ALTERNATIVE AVERAGE BASE PERIOD NET INCOME.

SEC. 509. ALTERNATIVE AVERAGE BASE PERIOD NET INCOME. (a) Amendment of Section 442.—Section 442 (relating to abnormalities during the base period) is hereby amended as follows: 65 Stat. 550 (1) By inserting at the end of subsection (a) thereof the following: “If such taxpayer is also entitled to the benefits of subsection (h), the taxpayer’s average base period net income determined under this section shall be the amount computed under subsection (c) or (d), whichever is applicable to the taxpayer, or the amount computed under subsection (h), whichever results in the lesser tax under this subchapter for the taxable year. In the case of any other taxpayer entitled to the benefits of subsection (h), the taxpayer’s average base period net income determined under this section shall be the amount computed under subsection (h).” (2) By striking out “determined under this section” in subsections (c) and (a) thereof each place it occurs and inserting in lieu thereof the following: “computed under this subsection”. (3) By inserting after “subsection (c) (2)” in subsection (e) (1) thereof the following: “and subsection (h)”. (4) By redesignating subsections (h) and (i) thereof as (i) and (j), respectively, and by inserting after subsection (g) thereof the following new subsection: “(h) Alternative Average Base Period Net Income.— “(1) Eligibility requirements.— A taxpayer which commenced business on or before the first day of its base period shall be entitled to the benefits of this subsection if— “(A) the aggregate excess profits net income (if any) for the 12 months selected under paragraph (2) (B) is less than 35 per centum of one-half of the aggregate excess profits net income for the 24 months remaining under such paragraph; and “(B) normal production, output, or operation was interrupted or diminished because of the occurrence, within 12 months preceding (i) the first day of the 12-month period selected under paragraph (2) (B) (i), or (ii) the first day of any period of 6 or more consecutive months selected under paragraph (2) (B) (ii), of events unusual or peculiar in the experience of such taxpayer. This subsection shall have no application unless the taxpayer has an aggregate excess profits net income for the 24 months remaining under paragraph (2) (B). “(2) Computation.— If the taxpayer is entitled to the benefits of this subsection, its average base period net income computed under this subsection shall be computed as follows: “(A) By determining under subsection (b) the period subject to adjustment under this section. For the purposes of subparagraph (B) but not for the purposes of paragraph (1) (B). such period shall be considered a period of 36 consecutive months. “(B) By selecting from such period whichever of the following 12 months results in the higher remaining aggregate excess profits net income— “(i) the 12 consecutive months the elimination of which produces the highest remaining aggregate excess profits net income, or “(ii) the 12 months which remain after retaining the 24 consecutive months which produce the highest remaining aggregate excess profits net income. “(C) By computing for each of the 12 months selected under subparagraph (B) a substitute excess profits net income computed under subsection (e). 65 Stat. 551 “(D) By computing the sum of— “(i) the aggregate of the substitute excess profits net income, as determined under subparagraph (C), for the 12 months selected under subparagraph (B), but the amount computed under this clause shall not exceed one-half of the aggregate excess profits net income for the 24 months remaining under subparagraph (B), and “(ii) the aggregate of the excess profits net income for each of the 24 months remaining under subparagraph (B), computed in the manner provided by the second sentence of section 435 (d) (1). “(E) By dividing by three the amount ascertained under subparagraph (D). “(3) Aggregate excess profits net income.—The ‘aggregate excess profits net income’ for any period shall be computed for the purposes of this subsection in the same manner as under subsection (b).” (b) Technical Amendments.— (1) Section 435 (f) (3) (relating to capital addition in the base period) is hereby amended by inserting immediately after the words “under section 442 (c) (1)”, wherever appearing therein, the following: “or under section 442 (h)”. (2) Section 461 (relating to definitions for purposes of part II) is hereby amended by inserting at the end thereof the following new subsection: “(g) Application of Section 442 (h).—For the purpose of this part, the reference to section 442 (c) in any section in this part shall be deemed a reference to section 442 (c) or (h).”