from the dividends of the shareholder, as provided by the internal revenue laws, should be deducted, since the tax was in reality a tax upon the shareholder, and its payment by the corporation was merely a mode of collecting it. 10 Int. Rev. Rec. 9.

Losses actually sustained during the year, incurred in trade, or arising from fires, storms, or shipwreck, and not compensated for by insurance or otherwise.

It was held under the old acts

That losses in one kind of business might be deducted from the gains in another, or from the gross income of the year, and that assessors should not allow the deduction of amounts claimed to have been lost in business when in reality they should be regarded as investments or expenditures. 3 Int. Rev. Rec. 140; 7 Id. 59.

That no so-called loss incurred by a gift of property could be allowed as a deduction. 7 Int. Rev. Rec. 59.

That the fact that income was devoted to payment of debts did not release the same from liability to income tax. 7 Int. Rev. Rec. 59.

That the original cost of property destroyed by fire during the year, less insurance received, might be deducted from the income for that

year of the person to whom the loss occurred. 5 Int. Rev. Rec. 154.

That the loss of a stock company by fire or shipwreck, if liable to tax, would be deductible from its income, not from that of its stockholders; and the fact that such company was not subject to income tax made a loss of this kind none the less a loss of the company. 5 Int. Rev. Rec. 148.

That there could be no deduction for depreciation in stocks or other property until disposed of and a loss realized. 7 Int. Rev. Rec. 59. But where stocks were sold for less than actual cost the difference between such cost and the price was allowed as a deduction from income of the year of sale. 7 Int. Rev. Rec. 59.

That losses during the income year on sales of real estate purchased during the income year, or within two years previous, might be deducted from the income for such income year. 7 Int. Rev. Rec. 60. But losses from exchange of real estate are estimated losses while the property is in the hands of the original parties and are not deductible. 41 U. S. Rev. Journ. 77.

That losses of capital such as by robbery, or as surety, etc., could not be deducted. 7 Int. Rev. Rec. 60. And losses in business since the

end of the income year could not enter into the income assessments for that year. Bout. (1863), 275; 1 Int. Rev. Rec. 181; 2 Id. 68.

That no deduction could be made for money paid on a judgment against a taxpayer in an action of tort. 1 Int. Rev. Rec. 155.

That a mere speculative loss, there being no sale, could not be deducted. 3 Int. Rev. Rec. 109. So of estimated depreciations, as of vessels. 1 Int. Rev. Rec. 109, 197. As to the custom of ship-owners to charge off a certain sum on account of the depreciation of vessels, see Bout. (1864), 152.

That the owners of vessels might balance the gains and losses as a whole, setting the gains of one against the losses of another, including even the entire loss of a vessel by capture, shipwreck, or other disaster, on which there was no insurance. Bout. (1863), 303.

That where a farmer lost animals by death, he might deduct the purchase money; but if the animals were raised by him, there could be no deduction. 3 Int. Rev. Rec. 100.

That where a company had collapsed and the stock was worthless, the loss on such stock should be deducted from the income of the year in which the company ceased to exist. 11 Int. Rev. Rec. 105.

Debts due to the taxpayer actually ascertained to be worthless and charged off within the year. It was held under the old acts

That payment by a surety made the principal his debtor. Whether the debt was worthless or not was a question to be determined in each particular case. Money paid as surety would not necessarily be lost, but when found to be a loss it might be deducted under the head of "debts ascertained to be worthless." 9 Int. Rev. Rec. 121.

That a merchant was entitled to deduct from his gross profits the bad debts of the year to which the statement related, or such as appeared to be bad at the end of the year. United States v. Mayer, Deady, 127.

That debts previously considered good, but found to be worthless during the income year, might be deducted from the creditor's income for that year, if never before deducted. 7 Int. Rev. Rec. 60.

That there must be a discretion given in making returns, and that it was not necessary to make a debt deductible that it should be declared worthless at law or in equity. United States v. Frost, 9 Int. Rev. Rec. 41, 42.

In construing the New Brunswick act, 31 Vict. c. 36, it is said, "Their Lordships have felt some difficulty in appreciating the

view of the Chief Justice, that the bad debts of the current year are a loss pro tanto of capital,' and that, in such case, 'it is the capital invested that is really lost, and not the income.' Surely every banker or trader properly conducting his affairs, would, in the first instance at least, charge losses to income; that is, in ascertaining the income of a year's business, would set the losses of the year against its profits. To treat profits as income and to charge losses to capital would be to enter upon a road leading very directly to financial ruin.” Lawless v. Sullivan, 6 Appeal Case, 373, 382.

A reasonable allowance for the exhaustion, wear and tear of property arising out of its use or employment in the business, not to exceed, in the case of mines, etc.

It was held under the old acts

That estimated appreciations or depreciations of the value of property were not to be considered in ascertaining amounts to be taxed. 5 Int. Rev. Rec. 154.

No deduction shall be made for any amount of expense of restoring property or making good the exhaustion thereof for which an allowance is or has been made.

It was held under the old acts