A domestic corporation which was not actually in existence before January 1, 1940, and which was not constructively in existence on the date of the beginning of its base period, and a foreign corporation which does not meet the requirements of (c) above, are required to compute their credit under the invested capital method provided in section 714. (Sec. 62, 53 Stat. 32, 26 U. S. C., Sup., 62; sec. 13, 14, 15, Excess Profits Tax Amendments of 1941, Public Law 10-77th Cong.) Sec. 30.2 Average base period net income of acquiring corporation. Section 742 of the Excess Profits Tax Act of 1940 provides rules for the computation of the average base period net income in the case of certain corporations which are "acquiring corporations" within the meaning of section 740. The Excess Profits Tax Amendments of 1941 provides that every acquiring corporation which was itself actually in existence before January 1, 1940 shall have an election to compute its average base period net income under either of the two following methods: (a) The average base period net income computed under section 713 solely with reference to the taxpayer's own base period experience, without reference to the base period experience of any of the taxpayer's component corporations; or (b) The average base period net income computed under section 742 with reference to the base period experience of the taxpayer and each qualified component corporation. The election shall be made in the excess profits tax return for the particular taxable year. An election once made is irrevocable for a particular taxable year, but a new election is granted for each succeeding taxable year. An acquiring corporation which was merely constructively in existence before January 1, 1940, by reason of the provisions of section 740, is required, in every case, to compute its average base period net income under section 742. (Sec. 62, 53 Stat. 32, 26 U. S. C., Sup., 62; sec. 15, Excess Profits Tax Amendments of 1941, Public Law 10-77th Cong.) Sec. 30.3 Information required in returns. Any taxpayer which is entitled to have its excess profits credit computed under section 713 or section 714, whichever credit results in the lesser excess profits tax, is required, even though it has filed old Form 1121, to file a return on Form 1121 (revised March 1941), and such return shall (unless the taxpayer states therein that it disclaims the use of one of the credits) contain computations of the credits computed under section 713 and section 714 and the excess profits net income computed with the credit under section 713 and the excess profits net income computed with the credit under section 714, and shall contain all the information required by such revised form and by these regulations with respect to such computations. A taxpayer stating in its return that it disclaims the use of one of the credits in the computation of the excess profits tax for the taxable year may omit from the return the computa tion and information based upon such disclaimed credit. (Sec. 62, 53 Stat. 32, 26 U. S. C., Sup., 62; sec. 16, Excess Profits Tax Amendments of 1941, Public Law 10-77th Cong.) Sec. 30.4 Modification of prior regulations. Regulations 109 [part 30, title 26, Code of Federal Regulations, 1941 Sup.] are hereby modified to the extent that they may be inconsistent with these regulations. (Sec. 62, 53 Stat. 32, 26 U. S. C., Sup. 62; sec. 13, 14, 15, 16, Excess Profits Tax Amendments of 1941, Public Law 1077th Cong.) Approved March 15, 1941: JOHN L. SULLIVAN, GUY T. HELVERING, Commissioner of Internal Revenue. Acting Secretary of the Treasury. [Filed with the Division of the Federal Register March 18, 1941, 11:46 a. m.] (T. D. 5044) Amending Regulations 10 Subchapter C-Miscellaneous excise taxes-Part 185-Warehousing of distilled spirits TREASURY Department, OFFICE OF COMMISSIONER OF INTERNAL REVENUE, Washington, D. C. To District Supervisors, Collectors of Internal Revenue, and Others Concerned: Pursuant to sections 2872, 2875, 2878, 2879, 2883, 2885, 2903, 2904, 2905, 2910, 2915, 3170, and 3176 of the Internal Revenue Code, Regulations 10 are hereby amended in these respects: (1) All requirements concerning export storage warehouses and export storage rooms are revoked. This amendment will affect the following sections, among others, 185.482, and 185.484; sections 185.18, 185.91, 185.474, (2) Except as they may affect bonds filed prior to the effective date of these regulations, all requirements relative to export storage bond, Form 654, are revoked. This amendment affects the following sections, among others, sections 185.52, 185.73, 185.91, 185.95, 185.103, 185.110, 185.111, 185.112, 185.120, 185.121, 185.131, 185.132, 185.133, 185.134, and 185.135; (3) (a) Each proprietor of an internal revenue bonded warehouse who has outstanding on the effective date of these regulations an export storage bond, Form 654, may, as to spirits stored thereunder, substitute for the obligation thereof bond, Form 1571, covering his bonded warehouse, by filing with the district supervisor a consent of surety, Form 1533, on the latter bond, if such bond is in the maximum penal sum or in such penal sum as will cover the tax on all distilled spirits in the warehouse or in transit thereto, including spirits bottled for export; provided that, if bond, Form 1571, is not in the maximum penal sum and is insufficient to cover the tax on spirits bottled for export, the proprietor may file a new or additional bond, Form 1571, to cover the tax on such spirits; (b) Each proprietor of an internal revenue bonded warehouse, who desires to receive, or deposit, for storage in his bonded warehouse on and after the effective date of these regulations distilled spirits bottled for export, must file with the district supervisor a consent of surety, Form 1533, extending the terms of the existing bond, Form 1571, to cover the tax on distilled spirits bottled for export to be stored in such bonded warehouse, if such bond is in the maximum penal sum or in such penal sum as will cover the tax on all distilled spirits in the warehouse or in transit thereto, including spirits bottled for export; provided that, if bond, Form 1571, is not in the maximum penal sum and is insufficient to cover tax on spirits bottled for export to be received, or deposited, for storage in the warehouse, the proprietor must file à new or additional bond, Form 1571, to cover the tax on such spirits; (c) One consent of surety, Form 1533, may be furnished to cover both situations mentioned in paragraphs (3) (a) and (b); and (4) Sections 185.51, 185.359, 185.365, 185.366, 185.367, and 185.369 are amended to read as follows: [The asterisk in parentheses at the end of the paragraphs following refers to section 3176, Internal Revenue Code.] Section 185.51 Transportation and Warehousing Bond, Form 1571.— Every person desiring the establishment of an internal revenue bonded warehouse shall, upon filing his application, Form 27-D, execute bond on Form 1571, "Transportation and Warehousing Bond," in triplicate, in conformity with the provisions of Article XI, and file the same with the district supervisor. The penal sum of such bond shall be not less than the amount of internal revenue tax at the rate prescribed by law on the quantity of distilled spirits that will be stored in such warehouse and in transit thereto at any one time, including distilled spirits bottled for export, provided that the maximum penal sum of such bond shall not exceed $200,000 for each such warehouse. (*; Secs. 2872, 2879 (c), I. R. C.) Section 185.359 Application.—Whenever an owner desires to remove distiller's original packages of distilled spirits from an internal revenue bonded warehouse for bottling in bond for storage pending withdrawal of the bottled spirits for exportation, he shall execute Form 655, in triplicate. (*; Secs. 2903, 2904, 2910, I. R. C.) Section 185.365 Records. (a) Report of packages removed for bottling. The storekeeper-gauger will report the removal of the spirits. from the bonded warehouse for bottling in bond for export on his. monthly return, Form 1513, and the bottling of the spirits on Form 1515 and Form 1516, in accordance with the regulations governing the bottling of distilled spirits in bond. When the spirits have been bottled and cased, they will be returned to the storage portion of the bonded warehouse. These spirits need not be maintained in a separate room or building, but shall be kept separate and apart from all other distilled spirits stored in the warehouse. The storekeeper-gauger shall report the quantity so deposited on Form 1516, in the statement, "Export Storage Transactions." (b) Report of cases filled and redeposited.-After the distilled spirits have been bottled and the cases returned to the storage portion of the bonded warehouse, the storekeeper-gauger will execute his report of cases filled and deposited in the bonded warehouse in Part 5 of Form 655. One copy of the report, together with Form 1520 covering the regauge of the packages, will be forwarded to the district supervisor. Remnants remaining after bottling distilled spirits in bond for export shall be disposed of as provided in the regulations governing the bottling of distilled spirits in bond, and appropriate notation made on Forms 655 and 1515. (*; Secs. 2904, 2910, 2915, I. R. C.) Section 185.366 Transfer between warehouses.-Whenever it is desired to transfer distilled spirits, which have been bottled in bond for export and which are stored in a bonded warehouse, to another internal revenue bonded warehouse for storage, prior to direct exportation or transportation for export, the proprietor of the receiving warehouse shall execute an application for transfer of the spirits on Form 236. If the transfer is to be made between bonded warehouses in the same district, Form 236 will be prepared in quintuplicate, and if the transfer is to be made between bonded warehouses in different districts, Form 236 will be prepared in sextuplet. The applicant will enter all applicable data indicated by the form, and will also enter thereon the statement "To be received and deposited for storage for export." The Forms 236 will be filed and disposed of in accordance with section 185.298 or 185.312, as the case may be. The cases will be inspected, transferred, received, examined, and reported in the manner provided by Article XXXII, insofar as it relates to the transfer of spirits bottled in bond before tax payment. (*; Sec. 2875, I. R. C.) Exportation of Bottled Distilled Spirits Section 185.367 Application and bond.-Whenever it is desired to withdraw bottled distilled spirits from the bonded warehouse, either for direct exportation or for transportation for export, the owner shall execute application on Form 206, in triplicate, in accordance with section 185.317. The request for regauge will not be executed. The applicant shall forward all copies of Form 206 to the district supervisor, together with a properly executed export bond in a sufficient penal sum, computed as prescribed in section 185.329, except that the application need not be accompanied by a bond if the applicant has on file with the district supervisor an approved continuing bond (Form 657 or 658) in a sufficient penal sum. (*; Secs. 2905, 3170, I. R. C.) Section 185.369 Records. When the spirits have been removed from the warehouse, the storekeeper-gauger shall make appropriate entries in Form 1516 in the statement "Export Storage Transactions," and the proprietor shall report the removal on Form 52-C. (*; Sec. 2904, I. R. C.) These regulations shall be effective on and after the thirtieth day following approval. TIMOTHY C. MOONEY, Approved May 1, 1941: JOHN L. SULLIVAN, Acting Commissioner of Internal Revenue. Acting Secretary of the Treasury. [Filed with the Division of the Federal Register May 5, 1941, 10:53 a. m.] (T. D. 5045) Income tax and excess-profits tax Regulations 103 and 109 amended to conform to the Excess Profits Tax Amend ments of 1941 TREASURY DEPARTMENT, OFFICE OF THE COMMISSIONER OF INTERNAL REVENUE, Washington, D. C. To Collectors of Internal Revenue and others Concerned: In order to conform Regulations 103 [part 19, title 26, Code of Federal Regulations, 1940 Sup.] and Regulations 109 [part 30, title 26 of such code, 1941 Sup.] to the Excess Profits Tax Amendments of 1941 (Public Law 10-77th Congress), approved March 7, 1941, such regulations are amended as follows: REGULATIONS 103 Paragraph 1. There is inserted immediately preceding section 19.23 (a)-1 the following: SEC. 10. CAPITALIZATION OF ADVERTISING, ETC., EXPENDITURES. (Excess Profits Tax Amendments of 1941.) (b) Amendment to Chapter 1.-Section 23 (a) of the Internal Revenue Code is amended by adding at the end thereof a new paragraph, applicable to taxable years beginning after December 31, 1939, reading as follows: (3) Expenditures for advertising and good will.—If a corporation has, for the purpose of computing its excess profits credit under chapter 2E, claimed the 473252-42--11 |