Tax Research Memorandum: Megacorp, Inc.

308 Words2 Pages
Tax Research Memorandum 2 Megacorp, Inc. Prepared by May 25, 2014 May 25, 2014 TAX FILE MEMORANDUM FROM SUBJECT Megacorp, Inc. Business Expense deduction The company wants to know if the IRS is correct under the law when they wouldn’t approve a payment made to Ideas, Inc. in the amount of $5 million as a business expense. Instead, the payment should be characterized as a capital expenditure so that they won’t be able to deduct the payment. FACTS Megacorp acquired Little, Inc. including all assets and liabilities. Prior to the acquisition, Little had a pending lawsuit from Ideas, Inc. asserting that Little had failed to comply with its patents. Megacorp agreed to pay $5 million in damages and later subtract it from business expense.

More about Tax Research Memorandum: Megacorp, Inc.

Open Document