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TITLE 26-INTERNAL REVENUE CODE "(2) Presumption of election under section 617.-For purposes of section 617 of the Internal Revenue Code of 1954 (section 617 of this title], an election under section 615(e) of such Code (subsec. (e) of section 615 of this title], which is effective with respect to explo- ration expenditures paid or incurred before January 1, 1970, shall be treated as an election under section 617(a) of such Code (section 617(a) of this title] with respect to exploration expenditures paid or incurred after December 31, 1969. The preceding sentence shall not apply to any taxpayer who notifies the Secretary of the Treasury or his delegate (at such time and in such manner as the Secretary or his delegate pre- scribes by regulations) that he does not desire his elec- tion under section 615(e) (subsec. (e) of section 615 of this title] to be so treated." EFFECTIVE DATE OF 1968 AMENDMENT Amendment by Pub. L. 90-364 applicable with re- spect to taxable years beginning after Dec. 31, 1967, except as provided by section 104 of Pub. L. 90-364, set out as notes under sections 51 and 6154 of this title, see section 103(f) of Pub. L. 90-364, set out as an Ef- fective Date of 1968 Amendment note under section 6154 of this title. EFFECTIVE DATE OF 1964 AMENDMENT Section 214(c) of Pub. L. 88-272 provided that: "The amendments made by subsections (a) [to this section] and (b) [to sections 244, 246(b). 804(a)(5) and 809(d)(8)(B) of this title] shall apply with respect to dividends received in taxable years ending after De- cember 31, 1963." EFFECTIVE DATE OF 1960 AMENDMENT Amendment of subsec. (c)(3) by Pub. L. 86-779, § 10(g) applicable with respect to taxable years of real estate investment trusts beginning after Dec. 31, 1960, see section 10(k) of Pub. L. 86-779, set out as an Effec- tive Date note under section 856 of this title. Section 3(c) of Pub. L. 86-779 provided that: "The amendments made by subsections (a) and (b) [adding subsec. (d) of this section and amending section 861(a)(2) of this title] shall apply to dividends received after December 31, 1959, in taxable years ending after such date." EFFECTIVE DATE OF 1958 AMENDMENT Section 57(d) of Pub. L. 85-866 provided that: "The amendments made by this section [adding sections 165(h)(3), (4), 1242 and 1243 and amending section 246(b)(1) of this title and subsecs. (a) to (c) of this sec- tion] shall apply with respect to taxable years begin- ning after the date of the enactment of this Act [Sept. 2, 1958]." SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 172, 244, 245, 246, 277, 512, 596, 804, 809, 812, 815, 854, 857, 861, 1244. 1504, 1564 of this title; title 46 section 1177. § 244. Dividends received on certain preferred stock (a) General rule In the case of a corporation, there shall be al- lowed as a deduction an amount computed as follows: (1) First determine the amount received as dividends on the preferred stock of a public utility which is subject to taxation under this chapter and with respect to which the deduc- tion provided in section 247 for dividends paid is allowable. (2) Then multiply the amount determined under paragraph (1) by the fraction- (A) the numerator of which is 14 percent, and (B) the denominator of which is that per. centage which equals the sum of the normal tax rate and the surtax rate for the taxable year prescribed by section 11. (3) Finally ascertain the amount which is 85 percent of the excess of- (A) the amount determined under para- graph (1), over (B) the amount determined under para. graph (2). (b) Exception If the dividends described in subsection (a)(1) are qualifying dividends (as defined in section 243(b)(1), but determined without regard to sec- tion 243(c)(4))- (1) subsection (a) shall be applied separate- ly to such qualifying dividends, and (2) for purposes of subsection (a)(3), the percentage applicable to such qualifying divi- dends shall be 100 percent in lieu of 85 per- cent. (Aug. 16, 1954, ch. 736, 68A Stat. 73; Feb. 26, 1964, Pub. L. 88-272, title II, § 214(b)(1), 78 Stat. 55.) AMENDMENTS 1964-Subsec. (b). Pub. L. 88-272 designated existing provisions as subsec. (a), and added subsec. (b). EFFECTIVE DATE OF 1964 AMENDMENT Amendment by Pub. L. 88-272 applicable to divi- dends received in taxable years ending after Dec. 31, 1963, see section 214(c) of Pub. L. 88-272, set out as an Effective Date of 1964 Amendment note ufider section 243 of this title. Cnoss REFERENCES Definition of public utility, see section 247 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 172, 243, 246, 247, 277, 512, 596, 804, 809, 812, 815, 1244 of this title. § 245. Dividends received from certain foreign corpo- rations (a) General rule In the case of dividends received from a for- eign corporation (other than a foreign personal holding company) which is subject to taxation under this chapter, if, for an uninterrupted period of not less than 36 months -ending with the close of such foreign corporation's taxable year in which such dividends are paid (or, if the corporation has not been in existence for 36 months at the close of such taxable year, for the period the foreign corporation has been in existence as of the close of such taxable year) such foreign corporation has been engaged in trade or business within the United States and if 50 percent or more of the gross income of such corporation from all sources for such period is effectively connected with the conduct of a trade or business within the United States, there shall be allowed as a deduction in the case of a corporation- (1) An amount equal to the percent (speci- fied in section 243 for the taxable year) of the dividends received out of its earnings and profits specified in paragraph (2) of the first sentence of section 316(a), but such amount shall not exceed an amount which bears the Page 205 § 245