Page:United States Statutes at Large Volume 68A.djvu/230

 190

INTERNAL REVENUE CODE OF 1954

(3) SPECIAL DEDUCTIONS DISALLOWED.—The special deductions for corporations provided in part VIII (except section 248) of subchapter B (section 241 and following, relating to the deduction for dividends received by corporations, etc.) shall not be allowed. (4) N E T OPERATING LOSS.—The net operating loss deduction provided in section 172 shall not be allowed, b u t there shall be allowed as a deduction the amount of the net operating loss (as defined in section 172(c)) for the preceding taxable year. (5) LONG-TERM CAPITAL GAINS,—There shall be allowed as a deduction the excess of the net long-term capital gain for the taxable year over the net short-term capital loss for such year, minus the taxes imposed by this subtitle attributable to such excess. The taxes attributable to such excess shall be an amount equal to the difference between—• (A) the taxes imposed by this subtitle (except the tax imposed by this part) for such year, and (B) such taxes computed for such year without including such excess in taxable income. (6) BANK AFFILIATES.—There shall be allowed the deduction

described in section 601 (relating to bank affiliates). (7) PAYMENT OP INDEBTEDNESS INCURRED PRIOR TO JANUARY l,

1934.—There shall be allowed as a deduction amounts used or irrevocably set aside to pay or to retire indebtedness of any kind incurred before January 1, 1934, if such amounts are reasonable with reference to the size and terms of such indebtedness. (8) E X P E N S E S AND DEPRECIATION APPLICABLE TO PROPERTY OP

THE TAXPAYER.—The aggregate of the deductions allowed under section 162 (relating to trade or business expenses) and section 167 (relating to depreciation), which are allocable to the operation and maintenance of property owned or operated by the corporation, shall be allowed only in an amount equal to the rent or other compensation received for the use of, or the right to use, the property, unless it is established (under regulations prescribed by the Secretary or his delegate) to the satisfaction of the Secretary or his delegate— (A) that the rent or other compensation received was the highest obtainable, or, if none was received, that none was obtainable; (B) that the property was held in the course of a business carried on bona fide for profit; and (C) either that there was reasonable expectation that the operation of the property would result in a profit, or that the property was necessary to the conduct of the business. (9) AMOUNT OF A LIEN I N FAVOR O F THE UNITED STATES.—

There shall be allowed as a deduction the amount, not to exceed the taxable income of the taxpayer, of any lien in favor of the United States (notice of which has been filed as provided in section 6323 (a)(1), (2), or (3)) to which the taxpayer is subject a t the close of the taxable year. The sum of the amounts deducted under this paragraph with respect to any lien shall, for the purposes of this section, be added to the taxable income of the taxpayer for 545(b)(3)

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