Application
The cost of the transportation equipment used for construction activities was paid out in the same manner as the cost of supplies, materials, and the wages of construction workers. The taxpayer does not question the capitalization of these other items, because they are elements of the cost of acquiring a capital asset. Thus, construction-related depreciation should also be capitalized.
§161 and §261 of the Internal Revenue Code require that the capitalization provision of §263(a) take precedence, on the facts here, over §167(a)
Read more about this topic: Commissioner V. Idaho Power Co.
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