CODIFICATION OF INTERNAL REVENUE LAWS lation; to an amount which does not exceed 5 per centum of the tax- payer's net income as computed without the benefit of this subsection. Such contributions or gifts shall be allowable as deductions only if verified under rules and regulations prescribed by the Commissioner, with the approval of the Secretary. (r) DIVIDENDS PAID BY BANKING CORPORATIONS.- For deduction of dividends paid by certain banking corporations, see section 121. SEC. 24 . ITEMS NOT DEDUCTIBLE. (a) GENERAL RuLE. - In computing net income no deduction shall in any case be allowed in respect of- (1) Personal, living, or family expenses; (2) Any amount paid out for new buildings or for perma- nent improvements or betterments made to increase the value of any property or estate; (3) Any amount expended in restoring property or in mak- ing good the exhaustion thereof for which an allowance is or has been made; (4) Premiums paid on any life insurance policy covering the life of any officer or employee, or of any person financially interested in any trade or business carried on by the taxpayer, when the taxpayer is directly or indirectly a beneficiary under such policy; or (5) Any amount otherwise allowable as a deduction which is allocable to one or more classes of income other than interest (whether or not any amount of income of that class or classes is received or accrued) wholly exempt from the taxes imposed by this chapter. (b) LossES FROM SALES OR EXCHANGES OF PROPERTY.- (1) LOSSES DISALLOWED.- In computing net income no deduc- tion shall in any case be allowed in respect of losses from sales or exchanges of property, directly or indirectly- (A) Between members of a family, as defined in paragraph (2) (D); (B) Except in the case of distributions in liquidation, between an individual and a corporation more than 50 per centum in value of the outstanding stock of which is owned, directly or indirectly, by or for such individual; (C) Except in the case of distributions in liquidation, between two corporations more than 50 per centum in value of the out- standing stock of each of which is owned, directly or indirectly, by or for the same individual, if either one of such corporations, with respect to the taxable year of the corporation preceding the date of the sale or exchange was, under the law applicable to such taxable year, a personal holding company or a foreign personal holding company; (D Between a grantor and a fiduciary of any trust; (E Between the fiduciary of a trust and the fiduciary of another trust, if the same person is a grantor with respect to each trust; or (F) Between a fiduciary of a trust and a beneficiary of such trust. (2) STOCK OWNERSHIP, FAMILY, AND PARTNERSHIP RULE.-For the purposes of determining, in applying paragraph (1), the ownership of stock- (A) Stock owned, directly or indirectly, by or for a corpora- tion, partnership, estate, or trust, shall be considered as being owned proportionately by or for its shareholders, partners, or beneficiaries; (B) An individual shall be considered as owning the stock owned, directly or indirectly, by or for his family;
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