Waring Products Corp. v. Commissioner
United States Tax Court
1. Engineering and designing expenses in the amount of $ 82,702.47 held deductible. Sec. 23 (a)(1), I. R. C. 1939. 2. Petitioner had only a skeleton staff. Many valuable services were performed on its behalf over a period of nearly 3 years by R-E Corporation which owned 50 per cent of petitioner's stock.
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1. Engineering and designing expenses in the amount of $ 82,702.47 held deductible. Sec. 23 (a)(1), I. R. C. 1939. 2. Petitioner had only a skeleton staff. Many valuable services were performed on its behalf over a period of nearly 3 years by R-E Corporation which owned 50 per cent of petitioner's stock. At about the time that R-E Corporation acquired the remaining 50 per cent of petitioner's stock it billed petitioner for such services in the amount of $ 114,655.16. Held, the amount was reasonable, and petitioner, being on the accrual basis, may deduct it during the taxable period when the…
1Opinion of the Court
OPINION.
Raum, Judge:
1. The Commissioner disallowed a deduction in the amount of $82,702.47, which petitioner claims to be allowable as engineering and designing expenses. A small part of these expenses pertained to the manufacture of the Blendor; the great bulk of the item represents costs incurred in connection with the unsuccessful effort to manufacture the iron. The Commissioner has conceded that these costs are not to be capitalized, nor does he contest the amount. His sole argument is that the deduction is not available because petitioner “was not legally obligated” to turn over to…
2Cases cited1 opinion
- Welch v. HelveringSupreme Court of the United States · 1933
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- Carbine v. CommissionerUnited States Tax Court · 1984
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