Effective 28 Aug 1947

148.150. Net income and gross income defined — how computed. — 1. "Net income" means gross income as defined in subsection 2 of this section minus the deductions allowed in subsection 3 of this section.

2. "Gross income" includes all gains, profits, earnings and other income of the taxpayer derived from sources within the state of Missouri, during the income period, including but not limited to interest from obligations issued by the United States government or any political subdivision or any instrumentality thereof, or any state or political subdivision thereof, or issued by any foreign country or nation or political subdivision thereof, all rents, compensation for services, commissions, brokerage and other fees, all gains or profits from the sale or other disposition of any property, real or personal, tangible or intangible; and all recoveries on losses sustained in the ordinary course of business subsequent to the effective date of sections 148.120 to 148.230; provided, however, that recoveries on such losses sustained during any prior income period within which the deductions, as permitted by subsection 3 of this section, exceed the taxpayer's gross income for said income period, computed in accordance with this subsection, shall not be included in the taxpayer's gross income for the income period in which they were received to the extent of said excess. Dividends received on shares of stock of any credit institution liable to tax under sections 148.120 to 148.230 shall not be included in gross income; provided, however, that gross income as defined in said sections when applied to pawnbrokers shall be the gross income or interest received by said pawnbrokers on their money lending activities alone and shall not include that part of their total income that is derived from the buying and selling of merchandise.

3. In computing net income there shall be allowed as deductions all ordinary and necessary expenses paid or incurred by the taxpayer during the income period in carrying on its trade or business in the state of Missouri. Without limiting the generality of the foregoing there shall be allowed as deduction a reasonable allowance for salaries and other compensation for personal services actually rendered; rents, repairs, bad debts and debts ordered to be charged off by the director of finance; interest, cost of insurance and advertising; all taxes paid or accrued during the income period to the United States and all taxes paid or accrued on real estate to the state of Missouri or any political subdivision thereof; all contributions paid or accrued pursuant to the unemployment compensation law of Missouri; reasonable allowances for depreciation and depletion; amortization of premiums on bonds, debentures, notes or other securities or evidences of indebtedness; a reasonable allowance for payments or contributions to or on account of any pension or retirement fund or plan for its officers or employees; contributions to any corporation, association or fund organized and operated exclusively for religious, charitable, scientific, literary or educational purposes, no part of the net earnings of which inure to the benefit of any private shareholder or individual to an amount which does not exceed five percent of the taxpayer's net income as computed without the benefit of this deduction; losses from the sale or disposition of any property, real or personal, tangible or intangible; and all other losses sustained during the income period not compensated for by insurance; provided, however, that deductions allowed to pawnbrokers shall be the same percent of the total deductions allowable under this section as the total volume of their loan business bears to the total volume of their loan and merchandise business combined.

4. Net income shall be computed in accordance with the method of accounting regularly employed in keeping the books of the taxpayer, unless such method does not clearly reflect the income, in which case the computation shall be made in accordance with such method as in the opinion of the director does clearly reflect the income. Where income of taxpayer is derived partly from sources within the state of Missouri and partly from sources without the state of Missouri, gross income, deductions and net income shall be computed on the basis of a separate accounting method.

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(L. 1945 p. 1937 § 5, A.L. 1947 V. I p. 557)