Internal Revenue Service
Revenue Ruling

TaxLinks.com   sm

 Rev. Rul. 70-26

1970-1 C.B. 55

IRS Headnote

Amounts paid by a real estate title insurance company for a block of title files are nondeductible capital expenditures even though one-half of the files were duplicates of its own files; O.D. 1049 superseded.

Full Text

Rev. Rul. 70-26 /1/

A title insurance company, engaged in the business of examining and showing title to real property together with certifying such title, purchased a block of title index files from another title company as part of its expansion program. Approximately half of the index files acquired proved to be of no service to the taxpayer as it duplicated many index files it already owned.

Held, amounts paid in acquiring the title index files represent a nondeductible capital expenditure within the meaning of section 263 of the Internal Revenue Code of 1954. The fact that half of the index files purchased proved to be duplicates of those already owned does not alter the character of the purchase. Bay Counties Title Guaranty Company v. Commissioner, 288 F. 2d 187 (1961), affirming 34 T.C. 29 (1960).

O.D. 1049, C.B. 5, 175 (1921), is hereby superseded since the position stated therein is restated under the current statute and regulations in this Revenue Ruling.

/1/ Prepared pursuant to Rev. Proc. 67-6, C.B. 1967-1, 576.