Mayrath v. Commissioner
United States Tax Court
Petitioner, contending to be in the trade or business of inventing, constructed an alleged "experimental" house at a cost of $ 287,474.11 for his family's personal use and occupancy.
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Petitioner, contending to be in the trade or business of inventing, constructed an alleged "experimental" house at a cost of $ 287,474.11 for his family's personal use and occupancy. Assuming that a similar luxury house without experimental features could be constructed for $ 116,520, petitioner deducted for the years 1956 and 1957 the cost in excess of that amount as research and experimental expenses under sec. 174, I.R.C. 1954. Held: 1. Such expenditures were not connected with a trade or business and were not of a research and experimental nature within the intendment of the statute. 2.…
1Opinion of the Court
OPINION
Whether petitioners are entitled to deduct a portion of the cost of their personal residence as a research and experimental expenditure under section 174 of the 1954 Code2 is the primary issue for decision.
In preparing their 1956 individual income tax return, petitioners estimated a total expenditure of $286,000 in the construction of their uncompleted residence which was to contain 5,826 square feet. Assuming that a luxury residence would cost $20 per square foot, petitioners multiplied the total square feet by $20 and arrived at a cost of $116,520 for a luxury residence “without…
2Cases cited2 opinions
- Koons v. CommissionerUnited States Tax Court · 1961
- Rushing v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1954
3Cited by40 opinions
- Richmond Television Corporation v. United StatesCourt of Appeals for the Fourth Circuit · 1965
- Martin Mayrath and Rose Mayrath v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1966
- Jack P, Stanton and Virginia G. Stanton v. Commissioner of Internal RevenueCourt of Appeals for the Fifth Circuit · 1968
- Spector v. CommissionerUnited States Tax Court · 1979
- Edwin A. Snow and Helen B. Snow v. Commissioner of Internal RevenueCourt of Appeals for the Sixth Circuit · 1973
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