1 2 3 4 5 6 deductions are allowable is used directly in the active and regular conduct of the lending or finance business. "(3) INCOME RECEIVED FROM CERTAIN DOMESTIC SUBSIDIARIES. For purposes of subsection (e) (6) (B), in the ease of a lending company which is authorized to engage in and is actively and regularly engaged in the small loan business (consumer finance business) 9 under one or more State statutes providing for the direct 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 regulation of such business, and which meets the require ments of subsection (e)(6)(A), there shall not be treated as personal holding company income the lawful income received from domestic subsidiary corporations fof which stock possessing at least 80 percent of the voting power of all classes of stock and of which at least 80 percent of each class of nonvoting stock is owned directly by such lending company) which are themselves excepted under subsection (e) (6).” "(3) INCOME RECEIVED FROM CERTAIN AFFILIATED CORPORATIONS.-For purposes of subsection (c) (6)(B), in the case of a lending or finance company which meets the requirements of subsection (c)(6)(A), there shall not be treated as personal holding company in come the lawful income received from a corporation which meets the requirements of subsection (c)(6) and which 1 2 3 4 tions is a member of the same affiliated group (as defined in section 1504) of which such company is a member. (d) PERSONAL HOLDING COMPANY INCOME.-Subsec(a) and (b) of section 543 (relating to personal 5 holding company income) are amended to read as follows: 6 "(a) GENERAL RULE.-For purposes of this subtitle, 7 the term 'personal holding company income' means the portion of the adjusted ordinary gross income which consists of: “(1) DIVIDENDS, ETC.-Dividends, interest, royalties (other than mineral, oil, or gas royalties or copyright royalties), and annuities. This paragraph shall not apply to "(A) interest constituting rent (as defined in subsection (b) (3)), "(B) interest on amounts set aside in a reserve fund under section 511 or 607 of the Mer chant Marine Act, 1936, and "(C) a dividend distribution of divested stock (as defined in subsection (e) of section 1111), but only if the stock with respect to which the distribu tion is made was owned by the distributee on September 6, 1961, or was owned by the distributee for at least 2 years before the date on which the antitrust order (as defined in subsection (d) of sec tion 1111) was entered. "(2) RENTS.-The adjusted income from rents; except that such adjusted income shall not be included if "(A) such adjusted income constitutes 50 percent or more of the adjusted ordinary gross income, and "(B) the personal holding company income for the taxable year (computed without regard to this paragraph and paragraph (6), and computed by including as personal holding company income copyright royalties and the adjusted income from mineral, oil, and gas royalties) is not more than 10 percent of the ordinary gross income. "(B) the sum of— "(i) the dividends paid during the taxable year (determined under section 562), "(ii) the dividends considered as paid on the last day of the taxable year under section 563(c) (as limited by the second sentence of section 563(b)), and "(iii) the consent dividends for the taxable year (determined under section 565), equals or exceeds the amount, if any, by which the personal holding company income for the taxable year (computed without regard to this paragraph and paragraph (6), and computed by including as personal holding company income copyright royalties and the adjusted income from mineral, oil, and gas royalties) exceeds 10 percent of the ordinary gross income. "(3) MINERAL, OIL, AND GAS ROYALTIES.-The adjusted income from mineral, oil, and gas royalties; except that such adjusted income shall not be included if "(A) such adjusted income constitutes 50 percent or more of the adjusted ordinary gross income, "(B) the personal holding company income for the taxable year (computed without regard to this paragraph, and computed by including as personal holding company income copyright royalties and the adjusted income from rents) is not more than 10 percent of the ordinary gross income, and "(C) the sum of the deductions which are al lowable under section 162 (relating to trade or busi ness expenses) other than "(i) deductions for compensation for per sonal services rendered by the shareholders, "(ii) deductions which are specifically al lowable under sections other than section 162, equals or exceeds 15 percent of the adjusted ordinary gross income. "(4) COPYRIGHT ROYALTIES.-Copyright royalties; except that copyright royalties shall not be included if"(A) such royalties (exclusive of royalties received for the use of, or right to use, copyrights or interests in copyrights on works created in whole, or in part, by any shareholder) constitute 50 percent or more of the ordinary gross income, "(B) the personal holding company income for the taxable year computed "(i) without regard to copyright royalties, other than royalties received for the use of, or right to use, copyrights or interests in copyrights in works created in whole, or in part, by any shareholder owning more than 10 percent of the total outstanding capital stock of the corporation, "(ii) without regard to dividends from any |