OPINION.
Petitioner, the sole stockholder of two corporations which are concededly personal holding companies within the meaning of section 351 of the Revenue Act of 1934,1 in order to obtain for these corporations the benefit of the remission of tax provided by subdivision (d) of that section, returned as his income what purported to be the entire “adjusted net income” of the respective corporations for the year 1934. The dispute here is whether in fact he did so, the item giving rise to that dispute being the amount of Federal income and excess profits tax due from the corporations for the year 1934 and *657paid in 1985. That is the only issue, the sole error alleged in the petition being respondent’s “Failure to recognize in computing the undistributed adjusted net income under Section 351 (b) (2) of the Revenue Act of 1934 of * * * both personal holding companies * * * the federal income taxes for the year 1934 * * The parties have stipulated that “The only issue in this case is the determination of ‘adjusted net income’ as defined in Section 351” and that “if the Board should sustain the determination of the respondent, there is a deficiency in income tax of $668.53 to be paid by petitioner, plus interest thereon as provided by law.”
Respondent contends that the corporations, being on the cash basis, may not deduct from their net income the amount of Federal taxes paid in the following year. This contention seems to us to be sustained by the plain language of the statute. Subsection (b) (4) of section 351 provides “The terms used in this section shall have the same meaning as when used in Title I.” Section 48 of Title I provides “ (c) * * * The terms * * * ‘paid or accrued’ shall be construed according to the method of accounting upon the basis of which the net income is computed under this Part.” For the purposes of section 351 the “adjusted net income” of the corporation, which petitioner must treat as his to conform with the provisions of subdivision (d), is defined to mean the net income minus Federal income, war profits and excess profits taxes “paid or accrued.” Applying to this term the definition contained in section 48, it is evident *658that where a corporation computes its net income on the cash basis, as these corporations did, only taxes actually paid may be deducted in computing the adjusted net income. Respondent’s determination is therefore sustained and the deficiency may be determined in accordance with the stipulation of the parties.
Decision will be entered for the respondent.