§ 613. Percentage depletion

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. 1954

   Aug. 16, 1954, ch. 736, 68A Stat. 208 · 68A Stat. 208

   Enacted · 26 U.S.C. § 613

   Aug. 16, 1954, ch. 736, 68A Stat. 208

   Source evidence

   Code source credit
   Aug. 16, 1954, ch. 736, 68A Stat. 208

2. 1958

   Technical Amendments Act of 1958

   Pub. L. 85–866 title I § 36(a) · 72 Stat. 1606

   Added · 26 U.S.C. § 613(d)

   Pub. L. 85–866 added subsec. (d)

   Source evidence

   Code amendment note
   Subsec. (d). Pub. L. 85–866 added subsec. (d).

   Enacted provision · exact public law section
   (a) Applicable Rates.— Section 613 (relating to percentage depletion) 26 USC 613. is amended by adding at the end thereof the following new subsection: “(d) Application of Percentage Depletion Rates to Certain Taxable Years Ending in 1954.— “(1) General rule.— At the election of the taxpayer in respect of any property (within the meaning of the Internal Revenue Code of 1939), the percentage specified in subsection (b) in the case of any mine, well, or other natural deposit listed in such subsection shall apply to a taxable year ending after December 31, 1953, to which the Internal Revenue Code of 1939 applies. “(2) Method of computation.— The allowance for depletion, in respect of any property for which an election is made under paragraph (1) for any taxable year, shall be an amount equal to the sum of— “(A) that portion of a tentative allowance, computed under the Internal Revenue Code of 1939 without regard to paragraph (1) of this subsection, which the number of days in such taxable year before January 1, 1954, bears to the total number of days in such taxable year; plus “(B) that portion of a tentative allowance, computed under the Internal Revenue Code of 1939 (as modified solely by the application of paragraph (1) of this subsection), which the number of days in such taxable year after December 31, 1953, bears to the total number of days in such taxable year.”

3. 1960

   Public Debt and Tax Rate Extension Act of 1960

   Pub. L. 86–564 § 302(a)(1) · 74 Stat. 290

   Changed · 26 U.S.C. § 613(b)(3)

   Pub. L. 86–564, § 302(a)(1), limited the 15 percent allowance for ball clay, bentonite, china clay, and sagger clay to cases where paragraph (5)(B) does not apply, and authorized a 15 percent allowance, if paragraph (5)(B) does not apply, for clay used or sold for use for purposes dependent on its refractory properties

   Source evidence

   Code amendment note
   Subsec. (b)(3). Pub. L. 86–564, § 302(a)(1), limited the 15 percent allowance for ball clay, bentonite, china clay, and sagger clay to cases where paragraph (5)(B) does not apply, and authorized a 15 percent allowance, if paragraph (5)(B) does not apply, for clay used or sold for use for purposes dependent on its refractory properties.

   Enacted provision · exact public law section
   (1) Paragraph (3) is amended to read as follows: “(3) 15 percent— “(A) metal mines (if paragraph (2) (B) does not apply), rock asphalt, and vermiculite; and “(B) if paragraph (5) (B) does not apply, ball clay, bentonite, china clay, sagger clay, and clay used or sold for use for purposes dependent on its refractory properties.”

4. 1960

   Public Debt and Tax Rate Extension Act of 1960

   Pub. L. 86–564 § 302(a)(2) · 74 Stat. 290

   Substituted · 26 U.S.C. § 613(b)(5)

   Pub. L. 86–564, § 302(a)(2), substituted provisions authorizing a 5 percent allowance for clay used, or sold for use, in the manufacture of building or paving brick, drainage and roofing tile, sewer pipe, flower pots, and kindred products for provisions which authorized a 5 percent allowance for brick and tile clay

   Source evidence

   Code amendment note
   Subsec. (b)(5). Pub. L. 86–564, § 302(a)(2), substituted provisions authorizing a 5 percent allowance for clay used, or sold for use, in the manufacture of building or paving brick, drainage and roofing tile, sewer pipe, flower pots, and kindred products for provisions which authorized a 5 percent allowance for brick and tile clay.

   Enacted provision · exact public law section
   (2) Paragraph (5) is amended to read as follows: “(5) 5 percent— “(A) gravel, mollusk shells (including clam shells and oyster shells), peat, pumice, sand, scoria, shale, and stone, except stone described in paragraph (6); “(B) clay used, or sold for use, in the manufacture of building or paving brick, drainage and roofing tile, sewer pipe, flower pots, and kindred products; and “(C) if from brine wells—bromine, calcium chloride, and magnesium chloride.”

5. 1960

   Public Debt and Tax Rate Extension Act of 1960

   Pub. L. 86–564 § 302(a)(3) · 74 Stat. 290

   Struck · 26 U.S.C. § 613(b)(6)

   Pub. L. 86–564, § 302(a)(3), struck out provisions which authorized a 15 percent allowance for refractory and fire clay. See subsec. (b)(3) of this section

   Source evidence

   Code amendment note
   Subsec. (b)(6). Pub. L. 86–564, § 302(a)(3), struck out provisions which authorized a 15 percent allowance for refractory and fire clay. See subsec. (b)(3) of this section.

   Enacted provision · exact public law section
   (3) Paragraph (6) is amended by striking “refractory and fire clay,”.

6. 1960

   Public Debt and Tax Rate Extension Act of 1960

   Pub. L. 86–564 § 302(b)(1) · 74 Stat. 290

   1. Substituted · 26 U.S.C. § 613(c)(2)

      Pub. L. 86–564, § 302(b)(1), substituted “the treatment processes considered as mining described in paragraph (4) (and the treatment processes necessary or incidental thereto)” for “the ordinary treatment processes normally applied by mine owners or operators in order to obtain the commercially marketable mineral product or products”

   2. Substituted · 26 U.S.C. § 613(c)(2)

      Pub. L. 86–564, § 302(b)(1), substituted “such treatment processes” for “the ordinary treatment processes”

   Source evidence

   Code amendment note
   Subsec. (c)(2). Pub. L. 86–564, § 302(b)(1), substituted “the treatment processes considered as mining described in paragraph (4) (and the treatment processes necessary or incidental thereto)” for “the ordinary treatment processes normally applied by mine owners or operators in order to obtain the commercially marketable mineral product or products”, and “such treatment processes” for “the ordinary treatment processes”.

   Enacted provision · exact public law section
   (1) By amending paragraph (2) to read as follows: “(2) Mining.— The term ‘mining’ includes not merely the extraction of the ores or minerals from the ground but also the treatment processes considered as mining described in paragraph (4) (and the treatment processes necessary or incidental thereto), and so much of the transportation of ores or minerals (whether or not by common carrier) from the point of extraction from the ground to the plants or mills in which such treatment processes are applied thereto as is not in excess of 50 miles unless the Secretary or his delegate finds that the physical and other requirements are such that the ore or mineral must be transported a greater distance to such plants or mills.”

7. 1960

   Public Debt and Tax Rate Extension Act of 1960

   Pub. L. 86–564 § 302(b)(2) · 74 Stat. 290

   1. Substituted · 26 U.S.C. § 613(c)(4)

      Pub. L. 86–564, § 302(b)(2), substituted “The following treatment processes where applied by the mine owner or operator shall be considered as mining to the extent they are applied to the ore or mineral in respect of which he is entitled to a deduction for depletion under section 611” for “The term ‘ordinary treatment processes’ includes the following” in opening provisions, included cleaning in subpar. (B)

   2. Substituted · 26 U.S.C. § 613(c)(4)

      Pub. L. 86–564, § 302(b)(2), substituted “ores or minerals which” for “minerals which” and included substantially equivalent processes in subpar. (C), included uranium and minerals which are not customarily sold in the form of the crude mineral product

   3. Substituted · 26 U.S.C. § 613(c)(4)

      Pub. L. 86–564, § 302(b)(2), substituted “from the ore or the mineral or minerals from other material from the mine or other natural deposit” for “from the ore, including the furnacing of quicksilver ores” in subpar. (D), included the furnacing of quicksilver ores in subpar. (E)

   4. Added · 26 U.S.C. § 613(c)(4)

      Pub. L. 86–564, § 302(b)(2), added subpars. (F) to (H)

   Source evidence

   Code amendment note
   Subsec. (c)(4). Pub. L. 86–564, § 302(b)(2), substituted “The following treatment processes where applied by the mine owner or operator shall be considered as mining to the extent they are applied to the ore or mineral in respect of which he is entitled to a deduction for depletion under section 611” for “The term ‘ordinary treatment processes’ includes the following” in opening provisions, included cleaning in subpar. (B), substituted “ores or minerals which” for “minerals which” and included substantially equivalent processes in subpar. (C), included uranium and minerals which are not customarily sold in the form of the crude mineral product and substituted “from the ore or the mineral or minerals from other material from the mine or other natural deposit” for “from the ore, including the furnacing of quicksilver ores” in subpar. (D), included the furnacing of quicksilver ores in subpar. (E), and added subpars. (F) to (H).

   Enacted provision · exact public law section
   (2) By striking out paragraph (4) and inserting in lieu thereof the following new paragraphs: “(4) Treatment processes considered as mining.— The following treatment processes where applied by the mine owner or operator shall be considered as mining to the extent they are applied to the ore or mineral in respect of which he is entitled 26 USC 611. to a deduction for depletion under section 611: “(A) In the case of coal—cleaning, breaking, sizing, dust allaying, treating to prevent freezing, and loading for shipment; “(B) in the case of sulfur recovered by the Frasch process—cleaning, pumping to vats, cooling, breaking, and loading for shipment; “(C) in the case of iron ore, bauxite, ball and sagger clay, rock asphalt, and ores or minerals which are customarily sold in the form of a crude mineral product—sorting, concentrating, sintering, and substantially equivalent processes to bring to snipping grade and form, and loading for shipment; “(D) in the case of lead, zinc, copper, gold, silver, uranium, or fluorspar ores, potash, and ores or minerals which are not customarily sold in the form of the crude mineral product—crushing, grinding, and beneficiation by concentration (gravity, flotation, amalgamation, electrostatic, or magnetic), cyanidation, leaching, crystallization, precipitation (out not including electrolytic deposition, roasting, thermal or electric smelting, or refining), or by substantially equivalent processes or combination of processes used in the separation or extraction of the product or products from the ore or the mineral or minerals from other material from the mine or other natural deposit; “(E) the pulverization of talc, the burning of magnesite, the sintering and nodulizing of phosphate rock, and the furnacing of quicksilver ores; “(F) in the case of calcium carbonates and other minerals when used in making cement—all processes (other than preheating of the kiln feed) applied prior to the introduction of the kiln feed into the kiln, but not including any subsequent process; “(G) in the case of clay to which paragraph (5) (B) of subsection (b) applies—crushing, grinding, and separating the mineral from waste, but not including any subsequent process; and “(H) any other treatment process provided for by regulations prescribed by the Secretary or his delegate which, with respect to the particular ore or mineral, is not inconsistent with the preceding provisions of this paragraph. “(5) Treatment processes not considered as mining.— Unless such processes are otherwise provided for in paragraph (4) (or are necessary or incidental to processes so provided for), the following treatment processes shall not be considered as ‘mining’: electrolytic deposition, roasting, calcining, thermal or electric smelting, refining, polishing, fine pulverization, blending with other materials, treatment effecting a chemical change, thermal action, and molding or shaping.”

8. 1960

   Public Debt and Tax Rate Extension Act of 1960

   Pub. L. 86–564 § 302(b)(2) · 74 Stat. 290

   Added · 26 U.S.C. § 613(c)(5)

   Pub. L. 86–564, § 302(b)(2), added par. (5)

   Source evidence

   Code amendment note
   Subsec. (c)(5). Pub. L. 86–564, § 302(b)(2), added par. (5).

   Enacted provision · exact public law section
   (2) By striking out paragraph (4) and inserting in lieu thereof the following new paragraphs: “(4) Treatment processes considered as mining.— The following treatment processes where applied by the mine owner or operator shall be considered as mining to the extent they are applied to the ore or mineral in respect of which he is entitled 26 USC 611. to a deduction for depletion under section 611: “(A) In the case of coal—cleaning, breaking, sizing, dust allaying, treating to prevent freezing, and loading for shipment; “(B) in the case of sulfur recovered by the Frasch process—cleaning, pumping to vats, cooling, breaking, and loading for shipment; “(C) in the case of iron ore, bauxite, ball and sagger clay, rock asphalt, and ores or minerals which are customarily sold in the form of a crude mineral product—sorting, concentrating, sintering, and substantially equivalent processes to bring to snipping grade and form, and loading for shipment; “(D) in the case of lead, zinc, copper, gold, silver, uranium, or fluorspar ores, potash, and ores or minerals which are not customarily sold in the form of the crude mineral product—crushing, grinding, and beneficiation by concentration (gravity, flotation, amalgamation, electrostatic, or magnetic), cyanidation, leaching, crystallization, precipitation (out not including electrolytic deposition, roasting, thermal or electric smelting, or refining), or by substantially equivalent processes or combination of processes used in the separation or extraction of the product or products from the ore or the mineral or minerals from other material from the mine or other natural deposit; “(E) the pulverization of talc, the burning of magnesite, the sintering and nodulizing of phosphate rock, and the furnacing of quicksilver ores; “(F) in the case of calcium carbonates and other minerals when used in making cement—all processes (other than preheating of the kiln feed) applied prior to the introduction of the kiln feed into the kiln, but not including any subsequent process; “(G) in the case of clay to which paragraph (5) (B) of subsection (b) applies—crushing, grinding, and separating the mineral from waste, but not including any subsequent process; and “(H) any other treatment process provided for by regulations prescribed by the Secretary or his delegate which, with respect to the particular ore or mineral, is not inconsistent with the preceding provisions of this paragraph. “(5) Treatment processes not considered as mining.— Unless such processes are otherwise provided for in paragraph (4) (or are necessary or incidental to processes so provided for), the following treatment processes shall not be considered as ‘mining’: electrolytic deposition, roasting, calcining, thermal or electric smelting, refining, polishing, fine pulverization, blending with other materials, treatment effecting a chemical change, thermal action, and molding or shaping.”

9. 1962

   Revenue Act of 1962

   Pub. L. 87–834 § 13(e) · 76 Stat. 960

   Inserted · 26 U.S.C. § 613(a)

   Pub. L. 87–834 inserted provisions requiring the allowable deductions taken into account with respect to expenses of mining in computing the taxable income from the property to be decreased by an amount equal to so much of any gain which is treated under section 1245 as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231, and is properly allocable to the property

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 87–834 inserted provisions requiring the allowable deductions taken into account with respect to expenses of mining in computing the taxable income from the property to be decreased by an amount equal to so much of any gain which is treated under section 1245 as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231, and is properly allocable to the property.

   Enacted provision · exact public law section
   (e) Computation of Taxable Income for Purposes of Limitation on Percentage Depletion Deduction.— Section 613(a) (relating to percentage depletion) is amended by inserting after the second sentence thereof the following new sentence: “For purposes of the preceding sentence, the allowable deductions taken into account with respect to expenses of mining in computing the taxable income from the property shall be decreased by an amount equal to so much of any gain which (1) is treated under section 1245 (relating to gain from disposition of certain depreciable property) as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231, and (2) is properly allocable to the 26 USC 1231. property.”

10. 1964

    Pub. L. 88–571 § 6(a) · 78 Stat. 857

    Inserted · 26 U.S.C. § 613(b)(2)(B); 26 U.S.C. § 613(b)(2)(6)

    Pub. L. 88–571 inserted “beryllium” after “antimony” in par. (2)(B), and deleted “beryl” after “bauxite” in pars. (2)(B) and (6)

    Source evidence

    Code amendment note
    Subsec. (b)(2)(B), (6). Pub. L. 88–571 inserted “beryllium” after “antimony” in par. (2)(B), and deleted “beryl” after “bauxite” in pars. (2)(B) and (6).

    Enacted provision · exact public law section
    (a) Section 613(b) of the Internal Revenue Code of 1954 (relating to percentage depletion rates) is amended— (1) by striking out “beryl,” in paragraphs (2) (B) and (6); and (2) by inserting “beryllium,” after “antimony,” in paragraph (2)(B).

11. 1966

    Pub. L. 89–809 § 207(a)(1) · 80 Stat. 1539

    Inserted · 26 U.S.C. § 613(b)(2)(B)

    Pub. L. 89–809, § 207(a)(1), inserted “clay, laterite, and nephelite syenite” after “anorthosite”

    Source evidence

    Code amendment note
    Subsec. (b)(2)(B). Pub. L. 89–809, § 207(a)(1), inserted “clay, laterite, and nephelite syenite” after “anorthosite”.

    Enacted provision · exact public law section
    (1) by inserting “clay, laterite, and nephelite syenite” after “anorthosite” in paragraph (2)(B); and

12. 1966

    Pub. L. 89–809 title II · 80 Stat. 1539

    Substituted · 26 U.S.C. § 613(b)(3)(B)

    Pub. L. 89–809, §§ 207(a)(2), 209(a)(2), substituted “if neither paragraph (2)(B), (5), or (6)(B) applies” for “if paragraph (5)(B) does not apply”

    Source evidence

    Code amendment note
    Subsec. (b)(3)(B). Pub. L. 89–809, §§ 207(a)(2), 209(a)(2), substituted “if neither paragraph (2)(B), (5), or (6)(B) applies” for “if paragraph (5)(B) does not apply”.

    Enacted provision · exact public law
    TITLE II— OTHER AMENDMENTS TO INTERNAL REVENUE CODE SEC. 201. APPLICATION OF INVESTMENT CREDIT TO PROPERTY USED IN POSSESSIONS OF THE UNITED STATES. (a) Property Used by Domestic Corporations, Etc.— Section 48(a)(2)(B) (relating to property used outside the United States) is amended— (1) by striking out “and” at the end of clause (v); (2) by striking out the period at the end of clause (vi) and inserting in lieu thereof and”; and (3) by adding at the end thereof the following new clause: “(vii) any property which is owned by a domestic corporation (other than a corporation entitled to the benefits of section 931 or 934(b)) or by a United States citizen (other than a citizen entitled to the benefits of 68A Stat. 291; 74 Stat. 998. section 931, 932, 933, or 934(c)) and which is used predominantly in a possession of the United States by such a corporation or such a citizen, or by a corporation created or organized in, or under the law of, a possession of the United States.” (b) Effective Date.— The amendments made by subsection (a) shall apply to taxable years ending after December 31, 1965, but only with respect to property placed in service after such date. In applying 76 Stat. 963. section 46(b) of the Internal Revenue Code of 1954 (relating to carryback and carryover of unused credits), the amount of any investment credit carryback to any taxable year ending on or before December 31, 1965, shall be determined without regard to the amendments made by this section. SEC. 202. BASIS OF PROPERTY RECEIVED ON LIQUIDATION OF SUBSIDIARY. (a) Definition of Purchase.— Section 334(b)(3) (relating to definition of purchase) is amended by adding at the end thereof the following new sentence: “Notwithstanding subparagraph (C) of this paragraph, for purposes of paragraph (2)(B), the term ‘purchase’ also means an acquisition of stock from a corporation when ownership of such stock would be attributed under section 318(a) to the person acquiring such stock, if the stock of such corporation by reason of which such ownership would be attributed was acquired by purchase (within the meaning of the preceding sentence).” (b) Period of Acquisition.— Section 334(b)(2)(B) (relating to exception) is amended by striking out “during a period of not more than 12 months,” and inserting in lieu thereof “during a 12-month period beginning with the earlier of— “(i) the date of the first acquisition by purchase of such stock, or “(ii) if any of such stock was acquired in an acquisition which is a purchase within the meaning of the second sentence of paragraph (3), the date on which the distributee is first considered under section 318(a) as owning stock owned by the corporation from which such acquisition was made,”. (c) Distribution of Installment Obligations.— Section 453(d)(4)(A) (relating to distribution of installment obligations in certain liquidations) is amended to read as follows: “(A) Liquidations to which section 332 applies.— If— “(i) an installment obligation is distributed in a liquidation to which section 332 (relating to complete liquidations of subsidiaries) applies, and “(ii) the basis of such obligation in the hands of the distributee is determined under section 334(b)(1), then no gain or loss with respect to the distribution of such obligation shall be recognized by the distributing corporation.” (d) Effective Dates.— The amendment made by subsection (a) shall apply only with respect to acquisitions of stock after December 31, 1965. The amendments made by subsections (b) and (c) shall apply only with respect to distributions made after the date of the enactment of this Act. SEC. 203. TRANSFERS OF PROPERTY TO INVESTMENT COMPANIES CONTROLLED BY TRANSFERORS. (a) Transfers to Investment Companies.— The first sentence of section 351(a) (relating to transfer to corporation controlled by the 68A Stat. 111. transferor) is amended by striking out “to a corporation” and inserting in lieu thereof “to a corporation (including, in the case of transfers made on or before June 30, 1967, an investment company)”. (b) Investment Companies Required to File Registration Statement With the S.E.C.— Section 351 is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection: “(d) Application of June 30, 1967, Date.— For purposes of this section, if, in connection with the transaction, a registration statement is required to be filed with the Securities and Exchange Commission, a transfer of property to an investment company shall be treated as made on or before June 30, 1967, only if— “(1) such transfer is made on or before such date, “(2) the registration statement was filed with the Securities and Exchange Commission before January 1, 1967, and the aggregate issue price of the stock and securities of the investment company which are issued in the transaction does not exceed the aggregate amount therefor specified in the registration statement as of the close of December 31, 1966, and “(3) the transfer of property to the investment company in the transaction includes only property deposited before May 1, 1967.” (c) Effective Date.— The amendments made by subsections (a) and (b) shall apply with respect to transfers of property to investment companies whether made before, on, or after the date of the enactment of this Act. SEC. 204. REMOVAL OF SPECIAL LIMITATIONS WITH RESPECT TO DEDUCTIBILITY OF CONTRIBUTIONS TO PENSION PLANS BY SELF-EMPLOYED INDIVIDUALS. (a) Removal of Special Limitations.— Paragraph (10) of section Repeal. 76 Stat. 820. 404(a) (relating to special limitation on amount allowed as deduction for self-employed individuals for contributions to certain pension, etc., plans) is repealed. (b) Conforming Amendments.— (1) Each of the following provisions of section 401 is amended by striking out “(determined without regard to section 404(a)(10))” each place it appears: (A) Subsection (a)(10)(A)(ii). (B) Subparagraphs (A) and (B) of subsection (d)(5). (C) Subparagraph (A) of subsection (d)(6). (D) Subparagraphs (A) and (B)(i) of subsection (e)(1). (E) Subparagraphs (B) and (C) and the last sentence of subsection (e)(3). (2) Subparagraph (A) of section 404(e)(2) is amended by striking out “(determined without regard to subsection (a)(10))”. (3) Paragraph (1) and subparagraph (B) of paragraph (2) of section 404(e) are each amended by striking out “(determined without regard to paragraph (10) thereof)”. (c) Definition of Earned Income.— Section 401(c)(2) (relating 76 Stat. 811. to definition of earned income for certain pension and profit-sharing plans) is amended by striking out subparagraphs (A) and (B) and inserting in lieu thereof the following: “(A) In general.— The term ‘earned income’ means the net earnings from self-employment (as defined in section 68A Stat. 353. 1402(a)), but such net earnings shall be determined— “(i) only with respect to a trade or business in which personal services of the taxpayer are a material income-producing factor, “(ii) without regard to paragraphs (4) and (5) of section 1402 (c), “(iii) in the case of any individual who is treated as an employee under sections 3121(d)(3)(A), (C), or 74 Stat. 945. (D), without regard to paragraph (2) of section 1402(c), and “(iv) without regard to items which are not included in gross income for purposes of this chapter, and the deductions properly allocable to or chargeable against such items. For purposes of this subparagraph, section 1402, as in effect for a taxable year ending on December 31, 1962, shall be treated as having been in effect for all taxable years ending before such date.” (d) Effective Date.— The amendments made by subsections (a) and (b) shall apply with respect to taxable years beginning after December 31, 1967. SEC. 205. TREATMENT OF CERTAIN INCOME OF AUTHORS, INVENTORS, ETC., AS EARNED INCOME FOR RETIREMENT PLAN PURPOSES. (a) Income From Disposition of Property Created by Tax-payer.— Section 401(c)(2) (relating to definition of earned income) is amended by adding at the end thereof the following new subparagraph: “(C) Income from disposition of certain property.— For purposes of this section, the term ‘earned income’ includes gains (other than any gain which is treated under any provision of this chapter as gain from the sale or exchange of a capital asset) and net earnings derived from the sale or other disposition of, the transfer of any interest in, or the licensing of the use of property (other than good will) by an individual whose personal efforts created such property. (b) Effective Date.— The amendment made by subsection (a) shall apply to taxable years ending after the date of the enactment of this Act. SEC. 206. EXCLUSION OF CERTAIN RENTS FROM PERSONAL HOLDING COMPANY INCOME. (a) Rents From Leases of Certain Tangible Personal Property.— Section 543(b)(3) (relating to adjusted income from rents) is amended by striking out “but does not include amounts constituting personal holding company income under subsection (a)(6), nor copyright royalties (as defined in subsection (a)(4) nor produced film rents (as defined in subsection (a)(5)(B)).” and inserting in lieu thereof the following: “but such term does not include— “(A) amounts constituting personal holding company income under subsection (a)(6), “(B) copyright royalties (as defined in subsection (a)(4)), “(C) produced film rents (as defined in subsection (a)(5)(B)), or “(D) compensation, however designated, for the use of, or the right to use, any tangible personal property manu-factured or produced by the taxpayer, if during the taxable year the taxpayer is engaged in substantial manufacturing or production of tangible personal property of the same type.” (b) Technical Amendments.— (1) Section 543(a)(2) (relating to adjusted income from rents 78 Stat. 81. included in personal holding company income) is amended by striking out the last sentence thereof. (2) Section 543(b)(2) (relating to definition of adjusted ordinary gross income) is amended by adding at the end thereof the following new subparagraph: “(D) Certain excluded rents.— From the gross income consisting of compensation described in subparagraph (D) of paragraph (3) subtract the amount allowable as deductions for the items described in clauses (i), (ii), (iii), and (iv) of subparagraph (A) to the extent allocable, under regulations prescribed by the Secretary or his delegate, to such gross income. The amount subtracted under this subparagraph shall not exceed such gross income.” (c) Effective Date.— The amendments made by subsections (a) and (b) shall apply to taxable years beginning after the date of the enactment of this Act. Such amendments shall also apply, at the election of the taxpayer (made at such time and in such manner as the Secretary or his delegate may prescribe), to taxable years beginning on or before such date and ending after December 31, 1965. SEC. 207. PERCENTAGE DEPLETION RATE FOR CERTAIN CLAY BEARING ALUMINA. (a) 23 Percent Rate.— Section 613(b) (relating to percentage depletion rates) is amended— (1) by inserting “clay, laterite, and nephelite syenite” after “anorthosite” in paragraph (2)(B); and (2) by striking out “if paragraph (5)(B) does not apply” in paragraph (3)(B) and inserting in lieu thereof “if neither paragraph (2)(B) nor (5)(B) applies”. (b) Effective Date.— The amendments made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act. SEC. 208. PERCENTAGE DEPLETION RATE FOR CLAM AND OYSTER SHELLS. (a) 15 Percent Rate.— Section 613(b) (relating to percentage 68A Stat. 208; 74 Stat. 291. depletion rates) is amended— (1) by striking out “mollusk shells (including clam shells and oyster shells),” in paragraph (5)(A), and (2) by inserting “mollusk shells (including clam shells and oyster shells),” after “marble,” in paragraph (6). (b) Effective Date.— The amendments made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act. SEC. 209. PERCENTAGE DEPLETION RATE FOR CERTAIN CLAY, SHALE, AND SLATE. (a) 7½ Percent Rate.— Section 613(b) (relating to percentage depletion rates) is amended— (1) by renumbering paragraphs (5) and (6) as (6) and (7), respectively, and by inserting after paragraph (4) the following new paragraph: “(5) 7½ percent—clay and shale used or sold for use in the manufacture of sewer pipe or brick, and clay, shale, and slate used or sold for use as sintered or burned lightweight aggregates.”; (2) by striking out in paragraph (3)(B)(as amended by section 207(a)(2)) “if neither paragraph (2)(B) nor (5)(B) applies” and inserting in lieu thereof “if neither paragraph (2)(B), (5), or (6)(B) applies”; (3) by striking out in paragraph (6)(as renumbered by paragraph (1)) “shale, and stone, except stone described in paragraph (6)” and inserting in lieu thereof “shale (except shale described in paragraph (5)), and stone (except stone described in paragraph (7))”; (4) by striking out, in subparagraph (B) of paragraph (6)(as so renumbered), “building or paving brick,” and by striking out “sewer pipe,”; and (5) by inserting after “any such other mineral” in paragraph (7)(as so renumbered) “(other than slate to which paragraph (5) applies)”. (b) Conforming Amendment.— Section 613(c)(4)(G) (relating to treatment processes) is amended by striking out “paragraph (5)(B)”and inserting in lieu thereof “paragraph (5) or (6)(B)”. (c) Effective Date.— The amendments made by subsections (a) and (b) shall apply to taxable years beginning after the date of the enactment of this Act. SEC. 210. STRADDLES. (a) Treatment as Short-Term Capital Gain.— Section 1234 (relating to options) is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection: “(c) Special Rule for Grantors of Straddles.— “(1) Gain on lapse.— In the case of gain on lapse of an option granted by the taxpayer as part of a straddle, the gain shall be deemed to be gain from the sale or exchange of a capital asset held for not more than 6 months on the day that the option expired. “(2) Exception.— This subsection shall not apply to any person who holds securities for sale to customers in the ordinary course of his trade or business. “(3) Definitions.— For purposes of this subsection— “(A) The term ‘straddle’ means a simultaneously granted combination of an option to buy, and an option to sell, the same quantity of a security at the same price during the same period of time. “(B) The term ‘security’ has the meaning assigned to such term by section 1236(c).” (b) Effective Date.— The amendments made by subsection (a) shall apply to straddle transactions entered into after January 25, 1965, in taxable years ending after such date. SEC. 211. TAX TREATMENT OF PER-UNIT RETAIN ALLOCATIONS. (a) Tax Treatment of Cooperatives.— (1) Section 1382(a) (relating to gross income of cooperatives) is amended by striking out the period at the end thereof and inserting “or by reason of any amount paid to a patron as a per-unit retain allocation (as defined in section 1388(f)).” (2) Section 1382(b) is amended— (A) by striking out “(b) Patronage Dividends.—” and inserting in lieu thereof “(b) Patronage Dividends and Per-Unit Retain Allocations.—”, (B) by striking out “or” at the end of paragraph (1), (C) by striking out the period at the end of paragraph (2) and inserting a semicolon in lieu thereof, (D) by striking out the sentence following paragraph (2) and inserting in lieu thereof the following: “(3) as per-unit retain allocations, to the extent paid in qualified per-unit retain certificates (as defined in section 1388(h)) with Post, p 1583. respect to marketing occurring during such taxable year; or “(4) in money or other property (except per-unit retain certificates) in redemption of a nonqualified per-unit retain certificate which was paid as a per-unit retain allocation during the payment period for the taxable year during which the marketing occurred. For purposes of this title, any amount not taken into account under the preceding sentence shall, in the case of an amount described in paragraph (1) or (2), be treated in the same manner as an item of gross income and as a deduction therefrom, and in the case of an amount described in paragraph (3) or (4), be treated as a deduction in arriving at gross income.” (3) Section 1382(e) is amended to read as follows: 76 Stat. 1047. “(e) Products Marketed Under Pooling Arrangements.— For purposes of subsection (b), in the case of a pooling arrangement for the marketing of products— “(1) the patronage shall (to the extent provided in regulations prescribed by the Secretary or his delegate) be treated as patronage occurring during the taxable year in which the pool closes, and “(2) the marketing of products shall be treated as occurring during any of the taxable years in which the pool is open.” (4) Section 1382(f) is amended by striking out “subsection (b)” and inserting in lieu thereof “paragraphs (1) and (2) of subsection (b)”. (5) The heading for section 1383 is amended by striking out the period at the end thereof and inserting “OR NONQUALIFIED PER-UNIT RETAIN CERTIFICATES.” (6) Section 1383(a) is amended— (A) by striking out “section 1382(b)(2)” and inserting in lieu thereof “section 1382(b)(2) or (4),”, (B) by striking out “nonqualified written notices of allocation” each place it appears and inserting in lieu thereof “non-qualified written notices of allocation or nonqualified per-unit retain certificates”, and (C) by striking out “qualified written notices of allocation” and inserting in lieu thereof “qualified written notices of allocation or qualified per-unit retain certificates (as the case may be)”. (7) Section 1383 (b)(2) is amended— (A) by striking out “nonqualified written notice of allocation” and inserting in lieu thereof “nonqualified written notice of allocation or nonqualified per-unit retain certificate”, (B) by striking out “qualified written notice of allocation” and inserting in lieu thereof “qualified written notice of allocation or qualified per-unit retain certificate (as the case may be)”, (C) by striking out “such written notice of allocation” and inserting in lieu thereof “such written notice of allocation or per-unit retain certificate”, and (D) by striking out “section 1382(b)(2)” and inserting in lieu thereof “section 1382(b)(2) or (4),”. (8) The table of sections for part I of subchapter T of chapter 1 is amended by striking out— “Sec. 1383. Computation of tax where cooperative redeems non-qualified written notices of allocation.” and inserting in lieu thereof— “Sec. 1383. Computation of tax where cooperative redeems non-qualified written notices of allocation or nonqualified per-unit retain certificates.” (b) Tax Treatment by Patrons.— (1) Section 1385(a) is amended by striking out “and” at the end of paragraph (1), by striking out the period at the end of paragraph (2) and inserting in lieu thereof “, and”, and by adding at the end thereof the following new paragraph: “(3) the amount of any per-unit retain allocation which is paid in qualified per-unit retain certificates and which is received by him during the taxable year from an organization described in section 1381(a).” (2) The heading for section 1385(c) is amended by striking out “Allocation” and inserting in lieu thereof “Allocation and Certain Nonqualified Per-Unit Retain Certificates”. (3) Section 1385(c)(1) is amended to read as follows: “(1) Application of subsection.— This subsection shall apply “(A) any nonqualified written notice of allocation which— “(i) was paid as a patronage dividend, or “(ii) was paid by an organization described in section 1381 (a)(1) on a patronage basis with respect to earnings derived from business or sources described in section 1382(c)(2)(A),and “(B) any nonqualified per-unit retain certificate which was paid as a per-unit retain allocation.” (4) Section 1385(c)(2) is amended— (A) by striking out “nonqualified written notice of allocation” and inserting in lieu thereof “nonqualified written notice of allocation or nonqualified per-unit retain certificate”, and (B) by striking out “such written notice of allocation” each place it appears and inserting in lieu thereof “such written notice of allocation or per-unit retain certificate”. (5) The table of parts for subchapter T of chapter 1 is amended by striking out— “Part II. Tax treatment by patrons of patronage dividends.” and inserting in lieu thereof— “Part II. Tax treatment by patrons of patronage dividends and per-unit retain allocations.” (c) Definitions.— (1) (A) Section 1388(e)(1) is amended by striking out “allocation)” and inserting in lieu thereof “allocation or a per-unit retain certificate)”. (B) Section 1388(e)(2) is amended by striking out “allocation” and inserting in lieu thereof “allocation or qualified per-unit retain certificate”. (2) Section 1388 is amended by adding at the end thereof the following new subsections: “(f) Per-Unit Retain Allocation.— For purposes of this subchapter, the term ‘per-unit retain allocation’ means any allocation, by an organization to which part I of this subchapter applies, other than by payment in money or other property (except per-unit retain certificates) to a patron with respect to products marketed for him, the amount of which is fixed without reference to the net earnings of the organization pursuant to an agreement between the organization and the patron. “(g) Per-Unit Retain Certificate.— For purposes of this subchapter, the term ‘per-unit retain certificate’ means any written notice which discloses to the recipient the stated dollar amount of a per-unit retain allocation to him by the organization. “(h) Qualified Per-Unit Retain Certificate.— “(1) Defined.— For purposes of this subchapter, the term ‘qualified per-unit retain certificate’ means any per-unit retain certificate which the distributee has agreed, in the manner provided in paragraph (2), to take into account at its stated dollar amount as provided in section 1385 (a). 76 Stat. 1048. “(2) Manner of obtaining agreement.— A distributee shall agree to take a per-unit retain certificate into account as provided in paragraph (1) only by— “(A) making such agreement in writing, or “(B) obtaining or retaining membership in the organization after— “(i) such organization has adopted (after the date of the enactment of this subsection) a bylaw providing that membership in the organization constitutes such agreement, and “(ii) he has received a written notification and copy of such bylaw. “(3) Period for which agreement is effective.— “(A) General rule.— Except as provided in subparagraph (B)— “(i) an agreement described in paragraph (2)(A) shall be an agreement with respect to all products delivered by the distributee to the organization during the taxable year of the organization during which such agreement is made and all subsequent taxable years of the organization; and “(ii) an agreement described in paragraph (2)(B) shall be an agreement with respect to all products delivered by the distributee to the organization after he received the notification and copy described in paragraph (2)(B)(ii). “(B) Revocation, etc.— “(i) Any agreement described in paragraph (2)(A) may be revoked (in writing) by the distributee at any time. Any such revocation shall be effective with respect to products delivered by the distributee on or after the first day of the first taxable year of the organization beginning after the revocation is filed with the organization; except that in the case of a pooling arrangement described in section 1382(e) a revocation made by a distributee 76 Stat. 1046. shall not be effective as to any products which were delivered to the organization by the distributee before such revocation. “(ii) Any agreement described in paragraph (2)(B) shall not be effective with respect to any products delivered after the distributee ceases to be a member of the organization or after the bylaws of the organization cease to contain the provision described in paragraph (2)(B)(i). “(i) Nonqualified Per-Unit Retain Certificate.— For purposes of this subchapter, the term ‘nonqualified per-unit retain certificate’ means a per-unit retain certificate which is not described in subsection (h).” (d) Information Reporting.— (1) Amounts subject to reporting.— Section 6044(b)(1) is amended by striking out “and” at the end of subparagraph (B), by striking out the period at the end of subparagraph (C) and inserting in lieu thereof “, and”, and by adding after subparagraph (C) the following new subparagraphs: “(D) the amount of any per-unit retain allocation (as defined in section 1388(f)) which is paid in qualified per-unit retain certificates (as defined in section 1388(h)), and “(E) any amount described in section 1382 (b)(4) (relating to redemption of nonqualified per-unit retain certificates).” (2) Determination of amount paid.— (A) Section 6044(d)(1) is amended by striking out “allocation)” and inserting in lieu thereof “allocation or a qualified per-unit retain certificate)”. (B) Section 6044(d)(2) is amended by striking out “allocation” and inserting in lieu thereof “allocation or a qualified per-unit retain certificate”. (e) Effective Dates.— (1) The amendments made by subsections (a), (b), and (c) shall apply to per-unit retain allocations made during taxable years of an organization described in section 1381(a) (relating to organizations to which part I of subchapter T of chapter 1 applies) beginning after April 30, 1966, with respect to products delivered during such years. (2) The amendments made by subsection (d) shall apply with respect to calendar years after 1966. (f) Transition Rule.— (1) Except as provided in paragraph (2), a written agreement between a patron and a cooperative association— (A) which clearly provides that the patron agrees to treat the stated dollar amounts of all per-unit retain certificates issued to him by the association as representing cash distributions which he has, of his own choice, reinvested in the cooperative association, (B) which is revocable by the patron at any time after the close of the taxable year in which it was made, (C) which was entered into after October 14, 1965, and before the date of the enactment of this Act, and (D) which is in effect on the date of the enactment of this Act, and with respect to which a written notice of revocation has not been furnished to the cooperative association, shall be effective (for the period prescribed in the agreement) for purposes of section 1388(h) of the Internal Revenue Code of 1954 as if entered into, pursuant to such section, after the date of the enactment of this Act. (2) An agreement described in paragraphs (1)(A) and (C) which was included in a by-law of the cooperative association and which is in effect on the date of the enactment of this Act shall be effective for purposes of section 1388(h) of such Code only for taxable years of the association beginning before May 1, 1967. SEC. 212. EXCISE TAX RATE ON AMBULANCES AND HEARSES. (a) Classification as Automobiles.— Section 4062 (relating to 68A Stat. 482; 78 Stat. 1086. definitions applicable to the tax on motor vehicles) is amended by adding at the end thereof the following new subsection: “(b) Ambulances, Hearses, Etc.— For purposes of section 4061 (a), a sale of an ambulance, hearse, or combination ambulance-hearse shall be considered to be a sale of an automobile chassis and an automobile body enumerated in subparagraph (B) of section 4061(a)(2).” 79 Stat. 136. (b) Effective Date.— The amendment made by subsection (a) shall apply with respect to articles sold after the date of the enactment of this Act. SEC. 213. APPLICABILITY OF EXCLUSION FROM INTEREST EQUALIZATION TAX OF CERTAIN LOANS TO ASSURE RAW MATERIALS SOURCES. (a) Exception to Exclusion.— Section 4914(d) (relating to loans 78 Stat. 813. to assure raw materials sources) is amended by adding at the end thereof the following new paragraph: “(3) Exception.— The exclusion from tax provided by paragraph (1) shall not apply in any case where the acquisition of the debt obligation of the foreign corporation is made with an intent to sell, or to offer to sell, any part of such debt obligation to United States persons.” (b) Technical Amendments.— (1) Section 4914(j)(1) (relating to loss of entitlement to exclusion in case of certain subsequent transfers) is amended— (A) by striking out in subparagraph (A) “, or the exclusion provided by subsection (d),”, and (B) by striking out “subsection (d) or (f)” in subparagraph (I)) and inserting in lieu thereof “subsection (f)”. (2) Section 4918 (relating to exemption for prior American 78 Stat. 831. ownership) is amended by adding at the end thereof the following new subsection: “(g) Certain Debt Obligations Arising Out of Loans To Assure Raw Material Sources.— Under regulations prescribed by the Secretary or his delegate, subsection (a) shall not apply to the acquisition by a United States person of any debt obligation to which section 4914(d) applied where the acquisition of the debt obligation by such person is made with an intent to sell, or to offer to sell, any part of such debt obligation to United States persons. The preceding sentence shall not apply if the tax imposed by section 4911 has applied 78 Stat. 809. to any prior acquisition of such debt obligation.” (c) Effective Date.— The amendments made by subsections (a) and (b) shall apply with respect to acquisitions of debt obligations made after the date of the enactment of this Act. SEC. 214. EXCLUSION FROM INTEREST EQUALIZATION TAX FOR CERTAIN ACQUISITIONS BY INSURANCE COMPANIES. (a) New Companies and Companies Operating in Former Less Developed Countries.— Section 4914(e) (relating to acquisitions by insurance companies doing business in foreign countries) is amended— (1) by striking out “at the time of the initial designation” in the last sentence of paragraph (2); (2) by striking out “An” in the first sentence of paragraph (3)(A)(i) and inserting in lieu thereof “Except as provided in clause (iii),an”; (3) by striking out “under this subparagraph” in paragraph (3)(A)(ii) and inserting in lieu thereof “under clause (i)”; (4) by adding after clause (ii) of paragraph (3)(A) the following new clauses: “(iii) Initial designation after October 2, 1964.— An insurance company which was not in existence on October 2, 1964, or was otherwise ineligible to establish a fund (or funds) of assets described in paragraph (2) by making an initial designation under clause (i) on or before such date, may establish (and thereafter currently maintain) such fund (or funds) of assets at any time after the enactment of this clause by designating stock of a foreign issuer or a debt obligation of a foreign obligor as a part of such fund in accordance with the provisions of clause (iv)(if applicable) and subparagraph (B)(i). “(iv) Funds involving currencies of former less developed countries.— An insurance company desiring to establish a fund under clause (iii) with respect to insurance contracts payable in the currency of a country designated as a less developed country on October 2, 1964, which thereafter has such designation terminated 78 Stat. 827. by an Executive order issued under section 4916(b), shall designate as assets of such fund, to the extent permitted by subparagraph (E), the stock of foreign issuers or debt obligations of foreign obligors as follows: First, stock and debt obligations having a period remaining to maturity of at least 1 year (other than stock or a debt obligation described in section 4916(a)) acquired before July 19, 1963, and owned by the company on the date which the President, in accordance with section 4916(b), communicates to Congress his intention to terminate the status of such country as a less developed country; second, stock and debt obligations having a period remaining to maturity of at least 1 year described m section 4916(a)(and owned by the company on the date of such termination) which, at the time of acquisition, qualified for the exclusion provided in such section because of the status of such country as a less developed country; and third, such stock or debt obligations as the company may elect to designate under subparagraph (B)(i). The period remaining to maturity referred to in the preceding sentence shall be determined as of the date of the President’s communication to Congress.”; (5) by striking out “to maintain fund” in the heading of paragraph (3)(B); (6) by striking out “as provided in subparagraph (A)(ii)” in paragraph (3)(B)(i) and inserting in lieu thereof “under subparagraphs (A)(i) and (ii)”; (7) by inserting before the period at the end of the first sentence of paragraph (3)(C) the following: “; except that, with respect to a fund established under subparagraph (A)(iii), stock or debt obligations acquired before the establishment of such fund may not be designated as part of such fund under this subparagraph”; (8) by striking out “subparagraph (B),” in paragraph (3)(E)(i) and inserting in lieu thereof “subparagraph (A)(iv), (B),”; (9) by striking out “subparagraph (A)” in paragraph (4)(B)(i) and inserting in lieu thereof “subparagraph (A)(i)”; (10) by striking out “paragraph (3)(A)” in paragraph (4)(B)(ii) and inserting in lieu thereof “paragraph (3)(A)(i)”; and (11) by adding at the end of paragraph (4) the following new 78 Stat. 820. paragraph: “(C) Special rule.— For purposes of subparagraph (A), if a country designated as a less developed country on September 2, 1964, thereafter has such designation terminated by an Executive order issued under section 4916(b), all insurance 78 Stat. 827. contracts payable in the currency of such country which were entered into before such designation was terminated shall be treated as insurance contracts payable in the currency of a country other than a less developed country.” (b) Effective Date.— The amendments made by subsection (a) shall take effect on the day after the date of the enactment of this Act. SEC. 215. EXCLUSION FROM INTEREST EQUALIZATION TAX OF CERTAIN ACQUISITIONS BY FOREIGN BRANCHES OF DOMESTIC BANKS. (a) Authority for Modification of Executive Orders.— Section 4931(a) (relating to commercial bank loans) is amended by adding at 78 Stat. 839. the end thereof the following new sentence: “Clause (A) of the preceding sentence shall not prevent a modification of such Executive order (or any modification thereof) to exclude from the application of subsection (b) acquisitions by commercial banks, through branches located outside the United States, of debt obligations of foreign obligors payable in currency of the United States.” (b) Effective Date.— The amendment made by subsection (a) shall apply with respect to acquisitions of debt obligations made after the date of the enactment of this Act.

13. 1966

    Pub. L. 89–809 § 209(a)(1) · 80 Stat. 1539

    Redesignated · 26 U.S.C. § 613(b)(5)

    Pub. L. 89–809, § 209(a)(1), added par. (5). Former par. (5) redesignated (6)

    Source evidence

    Code amendment note
    Subsec. (b)(5). Pub. L. 89–809, § 209(a)(1), added par. (5). Former par. (5) redesignated (6).

    Enacted provision · exact public law section
    (1) by renumbering paragraphs (5) and (6) as (6) and (7), respectively, and by inserting after paragraph (4) the following new paragraph: “(5) 7½ percent—clay and shale used or sold for use in the manufacture of sewer pipe or brick, and clay, shale, and slate used or sold for use as sintered or burned lightweight aggregates.”;

14. 1966

    Pub. L. 89–809 title II · 80 Stat. 1539

    1. Redesignated · 26 U.S.C. § 613(b)(6)

       Pub. L. 89–809, §§ 208(a)(1), 209(a)(1), (3), (4), redesignated par. (5) as (6)

    2. Struck · 26 U.S.C. § 613(b)(6)

       Pub. L. 89–809, §§ 208(a)(1), 209(a)(1), (3), (4), struck out “mollusk shells (including clam shells and oyster shells),”

    3. Substituted · 26 U.S.C. § 613(b)(6)

       Pub. L. 89–809, §§ 208(a)(1), 209(a)(1), (3), (4), substituted “shale (except shale described in paragraph (5)), and stone (except stone described in paragraph (7))” for “shale, and stone, except stone described in paragraph (6)” in subpar. (A)

    4. Redesignated · 26 U.S.C. § 613(b)(6)

       Pub. L. 89–809, §§ 208(a)(1), 209(a)(1), (3), (4), struck out “building or paving brick,” and “sewer pipe,” in subpar. (B). Former par. (6) redesignated (7)

    Source evidence

    Code amendment note
    Subsec. (b)(6). Pub. L. 89–809, §§ 208(a)(1), 209(a)(1), (3), (4), redesignated par. (5) as (6), struck out “mollusk shells (including clam shells and oyster shells),”, substituted “shale (except shale described in paragraph (5)), and stone (except stone described in paragraph (7))” for “shale, and stone, except stone described in paragraph (6)” in subpar. (A), and struck out “building or paving brick,” and “sewer pipe,” in subpar. (B). Former par. (6) redesignated (7).

    Enacted provision · exact public law
    TITLE II— OTHER AMENDMENTS TO INTERNAL REVENUE CODE SEC. 201. APPLICATION OF INVESTMENT CREDIT TO PROPERTY USED IN POSSESSIONS OF THE UNITED STATES. (a) Property Used by Domestic Corporations, Etc.— Section 48(a)(2)(B) (relating to property used outside the United States) is amended— (1) by striking out “and” at the end of clause (v); (2) by striking out the period at the end of clause (vi) and inserting in lieu thereof and”; and (3) by adding at the end thereof the following new clause: “(vii) any property which is owned by a domestic corporation (other than a corporation entitled to the benefits of section 931 or 934(b)) or by a United States citizen (other than a citizen entitled to the benefits of 68A Stat. 291; 74 Stat. 998. section 931, 932, 933, or 934(c)) and which is used predominantly in a possession of the United States by such a corporation or such a citizen, or by a corporation created or organized in, or under the law of, a possession of the United States.” (b) Effective Date.— The amendments made by subsection (a) shall apply to taxable years ending after December 31, 1965, but only with respect to property placed in service after such date. In applying 76 Stat. 963. section 46(b) of the Internal Revenue Code of 1954 (relating to carryback and carryover of unused credits), the amount of any investment credit carryback to any taxable year ending on or before December 31, 1965, shall be determined without regard to the amendments made by this section. SEC. 202. BASIS OF PROPERTY RECEIVED ON LIQUIDATION OF SUBSIDIARY. (a) Definition of Purchase.— Section 334(b)(3) (relating to definition of purchase) is amended by adding at the end thereof the following new sentence: “Notwithstanding subparagraph (C) of this paragraph, for purposes of paragraph (2)(B), the term ‘purchase’ also means an acquisition of stock from a corporation when ownership of such stock would be attributed under section 318(a) to the person acquiring such stock, if the stock of such corporation by reason of which such ownership would be attributed was acquired by purchase (within the meaning of the preceding sentence).” (b) Period of Acquisition.— Section 334(b)(2)(B) (relating to exception) is amended by striking out “during a period of not more than 12 months,” and inserting in lieu thereof “during a 12-month period beginning with the earlier of— “(i) the date of the first acquisition by purchase of such stock, or “(ii) if any of such stock was acquired in an acquisition which is a purchase within the meaning of the second sentence of paragraph (3), the date on which the distributee is first considered under section 318(a) as owning stock owned by the corporation from which such acquisition was made,”. (c) Distribution of Installment Obligations.— Section 453(d)(4)(A) (relating to distribution of installment obligations in certain liquidations) is amended to read as follows: “(A) Liquidations to which section 332 applies.— If— “(i) an installment obligation is distributed in a liquidation to which section 332 (relating to complete liquidations of subsidiaries) applies, and “(ii) the basis of such obligation in the hands of the distributee is determined under section 334(b)(1), then no gain or loss with respect to the distribution of such obligation shall be recognized by the distributing corporation.” (d) Effective Dates.— The amendment made by subsection (a) shall apply only with respect to acquisitions of stock after December 31, 1965. The amendments made by subsections (b) and (c) shall apply only with respect to distributions made after the date of the enactment of this Act. SEC. 203. TRANSFERS OF PROPERTY TO INVESTMENT COMPANIES CONTROLLED BY TRANSFERORS. (a) Transfers to Investment Companies.— The first sentence of section 351(a) (relating to transfer to corporation controlled by the 68A Stat. 111. transferor) is amended by striking out “to a corporation” and inserting in lieu thereof “to a corporation (including, in the case of transfers made on or before June 30, 1967, an investment company)”. (b) Investment Companies Required to File Registration Statement With the S.E.C.— Section 351 is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection: “(d) Application of June 30, 1967, Date.— For purposes of this section, if, in connection with the transaction, a registration statement is required to be filed with the Securities and Exchange Commission, a transfer of property to an investment company shall be treated as made on or before June 30, 1967, only if— “(1) such transfer is made on or before such date, “(2) the registration statement was filed with the Securities and Exchange Commission before January 1, 1967, and the aggregate issue price of the stock and securities of the investment company which are issued in the transaction does not exceed the aggregate amount therefor specified in the registration statement as of the close of December 31, 1966, and “(3) the transfer of property to the investment company in the transaction includes only property deposited before May 1, 1967.” (c) Effective Date.— The amendments made by subsections (a) and (b) shall apply with respect to transfers of property to investment companies whether made before, on, or after the date of the enactment of this Act. SEC. 204. REMOVAL OF SPECIAL LIMITATIONS WITH RESPECT TO DEDUCTIBILITY OF CONTRIBUTIONS TO PENSION PLANS BY SELF-EMPLOYED INDIVIDUALS. (a) Removal of Special Limitations.— Paragraph (10) of section Repeal. 76 Stat. 820. 404(a) (relating to special limitation on amount allowed as deduction for self-employed individuals for contributions to certain pension, etc., plans) is repealed. (b) Conforming Amendments.— (1) Each of the following provisions of section 401 is amended by striking out “(determined without regard to section 404(a)(10))” each place it appears: (A) Subsection (a)(10)(A)(ii). (B) Subparagraphs (A) and (B) of subsection (d)(5). (C) Subparagraph (A) of subsection (d)(6). (D) Subparagraphs (A) and (B)(i) of subsection (e)(1). (E) Subparagraphs (B) and (C) and the last sentence of subsection (e)(3). (2) Subparagraph (A) of section 404(e)(2) is amended by striking out “(determined without regard to subsection (a)(10))”. (3) Paragraph (1) and subparagraph (B) of paragraph (2) of section 404(e) are each amended by striking out “(determined without regard to paragraph (10) thereof)”. (c) Definition of Earned Income.— Section 401(c)(2) (relating 76 Stat. 811. to definition of earned income for certain pension and profit-sharing plans) is amended by striking out subparagraphs (A) and (B) and inserting in lieu thereof the following: “(A) In general.— The term ‘earned income’ means the net earnings from self-employment (as defined in section 68A Stat. 353. 1402(a)), but such net earnings shall be determined— “(i) only with respect to a trade or business in which personal services of the taxpayer are a material income-producing factor, “(ii) without regard to paragraphs (4) and (5) of section 1402 (c), “(iii) in the case of any individual who is treated as an employee under sections 3121(d)(3)(A), (C), or 74 Stat. 945. (D), without regard to paragraph (2) of section 1402(c), and “(iv) without regard to items which are not included in gross income for purposes of this chapter, and the deductions properly allocable to or chargeable against such items. For purposes of this subparagraph, section 1402, as in effect for a taxable year ending on December 31, 1962, shall be treated as having been in effect for all taxable years ending before such date.” (d) Effective Date.— The amendments made by subsections (a) and (b) shall apply with respect to taxable years beginning after December 31, 1967. SEC. 205. TREATMENT OF CERTAIN INCOME OF AUTHORS, INVENTORS, ETC., AS EARNED INCOME FOR RETIREMENT PLAN PURPOSES. (a) Income From Disposition of Property Created by Tax-payer.— Section 401(c)(2) (relating to definition of earned income) is amended by adding at the end thereof the following new subparagraph: “(C) Income from disposition of certain property.— For purposes of this section, the term ‘earned income’ includes gains (other than any gain which is treated under any provision of this chapter as gain from the sale or exchange of a capital asset) and net earnings derived from the sale or other disposition of, the transfer of any interest in, or the licensing of the use of property (other than good will) by an individual whose personal efforts created such property. (b) Effective Date.— The amendment made by subsection (a) shall apply to taxable years ending after the date of the enactment of this Act. SEC. 206. EXCLUSION OF CERTAIN RENTS FROM PERSONAL HOLDING COMPANY INCOME. (a) Rents From Leases of Certain Tangible Personal Property.— Section 543(b)(3) (relating to adjusted income from rents) is amended by striking out “but does not include amounts constituting personal holding company income under subsection (a)(6), nor copyright royalties (as defined in subsection (a)(4) nor produced film rents (as defined in subsection (a)(5)(B)).” and inserting in lieu thereof the following: “but such term does not include— “(A) amounts constituting personal holding company income under subsection (a)(6), “(B) copyright royalties (as defined in subsection (a)(4)), “(C) produced film rents (as defined in subsection (a)(5)(B)), or “(D) compensation, however designated, for the use of, or the right to use, any tangible personal property manu-factured or produced by the taxpayer, if during the taxable year the taxpayer is engaged in substantial manufacturing or production of tangible personal property of the same type.” (b) Technical Amendments.— (1) Section 543(a)(2) (relating to adjusted income from rents 78 Stat. 81. included in personal holding company income) is amended by striking out the last sentence thereof. (2) Section 543(b)(2) (relating to definition of adjusted ordinary gross income) is amended by adding at the end thereof the following new subparagraph: “(D) Certain excluded rents.— From the gross income consisting of compensation described in subparagraph (D) of paragraph (3) subtract the amount allowable as deductions for the items described in clauses (i), (ii), (iii), and (iv) of subparagraph (A) to the extent allocable, under regulations prescribed by the Secretary or his delegate, to such gross income. The amount subtracted under this subparagraph shall not exceed such gross income.” (c) Effective Date.— The amendments made by subsections (a) and (b) shall apply to taxable years beginning after the date of the enactment of this Act. Such amendments shall also apply, at the election of the taxpayer (made at such time and in such manner as the Secretary or his delegate may prescribe), to taxable years beginning on or before such date and ending after December 31, 1965. SEC. 207. PERCENTAGE DEPLETION RATE FOR CERTAIN CLAY BEARING ALUMINA. (a) 23 Percent Rate.— Section 613(b) (relating to percentage depletion rates) is amended— (1) by inserting “clay, laterite, and nephelite syenite” after “anorthosite” in paragraph (2)(B); and (2) by striking out “if paragraph (5)(B) does not apply” in paragraph (3)(B) and inserting in lieu thereof “if neither paragraph (2)(B) nor (5)(B) applies”. (b) Effective Date.— The amendments made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act. SEC. 208. PERCENTAGE DEPLETION RATE FOR CLAM AND OYSTER SHELLS. (a) 15 Percent Rate.— Section 613(b) (relating to percentage 68A Stat. 208; 74 Stat. 291. depletion rates) is amended— (1) by striking out “mollusk shells (including clam shells and oyster shells),” in paragraph (5)(A), and (2) by inserting “mollusk shells (including clam shells and oyster shells),” after “marble,” in paragraph (6). (b) Effective Date.— The amendments made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act. SEC. 209. PERCENTAGE DEPLETION RATE FOR CERTAIN CLAY, SHALE, AND SLATE. (a) 7½ Percent Rate.— Section 613(b) (relating to percentage depletion rates) is amended— (1) by renumbering paragraphs (5) and (6) as (6) and (7), respectively, and by inserting after paragraph (4) the following new paragraph: “(5) 7½ percent—clay and shale used or sold for use in the manufacture of sewer pipe or brick, and clay, shale, and slate used or sold for use as sintered or burned lightweight aggregates.”; (2) by striking out in paragraph (3)(B)(as amended by section 207(a)(2)) “if neither paragraph (2)(B) nor (5)(B) applies” and inserting in lieu thereof “if neither paragraph (2)(B), (5), or (6)(B) applies”; (3) by striking out in paragraph (6)(as renumbered by paragraph (1)) “shale, and stone, except stone described in paragraph (6)” and inserting in lieu thereof “shale (except shale described in paragraph (5)), and stone (except stone described in paragraph (7))”; (4) by striking out, in subparagraph (B) of paragraph (6)(as so renumbered), “building or paving brick,” and by striking out “sewer pipe,”; and (5) by inserting after “any such other mineral” in paragraph (7)(as so renumbered) “(other than slate to which paragraph (5) applies)”. (b) Conforming Amendment.— Section 613(c)(4)(G) (relating to treatment processes) is amended by striking out “paragraph (5)(B)”and inserting in lieu thereof “paragraph (5) or (6)(B)”. (c) Effective Date.— The amendments made by subsections (a) and (b) shall apply to taxable years beginning after the date of the enactment of this Act. SEC. 210. STRADDLES. (a) Treatment as Short-Term Capital Gain.— Section 1234 (relating to options) is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection: “(c) Special Rule for Grantors of Straddles.— “(1) Gain on lapse.— In the case of gain on lapse of an option granted by the taxpayer as part of a straddle, the gain shall be deemed to be gain from the sale or exchange of a capital asset held for not more than 6 months on the day that the option expired. “(2) Exception.— This subsection shall not apply to any person who holds securities for sale to customers in the ordinary course of his trade or business. “(3) Definitions.— For purposes of this subsection— “(A) The term ‘straddle’ means a simultaneously granted combination of an option to buy, and an option to sell, the same quantity of a security at the same price during the same period of time. “(B) The term ‘security’ has the meaning assigned to such term by section 1236(c).” (b) Effective Date.— The amendments made by subsection (a) shall apply to straddle transactions entered into after January 25, 1965, in taxable years ending after such date. SEC. 211. TAX TREATMENT OF PER-UNIT RETAIN ALLOCATIONS. (a) Tax Treatment of Cooperatives.— (1) Section 1382(a) (relating to gross income of cooperatives) is amended by striking out the period at the end thereof and inserting “or by reason of any amount paid to a patron as a per-unit retain allocation (as defined in section 1388(f)).” (2) Section 1382(b) is amended— (A) by striking out “(b) Patronage Dividends.—” and inserting in lieu thereof “(b) Patronage Dividends and Per-Unit Retain Allocations.—”, (B) by striking out “or” at the end of paragraph (1), (C) by striking out the period at the end of paragraph (2) and inserting a semicolon in lieu thereof, (D) by striking out the sentence following paragraph (2) and inserting in lieu thereof the following: “(3) as per-unit retain allocations, to the extent paid in qualified per-unit retain certificates (as defined in section 1388(h)) with Post, p 1583. respect to marketing occurring during such taxable year; or “(4) in money or other property (except per-unit retain certificates) in redemption of a nonqualified per-unit retain certificate which was paid as a per-unit retain allocation during the payment period for the taxable year during which the marketing occurred. For purposes of this title, any amount not taken into account under the preceding sentence shall, in the case of an amount described in paragraph (1) or (2), be treated in the same manner as an item of gross income and as a deduction therefrom, and in the case of an amount described in paragraph (3) or (4), be treated as a deduction in arriving at gross income.” (3) Section 1382(e) is amended to read as follows: 76 Stat. 1047. “(e) Products Marketed Under Pooling Arrangements.— For purposes of subsection (b), in the case of a pooling arrangement for the marketing of products— “(1) the patronage shall (to the extent provided in regulations prescribed by the Secretary or his delegate) be treated as patronage occurring during the taxable year in which the pool closes, and “(2) the marketing of products shall be treated as occurring during any of the taxable years in which the pool is open.” (4) Section 1382(f) is amended by striking out “subsection (b)” and inserting in lieu thereof “paragraphs (1) and (2) of subsection (b)”. (5) The heading for section 1383 is amended by striking out the period at the end thereof and inserting “OR NONQUALIFIED PER-UNIT RETAIN CERTIFICATES.” (6) Section 1383(a) is amended— (A) by striking out “section 1382(b)(2)” and inserting in lieu thereof “section 1382(b)(2) or (4),”, (B) by striking out “nonqualified written notices of allocation” each place it appears and inserting in lieu thereof “non-qualified written notices of allocation or nonqualified per-unit retain certificates”, and (C) by striking out “qualified written notices of allocation” and inserting in lieu thereof “qualified written notices of allocation or qualified per-unit retain certificates (as the case may be)”. (7) Section 1383 (b)(2) is amended— (A) by striking out “nonqualified written notice of allocation” and inserting in lieu thereof “nonqualified written notice of allocation or nonqualified per-unit retain certificate”, (B) by striking out “qualified written notice of allocation” and inserting in lieu thereof “qualified written notice of allocation or qualified per-unit retain certificate (as the case may be)”, (C) by striking out “such written notice of allocation” and inserting in lieu thereof “such written notice of allocation or per-unit retain certificate”, and (D) by striking out “section 1382(b)(2)” and inserting in lieu thereof “section 1382(b)(2) or (4),”. (8) The table of sections for part I of subchapter T of chapter 1 is amended by striking out— “Sec. 1383. Computation of tax where cooperative redeems non-qualified written notices of allocation.” and inserting in lieu thereof— “Sec. 1383. Computation of tax where cooperative redeems non-qualified written notices of allocation or nonqualified per-unit retain certificates.” (b) Tax Treatment by Patrons.— (1) Section 1385(a) is amended by striking out “and” at the end of paragraph (1), by striking out the period at the end of paragraph (2) and inserting in lieu thereof “, and”, and by adding at the end thereof the following new paragraph: “(3) the amount of any per-unit retain allocation which is paid in qualified per-unit retain certificates and which is received by him during the taxable year from an organization described in section 1381(a).” (2) The heading for section 1385(c) is amended by striking out “Allocation” and inserting in lieu thereof “Allocation and Certain Nonqualified Per-Unit Retain Certificates”. (3) Section 1385(c)(1) is amended to read as follows: “(1) Application of subsection.— This subsection shall apply “(A) any nonqualified written notice of allocation which— “(i) was paid as a patronage dividend, or “(ii) was paid by an organization described in section 1381 (a)(1) on a patronage basis with respect to earnings derived from business or sources described in section 1382(c)(2)(A),and “(B) any nonqualified per-unit retain certificate which was paid as a per-unit retain allocation.” (4) Section 1385(c)(2) is amended— (A) by striking out “nonqualified written notice of allocation” and inserting in lieu thereof “nonqualified written notice of allocation or nonqualified per-unit retain certificate”, and (B) by striking out “such written notice of allocation” each place it appears and inserting in lieu thereof “such written notice of allocation or per-unit retain certificate”. (5) The table of parts for subchapter T of chapter 1 is amended by striking out— “Part II. Tax treatment by patrons of patronage dividends.” and inserting in lieu thereof— “Part II. Tax treatment by patrons of patronage dividends and per-unit retain allocations.” (c) Definitions.— (1) (A) Section 1388(e)(1) is amended by striking out “allocation)” and inserting in lieu thereof “allocation or a per-unit retain certificate)”. (B) Section 1388(e)(2) is amended by striking out “allocation” and inserting in lieu thereof “allocation or qualified per-unit retain certificate”. (2) Section 1388 is amended by adding at the end thereof the following new subsections: “(f) Per-Unit Retain Allocation.— For purposes of this subchapter, the term ‘per-unit retain allocation’ means any allocation, by an organization to which part I of this subchapter applies, other than by payment in money or other property (except per-unit retain certificates) to a patron with respect to products marketed for him, the amount of which is fixed without reference to the net earnings of the organization pursuant to an agreement between the organization and the patron. “(g) Per-Unit Retain Certificate.— For purposes of this subchapter, the term ‘per-unit retain certificate’ means any written notice which discloses to the recipient the stated dollar amount of a per-unit retain allocation to him by the organization. “(h) Qualified Per-Unit Retain Certificate.— “(1) Defined.— For purposes of this subchapter, the term ‘qualified per-unit retain certificate’ means any per-unit retain certificate which the distributee has agreed, in the manner provided in paragraph (2), to take into account at its stated dollar amount as provided in section 1385 (a). 76 Stat. 1048. “(2) Manner of obtaining agreement.— A distributee shall agree to take a per-unit retain certificate into account as provided in paragraph (1) only by— “(A) making such agreement in writing, or “(B) obtaining or retaining membership in the organization after— “(i) such organization has adopted (after the date of the enactment of this subsection) a bylaw providing that membership in the organization constitutes such agreement, and “(ii) he has received a written notification and copy of such bylaw. “(3) Period for which agreement is effective.— “(A) General rule.— Except as provided in subparagraph (B)— “(i) an agreement described in paragraph (2)(A) shall be an agreement with respect to all products delivered by the distributee to the organization during the taxable year of the organization during which such agreement is made and all subsequent taxable years of the organization; and “(ii) an agreement described in paragraph (2)(B) shall be an agreement with respect to all products delivered by the distributee to the organization after he received the notification and copy described in paragraph (2)(B)(ii). “(B) Revocation, etc.— “(i) Any agreement described in paragraph (2)(A) may be revoked (in writing) by the distributee at any time. Any such revocation shall be effective with respect to products delivered by the distributee on or after the first day of the first taxable year of the organization beginning after the revocation is filed with the organization; except that in the case of a pooling arrangement described in section 1382(e) a revocation made by a distributee 76 Stat. 1046. shall not be effective as to any products which were delivered to the organization by the distributee before such revocation. “(ii) Any agreement described in paragraph (2)(B) shall not be effective with respect to any products delivered after the distributee ceases to be a member of the organization or after the bylaws of the organization cease to contain the provision described in paragraph (2)(B)(i). “(i) Nonqualified Per-Unit Retain Certificate.— For purposes of this subchapter, the term ‘nonqualified per-unit retain certificate’ means a per-unit retain certificate which is not described in subsection (h).” (d) Information Reporting.— (1) Amounts subject to reporting.— Section 6044(b)(1) is amended by striking out “and” at the end of subparagraph (B), by striking out the period at the end of subparagraph (C) and inserting in lieu thereof “, and”, and by adding after subparagraph (C) the following new subparagraphs: “(D) the amount of any per-unit retain allocation (as defined in section 1388(f)) which is paid in qualified per-unit retain certificates (as defined in section 1388(h)), and “(E) any amount described in section 1382 (b)(4) (relating to redemption of nonqualified per-unit retain certificates).” (2) Determination of amount paid.— (A) Section 6044(d)(1) is amended by striking out “allocation)” and inserting in lieu thereof “allocation or a qualified per-unit retain certificate)”. (B) Section 6044(d)(2) is amended by striking out “allocation” and inserting in lieu thereof “allocation or a qualified per-unit retain certificate”. (e) Effective Dates.— (1) The amendments made by subsections (a), (b), and (c) shall apply to per-unit retain allocations made during taxable years of an organization described in section 1381(a) (relating to organizations to which part I of subchapter T of chapter 1 applies) beginning after April 30, 1966, with respect to products delivered during such years. (2) The amendments made by subsection (d) shall apply with respect to calendar years after 1966. (f) Transition Rule.— (1) Except as provided in paragraph (2), a written agreement between a patron and a cooperative association— (A) which clearly provides that the patron agrees to treat the stated dollar amounts of all per-unit retain certificates issued to him by the association as representing cash distributions which he has, of his own choice, reinvested in the cooperative association, (B) which is revocable by the patron at any time after the close of the taxable year in which it was made, (C) which was entered into after October 14, 1965, and before the date of the enactment of this Act, and (D) which is in effect on the date of the enactment of this Act, and with respect to which a written notice of revocation has not been furnished to the cooperative association, shall be effective (for the period prescribed in the agreement) for purposes of section 1388(h) of the Internal Revenue Code of 1954 as if entered into, pursuant to such section, after the date of the enactment of this Act. (2) An agreement described in paragraphs (1)(A) and (C) which was included in a by-law of the cooperative association and which is in effect on the date of the enactment of this Act shall be effective for purposes of section 1388(h) of such Code only for taxable years of the association beginning before May 1, 1967. SEC. 212. EXCISE TAX RATE ON AMBULANCES AND HEARSES. (a) Classification as Automobiles.— Section 4062 (relating to 68A Stat. 482; 78 Stat. 1086. definitions applicable to the tax on motor vehicles) is amended by adding at the end thereof the following new subsection: “(b) Ambulances, Hearses, Etc.— For purposes of section 4061 (a), a sale of an ambulance, hearse, or combination ambulance-hearse shall be considered to be a sale of an automobile chassis and an automobile body enumerated in subparagraph (B) of section 4061(a)(2).” 79 Stat. 136. (b) Effective Date.— The amendment made by subsection (a) shall apply with respect to articles sold after the date of the enactment of this Act. SEC. 213. APPLICABILITY OF EXCLUSION FROM INTEREST EQUALIZATION TAX OF CERTAIN LOANS TO ASSURE RAW MATERIALS SOURCES. (a) Exception to Exclusion.— Section 4914(d) (relating to loans 78 Stat. 813. to assure raw materials sources) is amended by adding at the end thereof the following new paragraph: “(3) Exception.— The exclusion from tax provided by paragraph (1) shall not apply in any case where the acquisition of the debt obligation of the foreign corporation is made with an intent to sell, or to offer to sell, any part of such debt obligation to United States persons.” (b) Technical Amendments.— (1) Section 4914(j)(1) (relating to loss of entitlement to exclusion in case of certain subsequent transfers) is amended— (A) by striking out in subparagraph (A) “, or the exclusion provided by subsection (d),”, and (B) by striking out “subsection (d) or (f)” in subparagraph (I)) and inserting in lieu thereof “subsection (f)”. (2) Section 4918 (relating to exemption for prior American 78 Stat. 831. ownership) is amended by adding at the end thereof the following new subsection: “(g) Certain Debt Obligations Arising Out of Loans To Assure Raw Material Sources.— Under regulations prescribed by the Secretary or his delegate, subsection (a) shall not apply to the acquisition by a United States person of any debt obligation to which section 4914(d) applied where the acquisition of the debt obligation by such person is made with an intent to sell, or to offer to sell, any part of such debt obligation to United States persons. The preceding sentence shall not apply if the tax imposed by section 4911 has applied 78 Stat. 809. to any prior acquisition of such debt obligation.” (c) Effective Date.— The amendments made by subsections (a) and (b) shall apply with respect to acquisitions of debt obligations made after the date of the enactment of this Act. SEC. 214. EXCLUSION FROM INTEREST EQUALIZATION TAX FOR CERTAIN ACQUISITIONS BY INSURANCE COMPANIES. (a) New Companies and Companies Operating in Former Less Developed Countries.— Section 4914(e) (relating to acquisitions by insurance companies doing business in foreign countries) is amended— (1) by striking out “at the time of the initial designation” in the last sentence of paragraph (2); (2) by striking out “An” in the first sentence of paragraph (3)(A)(i) and inserting in lieu thereof “Except as provided in clause (iii),an”; (3) by striking out “under this subparagraph” in paragraph (3)(A)(ii) and inserting in lieu thereof “under clause (i)”; (4) by adding after clause (ii) of paragraph (3)(A) the following new clauses: “(iii) Initial designation after October 2, 1964.— An insurance company which was not in existence on October 2, 1964, or was otherwise ineligible to establish a fund (or funds) of assets described in paragraph (2) by making an initial designation under clause (i) on or before such date, may establish (and thereafter currently maintain) such fund (or funds) of assets at any time after the enactment of this clause by designating stock of a foreign issuer or a debt obligation of a foreign obligor as a part of such fund in accordance with the provisions of clause (iv)(if applicable) and subparagraph (B)(i). “(iv) Funds involving currencies of former less developed countries.— An insurance company desiring to establish a fund under clause (iii) with respect to insurance contracts payable in the currency of a country designated as a less developed country on October 2, 1964, which thereafter has such designation terminated 78 Stat. 827. by an Executive order issued under section 4916(b), shall designate as assets of such fund, to the extent permitted by subparagraph (E), the stock of foreign issuers or debt obligations of foreign obligors as follows: First, stock and debt obligations having a period remaining to maturity of at least 1 year (other than stock or a debt obligation described in section 4916(a)) acquired before July 19, 1963, and owned by the company on the date which the President, in accordance with section 4916(b), communicates to Congress his intention to terminate the status of such country as a less developed country; second, stock and debt obligations having a period remaining to maturity of at least 1 year described m section 4916(a)(and owned by the company on the date of such termination) which, at the time of acquisition, qualified for the exclusion provided in such section because of the status of such country as a less developed country; and third, such stock or debt obligations as the company may elect to designate under subparagraph (B)(i). The period remaining to maturity referred to in the preceding sentence shall be determined as of the date of the President’s communication to Congress.”; (5) by striking out “to maintain fund” in the heading of paragraph (3)(B); (6) by striking out “as provided in subparagraph (A)(ii)” in paragraph (3)(B)(i) and inserting in lieu thereof “under subparagraphs (A)(i) and (ii)”; (7) by inserting before the period at the end of the first sentence of paragraph (3)(C) the following: “; except that, with respect to a fund established under subparagraph (A)(iii), stock or debt obligations acquired before the establishment of such fund may not be designated as part of such fund under this subparagraph”; (8) by striking out “subparagraph (B),” in paragraph (3)(E)(i) and inserting in lieu thereof “subparagraph (A)(iv), (B),”; (9) by striking out “subparagraph (A)” in paragraph (4)(B)(i) and inserting in lieu thereof “subparagraph (A)(i)”; (10) by striking out “paragraph (3)(A)” in paragraph (4)(B)(ii) and inserting in lieu thereof “paragraph (3)(A)(i)”; and (11) by adding at the end of paragraph (4) the following new 78 Stat. 820. paragraph: “(C) Special rule.— For purposes of subparagraph (A), if a country designated as a less developed country on September 2, 1964, thereafter has such designation terminated by an Executive order issued under section 4916(b), all insurance 78 Stat. 827. contracts payable in the currency of such country which were entered into before such designation was terminated shall be treated as insurance contracts payable in the currency of a country other than a less developed country.” (b) Effective Date.— The amendments made by subsection (a) shall take effect on the day after the date of the enactment of this Act. SEC. 215. EXCLUSION FROM INTEREST EQUALIZATION TAX OF CERTAIN ACQUISITIONS BY FOREIGN BRANCHES OF DOMESTIC BANKS. (a) Authority for Modification of Executive Orders.— Section 4931(a) (relating to commercial bank loans) is amended by adding at 78 Stat. 839. the end thereof the following new sentence: “Clause (A) of the preceding sentence shall not prevent a modification of such Executive order (or any modification thereof) to exclude from the application of subsection (b) acquisitions by commercial banks, through branches located outside the United States, of debt obligations of foreign obligors payable in currency of the United States.” (b) Effective Date.— The amendment made by subsection (a) shall apply with respect to acquisitions of debt obligations made after the date of the enactment of this Act.

15. 1966

    Pub. L. 89–809 title II · 80 Stat. 1539

    1. Redesignated · 26 U.S.C. § 613(b)(7)

       Pub. L. 89–809, §§ 208(a)(2), 209(a)(1), (5), redesignated par. (6) as (7)

    2. Inserted · 26 U.S.C. § 613(b)(7)

       Pub. L. 89–809, §§ 208(a)(2), 209(a)(1), (5), inserted “mollusk shells (including clam shells and oyster shells),” after “marble,” and “(other than slate to which paragraph (5) applies)” after “any other such mineral”

    Source evidence

    Code amendment note
    Subsec. (b)(7). Pub. L. 89–809, §§ 208(a)(2), 209(a)(1), (5), redesignated par. (6) as (7) and inserted “mollusk shells (including clam shells and oyster shells),” after “marble,” and “(other than slate to which paragraph (5) applies)” after “any other such mineral”.

    Enacted provision · exact public law
    TITLE II— OTHER AMENDMENTS TO INTERNAL REVENUE CODE SEC. 201. APPLICATION OF INVESTMENT CREDIT TO PROPERTY USED IN POSSESSIONS OF THE UNITED STATES. (a) Property Used by Domestic Corporations, Etc.— Section 48(a)(2)(B) (relating to property used outside the United States) is amended— (1) by striking out “and” at the end of clause (v); (2) by striking out the period at the end of clause (vi) and inserting in lieu thereof and”; and (3) by adding at the end thereof the following new clause: “(vii) any property which is owned by a domestic corporation (other than a corporation entitled to the benefits of section 931 or 934(b)) or by a United States citizen (other than a citizen entitled to the benefits of 68A Stat. 291; 74 Stat. 998. section 931, 932, 933, or 934(c)) and which is used predominantly in a possession of the United States by such a corporation or such a citizen, or by a corporation created or organized in, or under the law of, a possession of the United States.” (b) Effective Date.— The amendments made by subsection (a) shall apply to taxable years ending after December 31, 1965, but only with respect to property placed in service after such date. In applying 76 Stat. 963. section 46(b) of the Internal Revenue Code of 1954 (relating to carryback and carryover of unused credits), the amount of any investment credit carryback to any taxable year ending on or before December 31, 1965, shall be determined without regard to the amendments made by this section. SEC. 202. BASIS OF PROPERTY RECEIVED ON LIQUIDATION OF SUBSIDIARY. (a) Definition of Purchase.— Section 334(b)(3) (relating to definition of purchase) is amended by adding at the end thereof the following new sentence: “Notwithstanding subparagraph (C) of this paragraph, for purposes of paragraph (2)(B), the term ‘purchase’ also means an acquisition of stock from a corporation when ownership of such stock would be attributed under section 318(a) to the person acquiring such stock, if the stock of such corporation by reason of which such ownership would be attributed was acquired by purchase (within the meaning of the preceding sentence).” (b) Period of Acquisition.— Section 334(b)(2)(B) (relating to exception) is amended by striking out “during a period of not more than 12 months,” and inserting in lieu thereof “during a 12-month period beginning with the earlier of— “(i) the date of the first acquisition by purchase of such stock, or “(ii) if any of such stock was acquired in an acquisition which is a purchase within the meaning of the second sentence of paragraph (3), the date on which the distributee is first considered under section 318(a) as owning stock owned by the corporation from which such acquisition was made,”. (c) Distribution of Installment Obligations.— Section 453(d)(4)(A) (relating to distribution of installment obligations in certain liquidations) is amended to read as follows: “(A) Liquidations to which section 332 applies.— If— “(i) an installment obligation is distributed in a liquidation to which section 332 (relating to complete liquidations of subsidiaries) applies, and “(ii) the basis of such obligation in the hands of the distributee is determined under section 334(b)(1), then no gain or loss with respect to the distribution of such obligation shall be recognized by the distributing corporation.” (d) Effective Dates.— The amendment made by subsection (a) shall apply only with respect to acquisitions of stock after December 31, 1965. The amendments made by subsections (b) and (c) shall apply only with respect to distributions made after the date of the enactment of this Act. SEC. 203. TRANSFERS OF PROPERTY TO INVESTMENT COMPANIES CONTROLLED BY TRANSFERORS. (a) Transfers to Investment Companies.— The first sentence of section 351(a) (relating to transfer to corporation controlled by the 68A Stat. 111. transferor) is amended by striking out “to a corporation” and inserting in lieu thereof “to a corporation (including, in the case of transfers made on or before June 30, 1967, an investment company)”. (b) Investment Companies Required to File Registration Statement With the S.E.C.— Section 351 is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection: “(d) Application of June 30, 1967, Date.— For purposes of this section, if, in connection with the transaction, a registration statement is required to be filed with the Securities and Exchange Commission, a transfer of property to an investment company shall be treated as made on or before June 30, 1967, only if— “(1) such transfer is made on or before such date, “(2) the registration statement was filed with the Securities and Exchange Commission before January 1, 1967, and the aggregate issue price of the stock and securities of the investment company which are issued in the transaction does not exceed the aggregate amount therefor specified in the registration statement as of the close of December 31, 1966, and “(3) the transfer of property to the investment company in the transaction includes only property deposited before May 1, 1967.” (c) Effective Date.— The amendments made by subsections (a) and (b) shall apply with respect to transfers of property to investment companies whether made before, on, or after the date of the enactment of this Act. SEC. 204. REMOVAL OF SPECIAL LIMITATIONS WITH RESPECT TO DEDUCTIBILITY OF CONTRIBUTIONS TO PENSION PLANS BY SELF-EMPLOYED INDIVIDUALS. (a) Removal of Special Limitations.— Paragraph (10) of section Repeal. 76 Stat. 820. 404(a) (relating to special limitation on amount allowed as deduction for self-employed individuals for contributions to certain pension, etc., plans) is repealed. (b) Conforming Amendments.— (1) Each of the following provisions of section 401 is amended by striking out “(determined without regard to section 404(a)(10))” each place it appears: (A) Subsection (a)(10)(A)(ii). (B) Subparagraphs (A) and (B) of subsection (d)(5). (C) Subparagraph (A) of subsection (d)(6). (D) Subparagraphs (A) and (B)(i) of subsection (e)(1). (E) Subparagraphs (B) and (C) and the last sentence of subsection (e)(3). (2) Subparagraph (A) of section 404(e)(2) is amended by striking out “(determined without regard to subsection (a)(10))”. (3) Paragraph (1) and subparagraph (B) of paragraph (2) of section 404(e) are each amended by striking out “(determined without regard to paragraph (10) thereof)”. (c) Definition of Earned Income.— Section 401(c)(2) (relating 76 Stat. 811. to definition of earned income for certain pension and profit-sharing plans) is amended by striking out subparagraphs (A) and (B) and inserting in lieu thereof the following: “(A) In general.— The term ‘earned income’ means the net earnings from self-employment (as defined in section 68A Stat. 353. 1402(a)), but such net earnings shall be determined— “(i) only with respect to a trade or business in which personal services of the taxpayer are a material income-producing factor, “(ii) without regard to paragraphs (4) and (5) of section 1402 (c), “(iii) in the case of any individual who is treated as an employee under sections 3121(d)(3)(A), (C), or 74 Stat. 945. (D), without regard to paragraph (2) of section 1402(c), and “(iv) without regard to items which are not included in gross income for purposes of this chapter, and the deductions properly allocable to or chargeable against such items. For purposes of this subparagraph, section 1402, as in effect for a taxable year ending on December 31, 1962, shall be treated as having been in effect for all taxable years ending before such date.” (d) Effective Date.— The amendments made by subsections (a) and (b) shall apply with respect to taxable years beginning after December 31, 1967. SEC. 205. TREATMENT OF CERTAIN INCOME OF AUTHORS, INVENTORS, ETC., AS EARNED INCOME FOR RETIREMENT PLAN PURPOSES. (a) Income From Disposition of Property Created by Tax-payer.— Section 401(c)(2) (relating to definition of earned income) is amended by adding at the end thereof the following new subparagraph: “(C) Income from disposition of certain property.— For purposes of this section, the term ‘earned income’ includes gains (other than any gain which is treated under any provision of this chapter as gain from the sale or exchange of a capital asset) and net earnings derived from the sale or other disposition of, the transfer of any interest in, or the licensing of the use of property (other than good will) by an individual whose personal efforts created such property. (b) Effective Date.— The amendment made by subsection (a) shall apply to taxable years ending after the date of the enactment of this Act. SEC. 206. EXCLUSION OF CERTAIN RENTS FROM PERSONAL HOLDING COMPANY INCOME. (a) Rents From Leases of Certain Tangible Personal Property.— Section 543(b)(3) (relating to adjusted income from rents) is amended by striking out “but does not include amounts constituting personal holding company income under subsection (a)(6), nor copyright royalties (as defined in subsection (a)(4) nor produced film rents (as defined in subsection (a)(5)(B)).” and inserting in lieu thereof the following: “but such term does not include— “(A) amounts constituting personal holding company income under subsection (a)(6), “(B) copyright royalties (as defined in subsection (a)(4)), “(C) produced film rents (as defined in subsection (a)(5)(B)), or “(D) compensation, however designated, for the use of, or the right to use, any tangible personal property manu-factured or produced by the taxpayer, if during the taxable year the taxpayer is engaged in substantial manufacturing or production of tangible personal property of the same type.” (b) Technical Amendments.— (1) Section 543(a)(2) (relating to adjusted income from rents 78 Stat. 81. included in personal holding company income) is amended by striking out the last sentence thereof. (2) Section 543(b)(2) (relating to definition of adjusted ordinary gross income) is amended by adding at the end thereof the following new subparagraph: “(D) Certain excluded rents.— From the gross income consisting of compensation described in subparagraph (D) of paragraph (3) subtract the amount allowable as deductions for the items described in clauses (i), (ii), (iii), and (iv) of subparagraph (A) to the extent allocable, under regulations prescribed by the Secretary or his delegate, to such gross income. The amount subtracted under this subparagraph shall not exceed such gross income.” (c) Effective Date.— The amendments made by subsections (a) and (b) shall apply to taxable years beginning after the date of the enactment of this Act. Such amendments shall also apply, at the election of the taxpayer (made at such time and in such manner as the Secretary or his delegate may prescribe), to taxable years beginning on or before such date and ending after December 31, 1965. SEC. 207. PERCENTAGE DEPLETION RATE FOR CERTAIN CLAY BEARING ALUMINA. (a) 23 Percent Rate.— Section 613(b) (relating to percentage depletion rates) is amended— (1) by inserting “clay, laterite, and nephelite syenite” after “anorthosite” in paragraph (2)(B); and (2) by striking out “if paragraph (5)(B) does not apply” in paragraph (3)(B) and inserting in lieu thereof “if neither paragraph (2)(B) nor (5)(B) applies”. (b) Effective Date.— The amendments made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act. SEC. 208. PERCENTAGE DEPLETION RATE FOR CLAM AND OYSTER SHELLS. (a) 15 Percent Rate.— Section 613(b) (relating to percentage 68A Stat. 208; 74 Stat. 291. depletion rates) is amended— (1) by striking out “mollusk shells (including clam shells and oyster shells),” in paragraph (5)(A), and (2) by inserting “mollusk shells (including clam shells and oyster shells),” after “marble,” in paragraph (6). (b) Effective Date.— The amendments made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act. SEC. 209. PERCENTAGE DEPLETION RATE FOR CERTAIN CLAY, SHALE, AND SLATE. (a) 7½ Percent Rate.— Section 613(b) (relating to percentage depletion rates) is amended— (1) by renumbering paragraphs (5) and (6) as (6) and (7), respectively, and by inserting after paragraph (4) the following new paragraph: “(5) 7½ percent—clay and shale used or sold for use in the manufacture of sewer pipe or brick, and clay, shale, and slate used or sold for use as sintered or burned lightweight aggregates.”; (2) by striking out in paragraph (3)(B)(as amended by section 207(a)(2)) “if neither paragraph (2)(B) nor (5)(B) applies” and inserting in lieu thereof “if neither paragraph (2)(B), (5), or (6)(B) applies”; (3) by striking out in paragraph (6)(as renumbered by paragraph (1)) “shale, and stone, except stone described in paragraph (6)” and inserting in lieu thereof “shale (except shale described in paragraph (5)), and stone (except stone described in paragraph (7))”; (4) by striking out, in subparagraph (B) of paragraph (6)(as so renumbered), “building or paving brick,” and by striking out “sewer pipe,”; and (5) by inserting after “any such other mineral” in paragraph (7)(as so renumbered) “(other than slate to which paragraph (5) applies)”. (b) Conforming Amendment.— Section 613(c)(4)(G) (relating to treatment processes) is amended by striking out “paragraph (5)(B)”and inserting in lieu thereof “paragraph (5) or (6)(B)”. (c) Effective Date.— The amendments made by subsections (a) and (b) shall apply to taxable years beginning after the date of the enactment of this Act. SEC. 210. STRADDLES. (a) Treatment as Short-Term Capital Gain.— Section 1234 (relating to options) is amended by redesignating subsection (c) as subsection (d) and by inserting after subsection (b) the following new subsection: “(c) Special Rule for Grantors of Straddles.— “(1) Gain on lapse.— In the case of gain on lapse of an option granted by the taxpayer as part of a straddle, the gain shall be deemed to be gain from the sale or exchange of a capital asset held for not more than 6 months on the day that the option expired. “(2) Exception.— This subsection shall not apply to any person who holds securities for sale to customers in the ordinary course of his trade or business. “(3) Definitions.— For purposes of this subsection— “(A) The term ‘straddle’ means a simultaneously granted combination of an option to buy, and an option to sell, the same quantity of a security at the same price during the same period of time. “(B) The term ‘security’ has the meaning assigned to such term by section 1236(c).” (b) Effective Date.— The amendments made by subsection (a) shall apply to straddle transactions entered into after January 25, 1965, in taxable years ending after such date. SEC. 211. TAX TREATMENT OF PER-UNIT RETAIN ALLOCATIONS. (a) Tax Treatment of Cooperatives.— (1) Section 1382(a) (relating to gross income of cooperatives) is amended by striking out the period at the end thereof and inserting “or by reason of any amount paid to a patron as a per-unit retain allocation (as defined in section 1388(f)).” (2) Section 1382(b) is amended— (A) by striking out “(b) Patronage Dividends.—” and inserting in lieu thereof “(b) Patronage Dividends and Per-Unit Retain Allocations.—”, (B) by striking out “or” at the end of paragraph (1), (C) by striking out the period at the end of paragraph (2) and inserting a semicolon in lieu thereof, (D) by striking out the sentence following paragraph (2) and inserting in lieu thereof the following: “(3) as per-unit retain allocations, to the extent paid in qualified per-unit retain certificates (as defined in section 1388(h)) with Post, p 1583. respect to marketing occurring during such taxable year; or “(4) in money or other property (except per-unit retain certificates) in redemption of a nonqualified per-unit retain certificate which was paid as a per-unit retain allocation during the payment period for the taxable year during which the marketing occurred. For purposes of this title, any amount not taken into account under the preceding sentence shall, in the case of an amount described in paragraph (1) or (2), be treated in the same manner as an item of gross income and as a deduction therefrom, and in the case of an amount described in paragraph (3) or (4), be treated as a deduction in arriving at gross income.” (3) Section 1382(e) is amended to read as follows: 76 Stat. 1047. “(e) Products Marketed Under Pooling Arrangements.— For purposes of subsection (b), in the case of a pooling arrangement for the marketing of products— “(1) the patronage shall (to the extent provided in regulations prescribed by the Secretary or his delegate) be treated as patronage occurring during the taxable year in which the pool closes, and “(2) the marketing of products shall be treated as occurring during any of the taxable years in which the pool is open.” (4) Section 1382(f) is amended by striking out “subsection (b)” and inserting in lieu thereof “paragraphs (1) and (2) of subsection (b)”. (5) The heading for section 1383 is amended by striking out the period at the end thereof and inserting “OR NONQUALIFIED PER-UNIT RETAIN CERTIFICATES.” (6) Section 1383(a) is amended— (A) by striking out “section 1382(b)(2)” and inserting in lieu thereof “section 1382(b)(2) or (4),”, (B) by striking out “nonqualified written notices of allocation” each place it appears and inserting in lieu thereof “non-qualified written notices of allocation or nonqualified per-unit retain certificates”, and (C) by striking out “qualified written notices of allocation” and inserting in lieu thereof “qualified written notices of allocation or qualified per-unit retain certificates (as the case may be)”. (7) Section 1383 (b)(2) is amended— (A) by striking out “nonqualified written notice of allocation” and inserting in lieu thereof “nonqualified written notice of allocation or nonqualified per-unit retain certificate”, (B) by striking out “qualified written notice of allocation” and inserting in lieu thereof “qualified written notice of allocation or qualified per-unit retain certificate (as the case may be)”, (C) by striking out “such written notice of allocation” and inserting in lieu thereof “such written notice of allocation or per-unit retain certificate”, and (D) by striking out “section 1382(b)(2)” and inserting in lieu thereof “section 1382(b)(2) or (4),”. (8) The table of sections for part I of subchapter T of chapter 1 is amended by striking out— “Sec. 1383. Computation of tax where cooperative redeems non-qualified written notices of allocation.” and inserting in lieu thereof— “Sec. 1383. Computation of tax where cooperative redeems non-qualified written notices of allocation or nonqualified per-unit retain certificates.” (b) Tax Treatment by Patrons.— (1) Section 1385(a) is amended by striking out “and” at the end of paragraph (1), by striking out the period at the end of paragraph (2) and inserting in lieu thereof “, and”, and by adding at the end thereof the following new paragraph: “(3) the amount of any per-unit retain allocation which is paid in qualified per-unit retain certificates and which is received by him during the taxable year from an organization described in section 1381(a).” (2) The heading for section 1385(c) is amended by striking out “Allocation” and inserting in lieu thereof “Allocation and Certain Nonqualified Per-Unit Retain Certificates”. (3) Section 1385(c)(1) is amended to read as follows: “(1) Application of subsection.— This subsection shall apply “(A) any nonqualified written notice of allocation which— “(i) was paid as a patronage dividend, or “(ii) was paid by an organization described in section 1381 (a)(1) on a patronage basis with respect to earnings derived from business or sources described in section 1382(c)(2)(A),and “(B) any nonqualified per-unit retain certificate which was paid as a per-unit retain allocation.” (4) Section 1385(c)(2) is amended— (A) by striking out “nonqualified written notice of allocation” and inserting in lieu thereof “nonqualified written notice of allocation or nonqualified per-unit retain certificate”, and (B) by striking out “such written notice of allocation” each place it appears and inserting in lieu thereof “such written notice of allocation or per-unit retain certificate”. (5) The table of parts for subchapter T of chapter 1 is amended by striking out— “Part II. Tax treatment by patrons of patronage dividends.” and inserting in lieu thereof— “Part II. Tax treatment by patrons of patronage dividends and per-unit retain allocations.” (c) Definitions.— (1) (A) Section 1388(e)(1) is amended by striking out “allocation)” and inserting in lieu thereof “allocation or a per-unit retain certificate)”. (B) Section 1388(e)(2) is amended by striking out “allocation” and inserting in lieu thereof “allocation or qualified per-unit retain certificate”. (2) Section 1388 is amended by adding at the end thereof the following new subsections: “(f) Per-Unit Retain Allocation.— For purposes of this subchapter, the term ‘per-unit retain allocation’ means any allocation, by an organization to which part I of this subchapter applies, other than by payment in money or other property (except per-unit retain certificates) to a patron with respect to products marketed for him, the amount of which is fixed without reference to the net earnings of the organization pursuant to an agreement between the organization and the patron. “(g) Per-Unit Retain Certificate.— For purposes of this subchapter, the term ‘per-unit retain certificate’ means any written notice which discloses to the recipient the stated dollar amount of a per-unit retain allocation to him by the organization. “(h) Qualified Per-Unit Retain Certificate.— “(1) Defined.— For purposes of this subchapter, the term ‘qualified per-unit retain certificate’ means any per-unit retain certificate which the distributee has agreed, in the manner provided in paragraph (2), to take into account at its stated dollar amount as provided in section 1385 (a). 76 Stat. 1048. “(2) Manner of obtaining agreement.— A distributee shall agree to take a per-unit retain certificate into account as provided in paragraph (1) only by— “(A) making such agreement in writing, or “(B) obtaining or retaining membership in the organization after— “(i) such organization has adopted (after the date of the enactment of this subsection) a bylaw providing that membership in the organization constitutes such agreement, and “(ii) he has received a written notification and copy of such bylaw. “(3) Period for which agreement is effective.— “(A) General rule.— Except as provided in subparagraph (B)— “(i) an agreement described in paragraph (2)(A) shall be an agreement with respect to all products delivered by the distributee to the organization during the taxable year of the organization during which such agreement is made and all subsequent taxable years of the organization; and “(ii) an agreement described in paragraph (2)(B) shall be an agreement with respect to all products delivered by the distributee to the organization after he received the notification and copy described in paragraph (2)(B)(ii). “(B) Revocation, etc.— “(i) Any agreement described in paragraph (2)(A) may be revoked (in writing) by the distributee at any time. Any such revocation shall be effective with respect to products delivered by the distributee on or after the first day of the first taxable year of the organization beginning after the revocation is filed with the organization; except that in the case of a pooling arrangement described in section 1382(e) a revocation made by a distributee 76 Stat. 1046. shall not be effective as to any products which were delivered to the organization by the distributee before such revocation. “(ii) Any agreement described in paragraph (2)(B) shall not be effective with respect to any products delivered after the distributee ceases to be a member of the organization or after the bylaws of the organization cease to contain the provision described in paragraph (2)(B)(i). “(i) Nonqualified Per-Unit Retain Certificate.— For purposes of this subchapter, the term ‘nonqualified per-unit retain certificate’ means a per-unit retain certificate which is not described in subsection (h).” (d) Information Reporting.— (1) Amounts subject to reporting.— Section 6044(b)(1) is amended by striking out “and” at the end of subparagraph (B), by striking out the period at the end of subparagraph (C) and inserting in lieu thereof “, and”, and by adding after subparagraph (C) the following new subparagraphs: “(D) the amount of any per-unit retain allocation (as defined in section 1388(f)) which is paid in qualified per-unit retain certificates (as defined in section 1388(h)), and “(E) any amount described in section 1382 (b)(4) (relating to redemption of nonqualified per-unit retain certificates).” (2) Determination of amount paid.— (A) Section 6044(d)(1) is amended by striking out “allocation)” and inserting in lieu thereof “allocation or a qualified per-unit retain certificate)”. (B) Section 6044(d)(2) is amended by striking out “allocation” and inserting in lieu thereof “allocation or a qualified per-unit retain certificate”. (e) Effective Dates.— (1) The amendments made by subsections (a), (b), and (c) shall apply to per-unit retain allocations made during taxable years of an organization described in section 1381(a) (relating to organizations to which part I of subchapter T of chapter 1 applies) beginning after April 30, 1966, with respect to products delivered during such years. (2) The amendments made by subsection (d) shall apply with respect to calendar years after 1966. (f) Transition Rule.— (1) Except as provided in paragraph (2), a written agreement between a patron and a cooperative association— (A) which clearly provides that the patron agrees to treat the stated dollar amounts of all per-unit retain certificates issued to him by the association as representing cash distributions which he has, of his own choice, reinvested in the cooperative association, (B) which is revocable by the patron at any time after the close of the taxable year in which it was made, (C) which was entered into after October 14, 1965, and before the date of the enactment of this Act, and (D) which is in effect on the date of the enactment of this Act, and with respect to which a written notice of revocation has not been furnished to the cooperative association, shall be effective (for the period prescribed in the agreement) for purposes of section 1388(h) of the Internal Revenue Code of 1954 as if entered into, pursuant to such section, after the date of the enactment of this Act. (2) An agreement described in paragraphs (1)(A) and (C) which was included in a by-law of the cooperative association and which is in effect on the date of the enactment of this Act shall be effective for purposes of section 1388(h) of such Code only for taxable years of the association beginning before May 1, 1967. SEC. 212. EXCISE TAX RATE ON AMBULANCES AND HEARSES. (a) Classification as Automobiles.— Section 4062 (relating to 68A Stat. 482; 78 Stat. 1086. definitions applicable to the tax on motor vehicles) is amended by adding at the end thereof the following new subsection: “(b) Ambulances, Hearses, Etc.— For purposes of section 4061 (a), a sale of an ambulance, hearse, or combination ambulance-hearse shall be considered to be a sale of an automobile chassis and an automobile body enumerated in subparagraph (B) of section 4061(a)(2).” 79 Stat. 136. (b) Effective Date.— The amendment made by subsection (a) shall apply with respect to articles sold after the date of the enactment of this Act. SEC. 213. APPLICABILITY OF EXCLUSION FROM INTEREST EQUALIZATION TAX OF CERTAIN LOANS TO ASSURE RAW MATERIALS SOURCES. (a) Exception to Exclusion.— Section 4914(d) (relating to loans 78 Stat. 813. to assure raw materials sources) is amended by adding at the end thereof the following new paragraph: “(3) Exception.— The exclusion from tax provided by paragraph (1) shall not apply in any case where the acquisition of the debt obligation of the foreign corporation is made with an intent to sell, or to offer to sell, any part of such debt obligation to United States persons.” (b) Technical Amendments.— (1) Section 4914(j)(1) (relating to loss of entitlement to exclusion in case of certain subsequent transfers) is amended— (A) by striking out in subparagraph (A) “, or the exclusion provided by subsection (d),”, and (B) by striking out “subsection (d) or (f)” in subparagraph (I)) and inserting in lieu thereof “subsection (f)”. (2) Section 4918 (relating to exemption for prior American 78 Stat. 831. ownership) is amended by adding at the end thereof the following new subsection: “(g) Certain Debt Obligations Arising Out of Loans To Assure Raw Material Sources.— Under regulations prescribed by the Secretary or his delegate, subsection (a) shall not apply to the acquisition by a United States person of any debt obligation to which section 4914(d) applied where the acquisition of the debt obligation by such person is made with an intent to sell, or to offer to sell, any part of such debt obligation to United States persons. The preceding sentence shall not apply if the tax imposed by section 4911 has applied 78 Stat. 809. to any prior acquisition of such debt obligation.” (c) Effective Date.— The amendments made by subsections (a) and (b) shall apply with respect to acquisitions of debt obligations made after the date of the enactment of this Act. SEC. 214. EXCLUSION FROM INTEREST EQUALIZATION TAX FOR CERTAIN ACQUISITIONS BY INSURANCE COMPANIES. (a) New Companies and Companies Operating in Former Less Developed Countries.— Section 4914(e) (relating to acquisitions by insurance companies doing business in foreign countries) is amended— (1) by striking out “at the time of the initial designation” in the last sentence of paragraph (2); (2) by striking out “An” in the first sentence of paragraph (3)(A)(i) and inserting in lieu thereof “Except as provided in clause (iii),an”; (3) by striking out “under this subparagraph” in paragraph (3)(A)(ii) and inserting in lieu thereof “under clause (i)”; (4) by adding after clause (ii) of paragraph (3)(A) the following new clauses: “(iii) Initial designation after October 2, 1964.— An insurance company which was not in existence on October 2, 1964, or was otherwise ineligible to establish a fund (or funds) of assets described in paragraph (2) by making an initial designation under clause (i) on or before such date, may establish (and thereafter currently maintain) such fund (or funds) of assets at any time after the enactment of this clause by designating stock of a foreign issuer or a debt obligation of a foreign obligor as a part of such fund in accordance with the provisions of clause (iv)(if applicable) and subparagraph (B)(i). “(iv) Funds involving currencies of former less developed countries.— An insurance company desiring to establish a fund under clause (iii) with respect to insurance contracts payable in the currency of a country designated as a less developed country on October 2, 1964, which thereafter has such designation terminated 78 Stat. 827. by an Executive order issued under section 4916(b), shall designate as assets of such fund, to the extent permitted by subparagraph (E), the stock of foreign issuers or debt obligations of foreign obligors as follows: First, stock and debt obligations having a period remaining to maturity of at least 1 year (other than stock or a debt obligation described in section 4916(a)) acquired before July 19, 1963, and owned by the company on the date which the President, in accordance with section 4916(b), communicates to Congress his intention to terminate the status of such country as a less developed country; second, stock and debt obligations having a period remaining to maturity of at least 1 year described m section 4916(a)(and owned by the company on the date of such termination) which, at the time of acquisition, qualified for the exclusion provided in such section because of the status of such country as a less developed country; and third, such stock or debt obligations as the company may elect to designate under subparagraph (B)(i). The period remaining to maturity referred to in the preceding sentence shall be determined as of the date of the President’s communication to Congress.”; (5) by striking out “to maintain fund” in the heading of paragraph (3)(B); (6) by striking out “as provided in subparagraph (A)(ii)” in paragraph (3)(B)(i) and inserting in lieu thereof “under subparagraphs (A)(i) and (ii)”; (7) by inserting before the period at the end of the first sentence of paragraph (3)(C) the following: “; except that, with respect to a fund established under subparagraph (A)(iii), stock or debt obligations acquired before the establishment of such fund may not be designated as part of such fund under this subparagraph”; (8) by striking out “subparagraph (B),” in paragraph (3)(E)(i) and inserting in lieu thereof “subparagraph (A)(iv), (B),”; (9) by striking out “subparagraph (A)” in paragraph (4)(B)(i) and inserting in lieu thereof “subparagraph (A)(i)”; (10) by striking out “paragraph (3)(A)” in paragraph (4)(B)(ii) and inserting in lieu thereof “paragraph (3)(A)(i)”; and (11) by adding at the end of paragraph (4) the following new 78 Stat. 820. paragraph: “(C) Special rule.— For purposes of subparagraph (A), if a country designated as a less developed country on September 2, 1964, thereafter has such designation terminated by an Executive order issued under section 4916(b), all insurance 78 Stat. 827. contracts payable in the currency of such country which were entered into before such designation was terminated shall be treated as insurance contracts payable in the currency of a country other than a less developed country.” (b) Effective Date.— The amendments made by subsection (a) shall take effect on the day after the date of the enactment of this Act. SEC. 215. EXCLUSION FROM INTEREST EQUALIZATION TAX OF CERTAIN ACQUISITIONS BY FOREIGN BRANCHES OF DOMESTIC BANKS. (a) Authority for Modification of Executive Orders.— Section 4931(a) (relating to commercial bank loans) is amended by adding at 78 Stat. 839. the end thereof the following new sentence: “Clause (A) of the preceding sentence shall not prevent a modification of such Executive order (or any modification thereof) to exclude from the application of subsection (b) acquisitions by commercial banks, through branches located outside the United States, of debt obligations of foreign obligors payable in currency of the United States.” (b) Effective Date.— The amendment made by subsection (a) shall apply with respect to acquisitions of debt obligations made after the date of the enactment of this Act.

16. 1966

    Pub. L. 89–809 § 209(b) · 80 Stat. 1539

    Substituted · 26 U.S.C. § 613(c)(4)(G)

    Pub. L. 89–809, § 209(b), substituted “paragraph (5) or (6)(B)” for “paragraph (5)(B)”

    Source evidence

    Code amendment note
    Subsec. (c)(4)(G). Pub. L. 89–809, § 209(b), substituted “paragraph (5) or (6)(B)” for “paragraph (5)(B)”.

    Enacted provision · exact public law section
    (b) Conforming Amendment.— Section 613(c)(4)(G) (relating to treatment processes) is amended by striking out “paragraph (5)(B)”and inserting in lieu thereof “paragraph (5) or (6)(B)”.

17. 1969

    Tax Reform Act of 1969

    Pub. L. 91–172 § 501(a) · 83 Stat. 487

    1. Added · 26 U.S.C. § 613(b)

       Pub. L. 91–172, § 501(a), reduced the percentage depletion rate on oil and gas wells from 27½ percent to 22 percent, reduced to 22 percent other minerals formerly receiving percentage depletion at a rate of 23 percent, added molybdenum in the category of minerals subject to the 22 percent depletion rate, reduced to 14 percent the rate on minerals formerly receiving depletion at a 15 percent rate except in the case of domestic gold, silver, oil shale, copper, and iron ore

    2. Inserted · 26 U.S.C. § 613(b)

       Pub. L. 91–172, § 501(a), reduced the percentage depletion rate on oil and gas wells from 27½ percent to 22 percent, reduced to 22 percent other minerals formerly receiving percentage depletion at a rate of 23 percent, inserted provision that for percentage depletion purposes, minerals other than sodium chloride, extracted from brine pumped from a saline perennial lake within the United States are not to be considered minerals from an inexhaustible source

    Source evidence

    Code amendment note
    Subsec. (b). Pub. L. 91–172, § 501(a), reduced the percentage depletion rate on oil and gas wells from 27½ percent to 22 percent, reduced to 22 percent other minerals formerly receiving percentage depletion at a rate of 23 percent, added molybdenum in the category of minerals subject to the 22 percent depletion rate, reduced to 14 percent the rate on minerals formerly receiving depletion at a 15 percent rate except in the case of domestic gold, silver, oil shale, copper, and iron ore, and inserted provision that for percentage depletion purposes, minerals other than sodium chloride, extracted from brine pumped from a saline perennial lake within the United States are not to be considered minerals from an inexhaustible source.

    Enacted provision · exact public law section
    (a) Change in Certain Percentage Depletion Rates.— Subsection (b) of section 613 (relating to percentage depletion) is amended 68A Stat. 208; 80 Stat. 1579. 26 USC 613. to read as follows: “(b) Percentage Depletion Rates.— The mines, wells, and other natural deposits, and the percentages, referred to in subsection (a) are as follows: “(1) 22 percent— “(A) oil and gas wells; “(B) sulphur and uranium; and “(C) if from deposits in the United States—anorthosite, clay, laterite, and nephelite syenite (to the extent that alumina and aluminum compounds are extracted therefrom), asbestos, bauxite, celestite, chromite, corundum, fluorspar, graphite, ilmenite, kyanite, mica, olivine, quartz crystals (radio grade), rutile, block steatite talc, and zircon, and ores of the following metals: antimony, beryllium, bismuth, cadmium, cobalt, columbium, lead, lithium, manganese, mercury, molybdenum, nickel, platinum and platinum group metals, tantalum, thorium, tin, titanium, tungsten, vanadium, and zinc. “(2) 15 percent— if from deposits in the United States— “(A) gold, silver, copper, and iron ore, and “(B) oil shale (except shale described in paragraph (5)). “(3) 14 percent— “(A) metal mines (if paragraph (1)(C) or (2)(A) does not apply), rock asphalt, and vermiculite; and “(B) if paragraph (1)(C), (5), or (6)(B) does not apply, ball clay, bentonite, china clay, sagger clay, and clay used or sold for use for purposes dependent on its refractory properties. “(4) 10 percent— asbestos (if paragraph (1)(C) does not apply), brucite, coal, lignite, perlite, sodium chloride, and wollastonite. “(5) 7½ Percent— clay and shale used or sold for use in the manufacture of sewer pipe or brick, and clay, shale, and slate used or sold for use as sintered or burned lightweight aggregates. “(6) 5 percent— “(A) gravel, peat, pumice, sand, scoria, shale (except shale described in paragraph (2)(B) or (5)), and stone except stone described in paragraph (7)); “(B) clay used, or sold for use, in the manufacture of drainage and roofing tile, flower pots, and kindred products; and “(C) if from brine wells—bromine, calcium chloride, and magnesium chloride. “(7) 14 percent— all other minerals, including, but not limited to, aplite, barite, borax, calcium carbonates, diatomaceous earth, dolomite, feldspar, fullers earth, garnet, gilsonite, granite, limestone, magnesite, magnesium carbonates, marble, mollusk shells (including clam shells and oyster shells), phosphate rock, potash, quartzite, slate, soapstone, stone (used or sold for use by the mine owner or operator as dimension stone or ornamental stone), thenardite, tripoli, trona, and (if paragraph (1)(C) does not apply) bauxite, flake graphite, fluorspar, lepidolite, mica, spodumene, and talc (including pyrophyllite), except that, unless sold on bid in direct competition with a bona fide bid to sell a mineral listed in paragraph (3), the percentage shall be 5 percent for any such other mineral (other than slate to which paragraph (5) applies) when used, or sold for use, by the mine owner or operator as rip rap, ballast, road material, rubble, concrete aggregates, or for similar purposes. For purposes of this paragraph, the term ‘all other minerals’ does not include— “(A) soil, sod, dirt, turf, water, or mosses; or “(B) minerals from sea water, the air, or similar inexhaustible sources. For the purposes of this subsection, minerals (other than sodium chloride) extracted from brines pumped from a saline perennial lake within the United States shall not be considered minerals from an inexhaustible source.”

18. 1969

    Tax Reform Act of 1969

    Pub. L. 91–172 § 502(a) · 83 Stat. 487

    1. Added · 26 U.S.C. § 613(c)(4)(H); 26 U.S.C. § 613(c)(4)(I)

       Pub. L. 91–172, § 502(a), added subpar. (H)

    2. Redesignated · 26 U.S.C. § 613(c)(4)(H); 26 U.S.C. § 613(c)(4)(I)

       Pub. L. 91–172, § 502(a), redesignated former subpar. (H) as (I)

    Source evidence

    Code amendment note
    Subsec. (c)(4)(H), (I). Pub. L. 91–172, § 502(a), added subpar. (H) and redesignated former subpar. (H) as (I).

    Enacted provision · exact public law section
    (a) In General.— Section 613(c)(4) (relating to treatment processes considered as mining) is amended by striking out “and” at the end of subparagraph (G), by redesignating subparagraph (H) as subparagraph (I), and by inserting after subparagraph (G) the following new subparagraph: “(H) in the case of oil shale—extraction from the ground, crushing, loading into the retort, and retorting, but not hydrogenation, refining, or any other process subsequent to retorting; and”,

19. 1974

    Pub. L. 93–499 § 2(a) · 88 Stat. 1549

    Inserted · 26 U.S.C. § 613(c)(4)(E)

    Pub. L. 93–499 inserted reference to decarbonation of trona

    Source evidence

    Code amendment note
    Subsec. (c)(4)(E). Pub. L. 93–499 inserted reference to decarbonation of trona.

    Enacted provision · exact public law section
    (a) Section 613(c)(4)(E) of the Internal Revenue Code of 1954 (relating to treatment processes considered as mining) is amended by inserting after “phosphate rock,” the following: “the decarbonation of trona,”.

20. 1975

    Tax Reduction Act of 1975

    Pub. L. 94–12 § 501(b)(2)(A) · 89 Stat. 26

    1. Struck · 26 U.S.C. § 613(b)(1)

       Pub. L. 94–12, § 501(b)(2)(A), struck out subpar. (A) “oil and gas wells”

    2. Redesignated · 26 U.S.C. § 613(b)(1)

       Pub. L. 94–12, § 501(b)(2)(A), redesignated former subpars. (B) and (C) as (A) and (B), respectively

    Source evidence

    Code amendment note
    Subsec. (b)(1). Pub. L. 94–12, § 501(b)(2)(A), struck out subpar. (A) “oil and gas wells” and redesignated former subpars. (B) and (C) as (A) and (B), respectively.

21. 1975

    Tax Reduction Act of 1975

    Pub. L. 94–12 § 501(b)(2)(B) · 89 Stat. 26

    Substituted · 26 U.S.C. § 613(b)(3); 26 U.S.C. § 613(b)(4)

    Pub. L. 94–12, § 501(b)(2)(B), substituted “(1)(B)” for “(1)(C)” wherever appearing

    Source evidence

    Code amendment note
    Subsec. (b)(3), (4). Pub. L. 94–12, § 501(b)(2)(B), substituted “(1)(B)” for “(1)(C)” wherever appearing.

22. 1975

    Tax Reduction Act of 1975

    Pub. L. 94–12 § 501(b)(2) · 89 Stat. 26

    1. Substituted · 26 U.S.C. § 613(b)(7)

       Pub. L. 94–12, § 501(b)(2) (B), (C), substituted “(1)(B)” for “(1)(C)” in provisions preceding subpar. (A)

    2. Added · 26 U.S.C. § 613(b)(7)

       Pub. L. 94–12, § 501(b)(2) (B), (C), added subpar. (C)

    Source evidence

    Code amendment note
    Subsec. (b)(7). Pub. L. 94–12, § 501(b)(2) (B), (C), substituted “(1)(B)” for “(1)(C)” in provisions preceding subpar. (A) and added subpar. (C).

23. 1975

    Tax Reduction Act of 1975

    Pub. L. 94–12 § 501(b)(1) · 89 Stat. 26

    Substituted · 26 U.S.C. § 613(d)

    Pub. L. 94–12, § 501(b)(1), substituted provisions denying the percentage depletion allowance in the case of oil and gas wells except as provided in section 613A for provisions governing the application of percentage depletion rates to certain taxable years ending in 1954

    Source evidence

    Code amendment note
    Subsec. (d). Pub. L. 94–12, § 501(b)(1), substituted provisions denying the percentage depletion allowance in the case of oil and gas wells except as provided in section 613A for provisions governing the application of percentage depletion rates to certain taxable years ending in 1954.

24. 1976

    Pub. L. 94–455 § 1901(b)(3)(K) · 90 Stat. 1520

    Substituted · 26 U.S.C. § 613(a)

    Pub. L. 94–455, § 1901(b)(3)(K), substituted “ordinary income” for “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231”

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 94–455, § 1901(b)(3)(K), substituted “ordinary income” for “gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231”.

    Enacted provision · exact public law section
    (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).

25. 1976

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

    Struck · 26 U.S.C. § 613(c)(2); 26 U.S.C. § 613(4)(I)

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

    Source evidence

    Code amendment note
    Subsec. (c)(2), (4)(I). 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”.

26. 1978

    Energy Tax Act of 1978

    Pub. L. 95–618 § 403(a)(2)(A) · 92 Stat. 3174

    Inserted · 26 U.S.C. § 613(c)(1)

    Pub. L. 95–618, § 403(a)(2)(A), inserted “and other than a geothermal deposit” after “oil or gas well”

    Source evidence

    Code amendment note
    Subsec. (c)(1). Pub. L. 95–618, § 403(a)(2)(A), inserted “and other than a geothermal deposit” after “oil or gas well”.

    Enacted provision · exact public law section
    (A) Paragraph (1) of section 613(c) (defining gross income from the property) is amended by inserting “and other than a geothermal deposit” after “oil or gas well”.

27. 1978

    Energy Tax Act of 1978

    Pub. L. 95–618 § 403(a)(1) · 92 Stat. 3174

    Added · 26 U.S.C. § 613(e)

    Pub. L. 95–618, § 403(a)(1), added subsec. (e)

    Source evidence

    Code amendment note
    Subsec. (e). Pub. L. 95–618, § 403(a)(1), added subsec. (e).

    Enacted provision · exact public law section
    (1) In general.— Section 613 (relating to percentage depletion) 26 USC 613. is amended by adding at the end thereof the following new subsection: “(e) Percentage Depletion for Geothermal Deposits.— “(1) In general.— In the case of geothermal deposits located in the United States or in a possession of the United States, for purposes of subsection (a)— “(A) such deposits shall be treated as listed in subsection (b),and “(B) the applicable percentage (determined under the table contained in paragraph (2)) shall be deemed to be the percentage specified in subsection (b). “(2) Applicable percentage.— For purposes of paragraph (1)— “In the case of taxable years beginning in calendar year— The applicable percentage is—  1978, 1979, or 1980 22  1981 20  1982 18  1983 16  1984 and thereafter 15 “(3) Geothermal deposit defined.— For purposes of paragraph (1), the term ‘geothermal deposit’ means a geothermal reservoir consisting of natural heat which is stored in rocks or in an aqueous liquid or vapor (whether or not under pressure). Such a deposit shall in no case be treated as a gas well for purposes of this section or section 613A, and this section shall not 26 USC 613A. apply to a geothermal deposit which is located outside the United States or its possessions.”

28. 1986

    Tax Reform Act of 1986

    Pub. L. 99–514 title IV § 412(a)(2) · 100 Stat. 2085

    Added · 26 U.S.C. § 613(e)(4)

    Pub. L. 99–514 added par. (4)

    Source evidence

    Code amendment note
    Subsec. (e)(4). Pub. L. 99–514 added par. (4).

    Enacted provision · exact public law section
    (2) Geothermal deposits.— Section 613(e) is amended by adding at the end thereof the following new paragraph: “(4) Percentage depletion not to include lease bonuses, etc.— In the case of any geothermal deposit, the term ‘gross income from the property’ shall, for purposes of this section, not include any amount described in section 613A(d)(5).”

29. 1990

    Revenue Reconciliation Act of 1990

    Pub. L. 101–508 § 11522(a) · 104 Stat. 1388

    Inserted · 26 U.S.C. § 613(a)

    Pub. L. 101–508, § 11522(a), inserted “(100 percent in the case of oil and gas properties)” after “50 percent”

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 101–508, § 11522(a), inserted “(100 percent in the case of oil and gas properties)” after “50 percent”.

    Enacted provision · exact public law section
    (a) In General.— The second sentence of subsection (a) of section 613 (relating to percentage depletion) is amended by inserting “(100 percent in the case of oil and gas properties)” after “50 percent”.

30. 1990

    Revenue Reconciliation Act of 1990

    Pub. L. 101–508 § 11815(b)(2) · 104 Stat. 1388

    Amended · 26 U.S.C. § 613(e)(1)(B)

    Pub. L. 101–508, § 11815(b)(2), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “the applicable percentage (determined under the table contained in paragraph (2)) shall be deemed to be the percentage specified in subsection (b).”

    Source evidence

    Code amendment note
    Subsec. (e)(1)(B). Pub. L. 101–508, § 11815(b)(2), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “the applicable percentage (determined under the table contained in paragraph (2)) shall be deemed to be the percentage specified in subsection (b).”

    Enacted provision · exact public law section
    (2) Subparagraph (B) of section 613(e)(1) is amended to read as follows: “(B) 15 percent shall be deemed to be the percentage specified in subsection (b),”.

31. 1990

    Revenue Reconciliation Act of 1990

    Pub. L. 101–508 § 11815(b)(1) · 104 Stat. 1388

    1. Redesignated · 26 U.S.C. § 613(e)(2)(4)

       Pub. L. 101–508, § 11815(b)(1), redesignated pars. (3) and (4) as (2) and (3), respectively

    2. Struck · 26 U.S.C. § 613(e)(2)(4)

       Pub. L. 101–508, § 11815(b)(1), struck out former par. (2) which related to the applicable percentage depletion for geothermal deposits

    Source evidence

    Code amendment note
    Subsec. (e)(2) to (4). Pub. L. 101–508, § 11815(b)(1), redesignated pars. (3) and (4) as (2) and (3), respectively, and struck out former par. (2) which related to the applicable percentage depletion for geothermal deposits.

    Enacted provision · exact public law section
    (1) Subsection (e) of section 613 is amended by striking paragraph (2) and by redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively.

32. 1996

    Small Business Job Protection Act of 1996

    Pub. L. 104–188 title I § 1704(t)(34) · 110 Stat. 1755

    Substituted · 26 U.S.C. § 613(e)(1)(B)

    Pub. L. 104–188 substituted “subsection (b).” for “subsection (b),”

    Source evidence

    Code amendment note
    Subsec. (e)(1)(B). Pub. L. 104–188 substituted “subsection (b).” for “subsection (b),”.

    Enacted provision · exact public law section
    (34) Subparagraph (B) of section 613(e)(1) is amended by striking the comma at the end thereof and inserting a period.

33. 2004

    Pub. L. 108–357 title I § 102(d)(6) · 118 Stat. 1418

    Changed · 26 U.S.C. § 613(a)

    Pub. L. 108–357, which directed the insertion of “and without the deduction under section 199” after “without allowances for depletion”, was executed by making the insertion after “without allowance for depletion”, to reflect the probable intent of Congress

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 108–357, which directed the insertion of “and without the deduction under section 199” after “without allowances for depletion”, was executed by making the insertion after “without allowance for depletion”, to reflect the probable intent of Congress.

    Enacted provision · exact public law section
    (6) Subsection (a) of section 613 is amended by inserting “and without the deduction under section 199” after “without allowances for depletion”.

34. 2005

    Tax Technical Corrections Act of 2005

    Pub. L. 109–135 title IV § 412(gg) · 119 Stat. 2577

    Inserted · 26 U.S.C. § 613(c)(4)(H)

    Pub. L. 109–135 inserted “(including in situ retorting)” after “and retorting”

    Source evidence

    Code amendment note
    Subsec. (c)(4)(H). Pub. L. 109–135 inserted “(including in situ retorting)” after “and retorting”.

    Enacted provision · exact public law section
    (gg) Subparagraph (H) of section 613(c)(4) is amended by inserting “(including in situ retorting)” after “and retorting”.

35. 2017

    Pub. L. 115–97 § 13305(b)(4) · 131 Stat. 2054

    Struck · 26 U.S.C. § 613(a)

    Pub. L. 115–97, § 13305(b)(4), struck out “and without the deduction under section 199” after “without allowance for depletion”

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 115–97, § 13305(b)(4), struck out “and without the deduction under section 199” after “without allowance for depletion”.

    Enacted provision · exact public law section
    (4) Section 613(a), as amended by section 11011, is amended by striking “and without the deduction under section 199”.

    Effective date note
    Amendment by Pub. L. 115–141 effective as if included in section 11011 of Pub. L. 115–97, see section 101(d)(1) of Pub. L. 115–141, set out as a note under section 62 of this title.

36. 2017

    Pub. L. 115–97 § 11011(d)(3) · 131 Stat. 2054

    Inserted · 26 U.S.C. § 613(a)

    Pub. L. 115–97, § 11011(d)(3), inserted “and without the deduction under section 199A” after “without the deduction under section 199”

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 115–97, § 11011(d)(3), inserted “and without the deduction under section 199A” after “without the deduction under section 199”.

    Enacted provision · exact public law section
    (3) Section 613(a) is amended by inserting “and without the deduction under section 199A” after “and without the deduction under section 199”.

    Effective date note
    Amendment by Pub. L. 115–141 effective as if included in section 11011 of Pub. L. 115–97, see section 101(d)(1) of Pub. L. 115–141, set out as a note under section 62 of this title.

37. 2018

    Department of Commerce Appropriations Act, 2018

    Pub. L. 115–141 div. T § 101(a)(2)(D) · 132 Stat. 348

    Substituted · 26 U.S.C. § 613(a)

    Pub. L. 115–141 substituted “any deduction under section 199A” for “the deduction under section 199A”

    Source evidence

    Code amendment note
    Subsec. (a). Pub. L. 115–141 substituted “any deduction under section 199A” for “the deduction under section 199A”.

    Enacted provision · exact public law section
    Sec. 101. During the current fiscal year, applicable appropriations and funds made available to the Department of Commerce by this Act shall be available for the activities specified in the Act of October 26, 1949 (15 U.S.C. 1514), to the extent and in the manner prescribed by the Act, and, notwithstanding 31 U.S.C. 3324, may be used for advanced payments not otherwise authorized only upon the certification of officials designated by the Secretary of Commerce that such payments are in the public interest.

    Effective date note
    Amendment by Pub. L. 115–141 effective as if included in section 11011 of Pub. L. 115–97, see section 101(d)(1) of Pub. L. 115–141, set out as a note under section 62 of this title.

36 of 50 references resolved to an enrolled provision · 14 partial