PUBLIC LAWS-CH. 289-MAY 28, 1938 Investment ex- penses. Proviso. Limitation on de- duction. Realestate expenses. If tax paid on share- holder's interest. Property deprecia- tion. Ante, p. 462 . Interest on indebt- edness; exception. Rental value of real estate. Insurance com- panies other than life or mutual. Imposition of tax. In general. Ante, pp. 455-456. Foreign companies, special class net in- come. Deductions. Interest on Federal obligations. Ante, p. 467. Dividends received. Ante, p. 467. No United States insurance business. (4) INVESTMENT EXPENSES.-Investment expenses paid during the taxable year: Provided, That if any general expenses are in part assigned to or included in the investment expenses, the total deduction under this paragraph shall not exceed one-fourth of 1 per centum of the book value of the mean of the invested assets held at the beginning and end of the taxable year; (5) REAL ESTATE EXPENSES.- Taxes and other expenses paid during the taxable year exclusively upon or with respect to the real estate owned by the company, not including taxes assessed against local benefits of a kind tending to increase the value of the property assessed, and not including any amount paid out for new buildings, or for permanent improvements or betterments made to increase the value of any property. The deduction allowed by this paragraph shall be allowed in the case of taxes imposed upon a shareholder of a company upon his interest as shareholder, which are paid by the com- pany without reimbursement from the shareholder but in such cases no deduction shall be allowed the shareholder for the amount of such taxes; (6) DEPRECIATION. -A reasonable allowance, as provided in section 23 (1), for the exhaustion, wear and tear of property, including a reasonable allowance for obsolescence; and (7) INTEREST.- Al l interest paid within the taxable year on its indebtedness, except on indebtedness incurred or continued to purchase or carry obligations (other than obligations of the United States issued after September 24, 1917, and originally subscribed for by the taxpayer) the interest upon which is wholly exempt from taxation under this title. (b) RENTAL VALUE OF REAL ESTATE.- The deduction under sub- section (a) (5) or (6) of this section on account of any real estate owned and occupied in whole or in part by a life insurance com- pany, shall be limited to an amount which bears the same ratio to such deduction (computed without regard to this subsection) as the rental value of the space not so occupied bears to the rental value of the entire property. SEC. 204. INSURANCE COMPANIES OTHER THAN LIFE OR MUTUAL. (a) IMPOSITION OF TAX. - (1) IN GENERAL. --In lieu of the tax imposed by sections 13 and 14, there shall be levied, collected, and paid for each taxable year upon the special class net income of every insurance company (other than a life or mutual insurance company) a tax of 161/1⁄2 per centum of the amount thereof. (2) SPECIAL CLASS NET INCOME OF FOREIGN COMPANIES.-In the case of a foreign insurance company (other than a life or mutual insurance company), the special class net income shall be the net income from sources within the United States minus the sum of- (A) INTEREST ON OBLIGATIONS OF THE UNITED STATES AND rrs INSTRUMENTALITIES.-The credit provided in section 26 (a). 2(B DIVIDENDs RECEIVED. - The credit provided in section 26 (b). (3) No UNITED STATES INSURANCE BUSINESS. -Foreign insur- ance companies not carrying on an insurance business within the United States shall not be taxable under this section but shall be taxable as other foreign corporations. 524 [52 STAT.
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