- 20 - 352-353. The Supreme Court has stated that a necessary expense is an expense that is appropriate or helpful to the development of the taxpayer’s business, see Commissioner v. Tellier, 383 U.S. 687, 689 (1966); Welch v. Helvering, 290 U.S. 111, 113-115 (1933), and that an ordinary expense is an expense that is “normal, usual, or customary” in the type of business involved, Deputy v. du Pont, 308 U.S. 488, 495-496 (1940); see also Welch v. Helvering, supra at 113-115. The Supreme Court has observed that the need for an expenditure to be ordinary serves, in part, 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, supra at 689-690. The fact that a payment falls within a literal reading of section 162(a) does not necessarily mean that the payment is deductible. Sections 161 and 261, for example, except certain payments from the current deductibility provision of section 162(a). See INDOPCO, Inc. v. Commissioner, 503 U.S. at 84. Section 161 provides that “there shall be allowed as deductions the items specified in * * * [section 162(a)], subject to the exceptions provided in * * * sec. 261 and following, relating to items not deductible”. Section 261 provides that “no deductionPage: Previous 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Next
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