M2 EQUITYBITES-December 15, 2010-ERHC Energy Inc posts higher general and administrative expenses
Paragon's general and administrative expenses
increased by $14,000 for the second quarter of 2005 to $239,000, and for the six months of 2005, these expenses increased by $233,000 to $697,000 for due diligence undertaken mostly during the first quarter of 2005 on a large potential acquisition.
51) Private Letter Ruling 9426004 notes that certain general and administrative expenses
attributable to the performance of services that do not directly benefit, or are not incurred by reason of a particular production activity, are not required to be capitalized.
The regulations state that under a cost-plus research contract, the allocable general and administrative expenses
of the contract researcher charged in connection with the contract research performed for the taxpayer constitute qualified research expenditures.
861-12T(j), Example 1 -- clarifying that general and administrative expenses
may be specifically traced to income generated by specific assets (rather than grouping such expenses with assets without directly identifiable yields) -- is also a good one.