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TITLE 26-INTERNAL REVENUE CODE solidated adjusted ordinary gross income for purposes of this part dividends received by a member of the affiliated group from a life in- surance company taxable under section 802 that is not a member of the affiliated group solely by reason of the application of para- graph (2) of subsection (b) of section 1504. (c) Exceptions The term "personal holding company" as de- fined in subsection (a) does not include- (1) a corporation exempt from tax under subchapter F (sec. 501 and following); (2) a bank as defined in section 581, or a do- mestic building and loan association within the meaning of sect!on 7701(a)(19); (3) a life insurance company; (4) a surety company; (5) a foreign personal holding company as defined in section 552; (6) a lending or finance company if- (A) 60 percent or more of its ordinary gross income (as defined in section 543(b)(1)) is derived directly from the active and regular conduct of a lending or finance business; (B) the personal holding company income for the taxable year (computed without regard to income described in subsection (d)(3) and income derived directly from the active and regular conduct of a lending or finance business, and computed by includ- ing as personal holding company income the entire amount of the gross income from rents, royalties, produced film rents, and compensation for use of corporate property by shareholders) is not more than 20 per- cent of the ordinary gross income; (C) the sum of the deductions which are directly allocable to the active and regular conduct of its lending or finance business equals or exceeds the sum of- (i) 15 percent of so much of the ordi- nary gross income derived therefrom as does not exceed $500,000, plus (it) 5 percent of so much of the ordinary gross income derived therefrom as ex- ceeds $500,000 but not $1,000,000; and (D) the loans to a person who is a share- holder in such company during the taxable year by or for whom 10 percent or more in value of its outstanding stock is owned di- rectly or indirectly (including, in the case of an individual, stock owned by members of his family as defined in section 544(a)(2)), outstanding at any time during such year do not exceed $5,000 in principal amount; (7) a foreign corporation (other than a cor- poration which has income to which section 543(a)(7) applies for the taxable year), if all of its stock outstanding during the last half of the taxable year is owned by nonresident alien individuals, whether directly or indirect- ly through foreign estates, foreign trusts, for- eign partnerships, or other foreign corpora- tions; (8) A small business investment company which is licensed by the Small Business; Ad- ministration and operating under the Small Business Investment Act of 1958 (15 U.S.C. 661 and following) and which is actively en- gaged in the business of providing funds to small business concerns under that Act. This paragraph shall not apply if any share holder of the small business investment company owns at any time during the taxable year di- rectly or indirectly (including, in the case of an individual, ownership by the members of his family as defined in section 544(a)(2)) a 5 per centum or more proprietary interest in a small business concern to which funds are provided by the investment company or 5 per centum or more in value of the outstanding stock of such concern. (d) Special rules for applying subsection (c)(6) (1) Lending or finance business defined (A) In general Except as provided in subparagraph (B), for purposes of subsection (c)(6), the term "lending or finance business" means a busi- ness of- (I) making loans, (ii) purchasing or discounting accounts receivable, notes, or installment obliga- tions, (i) rendering services or making facili- ties available in connection with activities described in clauses (I) and (it) carried on by the corporation rendering services or making facilities available, or (iv) rendering services or making facili- ties available to another corporation which is engaged in the lending or finance business (within the meaning of this para- graph), if such services or facilities are re- lated to the lending or finance business (within such meaning) of such other cor- poration and such other corporation and the corporation rendering services or making facilities available are members of the same affiliated group (as defined in section 1504). (B) Exceptions For purposes of subparagraph (A), the term "lending or finance business" does not include the business of- (I) making loans, or purchasing or dis- counting accounts receivable, notes, or in- stallment obligations, if (at the time of the loan, purchase, or discount) the re- maining maturity exceeds 60 months, unless the loans, notes, or installment ob- ligations are evidenced or secured by con- tracts of conditional sale, chattel mort- gages, or chattel lease agreements arising out of the sale of goods or services in the course of the borrower's or transferor's trade or business, or (it) making loans evidenced by, or pur- chasing, certificates of indebtedness issued in a series, under a trust indenture, and in registered form or with interest coupons attached. For purposes of clause (I), the " maining maturity shall be treated as including any period for which there may be a renewal or extension under the terms of an option ex- ercisable by the borrower. (2) Business deductions For purposes of subsection (c)(6)(C), the de- ductions which may be taken into account shall include only- Page 409 § 542