[Code of Federal Regulations]
[Title 26, Volume 13]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR]

[Page 614-615]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
Procedure and Administration--Table of Contents
 
Sec.  1.9001-4  Adjustments required in computing excess-profits credit.

    (a) In general. Subsection (f) of the Act provides adjustments 
required to be made in computing the excess-profits credit for any 
taxable year under the Excess Profits Tax Act of 1940 (54 Stat. 975) or 
under the Excess Profits Tax Act of 1950 (64 Stat. 1137). These 
adjustments are set forth in paragraphs (b) and (c) of this section, and 
they shall apply notwithstanding the terms-letter.
    (b) Equity invested capital. (1) Pursuant to subsection (f)(1) of 
the Act, in determining equity invested capital for any day of any 
taxable year under section 458 (relating to the Excess Profits Tax Act 
of 1950) or section 718 (relating to the Excess Profits Tax Act of 1940) 
of the Internal Revenue Code of 1939, the accumulated earnings and 
profits as of the changeover date, and as of the beginning of each 
taxable year thereafter, shall be reduced by the depreciation sustained 
before March 1, 1913, on all retirement-straight line property held on 
March 1, 1913, by the taxpayer or a predecessor for which cost was or is 
claimed as basis and which was held on the changeover date by the 
taxpayer or a predecessor.

[[Page 615]]

    (2) For the computation of accumulated earnings and profits in 
determining equity invested capital, see 26 CFR (1941 Supp.) 30.718-2, 
as amended by Treasury Decision 5299, approved October 1, 1943, 8 FR 
13451, C.B. 1943, 747 (Regulations 109); 26 CFR (1943 Cum. Supp.) 
35.718-2 (Regulations 112); and 26 CFR (1939) 41.458-4 (Regulations 
130).

    (c) Equity capital. (1) Pursuant to subsection (f)(2) of the Act, in 
determining the adjusted basis of assets for the purpose of computing 
equity capital for any day under section 437(c) (relating to the Excess 
Profits Tax Act of 1950) of the Internal Revenue Code of 1939, the basis 
of the assets which enter into the computation shall also be reduced by:

    (i) Depreciation sustained before March 1, 1913, on all retirement-
straight line property held on March 1, 1913, by the taxpayer or a 
predecessor for which cost was or is claimed as basis and which was:

    (a) Retired before the changeover date by the taxpayer or a 
predecessor, or

    (b) Held on the changeover date by the taxpayer or a predecessor and 
also held as of the beginning of the day for which the equity capital is 
being determined; and

    (ii) All depreciation applicable to the assets which enter into the 
computation and allowable under the terms-letter for all periods on and 
after the changeover date and before the taxable year for which the 
excess-profits credit is being computed.

    (2) The adjustment required to be made by subparagraph (1)(i)(a) of 
this paragraph as of the beginning of the day for which the equity 
capital is being determined shall be made in accordance with the 
conditions and limitation described in paragraph (b)(2) of Sec.  1.9001-
2.

    (3) For the determination of equity capital under section 437(c) of 
the Internal Revenue Code of 1939, see 26 CFR (1939) 40.437-5 
(Regulations 130).

              DEALER RESERVE INCOME ADJUSTMENT ACT OF 1960