- 9 -
and have no persuasive value to petitioner’s case.1
Accordingly, we find that the royalty payments incurred by
petitioner in 1995 are indirect costs to the production of the
end products, and, as such, the royalty payments are subject to
the capitalization rules of section 263A.
We have considered all of the other arguments made by
petitioner, and, to the extent we have not addressed them,
conclude they are without merit.
To reflect the foregoing,
Decision will be entered
for respondent.
1 We note that Wood v. United States, 377 F.2d 300 (5th Cir.
1967), and J. Strickland & Co. v. United States, 352 F.2d 1016
(6th Cir. 1965), were decided approximately 20 years before
Congress enacted sec. 263A in the Tax Reform Act of 1986, Pub. L.
99-514, sec. 803, 100 Stat. 2350. Petitioner also cited the
following cases which concerned the research and experimental
expenditures deduction under sec. 174 and years in issue from
1976 through 1984: Harris v. Commissioner, T.C. Memo. 1990-80
(tax years 1979-1982), affd. 16 F.3d 75 (5th Cir. 1994); Estate
of Cook v. Commissioner, T.C. Memo. 1993-581 (tax years 1976-
1982); Research Two Ltd. Pship. v. Commissioner, T.C. Memo. 2000-
259 (tax years 1982-84).
Page: Previous 1 2 3 4 5 6 7 8 9
Last modified: May 25, 2011