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Federal Tax Research 10th Edition by Roby Sawyers,William Raabe,Gerald Whittenburg,Steven Gill
Edition 10ISBN: 978-1285439396Federal Tax Research 10th Edition by Roby Sawyers,William Raabe,Gerald Whittenburg,Steven Gill
Edition 10ISBN: 978-1285439396 Exercise 76
The Pima and Southern Railroad (PSRR) is a small railroad operating in rural Arizona. It exists by carrying freight to remote areas of the southwest. This year the PSRR needs to replace a 30-mile section of its track. The PSRR has bids from a contractor to replace the track for the following amounts:
The old track is fully depreciated, and the cost shown is net of $200,000 salvage value received for the scrap metal. The new track is an improved type, and it is expected to last 35 to 40 years. The controller of PSRR, Casey Jones, comes to you and wants to know the tax treatment of the above expenditures. He specifically wants to know if any costs can be deducted or if all must be capitalized and written off over a period of years. He is also concerned about any potential problems with the uniform capitalization rules under § 263A. Prepare (in good form) a research memorandum to the file.
The old track is fully depreciated, and the cost shown is net of $200,000 salvage value received for the scrap metal. The new track is an improved type, and it is expected to last 35 to 40 years. The controller of PSRR, Casey Jones, comes to you and wants to know the tax treatment of the above expenditures. He specifically wants to know if any costs can be deducted or if all must be capitalized and written off over a period of years. He is also concerned about any potential problems with the uniform capitalization rules under § 263A. Prepare (in good form) a research memorandum to the file.
Explanation
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Memorandum refers to informal record in ...
Federal Tax Research 10th Edition by Roby Sawyers,William Raabe,Gerald Whittenburg,Steven Gill
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