CH. 1—NORMAL TAXES AND SURTAXES
77
SEC. 263. CAPITAL EXPENDITURES. (a) GENERAL RULE. — N o deduction shall be allowed for—
(1) Any amount paid out for new buildings or for permanent improvements or betterments made to increase the value of any property or estate. This paragraph shall not apply to— (A) expenditures for the development of mines or deposits deductible under section 616, (B) research and experimental expenditures deductible under section 174, or (C) soil and water conservation expenditures deductible under section 175. (2) Any amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made. (b) EXPENDITURES FOR ADVERTISING AND GOOD W I L L. — I f a corporation has, for the purpose of computing its excess profits tax credit under chapter 2E or subchapter D of chapter 1 of the Internal Revenue Code of 1939 claimed the benefits of the election provided in section 733 or section 451 of such code, as the case may be, no deduction shall be allowable under section 162 to such corporation for expenditures for advertising or the promotion of good will which, under the rules and regulations prescribed under section 733 or section 451 of such code, as the case may be, may be regarded as capital investments. (c) INTANGIBLE DRILLING AND DEVELOPMENT COSTS IN THE C A S E
OF O I L AND G A S WELLS.—Notwithstanding subsection (a), regulations shall be prescribed by the Secretary or his delegate under this subtitle corresponding to the regulations which granted the option to deduct as expenses intangible drilling and development costs in the case of oil and gas wells and which were recognized and approved by the Congress in House Concurrent Resolution 50, Seventy-ninth Congress. SEC. 264. CERTAIN AMOUNTS PAID IN CONNECTION WITH INSURANCE CONTRACTS. (a) GENERAL RULE. — N o deduction shall be allowed for—
(1) 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. (2) Any amount paid or accrued on indebtedness incurred or continued to purchase or carry a single premium life insurance, endowment, or annuity contract. Paragraph (2) shall apply in respect of annuity contracts only as to contracts purchased after March 1, 1954. (b) CONTRACTS TREATED AS SINGLE PREMIUM CONTRACTS.—For
purposes of subsection (a)(2), a contract shall be treated as a single premium contract— (1) if substantially all the premiums on the contract are paid within a period of 4 years from the date on which the contract is purchased, or (2) if an amount is deposited after March 1, 1954, with the insurer for payment of a substantial number of future premiums on the contract. § 264(b)(2)'
�
