The 'Gap Period' Problem in Section 195

Article Abstract:

Internal Revenue Code (IRC) Section 195 aimed to encourage the development of new businesses and clarify tax treatment of start-up expenses. The discussion of Code Section 195 defines start-up costs, explains the sixty month amortization period and how to obtain it and reviews the problem of the 'gap period'. The article refers to the time from when costs incur at the start of a business but before active trade as the 'gap period'. The options open to a taxpayer are emphasized in relation to IRC Section 195. The following court cases amplify the discussion: Blitzer v. United States, United States v. Manor Care, Inc., and Richmond Television Corp. v. Commissioner. Congress is considering legislation that would resolve the problem of the 'gap period'.

Finance

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The Qualification of Removable Wall Coverings as Section 38 Property

Article Abstract:

David Colker refutes the Internal Revenue Service's (IRS) view that wall coverings described in Technical Advice Memorandum (TAM) 8404007 do not qualify as IRC Section 38 property. The analysis of TAM 8404007 points out that the IRS basis for treating removable wall coverings, unlike wall-to-wall carpeting, is vague. It is also contended that the IRS' method of analysis in the TAM is inconsistent with Private Letter Ruling 7752075. Permanent covering and method of attachment are revelant to the discussion. Two issues are significant in determining whether a wall covering is permanent or nonpermanent: 1) how easy it is to remove and 2) how long it is expected to remain on a structure.

Laws, regulations and rules, Criticism and interpretation, United States. Internal Revenue Service

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