38 LAWS OF MARYLAND. [CH. 11

(m) Losses from lawful wagering transactions, but only
to the extent of gains derived therefrom.

(n) All ordinary and necessary expenses (not otherwise
herein provided for) paid or incurred during the taxable year
for the acquisition of income or the care of income producing
property.

(o) Net additions to legal reserves for the taxable year, as
required by law, in the ease of life insurance companies.

218. DEDUCTIONS NOT ALLOWED. In computing net income
no deductions shall be allowed in any case in respect of:

(a) Personal, living or family expenses;

(b) Any amount paid out for new buildings or new
machinery for permanent improvements or betterments, or for
any other capital outlay made to increase the value of any
property or estate;

(c) Any amount expended in restoring property or in
making good the exhaustion thereof for which an allowance
is or has been made;

(d) Premiums paid on any life insurance policy covering
the life of any officer or employee, or of any person financially
interested in any trade or business carried on by the taxpayer,
when the taxpayer is directly or indirectly a beneficiary under
such policy;

(e) Local improvement assessments.

219. NET INCOME. The term "net income" means the gross
income of a taxpayer less the deductions allowed by this sub-
title.

220. GAINS OR LOSSES FROM SALE. OF ASSETS. Gains or losses
from the sale or other disposition of property, real or per-
sonal, or mixed, shall be treated for purposes of this sub-title
as all other income or loss if such property be disposed of
within two (2) years from the time acquired, as provided in
Section 216 hereof. The basis for computing such gain or loss
shall be the cost or, if acquired by some means other than pur-
chase, the fair market value thereof at the time acquired.

221. EXCHANGES. Where property is exchanged for other
property, the property received in exchange for the purpose
of determining the gain or loss shall be treated as the
equivalent of cash to the amount of its fair market value; but
when in connection with the reorganization, merger or con-