§ 2. Definitions. When used in this part:\n 1. "Corporation" includes a joint-stock company or association and any\nbusiness conducted by a trustee or trustees wherein interest or\nownership is evidenced by certificate or other written instrument;\n 2. "Subsidiary" means a corporation of which over fifty per centum of\nthe number of shares of stock entitling the holders thereof to vote for\nthe election of directors or trustees is owned by the taxpayer;\n 3. "Subsidiary capital" means investments in the stock of subsidiaries\nand any indebtedness from subsidiaries, whether or not evidenced by\nwritten instrument, on which interest is not claimed and deducted by the\nsubsidiary for purposes of taxation under this part or part three of\nthis title, provided, however, that, in the discretion of the director\nof finance, there shall be deducted from subsidiary capital any\nliabilities payable by their terms on demand or within one year from the\ndate incurred, other than loans or advances outstanding for more than a\nyear as of any date during the year covered by the report, which are\nattributable to subsidiary capital;\n 4. "Investment capital" means investments in stocks, bonds and other\nsecurities, corporate and governmental, not held for sale to customers\nin the regular course of business, exclusive of subsidiary capital and\nstock issued by the taxpayer, provided, however, that, in the discretion\nof the director of finance there shall be deducted from investment\ncapital any liabilities payable by their terms on demand or within one\nyear from the date incurred, other than loans or advances outstanding\nfor more than a year as of any date during the year covered by the\nreport, which are attributable to investment capital;\n 5. "Investment income" means income, including capital gains in excess\nof capital losses, from investment capital, to the extent included in\ncomputing entire net income, less, (a) in the discretion of the director\nof finance, any deductions allowable in computing entire net income\nwhich are attributable to investment capital or investment income, and\n(b) such portion of any net operating loss deduction allowable in\ncomputing entire net income, as the investment income, before such\ndeduction, bears to entire net income, before such deduction, provided,\nhowever, that in no case shall investment income exceed entire net\nincome;\n 6. "Business capital" means all assets, other than subsidiary capital,\ninvestment capital and stock issued by the taxpayer, less liabilities\nnot deducted from subsidiary or investment capital which are payable by\ntheir terms on demand or within one year from the date incurred, other\nthan loans or advances outstanding for more than a year as of any date\nduring the year covered by the report, except that, subject to the\nprovisions of subdivision six of section four of this part, cash on hand\nand on deposit shall be treated as investment capital or as business\ncapital as the taxpayer may elect;\n 7. "Business income" means entire net income minus investment income;\n 8. "Entire net income" means total net income from all sources which\nshall be the same as the taxpayer's entire federal taxable income\ncomputed without regard to any election under subchapter s of chapter\none of the internal revenue code, except as hereinafter provided, and\nsubject to any modification required by paragraph (d) of subdivision\nthree of section four of this part.\n (a) Entire net income shall not include:\n (1) income, gains and losses from subsidiary capital which do not\ninclude the amount of a recovery in respect of any war loss;\n (2) fifty per centum of dividends other than from subsidiaries;\n (3) bona fide gifts;\n (4) income and deductions with respect to amounts received from school\ndistricts and from corporations and associations, organized and operated\nexclusively for religious, charitable or educational purposes, no part\nof the net earnings of which inures
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