Page:United States Statutes at Large Volume 53 Part 2.djvu/613

 53 STAT.] 76TH CONG. , 1ST SESS.-CH. 367-JULY 26, 1939 in a single sum or otherwise (but if such amounts are held by the insurer under an agreement to pay interest thereon, the interest payments shall be included in gross income). (2) ANNUITIES, AND SO FORTH. -Amounts received (other than amounts paid by reason of the death of the insured and interest payments on such amounts and other than amounts received as annuities) under a life-insurance or endowment contract, but if such amounts (when added to amounts received before the tax- able year under such contract) exceed the aggregate premiums or consideration paid (whether or not paid during the taxable year) then the excess shall be included in gross income. Amounts received as an annuity under an annuity or endowment contract shall be included in gross income; except that there shall be excluded from gross income the excess of the amount received in the taxable year over an amount equal to 3 per centum of the aggregate premiums or consideration paid for such annuity (whether or not paid during such year), until the aggregate amount excluded from gross income under this title in respect to such annuity equals the aggregate premiums or consideration paid for such annuity. In the case of a transfer for a valuable consideration, by assignment or otherwise, of a life-insurance, endowment, or annuity contract, or any interest therein, only the actual value of such consideration and the amount of the pre- miums and other sums subsequently paid by the transferee shall be exempt from taxation under paragraph (1) or this paragraph. (3) GIFTS, BEQUESTS, AND DEVISES.- The value of property acquired by gift, bequest, devise, or inheritance (but the income from such property shall be included in gross income). (4) TAX-FREE INTEREST.- Interest upon (A) the obligations of a State, Territory, or any political subdivision thereof, or the District of Columbia; or (B) obligations of a corporation organ- ized under Act of Congress, if such corporation is an instru- mentality of the United States; or (C) the obligations of the United States or its possessions. (5) COMPENSATION FOR INJURIES OR SICKNESS.- Amounts received, through accident or health insurance or under work- men's compensation acts, as compensation for personal injuries or sickness, plus the amount of any damages received, whether by suit or agreement on account of such injuries or sickness. (6) MINISTERs. -The rental value of a dwelling house and appurtenances thereof furnished to a minister of the gospel as part of his compensation. (7) INCOME EXEMPT UNDER TREATY.- Income of any kind to the extent required by any treaty obligation of the United States. (8) DIVIDENDS FROM CHINA TRADE ACT CORPORATIONS.-In the case of a person, amounts distributed as dividends to or for his benefit by a corporation organized under the China Trade Act, 1922, if, at the time of such distribution, he is a resident of China, and the equitable right to the income of the shares of stock of the corporation is in good faith vested in him. (9) Income of foreign governments. DEDUCTIONS FROM GROSS INCOME SEC. 5. (a) ITEMS OF DEDUCTION. -In computing net income there shall be allowed as deductions: (1) EXPENSES.-A ll 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 1089 Annuities, etc. Transfer for valu- able consideration. Gifts, bequests, and devises. Tax-free interest on specified obligations. Compensation for injuries or sickness. Rental value ofmin- ister's dwelling, etc. Exemptions under treaty obligations. China Trade Act corporations. 42 Stat. 849. 15U.S.C.ch.4; Snpp. IV, ch. 4. Income of foreign governments. Items allowed. Business expenses. Traveling expenses.

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