800 INC OME TAX Losses by individ- ua ls . Business. Not con nect ed wi th trade or business . Casualty losses not connec ted with bus i- ness . Los ses by c orpor a- tions . Basis for determining loss. Post, p . 818. Disallo wance of los s on sale of stock . Post, p . 826 . Losses for prior years. Post, p . 825. Worthless debts . Exhaustion, etc., of bus iness pro perty . Real estate in life tenancy . Property in trust . Mines, oil and gas wells, timber, etc . Re as ona ble allow- ance fo r depletion, e tc . In leases . Held in life tenancy. Property in trust . Oil and gas wells . Post, p. 821. Basis for depletion, etc. SEVENTIETH CONGRESS . SEss. I. C$. 852 . 1928 . without reimbursement from the shareholder, but in such cases no deduc tion shall be allowed the s hareholder fo r the amount of such taxes . (e) Losses by individuals.-In the case of an individual, losses sustained during the taxable year and not compensated for by insur ance or other wise- (1) if incurred in trade or business ; or (2) if incurred in any transaction entered into for profit, though not connected with the trade or business ; or (3) of property not connected with the trade or business, if the loss arises from fires, storms, shipwreck, or other casualty, or from theft. (f) Losses by corporations.-In the case of a corporation, losses sustained during the taxable year and not compensated for by insurance or otherwise . (g) Basis for determining loss .-The basis for determining the am ount o f dedu ction for l osses sustai ned, to be allowe d unde r subsection (e) or (f), shall be the same as is provided in section 113 for determining the gain or loss from the sale or other disposition of property . (h) Loss on sale of stock or securities .-For disallowance of loss deduction in the case of sales of stock or securities where within thirt y days before or after the date of the s ale the taxpa yer has acquired substantially identical property, see section 118 . (i) Net losses.-The special deduction for net losses of prio r years, to the extent provided in section 117 . (j) Bad debts .-Debts ascertained to be worthless and cha rged off 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 to be charged off in part . (k) Depreciation .-A reasonable allowance for the exhaustion, wear and tear of property used in the trade or business, including a reasonable allowance for obsolescence. In the case of property held by one person for life with remainder to another person, the deduc- tion 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 . (1) Depletion .-In the 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 Commis- sioner, with the approval of the Secretary . In the case of leases the deduction shall be equitably apportioned between the lessor and lessee . 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 bene- ficiaries and the trustee in accordance with the pertinent provisions of the instrument creating the trust, or, in the absence of such pro- visions, on the basis of the trust income allocable to each . (For per - centage depletion in case of oil and gas wells, see section 114(b) (3) .) (in) Basis for depreciation and depletion .-The basis upon which deple tion, exhaust ion, wear and tear, and obs olescence are to. be
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