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any arts and crafts or any other product, service, or commodity, produced, rendered, owned, controlled, or furnished by any Indian or Indian organization: Provided, however, That no employee of the United States Government shall be permitted to make any such purchases for the purpose of engaging directly or indirectly in the commercial selling, reselling, trąding, or bartering of said purchases by the said employee. (June 19, 1939, ch. 210, 53 Stat. 840.)

§ 337. Allotments in national forests. The Secretary of the Interior is authorized, in his discretion, to make allotments within the national forests in conformity with the general allotment laws, to any Indian occupying, living on, or having improvements on land included within any such national forests who is not entitled to an allotment on any existing Indian reservation, or for whose tribe no reservation has been provided, or whose reservation was not sufficient to afford an allotment to each member thereof. All applications for allotments under the provisions of this section shall be submitted to the Secretary of Agriculture who shall determine whether the lands applied for are more valuable for agricultural or grazing purposes than for the timber found thereon; and if it be found that the lands applied for are more valuable for agricultural or grazing purposes, then the Secretary of the Interior shall cause allotment to be made as herein provided. (June 25, 1910, ch. 431, $ 31, 36 Stat. 863.)

TITLE 26-INTERNAL REVENUE CODE

INCOME TAX

PUBLIC SALARY TAX Act The Public Salary Tax Act, April 12, 1939, ch. 59, title II, $$ 201-211, 53 Stat. 575-577, as amended June 25, 1940, 11:45 a. m., E. S. I., ch. 419, title IV, § 401, 54 Stat. 527, and Oct. 21, 1942, ch. 619, title V, § 509 (b), 56 Stat. 967, in addition to amendments of paragraph (a) of this section, contained provisions of a temporary nature as follows:

"SEC. 201. Any amount of income tax (including interest, additions to tax, and additional amounts) for any taxable year beginning prior to January 1, 1938, to the extent attributable to compensation for personal service as an officer or employee of a State, or any political subdivision thereof, or any agency or instrumentality of any one or more of the foregoing

“(a) shall not be assessed, and no proceeding in court for the collection thereof shall be begun or prosecuted (unless pursuant to an assessment made prior to January 1, 1939);

“(b) if assessed after December 31, 1938, the assessment shall be abated, and any amount collected in pursuance of such assessment shall be credited or refunded in the same manner as in the case of an income tax erroneously collected; and

"(c) shall, if collected on or before the date of the enactment of this Act, be credited or refunded in the same manner as in the case of an income tax erroneously collected, in the following cases,

(1) Where a claim for refund of such amount was filed before January 19, 1939, and was not disallowed on or before the date of the enactment of this Act;

“(2) Where such claim was so filed but has been disallowed and the time for beginning suit with respect thereto has not expired on the date of the enactment of this act;

"(3) Where a suit for the recovery of such amount is pending on the date of the enactment of this Act; and

“(4) Where a petition to the Board of Tax Appeals has been filed with respect to such amount and the Board's decision has not become final before the date of the enactment of this act.

"Sec. 202. In the case of any taxable year beginning after December 31, 1937, and before January 1, 1939, compensation for personal service as an officer or employee of a State, or any political subdivision thereof, or any agency or instrumentality of any one or more of the foregoing, shall not be included in the gross income of any individual under Title I of the Revenue Act of 1938 (May 28, 1938, ch, 289, 52 Stat. 452) and shall be exempt from taxation under such title, if such individual either

“(a) did not include in his return for a taxable year beginning after December 31, 1936, and before January 1, 1938, any amount as compensation for personal service as an officer or employee of a State, or any political subdivision thereof, or any agency or instrumentality of any one or more of the foregoing; or

“(b) did include any such amount in such return, but is entitled under section 201 of this Act to have the tax attributable thereto credited or refunded.

“Sec. 203. (a) Any amount of income tax (including interest, additions to tax, and additional amounts) collected on, before, or after the date of the enactment of this act for any taxable year beginning prior to January 1, 1939, to the extent attributable to compensation for personal service as an officer or employee of a State, or•any political subdivision thereof, or any agency or instrumentality of any one or more of the foregoing, shall be credited or refunded in the same manner as in the case of an income tax erroneously collected, if claim for refund with respect thereto is filed after January 18, 1939, and the Commissioner of Internal Revenue, under regulations prescribed by him with the approval of the Secretary of the Treasury, finds that disallowance of such claim would result in the application of the doctrines in the cases of Helvering against Therrell (303 U. S. 218) (58 S. Ct. 539, 82 L. Ed. 758, reversing 88 F. 2d 869). Helvering against Gerhardt (304 U. S. 405) (58 S. Ct. 969, 82 L. Ed. 1427 reversing 92 F. 2d 999. Rehearing denied 59 S. Ct. 57, 305 U. S. 669, 83 L. Ed. 434), and Graves et al. against New York ex rel. O'Keefe, decided March 27, 1939 (306 U. S. 466, 59 S. Ct. 595, 83 L. Ed. 927, 120 A. L. R. 1466, reversing 278 N. Y. 691, 16 N. E. 2d 404, affirming 253 App. Div. 91, 1 N. Y. S. 2d 195), extending the classes of officers and employees subject to Federal taxation.

“(b) Any amount of income tax (including interest, additions to tax, and additional amounts) for taxable years beginning after December 31, 1938, to the extent attributable to compensation for personal service rendered in a taxable year beginning prior to January 1, 1939 (other than compensation received as a pension, retirement pay, or similar allowance), as an officer or employee of a State, or any political subdivision thereof, or any agency or instrumentality of any one or more of the foregoing

“(1) shall not be assessed; and

“2) if assessed, the assessment shall be abated and any amount collected in pursuance of such assessment shall be credited or refunded in the same manner as in the case of an income tax erroneously collected, if the Commissioner of Internal Revenue, under regulations prescribed by him with the approval of the Secretary of the Treasury, finds that assessment of such tax, or disallowance of a claim for credit or refund. except for Title I of this Act (affecting sections 22 and 116 of Title 26, and section 84 of Title 5), would result in the application of the doctrines in the cases of Helvering against Therrell (303 U. S. 218) (58 S. Ct. 539, 82 L. Ed. 758, reversing 88 F. 2d 869). Helvering against Gerhardt (304 U. S. 405) (58 S. Ct. 969, 82 L, Ed. 1427, reversing 92 F. 2d 999. Rehearing denied 59 S. Ct. 57, 305 U. S. 669, 83 L. Ed. 434), and Graves et al. against New York ex rel. O'Keefe (306 U. S. 466), (59 S. Ct. 595, 83 L. Ed. 927, 120 A. L. R. 1466, reversing 278 N. Y. 691, 16 N. E. 2d 404, affirming 253 App. Div. 91, 1 N. Y, S. 2d 195), extending the classes of officers and employees subject to Federal taxation."

"SEC. 204. Neither section 201 nor section 203 shall apply in any case where the claim for refund, or the institution of the suit, or the filing of the petition with the Board, was, at the time filed or begun, barred by the statute of limitations properly applicable thereto.

“Sec. 205. Compensation shall not be considered as compensation within the meaning of sections 201, 202, and 203 to the extent that it is paid directly

or indirectly by the United States or any agency or instrumentality thereof. If the amount of the deficiency in income tax for any taxable year beginning before January 1, 1939, attributable to compensation paid indirectly by the United States, or any agency or instrumentality thereof, for personal service as an officer or employee of a State, or any political subdivision thereof, or any agency or instrumentality of any of the foregoing, is paid on or before March 15, 1941, then with respect to failure to pay such amount or make return of such compensation: (a) No criminal penalty shall apply; and (b) the additions to tax provided in sections 291 and 293 of the Internal Revenue Code shall not apply.” (As amended June 25, 1940, 11:45 a. m., E. S. T., ch. 419, title IV, § 401, 54 Stat. 527.)

“SEC. 206. The terms used in this Act shall have the same meaning as when used in Chapter I of the Internal Revenue Code. (Section 1 et seg, of this title.)

"SEC. 207. No collection of any tax (including interest, additions to tax, and penalties) imposed by any State, Territory, possession, or local taxing authority on the compensation received before January 1, 1939, for personal service as an officer or employee of the United States or any agency or instrumentality thereof which is exempt from Federal income taxation and, if a corporate agency or instrumentality, is one (a) a majority of the stock of which is owned by or on behalf of the United States, or (b) the power to appoint or select a majority of the board of directors of which is exercisable by or on behalf of the United States, shall be made after the date of the enactment of this act.

"SEC. 208. This title shall not apply with respect to any officer or employee of a State, or any political subdivision thereof, or any agency or instrumentality of any one or more of the foregoing, after the Secretary of the Treasury has determined and proclaimed that it is the policy of such State to collect from any individual any tax, interest, additions to tax, or penalties, on account of compensation received by such individual prior to January 1, 1939, for personal service as an officer or employee of the United States or any agency or instrumentality thereof. In making such determination the Secretary of the Treasury shall disregard the taxation of officers and employees of any corporate agency or instrumentality which is not exempt from Federal income taxation, or which if so exempt is one (a), a majority of the stock of which is not owned by or on behalf of the United States and (b), the power to appoint or select a majority of the board of directors of which is not exercisable by or on behalf of the United States.

"SEC. 209. In the case of the judges of the Supreme Court, and of the inferior courts of the United States created under article III of the Constitution, who took office on or before June 6, 1932, the compensation received as such shall not be subject to income tax under the Revenue Act of 1938 (May 28, 1938, ch. 289, 52 Stat. 452) or any prior revenue act.

"Sec. 210. For the purposes of this act, the term 'officer or employee' includes a member of a legislative body and a judge or officer of a court.

“SEC. 211. If either title of this act, or the application thereof to any person or circumstances, is held invalid, the other title of the act shall not be affected thereby.”

8 101. Exemptions from tax on corporations. The following organizations shall be exempt from taxation under this chapter

(1) Labor, agricultural, or horticultural organizations ;

(12) Farmers', fruit growers', or like associations organized and operated on a cooperative basis (a) for the purpose of marketing the products of members or other producers, and turning back to them the proceeds of sales, less the necessary marketing expenses, on the basis of either the quantity or the value of the products furnished by them, or (b) for the purpose of purchasing supplies and equipment for the use of members or other persons, and turning over such supplies and equipment to them at actual cost, plus necessary expenses. Exemption shall not be denied any such association because it has capital stock, if the dividend rate

of such stock is fixed at not to exceed the legal rate of interest in the State of incorporation or 8 per centum per annum, whichever is greater, on the value of the consideration for which the stock was issued, and if substantially all such stock (other than nonvoting preferred stock, the owners of which are not entitled or permitted to participate, directly or indirectly, in the profits of the association, upon dissolution or otherwise, beyond the fixed dividends) is owned by producers who market their products or purchase their supplies and equipment through the association; nor shall exemption be denied any such association because there is accumulated and maintained by it a reserve required by State law or a reasonable reserve for any necessary purpose. Such an association may market the products of nonmembers in an amount the value of which does not exceed the value of the products marketed for members, and may purchase supplies and equipment for nonmembers in an amount the value of which does not exceed the value of the supplies and equipment purchased for members, provided the value of the purchases made for persons who are neither members nor producers does not exceed 15 per centum of the value of all its purchases. Business done for the United States or any of its agencies shall be disregarded in determining the right to exemption under this paragraph;

(15) Corporations organized under Act of Congress, if such corporations are instrumentalities of the United States and if, under such Act, as amended and supplemented, such corporations are exempt from Federal income taxes ;

(53 Stat. 40; June 29, 1939, 10 p. m. E. S. T., ch. 247, title II, $ 217, 53 Stat. 876; Oct. 21, 1942, 4:30 p. m. E. W. T., ch. 619, title I, 98 137 (a), 165 (a), 56 Stat, 836, 872.)

§ 113. Adjusted basis for determining gain or loss.

(b) Adjusted basis. (1) General rule

(G) in the case of property pledged to the Commodity Credit Corporation, to the extent of the amount received as a loan from the Commodity Credit Corporation and treated by the taxpayer as income for the year in which received pursuant to section 123 of this chapter, and to the extent of any deficiency on such loan with respect to which the taxpayer has been relieved from liability.

(53 Stat. 40; June 29, 1939, 10 p. m., E. S. T., ch. 247, title II, 88 213 (d), 214 (a), 215 (b), 223 (b), 53 Stat. 871, 872, 879.)

§ 123. Commodity credit loans.-- (a) Amounts received as loans from the Commodity Credit Corporation shall, at the election of the taxpayer, be considered as income and shall be included in gross income for the taxable year in which received.

(b) If a taxpayer exercises the election provided for in subsection (a) for any taxable year beginning after December 31, 1938, then the method of computing income so adopted shall be adhered to with respect to all subsequent taxable years unless with the approval of the Commissioner a change to a different method is authorized.

(c) The election provided for in subsection (a) with respect to taxable years beginning after December 31, 1938, and before January 1, 1942, may be exercised by the taxpayer at, or at any time prior to the time prescribed for the filing of the taxpayer's return for the taxable year of the taxpayer beginning in 1942, or if there is more than one taxable year of the taxpayer beginning in 1942, for the last taxable year so beginning, provided the records of the taxpayer are sufficient to permit an accurate computation of income for such years, and the taxpayer consents in writing to the assessment, within such period as may be agreed upon, of any deficiency for such years, even though the statutory period for the assessment of any such deficiency had expired prior to the filing of such consent. (Added June 29, 1939, 10 p. m. E. S. T., ch. 247, title II, § 223 (a), 53 Stat. 579; Oct. 21, 1942, 4:30 p. m. E. W. T., ch. 619, title I, § 154 (a), 56 Stat. 848.)

EFFECTIVE DATE; RETROACTIVE OPERATION Section was made applicable to taxable years beginning after December 31, 1938, by § 223 (c) of act June 29, 1939, cited to text.

Act June 29, 1939, 10 p. m. E. S. T., ch. 247, title II, § 223 (d) and (e), 53 Stat. 879, provided as follows:

"(d) RETROACTIVE APPLICATION.-The provisions of subsection (a) [this section) shall be retroactively applied in computing income for any taxable year subject to the provisions of the Revenue Act of 1934, the Revenue Act of 1936, or the Revenue Act of 1938, or any of such Acts as amended, if

"(1) The taxpayer elects in writing (in accordance with regulations prescribed by the Commissioner with the approval of the secretary) within one year from the date of the enactment of this Act to treat such loans as income for such year, and

(2) The records of the taxpayer are sufficient to permit an accurate computation of income for such year, and

"(3) The taxpayer consents in writing to the assessment, within such period as may be agreed upon, of any deficiency for such year, even though the statutory period for the assessment of any such deficiency had expired prior to the filing of such consent.

Any tax overpaid for any such year shall be credited or refunded, subject to the statutory period of limitation properly applicable thereto.

"(e) ADJUSTMENT OF BASIS FOR PRIOR YEARS.-In computing income for any taxable year subject to the provisions of the Revenue Act of 1934, the Revenue Act of 1936, or the Revenue Act of 1938, or any of such Acts as amended, the basis, for determining gain or loss from the sale or other disposition of any property, pledged to the Commodity Credit Corporation as security on a loan obtained therefrom, shall be adjusted for the amount of such loan to the extent it was considered as income and included in gross income for the year in which received, and for the amount of any deficiency on such loan with respect to which the taxpayer was relieved from liability."

§ 124. Amortization deduction (a) General rule.—Every person, at his election, shall be entitled to a deduction with respect to the amortization of the adjusted basis (for determining gain) of any emergency facility (as defined in subsection (e)), based on a period of sixty months. Such amortization deduction shall be an amount, with respect to each month of such period within the taxable year, equal to the adjusted basis of the facility at the end of such month divided by the number of months (including the month for which the deduction is computed) remaining

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