FMR CORP. v. COMMISSIONER
United States Tax Court
P provides investment management services to regulated investment companies (RIC's), which are commonly referred to as mutual funds. During the years in issue, P incurred costs for developing and launching 82 new RIC's. The expenditures incurred in launching new RIC's were intended to, and did, provide significant future benefits to P. HELD: The expenditures are not currently deductible under sec. 162(a), I.R.C., and must be capitalized under sec. 263(a), I.R.C.
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P provides investment management services to regulated investment companies (RIC's), which are commonly referred to as mutual funds. During the years in issue, P incurred costs for developing and launching 82 new RIC's. The expenditures incurred in launching new RIC's were intended to, and did, provide significant future benefits to P. HELD: The expenditures are not currently deductible under sec. 162(a), I.R.C., and must be capitalized under sec. 263(a), I.R.C. HELD, FURTHER: P failed to establish a limited life for the future benefits obtained from the costs of launching RIC's. P may not…
1Opinion of the Court
Ruwe, Judge:
Respondent determined deficiencies in petitioner’s Federal income taxes as follows:
Year Deficiency
1985 . 1 $111,905
1986 . 534,142
1987 . 99,042
The issues for decision are: (1) Whether the costs petitioner incurred in starting new regulated investment companies during the years in issue are deductible as ordinary and necessary business expenses under section 1621 or must be capitalized; and (2) if the costs are capital expenditures, whether petitioner is entitled to deduct an amortized portion of such costs under section 167.
FINDINGS OF FACT
Some of the facts have been stipulated and…
2Cases cited19 opinions
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- Commissioner v. TellierSupreme Court of the United States · 1966
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- Newark Morning Ledger Co. v. United StatesSupreme Court of the United States · 1993
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