- 9 -
OPINION
The parties have conflicting interpretations of section
263A. Petitioner argues that the statutory requirement that the
standard be based on a national weighted average is invalid and
should be disregarded in favor of an approach where each
taxpayer’s experience should be the measure of whether the
section 263A “within 2 years test” is met. Respondent argues
that the nationwide average is valid even though no guidance had
been issued. Respondent also notes that any guidance that could
have been issued would not have supported petitioner’s position.
The statute requires taxpayers to capitalize certain direct
and indirect expenses or costs. See sec. 263A(a)(1). Section
263A does not apply to “any plant which has a preproductive
period of 2 years or less” if produced by the taxpayer in a
farming business. Sec. 263A(d)(1)(A)(ii). A “preproductive
period” means “in the case of a plant which will have more than 1
crop or yield, the period before the 1st marketable crop or yield
from such plant”. Sec. 263A(e)(3)(A)(i). For plants grown in
commercial quantities in the United States, that crop will be
within or without the 2-year period based on “the nationwide
weighted average preproductive period for such plant.” Sec.
263A(e)(3)(B). Section 263A(i) provides that the “Secretary
shall prescribe such regulations as may be necessary or
appropriate to carry out the purposes of this section”. Section
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011