof the following: “Sec. 153. Cross references.”. (B) Section 152(a)(9) is amended by striking out “section 153” and inserting in lieu thereof “section 143”. (C) Section 153, as redesignated by subparagraph (A) of this paragraph, is amended by adding at the end thereof the following new paragraph: “(5) For determination of marital status, see section 143.” (8) Amendments conforming to amendment of section 151.— (A) The following provisions are each amended by striking out “educational institution (as defined in section 151 Q(4))” each place it appears and inserting in lieu thereof educational organization described in section 170(b)(1)(A)(ii)”: sections 117(a)(1)(A), 117(b)(1), 117(b)(2), 152(d), 170(g)(1)(B)(as redesignated by subsection (a)(28) 26 USC 117, 152, 170, 403. (A)(i) of this section!, and 403(b)(1)(A)(ii). (B) Section 103(c)(3)(A), as redesignated by subsection (a)(17) of this section, is amended by striking out “educational institution (within the meaning of section 151(e)(4))” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”, (C) Section 163(b)(1) is amended by striking out “educational institution (as defined in section 151(e)(4)) and which is provided for a student of such institution” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii) and which is provided for a student of such organization”. (D) (i) Subparagraphs (A), (B), and (C) of section 415 (c)(4) are each amended by striking out “educational institution” each place it appears and inserting in lieu thereof “educational organization”. (ii) Subparagraph (D)(ii) of section 415(c)(4) is amended to read as follows: “(ii) For purposes of this paragraph the term ‘educational organization’ means an educational organization described in section 170(b)(1)(A)(ii).” (iii) Section 415(c)(4) is amended by striking out “educational institutions” from the paragraph heading and inserting in lieu thereof “educational organizations”. (E) Section 508(c)(2)(A) is amended to read as follows: “(A) educational organizations described in section 170 (b)(1)(A)(u),and”. (F) Section 512(b)(15)(B), as redesignated by section 1951(b)(8)(A) of this Act, is amended by striking out “edu-cational institution (as defined in section 151(e)(4))” and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”. (G) Section 1303(d) is amended by striking out “educational 26 USC 1303. institution (as defined in section 151(e)(4))” each place it appears and inserting in lieu thereof “educational organization described in section 170(b)(1)(A)(ii)”. (H) Sections 4941(d)(2)(G)(ii) and 4945(g)(1) each 26 USC 4941, 4945. are amended by striking out “educational institution described in section 151(e)(4)” and inserting in lieu thereof “educational organization described in section 170(b)(1)(AHii)”. (9) Amendments conforming to the amendments of section 152.— Section 2(b)(3)(B) is amended by striking out clause (ii), 26 USC 2. by adding “or” at the end of clause (i), and by redesignating clause (ii) as clause (ii). (10) Amendment conforming to the amendment of section 112.— (A) Section 374(e)(2) is amended by striking out “section Ante, p. 296. 172(j)” and inserting in lieu thereof “172(g)”. (B) Section 904(f)(2)(B)(i) and 904(f)(4)(B)(i), as Ante, p. 1624. amended by this Act, are each amended by striking out “section 172(k)(1)” and inserting in lieu thereof “section 172(h)”. (11) Amendments conforming to repeal of section 187.— (A) Section 48(a)(8) (relating to section 38 property) is 26 USC 48. amended by striking out “187,”. (B) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the item relating to section 187. (C) Section 1082(a)(2)(B) (relating to basis for determining gain 26 USC 1082. or loss) is amemled by striking out “187,”. (D) Section 1245(a)(2) (relating to gain from dispositions 26 USC 1245. of certain depreciable property) is amended by striking out “187,” each place it appears. (12) Amendments conforming to the repeal of section 342.— (A) Section 551(f), as redesignated by paragraph (1)(F) 26 USC 551. of this subsection, is amended by striking out paragraph (3). (B) The table of subparts for part II of subchapter C of chapter 1 is amended by striking out the item relating to subpart C and inserting in lieu thereof: “Subpart C. Collapsible corporations,” (C) The table of sections for subpart C of part II of subchapter C of chapter 1 is amended by striking out the item relating to section 342. (D) The heading of subpart C of part II of subchapter C of chapter 1 is amended to read as follows: “Subpart C— Collapsible Corporations”. (13) Amendments conforming to the repeal of section 303.— The table of sections for subpart C of part III of subchapter C of chapter 1 is amended by striking out the item relating to section 363. (14) Amendments conforming to the repeal of section 373.— (A) Section 372(b)(1) is amended by striking out “373 26 USC 372. (b) or”. (B) Section 374(b) is amended to read as follows: “(b) Basis.— “(1) Railroad corporations.— If the property of a railroad corporation, as defined in section 77(m) of the Bankruptcy Act (11 U.S.C. 205 (m)), was acquired after December 31, 1938, in pursuance of an order of the court having jurisdiction of such corporation— “(A) in a receivership proceeding, or “(B) in a proceeding under section 77 of the Bankruptcy Act, and the acquiring corporation is a railroad corporation (as defined in section 77(m) of the Bankruptcy Act) organized or made use of to effectuate a plan of reorganization approved by the court, in such proceeding, the basis shall be the same as it would be in the hands of the railroad corporation whose property was so acquired, increased in the amount of gain recognized under subsection (a)(2) to the transferor on such transfer. “(2) Property acquired by street, suburban, or interurban electric railway corporation.— If the property of any street, suburban, or interurban electric railway corporation engaged as a common carrier in the transportation of persons or property in interstate commerce was acquired after December 31, 1934, in pursuance of an order of the court having jurisdiction of such corporation in a proceeding under section 77 of the Bankruptcy Act (11 U.S.C. 501 and following), and the acquiring corporation is a street, suburban, or interurban electric railway engaged as a common carrier in the transportation of persons or property in interstate commerce, organized or made use of to effectuate a plan of reorganization approved by the court in such proceeding, then, notwithstanding the provisions of section 270 of the Bankruptcy Act (11 U.S.C. (570), the basis shall be the same as it would be in the hands of the corporation whose property was so acquired.” (C) Section 374(c)(8) is amended by striking out “subsection (b)” and inserting in lieu thereof “subsection (b)(1)”. . .. (D) Section 1232(b)(2) is amended by striking out “section 371, 373, or 374” and inserting in lieu thereof “section 371 or 374”. (E) The table of sections for part IV of subchapter C of chapter 1 is amended by striking out the item relating to section 373. (15) Amendment conforming to repeal of sections 391 through 395.— The table of parts for subchapter C of chapter 1 is amended by striking out the item relating to part VII. (16) Amendment conforming to the amendments of section 481.— Section 381 (c) is amended by striking out paragraph (21). (17) Amendment conforming to the amendments of section 545.— Section 381(c)(15) is amended by striking out “subsections (b)(7) and (c)” and inserting in lieu thereof “subsection (c)”. (18) Amendment conforming to the repeal of section 583.— The table of sections for part I of subchapter H of chapter 1 is amended by striking out the item relating to section 583. (19) Amendment conforming to the repeal of section 592.— The table of sections for part II of subchapter H of chapter 1 is amended by striking out the item relating to section 592. (20) Amendments conforming to the repeal of section 601.— (A) Section 535(b) is amended by striking out paragraph 26 USC 535. (8). (B) (i) Section 545(b) is amended by striking out paragraph 26 USC 545. (6), and by redesignating paragraph (8) as paragraph (6). (ii) Section 545(b)(2) is amended by striking out “paragraph (8)” and inserting in lieu thereof “paragraph (6)”. (iii) Section 545(c)(5) is amended by striking out “subsection (b)(8)” and inserting in lieu thereof “subsection (b)(6)”. (C) The table of parts for subchapter H of chapter 1 is amended by striking out the item relating to part III. (21) Amendments conforming to the repeal of section 615.— (A) (i) Section 243(b)(3)(C) is amended— 26 USC 243. (I) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following; “(ii) $400,000 limitation for certain exploration expenditures under section 617(h)(1),”, and (II) by redesignating clauses (iv) and (v) as clauses (iii) and (iv), respectively. (ii) Section 1564(h)(2)(C) is amended by striking out 26 USC 1564. “section 243(b)(3)(C)(v)” and inserting in lieu thereof “243(b)(3)(C)(iv)”. (B) Section 381(c)(10) is amended to read us follows: 26 USC 381. “(10) Treatment of certain mining develops cent and exploration expenses of distributor or transfer or corporation.— The acquiring corporation shall be entitled to deduct, as if it were the distributor or transferor corporation, expenses deferred under section 616 (relating to certain development expenditures) if the distributor or transferor corporation has so elected. For the purpose of applying the limitation provided in section 617(h), if, for any taxable year, the distributor or transferor corporation was allowed a deduction under section 617(a), the acquiring corporation shall be deemed to have been allowed such deduction.” (C) Section 617(h)(1) is amended by striking out “and 26 USC 617. section 615(a) and the amounts which are or have been treated as deferred expenses under section 615(b)” and inserting in lieu thereof “and subsection (a) of section 615 (as in effect before the enactment of the Tax Reform Act of 1976)”. (D) Section 617(h)(3) is amended to read as follows: “(3) Application of paragraph (2)(b).— Paragraph (2) (B) shall apply with respect to nil amounts deducted before the latest such transfer from the individual or corporation to the taxpayer. Paragraph (2)(B) shall apply only if— “(A) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make paragraph (7), (8), (11), (15), (17), (20), or (22) of section 113(a) of the Internal Revenue Code of 1939 apply to such transfer; or “(B) the taxpayer acquired any mineral property from the individual or corporation under circumstances which make section 334(b), 362 (a) and (b), 372(a), 374(b)(1), 1051, or 1082 apply to such transfer.” (E) Section 617 is amended by adding at the end thereof the following new subsection: “(i) Certain Pre-1970 Exploration Expenditures.— If— “(1) the taxpayer receives mineral property in a transaction as a result of which the basis of such property in the hands of the transferee is determined by reference to the basis in the hands of the transferor, “(2) an election made by the transferor under subsection (e) of section 615(e)(as in effect before the enactment of the Tax Reform Act of 1976) applied with respect to expenditures which were made by him and which were properly chargeable to such property, and “(3) the taxpayer has made or makes an election under subsection (a), then in the application of this section with respect to the transferee, the amounts allowed as deductions under such section 615 to the transferor, which (but for the transferor’s election) would be reflected in the adjusted basis of such property in the hands of the transferee, shall be treated as expenditures allowed as deductions under subsection (a) to the transferor.” (F) Section 703 (b) is amended by striking out “under section 615 (relating to pre–1970 exploration expenditures),”. (G) Section 1016 (a) is amended by striking out paragraph (I?)-. (H) The table of sections for part. I of subchapter I of chapter 1 is amended by striking out the item relating to section 615. (22) Amendments conforming to the repeal of section 632.— (A) The table of sections for part III of subchapter I of chapter 1 is amended by striking out the item relating to section 632. (B) Section 5(b) is amended by striking out paragraph (1). (23) Amendment conforming to the repeal of section 771.— The table of parts for’ subchapter K of chapter 1 is amended by striking out the item relating to part IV. (24) Amendment conforming to the amendment of section 802.— Section 815(c)(3)(B) is amended by striking out “(determined without regard to section 802(a)(3))”. (25) Amendment conforming to the amendment of section 812.— Section 844(b)(2) is amended by striking out “section 812(b)(1)(A)(iii)” and inserting in lieu thereof “section 812 (b)(1)(C)”. (26) Amendments conforming to the amendments of section 804.— (A) Paragraphs (5) and (6) of section 861(a) (relating to items treated as income from within United States) are each amended by striking out in the heading “sale” and inserting in lieu thereof “sale or exchange”, and by striking out “sale” in the text and inserting in lieu thereof “sale or exchange”. (B) section 861(e)(1) (relating to income from certain aircraft and vessels) is amended by striking out “sale or other disposition” and inserting in lieu thereof “sale, exchange, or other disposition”. (C) Paragraphs (5) and (6) of section 862(a) (relating to items treated as income from without the United States) 26 USC 863. and paragraphs (2) and (3) of section 863(b) (relating to sources of income) are each amended by striking out “sale” and inserting in lieu thereof “sale or exchange”. (D) Paragraph (2) of section 863(b) (relating to sources 26 USC 863. of income) is amended by striking out “sold” each place it appears and inserting in lieu thereof “sold or exchanged”. (27) Amendments conforming to the repeal of section 972.— (A) Section 970(b)(1) (relating to inclusion of certain 26 USC 970. previously excluded amounts of sub part F income) is amended by striking out “application of section 972” and inserting in lieu thereof “treatment (under section 972 as in effect before the date of the enactment of the Tax Reform Act of 1976) of two or more controlled foreign corporations which are export trade corporations as a single controlled foreign corporation ”. (B) The table of sections for subpart G of part III of subchapter N of chapter 1 is amended by striking out the item relating to section 972. (28) Amendments conforming to the amendment of section 1001.— (A) Subsection (c) of section 331 is amended to read as 26 USC 331. follows: “(c) Cross Reference.— “For general rule for determination of the amount of gain or loss recognized, see section 1001.” (B) (i) Section 1002 (relating to recognition of gain or 26 USC 1002. loss) is repealed. (ii) The table of sections for part I of subchapter 0 of chapter 1 is amended by striking out the item relating to section 1002. (29) Amendments conforming to the repeal of section 1920.— (A) The third sentence of subsection (a) of section 1016 is 26 USC 1016. amended by striking out “under section 1020” and inserting in lieu thereof “under section 1020 (as in effect before the date of the enactment of the Tax Reform Act of 1976)”, Ante, p. 1520; (B) The table of sections for part II of subchapter O of chapter 1 is amended by striking out the item relating to section 1020. (30) Amendments conforming to the repeal of section 1022.— (A) Section 1016(a) is amended— 26 USC 1016. (i) by striking out paragraph (21), and (ii) by redesignating paragraphs (20) and (22) as paragraphs (19) and (20), respectively. (B) The amendment made by subparagraph (A)(i) shall 26 USC 1016 note. apply with respect to stock or securities acquired from a decedent dying after the date of the enactment of this Act. (C) Tho table of sections for part II of subchapter O of chapter 1 is amended by striking out the item relating to section 1022, ~ (31) Amendments conforming to amendments of section 1033.— (A) Section 1250(d)(4)(B) is amended by striking out 26 USC 1250. “1033(a)(3)(A)” and inserting in lieu thereof “1033(a)(2)(A)” (B) Section 1250(d)(4)(C) and (D) are each amended by striking out “1033(a)(3)” and inserting in lieu thereof “1033(a)(2)”. (C) Section 6212(c)(2)(B) is amended by striking out “1033(a)(3)(C) and (D)” and inserting in lieu thereof “1033 (aj (2)(C) and (D)”. (D) Section 6504(4) is amended by Striking out “1033(a)(3)(C) and (D)” and inserting in lieu thereof “1033(a)(2)(C) and (D)”. (E) Sections 1071(b) and 1250(d)(4)(D) are each amended by striking out “1033(c)” and inserting in lieu thereof “1033(b)”. (32) Amendments conforming to the repeal of section 1111.— (A) Section 301 is amended by striking out subsection (f), and by redesignating subsection (g) as subsection (e). (B) (i) Section 312 is amended by striking out subsection (k), and by redesignating subsections (1) and (m) as subsections (j) and (k), respectively, (ii) Section 1246(g) is amended by striking out “312(1)” and inserting in lieu thereof “312 (j)”. (iii) Sections 964(a) and 1248(c)(1) are each amended by striking out “312 (m)(3)” and inserting in lieu thereof “312 (k)” (iv) Subsection (d) of section 1377, as added by this Act, is amended by striking out “312(m)” and inserting in lieu thereof “312(k)”. (C) Section 535(b) is amended by striking out paragraphs (9) and (10). (D) Section 543(a)(1) is amended by inserting “and” at the end of subparagraph (A), and by striking out subparagraphs (B) and (C) and inserting in lieu thereof the following: “(B) interest on amounts set aside in a reserve fund under section 511 or 607 of the Merchant Marine Act, 1936 (46 U.S.C. 1161 or 1177).” (E) Section 545(b) is amended by striking out paragraphs (10) and (11). (F) Section 553(a)(1) is amended to read as follows: “(1) Dividends, etc.— Dividends, interest, royalties, and annuities.” (G) Section 556(b) is amended by striking out paragraphs (7) and (8). (H) Section 561(b) is amended to read as follows: “(b) Special Rules Applicable.— In determining the deduction for dividends paid, the rules provided in section 562 (relating to rules applicable in determining dividends eligible for dividends paid deduction) and section 563 (relating to dividends paid after the close of the taxable year) shall be applicable.” (I) The table of parts for subchapter O of chapter 1 is amended by striking out the item relating to part IX. (33) Amendments conforming to amendment of section 1222.— (A) Section 57(a)(9)(A) is amended by striking out “the amount by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “the net capital gain”. (B) So much of the first sentence of section 57(a)(9)(B) as precedes “by a fraction” is amended to read as follows: “In the case of a corporation having a net capital gain for the taxable year, an amount equal to the product obtained by multiplying the net capital gain”. (C) Section 527(b)(2) is amended by striking out “net 26 USC 527. section 1201 gain” and inserting in lieu thereof “net capital gain”. (D) Sections 535(b)(6) and 545(b)(5) are each amended— 26 USC 535, 545. (1) by striking out from the paragraph heading “Long-term” and inserting in lieu thereof “Net”, (2) by striking out from the text “the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such year” each place it appears and inserting in lieu thereof’ “the net capital gain for the taxable year”, and (3) by striking out from the text “such excess” each place it appears and inserting in lieu thereof “such net capital gain”. (E) Section 802(a)(2) is amended— 26 USC 802. (i) by striking out “the net long-term capital gain of any life insurance company exceeds the net short-term capital loss” and inserting in lieu thereof “any life insurance company has a net capital gain”, and (ii) by striking out “such excess” each place it appears and inserting in lieu thereof “such net capital gain”. (F) Section 804(a)(2) is amended by 26 USC 804. striking out “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (G) Sections 809(b)(1)(B) and 809(b)(2)(B) are each 26 USC 809. amended by striking out “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (H) Section 815(b)(2)(A)(ii) is amended by striking out 26 USC 815. “by which the net long-term capital gain exceeds the net short-term capital loss” and inserting in lieu thereof “of the net capital gain”. (I) Section 852(b)(2)(A) is amended by striking out 26 USC 852. “the excess, if any, of the net long-term capital gain over the net short-term capital loss” and inserting in lieu thereof “the amount of the net capital gain, if any”. (J) (i) Section 852(b)(3)(A) is amended to read as follows: “(A) Imposition of tax.— There is hereby imposed for each taxable year in the case of every regulated investment company a tax, determined as provided in section 1201 (a), on the excess, if any, of the net capital gain over the deduction for dividends paid (as defined in section 561) determined with reference to capital gain dividends only.” (ii) The second sentence of section 852(b)(3)(C) is amended by striking out “excess of the net long-term capital gain over the net short-term capital loss” each place it appears and inserting in lien thereof “net capital gain”. (K) The second sentence of section 857(b)(3)(C) is 26 USC 857. amended by striking out “excess of the net long-term capital gain over the net short-term capital loss” each place it appears and inserting in lieu thereof “net capital gain”. (L) Section 1201(b) is amended by striking out “net section 26 USC 1201. 1201 gain” each place it appears and inserting in lieu thereof “net capital gain”. (M) The first sentence of section 1202 is amended to read as follows: “If for any taxable year, a taxpayer other than a corporation has a net capital gain, 50 percent of the amount of the net capital gain shall be a deduction from gross income.” (N) Sections 381(e)(3)(B), 381(c)(3)(C), 852(d), 4940 (c)(1), and 4940(c)(4) are each amended by striking out “net capital gain” and inserting in lieu thereof “capital gain net income”. (O) Section 1212(a)(1) is amended by striking out “net capital gain” each place it appears and inserting in lieu thereof “capital gain net income”, and by striking out “net capital gains” and inserting in lieu thereof “capital gain net income”. (P) Section 1247(a)(1)(B) is amended by striking out “the excess (determined as if such corporation were a domestic corporation) of the net long-term capital gain over the net short-term capital loss” and inserting in lieu thereof “the amount (determined as if such corporation were a domestic corporation) of the net capital gain”. (Q) (i) Section 1375(a)(1) is amended by striking out “the excess of the corporation’s net long-term capital gain over its short-term capital loss” and inserting in lieu thereof “the corporation’s net capital gain”. (ii) The second sentence of section 1375(a)(1) is amended by striking out “such excess” and inserting in lieu thereof “such net capital gain”. (iii) Section 1375(a)(3) is amended by striking out “the excess of an electing small business corporation’s net long-term capita] gain over its net short-term capital loss” and inserting in lieu thereof “an electing small business corporation’s net capital gain”. (R) The following provisions are each amended by striking out “the excess of the net long-term capital gain over the net short-term capital loss,” and inserting in lieu thereof “the net capital gain”: Sections 1247(a)(2)(A)(i), 1247(a)(2) 26 USC 1247, 1378. (C), 1247(d)(1) and (2). 1378(a)(1), 1378(b)(1), and 1378 (c)(8). (34) Amendment conforming to the repeal of section 1240.— The table of sections of part IV of subchapter P of chapter 1 is amended by striking out the item relating to section 1240. (35) Amendment conforming to the repeal of section 1315.— The table of sections for part II of subchapter Q of chapter 1 is amended by striking out the item relating to section 1315. (36) Amendments conforming to the repeal of section 1321.— (A) Section 472 is amended by striking out subsection (f). (B) Section 6422, as amended by this Act, is amended by striking out paragraph (2), and by redesignating paragraphs (3) through (13) as paragraphs (2) through (12), respectively. (C) Section 6504 is amended by striking out paragraph (1). (D) Section 6515 is amended by striking out paragraph (1). (E) The table of parts for subchapter Q of chapter 1 is amended by striking out the item relating to part III. (37) Amendments conforming to the repeal of sections 1331 through 1337.— (A) The third sentence of section 901(a) is amended by 26 USC 901. striking out “under section 1333 (relating to war loss recoveries) or”. _ . (B) Section 936(a)(2), as added by this Act, is 26 USC 936. amended— (i) by inserting “or” at the end of subparagraph (C), and (ii) by striking out subparagraph (D). (C) Section 6212(c),(2) is amended by striking out subparagraph 26 USC 6212. (D). (D) Section 6515 is amended by striking out paragraph 26 USC 6515. (6). (E) Section 6515, as amended by this Act, is amended by striking out paragraph (2), and by redesignating paragraphs (3), (4), (5), (6), (7), and (8) as paragraphs (1), (2), (3), (4). (5),and (6) respectively. (F) The table of parts tor subchapter Q of chapter 1 is amended by striking out the item relating to part IV. (38) Amendment conforming to the repeal of section 1342.— The table of sections for part V of subchapter Q of chapter 1 is amended by striking out the item relating to section 1342. (39) Amendments conforming to the repeal of section 1340.— (A) The table of sections for part VI of subchapter Q of chapter 1 is amended by striking out the item relating to section 1346. (B) Section 6504 is amended by striking out paragraph Post, p. 1829. (7). (40) Amendment conforming to amendment of section 1372.— Section 58(d)(2) is amended by striking out “, notwithstanding 26 USC 58. the provisions of section 1371(b)(1),” (41) Amendment conforming to the repeal of section 1465.— The table of sections for subchapter C of chapter 3 is amended by striking out the item relating to section 1465. (c) Amendments to Provisions Referring to Territories.— (1) Section 37(f) is amended by striking out “a Territory,”. Ante, p. 1559. 26 USC 105, 273, 454. 26 USC 117. (2) Sections 105(e)(2), 273, and 454(b)(2) are each amended by striking out a Territory.”. (3) Section 117(b)(2)(A)(iv) is amended by striking out “a territory,”. (4) Section 162(a) is amended by striking out “territory”. 26 USC 162. 26 USC 581. (5) Section 581 is amended by striking out “, of any State, or of any Territory” and inserting m lieu thereof “or of any State”, and by striking out “, Territorial,”. (6) Section 801(b)(3) is amended by striking out “or 26 USC 801. Territorial”. (7) Section 861(a)(1) is amended by striking out “, any Territory, 26 USC 861. any political subdivision of a Territory.”. (8) Paragraphs (6) and (7) of section 1014(b) are each 26 USC 1014. amended by striking out “Territory.”. (9) Section 1221 (5) is amended by striking out “or Territory,”. 26 USC 1221. 26 USC 2 note. (d) Effective Date.— Except as otherwise expressly provided in this section, the amendments made by this section shall apply with respect to taxable years beginning after December 31, 1976. The amendments made by subsections (a)(29) and (b)(10) shall apply with respect to taxable years ending after the date of the enactment of this Act. SEC. 1902. AMENDMENTS OF SUBTITLE B; ESTATE AND GIFT TAXES. (a) In General.— (1) Amendments of section 2012.— (A) Section 2012(b) (relating to credit for gift tax) is amended— (i) by Striking out “(b) in applying,” and inserting in lieu thereof “(b) Valuation Reductions.—In applying,”, and (ii) by striking out in paragraphs (2) and (3) “ deduction)—then” and inserting in lieu thereof “deduction), then”. (B) Section 2012(c) (relating to gift by spouse or third party) is amended by striking out “(c) Where the decedent” and inserting in lieu thereof “(c) Where Gift Considered Made One-Half by Spouse.—Where the decedent”. (C) Section 2012(d)(1) (relating to computation of amount of gift tax) is amended by striking out “(d)(1) For purposes of” and inserting in lieu thereof the following: “(d) Computation of Amount of Gift Tax Paid.— “(1) Amount of tax.— For purposes of”. (D) Section 2012(d)(2) (relating to credit for gift tax) is amended by striking out “(2) For purposes” and inserting in lieu thereof: “(2) Amount of gift.—For purposes”., (2) Amendments of section 2013.— Section 2013(d)(3) is amended by striking out “, or the corresponding provision of prior law,”. (3) Amendment of section 2038.— Section 2038 (relating to revocable transfers) is amended by striking out subsection (c) (relating to effect of disability in certain cases). (4) Amendments of section 2055.— (A) Section 2055(b) (relating to powers of appointment) is amended to read as follows: “(b) Powers of Appointment.— Property includible in the decedent’s gross estate under section 2041 (relating to powers of appointment) received by a donee described in this section shall, for purposes of this section, be considered a bequest of such decedent.” (B) Section 2055(f) (relating to cross references) is amended to read as follows: (f) Cross References.— “(1) For option as to time for valuation for purpose of deduction under this section, see section 2032. “(2) For exemption of gifts and bequests to or for the benefit of Library of Congress, see section 5 of the Act of March 3, 1925, as amended (2 U.S.C. 161). “(3) For treatment of gifts and bequests for the benefit of the Office of Naval Records and History as gifts or bequests to or for the use of the United States, see section 7222 of title 10, United States Code. “(4) For treatment of gifts and bequests to or for the benefit of National Park Foundation as gifts or bequests to or for the use of the United States, see section 8 of the Act of December 18, 1967 (16 U.S.C. 191). “(5) For treatment of gifts, devises, or bequests accepted by the Secretary of State under the Foreign Service Act of 1946 as gifts, devices, or bequests to or for the use of the United States, see section 1021(e) of that Act (22 U.S.C. 869(e)) . “(6) For treatment of gifts or bequests of money accepted by the Attorney General for credit to ‘Commissary Funds, Federal Prisons/ as gifts or bequests to or for the use of the United States, see section 2 of the Act of May 15, 1952, as amended by the Act of July 9, 1952 (31 U.S.C. 725s–4). “(7) For payment of tax on gifts and bequests of United States obligations to the United States, see section 24 of the Second Liberty Bond Act (31 U.S.C. 757e), “(8) For treatment of gifts and bequests for benefit of the Naval Academy as gifts or bequests to or for the use of the United States, see section 6973 of title 10, United States Code. _ “(9) For treatment of gifts and bequests for benefit of the Naval Academy Museum as gifts or bequests to or for the use of the United States, see section 6974 of title 10, United States Code. “(10) For exemption of gifts and bequests received by National Archives Trust Fund Board, see section 2308 of title 44, United States Code.” (5) Amendments of section 2100.— (A) Section 2106(a)(2)(F) (relating to cross references 26 USC 2106. concerning the charitable deduction for estate tax purposes) is amended to read as follows: “(F) Cross References.— “(1) For option as to time for valuation for purposes of deduction under this section, see section 2032. “(2) For exemption of certain bequests for the benefit of the United States and for rules of construction for certain bequests, see section 2C55(O.” (B) Section 2106 (relating to taxable estate of nonresidents) is amended by striking out subsection (c) (relating to treatment of United States bonds). (6) Amendment of sections 2107 and 2108.— Section 2107(a) (relating 26 USC 2107, 2108. to estate tax on expatriates) and section 2108(a) (relating to application of pre–1967 estate tax provisions) are each amended by striking out “the date, of enactment of this section” and inserting in lieu thereof “November 13, 1966”. (7) Amendment relating to section 2201.— (A) Section 6(b)(1) of the Act of January 2, 1975 (Public Law 93–597; 88 Stat. 1950) is amended by striking out 26 USC 2201. “Section 2210” and inserting in lieu thereof “Section 2201”. (B) The amendment made by subsection (A) is effective 26 USC 2201 note. 26 USC 2202. July 1, 1973. (8) Repeal of section 2202.— Section 2202 (relating to missionaries in foreign service) is repealed. (9) Amendment of section 2204.— The last sentence of section 2204(b) (relating to the discharge from personal liability of a fiduciary other than the executor) is amended by striking out “has not been” and inserting in lieu thereof 26 USC 2204. “has been”. (10) Amendment of section 2501.— Section 2501(a)(1) (relating 26 USC 2501. to imposition of gift tax) is amended to read as follows: “(1) General rule.— A tax, computed as provided in section 2502, is hereby imposed for each calendar quarter on the transfer of property by gift during such calendar quarter by any individual, resident or nonresident.” (11) Amendment of section 2522.— Subsection (d) of section 26 USC 2522. 2522 (relating to cross references) is amended to read as follows: “(d) Cross Reference.— “For exemption of certain gifts to or for the benefit of the United States and for rules of construction with respect to certain gifts, see section 2055(f).” (12) Amendments to sections referring to territories.— (A) The following provisions are each amended by striking out “Territory,”: sections 2055(a)(1), 2056(c)(2)(B), 26 USC 2055, 2056, 2106. and 2106(a)(2)(A)(i). (B) The following provisions are each amended by striking out “or Territory”: sections 2011(a), 2011(e), and 2053 (C) Section 2016 is amended by striking out “Territory or”. (D) Sections 2522(a)(1) and 2522(b)(1) are. each amended by striking out “Territory,”. (E) Section 2523(f)(1) is amended by striking out “Territory, or”. (b) Conforming and Clerical Amendments.— (1) Amendment conforming to repeal of section 2202.— The table of sections for subchapter C of chapter 11 is amended by striking out the item relating to section 2202. (2) Amendments conforming to amendment of section 2055.— (A) Section 6503, as amended by this Act, is amended by striking out subsection (e), and by redesignating subsections (f), (g) (h), and (i) as subsections (e), (f), (g), and (h), respectively. (B) Section 6167(h)(2) is amended by striking out “section 6503(f)” and inserting in lieu thereof “section 6503(e)”. (c) Effective Dates.— (1) Estate tax amendments.— The amendments made by paragraphs (1) through (10), and paragraphs (14)(A), (B),and (C), of subsection (a), and by subsection (b) shall apply in the case of estates of decedents dying after the date of the enactment of this Act, and the amendment made by paragraph (11) of subsection (a) shall apply in the case of estates of decedents dying after December 31, 1970. (2) Gift tax amendments.— The amendments made by paragraphs (12), (13), and (14)(D) and (E) of subsection (a) shall apply with respect to gifts made after December 31, 1976. SEC. 1903. AMENDMENTS OF SUBTITLE C; EMPLOYMENT TAXES. (a) In General.— (1) Amendments of sections 3101 and 3111.— (A) Section 3101(a) (relating to rate of tax on employees for old-age, survivors, and disability insurance) and section 26 USC 3111. 3111(a) (relating to rate of tax on employers for such insurance) are each amended by striking out paragraphs (1), (2), (3), and (4), and by redesignating paragraphs (5) and (6) as paragraphs (1) and (2), respectively. (B) Section 3101(b) (relating to rate of tax on employees for hospital insurance) and section 3111(b) (relating to rate of tax on employers for such insurance) are each amended by striking out paragraphs (1) and (2), and by redesignating paragraphs (3), (4), (5), and (6) as paragraphs (1), (2), (3), and (4), respectively. (2) Repeal of section 3113.— Section 3113 (relating to application of social security tax on District of Columbia credit unions) is repealed. (3) Amendments of section 3121.— (A) Section 3121(b) (relating to employment) is amended— (i) by striking out “performed after 1936 and prior to 1955 which was employment for purposes of subchapter A of chapter 9 of the Internal Revenue Code of 1939 under the law applicable to the period in which such service was performed, and any service, of whatever nature, performed after 1954” and inserting in lieu thereof “, of whatever nature, performed”, and (ii) by striking out “, in the case of service performed after 1954,”. (B) Section 3121(b)(1) is amended by striking out “65 26 USC 3121. Stat. 119;”. (C) Section 3121(b)(6)(B)(v) is amended by striking out “Secretary of the Treasury” and inserting in lieu thereof “Secretary of Transportation”. (D) Section 3121(g)(3) (relating to agricultural labor) is amended by striking out “46 Stat. 1550, § 3;”. (E) Section 3121(k)(1) (relating to exemption of certain organizations) is amended by striking out subparagraphs (F) and (H) and by redesignating subparagraph (G) as subparagraph (F). (F) Section 3121 (1)(2) (relating to employees of foreign subsidiaries) is amended by striking out “, but in no case prior to January 1, 1955”. (G) Section 3121 (m)(1) (relating to service in the uniformed services) is amended by striking out “after December 1956”. (4) Amendments of section 3122.— The last sentence of section 3122 (relating to Federal service) is amended by striking out 26 USC 3122. “Secretary” each place it appears and inserting in lieu thereof “Secretary of Transportation”. (5) Amendment of section 3123.— Section 3125(c) (relating 26 USC 3125. to returns in the case of Governmental employees in the District of Columbia) is amended by striking out “Commissioners of the District of Columbia or such agents as they may designate” and by inserting in lieu thereof “Mayor of the District of Columbia of such agents as he may designate”. (6) Amendment of section 3201.— Section 3201 (relating to 26 USC 3201. rate of tax on railroad employees) is amended— (A) by striking out “oi the Internal Revenue Code of 1954” each place it appears; (B) by striking out “of such Code”; (C) by striking out “after September 30, 1973, as is” and inserting in lieu thereof “as is”; and (D) by striking out “any month after September 30, 1973” and inserting in lieu thereof “any month”. (7) Amendments of section 3202.— (A) The second sentence of section 3202(a) (relating to 26 USC 3202. reduction of tax by railroad employer) is amended— (i) by striking out “after September 30, 1973,” each place it appears; (ii) by striking out “after September 30, 1973 and the aggregate” and inserting in lieu thereof “and the aggregate” (iii) by striking out “of the Internal Revenue Code of 1954” each place it appears; and (iv) by inserting a comma immediately after “for any month” each place it appears. (B) Section 3202(b) (relating to indemnification of employer) is amended by striking out “made”. (8) Amendments of section 3211.— Section 3211(a) (relating 26 USC 3211. to rate of tax on railroad employee representatives) is amended— (A) by striking out “3111(a), 3111(b)” and inserting in lieu thereof “3111(a), and 3111(b)”; (B) by striking out “of the Internal Revenue Code of 1954” each place it appears; (C) by striking out “rendered by him after September 30, 1973,” and inserting in lieu thereof “rendered by him”; and (D) by striking out “after September 30, 1973”. (9) Amendments of section 3221.— (A) The first sentence of section 3221(a) (relating to rate of tax on railroad employers) is amended— (i) by striking out “after September 30, 1973,” each place it appears; (ii) by striking out “after September 30, 1973: except that” and inserting in lieu thereof “, except that”; (iii) by striking out “after September 30, 1973 of the aggregate” and inserting in lieu thereof “of the aggregate”; (iv) by striking out “of the Internal Revenue Code of 1954” each place it appears; and (v) by inserting a comma before “the tax imposed”. (B) Section 3221(b) (relating to rate of tax on railroad employers) is amended to read as follows: “(b) The rate of tax imposed by subsection (a) shall be increased by the rate of tax imposed with respect to wages by section 3111(a) plus the rate imposed by section 3111(b).” (C) Section 3221(c) (relating to additional railroad retirement tax) is amended— (i) by striking out “(1) at the rate of 2 cents for the period beginning November 1, 1966, and ending March 31, 1970, and (2) commencing April 1, 1970,” and (ii) by striking out “commencing with the quarter beginning April 1, 1970”. (10) Amendments of section 3231.— (A) Section 3231(a)(defining employer) is amended by striking out “44 Stat. 577;”. (B) Section 3231(b)(defining employee) is amended by striking out. “50 Stat. 312;”. (C) Section 3231(e)(defining employee representative) is amended by striking out “44 Stat. 577;”. (D) Section 3231(d)(7)(defining service) is amended by striking out “50 Stat, 308;”. (11) Amendments of section 3301.— Section 3301 (relating to Federal unemployment tax rate) is amended— (A) by striking out “the calendar year 1970 and each calendar year thereafter” and inserting in lieu thereof “each calendar year”, and (B) by striking out the last sentence. (12) Amendments of section 3302.— (A) Section 3302(a) (relating to credits against tax) is amended by striking out “(10month period in the case of October 31, 1972)”. (B) Section 3302(b) (relating to additional credit) is amended— (i) by striking out “(10month period in the case of October 31, 1972)”, and (ii) by striking out “12 or 10month period, as the case may be,” and inserting in lieu thereof “12month period”. (C) (i) Section 3302(c) (relating to limitation on credits 26 USC 3302. against unemployment tax) is amended by striking out paragraph (2) and the unnumbered paragraph immediately following such paragraph (2) (relating to advances made to a State unemployment account before September 13, 1960), and by redesignating paragraphs (3) and (4) as paragraphs (2) and (3),respectively. (ii) Section 3302(c)(2) (relating to advances made to a State unemployment account after September 12, 1960), as redesignated by clause (i) of this subparagraph, is amended by striking out “on or after the date of the enactment of the Employment Security Act of 1960”, and by striking out “paragraphs (1) and (2)” and inserting in lieu thereof “paragraph (1)”. (iii) Section 3302(c)(3) (relating to reductions with respect to certain agreements under the Trade Act of 1974),as redesignated by clause (i) of this subparagraph, is amended by striking out “paragraphs (1), (2), and (3)” and inserting in lieu thereof “paragraphs (1) and (2)”. (iv) Section 3302 (d)(3) (relating to effect of repayment of advances) is amended by striking out “or (3)”. (v) Section 3302(d)(4), (5), and (6) (relating to special rules) are each amended by striking out “subsection (c)(3)” each place it appears and inserting in lieu thereof “subsection (c)(2)”. (vi) Section 3302(d)(7) (relating to determination and certification of percentages) is amended by striking out “subsection (c)(3)(B) or (C)” and inserting in lieu thereof “subsection (c)(2)(B) or (C)”. (D) Section 3302(d) (relating to special rules for credits against the unemployment tax) is amended by striking out paragraph (8)(a cross reference). (13) Amendments to section 3303.— Section 3303 (b) (relating 26 USC 3303. to certification with respect to additional credit allowance) is amended— (A) by striking out “(10month period in the case of October 31, 1972) ” each place it appears, (B) by striking out “12 or 10month period, as the case may be,” each place it appears in paragraphs (1) and (2), and inserting in lieu thereof “12month period”, and (C) by striking out “12 or 10month period, as the case may be,” in paragraph (3) and inserting in lieu thereof “12month period,”. (14) Amendments to section 3304.— (A) Section 3304(a)(3) (relating to requirements) is 26 USC 3304. amended by striking out “49 Stat, 640; 52 Stat. 1104, 1105;”. (B) Section 3304(c) (relating to certification) is amended by striking out “(10month period in the case of October 31, 1972)”. (15) Amendments of section 3305.— (A) Section 3305(g) (relating to vessels operated by 26 USC 3305. general agents of the United States) is amended by striking out “on or after July 1, 1953,”. (B) Section 3305 (h) (relating to certain contributions to States) is amended by striking out “on or after July 1, 1953, and”. (C) Section 3305(j) (relating to denial of credits in certain cases) is amended by striking out “after December 31, 1971,”. (16) Amendments of section 3300.— (A) Section 3306(c)(9) (relating to the exclusion of service performed by certain employees and employee representatives from the definition of employment) is amended by striking out “52 Stat. 1094, 1095;”. (B) Section 3306(c)(18) (relating to the exclusion of certain service performed by nonresident aliens from the definition of employment) is amended by inserting after the “Immigration and Nationality Act, as amended” the following: “(8U.S.C. 1101(a)(15)(F) or (J))”. (C) Section 3306(f) (relating to the definition of an unemployment fund) is amended by striking out “49 Stat. 640; 52 Stat. 1104, 1105;”. . (D) Section 3306(n) (relating to vessels operated by general agents of the United States) is amended by striking out “on or after July 1, 1953,”. (17) Amendment of section 3402.— Section 3402(1)(3)(B) (relating to marital status) is amended by striking out “section 2(b)” and inserting in lieu thereof “section 2 (a)”. (b) Amendment Conforming to the Repeal of Section 3113.— The table of sections for subchapter B of chapter 21 is amended by striking out the item relating to section 3113. (c) Amendments to Profusions Referring to Territories.— Sections 3401(c) and 3404 are each amended by striking out “Territory,” each place it appears. (d) Effective Dates.— The amendments made by this section shall apply with respect to wages paid after December 31, 1976, except that the amendments made to chapter 22 of the Internal Revenue Code of 26 USC 3201. 1954 shall apply with respect to compensation paid for services rendered after December 31, 1976. SEC. 1904. AMENDMENTS OF SUBTITLE D; MISCELLANEOUS EXCISE TAXES. (a) In General.— (1) Amendments of chapter 31.— (A) So much of chapter 31 (relating to retailers excise taxes) as precedes section 4041 is amended to read as follows: “Sec. 4041. Imposition of tax.” (B) Section 4041(g) (relating to exemptions from fuel taxes) is amended to read as follows: “(g) Other Exemptions.— Under regulations prescribed by the Secretary, no tax shall be imposed under this section— “(1) on any liquid sold for use or used as supplies for vessels or aircraft (within the meaning of section 4221(d)(3)); “(2) with respect to the sale of any liquid for the exclusive use of any State, any political subdivision of a State, or the District of Columbia, or with respect to the use by any of the foregoing of any liquid as a fuel; “(3) upon the sale of any liquid for export, or for shipment to a possession of the United States, and in due course so exported or shipped; and “(4) with respect to the sale of any liquid to a nonprofit educational organization for its exclusive use, or with respect to the use by a nonprofit educational organization of any liquid as a fuel. For purposes of paragraph (4), the term ‘nonprofit educational organization’ “Nonprofit educational organization.” means an educational organization described in section 170(h)(1)(A)(ii) which is exempt from income tax under section 501(a). The term also includes a school operated as an activity of an organization described in section 501(c)(3) which is exempt from income tax under section 501(a), if such school normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.” (C) Section 4041 (relating to tax on fuels) is amended by 26 USC 4041. adding at the end thereof the following new subsection: “(i) Sales by United States, Etc.— The taxes imposed by this section shall apply with respect to liquids sold at retail by the United States, or by any agency or instrumentality of the United States, unless sales by such agency or instrumentality are by statute specifically exempted from such taxes.” (D) Chapter 31 is amended by striking out section 4042 (a cross reference) and subchapter F (special provisions 26 USC 4042, 4054–4058. applicable to retailers taxes). (2) Amendments of section 421a.— (A) Section 4216 (relating to definition of price) is 26 USC 4216. amended by redesignating subsections (e), (f), and (g) as subsections (d), (e).and (f), respectively. (B) Paragraphs (3), (4). and (5) of section 4216(b) (relating to constructive sales price) are each amended by striking out “subsections (a) and (f)” each place it appears and inserting in lieu thereof “subsections (a) and (e)”. (3) Amendment of section 4217.— Section 4217(d) (relating 26 USC 4217. to lease treated as sale) is amended by striking out paragraph (4) (relating to certain 1958 transitional rules). (4) Repeal of section 4223.— Section 4223 (relating to floor-stock 26 USC 4226. taxes imposed before 1967) is repealed. (5) Amendment of section 4227.— Section 4227 (relating to 26 USC 4227. cross references) is amended to read as follows: “SEC. 4227. CROSS REFERENCE. “For credit for taxes on tires and inner tubes, see section 6416(c).” (6) Amendment of section 4263.— Section 4253 (relating to 26 USC 4253. exemptions from the tax on communications services) is amended by adding at the end thereof the following new subsections: “(i) State and Local Governmental Exemption.— Under regulations prescribed by the Secretary, no tax shall be imposed under section 4251 upon any payment received for services or facilities furnished to the government of any State, or any political subdivision thereof, or the District of Columbia. “(j) Exemption foe Nonprofit Educational Organizations.— Under regulations prescribed by the Secretary, no tax shall be imposed under section 4251 on any amount paid by a nonprofit educational organization for services or facilities furnished to such organization. For purposes of this subsection, the term ‘nonprofit educational organization’ means an educational “Nonprofit educational organization.” organization described in section 170(b)(1)(A)(ii) which is exempt from income tax under section 501(a). The term also includes a school operated as an activity of an organization described in section 501(c)(3) which is exempt from income tax under section 501(a), if such school normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.” (7) Amendments of section 4201.— (A) Subsections (a) and (b) of section 4261 (relating to tax on transportation of persons by air) are each amended by striking out “which begins after June 30, 1970,”. (B) Section 4261(c) is amended by striking out “and begins after June 30, 1970”. (8) Amendment of section 4271.— Section 4271 (a) (relating to tax on transportation of property by air) is amended by striking out “which begins after June 30, 1970,”. (9) Repeal of section 4292.— Section 4292 (relating to State and local governmental exemption from the tax on communications services) is repealed. (10) Repeal of section 4284.— Section 4294 (relating to exemption of nonprofit educational organizations from the tax on communications services) is repealed. (11) Repeal of section 4295.— Section 4295 (across reference) is repealed. (12) Amendment of of after 34.— Chapter 34 (relating to documentary stamp taxes) is amended to read as follows: “CHAPTER 34— POLICIES ISSUED BY FOREIGN INSURERS “Sec. 4371. Imposition of tax. “Sec. 4372. Definitions. “Sec. 4373. Exemptions. “Sec. 4374. Liability for tax. “SEC. 4371. IMPOSITION OF TAX. “There is hereby imposed, on each policy of insurance, indemnity bond, annuity contract, or policy of reinsurance issued by any foreign insurer or reinsurer, a tax at the following rates: “(1) Casualty insurance and indemnity bonds.— 4 cents on each dollar, or fractional part thereof, of the premium paid on the policy of casualty insurance or the indemnity bond, if issued to or for, or in the name of, an insured as defined in section 4372(d); “(2) Life insurance, sickness and accident policies, and annuity contracts.— 1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of life, sickness, or accident insurance, or annuity contract, unless the insurer is subject to tax under section 819; and “(3) Reinsurance.— 1 cent on each dollar, or fractional part thereof, of the premium paid on the policy of reinsurance covering any of the contracts taxable under paragraph (1) or (2). “SEC. 4372. DEFINITIONS. “(a) Foreign Insurer or Reinsurer.— For purposes of section 4371, the term ‘foreign insurer or reinsurer’ means an insurer or reinsurer who is a nonresident alien individual, or a foreign partnership, or a foreign corporation. The term includes a nonresident alien individual, foreign partnership, or foreign corporation which shall become bound by an obligation of the nature of an indemnity bond. The term does not include a foreign government, or municipal or other corporation exercising the taxing power. “(b) Policy of Casualty Insurance.— For purposes of section 4371(1), the term ‘policy of casualty insurance’ means any policy Ante, p. 1812. (other than li fe) or other instrument by whatever name called whereby a contract of insurance is made, continued, or renewed. “(c) Indemnity Bond.— For purposes of this chapter, the term ‘indemnity bond’ means any instrument by whatever name called whereby an obligation of the nature of an indemnity, fidelity, or surety bond is made, continued, or renewed. The term includes any bond for indemnifying any person who shall have become bound or engaged as surety, and any bond for the due execution or performance of any contract, obligation, or requirement, or the duties of any office or position, and to account for money received by virtue thereof, where a premium is charged for the execution of such bond. “(d) Insured.— For purposes of section 4371 (1), the term ‘insured’ means— “(1) a domestic corporation or partnership, or an individual resident of the United States, against, or with respect to, hazards, risks, losses, or liabilities wholly or partly within the United States, or “(2) a foreign corporation, foreign partnership, or nonresident individual, engaged in a trade or business within the United States, against, or with respect to, hazards, risks, losses, or liabilities within the United States. “(e) Policy of Life, Sickness, or Accident Insurance, or Annuity Contract.— For purposes of section 4371(2), the term ‘policy of life, sickness, or accident insurance, or annuity contract’ means any policy or other instrument by whatever name called whereby a contract of insurance Or an annuity contract is made, continued, or renewed with respect to the life or hazards to the person of a citizen or resident of the United States. “(f) Policy of Reinsurance.— For purposes of section 4371(3), the term ‘policy of reinsurance’ means any policy or other instrument by whatever name called whereby a contract or reinsurance is made, continued, or renewed against, or with respect to, any of the hazards, risks, losses, or liabilities covered by contracts taxable under paragraph (1) or (2) of section 4371. “SEC. 4373. EXEMPTIONS. “The tax imposed by section 4371 shall not apply to— “(1) Domestic agent.— Any policy, indemnity bond, or annuity contract signed or countersigned by an officer or agent of the insurer in a State, or in the District of Columbia, within which such insurer is authorized to do business; or “(2) Indemnity bond.— Any indemnity bond required to be filed by any person to secure payment of any pension, allowance, allotment, relief, or insurance by the United States, or to secure a duplicate for, or the payment of, any bond, note, certificate of indebtedness, war-saving certificate, warrant, or check, issued by the United States. “SEC. 4374. LIABILITY FOR TAX. “The tax imposed by this chapter shall be paid, on the basis of a return, by any person who makes, signs, issues, or sells any of the documents and instruments subject to the tax, or for whose use or benefit the same are made, signed, issued, or sold. The United States or any agency or instrumentality thereof shall not be liable for the tax,” (13) Amendment of section 4493.— (A) Section 4493(b)(1) (relating to certain persons engaged in foreign air commerce) is amended by striking out “beginning on or after July 1, 1970”. (B) Section 4493(b)(2) is amended by striking out the last sentence. (14) Amendment of chapter 37.— So much of chapter 37 as precedes section 4501 (relating to tax on sugar) is amended to read as follows: “CHAPTER 37— SUGAR “Sec. 4501. Imposition of tax. “Sec. 4502. Definitions, “Sec. 4503. Exemptions for sugar manufactured for home consumption.” (15) Repeal of sections 4591 through 4597.— Chapter 38 (relating to import taxes on oleomargarine) is repealed. (16) Repeal of sections 4801 through 4806.— Subchapter B of chapter 39 (relating to tax on white phosphorus matches) is repealed. (17) Repeal of sections 4811 through 4826.— Subchapter C of chapter 39 (relating to tax on unadulterated butter) is repealed. (18) Repeal of sections 4881 through 4886.— Subchapter E of chapter 39 (relating to tax on circulation other than of national banks) is repealed. (19) Amendment of section 4901.— Section 4901 (relating to payment of occupational taxes) is amended by striking out subsection (c). (20) Amendment of section 4905.— Section 4905(a) (relating to liability for occupational taxes in case of death or change of location) is amended by striking out “wife” and inserting in lieu thereof “spouse”. (21) Repeal of section 4911 through 4931.— (A) Chapter 41 (relating to interest equalization tax) is repealed. (B) The repeal made by subparagraph (A) shall apply with respect to acquisitions of stock and debt obligations made after June 30, 1974. (22) Amendments of section 4973.— (A) So much of section 4973(a) (relating to tax on excess contributions) as follows “of any individual,” in paragraph (3) thereof is amended to read as follows: “there is imposed for each taxable year a tax in an amount equal to 6 percent of the amount of the excess contributions to such individual’s accounts, annuities, or bonds (determined as of the close of the taxable year). The amount of such tax for any taxable year shall not exceed 6 percent of the value of the account, annuity, or bond (determined as of the close of the taxable year). in the case of an endowment contract described in section 408(b), the tax imposed by this section does not apply to any amount allocable to life, health, accident, or other insurance under such contract. The tax imposed by this subsection shall be paid by such individual.” (B) Section 4973(c) is amended by striking out “subsection 26 USC 4973. (a)(3)” and inserting in lieu thereof “subsection (a)(2)”. (b) Conforming and Clerical Amendments.— (1) Amendments conforming to amendment of chapter 31.— (A) Section 6416(a)(1) is amended by striking out 26 USC 6416. “(retailers taxes)” and inserting in lieu thereof “(special fuels)”, (B) Section 6416 (e) is amended by striking out “subchapter E of”. (2) Amendment conforming to amendment of section 4216.— Section 6416(b)(1) is amended by striking out “section 4216(f)(2) and (3)” and inserting in lieu thereof “section 4216 (e)(2) and (3)” (3) Amendment conforming to the repeal of section 4226.— The table of sections for subchapter G of chapter 32 is amended by striking out the item relating to section 4226. (4) Amendment conforming to the repeal of sections 4292, 4294, and 4295.— The table of sections for subchaptet E of chapter 33 is amended by striking out the items relating to sections 4292, 4294, and 4295. (5) Amendments conforming to the amendment of chapter 34.— (A) Section 7270 is amended by striking out “the affixing 26 USC 7270. of stamps on insurance policies, etc.” and inserting in lieu thereof “liability for tax on policies issued by foreign insurers”. (B) Section 6808 is amended by striking out paragraph 26 USC 6808. (4). (6) Amendments conforming to the amendment of chapter 37.— (A) Section 7240 is amended by striking out “subchapter 26 USC 7240. A of”. (B) Section 7655(a) is amended— 26 USC 7655. (i) by striking out “Subchapter A of chapter 37” in paragraph (5) and inserting in lieu thereof “Chapter 37”, and (ii) by redesignating paragraph (5) as paragraph (3). (7) Amendments conforming to repeal of sections 4591 through 4597.— (A) Section 6808 is amended by striking out paragraph 26 USC 6808. (7). (B) (i) Section 7234 (relating to violations of laws concerning 26 USC 7234. oleomargarine or adulterated butter operations) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7234. (C) (i) Section 7265 (relating to other offenses concerning 26 USC 7265. oleomargarine or adulterated butter operations) is repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7265. (D) Section 7611(a), as redesignated by this Act, is Ante, p. 1699. amended by striking out paragraph (1). (E) The table of chapters for subtitle D is amended by striking out the item relating to chapter 38, (8) Amendments conforming to repeal of sections 4801 through 4806.— (A) Section 4905(b) is amended to rend as follows: “(b) Registration.— “For registration in case of wagering, see section 1412.” (B) Section 6808 is amended by striking out paragraph (12). (C) Section 7012 is amended by striking out subsection (D) (i) Section 7239 (relating to violations of laws concerning white phosphorus matches) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7239. (E) (i) Sections 7267 and 7274 (relating to offenses and penalties concerning white phosphorus matches) are each repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the items relating to sections 7267 and 7274. (F) Section 7272(b) is amended by striking out “4804” (G) Section 7303 is amended by striking out paragraph (6) (H) (i) Part II of subchapter C of chapter 75 (relating to provisions common to forfeitures) is amended by striking out section 7328 (relating to confiscation of white phosphorus 26 USC 7328, 7329. matches), and by redesignating section 7329 (relating to cross references) as section 7328. (ii) The table of sections for part II of subchapter C of chapter 75 is amended by striking out the last two items and inserting in lieu thereof the following: “Sec. 7328. Cross references.” (9) Amendments conforming to repeat, of sections 4811 through 4826.— (A) Section 6808 (relating to cross references) is amended by striking out paragraph (10). (B) (i) Section 7235 (relating to violations of laws concerning adulterated butter and process or renovated butter) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7235. (C) (i) Section 7264 (relating to offenses concerning renovated or adulterated butter) is repealed. (ii) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7264. (D) Section 7303 is amended by striking out paragraphs (3), (4), and (5), and by redesignating paragrapns (7) and (8) as paragraphs (2) and (3), respectively. (E) Section 7611(a), as redesignated by this Act, is amended by striking out paragraph (2) , and by redesignating paragraphs (5) and (6) as paragraphs (1) and (2), respectively. (10) Amendments conforming to the repeal of sections 4911 through 4931.— (A) (i) (I) Section 263, as amended by this Act, is amended 26 USC 263. by striking out subsections (a)(3) and (d) (relating to the allowance of deductions for payment of interest equalization tax), and by redesignating subsections (e), (f), and (g) as subsections (d), (c),and (f), respectively. (II) Section 263(d), as redesignated by clause (i)(I) of this subparagraph, is amended by striking out “subsection (f)” and inserting in lieu thereof “subsection (e)”, (ii) Section 6011 (relating to requirement of return, statement, or 26 USC 6011. list) is amended by striking out subsection (d) (relating to interest equalization tax returns, etc.), and by redesignating subsections (e) and (f) as subsections (c) and (d), respectively. (iii) (I) Section 6076 (relating to time for filing interest 26 USC 6076. equalization tax returns) is repealed. (II) The table of sections for part V of subchapter A of chapter 61 is amended by sticking out the item relating to section 6076. (iv) Section 6611 (relating to interest on overpayments) 26 USC 6611. is amended by striking out subsection (h) (relating to over-payments of interest equalization tax) and by redesignating subsection (i) as subsection (h). (v) Section 6651 (relating to failure to file tax return 26 USC 6651. or to pay tax) is amended by striking out subsection (e) (relating to certain interest equalization tax returns). (vi) (I) Section 6680 (relating to failure to file interest 26 USC 6680. equalization tax returns) is repealed. (II) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6680. (vii) The amendments made by this subparagraph shall 26 USC 263 note. apply with respect to acquisitions of stock or debt obligations made after June 30, 1974, except that the repeal of paragraph (2) of section 6011(d) under clause (ii) shall apply with respect to loans and commitments made after such date. (B) Section 861(a)(1)(G) (relating to income from 26 USC 861. sources within the United States) is amended— (i) by striking out “section 4912(c)” and inserting in lieu thereof “subsection (c) of section 4912 (as in effect before July 1, 1974)”; and (ii) by striking out “section 4912(c)(2)” and inserting in lieu thereof “subsection (c)(2) of such section”. (C) The second sentence of section 1232(b)(2) (relating 26 USC 1232. to the definition of the issue price of bonds and other evidences of indebtedness) is amended by striking out “section 4911” anrl inserting in lieu thereof “section 4911, as in effect before July 1, 1974”. (D) (i) Section 6681 (relating to false equalization tax 26 USC 6681. certificates) is repealed. (ii) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6681. (iii) The amendments made by this subparagraph shall 26 USC 6681 note. apply with respect to actions occurring after June 30, 1974. (E) (i) Section. 6689 (relating to failure by certain foreign 26 USC 6689. issuers and obligors to comply with United States investment equalization tax requirements) is repealed. (ii) The table of sections for subchapter B of chapter 68 is amended by striking out the item relating to section 6689. (iii) The amendments made by this subparagraph shall apply with respect to stock or debt obligations issued after June 30, 1974. (F) (i) Section 7241 (relating to penalty for fraudulent equalization tax certificates) is repealed. (ii) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7241. (iii) The amendments made by this subparagraph shall apply with respect to statements and certificates executed after June 30, 1974. (G) The table of chapters for subtitle D is amended by striking out the item relating to chapter 41. (c) Amendment to Provision Referring to Territories.— Section 4482 (c)(1) is amended by striking out “, a Territory of the United States,”. (d) Effective Date.— Except as otherwise provided in this section, the amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. SEC. 1905. AMENDMENTS OF SUBTITLE E; ALCOHOL, TOBACCO, AND CERTAIN OTHER EXCISE TAXES. (a) In General.— (1) Amendment of section 5005.— Section 5005(c)(2) (relating to transfers in bond of distilled spirits) is amended by striking out the last two sentences and inserting in lieu thereof the following: “Such relief from liability shall be effective from the time of removal from the transferor’s bonded premises, or from the time of divestment of interest, whichever is later.” (2) Amendments of section 5008.— (A) Section 5008(b)(1) (relating to abatement, remission, refund, and allowance for loss of destruction of distilled spirits) is amended by inserting immediately after “the tax imposed by this chapter” the following: “or by section 7652”. (B) Section 5008(b)(2) is amended by striking out “the taxes imposed under section 5001(a)(1)” and all that follows and inserting in lieu thereof the following: “the taxes imposed under section 5001(a)(1), under subpart B of this part, or under section 7652 on the spirits so destroyed, to the proprietor of the distilled spirits plant who withdrew the distilled spirits on payment or determination of tax.” (C) Subsections (c)(1) and (d)(1) of section 5008 are each amended by inserting immediately after “under section 5001(a)(1)” the following: “or under section 7652”. (D) Section 5008(d)(1) is amended by striking out “, on or after July 1, 1959,”. (3) Amendment of section 5009.— Section 5009(b)(3) is amended by striking out “46 Stat. 694;”. (4) Amendment of section 5025.— Section 5025 (j) (relating to stabilization of distilled spirits) is amended by striking out “the bottling of distilled spirits,” and inserting in lieu thereof “the bottling of distilled spirits, or preparatory to exportation,”. (5) Amendment of section 5054.— Section 5054 (relating to determination and collection of tax on beer) is amended by striking out subsection (c) (relating to stamps or other devices as evidence of payment of tax) and by redesignating subsection (d) as subsection (c). (6) Amendments of section 5061.— (A) Section 5061(a) (relating to collections of alcohol 26 USC 5061. taxes) is amended by striking out the last sentence. (B) Section 5061(b) (relating to methods of collection) is amended to read as follows: “(b) Exceptions.— Notwithstanding the provisions of subsection (a), any taxes imposed on, or amounts to be paid or collected in respect of, distilled spirits, wines, rectified distilled spirits and wines, and beer under— “(1) section 5001(a)(5), (6),or (7), “(2) section 5006(c) or (d), “(3) section 5026(a)(2), “(4) section 5041 (d), “(5) section5043(a)(3), “(6) section5054(a)(3) or (4),or “(7) section5505(a), shall be immediately due and payable at the time provided by such provisions (or if no specific time for payment is provided, at the time the event referred to in such provision occurs). Such taxes and amounts shall be assessed and collected by the Secretary on the basis of the information available to him in the same manner as taxes payable by return but with respect to which no return has been filed.” (C) Section 5061(c) (relating to applicability of other provisions of law) is amended to read as follows: “(c) Import Duties.— The internal revenue taxes imposed by this part shall be in addition to any import duties unless such duties are specifically designated as being in lieu of internal revenue tax.” (7) Amendment of section 5113.— Section 5113(f)(1) (relating 26 USC 5113. to retail dealers in liquors) is amended by striking out “wines or beer” and inserting in lieu thereof “distilled spirits, wines, or beer”. (8) Amendments of section 5117.— Section 5117 (relating 26 USC 5117. to prohibited purchases by dealers) is amended by redesignating subsection (b) as subsection (c) and by inserting after subsection (a) the fol lowing new subsection: “(b) Limited Retail Dealers.— A limited retail dealer may lawfully purchase distilled spirits for resale from a retail dealer in liquors.” (9) Amendment of section 5121.— Section 5121(c) (relating 26 USC 5121. to limited retail dealers) is amended to read as follows: “(c) Limited Retail Dealers.— Every limited retail dealer shall pay a special tax of $4.50 for each calendar month in which sales are made as such dealer; except that the special tax shall be $2.20 for each calendar month in which only sales of beer or wine are made.” (10) Amendment of section 3122.— Section 5122(c) (relating 26 USC 5122. to definition of limited retail dealer) is amended by striking out “beer or wine” each place it appears and inserting in lieu thereof “distilled spirits, wine, or beer”. (11) Amendment of section 5131.— Section 5131(a) (relating 26 USC 5131. to eligibility for drawback) is amended by striking out “produced in a domestic registered distillery or industrial alcohol plant and withdrawn from bond, or using distilled spirits withdrawn from the bonded premises of a distilled spirits plant,”. (12) Amendment of section 5142.— Section 5142(c) (relating to payment of occupational taxes) is amended to read as follows: “(c) How Paid.— “(1) Payment by return.— The special taxes imposed by this part shall he paid on the basis of a return under such regulations as the Secretary shall prescribe. “(2) Stamp denoting payment of tax.— After receiving a properly executed return and remittance of any special tax imposed by this subpart, the Secretary shall issue to the taxpayer an appropriate stamp as a receipt denoting payment of the tax. This paragraph shall not apply in the case of a return covering liability for a past period.” (13) Amendments of section 5171.— Section 5171(b) (relating to permits for operation of business as distillers, etc.) is amended— (A) in paragraph (1), by striking out “49 Stat. 978;”, and (B) by striking out paragraph (3) (relating to continuance of business after June 30, 1959, pending application for permit). (14) Amendment of section 5174.— Section 5174(a)(2)(A) (relating to withdrawal bonds for distilled spirits) is amended by striking out “such spirits” and inserting in lieu thereof “distilled spirits from bond”. (15) Amendment of section 5232.— Section 5232(a) (relating to transfer of imported distilled spirits) is amended by striking out “and the importer” and inserting in lieu thereof “and the importer, or the person bringing such distilled spirits into the United States,”. (16) Amendment of section 5233.— Section 5233(b)(4) (relating to bottling requirements) is amended by striking out “49 Stat. 977;”. (17) Amendment of section 5234.— The first sentence of section 5234(a)(2) (relating to the mingling of distilled spirits) is amended by striking out “8 years” and inserting in lieu thereof “20 years”. (18) Amendment of section 5314.— Section 5314(a)(2) (relating to application of certain provisions to Puerto Rico) is amended by striking out “section 5001(a)(4)” and inserting in lieu thereof “section 5001(a)(10)”. _ (19) Repeal of section 5315.— Section 5315 (relating to the status of certain distilled spirits on July 1, 1959) is repealed. (20) Amendments of section 5368.— (A) The heading of section 5368 is amended to read as follows: “SEC. 5368. GAUGING AND MARKING.” (B) Section 5368(b) (relating to removal of wines) is amended to read as follows: “(b) Marking.— Wines shall be removed in such containers (including vessels, vehicles, and pipelines) bearing such marks and labels, evidencing compliance with this chapter, as the Secretary may by regulations prescribe.” (21) Amendment of section 5392.— Section 5392(f)(defining own production) is amended by striking out “49 Stat. 990;”. (22) Amendments of section 5601.— Section 5601(b) (relating to presumptions in the case of criminal penalties) is amended to read as follows: “(b) Presumption.— Whenever on trial for violation of subsection (a)(4) the defendant is shown to have been at the site or place where, and at the time when, the business of a distiller or rectifier was so engaged in or carried on, such presence of the defendant shall be deemed sufficient, evidence to authorize conviction, unless the defendant explains such presence, to the satisfaction of the jury (or of the court when tried without jury).” (23) Amendments of section 5685.— (A) Section 5685(a) (relating to penalty for possession 26 USC 5685. of devices for emitting gas, smoke, etc.) is amended by striking out “section 5848” and inserting in lieu thereof “section 5845”. (B) Section 5685(c) (relating to forfeiture of firearms, devices, etc.) is amended by striking out “section 5862” and inserting in lieu thereof “section 5872”. (C) Section 5685(d) (relating to the definition of machine gun) is amended to read as follows: “(d) Definition of Machine Gun.— As used in this section, the term ‘machine gun’ means a machine gun as defined in section 5845(b).” (24) Amendment of section 5701.— Section 5701(e) (relating 26 USC 5701. to imported tobacco products, etc.) is amended by striking out “such articles” and inserting in lieu thereof “such articles, unless such import duties are imposed in lieu of internal revenue tax”. (25) Amendments of section 5703.— (A) Section 5703(a)(2) (relating to transfer of liability 26 USC 5703. for tobacco taxes) is amended by adding at the end thereof the following new sentence: “All provisions of this chapter applicable to tobacco products and cigarette, papers and tubes in bond shall be applicable to such articles returned to bond upon withdrawal from the market or returned to bond after previous removal for a tax-exempt purpose.” (B) The second sentence of section 5703(b) (relating to method of payment of tobacco taxes) is amended by striking out “, except that the taxes shall continue to be paid by stamp until the Secretary or his delegate provides, by regulations, for the payment, of the taxes on the basis of a return”. (C) Section 5703 is amended by striking out subsection (c) (relating to stamps to evidence tobacco taxes) and by redesignating subsections (d) and (e) as subsections (c) and (d), respectively. (26) Amendments of section 3704.— Subsections (c) and (d) of section 5704 (relating to exemptions from tobacco taxes) are 26 USC 5704. each amended by inserting after “to a manufacturer of tobacco products or cigarette papers and tubes” the following: “or to the proprietor of an export warehouse”. (27) Amendment of section 5712.— Section 5712 (relating to 26 USC 5712. application for permit) is amended by striking out the last sentence. (28) Amendments of section 572a.— (A) The heading of section 5723 is amended by striking 26 USC 5723. out “NOTICES, AND STAMPS” and inserting in lieu thereof “AND NOTICES”. (B) Section 5723(b) (relating to marks, and so forth, on packages) is amended to rend as follows: “(b) Marks, Labels, and Notices.— Every package of tobacco products Regulation. or cigarette papers or tubes shall, before removal, bear the marks, labels, and notices, if any, that the Secretary by regulation prescribes.” (b) Conforming and Clerical Amendments.— (1) Amendments conforming to amendment of section 5054.— (A) Section 5676 (relating to beer stamp penalties) is repealed. (B) The table of sections for part III of subchapter J of chapter 51 is amended by striking out the item relating to section 5676. (2) Amendments conforming to amendments of section 5081.— (A) Section 5007(b)(1) is amended by striking out the second sentence. (B) Section 5026(b) is amended by striking out “Except as provided in subsection (a)(2), the taxes” and inserting in lieu thereof “The taxes”. (C) Section 5043(b) is amended by striking out “Except as provided in subsection (a)(3), the taxes” and inserting in lieu thereof “The taxes”. (D) Section 5662 is amended by striking out “stamp,” each place it appears. (E) (i) Section 5689 (relating to penalty and forfeiture for tampering with a stamp machine) is repealed. (ii) The table of sections for part IV of subchapter J of chapter 51 is amended by striking out the item relating to section 5689. (iii) Section 5061 is amended by striking out subsection (d). (3) Amendments conforming to amendment of section 5142.— (A) (i) Section 5104 (relating to method of payment of tax on stills) is repealed. (ii) The table of sections for subpart C of part II of subchapter A of chapter 51 is amended by striking out the item relating to section 5104. (B) Section 5111(a) is amended by striking out the second sentence. (C) Section 5121(a) is amended by striking out the second sentence. (D) (i) Section 5144 (relating to supply of stamps) is repealed. (ii) The table of sections for subpart G of part II of subchapter A of chapter 51 is amended by striking out the item relating to section 5144. (E) Section 5148(3) is amended by striking out “penalties” and inserting in lieu thereof “penalties, authority for assessments,”. (4) Amendment conforming to the repeal of section 5315.— The table of sections for part III of subchapter E of chapter 51 is amended by striking out the item relating to section 5315. (5) Amendment conforming to the amendment of section 5358.— The item relating to section 5368 in the table of sections for part II of subchapter E of chapter 51 is amended to read as follows: “Sec. 5368. Gauging and marking.” (6) Amendments conforming to the amendment of section 5001.— (A) Section 5105 (b)(2) is amended by striking out “, 5601 26 USC 5105. (b)(1),”. (B) Section 5177(b)(2) is amended by striking out “5601 26 USC 5177. (b)(2),” and inserting in lieu thereof “5601 (b),”. (C) Section 5179(b)(1) is amended by striking out “, 5601 26 USC 5179. (b)(1)”. (D) Section 5222(d) is amended by striking out “5601(b) 26 USC 5222. (3), 5601(b)(4)”. (E) Section 5505(i) is amended by striking out “5601(b) 26 USC 5505. (1),”. (7) Amendments conforming to the amendment of section 5723.— (A) Paragraphs (2) and (3) of section 5751(a) are each 26 USC 5751. amended by striking out “notices, and stamps” and inserting in lieu thereof “and notices”. (B) (i) Section 5752 is amended to read as follows: “SEC. 5752. RESTRICTIONS RELATING TO MARKS, LABELS, NOTICES, AND PACKAGES. “No person shall, with intent to defraud the United States, destroy, obliterate, or detach any mark, label, or notice prescribed or authorized, by this chapter or regulations thereunder, to appear on, or be affixed to, any package of tobacco products or cigarette papers or tubes, before such package is emptied.” (ii) Section 5762(a) is amended by striking out paragraphs 26 USC 5762. (8), (7), (8), (9), (10), and (11) and inserting in lieu thereof the following: “(6) Destroying, obliterating, or detaching marks, labels, or notices before packages are emptied.— Violates any provision of section 5752;”. (iii) The item relating to section 5752 in the table of sections for subchapter E of chapter 52 is amended to read as follows: “Sec. 5752. Restrictions relating to marks, labels, notices, and packages.” (C) (i) Section 5763(a)(2) is amended by striking out 26 USC 5763. “notices, and stamps” and inserting in lieu thereof “and notices”. (ii) Section 5763(b) is amended by striking out “internal revenue stamps,”. (D) The item relating to section 5723 in the table of sections for subchapter C of chapter 52 is amended to read as follows: “Sec. 5723. Packages, marks, labels, and notices.” (c) Amendments to Provisions Referring to Territories.— (1) Section 5114(b) is amended by striking out “or Territory” 26 USC 5114. each place it appears and by striking out “Territories,”. (2) Section 5214(a)(2) is amended by striking out “or Territory 26 USC 5214. ” each place it appears. (3) Section 5272(b) is amended by striking out “and 26 USC 5272. Territories”. (4) Section 5362(c)(9) is amended by striking out “and 26 USC 5362. Territories”. (5) Section 5551(b)(2) is amended by striking out “Territory, 26 USC 5551. or”. (6) Section 5685(a) is amended by striking out “Territory 26 USC 5685. or”. (d) Effective Date.— The amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. SEC. 1906. AMENDMENTS OF SUBTITLE F; PROCEDURE AND ADMINISTRATION. (a) In General.— (1) Amendments of section 6013.— (A) Section 6013(b)(2)(C) (relating to petition to the Tax Court) is amended by striking out “of the United States”. (B) The heading of section 6013(d) is amended to read as follows: “(d) Special Rules.—”. (C) Section 6013(d)(1) (relating to joint return after death of one spouse) is amended by striking out “and” at the end of subparagraph (A) and inserting in lieu thereof “or”, and by striking out “and” at the end of the subparagraph (B). (2) Amendment of section 6015.— Section 6015 (relating to declaration of estimated tax by individuals) is amended by striking out subsection (j) (relating to an effective date provision). (3) Amendment of section 6037.— Section 6037 (relating to returns of subchapter S corporations) is amended by striking out “section 1371(a)(2)” and inserting in lieu thereof “section 1371 (b)” (4) Amendment of section 6046.— Section 6046(e) (relating to information as to organization of foreign corporation) is amended to read as follows: “(e) Limitation.— No information shall be required to be furnished under this section with respect to any foreign corporation unless such information was required to be furnished under regulations which have been in effect for at least 90 days before the date on which the United States citizen, resident, or person becomes liable to file a return required under subsection (a).” (5) Amendment of section 6051.— Section 6051(a) (relating to information required to be furnished to employees) is amended by striking out “and” where it appears at the end of paragraph (6). (6) Amendments of section 6065.— Section 6065 (relating to verification of returns) is amended by striking out subsection (b) (relating to verification by oath), and by striking out in subsection (a) the following: “(a) Penalties of Perjury.—”. (7) Repeat, of section 6105.— Section 6105 (relating to compilation of data for certain excess profits tax cases) is repealed. (8) Amendment of section 6111.— Section 6111 (relating to cross references), as redesignated by this Act, is amended to read as follows: “SEC. 6111. CROSS REFERENCE. “For inspection of records, returns, etc., concerning gasoline or lubricating oils, see section 4102.” (9) Amendment of section 6152.— Section 6152(a)(1) (relating to installment payments by corporations) is amended to read as follows: “(1) Corporations.— A corporation subject to the taxes imposed 26 USC 1. by chapter 1 may elect to pay the unpaid amount of such taxes in two equal installments.” (10) Amendments of section bib4.— (A) Section 6154(c)(1)(B) (relating to definition of estimated 26 USC 6154. tax) is amended— (i) by adding “and” after the comma at the end of clause (i), and (ii) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following: “(ii) in the case of a taxable year beginning before January 1, 1977, the amount of the corporation’s temporary estimated tax exemption for such year.” (B) Section 6154(c)(2)(A)(ii) (relating to temporary estimated tax payments) is amended by striking out “clauses (ii) and (iii)” and inserting in lieu thereof “clause (ii)”. (C) Section 6154(c)(2)(B) (relating to estimated tax) is amended by striking out the following: “1968, 1969, 1970, 1971, and 1972 100 percent   1973 80 percent   1974 60 percent”. (D) Section 6154(c) (relating to estimated tax) is amended by striking out paragraph (3) (relating to transitional exemption for taxable years beginning before 1972). (11) Amendments of section 6157.— (A) Section 6157 (relating to payment of Federal unemployment 26 USC 6157. tax) is amended by striking out subsection (c) (relating to special rides for 1970 and 1971), and by redesignating subsection (d) as subsection (c). (B) Section 6157(a) is amended by striking out “subsections (c) and (d)” and inserting in lieu thereof “subsection (c)” (12) Repeal of section 6162.— Section 6162 (relating to payment 26 USC 6162. of tax on gain on liquidation of certain personal holding companies) is repealed. (13) Amendment of section 6205.— Section 6205 (a)(4) (relating 26 USC 6205. to District of Columbia as employer) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (14) Amendment of section 6207.— Section 6207 (relating to 26 USC 6207. cross references) is amended by striking out paragraph (7). (15) Amendment of section 6213.— Section 6213(a) (relating Ante, p. 1698. to time for filing petition with the Tax Court) is amended by striking out “States of the Union and the District of Columbia” and inserting in lieu thereof “United States”. (16) Amendment of section 6215.— Section 6215(b)(5)(a 26 USC 6215. cross reference) is amended by striking out “60 Stat. 48;”. (17) Amendment of section 6302.— Section 6302(b) (relating 26 USC 6302. to collection of certain excise taxes) is amended by striking out “sections 4501 (a) or 4511 of chapter 37, or section 4701 or 4721 of chapter 39” and inserting in lien thereof “section 4501(a) of chapter 37”. (18) Repeal of section 6304.— Section 6304 (relating to a cross 26 USC 6304. reference) is repealed. (19) Amendment of section 6313.— Section 6313 (relating to 26 USC 6313. fractional parts of a cent) is amended by striking out “not payable by stamp”. (20) Amendments of section 6326.— (A) Paragraph (2) of section 6326 (cross references) is amended by striking out “52 Stat. 851;”. (B) Paragraph (3) of section 6326 is amended by striking out “52 Stat. 867” (C) Paragraph (4) of section 6326 is amended by striking out “52 Stat. 867–877;”. (D) Paragraph (5) of section 6326 is amended by striking out “52 Stat. 938;”. (21) Amendment of section 6365.— Section 6365 (b) (relating to definition of governor) is amended by striking out “Commissioner of the District of Columbia” and inserting in lieu thereof “Mayor of the District of Columbia”. (22) Amendment of section 6412.— Section 6412(a) (relating to floor stock refunds) is amended by redesignating paragraphs (2) and (4) as paragraphs (1) and (2), respectively. (23) Amendments of section 6413.— (A) Section 6413(a)(4) (relating to District of Columbia as employer) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (B) (i) Section 6413 (c)(1) (relating to refunds of certain employment taxes) is amended to read as follows: “(1) In General.— If by reason of an employee receiving wages from more than one employer during a calendar year the wages received by him during such year exceed the contribution and benefit base (as determined under section 230 of the Social 42 USC 430. Security Act) which is effective with respect to such year, the employee shall be entitled (subject to the provisions of section 31 (b)) to a credit or refund of any amount of tax, with respect to such wages, imposed by section 3101 or section 3201, or by both such sections, and deducted from the employee’s wages (whether or not paid to the Secretary), which exceeds the tax with respect to the amount of such wages received in such year which is equal “Wages.” to such contribution and benefit base. The term ‘wages’ as used in this paragraph shall, for purposes of this paragraph, include ‘compensation’ as defined in section 3231(e).” (ii) So much of section 6413(c)(2)(A) (relating to Federal employees) as follows “and the term ‘wages’ includes” is amended to read as follows: “for purposes of this subsection the amount, not to exceed an amount equal to the contribution and benefit base (as determined under section 230 of the Social Security Act) for any calendar year with respect to which such contribution and benefit base is effective, determined by each such head or agent as constituting wages paid to an employee.” (iii) The amendments made by clauses (i) and (ii) shall apply with respect to remuneration paid after December 31, 1976. (C) Section 6413(c)(2)(F) (relating to government employees in the District of Columbia) is amended by striking out “Commissioners of the District of Columbia and each agent designated by them” and inserting in lieu thereof “Mayor of the District of Columbia and each agent designated by him”. (D) Section 6418(c)(3) (relating to special refunds) is 26 USC 6413. amended by striking out “after 1967”. (24) Amendments of section 6416.— (A) Section 6416(a)(3) (relating to special rules for 26 USC 6416. refund of overpayment of tax) is amended by redesignating subparagraphs (C) and (D) as subparagraphs (A) and (B), respectively, (B) (i) Section 6416(b)(2) (relating to overpayments of certain excise taxes), as amended by section 2108 of this Act, Post, p. 1904. is amended by striking out subparagraphs (G), (H), (I), and (J), and by redesignating subparagraphs (F), (K), (L), (M), (R), (8), and (T) as subparagraphs (E), (F), (G), (H), (I), (J),and (K),respectively. (ii) The repeals made by clause (i) shall apply with 26 USC 6416 note. respect to the use or resale for use of liquids after December 31, 1976. (25) Repeal of section 6417.— Section 6417 (relating to coconut 26 USC 6417. and palm oil) is repealed. (26) Amendments of section 6420.— (A) Section 6420(b) (relating to time for filing refund 26 USC 6420. claims on gasoline) is amended to read as follows: “(b) Time fob Filing Claims; Period Covered.— Not more than one claim may be filed under this section by any person with respect to gasoline used during his taxable year, and no claim shall be allowed under this section with respect to gasoline used during any taxable year unless filed by such person not later than the time prescribed by law for filing a claim for credit or refund of overpayment of income tax for such taxable year. For purposes of this subsection, a person’s taxable year shall be his taxable year for purposes of subtitle A.” 26 USC 1. (B) Section 6420(e)(1) (relating to application of other laws) is amended by striking out “apply in in respect” and inserting in lieu thereof “apply in respect’”. (C) (i) Section 6420 is amended by striking out subsection (g) (relating to effective date) and by redesignating subsections (h) and (i) as subsections (g) and (h), respectively. (ii) Section 6420(a) is amended by striking out “subsection (h)” and inserting in lieu thereof “subsection (g)”. (D) Section 6420(g) (relating to income tax credit in lieu of gas tax refund), as redesignated by subparagraph (C)(i) of this paragraph, is amended by strikingout “with respect to gasoline used after June 30, 1965,” and “for gasoline used after June 30, 1965”. (27) Amendments of section 6421.— (A) (i) Subsections (a) and (e)(3) of section 6421 (relating 26 USC 6421. to nonhighway use of gasoline) are each amended by striking out “after June 30, 1970,”. (ii) The amendments made by clause (i) shall only 26 USC 6421 note. apply with respect, to gasoline used as a fuel after June 30, 1970. (B) Section 6421(c) (relating to nonhighway use of gasoline) is amended to read as follows: “(c) Time for Filing Claims; Period Covered.— “(1) In general.— Except as provided in paragraph (2), not more than one claim may be filed under subsection (a), and not more than one. claim may be filed under subsection (b), by any person with respect to gasoline used during his taxable year; and no claim shall be allowed under this paragraph with respect to gasoline used during any taxable year unless filed by such person not later than the time prescribed by law for filing a claim for credit or refund of overpayment of income tax for such taxable year. For purposes of this subsection, a person’s taxable year shall be his taxable year for purposes of subtitle A. “(2) Exception.— If $1,000 or more is payable under this section to any person with respect to gasoline used during any of the first three Quarters of his taxable year, a claim may be filed under this section by such person with respect to gasoline used during such quarter. No claim filed under this paragraph shall be allowed unless filed on or before the last day of the first quarter following the quarter for which the claim is filed.” (C) Section 6421(h) (relating to effective dates) is amended by striking out “after June 30, 1956, and”. (D) Section 6421 (i) (relating to income tax credit in lieu of refund) is amended— (i) by striking out, in paragraph (1), “with respect to gasoline used after June 30, 1965,”, (ii) by striking out, in paragraph (2), “subsection (c)(3)(B)” and inserting in lieu thereof “subsection (c)(2)”, and (iii) by striking out, in paragraph (3), “for gasoline used after June 30, 1965.” (28) Amendments of Section 6422.— (A) Paragraph (9) of section 6422 (relating to cross references), as redesignated by section 1901(b)(36)(B), is amended by striking out “60 Stat. 48;”. (B) Paragraph (11) of section 6422, as so redesignated, is amended by striking out “47 Stat. 1516;”. (29) Amendments of section 6423.— (A) Section 6423(b) (relating to filing of refund claim in case of alcohol and tobacco taxes) is amended to read as follows: “(b) Filing of claims.— No credit or refund of any amount to which subsection (a) applies shall be allowed or made unless a claim therefor has been filed by the person who paid the a mount claimed, and unless such claim is filed within the time prescribed by law and in accordance with regulations prescribed by the Secretary. Al] evidence relied upon in support of such claim shall be clearly set forth and submitted with the claim.” (B) Section 6123 is amended by striking out subsection (c) (relating to suits barred on April 30, 1958) and by redesignating subsections (d) and (e) as subsections (c) and (d), respectively. (C) Section 6423 (c) (relating to application of section), as redesignated by subparagraph (B) of this paragraph, is amended by adding “and” at the end of paragraph (1), by striking out “, and” at the end of paragraph (2) and inserting in lieu thereof a period, and by striking out paragraph (3). (30) Amendments of section 6424.— (A) The last sentence of section 6424(b)(1) (relating to refund claims with respect to lubricating oil) is amended by striking out “, except that a person’s first taxable year beginning after December 31, 1965, shall include the period after December 31, 1965, and before tile beginning of such first taxable year”. (B) Section 6424 (relating to lubricating oil not used in highway motor vehicles) is amended by striking out subsection (f) (relating to effective date of section), and by redesignating subsections (g) and (h) as subsections (f) and (g), respectively. (31) Amendments of section 6427.— (A) Subsections (a), (b), and (c) of section 6427 (relating 26 USC 6427. to fuels not used for taxable purposes) are each amended by striking out “, after June 30, 1970,” (B) The amendments made by subparagraph (A) shall 26 USC 6427 note. apply only with respect to fuel used or resold after June 30, 1970. (32) Amendments of section 6504.— (A) Section 6504 (relating to cross references) is amended 26 USC 6504. by striking out paragraphs (13) and (14) and inserting in lieu thereof: “(13) Assessments to recover excessive amounts paid under section 6420 (relating to gasoline used on farms), 6421 (relating to gasoline used for certain nonhighway purposes or by local transit systems), 6424 (relating to lubricating oil not used in highway motor vehicles), or 6427 (relating to fuels not used for taxable purposes) and assessments of civil penalties under section 6675 for excessive claims under section 6420, 6421, 6424, or 6427, see section 6206.” (B) Section 6504, as amended by this Act, Is further amended by redesignating paragraphs (2), (3), (4), (5), (9), (19), (11), (12), (13), and (15) as paragraphs (1), (2), (3), (4), (5), (6), (7), (8), (9), and (10), respectively. (33) Amendments of section 6511.— (A) Section 6511(d)(2)(A)(ii) (relating to net operating 26 USC 6511. loss carryback) is amended by striking out “September 1, 1959, or” and by striking out “, whichever is the later”. (B) Section 6511(d)(5) is amended by striking out “the later of the following dates: (A)”, and by striking out “, or (B) December 31, 1965”. (34) Amendment of section 6601.— Section 6601(h) (relating 26 USC 6601. to interest on estimated tax payments) is amended by striking out “(or section 59 of the Internal Revenue Code of 1939)”. 53 Stat. 32. 26 USC 6654. (35) Amendment of section 6654.— Section 6654 (relating to payment of estimated income tax) is amended by striking out subsection (h) (relating to applicability of section). (36) Amendment of section 6802.— Section 6802(2) (relating 26 USC 6802. to supply and distribution of stamps) is amended by striking out the semicolon at the end and inserting in lieu thereof a period. (37) Amendment of section 6803.— Section 6803 (relating to 26 USC 6803. accounting and safeguarding is amended to read as follows: “SEC. 6803. ACCOUNTING AND SAFEGUARDING. “(a) Bond.— In cases coining within the provisions of paragraph (2) of section 6802, the Secretary may require a bond, with sufficient sureties, in a sum to be fixed by the Secretary, conditioned for the faithful return, whenever so required, of all quantities or amounts undisposed of and for the payment monthly for all quantities or amounts sold or not remaining on hand. “(b) Regulations.— The Secretary may from time to time make such regulations as he may find necessary to insure the safekeeping or prevent the illegal use of all adhesive stamps referred to in paragraph (2) of section 6802.” (38) Amendment of section 6863.— Section 6863(b)(3) (relating to stay of sale of seized property pending Tax Court decision) is amended by striking out subparagraph (C) (relating to effective date). (39) Amendment of section 7012.— Section 7012 (relating to cross references), as amended by section 1904(b)(8)(C) of this Act, is amended to read as follows: “SEC. 7012. CROSS REFERENCES. “(1) For provisions relating to registration in connection with firearms, see sections 5802, 5841, and 5861. “(2) For special rules with respect to registration by persons engaged in receiving wagers, see section 4412. “(3) For provisions relating to registration in relation to the production or importation of gasoline, see section 4101. “(4) For provisions relating to registration in relation to the manufacture or production of lubricating oils, see section 4101. “(5) For penalty for failure to register, see section 7272. “(6) For other penalties for failure to register with respect to wagering, see section 7262.” (40) Amendment of section 7103.— Section 7103 (relating to cross references regarding bonds) is amended by striking out subsection (d). ‘ (41) Amendments of section 7271.— Section 7271 (relating to penalties for offenses concerning stamps) is amended by striking out paragraph (2), and by redesignating paragraphs’ (3) and (4) as paragraphs (2) and (3), respectively. (42) Amendment of section 7272.— Section 7272(b) (relating to cross references) is amended by striking out “4722, 4753,”. (43) Amendments of section 7326.— Section 7326 (relating to disposal of forfeited property) is amended— (A) by striking out “section 5862(b)” and inserting in lieu thereof “section 5872(b)”, and (B) by redesignating subsection (c) as subsection (b). (44) Amendments of section 7422.— Section 7422(c) (relating to suits against collection officers) is amended by striking out “instituted after June 15, 1942,”, and by striking out “where the petition to the Tax Court was filed after such date”. (45) Amendments of section 7428.— (A) Paragraph (1) of section 7428 (cross references), as redesignated by this Act, is amended by striking out “52 Stat, 851;”. (B) Paragraph (2) of such section 7428 is amended by striking out “52 Stat. 867;”. (C) Paragraph (3) of such section 7428 is amended by Striking out “52 Stat. 876–877;”. (D) Paragraph (4) of such section 7428 is amended by striking out “52 Stat. 938;”. (46) Amendments of section 7448.— (A) Subsection (a)(6) of section 7448 (relating to annuities to widows and dependent children of Tax Court judges) is amended— (i) by striking out “The term ‘widow’ means a surviving wife of,” and inserting in lieu thereof “The term ‘surviving spouse’ means a surviving spouse of”; and (ii) by striking out “the mother of issue” and inserting in lieu thereof “a parent of issue”. (B) Section 7448(h) is amended— (i) by striking out “surviving widow or widower” and inserting in lieu thereof “surviving spouse”; (ii) by striking out “such widow” each place it appears and inserting in lieu thereof “such surviving spouse”; (iii) by striking out “a widow” each place it appeal’s and inserting in lieu thereof “a surviving spouse”; (iv) by striking out “widow’s” each place it appears and inserting in lieu thereof “surviving spouse’s”; and (v) by striking out “surviving her” and inserting hi lieu thereof “surviving such spouse”. (C) Sections 7448 (h) and (o) are each amended by striking 26 USC 7448. out “she” and inserting in lieu thereof “such spouse”. (D) Section 7448 (o) is amended by striking out “her” and inserting in lieu thereof “such spouse’s”. (E) Sections 7448 (d), (j), (m), (n), (o), and (q) are each amended by striking out “widow” each place it appears and inserting in lieu thereof “surviving spouse”. (F) The section heading for section 7448 is amended by striking out “WIDOWS” and inserting in lieu thereof “SURVIVING SPOUSES”. (47) Amendments of section 7471.— (A) Subsection (a) of section 7471 (relating to Tax Court 26 USC 7471. employees) is amended by striking out “is authorized in accordance with the civil service laws to appoint, and in accordance with the Classification Act of 1949 (63 Stat. 954; 5 U.S.C. chapter 21), as amended, to fix the compensation of,” and inserting in lieu thereof “is authorized to appoint, in accordance with the provisions of title 5, United States Code, governing appointment in the competitive service, and 5 USC 101 et seq. 5 USC 5101, 5331. to fix the basic pay of, in accordance with chapter 51 and subchapter III of chapter 53 of such title,”. (B) Subsection (b) of section 7471 is amended by striking out “as provided in the Travel Expense Act of 1949 (63 Stat. 166; 5 U.S.C. chapter 16).” and inserting in lieu thereof “as provided in chapter 57 of title 5, United States Code.” 5 USC 5701. 26 USC 7476. (48) Amendment of section 7476.— Section 7476(a) (relating to declaratory judgments) is amended by striking out so much thereof as follows paragraph (2)(B) and inserting in lieu thereof the following: “upon the filing of an appropriate pleading, the Tax Court may make a declaration with respect to such initial qualification or continuing qualification. Any such declaration shall have the force and effect of a decision of the Tax Court, and shall be reviewable, as such.” (49) Amendment of section 7502.— Section 7502(b) (relating 26 USC 7502. to timely mailing treated as timely filing and paying) is amended by striking out “United State Post Office” and inserting in lieu thereof “United States Postal Service”. (50) Amendments of section 7507.— Paragraphs (2) and (3) of section 7507(c) (relating to insolvent hanks) are each amended 26 USC 7507. by striking out “after May 28, 1938,”. (51) Amendments of section 7508.— (A) The heading of section 7508 (relating to time for 26 USC 7508. performing certain acts) is amended by striking out “BY REASON OF WAR” and inserting in lieu thereof “BY REASON OF SERVICE IN COMBAT ZONE”. (B) Section 7508(a) (relating to time to be disregarded) is amended by striking out “States of the Union and the District of Columbia” each place it appears and inserting in lieu thereof “United States”. (52) Amendments of section 7509.— Section 7509 (relating to expenditures incurred by the Post Office Department) is amended— (A) in the section heading, by striking out “POST OFFICE DEPARTMENT” and inserting in lieu thereof “UNITED STATES POSTAL SERVICE”; (B) by striking out “Post Office Department” each place it appears and inserting in lieu thereof “United States Postal Service”; (C) by striking out “such Department” and inserting in lieu thereof “such Service”; and (D) by striking out “, together with the receipts required to be deposited under section 6803(a),”, (53) Amendment or section Tear.— Section 7621 (b) (relating to boundaries of internal revenue districts) is amended to read as follows: “(b) Boundaries.— For the purpose mentioned in subsection (a), the President may subdivide any State or the District of Columbia, or may unite into one district two or more States.” (54) Repeal of section 7G4t.— Subchapter C of chapter 78 (relating to supervision of operations of certain manufacturers) is repealed. (55) Amendments of section 7052.— Section 7652(b)(3) (relating to disposition of internal revenue collections) is amended— (A) by striking out subparagraph (B) and by redesignating subparagraph (C) as subparagraph (B). (B) by striking out “approved emergency relief purposes and essential public projects as provided in subparagraph (B)” and inserting in lieu thereof “emergency relief purposes and essential public projects, with the prior approval of the President or his designated representative”, and (C) by striking out “, including payments under subparagraph (B),”. (56) Amendment of section 7653.— Section 7653(d)(a cross reference) is amended by striking out “c. 512, 64 Stat. 392, section 30;”. (57) Amendments of section 7701.— (A) Section 7701(a)(11) (relating to definitions of Secretary) is amended to read as follows: “(11) Secretary of the treasury and secretary.— “(A) Secretary of the treasury.— The term ‘Secretary of the Treasury’ means the Secretary of the Treasury, personally, and shall not include any delegate of his. “(B) Secretary.— The term ‘Secretary’ means the Secretary or the Treasury or his delegate.”. (B) Section 7701(a)(12)(A) (relating to definition of Secretary or his delegate) is amended to read as follows: “(A) In general.— The term ‘or his delegate’— “(i) when used with reference to the Secretary of the Treasury, means any officer, employee, or agency of the Treasury Department duly authorized by the Secretary of the Treasury directly, or indirectly by one or more redelegations of authority, to perform the function mentioned or described in the context; and “(ii) when used with reference to any other official of the United States, shall be similarly construed.” (58) Amendment of section 7803.— Section 7803 (relating 26 USC 7803. to other personnel) is amended by redesignating subsection (d) as subsection (c). (59) Amendment of section 7809.— Section 7809(a) (relating 26 USC 7809. to deposit of collections) is amended by striking out “4735, 4762,”. (b) Conforming and Clerical Amendments.— (1) Amendment conforming to the repeal of section 6105.— The table of sections for subchapter B of chapter 61 is amended by striking out the item relating to section 6105. (2) Amendment conforming to amendment of section 6111.— The item relating to section 6111 in the table of sections for subchapter B of chapter 61 is amended to read as follows: “Sec. 6111. Cross reference.” (3) Amendments conforming to amendments of section 6154.— (A) Paragraph (1)(B) of section 6655(e) is amended: 26 USC 6655. (i) by adding “and” at the end of clause (i), and (ii) by striking out clauses (ii) and (iii) and inserting in lieu thereof the following: “(ii) in the case of a taxable year beginning before January 1, 1977, the amount of the corporation’s temporary estimated tax exemption for such year.” (B) Paragraph (2)(B) of section 6655(e) is amended by striking out “clauses (ii) and (iii)” and inserting in lieu thereof “clause (ii)”. (C) (i) Section 6655(e) is amended by striking out paragraph (3) and by redesignating paragraph (4) as paragraph (3). (ii) Section 243(b)(3)(C)(iv), as redesignated by section Ante, p. 1797. 1901 (b)(20)(A) of this Act, is amended by striking out “sections 6154(c)(2) and (3)” and inserting in lieu thereof “section 6154(c)(2)”, and by striking out. “sections 6655(e)(2) and (3)” and inserting in lieu thereof “section 6655(e)(2)”. (4) Amendment conforming to the re feat, of section 6162.— The table of sections for subchapter B of chapter 62 is amended by striking out the item relating to section 6162. (5) Amendment conforming to the repeal of section 6304.— The table of sections for subchapter A of chapter 64 is amended by striking out the item relating to section 6304. (6) Amendments conforming to the amendment of section 6416.— (A) Subparagraph (A) of section 6420(c)(3) is amended 26 USC 6420. to read as follows: “(A) by the owner, tenant, or operator of a farm, in connection with cultivating the soil, or in connection with raising or harvesting any agricultural or horticultural commodity, including the raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry, and fur-bearing animals and wildlife, on a farm of which he is the owner, tenant, or operator; except that, if such use is by any person other than the owner, tenant, or operator of such farm, then for purposes of this subparagraph, in applying subsection (a) to this subparagraph, the owner, tenant, or operator of the farm on which gasoline or a liquid taxable under section 26 USC 4041. 4041 issued shall be treated as the user and the ultimate purchaser of such gasoline or liquid;”. (B) The amendments made by subparagraph (A) shall apply with respect to the use of liquids after December 31, 1970. (7) Amendment conforming to the repeal of section 6417.— The table of sections for subchapter B of chapter 65 is amended Ante, p. 1827. by striking out the item relating to section 6417. (8) Amendment conforming to amendment of section 6420.— Section 39(a)(1) is amended by striking out “section 6420(h)” and inserting in lieu thereof “section 6420(g)”. (9) Amendment conforming to amendment of section 6424.— Section 39(a)(3) is amended by striking out “section 6424(g)” Ante, p, 1829. and inserting in lieu thereof “section 6424(f)”. (10) Amendment conforming to amendment of section 7448.— The item relating to section 7448 in the table of sections for part I of subchapter C of chapter 76 is amended to read as follows: “Sec. 7448. Annuities of surviving spouses and dependent children.”. (11) Amendment conforming to amendment of section 7508.— The item relating to section 7508 in the table of sections for chapter 77 is amended to read as follows: “Sec. 7508. Time for performing certain acts postponed by reason of service in combat gone.”. (12) Amendment conforming to amendment of section 7500.— The item relating to section 7509 in the table of sections for chapter 77 is amended to read as follows: “Sec. 7509. Expenditures incurred by the United States Postal Service,”. (13) Amendment conforming to repeal of section 7641.— The table of subchapters for chapter 78 is amended by striking Ante, p. 1832. 26 USC 1 el seq. out the item relating to subchapter C. (A) The Internal Revenue Code of 1954, as amended by this Act, is amended by striking out “Secretary or his delegate” each place it appears and inserting in lieu thereof “Secretary”. (B) The following provisions are each amended by striking 26 USC 4293, 4483, 5551, 7801, 7802, 9006, 9007. 26 USC 3121, 3303, 3304, 3305, 3306, 9005, 9007, 9010, 9012. 26 USC 31. 26 USC 3304. out “Secretary” each place it appears and inserting in lieu thereof “Secretary of the Treasury”: sections 4293, 4483 (b), 5551, 7801(b). 7802(a), 9006(a), 9006(b), and 9007(d). (C) The following provisions are each amended by striking out “to the Secretary” each place it appears and inserting in lieu thereof “to the Secretary of the Treasury”: sections 3121 (b)(12)(B). 3303(b), 3304(a)(3). 3304(c), 3305(j), 3306(c)(12)(B), 9005(a), 9007(b), 9010(b), and 9012(e)(3). (D) Section 31(b)(1) is amended by striking out “(or his delegate)”. (E) The last sentence of section 3304(c) is amended by striking out “the Secretary shall” and inserting in lieu thereof “the Secretary of Labor shall”. (F) Section 3310(d)(2) is amended by striking out “the 26 USC 3310. Secretary’s action” each place it appears and inserting in lieu thereof “the Secretary of Labor’s action”. (G) Section 3221(a) and 3221(c) are each amended by 26 USC 3221. striking out “of the Treasury” each place it appears. (H) Section 3310(e) is amended by striking out “of 26 USC 3310. the Secretary” and inserting in lieu thereof “of the Secretary of Labor”. (I) Section 4412(c) is amended by striking out “he or his 26 USC 4412. delegate” and inserting in lieu thereof “the Secretary”. (J) Section 5845(f) is amended by striking out “of the 26 USC 5845. Treasury or his delegate”. (K) Section 6402(b) is amended by striking out “(or his 26 USC 6402. delegate)”. (L) Section 7458 is amended by striking out “nor his 26 USC 7458. delegate”. (M) Section 7514 is amended by striking out “functions of 26 USC 7514. the Secretary” and inserting in lieu thereof “functions of the Secretary of the Treasury”. (c) Amendments to Sections Referring to Territories.— (1) Section 6871(a) is amended by striking out “or Territory”. 26 USC 6871. 26 USC 7622. 26 USC 7701. (2) Section 7622(b) is amended by striking out “, Territory,”. (3) Section 7701(a)(4) is amended by striking out “or Territory”. (d) Effective Date.— (1) General rule.— Except as otherwise expressly provided in this section, the amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. (2) Amendments relating to income tax.— The amendments made by this section, when relating to a tax imposed by chapter 26 USC 1, 1401. 1 or chapter 2 of the Internal Revenue Code of 1954, shall take effect with respect to taxable years beginning after December 31, 1976. SEC. 1907. AMENDMENTS OF SUBTITLE G; THE JOINT COMMITTEE ON INTERNAL REVENUE TAXATION. (a) In General.— (1) Amendment of section 8001.— Section 8001 (relating to 26 USC 8001. creation of the Joint Committee) is amended by striking out “Joint Committee on Internal Revenue Taxation” and inserting in lieu thereof “Joint Committee on Taxation”. (2) Amendment of section 8004.— Section 8004 (relating to 26 USC 8004. compensation of staff) is amended by striking out “compensation of a clerk” and inserting in lieu thereof “compensation of the Chief of Staff of the Joint Committee”. (3) Amendment of section 8021.— Section 8021(d) (relating 26 USC 8021. to authority to make expenditures) is amended to read as follows: “(d) To Make Expenditures.— The Joint Committee, or any subcommittee thereof, is authorized to make such expenditures as it deems advisable.”. (4) Amendment of section 8023.— Section 8023(c) (relating 26 USC 8023. to reorganization plans) is amended to read as follows: “(c) Application of Subsections (a) and(b).— Subsections (a) and (b) shall be applied in accordance with their provisions without regard to any reorganization plan becoming effective on, before, or after the date of the enactment of this subsection.”. (5) All references in any other statute, or in any rule, regulation, or order, to the Joint Committee on Internal be venue Taxation shall be considered to be made to the Joint Committee on Taxation. (b) Amendments Conforming to the Amendment of Section 8001.— (1) The heading of subtitle G is amended by striking out “Internal Revenue”, (2) The table of subtitles for the Internal Revenue Code of 1954 is amended by striking out the item relating to subtitle G and inserting in lieu thereof the following: “Subtitle G. The Joint Committee on Taxation.”. (c) Effective Date.— The amendments made by this section shall take effect on the first day of the first month which begins more than 90 days after the date of the enactment of this Act. SEC. 1908. EFFECTIVE DATE OF CERTAIN DEFINITIONS AND DESIGNATIONS For purposes of any amendment made by any provision of this Act (other than this title)— (1) which contains a term the meaning of which is defined in or modified by any provision of this title, and (2) which has an effective date earlier than the effective date of the provision of this title defining or modifying such term, that definition or modification shall be considered to take effect as of such earlier effective date. Subtitle B— Amendments of Code Provisions With Limited Current Application; Repeals and Savings Provisions SEC. 1951. PROVISIONS OF SUBTITLE A (a) References to Internal Revenue Code.— Except as otherwise expressly provided, whenever in this section a reference is made to a section or other provision, the reference shall be considered to be made 26 USC 1. to a section or other provision of the Internal Revenue Code of 1954. (b) Amendments.— (1) Amendment of section 72.— (A) Repeal.— Section 72 (relatinfi to annuities) is amended by striking out subsection (i) (relating to joint and survivor annuities where first annuitant died in 1951, 1952, or 1953). (B) Savings provision.— Notwithstanding subparagraph (A), if the provisions of section 72(i) applied to amounts received in taxable years beginning before January 1, 1977, under an annuity contract, then amounts received under such contract on or after such date shall be treated as if such provisions were not repealed. (2) Amendments of section 108.— (A) Repeal.— Section 108 (relating to income from discharge of indebtedness) is amended by striking out subsection (b) (relating to certain railroad corporations) and by striking out of subsection (a) the following: “(a) Special Rule of Exclusion.—”. (B) Savings provision.— If any discharge, cancellation, 26 USC 108 note. or modification of indebtedness of a railroad corporation occurs in a taxable year beginning after December 31, 1976, pursuant to an order of a court in a proceeding referred to in section 108(b)(A) or (13) which commenced before January 1, 1960, then, notwithstanding the amendments made by subparagraph (A), the provisions of subsection (b) of section 108 shall be considered as not repealed with respect to such discharge, cancellation, or modification of indebtedness. (3) Amendments of section 164.— (A) Repeal.— Section 164 (relating to taxes) is amended 26 USC 164. by striking out subsection (f) (relating to payments for municipal services in atomic energy communities) and by redesignating subsection (g) as subsection (f). (B) Savings provision.— Notwithstanding subparagraph 26 USC 164 note. (A), any amount paid or accrued in a taxable year beginning after December 31, 1976, to the Atomic Energy Commission or its successors for municipal-type services shall be allowed as a deduction under section 164 if such amount would have been deductible by reason of section 164(f)(as in effect for a taxable year ending on December 31, 1976) and if the amount is paid or accrued with respect to real property in a community (within the meaning of section 21 b. of the Atomic Energy Community Act of 1955 (42 U.S.C. 2304 (b))) in which the Commission on December 31, 1976, was rendering municipal-type services for which it received compensation from the owners of property within such community. (4) Repeal of section 168.— (A) Repeal.— Section 168 (relating to amortization of 26 USC 168. emergency facilities) is repealed. (B) Savings provision.— Notwithstanding the repeal 26 USC 168 note. made by subparagraph (A), if a certificate was issued before January 1, 1960, with respect to an emergency facility which is or has been placed in service before the date of the enactment of this Act, the provisions of section 168 shall not, with respect to such facility, be considered repealed. The benefit of deductions by reason of the preceding sentence shall be allowed to estates and trusts in the same manner as in the case of an individual. The allowable deduction shall be apportioned between the income beneficiaries and the fiduciary in accordance with regulations prescribed under section 642(f). (5) Amendment of section 171.— (A) Repeal.— (i) Section 171(b)(1)(B) (relating to amount of 26 USC 171. bond premium) is amended by striking out clause (iii) (relating to certain bonds acquired before 1958). (ii) Section 171(b)(1)(B)(i) is amended by striking out “clause (ii) or (iii) applies,” and inserting in lieu thereof “clause (ii) applies, or”, and by inserting “and” at the end thereof. (iii) Section 171 (b)(1)(B)(ii) is amended by striking out “. or” and inserting “, and” in lieu thereof. (iv) The second sentence in section 171 (b)(2) is amended by striking out “or (iii)”. (B) Savings provision.— Notwithstanding the amendments made by subparagraph (A), in the case of a bond the interest on which is not excludable from gross income— (i) which was issued after January 22, 1951, with a call date not more than 3 years after the date of such issue, and (ii) which was acquired by the taxpayer after January 22, 1954, and before January 1, 1958, the bond premium for a taxable year beginning after December 31, 1975, shall not be determined under section 171(b)(1)(B)(i) but shall be determined with reference to the amount payable on maturity, and if the bond is called before its maturity, the bond premium for the year in which the bond is called shall be determined in accordance with the provisions of section 171 (b)(2). (6) Amendment of section 333.— (A) Repeal.— Section 333 (relating to election as to recognition of gain in certain liquidations) is amended by striking out subsection (g) (relating to the liquidation of certain personal holding companies). (B) Savings provision.— Nothwithstanding subparagraph (A), if any corporation meets all the requirements of section 333(g)(2)(B), as in effect before its repeal by this Act, the liquidation of such corporation shall be treated as if paragraphs (2), (3), and (4) of section 333(g) had not been repealed. (C) Phase-in of 12month holding period requirement.— For purposes of subparagraph (B), the period for holding of stock specified in section 333(g)(2)(A)(u), as in effect before such repeal, shall— (i) in the case of taxable years beginning in 1977, be considered to be “9 months”; and (ii) in the case of taxable years beginning after December 31, 1977, be considered to be “1 year”. (7) Amendment of section 453.— (A) Repeal.— Section 453(b)(2) (relating to limitation on use of installment sales method) is amended to read as follows: “(2) Limitation.— Paragraph (1) shall apply only if in the taxable year of the sale or other disposition— “(A) there are no payments, or “(B) the payments (exclusive of evidences of indebtedness or the purchaser) do not exceed 30 percent of the selling price.”. (B) Savings provision.— Notwithstanding subparagraph (A), in the case of installment payments received during taxable years beginning after December 31, 1976, on account of a sale or other disposition made during a taxable year beginning before January 1, 1954, subsection (b)(1) of section 453 (relating to sales of realty and casual sales of personalty) shall apply only if the income was (by reason of section 53 Stat. 24. 44(b) of the Internal Revenue Code of 1939) returnable on the basis and in the manner prescribed in section 44(a) of such Code. (8) Amendments of section 512.— (A) Repeal.— Section 512(b) (relating to unrelated business 26 USC 512. taxable income) is amended by striking out paragraphs (13) and (14) and by redesignating paragraphs (15), (16), and (17) as paragraphs (13), (14), and (15), respectively. (B) Savings provision.— Notwithstanding subparagraph 26 USC 512 note. (A), income received in a taxable year beginning after December 31, 1975, shall be excluded from gross income in determining unrelated business taxable income, if such income would have been excluded by paragraph (13) or (14) of section 512(b) if received in a taxable year beginning before such date. Any deductions directly connected with income excluded under the preceding sentence in determining unrelated business taxable income shall also be excluded for such purpose. (9) Amendment of section 545.— (A) Repeal.— Section 545(b) (relating to adjustments in 26 USC 545. computing undistributed personal holding company income) is amended by striking out paragraph (9) (relating to deductions on account of certain liens in favor of the United States). (B) Savings provision.— Notwithstanding subparagraph 26 USC 545 note. (A), if any amount was deducted under paragraph (9) of section 545(b) in a taxable year beginning before January 1, 1977, on account of a lien which is satisfied or released in a taxable year beginning on or after such date, the amount so deducted shall be included in income, for purposes of section 545, as provided in the second sentence of such paragraph. Shareholders of any corporation which has amounts included in its income by reason of the preceding sentence may elect to compute the income tax on dividends attributable to amounts so included as provided in the third sentence of such paragraph. (10) Amendments of section 691.— (A) Repeal.— Section 691 (relating to income in respect 26 USC 691. of decedents) is amended by striking out subsection (e) (relating to certain installment obligations transmitted at death) and by redesignating subsection (f) as subsection (e). (B) Savings provision.— Notwithstanding subparagraph 26 USC 691 note. (A), any election made under section 691(e) to have subsection (a)(4) of such section apply in the case of an installment obligation shall continue to be effective with respect to taxable years beginning after December 31, 1976. Section 691(c) shall not apply in respect of any amount included in gross income by reason of the preceding sentence. The liability under bond filed under section 44(d) of the Internal Revenue Code of 1939 (or corresponding provisions of prior law) in 53 Stat. 24. respect of which such an election applies is hereby released with respect to taxable years to which such election applies. (11) Amendments of section 817.— (A) Repeal.— Section 817 is amended by striking out 26 USC 817. subsection (d) (relating to certain gains occurring before 1959). (B) Savings provision.— Notwithstanding subparagraph 26 USC 817 note. (A), any gain in a taxable year beginning after December 31, 1976, from any sale or other disposition of property prior to January 1, 1959, would be excluded or not taken into account for purposes of part 1 of subchapter L of chapter Ante, p. 1839. 1 if subsection (d) of section 817 of such Code were still in effect for such taxable year, such gain shall be excluded for purposes of such part. (12) Repeal of section 1347.— (A) Repeal.— Section 1347 (relating to certain claims filed against the United States before January 1, 1958) is repealed. (B) Savings provision.— Notwithstanding subparagraph (A), if amounts received in a taxable year beginning after December 31, 1976, would have been subject to the provisions of section 1347 if received in a taxable year beginning before such date, the tax imposed by section 1 attributable to such receipt shall be computed as if section 1347 had not been repealed. (13) Repeal of section 1471.— (A) Repeal.— Subchapter A of chapter 4 (relating to recovery of excessive profits on certain Government contracts) is repealed. (B) Savings provision.— If the amount of profit required to be paid into the Treasury under section 2382 or 7300 of title 10, United States Code, is not voluntarily paid, the Secretary of the Treasury or his delegate shall collect the same under the methods employed to collect taxes under subtitle A. All provisions of law (including penalties) applicable with respect to such taxes and not inconsistent with section 2382 or 7300 of title 10 of such Code, shall apply with respect to the assessment, collection, or payment of excess profits to the Treasury as provided in the preceding sentence, and to refunds by the Treasury of overpayments of excess profits into the Treasury. (14) Amendment of section 1481.— (A) Repeal.— Section 1481 (relating to mitigation of effect of renegotiation of Government contracts) is amended by striking out subsection (d) (relating to renegotiation for years prior to 1954). (B) Savings provision.— If, during a taxable year beginning after December 31, 1976, a recovery of excessive profits through renegotiation which relates to profits of a taxable 53 Stat. 1. year subject to the Internal Revenue Code of 1939, the adjustments in respect to such renegotiation shall be made under section 3806 of such Code. (c) Conforming and Clerical Amendments.— (1) Amendment conforming to the amendment of section 1017.— Section 1017 is amended by striking out “section 108(a)” each time it appears therein and inserting in lieu thereof “section 108”. (2) Amendments conforming to repeal of section 168.— (A) Section 1238 is amended by striking out “(relating to amortization deduction of emergency facilities)” and inserting in lieu thereof “(as in effect before its repeal by the Tax Ante, p. 1520. 26 USC 642, 1082. Ante, p. 1837. 26 USC 1245, 1250. Reform Act. of 1976)”. (B) Sections 642(f) and 1082(a)(2)(B) are each amended by striking out “168,”. (C) Sections 1245(a)(2) and 1250(b)(3) are each amended by striking out “168,” each place it appears and inserting in lieu thereof “168 (as in effect before its repeal by the Tax Reform Act of 1976),”. (D) The table of sections for part VI of subchapter B of chapter 1 is amended by striking out the item relating to section 168. Ante, p. 1837. (3) Amendments conforming to the repeal of section 1347.— (A) Section 5(b) is amended by striking out paragraph 26 USC 5. (5) and by redesignating paragraphs (2), (3), and (4), as paragraphs (1), (2), and (3), respectively. (B) The table of sections for part VI of subchapter Q of chapter 1 is amended by striking out the item relating to section 1347. Ante, p. 1840. (C) The heading of part VI of subchapter Q of chapter 1 is amended to read as follows: “PART VI— MAXIMUM RATE ON PERSONAL SERVICE INCOME.” (D) The table of parts for subchapter Q of chapter 1 is amended by striking out the item relating to part VI and inserting in lieu thereof the following: “Part VI. Maximum rate on personal service income.” (4) Amendment conforming to the repeal of section 1471.— The table of subchapters for chapter 4 is amended by striking out the item relating to subchapter A. (d) Effective Date.— Except as otherwise expressly provided, the 26 USC 72 note. amendments made by this section shall apply with respect to taxable years beginning after December 31, 1976. SEC. 1952. PROVISIONS OF SUBCHAPTER D OF CHAPTER 39; COTTON FUTURES. (a) Short Title.— This section may be cited as the “United States Cotton Futures Act”. (b) Repeal of Tax on Cotton Futures.— Subchapter D of chapter 39 (relating to tax on cotton futures) is repealed. 26 USC 4851. (c) Definitions.— For purposes of this section— (1) Cotton futures contract.— The term “cotton futures contract” means any contract of sale of cotton for future delivery made at, on, or in any exchange, board of trade, or similar institution or place of bus mess which has been designated a “contract market” by the Commodity Futures Trading Commission pursuant to the Commodity Exchange Act and the term “contract of 7 USC 1. sale” as so used shall be held to include sales, agreements of sale, and agreements to sell. (2) Future delivery.— The term “future delivery” shall not include any cash sale of cotton for deferred shipment or delivery. (3) Person.— The term “person” includes an individual, trust, estate, partnership, association, company, or corporation. (4) Secretary.— The term “Secretary” means the Secretary of Agriculture of the United States. (5) Standards.— The term “standards” means the official cotton standards of the United States established by the Secretary pursuant to the United States Cotton Standards Act, as emended. (d) Bona Fide Spot Markets and Commercial Differences.— (1) Definition.— For purposes of this section, the only markets which shall be considered bona fide spot markets shall be those which the Secretary shall, from time to time, after investigation, determine and designate to be such, and which we shall give public notice. (2) Determination.— In determining, pursuant to the provisions of this section, what markets are bona fide spot markets, the Secretary is directed to consider only markets in “which spot cotton is sold in such volume and under such conditions as customarily to reflect accurately the value of middling cotton and the differences between the prices or values of middling cotton and of other grades of cotton for which standards shall have been established by the Secretary; except that if there are not sufficient places, in the markets of which are made bona fide sales of spot cotton of grades for which standards are established by the Secretary, to enable him to designate at least five spot markets in accordance with subsection (f)(3), he shall, from data as to spot sales collected by him, make rules and regulations for determining the actual commercial differences in the value of spot cotton of the grades established by him as reflected by bona fide sales of spot cotton, of the same or different, grades, in the market selected and designated by him, from time to time, for that purpose, and in that event differences in value of cotton of various grades involved in contracts made pursuant to subsection (f)(1) and (2) shall be determined in compliance with such rules and regulations. It shall be the duty of any person engaged in the business of dealing in cotton, when requested by the Secretary or any agent acting under his instructions, to answer correctly to the best of his knowledge, under oath or otherwise, all questions touching his knowledge of the number of bales, the classification, the price or bona fide price offered, and other trims of purchase or sale, of any cotton involved in any transaction participated in by him, or to produce all books, letters, papers, or documents in his possession or under his control relating to such matter. (3) Withholding information.— Any person engaged in the business of dealing in cotton who shall, within a reasonable time prescribed by the Secretary or any agent acting under his instructions, willfully fail or refuse to answer questions or to produce books, letters, papers, or documents, as required under paragraph (2) of this subsection, or who shall willfully give any answer that is false or misleading, shall, upon conviction thereof, be fined not more than $500. (e) Form and Validity of Cotton Futures Contracts.— Each cotton futures contract shall be a basis grade contract, or a tendered grade contract, or a specific grade contract as specified in subsections (f), (g), or (h) and shall be in writing plainly stating, or evidenced by written memorandum showing, the terms of such contract, including the quantity of the cotton involved and the names and addresses of the seller and buyer in such contract, and shall be signed by the party to be charged, or by his agent in his behalf. No cotton futures contracts which does not conform to such requirements shall be enforceable by, or on behalf of, any party to such contract or his privies. (f) Basis Grade Contracts.— (1) Conditions.— Each basis grade cotton futures contract shall comply with each of the following conditions: (A) Conformity with regulations.— Conform to the regulations made pursuant to this section. (B) Specification of grade, price, and dates of sale and settlement.— Specify the basis grade for the cotton involved in the contract, which shall be one of the grades for which standards are established by the Secretary, except grades prohibited from being delivered on a contract made under this subsection by subparagraph (E), the price per pound at which the cotton of such basis grade is contracted to be bought or sold, the date when the purchase or sale was made, and the month or months in which the contract is to be fulfilled or settled; except that middling shall be deemed the basis £ade incorporated into the contract if no other basis grade specified either in the contract or in the memorandum evidencing the same. (C) Provision for delivery of standard grades only.— Provide that the cotton dealt with therein or delivered thereunder shall be of or within the grades for which standards are established by the Secretary except grades prohibited from being delivered on a contract made under this subsection by subparagraph (E) and no other grade or grades. (D) Provision for settlement on basis of actual commercial differences.— Provide that in case cotton of grade other than the basis grade be tendered or delivered in settlement of such contract, the differences above or below the contract price which the receiver shall pay for such grades other than the basis grade shall be the actual commercial differences, determined as hereinafter provided, (E) Prohibition of delivery of inferior cotton.— Provide that cotton that, because of the presence of extraneous matter of any character, or irregularities or defects, is reduced in value below that of low middling, or cotton that is below the grade of low middling, or, if tinged, cotton that is below the grade of strict middling, or, if yellow stained, cotton that is below the grade of good middling, the grades mentioned being of the official cotton standards of the United States, or cotton that is less than seven-eighths of an inch in length of staple, or cotton of perished staple, or of immature staple, or cotton that is “gin cut” or reginned, or cotton that is “repacked” or “false packed” or “mixed packed” or “water packed”, shall not be delivered on, under, or in settlement of such contract. (F) Provisions for tender in full, notice of delivery date, and certificate of grade.— Provide that all tenders of cotton under such contract shall be the full number of bales involved therein, except that such variations of the number of bales may be permitted as is necessary to bring the total weight of the cotton tendered within the provisions of the contract as to weight; that, on the fifth business day prior to delivery, the person making the tender shall give to the person receiving the same written notice of the date of delivery, and that, on or prior to the date so fixed for delivery, and in advance of final settlement of the contract, the person making the tender shall furnish to the person receiving the same a written notice or certificate stating the grade of each individual bale to be delivered and, by means of marks or numbers, identifying each bale with its grade. (G) Provision for tender and settlement in accordance with government classification.— Provide that all tenders of cotton and settlements therefor under such contract shall be in accordance with the classification thereof made under the regulations of the Secretary by such officer or officers of the Government as shall be designated for the purpose, and the costs of such classification shall be fixed, assessed, col- Regulations. lected, and paid as provided in such regulations. The Secretary is authorized to prescribe regulations for carrying out the purposes of this subparagraph and the certificates of the officers of the Government, as to the classification of any cotton for the purposes of this subparagraph shall be accepted in the courts of the United States in all suits between the parties to such contract, or their privies, as prima facie evidence of the true classification of the cotton involved. (2) Incorporation of conditions in contracts.— The provisions of paragraphs (1)(C), (D), (E), (F), and (G) shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the memorandums evidencing the same, at or prior to the time the same is signed, the phrase “Subject to United States Cotton Futures Act, subsection (f).” (3) Delivery allowances.— For the purpose of this subsection, the differences above or below the contract price which the receiver shall pay for cotton of grades above or below the basic grade in the settlement of a contract of sale for the future delivery of cotton shall be determined by the actual commercial differences in value thereof upon the sixth business day prior to the day fixed, in accordance with paragraph (1)(F), for the delivery of cotton on the contract, established by the sale of spot cotton in the spot markets of not less than five places designated for the purpose from time to time by the Secretary, as such values were established by the sales of spot cotton, in such designated five or more markets. For purposes of this paragraph, such values in the such spot markets shall be based upon the standards for grades of cotton established by the Secretary. Whenever the value Rules and regulations. of one grade is to be determined from the sale or sales of spot cotton of another grade or grades, such value shall be fixed in accordance with rules and regulations which shall be prescribed for the purpose by the Secretary. (g) Tendered Grade Contracts.— (1) Conditions.— Each tendered grade cotton future contract shall comply with each of the following conditions: (A) Compliance with subsection (f).— Comply with all the terms and conditions of subsection (f) not inconsistent with this subsection; and (B) Provision for contingent specific performance.— Provide that, in case cotton of grade or grades other than the basis grade specified in the contract shall be tendered in performance of the contract, the parties to such contract may agree, at the time of the tender, as to the price of the grade or grades so tendered, and that if they shall not then agree as to such price, then, and in that event, the buyer of said contract shall have the right to demand the specific fulfillment of such contract by the actual delivery of cotton of the basis grade named therein and at the price specified for such basis grade in said contract. (2) Incorporation of conditions in contract.— Contracts made in compliance, with this subsection shall be known as “subsection (g) Contracts”. The provisions of this subsection shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the memorandum evidencing the same, at or prior to the time the same is signed, the phrase “Subject to United States Cotton Futures Act, subsection (g)”. (3) Application of subsection.— Nothing in this subsection shall be so construed as to authorize any contract in which, or in the settlement of or in respect to which, any device or arrangement whatever is resorted to, or any agreement is made, for the determination or adjustment of the price of the grade or grades tendered other than the basis grade specified in the contract by any “fixed difference” system, or by arbitration, or by any other method not provided for by this section. (h) Specific Grade Contracts.— (1) Conditions.— Each specific grade cotton futures contract shall comply with each of the following conditions: (A) Conformity with rulesand regulations.— Con form to the rules and regulations made pursuant to this section. (B) Specification of grade, price, dates of sale and delivery.— Specify the grade, type, sample, or description of the cotton involved in the contract, the price per pound at which such cotton is contracted to be bought or sold, the date of the purchase or sale, and the time when shipment or delivery of such cotton is to be made. (C) Prohibition of delivery of other than specified grade.— Provide that cotton of or within the grade or of the type, or according to the sample or description, specified in the contract shall be delivered thereunder, and that no cotton which does not conform to the type, sample, or description, or which is not of or within the grade specified in the contract shall be tendered or delivered thereunder. (D) Provision for specific performance.— Provide that the delivery of cotton under the contract shall not be effected by means of “setoff” or “ring” settlement, but only by the actual transfer of the specified cotton mentioned in the contract. (2) Incorporation of conditions in contract.— The provisions of paragraphs (1)(A), (C). and (D) shall be deemed fully incorporated into any such contract if there be written or printed thereon, or on the document or memorandum evidencing the same, at or prior to the time the same is entered into, the words “Subject to United States Cotton Futures Act, subsection (h)”. Ante, p. 1841. (3) Application of subsection.— This subsection shall not be construed to apply to any contract of sale made in compliance with subsection (f) or (g). (i) Liability of Principal for Acts of Agent.— When construing and enforcing the provisions of this section, the act, omission, or failure of any official, agent, or other person acting for or employed by any association, partnership, or corporation within the scope of his employment or office shall, in every case, also be deemed the act, omission, or failure of such association, partnership, or corporation, as well as that of the person. (j) Regulations.— The Secretary is authorized to make such regulations with the force and effect of law as he determines may be necessary to carry out the provisions of this section and the powers vested in him by this section. (k) Validations.— Any person who knowingly violates any regulation made in pursuance of this section, shall, upon conviction thereof be fined not less than $100 nor more than $500, for each violation thereof, in the discretion of the court, and, in case of natural persons, may, in addition be punished by imprisonment for not less than 30 days nor more than 90 days, for each violation, in the discretion of the court except that this subsection shall not apply to violations subject to subsection (d)(3). (l) Applicability to Contracts Prior to Effective Date.— The provisions of this section shall not apply to any cotton futures contract entered into prior to the effective date of this section or to any act or failure to act by any person prior to such effective date and all such prior contracts, acts or failure to act shall continue to be governed by 26 USC 1. the applicable provisions of the Internal Revenue Code of 1954 as in effect prior to the enactment of this section. All designations of bona fide spot markets and all rules and regulations issued by the Secretary pursuant to the applicable provisions of the Internal Revenue Code of 1954 which were in effect on the effective date of this section, shall remain fully effective as designations and regulations under this section until superseded, amended, or terminated by the Secretary. (m) Authorization.— There are authorized to be appropriated such sums as may be necessary to carry out this section. (n) Conforming and Clerical, Amendments.— (1) Section 6808 (relating to cross references) is amended by striking out paragraph (2), and by redesignating paragraphs (3), (6), and (11) as paragraphs (1), (2), and (3), respectively. (2) (A) Section 7233 (relating to failure to pay tax on cotton futures) is repealed. (B) The table of sections for part II of subchapter A of chapter 75 is amended by striking out the item relating to section 7233. (3) (A) Section 7263 (relating to penalties concerning cotton futures) is repealed. (B) The table of sections for subchapter B of chapter 75 is amended by striking out the item relating to section 7263. (4) (A) Subchapter E of chapter 76 (relating to miscellaneous provisions regarding cotton futures contracts) is repealed. (B) The table of subchapters for chapter 76 is amended by striking out the items relating to subchapter E. (5) Chapter 39 (relating to regulatory taxes) is amended by striking out the chapter heading and the table of subchapters. (6) The table of chapters for subtitle D is amended by striking out the item relating to chapter 39. (o) Effective Date.— The provisions of this section shall take effect on the 90th day after the date of the enactment of this Act.

13. 1977

    Pub. L. 95–176 § 2(f) · 91 Stat. 1363

    1. Substituted · 26 U.S.C. § 5008(d)

       Pub. L. 95–176, § 2(f), reenacted par. (1) and substituted heading “General” for “Allowance of tax” ; added pars. (2) and (3)

    2. Substituted · 26 U.S.C. § 5008(d)

       Pub. L. 95–176, § 2(f), reenacted par. (1) and substituted heading “(or the tax equal to such tax imposed under section 7652)” for “or under section 7652” ; added pars. (2) and (3)

    3. Redesignated · 26 U.S.C. § 5008(d)

       Pub. L. 95–176, § 2(f), reenacted par. (1) and redesignated as par. (4) provisions of former par. (2)

    4. Inserted · 26 U.S.C. § 5008(d)

       Pub. L. 95–176, § 2(f), reenacted par. (1) and inserted reference to allowance of claims under par. (2) or (3)

    Source evidence

    Code amendment note
    Subsec. (d). Pub. L. 95–176, § 2(f), reenacted par. (1) and substituted heading “General” for “Allowance of tax” and “(or the tax equal to such tax imposed under section 7652)” for “or under section 7652”; added pars. (2) and (3); and redesignated as par. (4) provisions of former par. (2) and inserted reference to allowance of claims under par. (2) or (3).

    Enacted provision · exact public law section
    (f) Section 5008(d) of such Code is amended to read as follows: “(d) Distilled Spirits Returned to Bonded Premises.— “(1) General.— Whenever any distilled spirits withdrawn from bonded premises on payment or determination of tax are returned to the bonded premises of a distilled spirits plant under section 5215(a), the Secretary shall abate, remit, or (without interest) 26 USC 5001. 26 USC 7652. credit or refund the tax imposed under section 5001(a) (1) (or the tax equal to such tax imposed under section 7652) on the spirits so returned. “(2) Distilled spirits returned to bonded premises for storage pending exportation.— Whenever any distilled spirits are Credit or refund. Ante, p. 1363. returned under section 5215(b) to the bonded premises of a distilled spirits plant, the Secretary shall (without interest) credit or refund the internal revenue tax found to have been paid or determined with respect to such distilled spirits. Such amount of Amount. tax shall be the same amount which would be allowed as a drawback under section 5062(b) on the exportation of such distilled Ante, p. 1363. spirits. “(3) Distilled spirits stamped and labeled as bottled in bond.— Whenever any distilled spirits are returned under section Credit or refund. 5215(c) to the bonded premises of a distilled spirits plant, the Secretary shall (without interest) credit or refund the tax imposed under section 5001(a) (1) on the spirits so returned. 26 USC 5001. Claim, filing. “(4) Limitation.— No allowance under paragraph (1), (2), or (3) shall be made unless a claim is filed under such regulations as the Secretary may prescribe, by the proprietor of the distilled spirits plant to which the distilled spirits are returned within 6 months of the date of return.”

14. 1977

    Pub. L. 95–176 § 4(e) · 91 Stat. 1363

    Added · 26 U.S.C. § 5008(f)(5)

    Pub. L. 95–176, § 4(e), added par. (5)

    Source evidence

    Code amendment note
    Subsec. (f)(5). Pub. L. 95–176, § 4(e), added par. (5).

    Enacted provision · exact public law section
    (e) (1) Section 5008(f)(3) of such Code is amended by striking “and” at the end thereof. (2) Section 5008(f)(4) of such Code is amended by striking out the period at the end thereof and inserting in lieu thereof “; and”. (3) Section 5008(f) of such Code is amended by adding at the end thereof the following: “(5) the customs bonded warehouse in the case of withdrawal Ante, pp. 1364, 1365. under sections 5066 and 5214(a) (9). The provisions of subsection (a) shall be applicable to loss of distilled spirits withdrawn from bonded premises without payment of tax under section 5214(a) (10) for certain research, development, or testing, until such distilled spirits are used as provided by law.”

15. 1979

    Trade Agreements Act of 1979

    Pub. L. 96–39 § 807(a)(6)(A) · 93 Stat. 144

    Added · 26 U.S.C. § 5008(a)(1)(C)

    Pub. L. 96–39, § 807(a)(6)(A), added subpar. (C)

    Source evidence

    Code amendment note
    Subsec. (a)(1)(C). Pub. L. 96–39, § 807(a)(6)(A), added subpar. (C).

    Enacted provision · exact public law section
    (A) Paragraph (1) of section 5008(a) (relating to distilled spirits lost or destroyed in bond) is amended— (i) by striking out “and” at the end of subparagraph (A), (ii) by striking out “subsection (b)(1).’ at the end of subparagraph (B) and inserting in lieu thereof “subsection (b); and”, and (iii) by adding at the end thereof the following new subparagraph: “(C) Unexplained shortage.— In the case of an unexplained shortage of bottled distilled spirits.”

16. 1979

    Trade Agreements Act of 1979

    Pub. L. 96–39 § 807(a)(6)(B) · 93 Stat. 144

    1. Substituted · 26 U.S.C. § 5008(a)(5)

       Pub. L. 96–39, § 807(a)(6)(B), substituted “before” for “prior to the completion”

    2. Struck · 26 U.S.C. § 5008(a)(5)

       Pub. L. 96–39, § 807(a)(6)(B), struck out provisions relating to the applicability of this subsection where the loss occurred after the time prescribed for the withdrawal of the distilled spirits from the bonded premises under section 5006(a)(2) and relating to the applicability of this paragraph to any loss of distilled spirits for which abatement, remission, credit, or refund of tax is allowed under subsec. (c)

    Source evidence

    Code amendment note
    Subsec. (a)(5). Pub. L. 96–39, § 807(a)(6)(B), substituted “before” for “prior to the completion” and struck out provisions relating to the applicability of this subsection where the loss occurred after the time prescribed for the withdrawal of the distilled spirits from the bonded premises under section 5006(a)(2) and relating to the applicability of this paragraph to any loss of distilled spirits for which abatement, remission, credit, or refund of tax is allowed under subsec. (c).

    Enacted provision · exact public law section
    (B) Paragraph (5) of section 5008(a) is amended to read as follows: “(5) Applicability.— The provisions of this subsection shall extend to and apply in respect of distilled spirits lost after the tax was determined and before completion of the physical removal of the distilled spirits from the bonded premises.”

17. 1979

    Trade Agreements Act of 1979

    Pub. L. 96–39 § 807(a)(6)(C) · 93 Stat. 144

    Struck · 26 U.S.C. § 5008(b)

    Pub. L. 96–39, § 807(a)(6)(C), struck out “(1) Distilled spirits in bond” before “The proprietor of” and provisions relating to distilled spirits withdrawn for rectification or bottling

    Source evidence

    Code amendment note
    Subsec. (b). Pub. L. 96–39, § 807(a)(6)(C), struck out “(1) Distilled spirits in bond” before “The proprietor of” and provisions relating to distilled spirits withdrawn for rectification or bottling.

    Enacted provision · exact public law section
    (C) Section 5008 is amended by striking out subsections (b), (c), (d), and (e) and by inserting in lieu thereof the following: “(b) Voluntary Destruction.— The proprietor of the distilled spirits plant or other persons liable for the tax imposed by this chapter or by section 7652 with respect to any distilled spirits in bond may voluntarily destroy such spirits, but only if such destruction is under such supervision and under such regulations as the Secretary may prescribe. “(c) Distilled Spirits Returned to Bonded Premises.— “(1) In general.— Whenever any distilled spirits withdrawn from bonded premises on payment or determination of tax are returned to the bonded premises of a distilled spirits plant under section 5215(a), the Secretary shall abate or (without interest) credit or refund the tax imposed under section 5001(a)(1) (or the tax equal to such tax imposed under section 7652) on the spirits so returned. “(2) Claim must be filed within 6 months of return of spirits.— No allowance under paragraph (1) may be made unless claim therefor is filed within 6 months of the date of the return of the spirits. Such claim may be filed only by the proprietor of the distilled spirits plant to which the spirits were returned, and shall be filed in such form as the Secretary may by regulations prescribe.”

18. 1979

    Trade Agreements Act of 1979

    Pub. L. 96–39 § 807(a)(6)(C) · 93 Stat. 144

    Struck · 26 U.S.C. § 5008(c)

    Pub. L. 96–39, § 807(a)(6)(C), added subsec. (c). Former subsec. (c), which related to loss of distilled spirits withdrawn from bond for rectification or bottling, was struck out

    Source evidence

    Code amendment note
    Subsec. (c). Pub. L. 96–39, § 807(a)(6)(C), added subsec. (c). Former subsec. (c), which related to loss of distilled spirits withdrawn from bond for rectification or bottling, was struck out.

    Enacted provision · exact public law section
    (C) Section 5008 is amended by striking out subsections (b), (c), (d), and (e) and by inserting in lieu thereof the following: “(b) Voluntary Destruction.— The proprietor of the distilled spirits plant or other persons liable for the tax imposed by this chapter or by section 7652 with respect to any distilled spirits in bond may voluntarily destroy such spirits, but only if such destruction is under such supervision and under such regulations as the Secretary may prescribe. “(c) Distilled Spirits Returned to Bonded Premises.— “(1) In general.— Whenever any distilled spirits withdrawn from bonded premises on payment or determination of tax are returned to the bonded premises of a distilled spirits plant under section 5215(a), the Secretary shall abate or (without interest) credit or refund the tax imposed under section 5001(a)(1) (or the tax equal to such tax imposed under section 7652) on the spirits so returned. “(2) Claim must be filed within 6 months of return of spirits.— No allowance under paragraph (1) may be made unless claim therefor is filed within 6 months of the date of the return of the spirits. Such claim may be filed only by the proprietor of the distilled spirits plant to which the spirits were returned, and shall be filed in such form as the Secretary may by regulations prescribe.”

19. 1979

    Trade Agreements Act of 1979

    Pub. L. 96–39 § 807(a)(6)(D) · 93 Stat. 144

    Redesignated · 26 U.S.C. § 5008(d)

    Pub. L. 96–39, § 807(a)(6)(D), redesignated subsec. (f) as (d). Former subsec. (d), which related to distilled spirits returned to bonded premises, was struck out

    Source evidence

    Code amendment note
    Subsec. (d). Pub. L. 96–39, § 807(a)(6)(D), redesignated subsec. (f) as (d). Former subsec. (d), which related to distilled spirits returned to bonded premises, was struck out.

    Enacted provision · exact public law section
    (D) Section 5008 is amended by redesignating subsections (f), (g), and (h) as subsections (d), (e), and (f), respectively.

20. 1979

    Trade Agreements Act of 1979

    Pub. L. 96–39 § 807(a)(6)(D) · 93 Stat. 144

    1. Redesignated · 26 U.S.C. § 5008(e)

       Pub. L. 96–39, § 807(a)(6)(D), (E), redesignated subsec. (g) as (e)

    2. Substituted · 26 U.S.C. § 5008(e)

       Pub. L. 96–39, § 807(a)(6)(D), (E), substituted “subsection (c)” for “subsections (b)(2), (c), and (d)” . Former subsec. (e), which related to samples of distilled spirits used for analysis or testing by United States, was struck out

    3. Substituted · 26 U.S.C. § 5008(e)

       Pub. L. 96–39, § 807(a)(6)(D), (E), substituted “under such subsection” for “under such subsections” . Former subsec. (e), which related to samples of distilled spirits used for analysis or testing by United States, was struck out

    Source evidence

    Code amendment note
    Subsec. (e). Pub. L. 96–39, § 807(a)(6)(D), (E), redesignated subsec. (g) as (e) and substituted “subsection (c)” for “subsections (b)(2), (c), and (d)” and “under such subsection” for “under such subsections”. Former subsec. (e), which related to samples of distilled spirits used for analysis or testing by United States, was struck out.

    Enacted provision · exact public law section
    (D) Section 5008 is amended by redesignating subsections (f), (g), and (h) as subsections (d), (e), and (f), respectively.

21. 1979

    Trade Agreements Act of 1979

    Pub. L. 96–39 § 807(a)(6)(D) · 93 Stat. 144

    Redesignated · 26 U.S.C. § 5008(f)

    Pub. L. 96–39, § 807(a)(6)(D), redesignated subsec. (h) as (f). Former subsec. (f) redesignated (d)

    Source evidence

    Code amendment note
    Subsec. (f). Pub. L. 96–39, § 807(a)(6)(D), redesignated subsec. (h) as (f). Former subsec. (f) redesignated (d).

    Enacted provision · exact public law section
    (D) Section 5008 is amended by redesignating subsections (f), (g), and (h) as subsections (d), (e), and (f), respectively.

22. 1979

    Trade Agreements Act of 1979

    Pub. L. 96–39 § 807(a)(6)(D) · 93 Stat. 144

    Redesignated · 26 U.S.C. § 5008(g); 26 U.S.C. § 5008(h)

    Pub. L. 96–39, § 807(a)(6)(D), redesignated subsecs. (g) and (h) as (e) and (f), respectively

    Source evidence

    Code amendment note
    Subsecs. (g), (h). Pub. L. 96–39, § 807(a)(6)(D), redesignated subsecs. (g) and (h) as (e) and (f), respectively.

    Enacted provision · exact public law section
    (D) Section 5008 is amended by redesignating subsections (f), (g), and (h) as subsections (d), (e), and (f), respectively.

23. 1997

    Pub. L. 105–34 title XIV § 1411(a) · 111 Stat. 788

    Substituted · 26 U.S.C. § 5008(c)(1)

    Pub. L. 105–34 substituted “on which tax has been determined or paid” for “withdrawn from bonded premises on payment or determination of tax”

    Source evidence

    Code amendment note
    Subsec. (c)(1). Pub. L. 105–34 substituted “on which tax has been determined or paid” for “withdrawn from bonded premises on payment or determination of tax”.

    Enacted provision · exact public law section
    (a) In General.— Section 5008(c)(1) (relating to distilled spirits returned to bonded premises) is amended by striking “withdrawn from bonded premises on payment or determination of tax” and inserting “on which tax has been determined or paid”.

    Effective date note
    Pub. L. 105–34, title XIV, § 1411(b), Aug. 5, 1997, 111 Stat. 1046, provided that: “The amendment made by subsection (a) [amending this section] shall take effect on the 1st day of the 1st calendar quarter that begins at least 180 days after the date of the enactment of this Act [Aug. 5, 1997].”

26 of 31 references resolved to an enrolled provision · 5 partial