Page 411

TITLE 26-INTERNAL REVENUE CODE EFFECTIVE DATE OF 1974 AMENDMENT Section 3(b) of Pub. L. 93-480 provided that: "The amendment made by this section [adding subsec. (b)(5) of this section] shall apply to taxable years be- ginning after December 31, 1973." EFFECTIVE DATE OF 1969 AMENDMENT Amendment by section 101(j)(16) of Pub. L. 91-172 applicable to taxable years beginning after Dec. 31, 1969, see section 101(k)(2)(B) of Pub. L. 91-172, set out as an Effective Date of 1969 Amendment note under section 4940 of this title. EFFECTIVE DATE OF 1966 AMENDMENT Amendment by Pub. L. 89-809 with respect to tax- able years beginning after Dec. 31, 1966, see section 104(n) of Pub. L. 89-809, set out as an Effective Date of 1966 Amendment note under section 11 of this title. EFFECTIVE DATE OF 1964 AMENDMENT Amendment of subsecs. (a)(1), (b), (c)(6)-(8), and (d) by Pub. L. 88-272 applicable to taxable years begin- ning after Dec. 31, 1963, and amendment of subsec. (c)(2) by Pub. L. 88-272 applicable to taxable years be- ginning after Oct. 16, 1962, see section 225(1) of Pub. L. 88-272, set out as an Effective Date of 1964 Amend- ment note under section 316 of this title. EFFEcTIvE DATE OF 1962 AMENDMENT Section 2 of Pub. L. 87-768 provided that: "The amendment made by the first section of this Act [to subsec. (c)(7) of this section] shall apply with respect to taxable years beginning after December 31, 1961." EFFECTIVE DATE OF 1959 AMENDMENT Section 3(b) of Pub. L. 86-376 provided that: "The amendment made by this section [adding subsec. (c)(11) of this section] shall apply to taxable years be- ginning after December 31, 1958." EFFECTIVE DATE OF 1955 AMENDMENT Section 4 of act Aug. 12, 1955, provided that: "The amendment made by section 3 of this Act [to subsec- tion (a)(2)of this section] shall apply only with respect to taxable years beginning after December 31, 1954." CROSS REFERENCES Accumulated earnings tax as inapplicable to person- al holding company defined in this section, see section 532 of this title. Liquidations before Jan. 1. 1966, see section 225(h) of Pub. L. 88-272, set out as a note under section 333 of this title. Personal holding company dividend defined, see sec- tion 316 of this title. Regulated investment company as meaning any do- mestic corporation other than a personal holding com- pany as defined in this section, see section 851 of this title. Rules for determining stock ownership, see section 544 of this title. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 58, 280, 316, 465, 532, 541, 544, 545, 562, 851, 856, 864, 992, 1504 of this title. § 543. Personal holding company income (a) General rule For purposes of this subtitle, the term "per- sonal holding company income" means the por- tion of the adjusted ordinary gross income which consists of: (1) Dividends, etc. Dividends, Interest, royalties (other than mineral, oil, or gas royalties or copyright roy- alties), and annuities. This paragraph shall not apply to- (A) interest constituting rent (as defined in subsection (b)(3)), and (B) Interest on amounts set aside in a re- serve fund under section 511 or 607 of the Merchant Marine Act, 1936 (46 U.S.C. 1161 or 1177). (2) Rents The adjusted income from rents; except that such adjusted income shall not be In- cluded if- (A) such adjusted income constitutes 50 percent or more of the adjusted ordinary gross income, and (B) the sum of- (I) the dividends paid during the taxable year (determined under section 562), (ii) the dividends considered as paid on the last day of the taxable year under sec- tion 563(c) (as limited by the second sen- tence of section 563(b)), and (ili) the consent dividends for the tax- able year (determined under section 565), equals or exceeds the amount, if any, by which the personal holding company income for the taxable year (computed without regard to this paragraph and paragraph (6), and computed by Including as personal hold- ing company Income copyright royalties and the adjusted income from mineral, oil, and gas royalties) exceeds 10 percent of the ordi- nary gross Income. (3) Mineral, olland gas royalties The adjusted income from mineral, oil, and gas royalties; except that such adjusted income shall not be included if- (A) such adjusted income constitutes 50 percent or more of the adjusted ordinary gross Income, (B) the personal holding company income for the taxable year (computed without regard to this paragraph, and computed by including as personal holding company income copyright royalties and the adjusted income from rents) is not more than 10 per- cent of the ordinary gross Income, and (C) the sum of the deductions which are allowable under section 162 (relating to trade or business expenses) other than- (I) deductions for compensation for per- sonal services rendered by the sharehold- ers, and (ii) deductions which are specifically al- lowable under sections other than section 162, equals or exceeds 15 percent of the adjusted ordinary gross Income. (4) Copyright royalties Copyright royalties; except that copyright royalties shall not be included if- (A) such royalties (exclusive of royalties received for the use of, or right to use, copy- rights or interests in copyrights on works created In whole, or in part, by any share- holder) constitute 50 percent or more of the ordinary gross Income, (B) the personal holding company income for the taxable year computed- § 543 Page 411