TG Missouri v. Commissioner (2009)

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Main Issue:

  • Supplies expense


  • Taxpayer designs and engineers production molds which are then sold to their customers
  • Taxpayer maintains possession of the molds
  • Taxpayer included the costs of the actual molds as a supply expense
  • IRS argued that the molds are a character subject to depreciation and not qualified supply expense


  • Court sided with the taxpayer stating that there should be a fact specific analysis to determine
    • whether the supplies were utilized in a qualified development project
    • whether the supply is depreciable in the hands of the taxpayer

Take-Away Point:

  • Many mold companies may be understating QREs associated with molds. Need to make sure the inclusion of mold costs is appropriate based on the two-prong analysis above

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