REDUCTION OF SURTAX EXEMPTION IN CASE OF CERTAIN CONTROLLED CORPORATIONS, ETC.

SEC. 235. REDUCTION OF SURTAX EXEMPTION IN CASE OF CERTAIN CONTROLLED CORPORATIONS, ETC. (a) In General.—Subchapter B of chapter 6 (related rules for consolidated returns) is amended by adding at the end thereof the following new part: “PART II—CERTAIN CONTROLLED CORPORATIONS “Sec. 1561. Surtax exemptions in case of certain controlled corporations. “Sec. 1562. Privilege of groups to elect multiple surtax exemptions. “Sec. 1563. Definitions and special rules. “SEC. 1561. SURTAX EXEMPTIONS IN CASE OF CERTAIN CONTROLLED CORPORATIONS. “(a) General Rule.—If a corporation is a component member of a controlled group of corporations on a December 31, then for purposes of this subtitle the surtax exemption of such corporation for the taxable year which includes such December 31 shall be an amount equal to— “(1) $25,000 divided by the number of corporations which are component members of such group on such December 31, or “(2) if all such component members consent (at such time and 78 Stat. 117in such manner as the Secretary or his delegate shall by regulations prescribe) to an apportionment plan, such portion of $25,000 as is apportioned to such member in accordance with such plan. The sum of the amounts apportioned under paragraph (2) among the component members of any controlled group shall not exceed $25,000. “(b) Certain Short Taxable Years.—If a corporation— “(1) has a short, taxable year which does not include a December 31, and “(2) is a component, member of a controlled group of corporations with respect to such taxable year, then for purposes of this subtitle the surtax exemption of such corporation for such taxable year shall be an amount equal to $25,000 divided by the number of corporations which are component members of such group on the last day of such taxable year. For purposes of the preceding sentence, section 1563(b) shall be applied as if such last day were substituted for December 31. “SEC. 1562. PRIVILEGE OF GROUPS TO ELECT MULTIPLE SURTAX EXEMPTIONS. “(a) Election of Multiple Surtax Exemptions.— “(1) In general.—A controlled group of corporations shall (subject to the provisions of this section) have the privilege of electing to have each of its component members make its returns without regard to section 1561. Such election shall be made with respect to a specified December 31 and shall be valid only if— “(A) each corporation which is a component member of such group on such December 31, and “(B) each other corporation which is a component member of such group on any succeeding December 31 before the day on which the election is filed, consents to such election. “(2) Years for which effective.—An election by a controlled group of corporations under paragraph (1) shall be effective with respect to the taxable year of each component member of such group which includes the specified December 31, and each taxable year of each corporation which is a component member of such group (or a successor group) on a succeeding December 31 included within such taxable year, unless the election is terminated under subsection (c). “(3) Effect of election.—If an election by a controlled group of corporations under paragraph (1) is effective with respect to any taxable year of a corporation— “(A) section 1561 shall not apply to such corporation for such taxable year, but “(B) the additional tax imposed by subsection (b) shall apply to such corporation for such taxable year. “(b) Additional Tax Imposed.— “(1) General rule.—If an election under subsection (a)(1) by a controlled group of corporations is effective with respect to the taxable year of a corporation, there is hereby imposed for such taxable year on the taxable income of such corporation a tax equal to 6 percent of so much of such corporation’s taxable income for such taxable year as does not exceed $25,000. This paragraph shall not apply to the taxable year of a corporation if— “(A) such corporation is the only component member of such controlled group on the December 31 included in such corporation’s taxable year which has taxable income for a taxable year including such December 31, or 78 Stat. 118 “(B) such corporation’s surtax exemption is disallowed for such taxable year under any provision of this subtitle. “(2) Tax treated as imposed by section ii, etc.—If for the taxable year of a corporation a tax is imposed by section 11 on tile taxable income of such corporation, the additional tax imposed by this subsection shall be treated for purposes of this title as a tax imposed by section 11. If for the taxable year of a corporation a tax is imposed on the taxable income of such corporation which is computed under any other section by reference to section 11, the additional tax imposed by this subsection shall be treated for purposes of this title as imposed by such other section. “(3) Taxable income defined.—For purposes of this subsection, the term ‘taxable income’ means— “(A) in the case of a corporation subject to tax under section 511, its unrelated business taxable income (within the meaning of section 512); “(B) in the case of a life insurance company, its life insurance company taxable income (within the meaning of section 802(b)); “(C) in the case of a regulated investment company, its investment company taxable income (within the meaning of section 852(b) (2)); and “(D) in the case of a real estate investment trust, its real estate investment trust taxable income (within the meaning of section 857(b) (2)). “(4) Special rules.—If for the taxable year an additional tax is imposed on the taxable income of a corporation by this subsection, then sections 244 (relating to dividends received on certain preferred stock), 247 (relating to dividends paid on certain preferred stock of public utilities), 804(a) (3) (relating to deduction for partially tax-exempt interest in the case of a life insurance company), and 922 (relating to special deduction for Western Hemisphere trade corporations) shall be applied without regard to the additional tax imposed by this subsection. “(c) Termination of Election.—An election by a controlled group of corporations under subsection (a) shall terminate with respect to such group— “(1) Consent of the members.—If such group files a termination of such election with respect to a specified December 31, and— “(A) each corporation which is a component member of such group on such December 31, and “(B) each other corporation which is a component member of such group on any succeeding December 31 before the day on which the termination is filed, consents to such termination. “(2) Refusal by new member to consent.—If on December 31 of any year such group includes a component member which— “(A) on the immediately preceding January 1 was not a member of such group, and “(B) within the time and in the manner provided by regulations prescribed by the Secretary or his delegate, files a statement that it does not consent to the election. “(3) Consolidated returns.—If— “(A) a corporation is a component member (determined without regard to section 1563(b)(3)) of such group on a December 31 included within a taxable year ending on or after January 1, 1964, and 78 Stat. 119 ‘(B) such corporation is a member of an affiliated group of corporations which makes a consolidated return under this chapter (sec. 1501 and following) for such taxable year. “(4) Controlled group no longer in existence.—If such Soup is considered as no longer in existence with respect to any December 31. Such termination shall be effective with respect to the December 31 referred to in paragraph (1) (A), (2), (3), or (4), as the case may be. “(d) Election After Termination.—If an election by a controlled group of corporations is terminated under subsection (c), such group (and any successor group) shall not be eligible to make an election under subsection (a) with respect to any December 31 before the sixth December 31 after the December 31 with respect to which such termination was effective. “(e) Manner and Time of Giving Consent and Making Election, Etc.—An election under subsection (a)(1) or a termination under subsection (c)(1) (and the consent of each member of a controlled group of corporations which is required with respect to such election or termination) shall be made in such manner as the Secretary or his delegate shall by regulations prescribe, and shall be made at any time before the expiration of 3 years after— “(1) in the case of such an election, the date when the income tax return for the taxable year of the component member of the controlled group which has the taxable year ending first, on or after the specified December 31 is required to be filed (without regard to any extensions of time), and “(2) in the case of such a termination, the specified December 31 with respect to which such termination was made. Any consent to such an election or termination, and a failure by a component member to file a statement that it does not consent to an election under this section, shall be deemed to be a consent to the application of subsection (g)(1) (relating to tolling of statute of limitations on assessment of deficiencies). “(f) Special Rules.—For purposes of this section— “(1) Continuing and successor controlled groups.—The determination of whether a controlled group of corporations— “(A) is considered as no longer in existence with respect to any December 31, or “(B) is a successor to another controlled group of corporations (and the effect of such determination with respect to any election or termination), shall be made under regulations prescribed by the Secretary or his delegate. For purposes of subparagraph (B), such regulations shall be based on the continuation (or termination) of predominant equitable ownership. “(2) Certain short taxable years.—If one or more corporations have short taxable years which do not include a December 31 and are component members of a controlled group of corporations with respect to such taxable years (determined by applying section 1563(b) as if the last day of each such taxable year were substituted for December 31), then an election by such group under this section shall apply with respect to such corporations with respect to such taxable years if— “(A) such election is in effect with respect to both the December 31 immediately preceding such taxable years and the December 31 immediately succeeding such taxable years, or “(B) such election is in effect with respect to the December 31 immediately preceding or succeeding such taxable 78 Stat. 120years and each such corporation files a consent to the application of such election to its short taxable year at such tune and in such manner as the Secretary or his delegate shall prescribe by regulations. (g) tolling of Statute of Limitations.—In any case in which a controlled group of corporations makes an election or termination under this section, the statutory’ period— “(1) for assessment or any deficiency against a corporation which is a component member of such group for any taxable year, to the extent such deficiency is attributable to the application of this part, shall not expire before the expiration of one year after the date such election or termination is made; and “(2) for allowing or making credit or refund of any overpayment of tax by a corporation which is a component member of such group for any taxable year, to the extent such credit or refund is attributable to the application of this part, shall not expire before the expiration of one year after the date such election or termination is made. “SEC. 1563. DEFINITIONS AND SPECIAL RULES. “(a) Controlled Group of Corporations.—For purposes of this part, the term ‘controlled group of corporations’ means any group of— “(1) Parent-subsidiary controlled group.—One or more chains of corporations connected through stock ownership with a common parent corporation if— “(A) stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of stock of each of the corporations, except the common parent corporation, is owned (within the meaning of subsection (d)(1)) by one or more of the other corporations; and “(B) the common parent corporation owns (within the meaning of subsection (d)(1)) stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of stock of at least one of the other corporations, excluding, in computing such voting power or value, stock owned directly by such other corporations. “(2) Brother-sister controlled group.—Two or more corporations if stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of stock of each of the corporations is owned (within the meaning of subsection (d) (2)) by one person who is an individual, estate, or trust. “(3) Combined group.—Three or more corporations each of which is a member of a group of corporations described in paragraph (1) or (2), and one of which— “(A) is a common parent corporation included in a group of corporations described in paragraph (1), and also “(B) is included in a group of corporations described in paragraph (2). “(4) Certain insurance companies.—Two or more insurance companies subject to taxation under section 802 which are members of a controlled group of corporations described in paragraph (1), (2), or (3). Such insurance companies shall be treated as a controlled group of corporations separate from any other corporations which are members of the controlled group of corporations described in paragraph (1), (2), or (3). 78 Stat. 121 “(b) Component Member.— “(1) General rule.—For purposes of this part, a corporation is a component member of a controlled group of corporations on a December 31 of any taxable year (and with respect to the taxable year which includes such December 31) if such corporation— “(A) is a member of such controlled group of corporations on the December 31 included in such year and is not treated as an excluded member under paragraph (2), or “(B) is not a member of such controlled group of corporations on the December 31 included in such year but is treated as an additional member under paragraph (3). “(2) Excluded members.—A corporation which is a member of a controlled group of corporations on December 31 of any taxable year shall be treated as an excluded member of such group for the taxable year including such December 31 if such corporation— “(A) is a member of such group for less than one-half the number of days in such taxable year which precede such December 31, “(B) is exempt from taxation under section 501(a) (except a corporation which is subject to tax on its unrelated business taxable income, under section 511) for such taxable year, “(C) is a foreign corporation subject to tax under section 881 for such taxable year, “(D) is an insurance company subject to taxation under section 802 or section 821 (other than an insurance company which is a member of a controlled group described in subsection (a)(4)), or “(E) is a franchised corporation, as defined in subsection (f)(4). “(3) Additional members.—A corporation which— “(A) was a member of a controlled group of corporations at any time during a calendar year, “(B) is not a member of such group on December 31 of such calendar year, and “(C) is not described, with respect to such group, in subparagraph (B), (C), (D), or (E) of paragraph (2), shall be treated as an additional member of such group on December 31 for its taxable year including such December 31 if it was a member of such group for one-half (or more) of the number of days in such taxable year which precede such December 31. ‘(4) Overlapping groups.—If a corporation is a component member of more than one controlled group of corporations with respect to any taxable year, such corporation shall be treated as a component member of only one control1ed group. The determination as to the group of which such corporation is a component member shall be made under regulations prescribed by the Secretary or his delegate winch are consistent with the purposes of this part. “(c) Certain Stock Excluded.— “(1) General rule.—For purposes of this part, the term, ‘stock’ does not include— “(A) nonvoting stock which is limited and preferred as to dividends, “(B) treasury stock, and “(C) stock which is treated as ‘excluded stock’ under paragraph (2), 78 Stat. 122 “(2) Stock treated as ‘exceeded stock’.— “(A) Parent-subsidiary controlled group.—For purposes of subsection (a) (1), if a corporation (referred to in this paragraph as ‘parent corporation’) owns (within the meaning of subsections (d)(1) and (e)(4)), 50 percent or more of the total combined voting power of all classes of stock entitled to vote or 50 percent or more of the total value of shares of all classes of stock in another corporation (referred to in this paragraph as ‘subsidiary corporation’), the following stock of the subsidiary corporation shall be treated as excluded stock— “(i) stock in the subsidiary corporation held by a trust which is part of a plan of deferred compensation for the benefit of the employees of the parent corporation or the subsidiary corporation, “(ii) stock in the subsidiary corporation owned by an individual (within the meaning of subsection (d)(2)) who is a principal stockholder or officer of the parent corporation. For purposes of this clause, the term ‘principal stockholder’ of a corporation means an individual who owns (within the meaning of subsection (d) (2)) 5 percent or more of the total combined voting power of all classes of stock entitled to vote or 5 percent or more of the total value of shares of all classes of stock in such corporation, or “(iii) stock in the subsidiary corporation owned (within the meaning of subsection (d)(2)) by an employee of the subsidiary corporation if such stock is subject to conditions which run in favor of such parent (or subsidiary) corporation and which substantially restrict or limit the employee’s right (or if the employee constructively owns such stock, the direct owner’s right) to dispose of such stock. “(B) Brother-sister controlled group.—For purposes of subsection (a)(2), if a person who is an individual, estate, or trust (referred to in this paragraph as ‘common owner’) owns (within the meaning of subsection (d)(2)), 50 percent or more of the total combined voting power of all classes of stock entitled to vote or 50 percent or more of the total value of shares of all classes of stock in a corporation, the following stock of such corporation shall be treated as excluded stock— “(i) stock in such corporation held by an employees’ trust described in section 401(a) which is exempt from tax under section 501(a), if such trust is for the benefit of the employees of such corporation, or “(ii) stock in such corporation owned (within the meaning of subsection (d)(2)) by an employee of the corporation if such stock is subject to conditions which run in favor of such common owner (or such corporation) and which substantially restrict or limit the employee’s right (or if the employee constructively owns such stock, the direct owner’s right) to dispose of such stock. If a condition which limits or restricts the employee’s right (or the direct owner’s right) to dispose of such stock also applies to the stock held by the common owner pursuant to a bona fide reciprocal stock purchase arrangement, such condition shall not be treated as one which restricts or limits the employee’s right to dispose of such stock. 78 Stat. 123 “(d) Rules for Determining Stock Ownership.— “(1) Parent-subsidiary controlled group.—For purposes of determining whether a corporation is a member of a parent-subsidiary controlled group of corporations (within the meaning of subsection (a) (1)), stock owned by a corporation means— “(A) stock owned directly by such corporation, and “(B) stock owned with the application of subsection (e)(1). “(2) Brother-sister controlled group.—For purposes of determining whether a corporation is a member of a brother-sister controlled group of corporations (within the meaning of subsection (a) (2)), stock owned by a person who is an individual, estate, or trust means— “(A) stock owned directly by such person, and “(B) stock owned with the application of subsection (e). “(e) Constructive Ownership.— “(1) Options.—If any person has an option to acquire stock, such stock shall be considered as owned by such person. For purposes of this paragraph, an option to acquire such an option, and each one of a series of such options, shall be considered as an option to acquire such stock. “(2) Attribution from partnerships.—Stock owned, directly or indirectly, by or for a partnership shall be considered as owned by any partner having an interest of 5 percent or more in either the capital or profits of the partnership in proportion to his interest in capital or profits, whichever such proportion is the greater. “(3) Attribution from estates or trusts.— “(A) Stock owned, directly or indirectly, by or for an estate or trust shall be considered as owned by any beneficiary who has an actuarial interest of 5 percent or more in such stock, to the extent of such actuarial interest. For purposes of this subparagraph, the actuarial interest of each beneficiary shall be determined by assuming the maximum exercise of discretion by the fiduciary in favor of such beneficiary and the maximum use of such stock to satisfy his rights as a beneficiary. “(B) Stock owned, directly or indirectly, by or for any portion of a trust of which a person is considered the owner under subpart E of part I of subchapter J (relating to grantors and others treated as substantial owners) shall be considered as owned by such person. “(C) This paragraph shall not apply to stock owned by any employees’ trust described in section 401(a) which is exempt from tax under section 501 (a). “(4) Attribution from corporations.—Stock owned, directly or indirectly, by or for a corporation shall be considered as owned by any person who owns (within the meaning of subsection (d)) 5 percent or more in value of its stock in that proportion which the value of the stock which such person so owns bears to the value of all the stock in such corporation. “(5) Spouse.—An individual shall be considered as owning stock in a corporation owned, directly or indirectly, by or for his spouse (other than a spouse who is legally separated from the individual under a decree of divorce whether interlocutory or final, or a decree of separate maintenance), except in the case of a corporation with respect to which each of the following conditions is satisfied for its taxable year— 78 Stat. 124 “(A) The individual does not, at any time during such taxable year, own directly any stock in Such corporation; “(B) The individual is not a director or employee and does not participate in the management of such corporation at any time during such taxable year; “(C) Not more than 50 percent of such corporation’s gross income for such taxable year was derived from royalties, rents, dividends, interest, and annuities; and “(D) Such stock in such corporation is not, at any time during such taxable year, subject to conditions which substantially restrict or limit the spouse’s right to dispose of such stock and which run in favor of the individual or his children who have not attained the age of 21 years. “(6) Children, grandchildren, parents, and grandparents.— “(A) Minor children.—An individual shall be considered as owning stock owned, directly or indirectly, by or for his children who have not attained the age of 21 years, and, if the individual has not attained the age of 21 years, the stock owned, directly or indirectly, by or for his parents. “(B) Adult children and grandchildren.—An individual who owns (within the meaning of subsection (d)(2), but without regard to this subparagraph) more than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of shares of all classes of stock in a corporation shall be considered as owning the stock in such corporation owned, directly or indirectly, by or for his parents, grandparents, grandchildren, and children who have attained the age of 21 years. “(C) Adopted child.—For purposes of this section, a legally adopted child of an individual shall be treated as a child of such individual by blood. “(f) Other Definitions and Rules.— “(1) Employee defined.—For purposes of this section the term ‘employee’ has the same meaning such term is given in section 3306(i). “(2) Operating rules.— “(A) In general.—Except as provided in subparagraph (B), stock constructively owned by a person by reason of the application of paragraph (1), (2), (3), (4), (5), or (6) of subsection (e) shall, for purposes of applying such paragraphs, be treated as actually owned by such person. “(B) Members of family.—Stock constructively owned by an individual by reason of the application of paragraph (5) or (6) of subsection (e) shall not be treated as owned by him for purposes of again applying such paragraphs in order to make another the constructive owner of such stock. “(3) Special rules.—For purposes of this section— “(A) If stock may be considered as owned by a person under subsection (e)(1) and under any other paragraph of subsection (e), it shall be considered as owned by him under subsection (e)(1). “(B) If stock is owned (within the meaning of subsection (d)) by two or more persons, such stock shall be considered as owned by the person whose ownership of such stock results in the corporation being a component member of a controlled group. If by reason of the preceding sentence, a corporation would (but for this sentence) become a component member of two controlled groups, it shall be treated as a component member of one controlled group. The determination as to 78 Stat. 125the group of which such corporation is a component member shall be made under regulations prescribed by the Secretary or his delegate which are consistent with the purposes of this part. “(C) If stock is owned by a person within the meaning of subsection (d) and such ownership results in the corporation being a component member of a controlled group, such stock shall not be treated as excluded stock under subsection (c) (2), if by reason of treating such stock as excluded stock the result is that such corporation is not a component member of a controlled group of corporations. “(4) Franchised corporation.—If— “(A) a parent corporation (as defined in subsection (c) (2) (A)), or a common owner (as defined in subsection (c) (2) (B)), of a corporation which is a member of a controlled group of corporations is under a duty (arising out of a written agreement) to sell stock of such corporation (referred to in this paragraph as ‘franchised corporation’) which is franchised to sell the products of another member, or the common owner, of such controlled group; “(B) such stock is to be sold to an employee (or employees) of such franchised corporation pursuant to a bona fide plan designed to eliminate the stock ownership of the parent corporation or of the common owner in the franchised corporation; “(C) such plan— “(i) provides a reasonable selling price for such stock, and “(ii) requires that a portion of the employee’s share of the profits of such corporation (whether received as compensation or as a dividend) be applied to the purchase of such stock (or the purchase of notes, bonds, debentures or other similar evidence of indebtedness of such franchised corporation held by such parent corporation or common owner); “(D) such employee (or employees) owns directly more than 20 percent of the total value of shares of all classes of stock in such franchised corporation; “(E) more than 50 percent of the inventory of such franchised corporation is acquired from members of the controlled group, the common owner, or both; and “(F) all of the conditions contained in subparagraphs (A), (B), (C), (D), and (E) have been met for one-half (or more) of the number of days preceding the December 31 included within the taxable year (or if the taxable year does not include December 31, the last day of such year) of the franchised corporation, then such franchised corporation shall be treated as an excluded member of such group, under subsection (b)(2), for such taxable year.” (b) Disallowance of Surtax Execution and Accumulated Earnings Credit.—Section 1551 (relating to disallowance of surtax exemption and accumulated earnings credit) is amended to read as follows: “SEC. 1551. DISALLOWANCE OF SURTAX EXEMPTION AND ACCUMULATED EARNINGS CREDIT. “(a) In General.—If— “(1) any corporation transfers, on or after January 1, 1951, and on or before June 12, 1963, all or part of its property (other than money) to a transferee corporation, 78 Stat. 126 “(2) any corporation transfers, directly or indirectly, after June 12, 1963, all or part of its property (other than money) to a transferee corporation, or “(3) five or fewer individuals who are in control of a corporation transfer, directly or indirectly, after June 12, 1963, property (other than money) to a transferee corporation, and the transferee corporation was created for the purpose of acquiring such property or was not actively engaged in business at the time of such acquisition, and if after such transfer the transferor or transferors are in control of such transferee corporation during any part of the taxable year of such transferee corporation, then for such taxable year of such transferee corporation the Secretary or his delegate may (except as may be otherwise determined under subsection (d)) disallow the surtax exemption (as defined in section 11(d)), or the $100,000 accumulated earnings credit provided in paragraph (2) or (3) of section 535(c), unless such transferee corporation shall establish by the clear preponderance of the evidence that the securing of such exemption or credit was not a major purpose of such transfer. “(b) Control.—For purposes of subsection (a), the term ‘control’ means— “(1) With respect to a transferee corporation described in subsection (a) (1) or (2), the ownership by the transferor corporation, its shareholders, or both, of stock possessing at least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of the stock; or “(2) With respect to each corporation described in subsection (a)(3), the ownership by the five or fewer individuals described in such subsection of stock possessing— “(A) at least 80 percent of the total combined voting power of all classes of stock entitled to vote or at least 80 percent of the total value of shares of all classes of the stock of each corporation, and “(B) more than 50 percent of the total combined voting power of all classes of stock entitled to vote or more than 50 percent of the total value of shares of all classes of stock of each corporation, taking into account the stock ownership of each such individual only to the extent such stock ownership is identical with respect to each such corporation. For purposes of this subsection, section 1563(e) shall apply in determining the ownership of stock. “(c) Authority of the Secretary Under This Section.—The provisions of section 269(b), and the authority of the Secretary under such section, shall, to the extent not inconsistent with the provisions of this section, be applicable to this section.” (c) Technical Amendments.— (1) Amendment of section 802.—The second sentence of section 802(a) (1) (relating to tax on life insurance companies) is amended to read as follows: “Such tax shall consist of a normal tax and surtax computed as provided in section 11 as though the life insurance company taxable Income were the taxable income referred to in section 11.” (2) Amendment of section 269.—Section 269(a) (relating to acquisitions made to evade or avoid income tax) is a mended by striking out “then such deduction, credit, or other allowance shall not be allowed” at the end of the first sentence and inserting in lieu thereof “then the Secretary or his delegate may disallow such deduction, credit, or other allowance”. 78 Stat. 127 (3) Special rule for 32–53-week year.—Section 441 (f)(2) (A) (relating to effective date with respect to special rules for 52–53-week year) is amended by striking out “In any case in which the effective date or the applicability of any provision of this title is expressed in terms of taxable years beginning or ending with reference to a specified date” and inserting in lieu thereof “In any case in which the effective date or the applicability of any provision of this title is expressed in terms of taxable years beginning, including, or ending with reference to a specified date”. (4) Subchapter B of chapter 6 is amended by inserting after the heading and before the table of sections the following: “Part I. In general. “Part II. Certain controlled corporations. “PART I—IN GENERAL” (d) Effective Date.—The amendments made by subsections (a) and (c) shall apply with respect to taxable years ending after December 31, 1963. The amendment made by subsection (b) shall apply with respect to transfers made after June 12, 1963.