Act of 1928. Supplement D-Returns and [Supplementary to Subtitle B, Part V] SEC. 141. CONSOLIDATED RETURNS OF CORPORATIONS-1929 AND SUBSEQUENT TAXABLE YEARS. (a) Privilege to file consolidated returns. An affiliated group of corporations shall, subject to the provisions of this section, have the privilege of making a consolidated return for the taxable year 1929 or any subsequent taxable year, in lieu of separate returns. The making of a consolidated return shall be upon the condition that all the corporations which have been members of the affiliated group at any time during the taxable year for which the return is made consent to all the regulations under subsection (b) prescribed prior to the making of such return; and the making of a consolidated return shall be considered as such consent. In the case of a corporation which is a member of the affiliated group for a fractional part of the year the consolidated return shall include the income of such corporation for such part of the year as it is a member of the affiliated group. (b) Regulations.-The Commissioner, with the approval of the Secretary, shall prescribe such regulations as he may deem necessary in order that the tax liability of an affiliated group of corporations making a consolidated return and of each corporation in the group, both during and after the period of affiliation, may be determined, computed, assessed, collected, and adjusted in such manner as clearly to reflect the income and to prevent avoidance of tax liability. (c) Computation and payment of tax. In any case in which a consolidated return is made the tax shall be determined, computed, assessed, collected, and adjusted in accordance with the regulations under subsection (b) prescribed prior to the date on which such return is made. Only one specific credit, computed as provided in section 26 (b), shall be allowed in computing the tax. Act of 1926. CONSOLIDATED RETURNS OF CORPORATIONS. SEC. 240. (a) Corporations which are affiliated within the meaning of this section may, for any taxable year, make separate returns or, under regulations prescribed by the Commissioner with the approval of the Secretary, make a consolidated return of net income for the purpose of this title, in which case the taxes thereunder shall be computed and determined upon the basis of such return. If return is made on either of such bases, all returns thereafter made shall be upon the same basis unless permission to change the basis is granted by the Commissioner. (b) In any case in which a tax is assessed upon the basis of a consolidated return, the total tax shall be computed in the first instance as a unit and shall then be assessed upon the respective affiliated corporations in such proportions as may be agreed upon among them, or, in the absence of any such agreement, then on the basis of the net income properly assignable to each. There shall be allowed in computing the income tax only one specific credit computed as provided in subdivision (b) of section 236. Act of 1928. (d) Definition of "affiliated group."As used in this section an "affiliated group" means one or more chains of corporations connected through stock ownership with a common parent corporation if (1) At least 95 per centum of the stock of each of the corporations (except the common parent corporation) is owned directly by one or more of the other corporations; and (2) The common parent corporation owns directly at least 95 per centum of the stock of at least one of the other corporations. As used in this subsection the term "stock" does not include nonvoting stock which is limited and preferred as to dividends. An (e) A consolidated return shall be made only for the domestic corporations within the affiliated group. insurance company subject to the tax imposed by section 201 or 204 shall not be included in the same consolidated return with a corporation subject to the tax imposed by section 13. (f) China Trade Act corporations.-A corporation organized under the China Trade Act, 1922, shall not be deemed to be affiliated with any other corporation within the meaning of this section. (g) Corporations deriving income from possessions of United States.For the purposes of this section a corporation entitled to the benefits of section 251, by reason of receiving a large percentage of its income from possessions of the United States, shall be treated as a foreign corporation. (h) Subsidiary formed to comply with foreign law. In the case of a domestic corporation owning or controlling, directly or indirectly, 100 per centum of the capital stock (exclusive of directors' qualifying shares) of a corporation organized under the laws of a contiguous foreign country and maintained solely for the purpose of complying with the laws of such country as to title and operation of property, such foreign corporation may, at the option Act of 1926. (d) For the purpose of this section two or more domestic corporations shall be deemed to be affiliated (1) if one corporation owns at least 95 per centum of the stock of the other or others, or (2) if at least 95 per centum of the stock of two or more corporations is owned by the same interests. As used in this subdivision the term "stock" does not include nonvoting stock which is limited and preferred as to dividends. This subdivision shall be applicable to the determination of affiliation for the taxable year 1926 and each taxable year thereafter. NOTE.-See Section 240 (d) of the 1926 Act, above. (e) A corporation organized under the China Trade Act, 1922, shall not be deemed to be affiliated with any other corporation within the meaning of this section. (g) For the purposes of this section a corporation entitled to the benefits of section 262 shall be treated as a foreign corporation. (a) Consolidated returns permitted.— Corporations which are affiliated within the meaning of this section may, for the taxable year 1928, make separate returns or, under regulations prescribed by the Commissioner with the approval of the Secretary, make a consolidated return of net income for the purpose of this title in which case the taxes thereunder shall be computed and determined upon the basis of such return. If return for the taxable year 1927 was made upon either of such bases, return for the taxable year 1928 shall be upon the same basis unless permission to change the basis is granted by the Commissioner. (b) Computation and payment of tax. In any case in which a tax is assessed upon the basis of a consolidated return, the total tax shall be 1739-28- -6 (h) (1) If a notice under subdivision (a) of section 274 in respect of a deficiency for the taxable year 1922, 1923, 1924, 1925, 1926, or 1927, has been mailed to a corporation, the supension of the running of the statute of limitations, provided in subdivision (b) of section 277 and in subdivision (l) of section 283, shall apply in the case of corporations with which such corporation made a consolidated return for such taxable year. (2) If a notice under subdivision (a) of section 274 in respect of a deficiency forthe taxable year 1921 or any previous taxable year has been mailed to a corporation, the suspension of the running of the statute of limitations provided in subdivision (b) of section 277 and in subdivision (1) of section 283, shall apply in the case of the corporations with which such corporation was affiliated, determined in accordance with the law applicable to the year in respect of which the deficiency is asserted.1 NOTE. For consolidated returns under 1926 Act see section 240, opposite section 141 of the 1928 Act. Amendment by Revenue Act of 1928 applicable where the period of limitation had not expired prior o May 29, 1928. See sec. 501. Act of 1928. Act of 1926. vidual) shall make under oath a return for any of the following individuals, estates, or trusts for which he acts, stating specifically the items of gross income thereof and the deductions and credits allowed under this title (1) Every individual having a net income for the taxable year of $1,500 or over, if single, of if married and not living with husband or wife; (2) Every individual having a net income for the taxable year of $3,500 or over, if married and living with husband or wife; (3) Every individual having a gross income for the taxable year of $5,000 or over, regardless of the amount of his net income; (4) Every estate or trust the net income of which for the taxable year is $1,500 or over; (5) Every estate or trust the gross income of which for the taxable year is $5,000 or over, regardless of the amount of the net income; and (6) Every estate or trust of which any beneficiary is a nonresident alien. (b) Joint fiduciaries. Under such regulations as the Commissioner with the approval of the Secretary may prescribe a return made by one of two or more joint fiduciaries and filed in the office of the collector of the district where such fiduciary resides shall be sufficient compliance with the above requirement. Such fiduciary shall make oath (1) that he has sufficient knowledge of the affairs of the individual, estate or trust for which the return is made, to enable him to make the return, and (2) that the return is, to the best of his knowledge and belief, true and correct. under oath a return for any of the following individuals, estates, or trusts for which he acts, stating specifically the items of gross income thereof and the deductions and credits allowed under this title (1) Every individual having a net income for the taxable year of $1,500 or over, if single, or if married and not living with husband or wife; (2) Every individual having a net income for the taxable year of $3,500 or over, if married and living with husband or wife; (3) Every individual having a gross income for the taxable year of $5,000 or over, regardless of the amount of his net income; (4) Every estate or trust the net income of which for the taxable year is $1,500 or over; (5) Every estate or trust the gross income of which for the taxable year is $5,000 or over, regardless of the amount of the net income; and (6) Every estate or trust of which any beneficiary is a nonresident alien. (b) Under such regulations as the Commissioner with the approval of the Secretary may prescribe a return made by one of two or more joint fiduciaries and filed in the office of the collector of the district where such fiduciary resides shall be sufficient compliance with the above requirement. Such fiduciary shall make oath (1) that he has sufficient knowledge of the affairs of the individual, estate or trust for which the return is made, to enable him to make the return, and (2) that the return is, to the best of his knowledge and belief, true and correct. Any fiduciary required to make a return under this Act shall be subject to all the provisions of this Act which apply to individuals. SEC. 221. (b) In any case where bonds, mortgages, or deeds of trust, or other similar obligations of a corpora |