Page:United States Statutes at Large Volume 68A.djvu/91

 CH. 1

NORMAL TAXES AND SURTAXES

51

(B) a debt the loss from the worthlessness of which is incurred in the taxpayer's trade or business. (e) WORTHLESS SECURITIES.—This section shall not apply to a debt which is evidenced by a security as defined in section 165(g) (2)(C). (f)

GUARANTOR OP CERTAIN

NONCORPORATE

OBLIGATIONS.—A

payment by the taxpayer (other than a corporation) in discharge of part or all of his obligation as a guarantor, endorser, or indemnitor of a noncorporate obligation the proceeds of which were used in the trade or business of the borrower shall be treated as a debt becoming worthless within such taxable year for purposes of this section (except that subsection (d) shall not apply), b u t only if the obligation of the borrower to the person to whom such payment was made was worthless (without regard to such guaranty, endorsement, or indemnity) at the time of such payment. (g)

CROSS R E F E R E N C E S. —

(1) For disallowance of deduction for worthlessness of debts owed by political parties and similar organizations, see section 271. (2) For special rule for banks with respect to worthless securities, see section 582. (3) For special rule for bad debt reserves of certain mutual savings banks, domestic building and loan associations, and cooperative banks, see section 593. SEC. 167. DEPRECIATION. (a) GENERAL RULE. — The r e shall be allowed as a depreciation deduction a reasonable allowance for the exhaustion, wear and tear (including a reasonable allowance for obsolescence)— (1) of property used in the trade or business, or (2) of property held for the production of income. (b) U S E OF CERTAIN M E T H O D S AND R A T E S. — For taxable years ending after December 31, 1953, the term "reasonable allowance" as used in subsection (a) shall include (but shall not be limited to) an allowance computed in accordance with regulations prescribed by the Secretary or his delegate, under any of the following methods: (1) the straight line method, (2) the declining balance method, using a rate not exceeding twice the rate which would have been used had the annual allowance been computed under the method described in paragraph (1), (3) the sum of the years-digits method, and (4) any other consistent method productive of an annual allowance which, when added to all allowances for the period commencing with the taxpayer's use of the property and including the taxable year, does not, during the first two-thirds of the useful life of the property, exceed the total of such allowances which would have been used had such allowances been computed under the method described in paragraph (2). Nothing in this subsection shall be construed to Hmit or reduce an allowance otherwise allowable under subsection (a). (c) LIMITATIONS ON U S E OF CERTAIN M E T H O D S AND RATES.—•

Paragraphs (2), (3), and (4) of subsection (b) shall apply only in the case of property (other than intangible property) described in subsection (a) with a useful life of 3 years or more— § 167(c)

�