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:
“Until, accustomed to disappointments, you can let yourself rule and be ruled by these strings or emanations that connect everything together, you haven’t fully exorcised the demon of doubt that sets you in motion like a rocking horse that cannot stop rocking.”
—John Ashbery (b. 1927)
“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)
“The world is filled with the proverbs and acts and winkings of a base prudence, which is a devotion to matter, as if we possessed no other faculties than the palate, the nose, the touch, the eye and ear; a prudence which adores the Rule of Three, which never subscribes, which never gives, which seldom lends, and asks but one question of any project,—Will it bake bread?”
—Ralph Waldo Emerson (1803–1882)