Rev. Rul. 63-157

In its return for the year 1959, the taxpayer properly claimed the special deduction allowable to a Western Hemisphere trade corporation under section 922 of the Internal Revenue Code of 1954. Its taxable income was first determined without regard to section 922 of the Code, as required by section 922(1) of the Code, and that amount was multiplied by the fraction provided by section 922(2) of the Code to compute the amount of the special deduction.

After incurring a net operating loss in 1962, the taxpayer filed a claim for refund of a portion of the tax for 1959 on the basis of the additional deduction allowable under section 182 of the Code.

Held , the taxable income, for purposes of section 922(1) of the Code, is reduced by the additional deduction allowable under section 172 of the Code. The amount of the special deduction allowable under section 922 is computed by multiplying that reduced amount of taxable income by the fraction provided in section 922(2) of the Code.

Domestic corporation operating in a Western Hemisphere possession of the United States. See Rev. Rul. 63-224, below.