SEC. 1375. SPECIAL RULES APPLICABLE TO DISTRIBUTIONS OF ELECTING SMALL BUSINESS CORPORATIONS (Added 1958-72 Stat. 1654-1655): (b). (e). (added) Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 201(d) (13), 78 Stat. 32: Dividends received after December 31, 1964, in taxable years ending after such date. (Id., § 201(e), 78 Stat. 32-33.) Feb. 26, 1964, H.R. 8363, P.L. 88-272 § 233 (b), 78 Stat. 112-113: Amended Sec. 1375 (as added by P.L. 85-866, § 64(a)) by adding at the end thereof, after subsection (d) (relating to distributions of undistributed taxable income previously taxed to shareholders), the following new subsection (e): "(e) CERTAIN DISTRIBUTIONS AFTER CLOSE OF TAXABLE YEAR."(1) IN GENERAL.-For purposes of this chapter, if— "(A) a corporation makes a distribution of money to its shareholders on or before the 15th day of the third month following the close of a taxable year with respect to which it was an electing small business corporation, and "(B) such distribution is made pursuant to a resolution of the board of directors of the corporation, adopted before the close of such taxable year, to distribute to its shareholders all or a part of the proceeds of one or more sales of capital assets, or of property described in section 1231 (b), made during such taxable year, such distribution shall, at the election of the corporation, be treated as a distribution of money made on the last day of such taxable year. "(2) SHAREHOLDERS. An election under paragraph (1) with respect to any distribution may be made by a corporation only if each person who is a shareholder on the day the distribution is received "(A) owns the same proportion of the stock of the corporation on such day as he owned on the last day of the taxable year of the corporation preceding the distribution, and "(B) consents to such election at such time and in such manner as the Secretary or his delegate shall prescribe by regulations. "(3) MANNER AND TIME OF ELECTION.-An election under paragraph (1) shall be made in such manner as the Secretary or his delegate shall prescribe by regulations. Such election shall be made not later than the time prescribed by law for filing the return for the taxable year during which the sale was made (including extensions thereof) except that, with respect to any taxable year ending on or before the date of the enactment of the 317 Subsection (b) of section 1375 (as added by P.L. 85-866, § 648(a)) read as follows (72 Stat. 1654): "(b) DIVIDENDS RECEIVED CREDIT NOT ALLOWED.-The amount includible in the gross income of a shareholder as dividends from an electing small business corporation during any taxable year of the corporation (including any amount treated as a dividend under section 1373(b)) shall not be considered a dividend for purposes of section 34, section 37, or section 116 to the extent that such amount is a distribution of property out of earnings and profits of the taxable year as specified in section 316(a)(2). For purposes of this subsection, the earnings and profits of the taxable year shall be deemed not to exceed the corporation's taxable income (computed as provided in section 1373(d)) for the taxable year." SEC. 1375 (added 1958)-Continued (e) (added 1964)-Continued Revenue Act of 1964, such election shall be made within 120 days after such date." Applicability: Taxable years of corporations beginning after December 31, 1957. (Id., § 233(c), 78 Stat. 113.) CH. 1, SUBCHAPTER T-COOPERATIVES AND THEIR PATRONS (Added 1962-76 Stat. 1045-1051): Subchapter T. Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 17(a), 76 Stat. 1045–1051: (added) Amended Chapter 1 (relating to mormal taxes and surtaxes) by adding at the end thereof, after Subchapter S (election of certain small business corporations as to taxable status as added by P.L. 85-866, § 64(a)), the following new Subchapter T: 318 "Subchapter T-Cooperatives and Their Patrons "Part I. Tax treatment of cooperatives. "Part II. Tax treatment by patrons of patronage dividends. followed by the text of the sections thereof grouped under the respec- "PART I-TAX TREATMENT OF COOPERATIVES "Sec. 1381. Organizations to which part applies. "Sec. 1382. Taxable income of cooperatives. "Sec. 1383. Computation of tax where cooperative redeems nonqualified written notices of allocation.", PART II-TAX TREATMENT BY PATRONS OF PATRONAGE DIVIDENDS "Sec. 1385. Amounts includible in patron's gross income.", "PART III-DEFINITIONS; SPECIAL RULES "Sec. 1388. Definitions; special rules." Applicability: "(1) FOR THE COOPERATIVES.-Except as provided in paragraph (3), the amendments made by subsections (a) and (b)319 shall apply to taxable years of organizations described in section 1381(a) of the Internal Revenue Code of 1954 (as added by subsection (a)) beginning after December 31, 1962. (2) FOR THE PATRONS. Except as provided in paragraph_(3), section 1385 of the Internal Revenue Code of 1954 (as added by subsection (a)) shall apply with respect to any amount received from any organization described in section 1381(a) of such Code, to the extent that such amount is paid by such organization in a taxable year of such organization beginning after December 31, 1962. "(3) APPLICATION OF EXISTING LAW.-In the case of any money, written notice of allocation, or other property paid by any organization described in section 1381(a) "(A) before the first day of the first taxable year of such organization beginning after December 31, 1962, or "(B) on or after such first day with respect to patronage occurring before such first day, the tax treatment of such money, written notice of allocation, or other property (including the tax treatment of gain or loss on the redemp 31 The complete text of the new Subchapter T as enacted October 16, 1962, will be found in slip law 87-834, at pages 86-92. The amendments here referred to were as follows: Subsection (a) added the new Subchapter T; Subsection (b) amended Secs. 521(a), and 6072(d), repealed Sec. 522, and amended the table of Subchapters for Chapter 1 and the table of sections for Part III of Subchapter Flof Chapter 1. 60-448-67-33 CH. 1T (added 1962)-Continued tion, sale, or other disposition of such written notice of allocation) by CHAPTER 2-TAX ON SELF-EMPLOYMENT INCOME (68A Stat. 353-355): NOTE: The table of sections for Chapter 2 reads as follows (68A Stat. 353) : "Sec. 1401. Rate of tax. "Sec. 1402. Definitions. "Sec. 1403. Miscellaneous provisions." This table has not been amended. SEC. 1401. RATE OF TAX (68A Stat. 353): (4), (5) (deleted, added) In full Sept. 1, 1954, H.R. 9366, P.L. 83-761, § 208 (a), 68 Stat. 1093: Amended Sec. 1401 320 (imposing tax on self-employment income) by striking out paragraph (4) and inserting in lieu thereof the following new paragraphs (4) and (5): (4) in the case of any taxable year beginning after December 31, 1969, and before January 1, 1975, the tax shall be equal to 5% percent of the amount of the self-employment income for such taxable year; "(5) in the case of any taxable year beginning after December 31, 1974, the tax shall be equal to 6 percent of the amount of the self-employment income for such taxable year." Applicability: Indicated by the terms of the amendment. Aug. 1, 1956, H.R. 7225, P.L. 84-880, § 202(a), 70 Stat. 845: Amended Sec. 1401 (as amended by P.L. 83-761, § 208(a)) to read as follows: "SEC. 1401. RATE OF TAX. "In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax as follows: "(1) in the case of any taxable year beginning after December 31, 1956, and before January 1, 1960, the tax shall be equal to 3% percent of the amount of the self-employment income for such taxable year; "(2) in the case of any taxable year beginning after December 31, 1959, and before January 1, 1965, the tax shall be equal to 4% percent of the amount of the self-employment income for such taxable year; 320 Section 1401 originally read as follows (68A Stat. 353): "SEC. 1401. RATE OF TAX. "In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax as follows: "(1) in the case of any taxable year beginning before January 1, 1960, the tax shall be equal to 3 percent of the amount of the self-employment income for such taxable year; "(2) in the case of any taxable year beginning after December 31, 1959, and before January 1, 1965, the tax shall be equal to 3% percent of the amount of the self-employment income for such taxable year; "(3) in the case of any taxable year beginning after December 31, 1964, and before January 1, 1970, the tax shall be equal to 41⁄2 percent of the amount of the self-employment income for such taxable year; "(4) in the case of any taxable year beginning after December 31, 1969, the tax shall be equal to 4% percent of the amount of the self-employment income for such taxable year." SEC. 1401 (revised 1956)-Continued (4), (5)-Continued In full__ Do.... (in full) "(3) in the case of any taxable year beginning after December 31, 1964, and before January 1, 1970, the tax shall be equal to 4% percent of the amount of the self-employment income for such taxable year; "(4) in the case of any taxable year beginning after December 31, 1969, and before January 1, 1975, the tax shall be equal to 5% percent of the amount of the self-employment income for such taxable year; and "(5) in the case of any taxable year beginning after December 31, 1974, the tax shall be equal to 6% percent of the amount of the self-employment income for such taxable year." Aug. 28, 1958, H.R. 13549, P.L. 85-840, § 401(a), 72 Stat. 1041: "SEC. 1401. RATE OF TAX. "In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax as follows: "(1) in the case of any taxable year beginning after December 31, 1958, and before January 1, 1960, the tax shall be equal to 34 percent of the amount of the self-employment income for such taxable year; "(2) in the case of any taxable year beginning after December 31, 1959, and before January 1, 1963, the tax shall be equal to 41⁄2 percent of the amount of the self-employment income for such taxable year; "(3) in the case of any taxable year beginning after December 31, 1962, and before January 1, 1966, the tax shall be equal to 54 percent of the amount of the self-employment income for such taxable year; "(4) in the case of any taxable year beginning after December 31, 1965, and before January 1, 1969, the tax shall be equal to 6 percent of the amount of the self-employment income for such taxable year; and "(5) in the case of any taxable year beginning after December 31, 1968, the tax shall be equal to 6% percent of the amount of the self-employment income for such taxable year." June 30, 1961, H.R. 6027, P.L. 87-64, § 201(a), 75 Stat. 140: Amended Sec. 1401 (as previously amended) to read as follows: "SEC. 1401. RATE OF TAX. "In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax as follows: "(1) in the case of any taxable year beginning after December 31, 1961, and before January 1, 1963, the tax shall be equal to 4.7 percent of the amount of the self-employment income for such taxable year; "(2) in the case of any taxable year beginning after December 31, 1962, and before January 1, 1966, the tax shall be equal SEC. 1401 (revised 1961)-Continued Do.. to 5.4 percent of the amount of the self-employment income for such taxable year; "(3) in the case of any taxable year beginning after December 31, 1965, and before January 1, 1968, the tax shall be equal to 6.2 percent of the amount of the self-employment income for such taxable year; and "(4) in the case of any taxable year beginning after December 31, 1967, the tax shall be equal to 6.9 percent of the amount of the self-employment income for such taxable year." Applicability: Taxable years beginning after December 31, 1961. (Id., § 201(d), 75 Stat. 141.) July 30, 1965, H.R. 6675, P.L. 89-97, § 321(a), 79 Stat. 394-395: Amended Sec. 1401 (amended as set forth above) to read as follows: "SEC. 1401. RATE OF TAX. "(a) OLD-AGE, SURVIVORS, AND DISABILITY INSURANCE.-In addition to other taxes, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax as follows: "(1) in the case of any taxable year beginning after December 31, 1965, and before January 1, 1967, the tax shall be equal to 5.8 percent of the amount of the self-employement income for such taxable year; "(2) in the case of any taxable year beginning after December 31, 1966, and before January 1, 1969, the tax shall be equal to 5.9 percent of the amount of the self-employment income for such taxable year; "(3) in the case of any taxable year beginning after December 31, 1968, and before January 1, 1973, the tax shall be equal to 6.6 percent of the amount of the self-employment income for such taxable year; and "(4) in the case of any taxable year beginning after December 31, 1972, the tax shall be equal to 7.0 percent of the amount of the self-employment income for such taxable year. "(b) HOSPITAL INSURANCE. In addition to the tax imposed by the preceding subsection, there shall be imposed for each taxable year, on the self-employment income of every individual, a tax as follows: "(1) in the case of any taxable year beginning after December 31, 1965, and before January 1, 1967, the tax shall be equal to 0.35 percent of the amount of the self-employment income for such taxable year; "(2) in the case of any taxable year beginning after December 31, 1966, and before January 1, 1973, the tax shall be equal to 0.50 percent of the amount of the self-employment income for such taxable year' "(3) in the case of any taxable year beginning after December 31, 1972, and before January 1, 1976, the tax shall be equal to 0.55 percent of the amount of the self-employment income for such taxable year; "(4) in the case of any taxable year beginning after December 31, 1975, and before January 1, 1980, the tax shall be equal to 0.60 percent of the amount of the self-employment income for such taxable year; "(5) in the case of any taxable year beginning after December 31, 1979, and before January 1, 1987, the tax shall be equal to |