The Allocation and Apportionment of Deductions (Portfolio 6640)
At a glance
I. Introduction
II. General Principles
III. Allocation and Apportionment of Interest Expense
IV. Allocation and Apportionment of R& E Expense
V. Allocation and Apportionment of Other Deductions
VI. Allocation of Expenses at the Controlled Foreign Corporation Level
Abstract
Bloomberg Tax Portfolio, The Allocation and Apportionment of Deductions anallyzes the rules for allocating and apportioning deductions. In general, deductions must be allocated to the gross income to which they relate (defined as narrowly as possible) and then apportioned among the relevant “statutory” and “residual” groupings of income (e.g., foreign-source income within a particular foreign tax credit “basket” and all other income) within that set of gross income.
Because of the complexity of the rules, a substantial part of the Portfolio focuses on the rules for allocating and apportioning interest deductions and research and experimental deductions. The Portfolio also discusses the rules for allocating and apportioning other deductions, including those for state and local taxes, stewardship and supportive expenses, charitable contributions, losses from the disposition of capital assets, and net operating losses.