§ 21. Deductions. In computing net income there shall be allowed as\ndeductions:\n 1. All the ordinary and necessary expenses paid or incurred during the\nyear in carrying on business, including a reasonable allowance for\nsalaries or other compensation for personal services actually rendered,\nand including rentals or other payments required to be made as a\ncondition to the continued use or possession for business purposes of\nproperty to which the taxpayer has not taken or is not taking title or\nin which such taxpayer has no equity.\n 2. All interest paid or accrued during the year on indebtedness.\n 3. Taxes, other than taxes on income or profits paid or accrued within\nthe year, imposed, first, by the authority of the United States, or of\nany of its possessions, or, second, by the authority of any state, or\nterritory, or any county, school district, municipality, or other taxing\nsubdivisions of any state or territory, not including those assessed\nagainst local benefits of a kind tending to increase the value of the\nproperty assessed, or, third, by the authority of any foreign\ngovernment, or, fourth, under the franchise tax on banking corporations\nimposed by article thirty-two of the tax law, or, fifth, any tax imposed\nunder this subpart.\n 4. Losses sustained during the year and not compensated for by\ninsurance or otherwise, if incurred in business; unless in order to\nclearly reflect the income the losses should in the opinion of the\ndirector of finance be accounted for as of a different period. No\ndeduction shall be allowed for any loss claimed to have been sustained\nin any sale or other disposition of shares of stock or securities where\nit appears that within thirty days before or after the date of such sale\nor other disposition the taxpayer has acquired substantially identical\nproperty, and the property so acquired is held by the taxpayer for any\nperiod after such sale or other disposition, unless such claim is made\nwith respect to a transaction made in the ordinary course of business.\nIf such acquisition is to the extent of part only of substantially\nidentical property, only a proportionate part of the loss shall be\ndisallowed.\n 5. Debts ascertained to be worthless and charged off within the year;\nor in the discretion of the director of finance a reasonable addition to\na reserve for bad debts. When satisfied that a debt is recoverable only\nin part, the director of finance may allow such debt to be charged off\nin part.\n 6. A reasonable allowance for the exhaustion, wear and tear of\nproperty used in business, including a reasonable allowance for\nobsolescence. In the case of any such property acquired before January\nfirst, nineteen hundred sixty-six, the amount of such deduction shall be\nequal to the deduction properly taken for such property in reporting the\ntax due pursuant to article nine-b of the tax law. With respect to\nproperty such as described in subdivision twelve of this section, this\ndeduction may be computed and allowed as provided therein.\n 7. If the gross income be derived from business carried on within and\nwithout the city, the deductions allowed by this section shall be\nallocated and determined on the basis of separate accounting for each\noffice or branch or, at the election of the taxpayer, under rules and\nregulations to be prescribed by the director of finance.\n 8. In the case of any taxpayer who establishes or maintains a pension\ntrust to provide for the payment of reasonable pensions to its\nemployees, there shall be allowed as a deduction (in addition to the\ncontributions to such trust during the taxable year to cover the pension\nliability accruing during the year, allowed as a deduction under\nsubdivision one of this section) a reasonable amount transferred or paid\ninto such trust during the taxable year in excess of such contributions,\nbut only if such amount (a) has not theretofore been allowable as a\ndeduction, and (b) is apportioned in equa
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