Document Type


Publication Date


Publication Information

15 B.C. Indus. & Com. L. Rev. 443 (1973-1974)


Should expenditures that have an impact on a company’s production beyond one tax year be capitalized for tax purposes? How can these be distinguished from the “ordinary and necessary expenses” of a business? Is it reasonable to permit a current deduction for these expenditures? While a capitalized expenditure has often been seen as an expenditure that has produced an “asset”, there is no clear rule on what is an asset how to define it. The article examines these issues, with a discussion of the statutory provisions concerning capital expenditures and the problem of whether capitalization is a method of accounting. It focuses on three kinds of expenditure problems: 1) The capital nature of ground rent and insurance during the construction of a building 2) The capital nature of educational expenditures 3) The capital nature of costs of expanding a business. The article concludes by arguing that capitalized expenditures should be defined as costs that produce or enhance an asset. The types of expenditures that can be capitalized is dependent on whether the asset is a tangible property or something less tangible in tax terms, like a new job or a contract right.


Reprinted with permission of the Boston College Industrial & Commercial Law Review (now BC Law Review).



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.