able year less losses incurred and able year less losses incurred and
expenses incurred;
expenses incurred;

Taxable Years
Beginning before 1939

Sec. 204. (b) (5) Premiums

Sec. 204. (b) (5) Premiums Sec. 204. (b) (5) Premiums earned.-"Premiums earned on in- earned.—“Premiums earned on in- earned. surance contracts during the taxable surance contracts during the taxable year" means an amount computed year" means an amount computed as follows: as follows:

From the amount of gross preFrom the amount of gross premiums written on insurance con- miums written on insurance contracts during the taxable year, tracts during the taxable year, deduct return premiums and pre- deduct return premiums and premiums paid for reinsurance. To miums paid for reinsurance. To the result so obtained add unearned the result so obtained add unearned premiums on outstanding business premiums on outstanding business at the end of the preceding taxable at the end of the preceding taxable year and deduct unearned pre- year and deduct unearned premiums on outstanding business at miums on outstanding business at the end of the taxable year; the end of the taxable year;

See p. 312, Eighth Edition.

Sec. 204. (b) (6) Losses in

Sec. 204. (b) (6) Losses in- See. 204. (b) (6) Losses incurred. "Losses incurred" means curred.-"Losses incurred" means curred. losses incurred during the taxable losses incurred during the taxable year on insurance contracts, com- year on insurance contracts, computed as follows: puted as follows:

To losses paid during the taxable To losses paid during the taxable year, add salvage and reinsurance year, add salvage and reinsurance recoverable outstanding at the end recoverable outstanding at the end of the preceding taxable year, and of the preceding taxable year, and deduct salvage and reinsurance re- deduct salvage and reinsurance recoverable outstanding at the end of coverable outstanding at the end of the taxable year. To the result so the taxable year. To the result so obtained add all unpaid losses out- obtained add all unpaid losses outstanding at the end of the taxable standing at the end of the taxable year and deduct unpaid losses out- year and deduct unpaid losses outstanding at the end of the preced- standing at the end of the preceding ing taxable year; taxable year;

See p. 314, Eighth Edition.

See p. 314, Eighth Edition.

Sec. 204. (b) (7) Expenses Sec. 204. (b) (7) Expenses in- Sec. 204. (b) (7) Expenses inincurred. "Expenses incurred" curred.-"Expenses incurred" curred. means all expenses shown on the means all expenses shown on the annual statement approved by the annual statement approved by the National Convention of Insurance National Convention of Insurance Commissioners, and shall be com- Commissioners, and shall be computed as follows: puted as follows:

To all expenses paid during the To all expenses paid during the taxable year add expenses unpaid taxable year add expenses unpaid

Taxable Years
Beginning in 1943

at the end of the taxable year and deduct expenses unpaid at the end of the preceding taxable year. For the purpose of computing the net income subject to the tax imposed by this section there shall be deducted from expenses incurred as defined in this paragraph all expenses incurred which are not allowed as deductions by subsection (c) of this section.

Sec. 204. (c) Deductions allowed. -In computing the net income of an insurance company subject to the tax imposed by this section there shall be allowed as deductions:

Sec. 204. (c) (1) All ordinary and necessary expenses incurred, as provided in section 23 (a);

Sec. 204. (c) (2) All interest as provided in section 23 (b);

Sec. 204. (c) (3) Taxes as provided in section 23 (c);

Sec. 204. (c) (4) Losses incurred as defined in subsection (b) (6) of this section;

at the end of the taxable year and at the end of the taxable year and
deduct expenses unpaid at the end deduct expenses unpaid at the end
of the preceding taxable year. For of the preceding taxable year. For
the purpose of computing the net the purpose of computing the net
income subject to the tax imposed income subject to the tax imposed
by this section there shall be de- by this section there shall be de-
ducted from expenses incurred as ducted from expenses incurred as
defined in this paragraph all ex- defined in this paragraph all ex-
penses incurred which are not al- penses incurred which are not al-
lowed as deductions by subsection lowed as deductions by subsection
(c) of this section.
(c) of this section.

Sec. 204. (c) Deductions allowed. Sec. 204. (c) Deductions allowed. -In computing the net income of -In computing the net income of an insurance company subject to an insurance company subject to the tax imposed by this section the tax imposed by this section there shall be allowed as deduc- there shall be allowed as deductions: tions:

Sec. 204. (c) (1) All ordinary and necessary expenses incurred, as provided in section 23 (a);

Sec. 204. (c) (2) All interest as provided in section 23 (b);

Sec. 204. (c) (3) Taxes as provided in section 23 (c);

Sec. 204. (c) (4) Losses incurred as defined in subsection (b) (6) of this section;

Sec. 204. (c) (5) Capital Losses.

Sec. 204. (c) (1) All ordinary and necessary expenses incurred, as provided in section 23 (a);

Sec. 204. (c) (2) All interest as provided in section 23 (b);

Sec. 204. (c) (3) Taxes as provided in section 23 (c);

Sec. 204. (c) (4) Losses incurred as defined in subsection (b) (6) of this section;

Sec. 204. (c) (5) Capital Losses. Sec. 204. (c) (5) Subject to the -Capital losses to the extent pro--Capital losses to the extent pro- limitation contained in section 117 vided in section 117 plus losses vided in section 117 plus losses (d), losses sustained during the from capital assets sold or ex-from capital assets sold or ex-taxable year from the sale or other changed in order to obtain funds changed in order to obtain funds disposition of property; to meet abnormal insurance losses to meet abnormal insurance losses

and to provide for the payment of and to provide for the payment of
dividends and similar distributions dividends and similar distributions
to policyholders. Capital assets to policyholders. Capital assets
shall be considered as sold or ex- shall be considered as sold or ex-
changed in order to obtain funds to changed in order to obtain funds to
meet abnormal insurance losses and meet abnormal insurance losses and
to provide for the payment of divi- to provide for the payment of divi-
dends and similar distributions to dends and similar distributions to
policyholders to the extent that the policyholders to the extent that the
gross receipts from their sale or gross receipts from their sale or
exchange are not greater than the exchange are not greater than the
excess, if any, for the taxable year excess, if any, for the taxable year
of the sum of dividends and similar of the sum of dividends and similar
distributions paid to policyholders distributions paid to policyholders
in their capacity as such, losses in their capacity as such, losses
paid, and expenses paid over the
sum of interest, dividends, rents,
and net premiums received. In the
application of section 117 (e) for
the purposes of this section, the net
capital loss for the taxable year
shall be the amount by which
losses for such year from sales or
exchanges of capital assets exceeds
the sum of the gains from such
sales or exchanges and whichever

paid, and expenses paid over the
sum of interest, dividends, rents,
and net premiums received. In the
application of section 117 (e) for
the purposes of this section, the net
capital loss for the taxable year
shall be the amount by which losses
for such year from sales or ex-
changes of capital assets exceeds the
sum of the gains from such sales or
exchanges and whichever of the

at the end of the taxable year and at the end of the taxable year and
deduct expenses unpaid at the end deduct expenses unpaid at the end
of the preceding taxable year. For of the preceding taxable year. For
the purpose of computing the net the purpose of computing the net
income subject to the tax imposed income subject to the tax imposed
by this section there shall be de- by this section there shall be de-
ducted from expenses incurred as ducted from expenses incurred as
defined in this paragraph all ex- defined in this paragraph all ex-
penses incurred which are not al- penses incurred which are not al-
lowed as deductions by subsection lowed as deductions by subsection
(c) of this section.
(c) of this section.

Sec. 204. (c) Deductions allowed. Sec. 204. (c) Deductions allowed. -In computing the net income of -In computing the net income of an insurance company subject to an insurance company subject to the tax imposed by this section the tax imposed by this section there shall be allowed as deduc- there shall be allowed as deductions: tions:

Sec. 204. (c) (1) All ordinary Sec. 204. (c) (1) All ordinary and necessary expenses incurred, and necessary expenses incurred, as provided in section 23 (a); as provided in section 23 (a);

Sec. 204. (c) (2) All interest as provided in section 23 (b);

Sec. 204. (c) (3) Taxes as provided in section 23 (c);

Sec. 204 (c) (4) Losses incurred as defined in subsection (b) (6) of this section;

Sec. 204. (c) (5) Subject to the limitation contained in section 117 (d), losses sustained during the taxable year from the sale or other disposition of property;

Sec. 204. (c) (2) All interest as provided in section 23 (b);

Sec. 204. (c) (3) Taxes as provided in section 23 (c);

Sec. 204. (c) (4) Losses incurred as defined in subsection (b) (6) of this section;

Sec. 204. (c) (5) Subject to the limitation contained in section 117 (d), losses sustained during the taxable year from the sale or other disposition of property;

Taxable Years Beginning before 1939

Sec. 204. (c) Deductions allowed.

See p. 314, Eighth Edition.

Taxable Years
Beginning in 1943

of the following amounts is the lesser:

(A) the corporation surtax net income (computed without regard to gains or losses from sales or exchanges of capital assets); or

Taxable Years
Beginning in 1942

following amounts is the lesser:
(A) the corporation surtax net
income (computed without regard
to gains or losses from sales or ex-
changes of capital assets); or

(B) losses from the sale or ex(B) losses from the sale or ex- change of capital assets sold or exchange of capital assets sold or ex- changed to obtain funds to meet changed to obtain funds to meet abnormal insurance losses and to abnormal insurance losses and to provide for the payment of diviprovide for the payment of dividends and similar distributions to dends and similar distributions to policyholders.

Sec. 204. (c) (6) Debts in the nature of agency balances and bills receivable which become worthless within the taxable year:

Sec. 204 (c) (6), I. R. C., supra, amended by Sec. 124 (b), R A. of 1942, to read as above. Sec. 124 (d) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1938.

For Sec. 204 (c) (6), I. R. C., before amendment, see 1942 column.

Sec. 204. (c) (7) The amount of interest earned during the taxable year which under section 22 (b) (4) is excluded from gross income;

Sec. 204. (c) (8) A reasonable allowance for the exhaustion, wear and tear of property, as provided in section 23 (1);

Sec. 204. (c) (9) Charitable, and so forth, contributions, as provided in section 23 (q);

Sec. 204. (c) (10) Deductions (other than those specified in this subsection) as provided in section

23.

Sec. 204 (c) (10), I. R. C., supra, amended by Sec. 226 (a), R. A. of 1939, to read as above. Sec. 226 (b) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1938.

For Section 204 (c) (10), I. R. C., before amendment, see explanation under Sec. 204 (c) (10), I. R. C., in 1939 column.

Sec. 204 (c) (5), I. R. C.,
164
supra, amended by Sec.
(c) (1), R. A. of 1942, to read
as above. Sec. 101 of said Act
makes amendment applicable
to taxable years beginning
after Dec. 31, 1941.

For Sec. 204 (c), I. R. C.,
before amendment, see 1941
column.

Taxable Years
Beginning in 1941

Sec. 204. (c) (6) Bad debts Debts Sec. 204. (c) (6) Bad debts Debts in the nature of agency balances in the nature of agency balances and bills receivable which become and bills receivable which become ascertained to be worthless and ascertained to be worthless and charged off within the taxable charged off within the taxable

year:

Sec. 204 (c) (6), I. R. C., supra, amended by Sec. 124 (b), R. A. of 1942, by omitting language in stricken through type and adding language in italics. Sec. 124 (d) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1938.

Sec. 204. (c) (7) The amount of interest earned during the taxable year which under section 22 (b) (4) is excluded from gross income;

Sec. 204. (c) (8) A reasonable allowance for the exhaustion, wear and tear of property, as provided in section 23 (1);

Sec. 204. (c) (9) Charitable, and so forth, contributions, as provided in section 23 (q);

year:

Sec. 204 (c) (6), I. R. C., supra, amended by Sec. 124 (b), R. A. of 1942, by omitting language in stricken through type and adding language in italics. Sec. 124 (d) of said Act makes amendto taxable ment applicable years beginning after Dec. 31, 1938.

Sec. 204. (c).(7) The amount of interest earned during the taxable year which under section 22 (b) (4) is excluded from gross income;

Sec. 204. (c) (8) A reasonable allowance for the exhaustion, wear and tear of property, as provided in section 23 (1);

Sec. 204. (c) (9) Charitable, and so forth, contributions, as provided in section 23 (q);

Sec. 204. (c) (10) Deductions (other than those specified in this subsection) as provided in section

23.

Sec. 204 (c) (10), I. R. C., supra, amended by Sec. 226 (a), R. A. of 1939, to read as above. Sec. 226 (b) of said Act makes amendment to applicable taxable years beginning after Dec. 31, 1938. For section 204 (c) (10),

I. R. C., before amendment, see explanation under Sec. 204 (c) (10), I. R. C., in 1939 column.

Sec. 204. (c) (6) Bad debts Debts Sec. 204. (c) (6) Bad debts Debts in the nature of agency balances in the nature of agency balances and bills receivable which become and bills receivable which become ascertained to be worthless and ascertained to be worthless and charged off within the taxable charged off within the taxable. year;