Madison Gas and Electric Company v. Commissioner of Internal Revenue

CUMMINGS, Circuit Judge.

This is an action under 26 U.S.C. § 7422 for the refund of federal income taxes. The question is whether certain training and related expenses incurred by a public utility in the expansion of its generating capacity through the joint construction and operation of a nuclear plant with two other utilities are deductible as ordinary and necessary expenses in the years of payment or are non-deductible pre-operating capital expenditures of a new partnership venture. The Tax Court in an opinion reported at 72 T.C. 521 held that they are non-deductible capital expenditures.…