21  T.  D.  2090.  '


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CHAl^TER  31
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DEDUCTION  OP  LOSSES

The  law  provides  in  the  ease  of  individuals  that ' '  losses
actually  sustained  during  the  year,  incurred  in  business
or  trade,  or  arising  from  fires,  storms,  shipwreck  or
other  casualty,  and  from  theft,  when  such  losses  are  not
compensated  for  by  insurance  or  otherwise,  may  be
deducted,  as  also  may  debts  due  the  taxpayer  actually
ascertained  to  be  worthless  and  charged  off  within  the
year.  In  the  case  of  the  individual  there  is  a  limitation
as  to  the  amount  of  loss  which  may  be  deducted  in  trans-
actions entered  into  for  profit  but  not  connected  with  his
business  or  trade.  This  limitation  and  a  discussion  of
losses  incurred  in  trade  is  contained  in  the  chapter  on
citizens  and  residents.*  The  rules  discussed  in  this  chap-
ter are  those  applicable  to  corporations  and  individuals  •
generally.  In  the  case  of  corporations  all  losses  actually
sustained  and  charged  off  within  the  year  and  not  com-
pensated by  insurance  or  otherwise  may  be  deducted.*

Measure  of  Loss.  In  the  case  of  loss  of  property  or
assets  the  loss  must  be  based  upon  the  difference  between
the  cost  value  and  the  salvage  value  of  the  property  or
assets,  including  in  the  latter  value  such  amount,  if  any,
as  has,  in  the  current  or  previous  years,  been  set  aside

1  See  Chapter  4.
9  Act  of  September  8,  1916,  §  12  (a).
