- 42 - subject to appropriate exceptions where application of the rules might be unduly burdensome. * * * * * * * The uniform capitalization rules will be patterned after the rules applicable to extended period long-term contracts, set forth in the final regulations issued under section 451. Accordingly, taxpayers subject to the rules will be required to capitalize not only direct costs but also an allocable portion of most indirect costs that benefit the assets produced or acquired for resale * * *. The committee recognizes that modifications of the rules set forth in the long- term contract regulations may be necessary or appropriate in order to adapt such rules to production not involving a contract, and intends that the Treasury Department will have the authority to make such modifications. * * * The existing long-term contract regulations provide a large measure of flexibility to taxpayers in allocating indirect costs to contracts inasmuch as they permit any reasonable method of allocation authorized by cost accounting principles. The committee expects that the regulations under this provision will adopt a similarly liberal approach and permit allocations of costs among numerous items produced or held for resale by a taxpayer to be made on the basis of burden rates of other appropriate methods similar to those provided under present law. S. Rept. 99-313, at 140-142 (1986), 1986-3 C.B. (Vol. 3) 1, 140- 142. In less detail, the House report states: “allocations of indirect production costs among items produced, or between inventory and current expense, are to be made under rules similar to those provided under present law.” H. Rept. 99-426, at 626 (1985), 1986-3 C.B. (Vol. 2) 1, 626. The legislative history, as quoted above, clearly indicates that Congress intended the uniform capitalization rules to bePage: Previous 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 Next
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