FMR Corp. and Subsidiaries - Page 19

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          collectively referred to as "RIC launching activities".  No                 
          activities incurred after the launch of a new RIC, such as                  
          advertising or subsequent annual SEC filings, are included in RIC           
          launching activities, and respondent has not challenged the                 
          deductibility of the cost of such postlaunch activities.                    
          Petitioner estimates its total costs for RIC launching activities           
          for 81 new RIC's were $1,259,226, $1,591,010, and $659,772, in              
          1985, 1986, and 1987, respectively.  During 1985, petitioner                
          launched a RIC, the estimated costs of which were not included in           
          either the notice of deficiency or the costs stated above.  The             
          estimated cost to launch this RIC was $116,318, thereby making              
          the 1985 total cost of RIC launching $1,375,544.  Respondent                
          accepts petitioner's estimates for purposes of conclusively                 
          establishing the amounts in issue in the instant case.                      

                                       OPINION                                        

               The principal issue for decision is whether petitioner is              
          entitled to a section 162(a) deduction for expenditures incurred            
          in launching 82 RIC's during the years in issue.  Section 162(a)            
          allows as a deduction "all the ordinary and necessary expenses              
          paid or incurred during the taxable year in carrying on any trade           
          or business".  To qualify as an allowable deduction under section           
          162(a), an item must:  (1) Be paid or incurred during the taxable           








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