TRANSITION FROM WAR PRODUCTION AND INCREASE IN PEACETIME CAPACITY.

SEC. 516. TRANSITION FROM WAR PRODUCTION AND INCREASE IN PEACETIME CAPACITY. (a) In General.—Part I of subchapter D of chapter 1 is hereby amended by adding at the end thereof a new section to read as follows: “SEC. 459. MISCELLANEOUS PROVISIONS. “(a) Average Base Period Net Income—Transition From War Production and Increase in Peacetime Capacity.—In the case of a taxpayer which commenced business before January 1, 1940, and since such date has engaged primarily in manufacturing, the taxpayer’s average base period net income determined under this subsection shall be the amount computed under section 435 (e) (2) (G) (i) and (ii) if— “(1) The adjusted basis of the taxpayer’s total facilities (as defined in section 444 (d)) as of the beginning of its base period (when added to the total facilities at such time of all corporations with which the taxpayer has the privilege under section 141 of filing a consolidated return for its first taxable year under this subchapter) did not exceed $10,000,000; “(2) The basis (unadjusted) of the taxpayer’s total facilities (as defined in section 444 (d)) at the close of its base period was 250 per centum or more of the basis (unadjusted) of its total facilities at the beginning of its base period; “(3) The percentage of the taxpayer’s aggregate gross income which was from contracts with the United States and related subcontracts was (A) at least 70 per centum for the period comprising all taxable years beginning after December 31, 1941, and ending before January 1, 1946, (B) less than 20 per centum for the period comprising all taxable years ending after December 31, 1945, and before January 1, 1950, and (C) less than 20 per centum for the period comprising all taxable years ending after December 31, 1949, and beginning before July 1, 1950; and “(4) The average monthly excess profits net income of the taxpayer (computed in the manner provided in section 443 (e)) for— “(A) the period comprising all taxable years ending with or within the last 24 months of its base period, and “(B) the last taxable year ending before the first day of its base period, are each 300 per centum or more of the average monthly excess profits net income (so computed) of the taxpayer for the period comprising all taxable years ending with or within the first 24 months of its base period.” (b) Technical Amendments.—Section 435 (c) (relating to determination of average base period net income) is hereby amended as follows: (1) By inserting immediately after “445 or 446,” the following: “or any subsection of section 459,”. (2) By inserting immediately after “or under such section” the following: “or subsection”.