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The taxpayer argued that the costs of installation were deductible and the tax court agreed. The costs of installation only permitted the taxpayer to continue the plant’s operation. The expenses did not add to the value of the business or permit the taxpayer to make new uses of the basement. 4.
Welch v. Helvering, 290 U.S. 111 (1933), was a decision by the United States Supreme Court on the difference between business and personal expenses and the difference between ordinary business deductions and capital expenses. It is one of the most important income tax law cases.
Because business expenses are fully deductible under section 162, taxpayers try to argue that expenses were not start up expenses. The Second Circuit Court of Appeals found that the Tax Court should look at if employment of the taxpayer is in the same trade or business to determine if it is a start-up expense, or a carrying on expense. [11]
The Second Circuit Court of Appeals reversed the Tax Court and held it to be a capital loss. [2] The U.S. Supreme Court agreed with the Second Circuit and held that it was a capital loss. [1] Allowing the income from the liquidation to be taxed as a capital gain, while allowing loss payments out of that income to be deducted as an ordinary ...
The court held that the travel expenses were compensation to the employee for services rendered to the company during 1972 and should be included in gross income. Therefore, when a company pays travel expenses, a taxpayer must include such compensation in gross income when the excursion is viewed as a reward for outstanding employee success ...
Internal Revenue Code § 212 (26 U.S.C. § 212) provides a deduction, for U.S. federal income tax purposes, for expenses incurred in investment activities. Taxpayers are allowed to deduct all the ordinary and necessary expenses paid or incurred during the taxable year-- (1) for the production or collection of income;
Though these payments qualified for § 162 deduction as expenses paid in the course of the opticians' trade or business, the IRS argued that the expenses should be disallowed as against public policy. [8] While the Court disapproved of the business ethics displayed by the opticians, the Court upheld the deductions as valid under the Code. [8]
Commissioner, 14 T.C. 635 (1950), was a case in which the United States Tax Court ruled that Midland Empire Packing Company was permitted to deduct the costs of lining its basement walls and floor. [1] The costs were held to be repairs, and thus deductible as an ordinary and necessary business expense under section 162(a) of the Internal ...