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TITLE 26-INTERNAL REVENUE CODE and if such amount so applied in reduction of the decrease exceeds such loss, the excess over such loss shall increase that part of the earnings and profits consisting of increase in value of property accrued before March 1, 1913. (h) Allocation in certain corporate separations In the case of a distribution or exchange to which section 355 (or so much of section 356 as relates to section 355) applies, proper allocation with respect to the earnings and profits of the distributing corporation and the controlled cor- poration (or corporations) shall be made under regulations prescribed by the Secretary. (I) Distribution of proceeds of loan insured by the United States If a corporation distributes property with re- spect to its stock and if, at the time of distribu- tion- (1) there is outstanding a loan to such cor- poration which was made, guaranteed, or in- sured by the United States (or by any agency or instrumentality thereof), and (2) the amount of such loan so outstanding exceeds the adjusted basis of the property constituting security for such loan, then the earnings and profits of the corpora- tion shall be increased by the amount of such excess, and (immediately after the distribution) shall be decreased by the amount of such excess. For purposes of paragraph (2), the ad- justed basis of the property at the time of dis- tribution shall be determined without regard to any adjustment under section 1016(a)(2) (relat- ing to adjustment for depreciation, etc.). For purposes of this subsection, a commitment to make, guarantee, or insure a loan shall be treat- ed as the making, guaranteeing, or insuring of a loan. (j) Earnings and profits of foreign investment compa- nies (1) Allocation within affiliated group In the case of a sale or exchange of stock in a foreign investment company (as defined in section 1246(b)) by a United States person (as defined in section 7701(a)(30)), if such compa- ny is a member of an affiliated group, then the accumulated earnings and profits of all members of such affiliated group shall be al- located, under regulations prescribed by the Secretary, in such manner as is proper to carry out the purposes of section 1246. (2) Affiliated group defined For purposes of paragraph (1) of this sub- section, the term "affiliated group" has the meaning assigned to such term by section 1504(a); except that (A) "more than 50 per- cent" shall be substituted for "80 percent or more", and (B) all corporations shall be treat- ed as includible corporations (without regard to the provisions of section 1504(b)). (3) Partial liquidations and redemptions If a foreign investment company (as defined in section 1246) distributes amounts in partial liquidation or in a redemption to which sec- tion 302(a) or 303 applies, the part of such distribution which is properly chargeable to earnings and profits shall be an amount which Is not in excess of the ratable share of the earnings and profits of the company accu- mulated after February 28, 1913, attributable to the stock so redeemed. (k) Effect of depreciation on earnings and profits (I) General rule For purposes of computing the earnings and profits of a corporation for any taxable year beginning after June 30, 1972, the allowance for depreciation (and amortization, if any) shall be deemed to be the amount which would be allowable for such year if the straight line method of depreciation had been used for each taxable year beginning after June 30, 1972. (2) Exceptions If for any taxable year beginning after June 30, 1972, a method of depreciation was used by the taxpayer which the Secretary has de- termined results in a reasonable allowance under section 167(a), and which is not- (A) a declining balance method, (B) the sum of the years-digit method, or (C) any other method a",owable solely by reason of the applicatiun of subsection (b)(4) or (j)(1)(C) of section 167, then the adjustment to earnings and profits for depreciation for such year shall be deter- mined under the method so used (in lieu of under the straight line method). (3) Certain foreign corporations The provisions of paragraph (1) shall not apply in computing the earnings and profits of a foreign corporation for any taxable year for which less than 20 percent of the gross income from all sources of such corporation is derived from sources within the United States. (Aug. 16, 1954, ch. 736, 68A Stat. 95; Feb. 2, 1962, Pub. L. 97-403, § 3(a), 76 Stat. 6; Oct. 16, 1962, Pub. L. 87-834, §§13(f)(3), 14(b)(1), 76 Stat. 1035, 1040; Feb. 26, 1964, Pub. L. 88-272, title II, § 231(b)(3), 78 Stat. 105; Aug. 22, 1964, Pub. L. 88-484, § 1(b)(1), 78 Stat. 597; Sept. 12, 1966, Pub. L. 89-570, § 1(b)(3), 80 Stat. 762; Dec. 30, 1969, Pub. L. 91-172, title II, § 211(b)(3), title IV, § 442(a), title IX, § 905(b)(2), 83 Stat. 570, 628, 714; Oct. 4, 1976, Pub. L. 94-455, title II, § 205(c)(1)(D), title XIX, §§ 1901(a)(43), (b)(32)(B)(i), 1906(b)(13)(A), 90 Stat. 1535, 1771, 1800, 1834.) REFERENCES IN TEXT Section 115(h) of the Internal Revenue Code of 1939, referred to in subsec. (d)(2), was classified to sec- tion 115(h) of former Title 26, Internal Revenue Code. Section 115(h) was repealed by section 7851(a)(1) of this title. For table of comparisons of the 1939 Code to the 1954 Code, see Table I preceding section 1 of this title. See, also, section 7851(e) of this title for provi- sion that references in the 1954 Code to a provision of the 1939 Code, not then applicable, shall be deemed a reference to I le corresponding provision of the 1954 Code, then applicable. AMENDMENTS 1976-Subsec. (c)(3). Pub. L. 94-455, §205(c)(1)(D), substituted "1252(a), or 1254(a)" for "or 1252(a)". Subsec. (d)(1). Pub. L. 94-455, § 1901(a)(43)(A), sub- stituted "this title" for "this Code" wherever appear- ing. Subsec. (11). Pub. L. 94-455, §§ 1901(a)(43)(B), 1906(b)(13)(A), redesignated former subsec. (i) as (h), Page 243