Article 251. Incomes Not Recorded When Defining the Tax Base

1. When defining the tax base, the following incomes shall not be taken into account:

1) in the form of the property and (or) rights of property, works or services received from the other persons as pre-payment for commodities (works, services) by the taxpayers, defining the incomes and outlays in accordance with the method of calculation;

2) in the form of property and (or) the rights of property received in the form of a pawn or of caution money as the security against liabilities;

3) in the form of property, rights of property or non-property rights assessed in cash, which are received in the form of contributions (deposits) to the authorized (pooled) capital (fund) of an organization (including income in the form of an excess of the price of placement of stocks (shares) over their nominal cost (initial amount));

4) in the form of property and (or) rights of property received within the limits of the initial contribution made by a partner of an economic company or partnership (by his legal successor or heir) when he leaves (withdraws from) the economic company or partnership, or if the property of a liquidated company or partnership is distributed between its participants;

5) in the form of property, rights of property and (or) non-property rights assessed in cash which are received within the limits of the initial contribution made by a participant in a simple partnership contract (joint activity contract) or by his legal successor, in the event of detachment of his share from the property in the joint ownership of the participants of the contract, or in the case of dividing such property;

6) in the form of the funds received as gratuitous aid (assistance) to the Russian Federation in accordance with the procedure laid down by the Federal Law on Gratuitous Aid (Assistance) to the Russian Federation and on the Introduction of Amendments and Addenda into the Individual Legislative Acts of the Russian Federation on Taxes, and on the Establishment of Privileges for Payments into the State Extra-Budgetary Funds in Connection with Rendering Gratuitous Aid (Assistance) to the Russian Federation;

7) in the form of the fixed assets and the non-material assets, received free of charge in conformity with the international treaties of the Russian Federation by the nuclear power plants for raising their safety, which have been used for production purposes;

8) in the form of the property received by budgetary organizations by decision of the executive power bodies of all levels;

9) in the form of the funds which have come in to a broker, agent and (or) other attorney under a commission contract, an agency agreement and (or) other similar agreement, as well as on account of compensation for the expenses borne by the broker, agent or other attorney instead of a client, principal and (or) other grantor where such expenses are not subject to inclusion into the expenses of the broker, agent and (or) other attorney under contracts made. A broker's fee, commission fee or any other similar remuneration shall not pertain to said incomes;

10) in the form of the funds and other property received under contracts of credit and borrowing (and other similar funds or other property irrespective of the form of legalizing the borrowings, including debt securities), as well as in the form of funds and other property obtained from the settlements of such borrowings;

11) in the form of the property received by a Russian organization free of charge:

- from an organization, if the authorized (pooled) capital (fund) of the receiving party consists by no less than 50 per cent of the deposit of the handing over organization;

- from an organization, if the authorized (pooled) capital (fund) of the handing over party consists by no less than 50 per cent of the deposit of the receiving organization;

- from a natural person, if the authorized (pooled) capital (fund) of the receiving party consists by no less than 50 per cent of the deposit (share) of this natural person.

In this case, the received property shall not be recognized as income for the purposes of taxation, if only in the course of one year, as of the date of its receipt said property (safe for monetary funds) is not handed over to third persons;

12) in the form of the funds derived in accordance with the demands of Articles 78, 79, 176 and 203 of the present Code from the budget (extra-budgetary fund);

13) in the form of the sums of guarantee contributions into special funds set up in conformity with the legislation of the Russian Federation, which are intended for reducing the risks of non-execution of liabilities under deals, which are obtained in the performance of the clearing activity or of an activity aimed at organizing trading in the securities market;

14) in the form of the property received by organizations within the framework of the purposive financing. In this case, the organizations which have received the funds of purposive financing shall be obliged to keep separate records for the incomes (expenditures) received (made) within the framework of the target financing. If no such recording is carried out by the organization which has received the funds under the purposive financing, said funds shall be regarded as those subject to taxation, as of the date of their receipt.

To the funds of budgets of all levels and of extra-budgetary funds, allocated to budgetary institutions according the estimate of incomes and outlays of a budgetary institution but not used for the purpose they are intended for within a tax period or used for the purposes other that those they are intended for, there shall apply the rules of budget laws of the Russian Federation.

To the funds of purposive financing there shall be referred the property received by the taxpayer and used by him in accordance with the purpose defined by the organization (natural person) which is the source of the purposive financing:

- in the form of the funds from the budgets of all levels and from the state extra-budgetary funds allocated to budgetary institutions in accordance with the incomes and the outlays estimate of the budgetary institutions;

- in the form of received grants. For the purposes of this Chapter grants shall mean monetary assets and other property, where their transfer (receipt) satisfies the following conditions:

grants shall be provided on the gratuitous and irrevocable basis by natural persons, non-profit making organizations, including foreign and international organizations and associations according to the list of such organizations endorsed by the Government of the Russian Federation;

grants shall be provided for implementation of specific programs in education, arts, culture, environmental protection, as well as for carrying out specific scientific research;

grants shall be provided on the conditions determined by grantors with the obligatory submission of reports by grantees on the purposive use of grants;

- in the form of the investments, received when holding investment tenders (auctions) in the order established by the legislation of the Russian Federation;

- in the form of the investments received from foreign investors for financing the capital production-intended investments, under the condition that they are used within one calendar year from the moment of their receipt;

- in the form of the funds of the share partners and (or) investors accumulated on the accounts of a building organization;

- in the form of the funds received by a mutual insurance company from organizations who are members of the mutual insurance company;

- in the form of the funds, received from the Russian Fund for Fundamental Studies, from the Russian Fund of Technological Development, from the Russian Humanitarian Scientific Fund, from the Fund for Rendering Assistance to the Development of Small Businesses in the Scientific and Technological Sphere, and from the Fund for the Production of Innovations;

- in the form of the funds received by enterprises and organizations, including especially dangerous radioactive and especially dangerous nuclear works and units, from the reserves intended for guaranteeing security of said works and units at all stages of their life cycle and development in conformity with the legislation of the Russian Federation on the use of nuclear power. Said incomes shall be included in the composition of the extra-sale incomes in case the grantee has actually used such funds for other than the intended purposes, or if he has not used them for the intended purpose in the course of one year after the end of the tax period in which they were received;

15) in the form of the cost of the shares additionally received by the shareholder organization which are distributed among the shareholders by the decision of the general meeting in proportion to the number of shares in their ownership, or in the form of the difference between the nominal cost of the new shares received instead of the original ones, and the nominal cost of the shareholder's original shares in the placement of the shares among the shareholders in cases of an augmentation of the authorized capital of a joint-stock company (without changing the share of the shareholder's participation in this joint-stock company);

16) in the form of the positive difference which has emerged as a result of revaluating precious stones in cases of a change of the price lists of the settlement prices for precious stones in the established order;

17) in the form of the sums by which in a report (tax) period an organization's authorized (pooled) capital was reduced in accordance with the demands of the legislation of the Russian Federation;

18) in the form of the cost of the materials and other property, received in dismantling and pulling down of the objects withdrawn from operation in cases of their liquidation, which shall be destroyed in conformity with Article 5 of the Convention on the Prohibition of the Development, Production, Accumulation and Application of Chemical Weapons, as Well as Their Destruction, and with Part Five of the Appendix on Checking the Convention on the Prohibition of the Development, Production, Accumulation and Application of Chemical Weapons, as Well as Their Destruction;

19) in the form of the cost of amelioration and other objects of agricultural use (including intra-economic water supply, gas and electricity supply networks) built at the expense of the budgetary funds received by an agricultural commodity producer;

20) in the form of the property and (or) the rights of property, received by organizations for the state stocks of special (radioactive) raw materials and of fissionable materials of the Russian Federation from transactions with material values from the state stocks of special (radioactive) raw materials and of fissionable materials, aimed at the replenishment and the maintenance of the stocks;

21) in the form of the sums of the taxpayer's credit indebtedness to the budgets of different levels, written off and (or) reduced in some other way in conformity with the legislation of the Russian Federation and (or) by the decision of the Government of the Russian Federation;

22) in the form of equipment, received on a gratuitous basis by state and municipal educational establishments, as well as by non-state educational establishments possessing licenses for the performance of educational activity, for exercising the activities stipulated by their statutes;

23) in the form of the fixed assets received by organizations included into the structure of the Russian Defence Organization for Sports and Technologies (hereinafter referred to in the present Chapter as ROSTO) (if these are handed over between two or more organizations included in the structure of this Organization), used for training citizens in the military-recorded specialities, for carrying out the military-patriotic education of youth, as well as for the development of the aviation, technological and military-applied kinds of sport in conformity with the legislation of the Russian Federation;

24) in the form of the positive difference received from revaluation of securities in accordance with the market cost;

25) in the form of the sums of the replenished reserves against devaluation of securities (with the exception of the reserves whose formation caused the expenses which under Article 300 of this Code previously decreased the tax base).

26) in the form of funds and other property which have been received by unitary enterprises from the owners of property of these enterprises or from the bodies authorized by them;

27) in the form of property (including monetary assets) and (or) property rights which have been received by a religious organization in connection with committing religious ceremonies and rituals and from the sale of religious literature and articles of religious purpose.

2. The purpose-oriented incomes (with the exception of the target incomes in the form of excisable commodities and excisable mineral raw materials) shall not be taken into account either, when determining the tax base. To these there shall be referred the target incomes from the budget to the budget receivers and the purpose-oriented receipts for maintaining non-profit organizations and for the performance by these non-profit organizations of their authorized activity, which have arrived gratis from other organizations and (or) from natural persons, and which said receivers have used for the intended purposes. With this, taxpayers who have received said purposive earnings shall be obliged to keep separate records of incomes (expenses) received (made) within the framework of purposive earnings.

To the above-mentioned purpose-oriented incomes for the maintenance of non-profit organizations and for the performance by the latter of their authorized activity the following shall be referred:

1) the entrance fees, membership dues and goal-oriented contributions and deductions paid under the laws of the Russian Federation to the public-legal professional associations, built on the principles of obligatory membership, the share participation contributions and the donations recognized as such in conformity with the Civil Code of the Russian Federation;

2) the property handed over to non-profit organizations under a will by way of succession;

3) the sums of financing from the federal budget, from budgets of the subjects of the Russian Federation, from local budgets, or from the budgets of state extra-budgetary funds, allocated for the performance of the authorized activity by non-profit organizations;

4) the funds and other property received within the framework of charitable activity;

5) the joint contribution of the founders of non-state pension funds;

6) pension contributions to non-state pension funds, if these are directed in full to the formation of the pension reserves of the nonstate pension funds;

7) receipts from the owners to the institutions they have established, used for the intended purpose;

8) lawyers' deductions for the maintenance of the Bar (of its institutions);

9) the funds which have come in to trade union organizations in conformity with the collective contracts (agreements) for the trade unions to hold socio-cultural and other events envisaged by their authorized activity;

10) funds used for their intended purpose which are received by the structural organizations of the Russian Defence Organization for Sports and Technologies from the Ministry of Defence of the Russian Federation and (or) from other executive power body under a general contract, as well as the target deductions from the organizations included in the structure of the Russian Defence Organization for Sports and Technologies, used in accordance with the constituent documents thereof for citizens' training in conformity with the legislation of the Russian Federation in the military-recorded specialities, for the militarypatriotic education of the youth and for the development of aviation, technological and military-applied kinds of sport.

11) property (including monetary assets) and (or) property rights which have been received by religious organizations for exercising their authorized activities.

Article 252. Outlays. Grouping of the Outlays

1. For the purposes of this Chapter, the taxpayer shall reduce the received incomes by the sum of the outlays he has made (with the exception of the outlays indicated in Article 270 of the present Code).

Recognised as outlays shall be the justified and Documented expenditures (and in the cases envisaged by Article 265 of the present Code, also the losses), made (incurred) by the taxpayer.

Seen as justified outlays shall be the expenditures justified from an economic viewpoint whose evaluation is expressed in monetary form.

Seen as documented outlays shall be the outgoings confirmed by the documents which are formalised in conformity with the legislation of the Russian Federation. Recognised as outlays shall be any kind of expenditures, under the condition that they are made for the performance of an activity aimed at deriving an income.

2. Depending on their character, as well as on the conditions necessary for the performance and on the directions of the taxpayer's activity, the outlays shall be subdivided into outlays involved in production and sale, and extra-sales outlays.

3. The specifics in qualifying the outlays recognised for the purposes of taxation, for the individual taxpayers' categories, or the outlays made in connection with special circumstances shall be established by the provisions of this Chapter.

4. If certain expenditures may be referred on equal grounds simultaneously to several groups of outlays, the taxpayer shall have the right to decide on his own to which particular group he refers such outlays.

5. The outlays incurred by a taxpayer which are shown in foreign currency shall be accounted in the aggregate with the outlays shown in roubles.

The outlays incurred by a taxpayer which are shown in conventional units shall be accounted in the aggregate with the outlays shown in roubles.

Said outlays shall be conversed by a taxpayer depending on the method of recognizing such outlays chosen for his accounting policy for the purposes of taxation in compliance with Articles 272 and 273 of this Code.

For the purposes of this Chapter, amounts shown in the composition of taxpayers' expenditures shall not be subject to repeated inclusion in the composition thereof.