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On May 31, 2001, this Court issued its report in Lychuk v.
Commissioner, supra, in which we held that loan acquisition costs
of the type at issue in the consolidated cases and certain
offering expenditures are capital expenditures not deductible
under section 162(a).
On January 24, 2002, the IRS released an Advance Notice of
Proposed Rulemaking (ANPRM) describing “rules and standards that
the IRS and Treasury Department expect to propose in 2002 in a
notice of proposed rulemaking that will clarify the application
of section 263(a) * * * to expenditures incurred in acquiring,
creating, or enhancing certain intangible assets or benefits.”
67 Fed. Reg. 3461 (Jan. 24, 2002). The ANPRM invites public
comments “regarding these standards.” Id. at 3461. One of the
anticipated proposals is a “12-month rule applicable to
expenditures paid to create or enhance certain intangible rights
or benefits.” Id. at 3462. The ANPRM states:
Under the rule, capitalization under section 263(a)
would not be required for * * * [certain described
expenditures paid to create or enhance certain
intangible rights or benefits] unless that expenditure
created or enhanced intangible rights or benefits for
the taxpayer that extend beyond the earlier of (i) 12
months after the first date on which the taxpayer
realizes the rights or benefits attributable to the
11(...continued)
(1999). Rev. Rul. 99-23, 1999-1 C.B. at 1000, distinguishes
between investigatory expenses incurred “in order to determine
whether to enter a new business and which new business to enter”
(deductible) and expenses “incurred in the attempt to acquire a
specific business” (nondeductible).
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Last modified: May 25, 2011