Rule
Construction-related expense items, such as tools, materials, and wages to construction workers are treated as part of the cost of acquisition of a capital asset. Reasonable wages paid in carrying on of a trade or business qualify as a deduction from gross income, but when wages are paid in connection with construction or acquisition of a capital asset they must be capitalized and are then entitled to be amortized over the life of the capital asset so acquired.
§263(a)(1) of the Internal Revenue Code denies a deduction for any amount paid out for construction or permanent improvement of facilities. This extends to the cost of acquisition, construction, or erection of buildings. Treas. Reg. §1.263(a)-2(a).
Read more about this topic: Commissioner V. Idaho Power Co.
Famous quotes containing the word rule:
“The principle of majority rule is the mildest form in which the force of numbers can be exercised. It is a pacific substitute for civil war in which the opposing armies are counted and the victory is awarded to the larger before any blood is shed. Except in the sacred tests of democracy and in the incantations of the orators, we hardly take the trouble to pretend that the rule of the majority is not at bottom a rule of force.”
—Walter Lippmann (1889–1974)
“Resolved to ruin or to rule the state.”
—John Dryden (1631–1700)
“All you people don’t know about lost causes. Mr. Paine does. He said once they were the only causes worth fighting for, and he fought for them once, for the only reason that any man ever fights for them. Because of just one plain, simple rule—Love Thy Neighbor. And in this world today, full of hatred, a man who knows that one rule has a great trust.”
—Sidney Buchman (1902–1975)