[Code of Federal Regulations]
[Title 26, Volume 1]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR1.263(a)-2]

[Page 423]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 1_INCOME TAXES--Table of Contents
 
Sec. 1.263(a)-2  Examples of capital expenditures.

    The following paragraphs of this section include examples of capital 
expenditures:
    (a) The cost of acquisition, construction, or erection of buildings, 
machinery and equipment, furniture and fixtures, and similar property 
having a useful life substantially beyond the taxable year.
    (b) Amounts expended for securing a copyright and plates, which 
remain the property of the person making the payments. See section 263A 
and the regulations thereunder for capitalization rules which apply to 
amounts expended in securing and producing a copyright and plates in 
connection with the production of property, including films, sound 
recordings, video tapes, books, or similar properties.
    (c) The cost of defending or perfecting title to property.
    (d) The amount expended for architect's services.
    (e) Commissions paid in purchasing securities. Commissions paid in 
selling securities are an offset against the selling price, except that 
in the case of dealers in securities such commissions may be treated as 
an ordinary and necessary business expense.
    (f) Amounts assessed and paid under an agreement between bondholders 
or shareholders of a corporation to be used in a reorganization of the 
corporation or voluntary contributions by shareholders to the capital of 
the corporation for any corporate purpose. Such amounts are capital 
investments and are not deductible. See section 118 and Sec. 1.118-1.
    (g) A holding company which guarantees dividends at a specified rate 
on the stock of a subsidiary corporation for the purpose of securing new 
capital for the subsidiary and increasing the value of its stockholdings 
in the subsidiary shall not deduct amounts paid in carrying out this 
guaranty in computing its taxable income, but such payments are capital 
expenditures to be added to the cost of its stock in the subsidiary.
    (h) The cost of good will in connection with the acquisition of the 
assets of a going concern is a capital expenditure.

[T.D. 6500, 25 FR 11402, Nov. 26, 1960, as amended by T.D. 8131, 52 FR 
10084, Mar. 30, 1987]