### Question
How is the term applicable percentage defined?


### Answer
The term **applicable percentage** is defined in *26 U.S.C. § 447* as the following:

> the percentage equal to a fraction—


(I) the numerator of which is the fair market value of the stock of another corporation held directly or indirectly as of the close of the taxable year by the family corporation, and


(II) the denominator of which is the fair market value of all stock of such corporation as of such time

#### Citation:
  - *26 U.S.C. § 447*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter E-Accounting Periods and Methods of Accounting > PART II-METHODS OF ACCOUNTING > Subpart A-Methods of Accounting in General**

