- 8 -
Porsche engine was a patent or model of Porsche, the
manufacturer. The Court finds it unnecessary to pass upon the
merits of this argument.
Section 174(c) and section 1.174-2(b)(1), Income Tax Regs.,
provide generally, in pertinent part, that expenditures for the
acquisition of property that is subject to an allowance for
depreciation under section 167 are not deductible under section
174, irrespective of the fact that the property may be used by
the taxpayer in connection with research or experimentation.
However, this portion of the regulations provides further that
"If any part of the cost or acquisition * * * of depreciable
property is attributable to research or experimentation * * *,
see subparagraphs (2), (3), and (4) of this paragraph." Sec.
1.174-2(b)(1), Income Tax Regs. Subparagraph (2) then provides
that "Expenditures for research or experimentation which result,
as an end product of the research or experimentation, in
depreciable property to be used in the taxpayer's trade or
business may, subject to the limitations of subparagraph (4)
* * *, be allowable as a current expense deduction under section
174(a)." Sec. 1.174-2(b)(2), Income Tax Regs. The referenced
subparagraph (4) then provides that the deductions allowable in
connection with the property are limited to "amounts expended for
research or experimentation", and that amounts expended for
research or experimentation do not include the costs of the
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 Next
Last modified: May 25, 2011