May 2013 Issue

May 2013


In this month’s issue, taxpayers receive insight on LB&I’s recently updated memorandum on exams involving the conversion of capitalized assets to deductible repair expenses, as well as a reminder for taxpayers emerging from NOLs to consider accounting method and Section 199 opportunities. We also discuss a range of newly issued IRS guidance, including rulings on whether: the transfer of patents was a sale subject to amortization; a taxpayer can claim bonus depreciation through an accounting method change; and a cash settlement payment for compensatory damages is ordinary business expense. Additionally, this issue contains guidance on whether: pharmaceutical litigation costs must be amortized; a publisher’s pre-production development activities were Section 199 manufacturing activities; and the special government contract rule is applicable for Section 199 purposes. Finally, we discuss a recent Tax Court decision in which an individual was denied a bad debt deduction for failing to prove worthlessness.

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Annette Smith
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Christine Turgeon
Tel: +1 (646) 471 1660

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