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Hatch-Waxman Litigation Costs Both Capital Expenditures And Ordinary Business Expenses | Tarter Krinsky & Drogin LLP


Mylan Inc. & Subsidiaries v. Commissioner of Internal Revenue (U.S. Tax Court April 27, 2021)
Under the Internal Revenue Code (“Code”) Section 162, ordinary and necessary business expenses are deductible, but Code Section 263 disallows a deduction for capital expenditures (“no deduction shall be allowed” for a capital expenditure). Capital expenditures must be capitalized and are generally recovered as depreciation or amortization deductions over a period of years. “Ordinary” expenses are those “customary or usual within a particular trade” and “necessary” if they are appropriate and helpful to the business’ operation. For a typical patent infringement litigation, the litigation costs to both the patentee and the alleged infringer are considered ordinary business expenses, not capital expenses. ....

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IRS Clarification on Defined Benefit Pension Plan Contributions


Monday, December 28, 2020
On November 16, 2020, the Internal Revenue Service (IRS) issued Notice 2020-82 (the Notice), to further extend the deadline for required minimum contributions for single-employer defined benefit pension plans that would otherwise be due during the 2020 calendar year, from January 1, 2021, to January 4, 2021. On the same day, the PBGC issued complementary guidance, in Technical Update 20-2 (the PBGC Update), to reflect the January 4, 2021, deadline established by the IRS in the Notice when calculating variable-rate premiums.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) previously established a January 1, 2021, deadline for certain required minimum contributions that would otherwise be due during the 2020 calendar year. This pension funding holiday applies for contributions to single-employer defined benefit pension plans required under Section 430(j) of the Internal Revenue Code (the Code). Under Code Section 430 ....

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