SEC. 1304 (revised 1964)-Continued "(4) subpart D of part III of subchapter N (sec. 931 and following, relating to income from sources within possessions of the United States). "(c) FAILURE OF CERTAIN MARRIED INDIVIDUALS TO MAKE JOINT RETURN, ETC. "(1) APPLICATION OF SUBSECTION.-Paragraphs (2), (3), and (4) of this subsection shall apply in the case of any individual who was married for any base period year or the computation year; except that "(A) such paragraphs shall not apply in respect of a base period year if "(i) such individual and his spouse make a joint return, or such individual makes a return as a surviving spouse (as defined in section 2(b)), for the computation year, and "(ii) such individual was not married to any other spouse for such base period year, and "(B) paragraph (4) shall not apply in respect of the computation year if the individual and his spouse make a joint return for such year. "(2) MINIMUM BASE PERIOD INCOME. For purposes of this part, the base period income of an individual for any base period year shall not be less than 50 percent of the base period income which would result from combining his income and deductions for such year "(A) with the income and deductions for such year of the individual who is his spouse for the computation year, or "(B) if greater, with the income and deductions for such year of the individual who was his spouse for such base period year. (3) MINIMUM BASE PERIOD CAPITAL GAIN NET INCOME.-For purposes of this part, the capital gain net income of any individual for any base period year shall not be less than 50 percent of the capital gain net income which would result from combining his capital gain net income for such year (determined without regard to this paragraph) with the capital gain net income for such year (similarly determined) of the individual with whom he is required by paragraph (2) to combine his income and deductions for such year. "(4) COMMUNITY INCOME ATTRIBUTABLE TO SERVICES.-In the case of amounts which constitute earned income (within the meaning of section 911(b)) and are community income under community property laws applicable to such income "(A) the amount taken into account for any base period year for purposes of determining base period income shall not be less than the amount which would be taken into account if such amounts did not constitute community income, and "(B) the amount taken into account for purposes of determining adjusted taxable income for the computation year shall not exceed the amount which would be taken into account if such amounts did not constitute community income. "(5) MARITAL STATUS. For purposes of this subsection, section 143 shall apply in determining whether an individual is married. for any taxable 6ear. "(d) DOLLAR LIMITATIONS IN CASE OF JOINT RETURNS.-In the case of a joint return, the $3,000 figure contained in section 1301 shall be applied to the aggregate averagable income, and the $3,000 SEC. 1304 (revised 1964)-Continued figure contained in section 1302(b)(2)(C) shall be applied to the aggregate net incomes. "(e) SPECIAL RULES WHERE THERE ARE CAPITAL GAINS. "(1) TREATMENT OF CAPITAL GAINS IN COMPUTATION YEAR.—In the case of any taxpayer who has capital gain net income for the computation year, the tax imposed by section 1 for the computation year which is attributable to the amount of such net income shall be computed "(A) by adding so much of the amount thereof as does not exceed average base period capital gain net income above 133% percent of average base period income, and "(B) by adding the remainder (if any) of such net income above the 20 percent of the averagable income as taken into account for purposes of computing the tax imposed by section 1 (and above the amounts (if any) referred to in subsection (f)(1)). "(2) COMPUTATION OF ATLERNATIVE TAX.-In the case of any taxpayer who has capital gain net income for the computation year, section 1201 (b) shall be treated as imposing a tax equal to the tax imposed by section 1, reduced by the amount (if any) by which "(A) the tax imposed by section 1 and attributable to the capital gain net income for the computation year (determined) under paragraph (1)), exceeds "(B) an amount equal to 25 percent of the excess of the net long-term capital gain over the net short-term capital loss. "(f) TREATMENT OF CERTAIN OTHER ITEMS. "(1) GIFT OR WAGERING INCOME.-The tax imposed by section 1 for the computation year which is attributable to the amounts subtacted from taxable income under paragraphs (2) and (3) of section 1302(b) shall equal the increase in tax under section 1 which results from adding such amounts above the 20 percent of the averagable income as taken into account for purposes of computing the tax imposed thereon by section 1. "(2) SECTION 72(m) (5).-Section 72 (m) (5) (relating to penalties applicable to certain amounts received by owner-employees) shall be applied as if this part had not been enacted. "(3) OTHER ITEMS.-Except as otherwise provided in this part, the order and manner in which items of income shall be taken into account in computing the tax imposed by this chapter on the income of any eligible individual to whom section 1301 applies for any computation year shall be determined under regulations prescribed by the Secretary or his delegate. "(g) SHORT TAXABLE YEARS.-In the case of any computation year or base period year which is a short taxable year, this part shall be applied in the manner provided in regulations prescribed by the Secretary or his delegate.' Applicability: Taxable years beginning after December 31, 1963. (Id., § 232(g), 78 Stat. 112.) See "Applicability" under revision of Part I of Subchapter Q of Chapter 1, p. 486 above. SEC. 1305. REGULATIONS-(Revised 1964-78 Stat. 110): New... Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 232(a), 78 Stat. 110: "SEC. 1305. REGULATIONS. "The Secretary or his delegate shall prescribe such regulations as may be necessary to carry out the purposes of this part. Applicability: Taxable years beginning after December 31, 1963. (Id., § 232(g), 78 Stat. 112.) See "Applicability" under revision of Part I of Subchapter Q of Chapter 1, p. 486 above. CH. 1, SUBCH. Q, PART II-MITIGATION OF EFFECT OF LIMITATIONS AND OTHER PROVISIONS (68A Stat. 337, ff.): NOTE: -The table of sections for Part II of Subchapter Q of Chapter 1 reads as follows (68A Stat. 337): "Sec. 1311. Correction of error. "Sec. 1312. Circumstances of adjustment. "Sec. 1313. Definitions. "Sec. 1314. Amount and method of adjustment. "Sec. 1315. Effective date." This table has not been amended. SEC. 1312. CIRCUMSTANCES OF ADJUSTMENT (68A Stat. 1647): Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 59(a), 72 Stat. 1647: (6)___ added) Amended Sec. 1312 by renumbering paragraph (6) (basis of property after erroneous treatment of a prior transaction) as paragraph (7), and by inserting after paragraph (5) (correlative deductions and inclusions for trusts or estates and legatees, beneficiaries, or heirs) the following new paragraph (6): "(6) CORRELATIVE DEDUCTIONS AND CREDITS FOR CERTAIN RELATED CORPORATIONS.-The determination allows or disallows a deduction (including a credit) in computing the taxable income (or, as the case may be, net income, normal tax net income, or surtax net income) of a corporation, and a correlative deduction or credit has been erroneously allowed, omitted, or disallowed, as the case may be, in respect of a related taxpayer described in section. 1313 (c) (7)." Applicability: Determinations (as defined in section 1313(a) made after November 14, 1954. (Id., § 59(c), 72 Stat. 1647.) SEC. 1314. AMOUNT AND METHOD OF ADJUSTMENT (68A Stat. 340-341): (a)__ (in part) June 21, 1965, H.R. 8371, P.L. 89-44, § 809 (d) (5) (B), 79 Stat. 168: Amended Sec. 1314(a)(1)(A)309 (relating to ascertainment of amount of adjustment) by striking out "(b)(1) and (3)” and inserting in lieu thereof “(b)(1), (3), and (4)”. 309 Subsection (a) of section 1314 originally read as follows (68A Stat. 340): "(a) ASCERTAINMENT OF AMOUNT OF ADJUSTMENT.-In computing the amount of an adjustment under this part there shall first be ascertained the tax previously determined for the taxable year [Footnote 309 continued on following page] SEC. 1314-Continued (a) (amended 1965)-Continued (c)- Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 59(b), 72 Stat. 1647: Amended Sec. 1314(c) 310 by striking out at the beginning of the second sentence "Other than in the case of an adjustment resulting from a determination under section 1313 (a) (4), the" and inserting in lieu thereof "The". Applicability: Determinations (as defined in section 1313(a)) made after November 14, 1954. (Id., § 59 (c), 72 Stat. 1647.) CH. 1, SUBCH. Q, PART III-INVOLUNTARY LIQUIDATION AND REPLACEMENT OF LIFO INVENTORIES (68A Stat. 342-343): NOTE: The table of sections for Part III of Subchapter Q of Chapter 1 reads as follows (68A Stat. 342): "Sec. 1321. Involuntary liquidation of LIFO inventories." No amendment has been made to this table or to section 1321. CH. 1, SUBCH. Q, PART IV-WAR LOSS RECOVERIES (68A Stat. 343-347): NOTE: The table of sections for Part IV of Subchapter Q of Chapter 1 reads as follows (68A Stat. 343): "Sec. 1331. War loss recoveries. "Sec. 1332. Inclusion in gross income of war loss recoveries. Footnote 309-Continued. with respect to which the error was made. The amount of the tax previously determined shall be the excess of "(1) the sum of— (A) the amount shown as the tax by the taxpayer on his return (determined as provided in section 6211 (b) (1) and (3), relating to the definition of deficiency), if a return was made by the taxpayer and an amount was shown as the tax by the taxpayer thereon, plus "(B) the amounts previously assessed (or collected without assessment) as a deficiency, over "(2) the amount of rebates, as defined in section 6211(b)(2), made. There shall then be ascertained the increase or decrease in tax previously determined which results solely from the correct treatment of the item which was the subject of the error (with due regard given to the effect of the item in the computation of gross income, taxable income, and other matters under this subtitle). A similar computation shall be made for any other taxable year affected, or treated as affected, by a net operating loss deduction (as defined in section 172) or by a capital loss carryover (as defined in section 1212), determined with reference to the taxable year with respect to which the error was made. The amount so ascertained (together with any amounts wrongfully collected as additions to the tax or interest, as a result of such error) for each taxable year shall be the amount of the adjustment for that taxable year." 310 Subsection (c) of section 1314 originally read as follows (68A Stat. 341): "(c) ADJUSTMENT UNAFFECTED BY OTHER ITEMS.-The amount to be assessed and collected in the same manner as a deficiency, or to be refunded or credited in the same manner as an overpayment, under this part, shall not be diminished by any credit or set-off based upon any item other than the one which was the subject of the adjustment. Other than in the case of an adjustment resulting from a determination under section 1313 (a) (4), the amount of the adjustment under this part, if paid, shall not be recovered by a claim or suit for refund or suit for erroneous refund based upon any item other than the one which was the subject of the adjustment." "Sec. 1334. Restoration of value of investments referable to destroyed or seized No amendments have been made to this table or to any of the sections listed therein. CH. 1, SUBCH. Q, PART V-CLAIM OF RIGHT (68A Stat. 348, 69 Stat. 717): NOTE: The original table of sections for Part V of Subchapter Q of Chapter 1 read as follows (68A Stat. 348): "Sec. 1341. Computation of tax where taxpayer restores substantial amount held under claim of right." P.L. 84-384, § 3, added a new section 1342 but made no corresponding amendment to the table of sections of Part V of Subchapter Q of Chapter 1. The heading of the new section was as follows: "SEC. 1342. COMPUTATION OF TAX WHERE TAXPAYER RECOVERS SUBSTANTIAL AMOUNT HELD BY ANOTHER UNDER CLAIM OF RIGHT" The text of section 1342 is set forth at pp. 497-498 below. SEC. 1341. COMPUTATION OF TAX WHERE TAXPAYER RESTORES SUBSTANTIAL AMOUNT HELD UNDER CLAIM OF RIGHT (68A Stat. 348): (a). (last sen❜ce) (b)(2). (last sen'ce) Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 60 (a), 72 Stat. 1647: "For purposes of paragraph (5) (B), the corresponding provisions of the Internal Revenue Code of 1939 shall be chapter 1 of such code (other than subchapter E, relating to self-employment income).", by inserting before the period at the end— "and subchapter E of chapter 2 of such code". Applicability: Taxable years beginning after December 31, 1953, and ending after August 16, 1954. (Id. § 1(c)(1) 72 Stat. 1606. See n. 36, p. 79 above.) Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 60(b), 72 Stat. 1647: Amended Sec. 1341(b) (2) 311 by striking out the last sentence and inserting in lieu thereof the following: "This paragraph shall not apply if the deduction arises out of refunds or repayments with respect to rates made by a regulated public 311 Subsection (b) of section 1341 originally read as follows (68A Stat. 318): "(b) SPECIAL RULES. "(1) If the decrease in tax ascertained under subsection (a) (5) (B) exceeds the tax imposed by this chapter for the taxable year (computed without the deduction) such excess shall be considered to be a payment of tax on the last day prescribed by law for the payment of tax for the taxable year, and shall be refunded or credited in the same manner as if it were an overpay ment for such taxable year. "(2) Subsection (a) does not apply to any deduction allowable with respect to an item which was included in gross income by reason of the sale or other disposition of stock in trade of the taxpayer (or other property of a kind which would properly have been included in the inventory of the taxpayer if on hand at the close of the prior taxable year) or property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business. This paragraph shall not apply if the deduction arises out of refunds or repayments made by a regulated public utility (as defined in section 1503 (c) without regard to paragraph (2) thereof) if such refunds or repayments are required to be made by the government, political subdivision, agency, or instrumentality referred to in such section." |