- 42 -
(2) which, if paid or incurred in connection with the
expansion of an existing trade or business (in the same
field as the trade or business referred to in paragraph
(1)), would be allowable as a deduction for the taxable year
in which paid or incurred.[18] [Emphasis added.]
Petitioner claims that the legislative history accompanying the
1980 enactment of section 195 confirms that Congress explicitly
recognized that business expansion costs are currently
deductible:
In the case of an existing business, eligible
startup expenditures do not include deductible ordinary
and necessary business expenses paid or incurred in
connection with an expansion of the business. As under
present law, these expenses will continue to be
currently deductible. * * * [H. Rept. 96-1278, at 11
(1980), 1980-2 C.B. 709, 712; emphasis added.]
18Sec. 195(c), as amended, defines startup expenditure to
mean any amount--
(A) paid or incurred in connection with--
(i) investigating the creation or acquisition of an
active trade or business, or
(ii) creating an active trade or business, or
(iii) any activity engaged in for profit and for the
production of income before the day on which the active
trade or business begins, in anticipation of such
activity becoming an active trade or business, and
(B) which, if paid or incurred in connection with the
operation of an existing active trade or business (in the
same field as the trade or business referred to in
subparagraph (A)), would be allowable as a deduction for the
taxable year in which paid or incurred.
Page: Previous 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 NextLast modified: May 25, 2011