Tax Court: Accountant Cannot Deduct Imputed Expenses of His Own Labor

In a Summary Opinion, Special Trial Judge Dean found that the petitioner, who testified that he was an accountant, could not deduct the time he spent doing web-site development for his own business. The court explained the distinction between imputed expenses (such as those claimed by the petitioner) and incurred expenses noting that only costs which are actually incurred or paid are deductible under sections 162 and 212 and finding for the respondent.

Read the opinion here:
Mondello v. Commissioner, T.C. Summ. 2011-97

Tax Court: Forbearance Payments to Shareholders Not Deductible as Interest

The Tax Court found that forbearance payments made to preferred stockholders to forgo redemption elections were not deductible as interest, but some of the payments were deductible as trade or business expenses under Sec. 162 and later payments were subject to capitalization under Sec. 263.

Media Space Inc. v. Commissioner, 135 T.C. No. 21 (2010)

Sales Percentage Trademark Royalty Payments are Deductible

The Second Circuit Court of Appeals, in an opinion by Judge Calebresi, reverses the Tax Court’s decision, holding instead that trademark royalty payments which are calculated as a percentage of sales and incurred on upon the sale of inventory are currently deductible.

Read the opinion here:
Robinson Knife Mfg. v. Commissioner, Docket 09-1496-ag (2d Cir. March 19, 2010)