Pierce Butler

“ Where an insurance company owns and occupies the whole of a building, it receives no rents therefor and is not allowed to deduct the expenses chargeable to the building. Where part is used by the company and part let, the rents are required to be included in the gross, but expenses may not be deducted unless, if it be necessary, there is added to the rents received an amount to make the total sufficient, after deduction of expenses, to leave 4 per cent. ”

“ Taxes and other expenses paid during the taxable year exclusively upon or with respect to the real estate owned by the company * * *' and ' (7) A reasonable allowance for the exhaustion, wear and tear of property, including a reasonable allowance for obsolescence.' But it is provided, section 245 (b) , that no deduction shall be made under paragraphs (6) and (7) 'on account of any real estate owned and occupied in whole or in part by a life insurance company unless there is included in the return of gross income the rental value of the space so occupied. ”

“ Congress intended that the rule should apply only where rents exceed such 4 per cent. Where they are less than that, addition of the prescribed rental value and deduction of expenses operate to increase taxable income. ”