Supreme Court's ruling in Indopco limits deductibility of takeover expenses

Article Abstract:

The Supreme Court's decision in Indopco, Inc v Commissioner held that friendly takeover expenses, resulting in long-term benefit should be capitalized under IRC section 263 rather than deducted under section 162(a). This decision limited the applicability of Commissioner v Lincoln Savings and Loan Ass'n's bright line test for 263 capitalization. The IRS has applied 263 with little consistency and the Indopco decision is unlikely to change that. However, it should only be applied to takeover expenses that create or enhance separate assets or result in long-term benefit.

Cases, Finance, Acquisitions and mergers, Corporations, Corporate finance

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Com. v. Soliman: Supreme Court unduly restricts home office deductions

Article Abstract:

The Supreme Court's decision in Commissioner v Soliman unfairly limits the availability of the home office deduction by establishing time and relative importance as the focal points rather than necessity. The ruling violates legislative intent because only those rich enough to afford a separate office will qualify for the deduction. This decision will affect many small business owners and those attempting to combine family obligations with work. Tax practitioners should seek another way to deduct the expenses rather than as principal work place.

Taxation, Home offices

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