Tax Accounting Corner

In Dominion Resources Inc, the Court of Appeals for the Federal Circuit recently reversed the Court of Federal Claims and held that the interest capitalization associated property rule in Reg. §1.263A-11(e)(1)(ii)(B), as applied to property temporarily withdrawn from service, is not a reasonable int...

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Veröffentlicht in:Journal of Passthrough Entities 2012-11, Vol.15 (6), p.53
1. Verfasser: (Jack) Donovan, John C
Format: Artikel
Sprache:eng
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Zusammenfassung:In Dominion Resources Inc, the Court of Appeals for the Federal Circuit recently reversed the Court of Federal Claims and held that the interest capitalization associated property rule in Reg. §1.263A-11(e)(1)(ii)(B), as applied to property temporarily withdrawn from service, is not a reasonable interpretation of Code Sec 263A, and that the Treasury failed to provide a reasoned explanation when it promulgated the regulation. The Federal Circuit noted that the relevant statutory provisions in Code Sec 263A are circular and require certain costs incurred in improving real property to be capitalized, instead of deducted. Obviously, tax advisers should review the Dominion Resources Inc decision and determine the impact on their clients (e.g., interest capitalization with respect to construction projects). Additionally, tax advisers should consider the significance of the Federal Circuit, a court of national jurisdiction, holding the regulation invalid.
ISSN:1099-7407