SEC. 3. (a) DEDUCTION ALLOWED-The following deductions shall be allowed from gross income in computing net income: (1) EXPENSES.-All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered; traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a 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 or is not taking title or in which he has no equity: Provided, however, That nothing herein contained shall be construed to exempt any salary or other compensation for personal services from taxation as a part of the taxable income of the person receiving the same. (2) INTEREST.-All interest paid or accrued, according to the taxpayer's method of accounting, within the taxable year. (3) TAXES.-All taxes paid or accrued during the taxable year except income, excess profits, sales, use, admission, utility bill, cigarette, inheritance, and estate taxes, and taxes assessed against local benefits of a kind tending to increase the value of the property assessed. (4) LOSSES.-Losses sustained during the taxable year and not compensated for by insurance or otherwise (A) if incurred in a trade or business; or (B) if incurred in any transaction entered into for the production or collection of income, or for the management, conservation, or maintenance of property held for the production of income, though not connected with any trade or business; or (C) of property not connected with a trade or business; if such losses arise from fires, storms, shipwrecks, or other casualty: Provided, however, That no such loss shall be allowed as a deduction under this subsection if such loss is claimed as a deduction for inheritance- or estate-tax purposes: And provided further, That this subsection shall not be construed to permit the deduction of a loss of any capital asset as defined in this Act. (5) BAD DEBTS.-Debts ascertained to be worthless and charged off within the taxable year or, in the discretion of the Assessor, a reasonable addition to a reserve for bad debts. When satisfied that a debt is recoverable only in part, the Assessor may allow such debt, in an amount not in excess of the part charged off within the taxable year, as a deduction. No debt which existed prior to January 1, 1939, shall be allowed as a deduction. (6) INSURANCE PREMIUMS.-All fire-, tornado-, and casualty-insurance premiums paid during the taxable year in connection with property held for investment or used in a trade or business. (7) DEPRECIATION.—A reasonable allowance for exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence; and including in the case of natural resources allowances for depletion as permitted by reasonable rules and regulations which the Commissioners are hereby authorized to promulgate. The basis upon which such allowances are to be computed is the basis provided for in title XI, section 4, of this Act. (8) CHARITABLE CONTRIBUTIONS.-Contributions or gifts, actually paid within the taxable year to or for the use of any religious, charitable, scientific, literary, military, or educational institution, the activities of which are confined principally to the District, and no part of the net income of which inures to the benefit of any private shareholder or individual: Provided, however, That such deductions shall be allowed only in an amount which in the aggregate of all such deductions does not exceed 15 per centum as computed without the benefit of this subsection. (9) WAGERING LOSSES.-Losses from wagering transactions shall be allowed only to the extent of the gains from such transactions. (10 MEDICAL, DENTAL, AND SO FORTH, EXPENSES OF INDIVIDUALS.-Expenses in the case of individuals, paid by the taxpayer during the taxable year, not compensated for by insurance or otherwise, for the medical care of the taxpayer, his spouse, or dependents as defined in this Act. The term "medical care", as used in this subsection, shall include amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of diseases, or for the purpose of effecting healthier function of the body (including amounts paid for accident or health insurance): Provided, however, That a taxpayer may deduct only such expenses as exceed 5 per centum of his net income, or 5 per centum of the aggregate net income in the case of husband and wife filing a joint return, computed with the benefit of subsection (8) of this section but without the benefit of this subsection: And provided further, That the maximum deduction for the taxable year shall not exceed $1,000 in the case of a husband and wife filing a joint return, or $500 in the case of all other individuals. (11) ALIMONY OR SEPARATE MAINTENANCE.-In the case of individuals, amounts paid as alimony or separate maintenance pursuant to and under a decree or judgment of a court of record of competent jurisdiction to adjudge or decree that the taxpayer pay such alimony or separate maintenance: Provided, however, That all amounts allowed as a deduction under this subsection shall be reported and taxed as income of the recipient thereof. (12) CONTRIBUTIONS OF AN EMPLOYER TO AN EMPLOYEES' TRUST OR ANNUITY PLAN AND COMPENSATION UNDER A DEFERRED-PAYMENT PLAN.-In the return of an employer, contributions made by such employer to an employees' trust or annuity plan and compensation under a deferred-payment plan to the extent that deductions for the same are allowed the taxpayer under the provisions of section 23 (p) of the Federal Internal Revenue Code. (13) NONTRADE OR NONBUSINESS EXPENSE.-In the case of an individual, all the ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of income, or for the management, conservation, or maintenance of property held for the production of income. (14) In lieu of the foregoing deductions, any resident, and any nonresident whose entire net income is subject to tax under this Act, whose gross income less allowance for dependents is $5,000 or more may irrevocably elect to deduct an optional standard deduction of $500: Provided, however, That the option provided in this section shall not be permitted to any such taxpayer on any return filed by him for any period less than a full calendar or fiscal year: And provided further, That in the case of husband and wife living together, the standard deduction shall not be allowed to either if the net income of one of the spouses is determined without regard to the standard deduction. (b) DEDUCTIONS NOT ALLOWED.-In computing net income, no deductions shall be allowed in any case for— (1) Personal, living, or family expenses; (2) Any amount paid out for new buildings or for permanent improvements or betterments, made to increase the value of any property or estate; (3) Any amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made; and (4) Premiums paid on any life-insurance policy covering the life of any officer or employee or of any person financially interested in any trade or business carried on by the taxpayer when the taxpayer is directly or indirectly a beneficiary under such policy. (5) If the net income of an unincorporated business for the taxable year is in excess of the exemption provided in section 4 of title VIII, no deduction which is allowed or allowable under section 3 (a) of this title from the gross income of any unincorporated business subject to the tax imposed by title VIII of this Act shall be allowed as deduction in the return and computation of the net income of any person entitled to share in the net income of such unincorporated business. (6) CAPITAL LOSSES.-Losses from the sale or exchange of any capital asset as defined in this Act. TITLE IV-ACCOUNTING PERIODS, INSTALLMENT SALES, AND INVENTORIES SEC. 1. ACCOUNTING PERIODS.--The net income shall be computed upon the basis of the taxpayer's annual accounting period (fiscal year or calendar year, as the case may be) in accordance with the method of accounting regularly employed in keeping the books of such taxpayer; but if no such method of accounting has been so employed, or if the method employed does not clearly reflect the income, the computation shall be made in accordance with such method as in the opinion of the Assessor does clearly reflect the income. If the taxpayer's annual accounting period is other than a fiscal year as defined in section 4 (j) of title I or if the taxpayer has no annual accounting period or does not keep books, the net income shall be computed on the basis of the calendar year. If the taxpayer makes a Federal income-tax return, his income shall be computed, for the purposes of this title, on the basis of the same calendar or fiscal year as in such Federal income-tax return, if the basis is accepted and approved by the Commissioner of Internal Revenue. SEC. 2. PERIOD IN WHICH ITEMS OF GROSS INCOME INCLUDED.-The amount of all items of gross income shall be included in the gross income for the taxable 99538-47-28 SEC. 3. (a) DEDUCTION ALLOWED-The following deductions shall be allowed from gross income in computing net income: (1) EXPENSES.-All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered; traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a 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 or is not taking title or in which he has no equity: Provided, however, That nothing herein contained shall be construed to exempt any salary or other compensation for personal services from taxation as a part of the taxable income of the person receiving the same. (2) INTEREST.—All interest paid or accrued, according to the taxpayer's method of accounting, within the taxable year. (3) TAXES.-All taxes paid or accrued during the taxable year except income, excess profits, sales, use, admission, utility bill, cigarette, inheritance, and estate taxes, and taxes assessed against local benefits of a kind tending to increase the value of the property assessed. (4) LOSSES.-Losses sustained during the taxable year and not compensated for by insurance or otherwise (A) if incurred in a trade or business; or (B) if incurred in any transaction entered into for the production or collection of income, or for the management, conservation, or maintenance of property held for the production of income, though not connected with any trade or business; or (C) of property not connected with a trade or business; if such losses arise from fires, storms, shipwrecks, or other casualty: Provided, however, That no such loss shall be allowed as a deduction under this subsection if such loss is claimed as a deduction for inheritance- or estate-tax purposes: And provided further, That this subsection shall not be construed to permit the deduction of a loss of any capital asset as defined in this Act. (5) BAD DEBTS.-Debts ascertained to be worthless and charged off within the taxable year or, in the discretion of the Assessor, a reasonable addition to a reserve for bad debts. When satisfied that a debt is recoverable only in part, the Assessor may allow such debt, in an amount not in excess of the part charged off within the taxable year, as a deduction. No debt which existed prior to January 1, 1939, shall be allowed as a deduction. (6) INSURANCE PREMIUMS.-All fire-, tornado-, and casualty-insurance premiums paid during the taxable year in connection with property held for investment or used in a trade or business. (7) DEPRECIATION.-A reasonable allowance for exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence; and including in the case of natural resources allowances for depletion as permitted by reasonable rules and regulations which the Commissioners are hereby authorized to promulgate. The basis upon which such allowances are to be computed is the basis provided for in title XI, section 4, of this Act. (8) CHARITABLE CONTRIBUTIONS.-Contributions or gifts, actually paid within the taxable year to or for the use of any religious, charitable, scientific, literary, military, or educational institution, the activities of which are confined principally to the District, and no part of the net income of which inures to the benefit of any private shareholder or individual: Provided, however, That such deductions shall be allowed only in an amount which in the aggregate of all such deductions does not exceed 15 per centum as computed without the benefit of this subsection. (9) WAGERING LOSSES.-Losses from wagering transactions shall be allowed only to the extent of the gains from such transactions. (10 MEDICAL, DENTAL, AND SO FORTH, EXPENSES OF INDIVIDUALS.-Expenses in the case of individuals, paid by the taxpayer during the taxable year, not com pensated for by insurance or otherwise, for the medical care of the taxpayer, his spouse, or dependents as defined in this Act. The term "medical care", as used in this subsection, shall include amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of diseases, or for the purpose of effecting healthier function of the body (including amounts paid for accident or health insurance): Provided, however, That a taxpayer may deduct only such expenses as exceed 5 per centum of his net income, or 5 per centum of the aggregate net income in the case of husband and wife filing a joint return, computed with the benefit of subsection (8) of this section but without the benefit of this subsection: And provided further, That the maximum deduction for the taxable year shall not exceed $1,000 in the case of a husband and wife filing a joint return, or $500 n the case of all other individuals. (11) ALIMONY OR SEPARATE MAINTENANCE.-In the case of individuals, amounts paid as alimony or separate maintenance pursuant to and under a decree or judgment of a court of record of competent jurisdiction to adjudge or decree that the taxpayer pay such alimony or separate maintenance: Provided, however, That all amounts allowed as a deduction under this subsection shall be reported. and taxed as income of the recipient thereof. (12) CONTRIBUTIONS OF AN EMPLOYER TO AN EMPLOYEES' TRUST OR ANNUITY PLAN AND COMPENSATION UNDER A DEFERRED-PAYMENT PLAN.-In the return of an employer, contributions made by such employer to an employees' trust or annuity plan and compensation under a deferred-payment plan to the extent that deductions for the same are allowed the taxpayer under the provisions of section 23 (p) of the Federal Internal Revenue Code. (13) NONTRADE OR NONBUSINESS EXPENSE.-In the case of an individual, all the ordinary and necessary expenses paid or incurred during the taxable year for the production or collection of income, or for the management, conservation, or maintenance of property held for the production of income. (14) In lieu of the foregoing deductions, any resident, and any nonresident whose entire net income is subject to tax under this Act, whose gross income less allowance for dependents is $5,000 or more may irrevocably elect to deduct an optional standard deduction of $500: Provided, however, That the option provided in this section shall not be permitted to any such taxpayer on any return filed by him for any period less than a full calendar or fiscal year: And provided further, That in the case of husband and wife living together, the standard deduction shall not be allowed to either if the net income of one of the spouses is determined without regard to the standard deduction. (b) DEDUCTIONS NOT ALLOWED.-In computing net income, no deductions shall be allowed in any case for (1) Personal, living, or family expenses; (2) Any amount paid out for new buildings or for permanent improvements or betterments, made to increase the value of any property or estate; (3) Any amount expended in restoring property or in making good the exhaustion thereof for which an allowance is or has been made; and (4) Premiums paid on any life-insurance policy covering the life of any officer or employee or of any person financially interested in any trade or business carried on by the taxpayer when the taxpayer is directly or indirectly a beneficiary under such policy. (5) If the net income of an unincorporated business for the taxable year is in excess of the exemption provided in section 4 of title VIII, no deduction which is allowed or allowable under section 3 (a) of this title from the gross income of any unincorporated business subject to the tax imposed by title VIII of this Act shall be allowed as deduction in the return and computation of the net income of any person entitled to share in the net income of such unincorporated business. (6) CAPITAL LOSSES.-Losses from the sale or exchange of any capital asset as defined in this Act. TITLE IV-ACCOUNTING PERIODS, INSTALLMENT SALES, AND INVENTORIES SEC. 1. ACCOUNTING PERIODS.-The net income shall be computed upon the basis of the taxpayer's annual accounting period (fiscal year or calendar year, as the case may be) in accordance with the method of accounting regularly employed in keeping the books of such taxpayer; but if no such method of accounting has been so employed, or if the method employed does not clearly reflect the income, the computation shall be made in accordance with such method as in the opinion of the Assessor does clearly reflect the income. If the taxpayer's annual accounting period is other than a fiscal year as defined in section 4 (j) of title I or if the taxpayer has no annual accounting period or does not keep books, the net income shall be computed on the basis of the calendar year. If the taxpayer makes a Federal income-tax return, his income shall be computed, for the purposes of this title, on the basis of the same calendar or fiscal year as in such Federal income-tax return, if the basis is accepted and approved by the Commissioner of Internal Revenue. SEC. 2. PERIOD IN WHICH ITEMS OF GROSS INCOME INCLUDED.-The amount of all items of gross income shall be included in the gross income for the taxable 99538-47-28 wday in velitel sanaived hỵ the taxpayer unless, under merhods of accounting perhit ráð nýdny spation I any such amounts are to be property accounted fe akifa Aopony powied in the case of death of a taxpayer on the cash basÍS, DO AMPUIT Wij bé arépand on his funt return; and on the aderual basis, amounts relep amdante carladibla in computing a partner's net income) accrued only by reasa of this death of the taxonyer shall not be included in computing net income for tha përóf in which fans the date of the taxpayer's death, but such amounts amall þó vadiuded in the income of the person receiving such amounts by inherthe pervivorship from the dererlent. 8. Peeita pow WHICH DwwCTIONS AND CREDITS TAKEN.-The deductions rendt bendite provided for in this Act shall be taken for the taxable year in which Sprad de gebened" or "paid or incurred", dependent upon the method of accounting Hind this traje of which the net income is computed unless, in order to clearly Pottset the Hering, the deductions or credits should be taken as of a different period In the ease of death of a taxpayer on the cash basis, no amount will be allurebd de a deduction which was accrued up to the date of the taxpayer's death; god on the deernal basis, no amount (except amounts includible in computing *partuce's not Theme) accrued only by reason of the death of the taxpayer shall he tundunted in computing net income for the period in which falls the date of the frejtor's death but such amounts shall be deductible by the estate or other pskom win paid them or is liable for their payment. RK # TeamTMENT SALES If a person reports any portion of his income from tusfaltusut sales for Federal income-tax purposes under section 44 of the Postural tuisrnal Revenue Code and as the same may hereafter be amended, and (surti tuum is subject to tax under this Act, he may report such income under *** X ** The same manner and upon the same basis as the same was reported Bu kim que puterat mucome-tax purposes, if such method of reporting is accepted ******** buy photoner of Internal Revenue. 24. Whenever im the onition of the Assessor the use of inApulang cookery in prior chware to de ermine the income of any taxpayer, BUNNYA CATAR Rahat po leku by xech taxpowe (pen, stach basis as the Assessor may AZ YAAM WOW ex sex xx 70x de u the best accounting practice in |