Section 3402-307 - General deductionsIn computing net income there shall be allowed as deductions--
A. All the ordinary and necessary expenses paid or incurred during the tax year in carrying on any trade or business, or in the production of income required to be included in gross income under this article, including a reasonable allowance for salaries or other compensation for personal service actually rendered, and including 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. All interest paid or accrued during the taxable year on indebtedness.C. Taxes paid or accrued within the tax year imposed by--(1) the authority of the United States or of any of its possessions, (2)by the Commonwealth of Pennsylvania (except the net income tax imposed by this act and taxes on liquid fuels),(3) by any city, borough, town, township, school district or poor district of this Commonwealth (except those assessed as local benefits tending to increase the value of the property assessed), or (4)by the authority of any other state, country or territory.D. Losses sustained during the tax year and not compensated for by insurance, or otherwise, if incurred in trade or business.E. Losses sustained during the tax year and not compensated for by insurance or otherwise, if incurred in any transaction entered into for profit, though not connected with the trade or business. No deduction shall be allowed under this clause for any loss claimed to have been sustained in any sale or other disposition of shares of stock or security where it appears that, within thirty days before or after the date of such sale or other disposition, the taxpayer has acquired (otherwise than by bequest or inheritance), or has entered into a contract or option to acquire, substantially identical property, and the property so acquired is held by the taxpayer for any period after such sale or disposition. If such acquisition or the contract or option to acquire is to the extent of part only of substantially identical property, then only a proportionate part of the loss shall be disallowed.F. Losses sustained during the tax year of property not connected with the trade or business (but in case of a taxpayer other than a resident only of real property or tangible personal property having an actual situs within the State) if arising from fires, storms, shipwrecks or other casualty, or from theft, and not compensated for by insurance or otherwise.G. Debts ascertained to be worthless and charged off within the tax year, and, when satisfied that a debt is recoverable only in part, the department may allow such debt to be charged off in part. In the case of a debt existing on January first, one thousand nine hundred thirty-five, no more than its fair market value on that date shall be deducted. A worthless debt arising since January first, one thousand nine hundred thirty-five from unpaid wages, salary, rent or any similar item of taxable income is not an allowable deduction, unless the income which such item represents has been included as income by the taxpayer in a return rendered under this act.H. A reasonable allowance for the exhaustion, wear and tear of property, the income from which is required to be included in gross income under this article, used in the trade or business, including a reasonable allowance for obsolescence. In case of property held by one person for life with remainder to another person, the deduction shall be computed as if the life tenant were the absolute owner of the property, and shall be allowed to the life tenant. In the case of property held in trust, the allowable deduction shall be apportioned between the income beneficiaries and the trustee in accordance with the pertinent provisions of the instrument creating the trust, or in the absence of such provisions, on the basis of the trust income allocable to each.I. In the case of mines, oil and gas wells, other natural deposits and timber, a reasonable allowance for depletion and for depreciation or improvement, according to the peculiar conditions in each case, such reasonable allowance in all cases to be made under rules and regulations to be made by the department. The department may apportion such deductions equitably between the lessor and lessee.J. In the case of a taxpayer other than a resident of the State, the deduction allowed in this section shall be allowed only if and to the extent that they are connected with income arising from sources within the State and taxable under this act to a nonresident taxpayer, and the proper apportionment and allocation of the deductions with respect to sources of income within and without the State shall be determined under rules and regulations to be prescribed by the department.1935, July 12, P.L. 970, No. 314, art. III, § 307.