Page:United States Statutes at Large Volume 53 Part 1.djvu/24

This page needs to be proofread.


CODIFICATION OF INTERNAL REVENUE LAWS in the principal business of the taxpayer, unless with the approval of the Commissioner change to a different method is authorized, and then upon such terms and conditions and in accordance with such regulations as the Commissioner, with the approval of the Secretary, may prescribe. (e) DISTRIBUTIONS BY CORPORATIONS. -Distributions by corpora- tions shall be taxable to the shareholders as provided in section 115. (f) DETERMINATION OF GAIN OR Loss.- In the case of a sale or other disposition of property, the gain or loss shall be computed as provided in section 111. (g) GROSS INCOME FROM SOURCES WITHIN AND WITHOUT UNITED STATES.- For computation of gross income from sources within and without the United States, see section 119. (h) FOREIGN PERSONAL HOLDING COMPANIES.- For provisions relating to gross income of foreign personal holding companies and of their shareholders, see section 334. (i) CONSENT DIVIDENDS.- For inclusion in gross income of amounts specified in shareholders' consents, see section 28. (j) INCOME FROM MORTGAGES MADE OR OBLIGATIONS ISSUED BY JOINT STOCK LAND BANKS. - For taxable status of income derived from mortgages made or obligations issued by Joint stock land banks, see section 3799. SEC. 23. DEDUCTIONS FROM GROSS INCOME. In computing net income there shall be allowed as deductions: (a) EXPENSES.- (1) IN GENERAL.-A ll the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or busi- ness, including a reasonable allowance for salaries or other com- pensation for personal services actually rendered; traveling ex- penses (including the entire amount expended for meals and lodg- ing) while away from home in the pursuit of a trade or business; and rentals or other payments required to be made as a condition to the continued use or possession, for purposes of the trade or business, of property to which the taxpayer has not taken or is not taking title or in which he has no equity. (2) CORPORATE CHARITABLE CONTRIBUTIO)NS.-No deduction shall be allowable under paragraph (1) to a corporation for any con- tribution or gift which would be allowable as a deduction under subsection (q) were it not for the 5 per centum limitation therein contained and for the requirement therein that payment must be made within the taxable year. (b) INTEREST. -A l l interest paid or accrued within the taxable year on indebtedness, except on indebtedness incurred or continued to purchase or carry obligations (other than obligations of the United States issued after September 24, 1917, and originally sub- scribed for by the taxpayer) the interest upon which is wholly exempt from the taxes imposed by this chapter. (c) TAXES GENERALLY.- Taxes paid or accrued within the taxable year, except- (1) Federal income, war-profits, and excess-profits taxes (other than the excess-profits tax imposed by section 106 of the Revenue Act of 1935, 49 Stat. 1019, or by section 600 of this title); (2) income, war-profits, and excess-profits taxes imposed by the authority of any foreign country or possession of the United States; but this deduction shall be allowed in the case of a tax- payer who does not signify in his return his desire to have to any extent the benefits of section 131 (relating to credit for taxes of foreign countries and possessions of the United States); (3) estate, inheritance, legacy, succession, and gift taxes; and (4) taxes assessed against local benefits of a kind tending to increase the value of the property assessed; but this paragraph 12