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TITLE 26-INTERNAL REVENUE CODE parent corporation, and shall be made for any taxable year of the common parent corpora- tion at such time and in such manner as the Secretary by regulations prescribes. Such election may not be made for an affiliated group for any taxable year of the common parent corporation for which an election under section 1562 is effective. Each corpora- tion which is a member of such group at any time during its taxable year which includes the last day of such taxable year of the common parent corporation must consent to such election at such time and in such manner as the Secretary by regulations pre- scribes. An election under this paragraph shall be effective- (A) for the taxable year of each member of such affiliated group which includes the last day of the taxable year of the common parent corporation with respect to which the election is made, and (B) for the taxable year of each member of such affiliated group which ends after the last day of such taxable year of the common parent corporation but which does not include such date, unless the election is terminated under paragraph (4). (3) Effect of election If an election by an affiliated group is effec- tive with respect to a taxable year of the common parent corporation, then under regu- lations prescribed by the Secretary- (A) no member of such affiliated group may consent to an election under section 1562 for such taxable year, (B) the members of such affiliated group shall be treated as one taxpayer for pur- poses of making the election under section 901(a) (relating to allowance of foreign tax credit), and (C) the members of such affiliated group shall be limited to one- (i) $150,000 minimum accumulated earn- ings credit under section 535(c)(2) or (3), (ii) $400,000 limitation for certain explo- ration expenditures under section 617(h)(1), (iii) $25,000 limitation on small business deduction of life insurance companies under sections 804(a)(3) and 809(d)(10), and (iv) surtax exemption, and one amount under section 6154(c)(2) and section 6655(e)(2), for purposes of estimated tax payment requirements under section 6154 and the addition to the tax under section 6655 for failure to pay estimated tax. (4) Termination An election by an affiliated group under paragraph (2) shall terminate with respect to the taxable year of the common parent corpo- ration and with respect to the taxable years of the members of such affiliated group which include the last day of such taxable year of the common parent corporation if- (A) Consent of members Such affiliated group files a termination of such election (at such time and in such manner as the Secretary by regulations pre- scribes) with respect to such taxable year of the common parent corporation, and each corporation which is a member of such af- filiated group at any time during its taxable year which includes the last day of such taxable year of the common parent corpora- tion consents to such termination, or (B) Refusal by new member to consent During such taxable year of the common parent corporation such affiliated group in- cludes a member which- (i) was not a member of such group during such common parent corporation's immediately preceding taxable year, and (i) such member files a statement that it does not consent to the election at such time and in such manner as the Secretary by regulations prescribes. (5) Definition of affiliated group For purposes of this subsection, the term "affiliated group" has the meaning assigned to it by section 1504(a), except that for such purposes sections 1504(b)(2), 1504(b)(4), and 1504(c) shall not apply. (6) Special rules for insurance companies If an election under this subsection is effec- tive for the taxable year of an insurance com- pany subject to taxation under section 802 or 821- (A) part II of subchapter B of chapter 6 (relating to certain controlled corporations) shall be applied without regard to section 1563(a)(4) (relating to certain insurance companies) and section 1563(b)(2)(D) (relat- ing to certain excluded members) with re- spect to such company and the other corpo- rations which are members of the con- trolled group of corporations (as deter- mined under section 1563 without regard to subsections (a)(4) and (b)(2)(D)) of which such company is a member, and (B) for purposes of paragraph (1), a distri- bution by such company out of earnings and profits of a taxable year for which an election under this subsection was not effec- tive, and for which such company was not a component member of a controlled group of corporations within the meaning of section 1563 solely by reason of section 1563(b)(2)(D), shall not be a qualifying divi- dend. (c) Special rules for certain distributions For purposes of subsection (a)- (1) Any amount allowed as a deduction under section 591 (relating to deduction for dividends paid by mutual savings banks, etc.) shall not be treated as a dividend. (2) A dividend received from a regulated in- vestment company shall be subject to the limitations prescribed In section 854. (3) Any dividend received from a real estate investment trust which, for the taxable year of the trust in which the dividend is paid, qualifies under part II of subchapter M (sec- tion 856 and following) shall not be treated as a dividend. (4) Any dividend received which is described in section 244 (relating to dividends received on preferred stock of a public utility) shall not be treated as a dividend. Page 203 § 243