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TITLE 26-INTERNAL REVENUE CODE (2) Stock and securities transactions Except in the case of regular dealers in stock or securities, gains from the sale or ex- change of stock or securities. (3) Commodities transactions Gains from futures trsnsactions in any commodity on or subject to the rules of a board of trade or commodity exchange. This paragraph shall not apply to gains by a pro- ducer, processor, merchant, or handler of the commodity which arise out of bona fide hedg- ing transactions reasonably necessary to the conduct of its business in the manner in which such business is customarily and usual- ly conducted by others. (4) Estates and trusts Amounts includible in computing the tax- able income of the corporation under part I of subchapter J (see. 641 and following, relat- ing to estatcs, trusts, and beneficiaries); and gains from the sale or other disposition of any interest in an estate or trust. (5) 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 vwae 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. (6) Use of corporation property by shareholder Amounts received as compensation (howev- er designated and from whomsoever received) for the use of, or right to use, property of the corporation in any case where, at any time during the taxable year, 25 percent or more in value of the outstanding stock of the cor- poration is owned, directly or indirectly, by or for an individual entitled to the use of the property; whether such right is obtained di- rectly from the corporation or by means of a sublease or other arrangement. This para- graph shall apply only to a corporation which has foreign personal holding company income for the taxable year, computed without regard to this paragraph and paragraph (7), in excess of 10 percent of its gross income. (7) Rents Rents, unless constituting 50 percent or more of the gross income. For purposes of this paragraph, the term "rents" means com- pensation, however designated, for the use of, or right to use, property, but does not include amounts constituting foreign personal hold- ing company income under paragraph (6). (b) Limitation on gross income in certain transac- tions For purposes of this part- (1) gross income and foreign personal hold- ing company income determined with respect to transactions described in subsection (a)(2) (relating to gains from stock and security transactions) shall include only the excess of gains over losses from such transactions, and (2) gross income and foreign personal hold- ing company income determined with respect to transactions described in subsection (a)(3) (relating to gairs from commodity transac- tions) shall include only the excess of gains over losses from such transactions. (Aug. 16, 1954, ch. 736, 68A Stat. 195; Apr. 22, 1960, Pub. L. 86- 135, § 1(e), 74 Stat. 78; Feb. 26, 1964, Pub. L. 88-272, title II, § 225(e), 78 Stat. 85; Oct. 4, 1976, Pub. L. 94-455, title XIX, § 1901(b)(32)(F), 90 Stat. 1800.) AMENDMENTS 1976-Subsec. (a)(1). Pub. L. 94-455 struck out provi- sions relating to dividend distribution of divested stock following "royalties, and annuities". 1964-Subsec. (a). Pub. L. 88-272 designated existing provisions as subsec. (a), and substituted pars. (1) to (7) for "personal holding company income, as defined in section 543, except that all interest, whether or not treated as rent, and all royalties, whether or not min- eral, oil, or gas royalties or copyright royalties, shall constitute "foreign personal holding company income". Subsec. (b). Pub. L. 88-272 added subsec. (b). 1960-Pub. L. 86-435 included copyright royalties within foreign personal holding company income. EFFECTIVE DATE OF 1976 AM.NDMENT Amendment by Pub. L. 94-455 applicable with re- spect to taxable years beginning after Dec. 31, 1976, see section 1901(d) of Pub. L. 94-455, set out as an Ef- fective Date of 1976 Amendment note under section 2 of this title. 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. EFFECTIVE DATE OF 1960 AMENDMENT Amendment 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 REFERENCES 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. SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 552, 554, 954 of this title. § 554. Stock ownership (a) Constructive ownership For purposes of determining whether a corpo- ration is a foreign personal holding company, insofar as such determination is based on stock ownership under section 552(a)(2), section 553(a)(0), or section 553(a)(6)- Page 423 § 554