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TITLE 26-INTERNAL REVENUE CODE (i) without regard to copyright royal- ties, other than royalties received for the use of, or right to use, copyrights or inter- ests in copyrights in works created in whole, or in part, by any shareholder owning more than 10 percent of the total outstanding capital stock of the corpora- tion, (ii) without regard to dividends from any corporation in which the taxpayer owns at least 50 percent of all classes of stock entitled to vote and at least 50 per- cent of the total value of all classes of stock and which corporation meets the re- quirements of this subparagraph and sub- paragraphs (A) and (C), and (iii) by including as personal holding company income the adjusted income from rents and the adjusted income from mineral, oil, and gas royalties, is not more than 10 percent of the ordinary gross income, and (C) the sum of the deductions which are properly allocable to such royalties and which are allowable under section 162, other than- (I) deductions for compensation for per. sonal services rendered by the sharehold- ers, (ii) deductions for royalties paid or ac- crued, and (iii) deductions which are specifically al- lowable under sections other than section 162, equals or exceeds 25 percent of the amount by which the ordinary gross income exceeds the sum of the royalties paid or accrued and the amounts allowable as deductions under section 167 (relating to depreciation) with respect to copyright royalties. For purposes of this subsection, the term "copyright royalties" means compensation, however designated, for the use of, or the right to use, copyrights in works protected by copyright issued under title 17 of the United States Code (other than by reason of section 2 or 6 thereof) and to which copyright protec- tion is also extended by the laws of any coun- try other than the United States of America by virtue of any international treaty, conven- tion, or agreement, or interests in any such copyrighted works, and includes payments from any person for performing rights in any such copyrighted work and payments (other than produced fiL, rents as defined in para- graph (5)(B)) received for the use of, or right to use, films. For purposes of this paragraph, the term "shareholder" shall include any person who owns stock within the meaning of section 544. () Produced film rents (A) Produced film rents; except that such rents shall not be included if such rents constitute 50 percent or more of the ordi- nary gross income. (B) For purposes of this section, the term "produced film rents" means payments re- ceived with respect to an interest in a film for the use of, or right to use, such film, but only to the extent that such interest was ac- quired before substantial completion of pro- duction of such film. In the case of a pro- ducer who actively particpates in the pro- duction of the film, such term includes an interest in the proceeds or profits from the film, but only to the extent such interest is attributable to such active participation. (6) Use of corporate property by shareholder (A) Amounts received as compensation (however designated and from whomever received) for the use of, or the right to use, tangible property of the corporation in any case where, at any time during the taxable year, 25 percent or more in value of the out- standing stock of the corporation is owned, directly or indirectly, by or for an individual entitled to the use of the property (whether such right is obtained directly from the cor- poration or by means of a sublease or other arrangement). (B) Subparagraph (A) shall apply only to a corporation which has personal holding company income in excess of 10 percent of its ordinary gross income. (C) For purposes of the limitation in sub- paragraph (B), personal holding company income shall be computed- (i) without regard to subparagraph (A) or paragraph (2), (ii) by excluding amounts received as compensation for the use of (or right to use) intangible property (other than min- eral, oil, or gas royalties or copyright roy- alties) if a substantial part of the tangible property used in connection with such in- tangible property is owned by the corpo- ration and all such tangible and Intangi- ble property is used in the active conduct of a trade or business by an Individual or individuals described in subparagraph (A), and (iii) by including copyright royalties and adjusted income from mineral, oil, and gas royalties. (7 Personal service contracts (A) Amounts received under a contract under which the corporation is to furnish personal services; if some person other than the corporation has the right to designate (by name or by description) the individual who is to perform the services, or if the in- dividual who is to perform the services is designated (by name or by description) in the contract; and (B) amounts received from the sale or other disposition of such a contract. This paragraph shall apply with respect to amounts received for services under a particu- lar contract only if at some time during the taxable year 25 percent or more in value of the outstanding stock of the corporation is owned, directly or indirectly, by or for the in- dividual who has performed, is to perform, or may be designated (by name or by descrip- tion) as the one to perform, such services. (8) Estates and trusts Amounts includible in computing the tax- able income of the corporation under pai t I of subchapter J (sec. 641 and following, relat- ing to estates, trusts, and beneficiaries). Page 412