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Internal Revenue Service-Continued
Income and excess profits taxes regulations (1939 IRC)-Continued
Income tax; taxable years beginning after December 31, 1951, 26 Part39—Con.
Computation of net income, 26 $$ 39.21–39.28, 39.111–39.130A-5
Deductions Continued
Emergency facilities, amortization deductions for, 26

$$ 39.124A (a)-39.124A (i)
Estates and trusts, 26 $ 39.172-1

Partnerships, 26 § 39.190–1
Employees' pensions, annuities, etc.; employers' contributions

to. See Contributions.
Expenses, 26 $$ 39.23 (a)-1-39.23 (a)-15
Business, trade, banking corporations, professional, farm-

ers, etc., 26 $$ 39.23 (a)-1-39.23 (a)-14
Corporate charitable contributions, 26 $ 39.23 (a)-13
Wage and salary payments, bonuses, pensions, etc.,

26 88 39.23 (a)-6-39.23 (a)-9
Medical, dental, etc., expenses, 26 39.23 (x)-1
Nontrade or nonbusiness expenses, 26 § 39.23 (a)-15
Personal and family expenses not deductible, 26 § 39.24_1
Unharvested crops sold with load; expenses not deductible,

26 $$ 39.24 (f), 39.24 (f)-1
Unpaid expenses not deductible, 26 $$ 39.24 (c), 39.24 (c)-1
Exploration (minerals) expenditures, 26 $ 39.23 (ff)-1
Foreign corporations, 26 $$ 39.232, 39.232-1, 39.233, 39.233–1
Grain storage facilities, amortization deduction for, 26

$$ 39.124B-39.124B-8
Insurance; certain items not deductible:

Business insurance premiums, 26 § 39.24 (a)-3

Single premium life or endowment, 26 $ 39.24 (a)-5
Insurance companies, other than life or mutual, 26 § 39.204
Interest, 26 § 39.23 (b)-1

Unpaid interest not deductible, 26 § 39.24 (c)-1
Life or terminable interests not deductible, 26 § 39.24 (d)-1
Limitations on deductions allowable to individuals in certain

cases (where deductions exceed gross income in five con

secutive years by more than $50,000), 26 § 39.130–1
Losses:

Bad debts. See Bad debts.
Basis for determining, 26 § 39.23 (i)
By corporations, 26 § 39.23 (f)-1
By farmers, 26 $ 39.23 (e)-5
By individuals, 26 $$ 39.23 (e)-1-39.23 (e)-5
Capital losses, 26 § 39.23 (g)
Net operating loss deduction, 26 $$ 39.122–1—39.122-5,

39.170-1
Nondeductible losses; sales or exchanges between certain

classes of persons, 26 § 39.24-6
Wagering losses, 26 § 39.23 (h)-1
Medical, dental, etc., expenses, 26 § 39.23 (x)-1
Mines or other natural deposits:

Depletion, 26 $$ 39.23 (m)-1-39.23 (m)-28, 39.114
Expenditures for development, 26 $ 39.23 (cc)

Expenditures for discovery or exploration, 26 § 39.23 (ff)-1
Mutual savings banks. See Banks.
Net operating loss deduction, 26 $$ 39.122, 39.170
Nondeductible items, 26 $ $ 39.24 (a)-39.24 (f)-1
Capital expenditures, personal expenses, insurance pre-

miums, certain taxes, etc., 26 § 39.24 (a)
Farm crops, unharvested, sold with land; expenses at-

tributable to, 26 $ 39.24 (f)
Life or terminable interest, 26 $ 39.24 (d)
Losses from sales or exchanges of property, 26 § 39.24 (b)
Unpaid expense and interest, 26 § 39.24 (c)

Internal Revenue Service-Continued
Income and excess profits taxes regulations (1939 IRC)-Continued
Income tax; taxable years beginning after December 31, 1951, 26 Part 39—Con.
Computation of net income, 26 $$ 39.21–39.28, 39.111—39.130A-5
Deductions Continued

Standard deduction; election, etc., 26 § 39.23 (aa)-1
Stock, tax on; taxes of shareholders paid by corporation, 26

$ 39.23 (d)
Taxes:

Capital items not deductible, 26 § 39.24 (a)-6

Federal and local taxes, 26 $$ 39.23 (c)-1-39.23 (c)-3
Dependents, credit for, 26 § 39.25–2 (e)
Depletion:

Basis for allowance for, 26 $ $ 39.114-1, 39.117 (k)-1

Deductions for, 26 $$ 39.23 (m)-1-39.23 (m)-28
Depreciation:

See also Depletion.
Basis for allowance for, 26 $$ 39.113 (d)-1, 39.114-1

Deductions for, 26 $$ 39.23 (1)-1-39.23 (1)-10
Distributions (dividends, etc.), by corporations, 26 $$ 39.115 (a)-

39.115 (m)-1
Emergency facilities, amortization deduction for, 26 $$ 39.124A-

39.124A (i)-1
Estates and trusts, 26 39.172–1

Partnerships, 26 $ 39.190–1
Employee stock options, 26 $$ 39.130A-1-39.130A-5
Employees' trusts, pension and annuity plans, etc.; employers'

contributions to, 26 $$ 39.23 (p)-1-39.23 (p)-12
Exclusions from gross income, 26 $$ 39.22 (b)-39.22 (b) (16),

39.116–39.116-6
Alimony payments, 26 § 39.22 (k)-1
Annuities, 26 $$ 39.22 (b) (2)-2–39.22 (b) (2)-5
Armed forces, members of:

Additional allowance for, 26 $ 39.22 (b) (13)-1

Mustering-out payments of, 26 $ 39.22 (b) (14)-1
Bridges acquired by State or political subdivisions, income

from, 26 $$ 39.116 (e), 39.116–3
Child, income from services of, 26 § 39.22 (m)-1
China Trade Act corporation, dividend from, 26 $$ 39.22 (b)

(8), 39.116 (f) Cost-of-living allowances, 26 $$ 39.116 (j), 39.116-4 Earned income from sources outside United States, 26 $$ 39.22

(b) (8), 39.116 (a), 39.116-1 Exploration, mining, etc., for defense purposes, payments to

encourage, 26 § 39.22 (b) (15) Federal or State obligations, interest or dividends on, 26

$$ 39.22 (b) (4)-1-39.22 (b) (4)-6 Foreign governments, international organizations, and their

employees; income of, 26 $8 39.22 (b) (8), 39.116 (c), (h),

39.116–2 Foreign Service personnel, certain allowances of, 26 $$ 39.116

(k), 39.116,5 Gifts, bequests, etc., 26 $ 39.22 (b) (3)-1 Improvements by lessee on lessor's property, value of, 26

$ 39.22 (b) (11)-1
Indebtedness, discharge of; income from, 26 $$ 39.22 (b) (9)-

1-39.22 (b) (9)-2, 39.22 (b) (10)-1
Injuries or sickness, compensation for, 26 § 39.22 (b) (5)
Inventories. See Inventories, below.
Life insurance, annuities, etc., 26 $$ 39.22 (b) (1)-1_39.22 (b)

(2)-5
Ministers; rental value of house furnished as part of compen-

sation, 26 § 39.22 (b) (6)

Internal Revenue Service-Continued
Income and excess profits taxes regulations (1939 IRC)-Continued
Income tax; taxable years beginning after December 31, 1951, 26 Part 39—Con.
Computation of net income, 26 $$ 39.21–39.28, 39.111–39.130A-5
Exclusions from gross income-Continued
Puerto Rico, income from sources within, 26 $$ 39.116 (1),

39.116-6
Railroad corporation, discharge of indebtedness, 26 $ 39.22 (b)

(10)-1 Recovery of bad debts, prior taxes, etc., previously deducted,

26 $ 39.22 (b) (12)-1 Shipowners' protective and indemnity associations, nonprofit;

receipts, 26 $$ 39.22 (b) (8), 39.116 (g) Sports program conducted for American National Red Cross,

26 $ 39.22 (b) (16) States, municipalites, etc.: Bridges; exclusion of certain income from gross income,

26 § 39.116 (e)
Income from public utility or government function, 26

$ 39.116 (d)
Obligations of; interest on, 26 § 39.22 (b) (4)-1
Territorial employees, compensation of, 26 § 39.22 (b) (8)
Treasury bills, gain from sale of, 26 $ 39.116 (i)

Treaties, income exempt under, 26 $ 39.22 (b) (7)
Gain or loss:
Capital gains and losses, 26 $$ 39.117 (a)_39.117 (p)-1

Bonds, debentures, etc.; losses of banks, 26 § 39.117 (i)
Bonds, retirement of, 26 8 39.117 (f)
Coal, disposal of, 26 $$ 39.117 (k), 39.117 (k)-1
Collapsible corporations, 26 $$ 39.117 (m), 39.117 (m)-1
Controlled corporations or individuals, sales or exchanges

between, 26 $$ 39.117 (0), 39.117 (0)-1
Holding period of property, 26 $$ 39.117 (h), 39.117 (h)-1
Husband and wife:

Sales or exchanges between, 26 $ 39.117 (0)-1

Short sales, 26 $ 39.117 (1)-1 (c) (3)
Involuntary conversions, 26 $$ 39.117 (j), 39.117 (j)-1
Property used in trade or business, 26 $$ 39.117 (j), 39.117

(j)-1
Livestock for draft, breeding, or dairy purposes, 26

$ 39.117 (j)-2
Securities; sale or exchange by dealers, 26 $$ 39.117 (n),

39.117 (n)-1
Wash sales, 26 88 39.118, 39.118–1
Short sales, 26 $$ 39.117 (g), 39.117 (g)-1, 39.117 (1)-1
Gain attributable to amortization deduction, 26

$ 39.117 (g)-2
Termination payments to employees, 26 $$ 39.117 (p),

39.117 (p)-1
Timber, cutting and disposal of, 26 $$ 39.117 (k), 39.117

(k)-1
Computation of gain or loss; general rule, 26 § 39.111-1
Net operating loss deduction, 26 88 39.122–1–39.122–5
Sales or exchanges, etc., of property:
Basis for determining gain or loss from sale or other dis-

position of property, 26 $$ 39.113 (a)-1—39.113

(a) 22-1 Adjusted basis; cancellation or discharge of indebted

ness, etc., 26 $$ 39.113 (b) (1)-1_39.113 (b) (4)-1 Depreciation, etc., allowed before 1952, 26 $ 39.113 (d) Property on which lessee has made improvements, 26 Unadjusted basis (property acquired by gift, transfer,

exchange, etc.), 26 83 39.113 (a)-1—39.113 (a)-23

$ 39.113 (c)-1

Internal Revenue. Service-Continued
Income and excess profits taxes regulations (1939 IRC)–Continued
Income tax; taxable years beginning after December 31, 1951, 26 Part 39—Con.
Computation of net income, 26 $$ 39.21–39.28, 39.111-39.130A-5
Gain or loss-Continued
Sales or exchanges, etc., of property-Continued
Determination of amount and recognition of gain or loss,

26 $$ 39.112 (a)-39.112 (m)-4
Control of corporation; definition, 26 $ 39.112 (h)-1
Exchanges not solely in kind, 26 $$ 39.112 (c)-1-

39.112 (e)-1 Exchanges solely in kind, 26 $$ 39.112 (b)-1—39.112

(b) (11)-2 Federal Communications Commission; gain from sale

or exchange pursuant to policies of, 26 $$ 39.112

(m)-1-39.112 (m)-4 Foreign corporations; reorganization or transfer of

property to or from foreign corporation, 26 $ 39.

112 (i)-1 Insolvent corporations, certain, reorganization of; ex

changes by securities holders, 26 $$ 39.112 (1)-1,

39.12 (1)-2 Involuntary conversions of property, 26 $$ 39.112 (f)

1, 39.112 (f)-2, 39.117 (j)-1 Liability, assumption of, not recognized, 26 § 39.112

(k)-1 Reorganizations, mergers, etc., exchanges in connec

tion with, 26 S$ 39.112 (g)-1-39.112 (g)-6 Residence; gain from sale or exchange of, 26 $ 39.112

(n)-1
Wash sales of stock or securities, 26 $ 39.118–1
War losses, 26 $$ 39.127 (a)-39.127 (f)-1
Gross income:
Adjusted gross income, 26 $ 39.22 (n)-1
Individuals with adjusted gross income of $5000 or less, tax

under Supplement T, 26 $$ 39.400—39.404–1
Dealers in tax-exempt securities, and short-term municipal

bonds; treatment of bond premium, 26 $$ 39.22 (0), 39.22

(0)-1 Deductions from. See Deductions. Definitions; various types of compensation or income included

in gross income, 26 $$ 39.22 (a)-1—39.22 (a)-23 Exclusions from. See Exclusions from gross income. Income from sources within or without United States (interest,

dividends, rents, royalties, compensation for labor or services, sale of property, transportation, telegraph service, etc.); in

clusion in gross income, 26 $$ 39.116–1, 39.119 (d)-39.119 (f) Inventories, 26 $$ 39.22 (c)-39.22 (c)-8, 39.22 (d)-39.22 (d) -7,

39.113 (a) (1)-1 Last-in first-out inventory method, election of, 26 $$ 39.22

(d)-1-39.22 (d)-7
Of certain groups:

Farmers, 26 § 39.22 (c)-6
Livestock raisers, 26 § 39.22 (c)-6
Manufacturers, 26 § 39.22 (c)-7
Miners, 26 $ 39.22 (c)-7
Retail merchants, 26 § 39.22 (c)-8

Securities, dealers in, 26 $ 39.22 (c)-5
Valuation of (at cost or market), etc., 26 $$ 39.22 (c)-1-

39.22 (c)-4
Losses:

Computation of gain or loss. See Gain or loss.
Deductions for. See Deductions.
War losses, 26 $$ 39.127 (a)-39.127 (f)-1

356055-56-39

Page 583

Internal Revenue Service Continued
Income and excess profits taxes regulations (1939 IRC)—Continued
Income tax; taxable years beginning after December 31, 1951, 26 Part 39—Con.
Computation of net income, 26 $$ 39.21–39.28, 39.111-39.130A-5

Military and naval personnel. See Armed forces.
Net income, meaning of, 26 $ 39.21-1
Personal exemption for individuals; credits, 26 $ 39.25-2
Taxes; recovery of unconstitutional taxes, 26 § 39.128-1
War losses, 26 $$ 39.127 (a)-1—39.127 (f)-1

Wash sales of stocks or securities, loss from, 26 $ 39.118–1
Contributions, deductions for. See Computation of net income: de-

ductions. Corporations, provisions applicable to. See Accounting; China Trade

Act corporations; Computation of net income; Foreign corpora-
tions; Rates of tax; Returns and payment of tax; and Tax-exempt

organizations.
Courts, District, jurisdiction of:

To enforce summons, etc., 26 § 39.3633

To issue orders, processed, and judgments, 26 $ 39.3800
Credits against net income. See Computation of net income.
Credits against tax, 26 $$ 39.33, 39.131 (a)-39.131 (j)-1, 39.3700

Authority to make, 26 § 39.3770
For overpayments. See Overpayments.
Foreign countries, or possessions of United States, taxes paid to, 26

$$ 39.31, 39.131 (a)-39.131 (j)
Tax withheld at source on wages, 26 $S 39.35–1, 39.35–2
Decedents, income in respect of, 26 $$ 39.126 (a)-39.126 (c)-1
Deductions. See Computation of net income.
Deficiencies, assessment and collection of, 26 $$ 39.271–39.275–2
Assessment, 26 $ 39.272-1

Jeopardy assessments, 26 § 39.273–1

Period of limitation on, 26 $ 39.275–1
Bankruptcy and receivership cases, 26 $$ 39.274–1, 39.274–2
Collection, 26 $ 39.272-2

Period of limitation on, 26 $ 39.275-2
Payment of deficiencies, extension of time for, 26 8 39.272–3
Period of limitation:

On assessment of tax, 26 $ 39.275–1

On collection of tax, 26 $ 39,275-2
Definitions, 26 $$ 39.3797–39.3797–12

Associations, 26 $$ 39.3797–2, 39.3797-3
Classification of taxables, 26 $ 39.3797–1
Collectors and directors, internal revenue, 26 § 39.3797–12
Domestic, foreign, resident, and nonresident person, 26 § 39.3797-8
Fiduciary, 26 $$ 39.3797–9, 39.3797–10
Insurance company, 26 § 39.3797–7
Military or naval forces of United States, 26 § 39.3797–11

Partnerships, 26 $$ 39.3797–4–39.3797-6
Delinquencies:

Interest rate; 6%, 26 $ 39.3794

Penalties for. See Penalties.
Dependents, credits for, 26 39.25–2 (e)
Depreciation or depletion, deductions for. See Computation of net in-

come: deductions.
Determinations under income tax laws, adjustments pursuant to. See

Adjustments.
Distraint proceedings, 26 $$ 39.3690–39.3725
Distributions:
By corporations (dividends, etc.); treatment of, in computation of

net income, 26 $$ 39.115 (a)-39.115 (m)-1
Distributions in obedience to orders of Securities and Exchange

Commission. See Exchanges and distributions.
Educational organizations; tax exemption. See Tax-exempt organi-

zations.

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