- 13 - During 1995 and 1996, CPSG, Inc., by and through its wholly owned subsidiaries, paid $67,543 and $1,361,006 of research and development costs on behalf of petitioner. These costs included: Description 1995 1996 Salaries1 $28,584 $1,076,850 Contract labor 20,947 46,451 Building rent 5,644 54,293 Commissions 4,250 3,306 Telephone 428 33,001 Entertainment 106 659 Equipment rental 6,052 68,379 Repairs/maintenance 1,036 26,086 Freight 497 265 Janitorial -0- 426 Recruiting fees -0- 4,187 Travel -0- 3,016 Services -0- 13,495 Dues & subscriptions-0- 1,500 Electricity -0- 14,218 License fees -0- 12,050 Small equipment -0- 573 Office supplies -0- 1,761 Postage/misc. -0- 491 1The category “Salaries” represents the cumulative amount paid to individuals living in Australia. CPSG, Inc. used its accounting system to track these costs. CPSG, Inc. initially deducted these research and development costs on its Federal income tax return for the year ended September 30, 1996. CPSG, Inc. subsequently amended its 1996 return eliminating the deduction. Petitioners attached Schedules C for a computer software development business named “DMS Development Co.” to their 1995 and 1996 returns. For the years at issue, petitioners reportedPage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
Last modified: May 25, 2011