Pelaez & Sons, Inc. v. Commissioner
United States Tax Court
Sec. 263A, I.R.C., enacted in 1986, requires the capitalization of developmental costs. For plants with preproduction periods that are 2 years or less, farmers may be excepted from the capitalization requirements. For certain plants, including citrus plants grown in commercial quantities in the United States, the statute requires that the standard for the 2-year test is to be based on a national weighted average preproductive period for that type of plant.
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Sec. 263A, I.R.C., enacted in 1986, requires the capitalization of developmental costs. For plants with preproduction periods that are 2 years or less, farmers may be excepted from the capitalization requirements. For certain plants, including citrus plants grown in commercial quantities in the United States, the statute requires that the standard for the 2-year test is to be based on a national weighted average preproductive period for that type of plant. If the preproductive period, so determined, is 2 years or less, citrus farmers could be excepted from the capitalization requirement of…
1Opinion of the Court
Gerber, Judge:
Respondent issued a notice of final S corporation administrative adjustment (fsaa) for Pelaez & Sons, Inc.’s (corporation) taxable years ended September 30, 1992, 1993, and 1994, reflecting net adjustments in the amounts of $1,514,209, $46,148, and ($155,814), respectively. The question we consider is whether the corporation is required, under the provisions of section 263A,1 to capitalize developmental expenses in connection with citrus trees. Respondent did not issue guidance as to the “nationwide weighted average preproductive period” for citrus trees (the standárd in section…
2Cases cited13 opinions
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- Burlington Northern Railroad v. Oklahoma Tax CommissionSupreme Court of the United States · 1987
- Sullivan v. StroopSupreme Court of the United States · 1990
- Graff Chevrolet Company v. Ellis Campbell, Jr., District Director of Internal RevenueCourt of Appeals for the Fifth Circuit · 1965
- First Chicago Corporation v. Commissioner of Internal RevenueCourt of Appeals for the First Circuit · 1988
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