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TITLE 26-INTERNAL REVENUE CODE to make the amounts therein referred to in- cludible under such paragraph as personal holding company income. The requirement in paragraphs (1), (2), (3), and (4) that all convertible securities must be in- cluded if any are to be included shall be subject to the exception that, where some of the out- standing securities are convertible only after a later date than in the case of others, the class having the earlier conversion date may be In- cluded although the others are not included, but no convertible securities shall be included unless all outstanding securities having a prior conversion date are also included. (Aug. 16, 1954, ch. 736, 68A Stat. 188; Apr. 22, 1960, Pub. L. 86-435, § 1(c), (d), 74 Stat. 78; Feb. 26, 1964, Pub. L. 88-272, title II, § 225(k)(3), 78 Stat. 93.) AMENDMEuTS 1964-Pub. L. 88-272 substituted "section 543(a)(')" for "section 543(a)(5)", and "section 543(a)(4)" for "section 543(a)(9)," wherever appearing. 1960-Subsec. (a). Pub. L. 86-435, § 1(c)(1), inserted a reference to section 543(a)(9) in the opening provi- sions. Subsec. (a)(4)(B). Pub. L. 86-435, § l(c)(2). included section 543(a)(9). Subsec. (b). Pub. L. 86-435, § 1(d), added par. (4), and inserted a reference to par. (4) in the last sentence. EFFECTIVE DATE OF 1964 AMENDMENT Amendment by Pub. L. 88-272 applicable to taxable years beginning after Dec. 31, 1963, see section 225(t)(1) of Pub. L. 88-272 set out as an Effective Date of 1964 Amendment note under section 316 of this title. ErnivE DATE OF 1960 AmENoMENr Amendment of subsecs. (a) and (b) of this section by Pub. L. 86-435 applicable only with respect to taxable years beginning after Dec. 31, 1959, see section 2 of Pub. L. 86-435, set out as an Effective Date of 1960 Amendment note under section 543 of this title. CROSS REFEIENcrs Collapsible corporations, see section 341 of this title. Limitations on assessment and collection, see section 6501 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. Returns of officers, directors, and shareholders of foreign personal holding companies, see section 6035 of this title. SEcTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 341, 542, 543, 6035, 6501 of this title. § 545. Undistributed personal holding company income (a) Definition For purposes of this part, the term "undistri- buted personal holding company income" means the taxable income of a personal holding company adjusted in the manner provided in subsections (b), (c), and (d), minus the divi- dends paid deduction as defined in section 561. In the case of a personal holding company which is a foreign corporation, not more than 10 percent in value of the outstanding stock of which is owned (within the meaning of section 958(a)) during the last half of the taxable year by United States persons, the term "undistri- buted personal holding company income" means the amount determined by multiplying the undistributed personal holding company income (determined without regard to this sen- tence) by the percentage in value of its out- standing stock which is the greatest percentage in value of its outstanding stock so owned by United States persons on any one day during such period. (b) Adjustments to taxable income For the purposes of subsection (a), the tax- able income shall be adjusted as follows: (1) Taxes There shall be allowed as a deduction Fed- eral income and excess profits taxes and income, war profits and excess profits taxes of foreign countries and possessions of the United States (to the extent not allowable as a deduction under section 275(a)(4)), accrued during the taxable year or deemed to be paid by a domestic corporation under section 902(a) or 960(a)(1) for the taxable year, but not including the accumulated earnings tax imposed by section 531, the personal holding company tax imposed by section 541, or the taxes imposed by corresponding sections of a prior income tax law. (2) Charitable contributions The deduction for charitable contributions provided under section 170 shall be allowed, but in computing such deduction the limita- tions in section 170(b)(1)(A), (B), and (D) shall apply, and section 170(b)(2) and (d)(1) shall not apply. For purposes of this para- graph, the term "contribution base" when used in section 170(b)(1) means the taxable income computed with the adjustments (other than the 5.percent limitation) pro- vided in section 170(b)(2) and (d)(1) and with- out deduction of the amount disallowed under paragraph (6) of this subsection. (3) Special deductions disallowed The special deductions for corporations pro- vided in part VIII (except section 248) of sub- chapter B (section 241 and following, relating to the deduction for dividends received by corporations, etc.) shall not be allowed. (4) Net operating loss The net operating loss deduction provided in section 172 shall not be allowed, but there shall be allowed as a deduction the amount of the net operating loss (as defined in section 172(c)) for the preceding taxable year com- puted without the deductions provided in part VIII (except section 248) of subchapter B. (5) Net capital gains There shall be allowed as a deduction the net capital gain for the taxable year, minus the taxes imposed by this subtitle attribut- able to such net capital gain. The taxes at- tributable to such net capital gain shall be an amount equal to the difference between- (A) the taxes imposed by this subtitle (except the tax imposed by this part) for such year, and (B) such taxes computed for such year without including such excess in taxable income. § 545 Page 416