56 STAT.] 77TH CONG., 2D SESS.-CH. 619-OCT. 21, 1942 SEC. 121. NON-TRADE OR NON-BUSINESS DEDUCTIONS. (a) DEDUCTION FOR ExPENsEs.- Section 23 (a) (relating to deduc- tion for expenses) is amended to read as follows: "(a) EXPENSES.- "(1) TRADE OR BUSINESS EXPENSES.- "(A) In General. - Al l the ordinary and necessary expenses paid or incurred during the taxable year in carry- ing on any trade or business, including a reasonable allow- ance 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. "(B) Corporate Charitable Contributions.- No deduction shall be allowable under subparagraph (A) to a corporation for any contribution or gift which would be allowable as a deduction under subsection (q) were it not for the 5 per centum limitation therein contained and for the requirement therein that payment must be made within the taxable year. "(C) Expenditures for Advertising and Good Will. -I f a corporation has, for the purpose of computing its excess profits credit under Chapter 2E, claimed the benefits of the election provided in section 733, no deduction shall be allow- able under subparagraph (A) to such corporation for expen- ditures for advertising or the promotion of good will which, under the rules and regulations prescribed under section 733 (a), may be regarded as capital investments. "(2) NON-TRADE OR NON-BUSINESS EXPENSES.-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." (b) ALLOCABLE TO EXEMPT INCOME. -Section 24 (a) (5) (relating to items not deductible) is amended by inserting after "this chapter the following: ", or any amount otherwise allowable under section 23 (a) -(2) which is allocable to interest (whether or not any amount of such interest is received or accrued) wholly exempt from the taxes imposed by this chapter". (c) DEPRECIATION DEDUCTION.-The first sentence of section 23 (1) (relating to deduction for depreciation) is amended to read as follows: "A reasonable allowance for the exhaustion, wear and tear (including a reasonable allowance for obsolescence)- "(1) of property used in the trade or business, or "(2) of property held for the production of income." (d) TAXABLE YEARS TO WHICH AMENDMENTS APrPiOABI. - The amendments made by this section shall be applicable to taxable years beginning after December 31, 1938. (e) RETROACTIVE AMENDMENT TO PRIOR REVENUE AcTs. -For the purposes of the Revenue Act of 1938 or any prior revenue Act the amendments made to the Internal Revenue Code by this section shall be effective as if they were a part of such revenue Act on the date of its enactment. 53 Stat. 12. 26U. .C.. 23(a); Supp. I, 9 23 (a). Post, p. 822. 54 Stat. 975; 55 Stat. 26. 26U..C. .i 710- 752; Supp. I , II 710- 743. Post, p. 899. 55 Stat. 26. 26 U.S. C., Supp. I, 5733(a). 53 Stat. 16 . 26U.S.C.C 24 (a) (5). Supra. 53 Stat. 14 . 26U.S.C.123(). 52 Stat. 447.
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