Page:United States Statutes at Large Volume 68A.djvu/297

 CH. 1—NORMAL TAXES AND SURTAXES

257

year following the taxable year) the payment of which is deferred for a period of not less than 5 years from the date of the policy contract. (f) INTEREST P A I D. — The term "interest paid" means— (1) All interest paid or accrued within the taxable year on indebtedness, except on indebtedness incurred or continued to purchase or carry obligations (other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer) the interest upon which is wholly exempt from taxation under this chapter, and (2) All amounts in the nature of interest, whether or not guaranteed, paid or accrued within the taxable year on insurance or annuity contracts (or contracts arising out of insurance or annuity contracts) which do not involve, at the time of payment or accrual, life, health, or accident contingencies. (g) TAXABLE INCOME.—The term "taxable income" means the gross income less the following deductions: (1) T A X - F R E E INTEREST.—The amount of interest received or accrued during the taxable year which under section 103 is excluded from gross income. (2) INVESTMENT EXPENSES.—Investment expenses paid or incurred during the taxable year. If any general expenses are in part assigned to or included in the investment expenses, the total . deduction under this paragraph shall not exceed one-fourth of 1 percent of the mean of the book value of the invested assets held at the beginning and end of the taxable year plus one-fourth of the amount by which taxable income (computed without any deduction for investment expenses allowed by this paragraph, for taxfree interest allowed by paragraph (1), or for partially tax-exempt interest and dividends received allowed by paragraph (5)) exceeds 3% percent of the book value of the mean of the invested assets held at the beginning and end of the taxable year. (3) K E A L ESTATE EXPENSES.—Taxes and other expenses paid or accrued during the taxable year exclusively on or with respect to the real estate owned by the company, not including taxes assessed against local benefits of a kind tending to increase the value of the property assessed, and not including any amount paid out for new buildings, or for permanent improvements or betterments made to increase the value of any property. The deduction allowed by this paragraph shall be allowed in the case of taxes imposed on a shareholder of a company on his interest as shareholder, which are paid or accrued by the company without reimbursement from the shareholder, b u t in such cases no deduction shall be allowed the shareholder for the amount of such taxes. (4) DEPRECIATION.—The depreciation deduction allowed by section 167. (5) SPECIAL DEDUCTIONS.—The special deductions allowed by part VIII of subchapter B (except section 248). (h) R E N T A L VALUE OF R E A L E S T A T E. — The deduction under subsection (g)(3) and (4) on account of any real estate owned and occupied in whole or in part by a life insurance company shall be limited to an amount which bears the same ratio to such deduction (computed without regard to this subsection) as the rental value of the space not so occupied bears to the rental value of the entire property. § 803(h)

�