CH. 1, SUBCH. B, PART VI—ITEMIZED DEDUCTIONS FOR INDIVIDUALS AND CORPORATIONS (68A Stat. 45, ff.): Table (Sec. 176 added) Do... (Sec. 177 added) Do.. (Sec. 178 added) Do... (Sec. 179 added) Sept. 1, 1954, H.R. 9366, P.L. 83-761, § 201(b), 68 Stat. 1097: "Sec. 176. Payments with respect to employees of certain foreign September 1, 1954-the date of enactment. June 29, 1956, H.R. 6143, P.L. 84-629, § 4(b), 70 Stat. 406-407: "Sec. 177. Trademark and trade name expenditures." Effective date: June 29, 1956-the date of enactment. Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 15(b), 72 Stat. 1613: Amended the table of sections for Part VI of Subchapter B of Chapter 1 by adding at the end thereof, after "Sec. 177" (as added by P.L. 84-629, § 4(b)), the following: "Sec. 178. Depreciation or amortization of improvements made by lessee on lessor's property." Applicability: Costs of acquiring a lease incurred, and improvements begun, after July 28, 1958 (other than improvements which, on July 28, 1958, and at all times thereafter, the lessee was under a binding legal obligation to make). (Id., § 15(c), 72 Stat. 1613.) Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 204(b), 72 Stat. 1680: Amended the table of sections for Part VI of Subchapter B of Chapter 1 by adding at the end thereof, after "Sec. 178" (as added by P.L. 85-866, § 15(b)), the following: "Sec. 179. Additional first-year depreciation allowance for small business." The table of sections for Part VI of Subchapter B of Chapter 1 originally read as follows (68A Stat. 45): CH. 1BVI-Continued Table-Continued Do..... (Sec. 180 added) Do.. (Sec. 181 added) Do.. Do.. SEC. 162. Sept. 14, 1960, H.R. 10960, P.L. 86-779, § 6(b), 74 Stat. 1001: Amended the table of sections for Part VI of Subchapter B of Chapter 1 by adding at the end thereof, after "Sec. 179" (as added by P.L. 85-866, § 204 (b)), the following: "Sec. 180. Expenditures by farmers for fertilizer, etc." Applicability: Taxable years beginning after December 31, 1959. Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 2(g) (3), 76 Stat. 973: "Sec. 181. Deduction for certain unused investment credit." Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 203 (a) (3) (D), 78 Stat. 34: "(A) in the case of property placed in service after December Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 21(c), 76 Stat. 1064: Amended the table of sections for Part VI of Subchapter B of Chapter 1 by adding at the end thereof, after "Sec. 181" (as added by P.L. 87-834, § 2(g) (3)), the following: "Sec. 182. Expenditures by farmers for clearing land." Applicability: Taxable years beginning after December 31, 1962. TRADE OR BUSINESS EXPENSES (68A Stat. 45-46): "(including the entire amount expended for meals and lodging)" and inserting in lieu thereof "(including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances)". 40 Section 162(a) originally read as follows (68A Stat. 45-46): "(a) IN GENERAL.-There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including"(1) a reasonable allowance for salaries or other compensation for personal services actually rendered; "(2) traveling expenses (including the entire amount expended for meals and lodging) while away from home in the pursuit of a trade or business; and "(3) 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. For purposes of the preceding sentence, the place of residence of a Member of Congress (including any Delegate and Resident Commissioner) within the State, congressional district, Territory, or possession which he represents in Congress shall be considered his home, but amounts expended by such Members within each taxable year for living expenses shall not be deductible for income tax purposes in excess of $3,000." SEC. 162-Continued (a) (2) (amended 1962)—Continued (b) (in part) (c)....... (redesignated, added) (d) ....... Applicability: Taxable years ending after December 31, 1962, but only in respect of periods after such date. (Id., § 4(c), 76 Stat. 977.) Sept. 14, 1960, H.R. 10960, P.L. 86-779, § 7(b), 74 Stat. 1002: Amended Sec. 162(b)" by inserting after "the percentage limitations," the following: Sept. 2, 1958, H.R. 8381, P.L. 85-866, § 5(a), 72 Stat. 1608: Amended Sec. 162 (relating to trade or business expenses) by redesignating subsection (c) (cross reference) as subsection (d), and by inserting after subsection (b) the following new subsection (c): "(c) IMPROPER PAYMENTS TO OFFICIALS OR EMPLOYEES OF FOREIGN COUNTRIES.-No deduction shall be allowed under subsection (a) for any expenses paid or incurred if the payment thereof is made, directly or indirectly, to an official or employee of a foreign country, and if the making of the payment would be unlawful under the laws of the United States if such laws were applicable to such payment and to such official or employee." Applicability: "The amendment made by subsection (a) shall apply only with respect to expenses paid or incurred after the date of the enactment of this Act. [Sept. 2, 1958.] The determination as to whether any expense paid or incurred on or before the date of the enactment of this Act shall be allowed as a deduction shall be made as if this section had not been enacted and without inference drawn from the fact that this section is not made applicable with respect to expenses paid or incurred on or before the date of the enactment of this Act." (Id., § 5(b), 72 Stat. 1608.) Sept. 14, 1960, H.R. 10960, P.L. 86-779, § 8(a), 74 Stat. 1003: Amended Sec. 162 by redesignating subsection (d) (former subsection (c) relettered by P.L. 85-866, § 5(a)) as subsection (e), and by inserting after subsection (c) (as added by P.L. 85-866, § 5(a)) the following new subsection: "(d) CAPITAL CONTRIBUTIONS TO FEDERAL NATIONAL MORTGAGE ASSOCIATION. For purposes of this subtitle, whenever the amount of capital contributions evidenced by a share of stock issued pursuant to section 303 (c) of the Federal National Mortgage Association Charter Act (12 U.S.C., sec. 1718) exceeds the fair market value of the stock as of the issue date of such stock, the initial holder of the stock shall treat the excess as ordinary and necessary expenses paid or incurred during the taxable year in carrying on a trade or business." "Subsection (b) of section 162 originally read as follows (68A Stat. 46): "(b) CHARITABLE CONTRIBUTIONS AND GIFTS EXCEPTED.-No deduction shall be allowed under subsection (a) for any contribution or gift which would be allowable as a deduction under section 170 were it not for the percentage limitations, or the requirements as to the time of payment, set forth in such section." SEC. 162-Continued (e).. (f) .. (redesignated) Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 3(a), 76 Stat. 973: Amended Sec. 162 by redesignating subsection (e) (former subsection (d) relettered by P.L. 86-779, § 8(a)) as subsection (f), and by inserting after subsection (d) (as added by P.L. 86-779, § 8(a)) the following new subsection: (e) APEARANCES, ETC., WITH RESPECT TO LEGISLATION. "(1) IN GENERAL.-The deduction allowed by subsection (a) shall include all the ordinary and necessary expenses (including, but not limited to, traveling expenses described in subsection (a) (2) and the cost of preparing testimony) paid or incurred during the taxable year in carrying on any trade or business (A) in direct connection with appearances before, submission of statements to, or sending communications to, the committees, or individual members, of Congress or of any legislative body of a State, a possession of the United States, or a political subdivision of any of the foregoing with respect to legislation or proposed legislation of direct interest to the taxpayer, or (B) in direct connection with communication of information between the taxpayer and an organization of which he is a member with respect to legislation or proposed legislation of direct interest to the taxpayer and to such organization, and that portion of the dues so paid or incurred with respect to any organization of which the taxpayer is a member which is attributable to the expenses of the activities described in subparagraphs (A) and (B) carried on by such organization. "(2) LIMITATION.-The provisions of paragraph (1) shall not be construed as allowing the deduction of any amount paid or incurred (whether by way of contribution, gift, or otherwise) "(A) for participation in, or intervention in, any political campaign on behalf of any candidate for public office, or "(B) in connection with any attempt to influence the general public, or segments thereof, with respect to legislative matters, elections, or referendums." Oct. 16, 1962, H.R. 10650, P.L. 87-834, § 3(a), 76 Stat. 973: Redesignated Sec. 162(e) (original subsection (c) redesignated) as subsection (f).42 Applicability: Taxable years beginning after December 31, 1962. Id., § 3(b), 76 Stat. 973.) ANCILLARY PROVISIONS: Section 97 of the Technical Amendments Act of 1958 (Sept. 2, 1958, H.R. 8381, P.L. 85-866, 72 Stat. 1672) provided as follows: "SEC. 97. DEDUCTIBILITY OF ACCRUED VACATION PAY. "Deduction under section 162 of the Internal Revenue Code of 1954 for accrued vacation pay, computed in accordance with the method of accounting consistently 42 The original subsection (c) of section 162 read as follows (68A Stat. 46): "(c) CROSS REFERENCE. "For special rule relating to expenses in connection with subdividing real property for sale, see section 1237.” It was successively redesignated as follows: As subsection (d) by P.L. 85-866, § 5(a), 72 Stat. 1608. SEC. 162-Continued ANCILLARY PROVISIONS (P.L. 85-866, § 97)—Continued followed by the taxpayer in arriving at such deduction, shall not be denied for any taxable year ending before January 1, 1961, solely by reason of the fact that (1) the liability for the vacation pay to a specific person has not been clearly established, or (2) the amount of the liability to each individual is not capable of computation with reasonable accuracy, if at the time of the accrual the employee in respect of whom the vacation pay is accrued has performed the qualifying service necessary under a plan or policy (communicated to the employee before the beginning of the vacation year) which provides for vacations with pay to qualified employees." See also section 96 of the Technical Amendments Act of 1958 as quoted in "ANCILLARY PROVISIONS" under Code section 6511, at p. 1109 below. June 8, 1960, H.R. 11405, P.L. 86–496, § 2, 74 Stat. 164: Amended section 97 of the Technical Amendments Act of 1958 (relating to deductibility of accrued vacation pay) by striking out "January 1, 1961," and inserting in lieu thereof "January 1, 1963,". Oct. 17, 1963, H.R. 6246, P.L. 88-153, § 1, 77 Stat. 272: Amended section 97 of the Technical Amendments Act of 1958 (as amended by P.L. 86-496, § 2) by striking out— "January 1, 1963," and inserting in lieu thereof "January 1, 1965,". Aug. 31, 1964, H.R. 10467, P.L. 88-554, § 1, 78 Stat. 761: Amended section 97 of the Technical Amendments Act of 1958 (as amended by P.L. 88-153, § 1) by striking out "January 1, 1965,' and inserting in lieu thereof "January 1, 1967,". SEC. 163. INTEREST (68A Stat. 46): (b)(1). (in part) Feb. 26, 1964, H.R. 8363, P.L. 88-272, § 224 (c), 78 Stat. 79: (1) by striking out "personal property is purchased" and inserting in lieu thereof "personal property or educational services are purchased"; and (2) by adding at the end thereof the following new sentence: "For purposes of this paragraph, the term 'educational services' means any service (including lodging) which is purchased from an educational institution (as defined in section 151(e)(4)) and which is provided for a student of such institution." Applicability: Payments made during taxable years beginning after December 31, 1963. (Id., § 224(d), 78 Stat. 79.) 43 Subsection (b)(1) of section 163 originally read as follows (68A Stat 46): "(b) INSTALLMENT PURCHASES WHERE INTEREST CHARGE IS NOT SEPARATELY STATED. "(1) GENERAL RULE.-If personal property is purchased under a contract "(A) which provides that payment of part or all of the purchase price is to be made in installments, and "(B) in which carrying charges are separately stated but the interest charge cannot be ascertained, then the payments made during the taxable year under the contract shall be treated for purposes of this section as if they included interest equal to 6 percent of the average unpaid balance under the contract during the taxable year. For purposes of the preceding sentence, the average unpaid balance is the sum of the unpaid balance outstanding on the first day of each month beginning during the taxable year, divided by 12." |