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TITLE 26-INTERNAL REVENUE CODE 1960-Pub. L. 86-779, § 6(b), Sept. 14, 1960, 74 Stat. 1001, added item 180. 1958-Pub. L. 85-866 title I, § 15(b), title II, § 204(b), Sept. 2, 1958, 72 Stat. 1613, 1680, added items 178 and 179. 1956-Act June 29, 1956, ch. 464, § 4(b), 70 Stat. 406, added item 177. 1954-Act Sept. 1, 1954, ch. 1206, title II, § 210(b), 68 Stat. 1097, added item 176. PART REFERRED TO IN OTHER SECTIONS This part is referred to in sections 62, 241 of this title. § 161. Allowance of deductions In computing taxable income under section 63(a), there shall be allowed as deductions the items specified in this part, subject to the ex- ceptions provided in part IX (sec. 261 and fol- lowing, relating to items not deductible). (Aug. 16, 1954, ch. 736, 68A Stat. 45.) CROSS REWERENCES Adjusted gross income as gross income minus certain deductions, see section 62 of this title. Deductions of nonresident alien individuals, see sec- tion 873 of this title. § 162. Trade or business expenses (a) In general There shall be allowed as a deduction all the ordinary and necessary expenses paid or in- curred during the taxable year in carrying on any trade or business, including- (1) a reasonable allowance for salaries or other compensation for personal services ac- tually rendered; (2) traveling expenses (including amounts expended for meals and lodging other than amounts which are lavish or extravagant under the circumstances) 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 busi- ness, 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 (in- cluding any Delegate and Resident Commis- sioner) within the State, congressional district, or possession which he represents in Congress shall be considered his home, but amounts ex- pended by such Members within each taxable year for living expenses shall not be deductible for income tax purposes in excess of $3,000. (b) Charitable contributions and gifts excepted No deduction shall be allowed under subsec- tion (a) for any contribution or gift which would be allowable as a deduction under section 170 were it not for the percentage limitations, the dollar limitations, or the requirements as to the time of payment, set forth in such section. (c) Illegal bribes, kickbacks, and other payments (1) Illegal payments to government officials or em- ployees No deduction shall be allowed under subsec- tion (a) for any payment made, directly or in- directly, to an official or employee of any gov- ernment, or of any agency or instrumentality of any government, if the payment consti- tutes an illegal bribe or kickback or, if the payment is to an official or employee of a for- eign government, the payment would be un- lawful under the laws of the United States if such laws were applicable to such payment and to such official or employee. The burden of proof in respect of the issue, for the pur- poses of this paragraph, as to whether a pay- ment constitutes an illegal bribe or kickback (or would be unlawful under the laws of the United States) shall be upon the Secretary to the same extent as he bears the burden of proof under section 7454 (concerning the burden of proof when the issue relates to fraud). (2) Other illegal payments No deduction shall be allowed under subsec- tion (a) for any payment (other than a pay- ment described in paragraph (1)) made, di- rectly or indirectly, to any person, if the pay- ment constitutes an illegal bribe, illegal kick- back, or other illegal payment under any law of the United States, or under any law of a State (but only if such State law is generally enforced), which subjects the payor to a criminal penalty or the loss of license or privi- lege to engage in a trade or business. For pu:- poses of this paragraph, a kickback includes a payment in consideration of the referral of a client, patient, or customer. The burden of proof in respect of the issue, for purposes of this paragraph, as to whether a payment con- stitutes an illegal bribe, illegal kickback, or other illegal payment shall be upon the Sec- retary to the same extent as he bears the burden of proof under section 7454 (concern- ing the burden of proof when the issue re- lates to fraud). (3) Kickbacks, rebates, and bribes under medicare and medicaid No deduction shall be allowed under subsec- tion (a) for any kickback, rebate, or bribe made by any provider of services, supplier, physician, or other person who furnishes items or services for which payment is or may be made under the Social Security Act, or in whole or in part out of Federal funds under a State plan approved under such Act, if such kickback, rebate, or bribe is made in connec- tion with the furnishing of such itenwm or ser- vices or the making or receipt of such pay- ments. For purposes of this paragraph, a kick- back includes a payment in consideration of the referral of a client, patient, or customer. (d) Capital contributions to Federal National Mort- gage 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) exceeis the fair market value of the stock as of th. issue date of such stock, the initial holder f the stock shall treat the excess as ordinary arid nec- essary expenses paid or incurred during the taxable year in carrying on a trade or business. Page 139