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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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