Taxable Years Taxable Years Taxable Years Sec. 23. (h) Wagering losses.- Sec. 23. (h) Wagering losses.— Sec. 23. (h) Wagering losses.— Losses from wagering transactions Losses from wagering transactions Losses from wagering transactions shall be allowed only to the extent shall be allowed only to the extent shall be allowed only to the extent of the gains from such transac- of the gains from such transac- of the gains from such transactions. tions. tions. Sec. 23. (i) Basis for determin- Sec. 23. (i) Basis for determin- Sec. 23. (i) Basis for determining loss. The basis for determin- ing loss.-The basis for determin- ing loss.-The basis for determining the amount of deduction for ing the amount of deduction for ing the amount of deduction for losses sustained, to be allowed losses sustained, to be allowed losses sustained, to be allowed under subsection (e) or (f), and under subsection (e) or (f), and under subsection (e) or (f), and for bad debts, to be allowed under for bad debts, to be allowed under for bad debts, to be allowed under subsection (k), shall be the ad- subsection (k), shall be the ad- subsection (k), shall be the adjusted basis provided in section justed basis provided in section justed basis provided in section 113 (b) for determining the loss 113 (b) for determining the loss 113 (b) for determining the loss from the sale or other disposition from the sale or other disposition from the sale or other disposition of property. of property. of property. Sec. 23. (j) Loss on wash sales of stock or securities. For disallowance of loss deduction in the case of sales of stock or securities where within thirty days before or after the date of the sale the taxpayer has acquired substantially identical property, see section 118. Sec. 23. (k) Bad debts. may may Sec. 23. (k) (1) General rule.- Sec. 23. (k) (1) General rule.- Sec. 23. (k) (1) General rule.— Debts which become worthless Debts ascertained to be which be- Debts ascertained to be which bewithin the taxable year or (in the come worthless and charged off come worthless and charged off discretion of the Commissioner, within the taxable year or (or, in within the taxable year or (or, in a reasonable addition to a reserve the discretion of the Commissioner, the discretion of the Commissioner, for bad debts); and when satis- a reasonable addition to a reserve a reasonable addition to a reserve fied that a debt is recoverable only for bad debts); and when satis- for bad debts); and when satisin part, the Commissioner fied that a debt is recoverable only fied that a debt is recoverable only allow such debt, in an amount not in part, the Commissioner may in part, the Commissioner in excess of the part which becomes allow such debt, in an amount not allow such debt, in an amount not worthless within the taxable year, which becomes worthless within the which becomes worthless within the in excess of the part charged off in excess of the part charged off as a deduction. This paragraph shall not apply in the case of a year, as a deduction. This taxable year, as a deduction. This taxpayer, other than a bank, as de- paragraph shall not apply in the paragraph shall not apply in the case of a taxpayer, other than a case of a taxpayer, other than a fined in section 104, with respect bank, as defined in section 104, bank, as defined in section 104, to a debt evidenced by a security with respect to a debt evidenced with respect to a debt evidenced as defined in paragraph (3) of this by a security as defined in para- by a security as defined in parasubsection. This paragraph shall graph (3) of this subsection. graph (3) of this subsection. not apply in the case of a taxpayer, other than a corporation, with respect to a non-business debt, as defined in paragraph (4) of this subsection. Sec. 23. (k) (2) Securities becoming worthless. If any securities (as defined in paragraph (3) of this subsection) become worthless within the taxable year and are capital assets, the loss resulting therefrom shall, in the case of a taxpayer other than a bank, as defined in section 104, for the purposes of this chapter, be considered taxable Sec. 23. (k) (2) Securities be- Sec. 23. (k) (2) Securities becoming worthless. If any securi- coming worthless. If any securiof this subsection) are ascertained of this subsection) are ascertained ties (as defined in paragraph (3) ties (as defined in paragraph (3) to be become worthless and charged to be become worthless and charged off-within the taxable year and are off within the taxable year and are capital assets, the loss resulting capital assets, the loss resulting therefrom shall, in the case of a therefrom shall, in the case of a taxpayer other than a bank, as taxpayer other than a bank, as defined in section 104, for the pur- defined in section 104, for the purposes of this chapter, be consid- poses of this chapter, be consid Sec. 23. (h) Wagering losses.— Sec. 23. (h) Wagering losses.— Losses from wagering transactions Losses from wagering transactions shall be allowed only to the extent shall be allowed only to the extent of the gains from such transac- of the gains from such transactions. tions. Sec. 23. (i) Basis for determin- Sec. 23. (i) Basis for determining loss. The basis for determin- ing loss.-The basis for determining the amount of deduction for ing the amount of deduction for losses sustained, to be allowed losses sustained, to be allowed under subsection (e) or (f), and under subsection (e) or (f), and for bad debts, to be allowed under for bad debts, to be allowed under subsection (k), shall be the ad- subsection (k), shall be the adjusted basis provided in section justed basis provided in section 113 (b) for determining the loss 113 (b) for determining the loss from the sale or other disposition from the sale or other disposition of property. of property. Sec. 23. (j) Loss on wash sales of stock or securities.— For disallowance of loss deduction in the case of sales of stock or securities where within thirty days before or after the date of the sale the taxpayer has acquired substantially identical property, see section 118. Sec. 23. (k) Bad debts. may Sec. 23. (j) Loss on wash sales of stock or securities. For disallowance of loss deduction in the case of sales of stock or securities where within thirty days before or after the date of the sale the taxpayer has acquired substantially identical property, see section 118. Sec. 23. (k) Bad debts. Sec. 23. (k) (1) General rule.- Sec. 23. (k) (1) General rule.— Debts ascertained to be which be- Debts ascertained to be which beworthless and charged off come worthless and charged off come within the taxable year or (or, in within the taxable year or (or, in the discretion of the Commissioner, the discretion of the Commissioner, a reasonable addition to a reserve a reasonable addition to a reserve for bad debts); and when satis- for bad debts); and when satisfied that a debt is recoverable only in part, the Commissioner allow such debt, in an amount not in excess of the part charged off which becomes worthless within the taxable year, as a deduction. This paragraph shall not apply in the case of a taxpayer, other than a bank, as defined in section 104, with respect to a debt evidenced by a security as defined in paragraph (3) of this subsection. fied that a debt is recoverable only Taxable Years Beginning before 1939 Sec. 23. (h) Wagering losses. See p. 40, Eighth Edition. Sec. 23. (i) Basis for determining loss. See p. 40, Eighth Edition. Sec. 23. (j) Loss on wash sales of stock or securities. See p. 40, Eighth Edition. Sec. 23. (k) Bad debts. Sec. 23. (k) (2) Securities be- Sec. 23. (k) (2) Securities becoming worthless.-If any securi- coming worthless. If any securities (as defined in paragraph (3) ties (as defined in paragraph (3) of this subsection) are ascertamed of this subsection) are ascertained to be become worthless and charged to be become worthless and charged off within the taxable year and are off within the taxable year and are capital assets, the loss resulting capital assets, the loss resulting therefrom shall, in the case of a therefrom shall, in the case of a taxpayer other than a bank, as taxpayer other than a bank, as defined in section 104, for the pur- defined in section 104, for the purposes of this chapter, be consid- poses of this chapter, be consid Sec. 23. (k) (2) Securities becoming worthless. See p. 42, Eighth Edition. Taxable Years as a loss from the sale or exchange, on the last day of such taxable year, of capital assets. means Taxable Years ered as a loss from the sale or ex- Taxable Years ered as a loss from the sale or exchange, on the last day of such taxable year, of capital assets. Sec. 23. (k) (3) Definition of seSec. 23. (k) (3) Definition of se- Sec. 23. (k) (3) Definition of securities. As used in paragraphs curities. As used in paragraphs curities. As used in paragraphs (1), (2) and (4) of this subsec- (1), (2) and (4) of this subsec- (1), (2) and (4) of this subsection the term "securities" tion the term "securities" means tion the term "securities" means bonds, debentures, notes, or certif- bonds, debentures, notes, or certif- bonds, debentures, notes, or certificates, or other evidences of in- icates, or other evidences of in- icates, or other evidences of indebtedness, issued by any corpora- debtedness, issued by any corporadebtedness, issued by any corporation (including those issued by a tion (including those issued by a tion (including those issued by a or political subdivi- government or political subdivigovernment or political subdivi- government sion thereof), with interest cou- sion thereof), with interest cousion thereof), with interest coupons or in registered form. pons or in registered form. pons or in registered form. 124 Sec. 23 (k) (1), (2) and (3), supra, amended by Sec. (a), 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, except last sentence of paragraph (k) (1) is applicable to taxable years beginning after Dec. 31, 1942. For Sec. 23 (k) (1), (2) and (3) before amendment, see 1942 column. Sec. 23. (k) (4) Non-business debts. In the case of a taxpayer, other than a corporation, if a nonbusiness debt becomes worthless within the taxable year, the loss resulting therefrom shall be considered a loss from the sale or exchange, during the taxable year, of a capital asset held for not more than 6 months. The term "nonbusiness debt" means a debt other than a debt evidenced by a security as defined in paragraph (3) and other than a debt the loss from the worthlessness of which is incurred in the taxpayer's trade or business. Sec. 23 (k) (4), I. R. C., supra, added to I. R. C. by Sec. 124 (a), R. A. of 1942. Sec. 124 (d) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1942. Sec. 23 (k) (1), (2) and (3), supra, amended by Sec. 124 (a), R. A. 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. 23. (k) (5) Securities of Sec. 23. (k) (5) Securities of affiliated corporations.-Bonds, de- affiliated corporations.-Bonds, debentures, notes or certificates, or bentures, notes or certificates, or other evidences of indebtedness is- other evidences of indebtedness issued with interest coupons or in registered form by any corporation affiliated with the taxpayer shall not be deemed capital assets for the purposes of paragraph (2) and paragraph (1) shall apply with respect to such debt except that no such deduction shall be allowed under such paragraph with respect to any such debt which is recoverable sued with interest coupons or in Sec. 23 (k), supra, amended by Sec. 124 (a), R. A. 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. 23. (k) (3) Definition of See p. 42, Eighth Edition. Sec. 23. (k) (3) Definition of se- Sec. 23. (k) (3) Definition of securities. As used in paragraphs curities. As used in paragraphs securities. (1), (2) and (4) of this subsec- (1), (2) and (4) of this subsection the term "securities" means tion the term "securities" means bonds, debentures, notes, or certif- bonds, debentures, notes, or certificates, or other evidences of in- icates, or other evidences of indebtedness, issued by any corpora- debtedness, issued by any corporation (including those issued by a tion (including those issued by a government or political subdivi- government or political subdivsion thereof), with interest cou- sion thereof), with interest coupons or in registered form. pons or in registered form. Taxable Years only in part. For the purposes of this paragraph a corporation shall be deemed to be affiliated with the taxpayer only if: (A) at least 95 per centum of each class of its stock is owned directly by the taxpayer; and (B) more than 90 per centum of the aggregate of its gross incomes for all taxable years has been from sources other than royalties, rents, dividends, interest or annuities or gains from sales or exchanges of stock and securities; and (C) the taxpayer is a domestic corporation. Sec. 23 (k) (5), I. R. C., added to I. R. C. by Sec. 124 (a), R. A. of 1942. Sec. 124 (d) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1941. Taxable Years this paragraph a corporation shall (A) at least 95 per centum of (B) more than 90 per centum of the aggregate of its gross incomes for all taxable years has been from sources other than royalties, rents, dividends, interest or annuities or gains from sales or exchanges of stock and securities; and (C) the taxpayer is a domestic Sec. 23 (k) (5), I. R. C., Taxable Years ex Sec. 23. (1) Depreciation.—A reasonable allowance for the haustion, wear and tear of prop erty used in the trade or business, including a reasonable allowance for obsolescence, (including a Sec. 23. (1) Depreciation.-A Sec. 23. (1) Depreciation.-A or business, or (1) of property used in the trade or business, or (2) of property held for production of income. rea allowance for obsoles (1) of property used in the trade or business, or (2) of property held for production of income. In the case of property held by one person for life with remainder to another person, the deduction shall be computed as if the life In the case of property held by one In the case of property held by one tenant were the absolute owner of person for life with remainder to person for life with remainder to another person, the deduction another person, the deduction the property and shall be allowed to the life tenant. In the case of tenant were the absolute owner of tenant were the absolute owner of shall be computed as if the life shall be computed as if the life property held in trust the allow the property and shall be allowed the property and shall be allowed able deduction shall be apportioned to the life tenant. In the case of to the life tenant. In the case of between the income beneficiaries property held in trust the allow-property held in trust the allowand the trustee in accordance with able deduction shall be apportioned able deduction shall be apportioned the pertinent provisions of the in-between the income beneficiaries between the income beneficiaries strument creating the trust, or, in and the trustee in accordance with and the trustee in accordance with the absence of such provisions, on the basis of the trust income allo cable to each. Sec. 23 (1), I. R. C., supra, amended by Sec. 121 (c), R. A. of 1942, to read as above. Sec. 121 (d) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1938. Sec. See 1942 column for 23 (1), I. R. C., before amendment. the pertinent provisions of the in- Sec. 23 (1), I. R. C., supra, the pertinent provisions of the instrument creating the trust, or, in the absence of such provisions, on the basis of the trust income allocable to each. Sec. 23 (1), I. R. C., supra, amended by Sec. 121 (c), R. A. of 1942, by omitting language in stricken through type and inserting language in italics. Sec. 121 (d) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1938. Sec. 23. (m) Depletion.-In the case of mines, oil and gas wells, case of mines, oil and gas wells, case of mines, oil and gas wells, other natural deposits, and timber, other natural deposits, and timber, other natural deposits, and timber, a reasonable allowance for deple- a reasonable allowance for deple- a reasonable allowance for depletion and for depreciation of im- tion and for depreciation of im- tion and for depreciation of im Sec. 23. (m) Depletion.-In the |