Aftermath of INDOPCO: the Service applies the future benefit test for capital expenditures

Article Abstract:

INDOPCO Inc v Commissioner, which was decided in 1992, has caused much concern in the business community about which expenses will eventually be counted as capital expenditures and thereby excluded from deduction as ordinary business expenses. The Supreme Court implied that an expense is subject to capitalization if it creates either a distinct asset or significant long-term benefit for the company. The inclusion of significant long-term benefits in this criterion has given rise to questions about a wide range of expenses including, for example, advertising and asbestos removal.

Author: McKenna, Matthew M., McGill, Sarah L.
Publisher: Warren, Gorham & Lamont, Inc.
Publication Name: Journal of Taxation of Investments
Subject: Law
ISSN: 0747-9115
Year: 1993
Capital investments

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Covered calls can provide tax and financial advantages

Article Abstract:

Covered call options can be used to defer a stock seller's gains to a later year, thus realizing a tax advantage in addition to their financial benefit. The important feature to determine tax benefits is the proper setting of the strike price for the option. An improper strike price could negate any tax benefits. Other features to consider are qualified covered calls, wash sales rules, recognizing losses and long term characterization of losses.

Author: Fink, Philip R., McCrudden, John
Publisher: Warren, Gorham & Lamont, Inc.
Publication Name: Journal of Taxation of Investments
Subject: Law
ISSN: 0747-9115
Year: 1993
Options (Finance), Hedging (Finance)

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Subjects list: Taxation, Investments
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