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:
“It is a rule of creative ability that it does nothing of any value, while it is possessed by this afflatus of vanity.”
—Christina Stead (1902–1983)
““Reason is an exception in me, too,” said Zarathustra: “Chaos and necessity and spinning stars—that is also the rule in the wisest world.””
—Friedrich Nietzsche (1844–1900)
“To me the “female principle” is, or at least historically has been, basically anarchic. It values order without constraint, rule by custom not by force. It has been the male who enforces order, who constructs power structures, who makes, enforces, and breaks laws.”
—Ursula K. Le Guin (b. 1929)