- -33 a production activity. Sec. 1.263A-1T(b)(2)(ii), Temporary Income Tax Regs., 52 Fed. Reg. 10062 (Mar. 30, 1987). Compensation paid to officers attributable to services performed in connection with particular production activities is an example of an indirect cost that must be capitalized. Sec. 1.263A- 1T(b)(2)(iii)(N), Temporary Income Tax Regs., 52 Fed. Reg. 10062 (Mar. 30, 1987). Marketing, selling, advertising, and distribution expenses, including compensation of officers attributable to services performed in connection with the cost of selling, are not required to be capitalized under section 263A. Sec. 1.263A-1T(b)(2)(iii)(N), supra; sec. 1.263A-1T(b)(2)(v)(A), Temporary Income Tax Regs., 52 Fed. Reg. 10066 (Mar. 30, 1987). The record is unclear as to Mrs. Penalba's role in the production aspect of petitioner's operations. However, under section 263A(g) development of a product is included in the definition of production. Mrs. Penalba testified that both she and Mr. Penalba were involved in purchasing raw materials for petitioner. Mrs. Penalba also testified that she worked a great deal with Mr. Penalba in product development. This testimony was somewhat inconsistent with the testimony of Mr. Rubino, petitioner's production manager during the year at issue, who testified that he did not work with Mrs. Penalba in production, and that her role in the company was strictly dealing with finances. While Mrs. Penalba may have had authority overPage: Previous 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 Next
Last modified: May 25, 2011