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VOLUME 24 .

1934

TED

NUMBER 103

Washington, Wednesday, May 27, 1959

Title 26 INTERNAL REVENUE, 1954
Chapter I Internal Revenue Service, Department of the Treasury SUBCHAPTER A INCOME TAX

T.D. 6380

PART 1 INCOME TAX; TAXABLE
YEARS BEGINNING AFTER DECEM
BER 31, 1953
Taxes and Carrying Charges Charge able to Capital Account and Treated as Capital Items In order to restore to the regulations under section 266, relating to taxes and carrying charges, the election to capi talize Federal social security taxes paid or accrued in connection with the con struction or acquisition of a capital asset, as previously provided in 39.24 a -6 of Regulations 118 and corresponding pro visions of prior regulations, 1.266-1 of the Income Tax Regulations 26 CFR
1954 Part 1 is hereby amended as follows for taxable years beginning after December 31, 1953, and ending after August 16, 1954:
Section 1.266-1 is amended as follows:
A By striking the last sentence of Paragraph b 2.
B By amending paragraph d to read as follows:

1.266-1 Taxes and carrying charge!
chargeable to capital account ant treated as capital items.

d The following examples are illus trative of the application of the provi sions of this section:

ar? le
In 1956 and 1957 A pays
ual taxes and interest on a mortgage or
rJm 0f, real Property. During 1956, tin k vacant and unproductive, bul a h0Ut 1957 A operates the property a:
and JP1? lot A may capitalize th e taxe;
th ,mortgage interest paid in 1956, b u t noi taxes and mortgage interest paid in 1957
thar e 2 v In February 1957, B begar B in iorln f an office building for him self of u., connection w ith th e erectior t a J r S paid $6,000 social security his 1957 return he elected t the Rnnio ? mu st continue to capitaliz with eeurity taxes paid in connectioi compSi0 ection 0i the building u n til it!
examrtfifot3 Assume the same facts as ir B ole?
except that in November 1957
begins to build a hotel. In 1957 I

pays $3,000 social security taxes in connec tion w ith the erection o f th e hotel. B s elec tion to capitalize th e social security taxes paid in erecting the office building started in February 1957 does n o t bind him to capitalize th e social security taxes paid in erecting th e hotel; he m ay-deduct the $3,000 social secu rity taxes paid in erecting the hotel.
E xam ple 4. In 1957, M Corporation began the erection of a building for itself, w hich w ill take three years to complete. M Corpo ration in 1957 paid $4,000 social security taxes and $8,000 intérest on a building loan in connection w ith th is building. M Cor poration m ay elect to capitalize th e social security taxes although i t deducts th e in
terest charges.
E xam ple 5 . C purchases m achinery in 1957 for use in his factory. He pays social security taxes on th e labor for transportation and installation of th e machinery, as well as interest on a loan to obtain fun ds to pay for th e m achinery and for transportation and installation costs. C may capitalize either th e social security taxes or th e in
terest, or both, up to th e date of in stallation or u n til the machinery is first p u t in to use by him , whichever date is later.

Because tliis Treasury decision merely restores an election given to taxpayers under former regulations, and because it is desirable to restore such election promptly, it is found that it is unneces sary and impracticable to issue this Treasury decision with notice and public procedure thereon under section 4a of the Administrative Procedure Act, ap proved June 11, 1946, or subject to the effective date limitation of section 4c of that Act.
68 A Stat. 917; 26 U.S.C. 7805
seal

D ana L atham ,
Commissioner of Internal Revenue.
Approved: M ay22,1959.
F red C. S cribner , Jr., Acting Secretary of th e Treasury.
F.R. Doc. 59-4433; Filed, May 26, 1959;
8:49 a.m.

Title 7 AGRICULTURE
Chapter VII Commodity Stabiliza tion Service Farm Marketing Quotas and Acreage Allotments, Department of Agriculture PART 718 DETERMINATION OF
ACREAGE AND PERFORMANCE
Sec.
718.1

Basis ahd purpose and applicability.
Continued on p. 4225

CONTENTS
Agricultural Marketing Service Proposed rule making:
Nectarines grown in California;
approval of expenses and fix ing of rate of assessment for fiscal year and carryover of unexpended funds__ - ______
Agriculture Department See Agricultural Marketing Serv ice; Commodity Credit Corpo ration; Commodity Stabiliza tion Service.
Air Force Department Rules and regulations:
Contract clauses; miscellaneous amendments_______________
Alien Property Office Notices:
Vested property, intention to return:
De Yeso, Angelo, et al__ i __
/Frijda, Raphel Joseph, and Mrs. M a t h i l d e BalogFrijda______ ___ _.________
Naeboe, Dagmar___________ _
Rossi, Pier Luigi, and Renzo Rossi____ ____ .:_____ _____ _
Atomic Energy Commission Rules and regulations:
Domestic uranium program; ap plications for certification and bonus payment; correction._
Civil Aeronautics Board Notices:
; TACA International Airlines, S.A.; hearing______ ______ ;
Commodity Credit Corporation Rules and regulations:
Barley loan and purchase agree ment program, 1959-crop;
support rates; correction___
Commodity Stabilization Service Rules and regulations:
_ Acreage and performance de terminations __ "2_______
Cotton; miscellaneous amend ments_____ _____ __ ______
General policy and interpreta tion; expiration of time limi tations___ ______ ____ _____
Customs Bureau Notices:
Tariff classification; pink beads similar in color and texture to a type of pink coral known as angel skin______________
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