Taxable Years 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.— Debts which become worthless within the taxable year; or (in the discretion of the Commissioner) a reasonable addition to a reserve for bad debts; and when satisfied that a debt is recoverable only in part, the Commissioner may allow such debt, in an amount not in excess of the part charged off 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. This paragraph shall 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. coming worthless. Same as 1944. Sec. 23. (k) (2) Securities be- 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 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 Sec. 23. (k) (3) Definition of securities. As used in paragraphs securities. (1), (2) and (4) of this subsection the term "securities" means bonds, Same as 1944. Sec. 23. (k) (2) Securities becoming worthless. Same as 1944. Sec. 23. (k) (3) Definition of securities. Same as 1944. Taxable Years Beginning in 1945 Sec. 23. (j) Loss on wash sales of stock or securities. Same as 1944. Sec. 23. (k) Bad debts. Sec. 23. (k) (1) General rule. Same as 1944. Sec. 23. (k) (2) Securities becoming worthless. Same as 1944. Sec. 23. (k) (3) Definition of securities. Same as 1944. Taxable Years Beginning in 1944 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.— Debts which become worthless within the taxable year; or (in the discretion of the Commissioner) a reasonable addition to a reserve for bad debts; and when satisfied that a debt is recoverable only in part, the Commissioner may 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. This paragraph shall 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) (1) I. R. C., supra, amended by Sec. 113 (a), R. A. of 1943, by adding language in italics and omitting language in stricken-through type. Retroactivity Sec. 113 (b) of said Act makes amendment applicable to taxable years beginning after Dec. 31, 1938. 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 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 securities. As used in paragraphs (1), (2) and (4) of this subsection the term "securities" means bonds, Taxable Years debentures, notes, or certificates, or other evidences of indebtedness, issued by any corporation (including those issued by a government or political subdivison thereof), with interest coupons or in registered form. Taxable Years Taxable Years Beginning in 1946 and 1947 Sec. 23. (k) (4) Non-business Same as 1944. Sec. 23. (k) (4) Non-business debts. In the case of a taxpayer, debts. 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) Non-business debts. Same as 1944. Sec. 23. (k) (5) Securities of Sec. 23. (k) (5) Securities of affiliated corporations. debentures, notes or certificates, or 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 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, (except rents derived from rental of properties to employees of the company in the ordinary course of its operating business), dividends, interest (except interest received on deferred purchase price of operating assets sold), annuities, or gains from sales or exchanges of stocks and securities; and (C) the taxpayer is a domestic corporation. Same as 1944. Sec. 23. (k) (5) Securities of affiliated corporations. Same as 1944. Taxable Years Beginning in 1945 Taxable Years Beginning in 1944 debentures, notes, or certificates, or other evidences of indebtedness, issued by any corporation (including those issued by a government or political subdivision thereof), with interest coupons or in registered form. Taxable Years Beginning before 1944 For any amendments prior to 1944, see Eighth Edition, p. 42, Sec. 23. (k) (4) Non-business debts. Same as 1944. Sec. 23. (k) (5) Securities of affiliated corporations. Same as 1944. 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) (5) Securities of affiliated corporations. Bonds, debentures, notes or certificates, or 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 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, (except rents derived from rental of properties to employees of the company in the ordinary course of its operating business), dividends, interest (except interest received on deferred purchase price of operating assets sold), or annuities, or gains from sales or exchanges of stocks and securities; and (C) the taxpayer is a domestic corporation. Sec. 23. (k) (4) Non-business debts. Section originated 1943 as Sec. 23. (k) (5) Securities of affiliated corporations. Section originated 1942 as Ninth Edition, p. 76. Taxable Years Taxable Years Taxable Years Beginning in 1946 and 1947 Sec. 23. (1) Depreciation.-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 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 tenant were the absolute owner of the property and shall be allowed to the life tenant. In the case of property held in trust the allowable deduction shall be apportioned between the income beneficiaries and the trustee in accordance with 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. See fn. 3 following Sec. 23 (a) (2), supra. Sec. 23. (m) Depletion. Same as 1944. Same as 1944. Sec. 23. (m) Depletion.-In the Sec. 23. (m) Depletion. case of mines, oil and gas wells, other natural deposits, and timber, a reasonable allowance for depletion and for depreciation of improvements, according to the peculiar conditions in each case; such reasonable allowance in all cases to be made under rules and regulations to be prescribed by the Commissioner, with the approval of the Secretary. In any case in which it is ascertained as a result of operations or of development work that the recoverable units are greater or less than the prior estimate thereof, then such prior estimate (but not the basis for depletion) shall be revised and the allowance under this subsection for subsequent taxable years shall be based upon such revised estimate. In the case of leases the deductions shall be equitably apportioned between the lessor and lessee. In the case of prop |