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TITLE 26-INTERNAL REVENUE CODE (A) deductions which are allowable only by reason of section 162 or section 404, except there shall not be included any such deduction in respect of compensation for personal services rendered by shareholders (including members of the shareholder's family as described in section 544(a)(2)), and (B) deductions allowable under section 167, and deductions allowable under section 164 for real property taxes, but in either case only to the extent that the property with respect to which such deductions are allowable Is used directly in the active and regular conduct of the lending or finance business. (3) Income received from certain affiliated corpora. tions For purposes of subsection (c)(6)(B), in the case of a lending or finance company which meets the requirements of subsection (c)(6)(A), there shall not be treated as person- al holding company income the lawful income received from a corporation which meets the requirements of subsection (c)(6) and which is a member of the same affiliated group (as de- fined in section 1504) of which such company is a member. (Aug. 16, 1954, ch. 736, 68A Stat. 182; Aug. 12, 1955, ch. 871, § 3, 69 Stat. 718; Sept. 23, 1959, Pub. L. 86-376, § 3(a), 73 Stat. 700; Oct. 9, 1962. Pub. L. 87-768, § 1, 76 Stat. 766; Feb. 26, 1964, Pub. L. 88-272, title II, § 225(b), (c), (k)(1), 78 Stat. 79, 80, 93; Nov. 13, 1966, Pub. L. 89-809, title I, § 104(h)(1), 80 Stat. 1559; Dec. 30, 1969, Pub. L. 91-172, title I, § 101(J)(16), 83 Stat. 528; Oct. 26, 1974, Pub. L. 93-480, § 3(a), 88 Stat. 1454; Oct. 4, 1976, Pub. L. 94-455, title XIX, § 1901(a)(76), 90 Stat. 1777.) Ranazxcxs IN TEXT The Small Business Investment Act of 1958, referred to in subsec. (c)(8), is Pub. L. 85-699, Aug. 21, 1958, 72 Stat. 689, as amended, which is classified principally to chapter 14B (§ 661 et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to this Code, see Short Title note set out under section 661 of Title 15 and Tables volume. That Act, referred to in subsec. (c)(8), refers to the Small Business Investment Act of 1958. AMENDMENTS 1978-Subsec. (a)(2). Pub. L. 94-455, § 1901(a)(76)(A), struck out "The preceding sentence shall not apply in the case of an organization or trust organized or cre- ated before July 1, 1950, if at all thes on or after July 1, 1950, and before the close of the taxable year such organization or trust has owned all of the common stock and at least 80 percent of the total number of shares of all other classes of stock of the corporation" following "considered an individual". Subsec. (b)(2). Pub. L. 94-455, § 1901(a)(76)(B), struck out "other than an affiliated group of railroad corporations the common parent of which would be eligible to file a consolidated return under section 141 of the Internal Revenue Act of 1942" following "group of corporations". Subsec. (c)(2). Pub. L. 94-455, § 1901(a)(76)(C), struck out "without regard to subparagraphs (D) and CE) thereof" following "meaning of section 7701(a)(19)". Subsec. (c)(8). Pub. L. 94-455, § 1901(a)(76,D), added "(15 U.S.C. 661 and following)" after "Small Business Investment Act of 1958". 1974-Subsec. (b)(5). Pub. L. 93-480 added subsec. (b)(5). 1969-Subsec. (a)(2). Pub. L. 91-172 substituted "3ec- tion 401(a), 501(c)(17), or 509(a)" for "section 503(b)" in the list of sections that contain the description of organizations that may be considered as individuals for the purpose of establishing stock ownership, and struck out provisions which would have kept an orga- nization or trust created before July 1, 1950, from being so designated if it had been denied exemption under section 504 or an unlimited charitable deduction under section 681(c) of this title. 1966-Subsec. (c)(7). Pub. L. 89-809 substituted re- quirement that the foreign corporation be other than a corporation which has income to which section 543(a)(7) applies for the taxable y'ar for requirement that the foreign corporation's gross income from sources within the United States for the period speci- fied in section 861(a)(2)(B) be less than 50 percent of its total gross income from all sources, and expanded the devices included in methods of indirect ownership to encompass foreign estates, foreign trusts, and for- eign partnerships. 1964-Subsec. (a)(1). Pub. L. 88-272, § 225(b), substi- tuted "60 percent of its adjusted ordinary gross income (as defined in section 543(b)(2)) for the taxable year is personal holding company income (as defined in section 543(a))" for "80 percent of Its gross income for the taxable year is personal holding company income as defined in section 543". Subsec. (b). Pub. L. 88-272, § 225(k)(1), substituted "adjusted ordinary gross income" for "gross income", wherever appearing. Subsec. (c)(2), (6) to (11). Pub. L. 88-272, § 225(c)(1), (2), inserted among the exceptions, domestic building and loan associations within section 7701(a)(19) with. out regard to subpars. (D) and CE) thereof, added par. (6), redesignated former pars. (10) and (11) as (7) and (8), respectively, and omitted former pars. (6) to (9) which related to licensed personal finance companies, lending companies, loan or investment corporations, and finance companies, respectively. Subsec. d). Pub. L. 88-272, 3 225(c)(3), added subsec. d). 1962-Subsec. (c)(7). Pub. L. 87-768 substituted "au- thorized to engage in and actively and regularly en- gaged in the small loan business (consumer finance business)" for "authorized to engage in the small loan business", inserted provisions excepting from the defi. nition of "personal holding company" a lending com- pany that received 80 percent or more of its gross income from lawful income from domestic subsidiary corporations (of which stock possessing at least 80 per. cent of the voting power of all classes of stock and of which at least 80 percent of each class of the nonvot- ing stock is owned directly by such lending company), which are themselves excepted under pars. (6), (7), (8), or (9) of this subsection, increased the maximum amount of the loan where no limit is prescribed from $500 to $1,500, and eliminated provisions which re- quired loans to mature in not more than 38 months, and which limited interest, discount and other charges to not more than an amount equal to simple interest at 3 percent per month payable in advance and com- puted only on unpaid balances. 1959-Subsee. (c)(11). Pub. L. 86-376 added subsec. (c)(11). 1955--Subsec. (a)(2). Act Aug, 12, 1955, §3, added sentence at the end to except from consideration as "individuals" certain charitable foundations created before July 1, 1950. EFOTVE DATm or 1976 A MENzrT Amendment of subsecs. (a)(2), (b)(2), (c)(2), (8) by section 1901(a)(76)CA)-(D) of Pub. L. 94-455 applicable 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 sec- tion 2 of this title. Page 410