Evening star., 1940-03-24

workmen's compensation acts. as
compensation for personal injuries
or sickness, plus the amount Of
damages received, whether by suit
or agreement, on account OF such
injuries or sickness.
6. The rental value OF a home fur
nished to a minister as part OF his
compensation.
7. Income of any kind to the ex-
tent required by any treaty obliga-
ton of the United States.
dends by corporation organized
under the China Trade Act of 1922,
If. at the time Of the distribution,
the recipient is a resident of China.
II. Income from foreign govern
ments.
IL. Payments of benefits to or on
account Of a beneficiary under any
Of the laws relating to veterans.
Deductions Allowed.
Deductions from gross income pro-
vided fall into II groups. namely:
l. Expenses.-All the ordinary and
necessary expenses paid or incurred
during the taxable year in car
rying on any trade or business.
including a reasonable allowance
for salaries or other compensation
for personal services actually
rendered: travelling expenses while
away from home in pursuit Of
trade or business, and rentals or
other payments required to be made
as a condition to the continued use
or possession. for purposes of the
trade or business, of property to
which the taxpayer has not taken
title or in which he has no equity.
2. Interest.-All interest paid or
accrued within the taxable year on
Indebtedness.
3. TaXes.-TaXes paid or accrued
within the taxable year except in
come taxes; estate, inheritance,
legacy, succession and gift taxes,
taxes assessed against local benefits
of kind tending to increase the
value of the property assessed, and
taxes paid to any State or territory
on property, business, or occupation,
able under this law.
Business Losses.
4. Losses.-Losses sustained IN
trade or business and not compen-
sated for by insurance or otherwise,
If the trade or business is subject
to this tax.
S. Losses incurred in any trans
action entered into for profit. and
not compensated for by insurance or
otherwise, il the profit would be sub
ject to this tax.
6. Intercompany dividends - In
the case of corporation, the amount
received as dividends from domes-
tic corporation, which is subject to
the income tax.
7. Bad debts.-Debts ascertained
to be worthless ana charged of
within the taxable year, or reason
able addition to a reserve for bad
debts.
8. Insurance premiums.-All fire,
tornado and casualty insurance pre-
miums paid during the taxable year
in connection with property held for
investment or business.
9. Depreciation. A reasonable al
lowance for exhaustion, wear and
tear of property used in the trade
or business, including reasonable
allowance for obsolescence and, in
the case of natural resources, for
depletion.
| Gifts to Charity.
10. Charitable contributions. -
Contributions paid for the use of any
corporation. or trust, or community
fund, or foundation, organized and
operated exclusively for religious,
charitable. scientific. literary, mill
tary or educational purposes. no part
of the net income of which inures
to the benefit of any private share
holder or individual; Provided, That
such deductions shall be allowed only
in an amount not exceeding Is per
cent of the taxpayers net income.
These deductions are allowed only as
to contributions or gifts made to
corporations, associations or insti-
tutions incorporated by or organized
under the laws of the District or
maintaining activities in the District
for exclusive public purposes.
II. Wagering losses.-Losses from
wagering transactions are allowed
only to the extent of the gains from
such transactions.
Limited to District.
The bill further provides that in
the case of taxpayer, other than
a resident, the above deductions
shall be allowed only to the extent
that they are connected with income
arising from sources within the Dis
trict and taxable under this title
to nonresident taxpayer. The
apportionment and ALLEGATION Of the
deductions with respect to sources
of income within and without the
District shall be determined under
rules and regulations which the
Commissioners would be authorized
to prescribe.
No gain or less from the sale or
exchange of capital asset (mean-
ing property held by the taxpayer
more than two years. is recognized
in the computation of net income
under this title. Gains or losses
from the sale or exchange of prop
erty other than capital assets shall
be treated in the same manner as
other income or deductible losses.
Deductions Not Allowed.
The deductions not allowed under
the proposed bill are similar to those
in the present income tax act. In
general, no deductions would be
allowed in respect to:
Personal, living Or family ex-
penSes.
2. Any amount paid out for new
buildings or for. permanent improve
ments or betterments, made to in
crease the value Of any property or
estate
8. Any amount expended in re-
storing property or in making good
the exhaustion thereof for which
an allowance is or has been made.
4. Premiums paid on any life in