Red Star Yeast & Products Co. v. Commissioner
United States Tax Court
1. Petitioner made certain payments to Best Yeast in 1943 and 1944 pursuant to a contract between petitioner and Best Yeast, under which Best Yeast rendered technical assistance and know-how services to petitioner in the course of and in connection with petitioner's development of a technique and process for the manufacture of active dry yeast.
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1. Petitioner made certain payments to Best Yeast in 1943 and 1944 pursuant to a contract between petitioner and Best Yeast, under which Best Yeast rendered technical assistance and know-how services to petitioner in the course of and in connection with petitioner's development of a technique and process for the manufacture of active dry yeast. Held, that the payments constituted a capital expenditure and that petitioner could not elect to expense or capitalize the expenditure as one for research and development. Held, further, that petitioner failed to establish a loss thereon in either 1945…
1Opinion of the Court
OPINION.
Fisher, Judge:
Best Yeast Payments.
In each of the years 1943 and 1944 petitioner paid $50,000 to Best Yeast under an agreement with that company, dated May 21, 1943. These amounts were deducted by petitioner in 1943 and 1944 as ordinary and necessary business expenses under section 23 (a) of the Internal Revenue Code of 1939. Respondent has capitalized both payments and has not allowed any deduction for depreciation in either of the years 1943 or 1944, or in any of the subsequent years involved in this proceeding.
Petitioner’s main contention is that the expenditure in question was not…
2Cases cited8 opinions
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- Hart-Bartlett-Sturtevant Grain Co. v. Commissioner of Internal RevenueCourt of Appeals for the Eighth Circuit · 1950
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- Russell Box Co. v. Commissioner of Internal RevenueCourt of Appeals for the First Circuit · 1953
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