Page:United States Statutes at Large Volume 42 Part 1.djvu/259

SIXTY-SEVENTH CONGRESS. Sess. I. Ch. 136. 1921. 231 and if in) egcs? of such liasis, shalgl be tgxpble to the extent of the H xxi: "·¤i;uu excess; u w en proper y is exc anve or ro ert s eciiied in I ° 8{$s_ at paragpaphs (1), (2), and (3) of subdivisiiin (c) aslfecifived inpexchange, P Opmy me ed toc>·et er with mone or other property of a readily realizable market value other than that s ecified in such paragraphs, the money or the fair market value ofp such other property received in exchange shall be applied against and reduce the basis, provided in this section, of the property exchanged, and if in excess of such basis, shall be taxable to the extent of the excess. (f) Nothing in this section shall be construed to prevent (in the Tax on i¤S¢8l1m¤¤t case of property sold under contract providing for ayment in paym°°tS' installments) the taxation of that portion of an installment pay- ment representing gain or profit in the year in which such payment is received. rNvnN·roR1ns. I¤v¤¤¢¤ri¤s Sec. 203. That whenever in the opinion of the Commissioner the . Usa ¤!.i¤ ·i¤¢¤¤¤i¤- use of inventories is necessary in order clearly to determine the mgm°°m°s' income of any taxpayer, inventories shall be taken by such tax ayer upon such basis as the Commissioner, with the approval ol the Secretary, may prescribe as conforming as nearly as may be to the_ best accounting practice in the trade or business and as most clearly reflecting the income. NET LOSSES. Netlosses. Sec. 204. (a) That as used in this section the term "net loss" I¤¤’·=g¤1¤* b¤¤i¤¤*S· means only net losses resulting from the operation of an trade or business regularly carried on by the taxpayer (including losses sustained from the sale or other disposition of real estate, machinery, and other ca ital assets, used in the conduct of such trade or business); and wllien so resulting means the excess of the deductions mlggumw °* d¤*·¤*· allowed by section 214 or 234, as the case may be, over the sum of PcsE'pp.239,254. the following: (1) the gross income of the taxpayer for the taxable year, (2) the amount by which the interest received free from taxation under this title exceeds so much of the interest paid or accrued within the taxable year on indebtedness as is not permitted to be deducted by paragraph (2) of subdivision (a) of section 214 or by paragra h (2) of subdivision (a) of section 234, (3) the amount by which the deductible losses not sustained in such trade or business exceed the taxable gains or profits not derived from such trade or business, (4) amounts received as dividends and allowed as a deduction under aragraph (6) of subdivision (a) of section 234, and (5) so much ofp the de letion deduction allowed with respect to any mine, oil or gas wellpas is based upon discovery value in lieu of cost. (b) lf for any taxable year beginning after December 31, 1920, it d,f·c§e°(;'§:)°;*guQge§&f appears upon the production of evidence satisfactory to the Com- ingtaxable yam. missioner that any tax ayer has sustained a net loss, the amount tlwr.>of shall be deducted from the net income of the taxpayer for the succwmling taxable year; and if such net loss is in excess of the net income for such succeeding taxable year, the amount of such excess shall be allowed as a deduction in computingthe net income for the next succeeding taxable year; the deduction in all cases to be made under regulations prescribed by the Commissioner with the approval of the Secretary. _ _ (c) The benefit of this section shall be allowed to the members of °rP €hc§¤*é*B: apartnership and the beneficiaries of an estate or trust, and to msur- :;l9(;;!I:g C0 compaance companies subject_to the tax imposed by section 243 or 246, ‘ under regulations prescribed by the Commissioner with the approval ,.0,,, W ,5,,,61 of the Secret . ' (d) If it asplgizars, upon the production of evidence satisfactory ,,,§,°,,,"§'§‘,§§°m'°{'¤l°€“l the Commissioner, that a taxpayer having a fiscal year begmmng m