- 31 -
Like the taxpayer in Fall River Gas Appliance Co., petitioner
believed that by launching the RIC's it would derive a continuing
economic benefit.13
The expenditures at issue bear other indicia of capital
expenditures. The right to market the investment concept,
obtained through the process of executing the contract with the
individual RIC14 and filing with the SEC and individual States,
is similar to the rights obtained by the taxpayers in P. Liedtka
Trucking, Inc. v. Commissioner, 63 T.C. 547 (1975), and Surety
Ins. Co. v. Commissioner, T.C. Memo. 1980-70. In P. Liedtka
Trucking, Inc. v. Commissioner, supra, the taxpayer, a trucking
business, incurred legal fees in connection with the acquisition
of a Certificate of Public Convenience and Necessity issued by
the Interstate Commerce Commission (ICC), which was required in
order to use several routes between various points in New York,
New Jersey, and Pennsylvania. The taxpayer deducted these costs
as an ordinary expense. We held that the costs incurred in
13See Union Mut. Life Ins. Co. v. United States, 570 F.2d
382, 392 (1st Cir. 1978) ("expenditures made with the
contemplation that they will result in the creation of a capital
asset cannot be deducted" even though those expenditures were
found to be regularly occurring and did not actually result in
the acquisition of an asset.)
14On brief, petitioner states: "The [management] contract
provides the petitioner with nothing more than an opportunity to
try to attract investment to the fund." Petitioner further
states: "The use of the mutual fund as an intermediary mechanism
between an advisor, such as the petitioner, and individual
investors is dictated by the practicalities of the market."
Page: Previous 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 NextLast modified: May 25, 2011