Page:United States Statutes at Large Volume 83.djvu/603

 83 STAT. 1

PUBLIC LAW 91-172-DEC. 30, 1969

575

deduction by reason of the first sentence of this paragraph for any taxable year shall not exceed one-half of the amount by which— "(i) the net investment income for such taxable year plus $25,000, exceeds "(ii) the investment interest paid or accrued during such taxable year (determined without regard to this paragraph) or $25,000, whichever is greater. "(B)

REDUCTIOlSr FOR CAPITAL GAIN DEDUCTION.

If—

"(i) an amount of disallowed investment interest treated under subparagraph (A) as investment interest paid or accrued in the taxable year is not allowable as a deduction for such taxable year by reason of the second sentence of subparagraph (A), and "(ii) the taxpayer is entitled to a deduction under section 1202 for such taxable year (whether or not the taxpayer claims such deduction), the amount of such disallowed investment interest shall be reduced by an amount equal to the amount of the deduction allowable under section 1202. "(3) DEFINITIONS.—For purposes of this subsection— " (A) N E T INVESTMENT INCOME.—The term 'net investment income' means the excess of investment income over investment expenses. " ^

"(^)

68A Stat. 320. ^e use 1202,

INVESTMENT INCOME.—The term 'investment income'

means— " (i) the gross income from interest, dividends, rents, and royalties, " (ii) the net short-term capital gain attributable to the disposition of property held for investment, and "(iii) any amount treated under sections 1245 and 76 Stat. 1032. 1250 as gain from the sale or exchange of property which Post. p. 6S2. is neither a capital asset nor property described in section 1231, 68A Stat. 325. but only to the extent such income, gain, and amounts are not derived from the conduct of a trade or business. "(C) INVESTMENT EXPENSES.—The term 'investment expenses' means the deductions allowable under sections 164(a) (1) or (2), 166, 167, 171, 212, or 611 directly connected with ^J^ 1,'^^-^^I^QJ the production of investment income. For purposes of this subparagraph, the deduction allowable under section 167 with Post, pp. 625, respect to any property may be treated as the amount which 649. would have been allowable had the taxpayer depreciated the property under the straight line method for each taxable year of its useful life for which the taxpayer has held the property, and the deduction allowable under section 611 with respect to any property may be treated as the amount which would have been allowable had the taxpayer determined the deduction under section 611 without regard to section 613 for each tax- _^°^^' PP- ^29, 630. able year for which the taxpayer has held the property. " (D) INVESTMENT INTEREST.—The term 'investment interest' means interest paid or accrued on indebtedness incurred or continued to purchase or carry property held for investment. " (E) DISALLOWED IN%TESTMENT INTEREST.—The term 'disallowed investment interest' means with respect to any taxable year, the amount not allowable as a deduction solely by reason of the limitations in paragraphs (1) and (2)(A).

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