Page 211

TITLE 26-INTERNAL REVENUE CODE PART REFERRED TO IN OTHER SECTIONS This part is referred to in sections 161, 211 of this title. § 261. General rule for disallowance of deductions In computing taxable income no deduction shall in any case be allowed in respect of the items specified in this part. (Aug. 16, 1954, ch. 736, 68A Stat. 76.) § 262. Personal, living, and family expenses Except as otherwise expressly provided in this chapter, no deduction shall be allowed for personal, living, or family expenses. (Aug. 16, 1954, ch. 736, 68A Stat. 76.) CROSS REFERENCES Additional exemption for students, see section 151 of this title. Medical and dental expenses deductible, see section 213 of this title. Non.trade or non.business expenses deductible, see section 212 of this title. Trade or business expenses deductible, see section 162 of this title. Traveling expenses including meals and lodging de- ductible, see section 162 of this title. § 263. Capital expenditures (a) General rule No deduction shall be allowed for- (1) Any amount paid out for new buildings or for permanent improvements or better- ments made to increase the value of any property or estate. This paragraph shall not apply to- (A) expenditures for the development of mines or deposits deductible under section 616, (B) research and experimental expendi- tures deductible under section 174, (C) soil and water conservation expendi- tures deductible under section 175, (D) expenditures by farmers for fertilizer, etc., deductible under section 180, (E) expenditures by farmers for clearing land deductible under section 182, or (F) expenditures for removal of architec- tural and transportation barriers to the handicapped and elderly which the taxpay- er elects to deduct under section 190. (2) Any amount expended in restoring prop- erty or in making good the exhaustion there- of for which an allowance is or has been made. (b) Expenditures for advertising and good will If a corporation has, for the purpose of com- puting its excess profits tax credit under chap- ter 2E or subchapter D of chapter 1 of the In- ternal Revenue Code of 1939 claimed the bene- fits of the election provided in section 733 or section 451 of such code, as the case may be, no deduction shall be allowable under section 162 to such corporation for expenditures for adver- tising or the promotion of good will which, under the rules and regulations prescribed under section 733 or section 451 of such code, as the case may be, may be regarded as capital in- vestments. (c) Intangible drilling and development costs in the case of oil and gas wells Notwithstanding subsection (a), regulations shall be prescribed by the Secretary under this subtitle corresponding to the regulations which granted the option to deduct as expenses intan- gible drilling and development costs in the case of oil and gas wells and which were recognized and approved by the Congress in House Con- current Resolution 50, Seventy-ninth Congress. (d) Expenditures In connection with certain railroad rolling stock In the case of expenditures in connection with the rehabilitation of a unit of railroad rolling stock (except a locomotive) used by a do- mestic common carrier by railroad which would, but for this subsection, be properly chargeable to capital account, such expendi- tures, if during any 12-month period they do not exceed an amount equal to 20 percent of the basis of such unit in the hands of the tax- payer, shall, at the election of the taxpayer, be treated (notwithstanding subsection (a)) as de- ductible repairs under section 162 or 212, An election under this subsection shall be made for any taxable year at such time and in such manner as the Secretary prescribes by regula- tions. An election may not be made under this subsection for any taxable year to which an election under subsection (e) applies to railroad rolling stock (other than locomotives). (e) Reasonable repair allowance The Secretary may by regulations provide that the taxpayer may make an election under which amounts representing either repair ex- penses or specified repair, rehabilitation, or im- provement expenditures for any class of depre- ciable property- (1) are allowable as a deduction under sec- tion 162(a) or 212 (whichever is appropriate) to the extent of the repair allowance for that class, and (2) to the extent such amounts exceed for the taxable year such repair allowance, are chargeable to capital account. Any allowance prescribed under this subsection shall reasonably reflect the anticipated repair experience of the class of property in the indus- try or other group. (f) Railroad ties In the case of a domestic common carrier by rail (including a railroad switching or terminal company) which uses the retirement-replace- ment method of accounting for depreciation of its railroad track, expenditures for acquiring and installing replacement ties of any material (and fastenings related to such ties) shall be ac- corded the same tax accounting treatment as expenditures for replacement ties of wood (and fastenings related to such ties). (Aug. 16, 1954, ch. 736, 68A Stat. 77; Sept. 14, 1960, Pub. L. 86-779, § 6(c), 74 Stat. 1001; Oct. 16, 1962, Pub. L. 87-834, § 21(b), 76 Stat. 1064; Sept. 2, 1964, Pub. L. 88-563, § 4, 78 Stat. 845; Oct. 9, 1965, Pub. L. 89-243, §4(p)(1), (2), 79 Stat. 964; Dec. 30, 1969, Pub. L. 91-172, title VII, § 706(a), 83 Stat. 674; Dec. 10, 1971, Pub. L. 92-178, title I, § 109(b), (c), 85 Stat. 509; Oct. 4, 1976, Pub. L. 94-455, title XVII, § 1701(a), title XIX, §§ 1904(b)(10)(A)(i), 1906(b)(13)(A), title Page 211 § 263