Page:United States Statutes at Large Volume 68A.djvu/89

 CH. 1

NORMAL TAXES AND SURTAXES

49

(e) T A X E S OF SHAREHOLDER P A I D BY CORPORATION.—Where a

corporation pays a tax imposed on a shareholder on his interest as a shareholder, and where the shareholder does not reimburse the corporation, then— (1) the deduction allowed by subsection (a) shall be allowed to the corporation; and (2) no deduction shall be allowed the shareholder for such tax. (f) CROSS R E F E R E N C E. — For provisions disallowing any deduction for the payment of the tax imposed by subchapter B of chapter 3 (relating to tax-free covenant bonds) see section 1451(f). SEC. 165. LOSSES. (a) GENERAL RULE. — The r e shall be allowed as a deduction any

loss sustained during the taxable year and not compensated for by insurance or otherwise. (b) AMOUNT OF DEDUCTION.—For purposes of subsection (a), the basis for determining the amount of the deduction for any loss shall be the adjusted basis provided in section 1011 for determining the loss from the sale or other disposition of property. (c) LIMITATION ON LOSSES OF INDIVIDUALS.—In the case of an individual, the deduction under subsection (a) shall be limited to— (1) losses incurred in a trade or business; (2) losses incurred in any transaction entered into for profit, though not connected with a trade or business; and (3) losses of property not connected with a trade or business, if such losses arise from fire, storm, shipwreck, or other casualty, or from theft. No loss described in this paragraph shall be allowed if, at the time of the filing of the return, such loss has been claimed for estate tax purposes in the estate tax return. (d) WAGERING LOSSES.—Losses from wagering transactions shall be allowed only to the extent of the gains from such transactions. (e) THE F T LOSSES.—For purposes of subsection (a), any loss arising from theft shall be treated as sustained during the taxable year in which the taxpayer discovers such loss. (f) CAPITAL LOSSES.—Losses from sales or exchanges of capital assets shall be allowed only to the extent allowed in sections 1211 and 1212. (g) WORTHLESS SECURITIES,— (1) GENERAL RULE.—If any security which is a capital asset be-

comes worthless during the taxable year, the loss resulting therefrom shall, for purposes of this subtitle, be treated as a loss from the sale or exchange, on the last day of the taxable year, of a capital asset. (2) SECURITY DEFINED.—For purposes of this subsection, the term "security" means— (A) a share of stock in a corporation; (B) a right to subscribe for, or to receive, a share of stock in a corporation; or (C) a bond, debenture, note, or certificate, or other evidence jf, of indebtedness, issued by a corporation or by a government or political subdivision thereof, with interest coupons or in registered / form. § 165(g)(2)(C)

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