Page:United States Statutes at Large Volume 45 Part 1.djvu/850

 SEVENTIETH CONGRESS. SESS. I. Cu. 852. 1928. Inc ome of State s, mun icipal ities and ot her pol itical sub- divisions ; Receipts of ship owners' mutual protection and indemnity associations ; Dividends from China Trade Act corporations. (c) Inventories .-Whenever in the opinion of the Commissioner the use of inventories is necessary in order clearly to determine the income of any taxpayer, inventories shall be taken by such taxpayer upon such basis as the Commissioner, with the approval of 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. (d) Distributions by corporations .-Distributions by corporations shall be taxable to the shareholders as provided in section 115. (e) 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 sections 111, 112, and 113. (f) Gross income from sources within and without United States .- For computation of gross income from sources within and without the Un ited S tates, see s ection 119. SEC. 23 . DEDUCTIONS FROM GROSS INCOME. In computing net income there shall be allowed as deductions ( a) E x p e n s e s .-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 (includ- ing the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business ; and rentals or other p ayments re quired to be made as a conditi on 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. ( b) I n t er e s t .-All interest paid or accrued within the taxable year on indebtedness, except on indebtedness incurred or continued to purchase or carry obligations or securities (other than obligations of the Unite d Stat es iss ued af ter Se ptember 24, 1 917, a nd ori ginall y subscribed for by the taxpayer) the interest upon which is wholly exempt from taxation under this title. (c) Taxes generally .-Taxes paid or accrued within the taxable year, except-- (1) income, war-profits, and excess-profits taxes imposed by the authority of the United States ; (2) so m uch of th e inc ome, war- profi ts, and e xcess -prof its taxes imposed by the authority of any foreign country or possession of the United States as is allowed as a credit against the tax under section 131 ; and (3) taxes assessed against local benefits of a kind tending to increase the value of the property assessed ; but this paragraph shall not exclude the allowance as a deduction of so much of such taxes as is properly allocable to maintenance or interest cha rges. For th e purp ose of this subsec tion, estate, inher itance, lega cy, an d succes sion t axes a ccrue on the due d ate the reof, except as ot herwis e provided by the law of the jurisdiction imposing such taxes, and shall be allowed as a deduction only to the estate. (d) Taxes of shareholder paid by corporation .The deduction for taxes allowed by subsection (c) shall be allowed to a corporation in the case of taxes imposed upon a shareholder of the corporation upon his interest as shareholder which are paid by the corporation 799 INCOME TAX Inve ntor ies t c de ter- mine income may be taken. Distribut ions by coo' porations . Post, p. 822. Computation of ga in or loss on sale, etc ., of property. Post, pp. 815-822. Sou rces within and without U nited States . Post, p.828. Deducti ons from gross income. Item s sp ecifi ed. Business expenses . Travel, etc., included. Inte rest on d ebts. Exception. Taxes paid . Exc eptio ns. Post, p. 829. Acc rual of estate, etc. Lim itati ons . Taxes of shareholder pa id by the corpora. tion.

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