61 STAT.] 80TH CONG., 1 ST SESS.-CH. 258-JULY 16, 1947 income of such individual ratably over that part of the period which precedes the date of such receipt or accrual. SEC. 3. (a) DEDUCTIONS A-LOWED. -The following deductions shall be allowed from gross income in computing net income: (1) EXPENSES. - All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered; traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business; and rentals or other pay- ments required to be made as a condition to the continued use or pos- session, 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: Provided, however, That nothing herein contained shall be construed to exempt any salary or other compensation for personal services from taxation as a part of the taxable income of the person receiving the same. (2) INTERrEST.- Al l interest paid or accrued, according to the tax- payer's method of accounting, within the taxable year. (3) TAXES.- All taxes imposed upon the taxpayer and paid or accrued during the taxable year except- (A) income taxes; (B) franchise taxes imposed by this article; C) estate, inheritance, legacy, succession, and gift taxes; (D) taxes assessed against local benefits of a kind tending to increase the value of the property assessed; (E) taxes paid to any State, Territory, county, or munici- pality on property, business, or occupation the income from which is not taxable under this article. (4) LossEs. - Losses sustained during the taxable year and not com- pensated for by insurance or otherwise- (A) if incurred in a trade or business; or (B) if incurred in any transaction entered into for the produc- tion or collection of income subject to tax under this article, or for the management, conservation, or maintenance of property held for the production of income subject to tax under this article, though not connected with any trade or business; or (C) of property not connected with a trade or business; if such losses arise from fires, storms, shipwrecks, or other casualty: Provided, however, That no such loss shall be allowed as a deduc- tion under this subsection if such loss is claimed as a deduction for inheritance- or estate-tax purposes: And provided further, That this subsection shall not be construed to permit the deduction of a loss of any capital asset as defined in this article. (5) BAD DEBTS. -Debts ascertained to be worthless and charged off within the taxable year or, in the discretion of the Assessor, a reason- able addition to a reserve for bad debts. When satisfied that a debt is recoverable only in part, the Assessor may allow such debt, in an amount not in excess of the part charged off within the taxable year, as a deduction. No debt which existed prior to January 1, 1939, shall be allowed as a deduction. (6) INSURANCE PREMIUMS.-All fire-, tornado-, and casualty-insur- ance premiums paid during the taxable year in connection with prop- erty held for investment or used in a trade or business, the income from which is taxable under this article. (7) DEPRECIATION.-A reasonable allowance for exhaustion, wear, and tear of property used in the trade or business, including a reason- able allowance for obsolescence; and including in the case of natural resources allowances for depletion as permitted by reasonable rules 95347°- 48- -pt. 1 -- -22 Business expenses. Traveling expenses. Salary, etc.. for per- sonal services. Exceptions. Restrictions. Time limitation. 337
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