- -31
Section 263A4 generally requires the capitalization of
4 SEC. 263A. CAPITALIZATION AND INCLUSION OF INVENTORY
COSTS OF CERTAIN EXPENSES.
(a) Nondeductibility of Certain Direct and Indirect
Costs.--
(1) In general.--In the case of any property to
which this section applies, any costs described in paragraph
(2)--
(A) in the case of property which is inven
tory
in
the
hands
of
the
taxpa
yer,
shall
be
inclu
ded
in
inven
tory
costs
, and
(B) in the case of any other property, shall
be capitalized.
(2) Allocable costs.--The costs described in this
paragraph with respect to any property are--
(A) the direct costs of such property, and
(B) such property's proper share of those
indirect costs (including taxes) part or all of which
are allocable to such property.
Any cost which (but for this subsection) could not be
taken into account in computing taxable income for any
taxable year shall not be treated as a cost described
in this paragraph.
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