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:
Cost of new track.....$5,000,000
Installing new track.. $3,000,000
Road bed grading and improvements...$2,500,000
Removing old track (net of salvage)..... $1,500,000
Total contact awarded is $12,000,000
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 the Internal Revenue Code Sec. 263A. Prepare a research memorandum to the file.
The following posting discusses taxation and research methods.
How will a Taxation & Research Memorandum be put together for the following question?
What is the tax treatment of travel expenses for the purpose of data collection paid by a tenured full professor?
Not sure what IRC this will relate to and need assistance getting started based on the following criteria.
Professor James obtained tenure and promotion to full professor status many years ago. Yet, he continues to publish research papers in scholarly journals to satisfy his own curiosity and to maintain his professional prestige and status within the academic community. Publications are also necessary in order for the Professor to receive pay raises at the university. This year, spent $3,400 was spent of his own funds to travel to collect some critical pieces of dataView Full Posting Details