22
the sense of "normal, usual, or customary" in a taxpayer's trade
or business). Deputy v. du Pont, 308 U.S. 488, 495 (1940). More
importantly, the term "ordinary" serves as a means to "clarify
the distinction, often difficult, between those expenses that are
currently deductible and those that are in the nature of capital
expenditures, which, if deductible at all, must be amortized over
the useful life of the asset." Commissioner v. Tellier, 383 U.S.
687, 689-690 (1966).
No current deduction is allowed for a capital expenditure.
Sec. 263(a); INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 83
(1992). Section 1.263(a)-2(a), Income Tax Regs., includes as
examples of capital expenditures "The cost of acquisition,
construction, or erection of buildings, machinery and equipment,
furniture and fixtures, and similar property having a useful life
substantially beyond the taxable year." Section 461(a) provides
that "The amount of any deduction * * * shall be taken for the
taxable year which is the proper taxable year under the method of
accounting used in computing taxable income." Section 1.461-
1(a)(2), Income Tax Regs., provides further guidance as to when a
capital expenditure should be taken into account for Federal
income tax purposes under an accrual method of accounting:
any expenditure which results in the creation of an
asset having a useful life which extends substantially
beyond the close of the taxable year may not be
deductible, or may be deductible only in part, for the
taxable year in which incurred. * * *[13]
13Sec. 1.461-1, Income Tax Regs., was amended by T.D. 8408,
(continued...)
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011