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TITLE 26-INTERNAL REVENUE CODE poses of this paragraph, the amount of the earnings and profits for the taxable year which are retained is the amount by which the earnings and profits for the taxable year exceed the dividends paid deduction (as de- fined in section 561) for such year. (2) Minimum credit The credit allowable under paragraph (1) shall in no case be less than the amount by which $150,000 exceeds the accumulated earnings and profits of the corporation at the close of the preceding taxable year. (3) Holding and investment companies In the case of a corporation which is a mere holding or investment company, the accumu- lated earnings credit is the amount (if any) by which $150,000 exceeds the accumulated earnings and profits of the corporation at the close of the preceding taxable year. (4) Accumulated earnings and profits For purposes of paragraphs (2) and (3), the accumulated earnings and profits at the close of the preceding taxable year shall be re- duced by the dividends which under section 563(a) (relating to dividends paid after the close of the taxable year) are considered as paid during such taxable year. (5) Cross reference For denial of credit provided in paragraph (2) or (3) where multiple corporations are formed to avoid tax, see section 1551, and for limitation on such credit in the case of certain controlled corporations, see sections 1561 and 1564. (Aug. 16, 1954, ch. 736, 68A Stat. 180; Sept. 2, 1958, Pub. L. 85-866, title I, § 31, title II, § 205(a), 72 Stat. 1631, 1680; Feb. 2, 1962, Pub. L. 87-403, § 3(b), 76 Stat. 6; Oct. 16, 1962, Pub. L. 87-834, § 9(d)(2), 76 Stat. 1001; Feb. 26, 1964, Pub. L. 88-272, title II, § 207(b)(4), 78 Stat. 42; Dec. 30, 1969, Pub. L. 91-172, title IV, § 401(b)(2)(C), title V, § 512(f)(5), (6), 83 Stat. 602, 641; Mar. 29, 1975, Pub. L. 94-12, title III, § 304(a), 89 Stat. 45; Oct. 4, 1976, Pub. L. 94-455, title X, § 1033(b)(3), title XIX, §§ 1901(a)(74), (b)(20)(A), (32)(C), (33)(D), 1906(b)(13)(A), 90 Stat. 1628, 1777, 1797, 1800, 1801, 1834.) AMENDmExTS 1976--Subsec. (b)(1). Pub. L. 94-455. §§ 1033(b)(3), 1901(a)(74), struck out "(other than the excess profits tax imposed by subehapter E of chapter 2 of the Inter- nal Revenue Code of 1939 for taxable years beginning after December 31, 1940)" following "income and excess profits taxes", and substituted "section 902(a) or 960(a)(1)" for "section 902(a)(1) or 960(a)(1)(C)" following "domestic corporation under". Subsec. (b)(6). Pub. L. 94-455, § 1901(b)(33)(D), sub- stituted "Net" for "Long-term" following "(6)". Subsec. (b)(8). Pub. L. 94-455, § 1901(b)(20)(A), struck out par. (8) which related to allowance of de- duction by bank affiliates. Subsec. (b)(9). Pub. L. 94-455, § 1901(b)(32)(C), struck out subsec. (b)(9) relating to allowance of de- duction for distributions of divested stock. Subsec. (b)(10). Pub. L. 94-455, § 1901(b)(32)(C), struck out subsec. (b)(10) relating to special adjust- ment on disposition of antitrust stock received as a dividend. 1975-Subsecs. (c)(2), (3). Pub. L. 94-12 substituted "$150,000" for "$100,000" in pars. (2) and (3). 1969-Subsec. (b)(6). Pub. L. 91-172, § 512(f)(5), sub- stituted "capital loss carryback or carryover" for "cap- ital loss carryover" and "capital loss carryback and carryover" for "capital loss carryover" in subpar. (B). Subsec. (b)(7). Pub. L. 91-172, § 512(f)(6), substituted "Capital loss" for "Capital loss carryover" in par. catchllne and "capital loss carryback or carryover" for "capital loss carryover" in text. Subsec. (c)(5). Pub. L. 91-172, 1 401(b)(2)(C), substi- tuted "section' 1551, and for limitation on such credit in the case of certain controlled corporations, see sec. tions 1561 and 1564" for "section 1551". 1964-Subsec. (b)(1). Pub. L. 88-272 substituted "sec- tion 275(a)(4)" for "section 164(b)(6)". 1962-Subsec. (b)(1). Pub. L. 87-834 substituted "ac- crued during the taxable year or deemed to be paid by a domestic corporation under section 902(a)(1) or 960(a)(1)(C) for the taxable year" for "accrued during the taxable year". Subsecs. (b)(9), (10). Pub. L. 87-403 added subsec. (b) (9), (10). 1958-Subsec. (b)(2). Pub. .. 85-866, § 31(a), deleted following "without regard to" the words "the limita- tion in". Subsec. (b)(6)(B). Pub. L. 85-866, § 31(a), substituted "in taxable income the excess of the net long-term capital gain for the taxable year over the net short- term capital loss for such year (determined without regard to the capital loss carryover provided in section 1212)" for "such excess in taxable income". Subsec. (c). Pub. L. 85-866, § 205(a), substituted "$100,000" for "$60,000" in pars. (2) and (3). EnrcTivE DATE OF 1976 AMnMmErT Effective date of amendment of subsec. (b)(1) by Pub. L. 94-455, §1033(b)(3), see section 1033(c) of Pub. L. 94-455, set out as an Effective Date of 1976 Amend- ment note under section 902 of this title. Amendment of subsec. (b) by section 1901(a)(74), (b)(20)(A), (b)(32)(C), (b)(33)(D), of Pub. L. 94-455, ap- plicable with respect to taxable years beginning after Dec. 31, 1976. see section 1901(d) of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 2 of this title. E cTxvz DATE OF 1975 AMENDMENT Section 305(c) of Pub. L. 94-12 provided that: "The amendments made by section 304 [amending sections 243, 535, 1551, and 1561(a)(2) of this title] apply to taxable years beginning after December 31, 1974." ErFECTIVE DATE or 1969 AMENDMEN Amendment of subsec. (b)(6), (7) by section 512(f) (5), (6) of Pub. L. 91-172 applicable with respect to net capital losses sustained in taxable years beginning after Dec. 31, 1969, see section 512(g) of Pub. L. 91- 172, set out as an Effective Date of 1969 Amendment note under section 1212 of this title. Amendment of subsec. (c)(5) by section 401(b)(2)(C) of Pub. L. 91-172 applicable with respect to taxable years beginning after Dec. 31, 1969, see section 401(h)(2) of Pub. L. 91-172, set out as an Effective Date of 1969 Amendment note under section 1561 of this title. EmECTivE DATE OF 1964 AmENDMmcr Amendment by Pub. L. 88-272 applicable to taxable years beginning after Dec. 31, 1963, see section 207(c) of Pub. L. 88-272, set out as an Effective Date of 1964 Amendment note under section 164 of this title. EFrr vE DATE OF 1962 ANDMENT Amendment of subsec. (b)(1) by Pub. L. 87-834 appli. cable in respect of any distribution received by a do. mestic corporation after Dec. 31, 1964, and in respect of any distribution received by a domestic corporation before Jan. 1, 1965, in a taxable year of such corpora- tion beginning after Dec. 31, 1962, but only to the extent that such distribution is made out of the accu- mulated profits of a foreign corporation for a taxable year (of such foreign corporation) beginning after Dec. 31, 1962, see section 9(e) of Pub. L. 87-834, set out § 535 Page 406