Dawson, Judge:
Respondent determined a deficiency of $1,946 in petitioners’ Federal income tax for the year 1974. Concessions have been made by the parties. The only issue presented for decision is whether petitioner Fernando Faura, an author, may currently deduct under section 1621 certain expenses paid or incurred while writing two books, or whether such expenses should be capitalized pursuant to section 263.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. The stipulations of facts and attached exhibits are incorporated herein by this reference.
Fernando Faura (hereinafter petitioner) and Rita Faura maintained their legal residence in San Fernando, Calif., at the time they filed their petition in this case. Petitioner and his wife timely filed their joint Federal income tax return for the taxable year 1974.
Petitioner was in the trade or business of being an author in 1974 when he paid or incurred the following expenses in connection with the writing of two manuscripts:
Office expenses
(1) Office rent . $672.00
(2) Mail . 20.00
(3) Gifts1 . 30.00
(4) Printing . 58.95
(5) Telephone . 180.00
(6) Supplies . 50.00
(7) Answering service . 25.00
(8) Post office box rental . 18.00
(9) Legal fees . 40.00
(10) Subscriptions . 40.00
(11) Water and power . 57.00
(12) Gas . 55.00
(13) Architectural . 125.00
(14) Research . 38.95
(15) Travel1 . 571.38
(16) Miscellaneous office expense . 40.00
(17) Entertainment1 . 1,000.00
Total office expenses . 3,021.28
Transportation expenses
(1) Automobile repair expenses . $231.69
(2) Gasoline . 721.76
(3) Depreciation autos . 780.00
(4) Automobile insurance . 239.59
Total transportation expenses . 1,973.04
Total expenses . 4,994.32
Petitioner has realized no income from the sale of his writings. He had not sold the manuscripts as of the date of the trial, but he was still actively marketing his unprinted books.
Petitioner claimed a deduction for his expenditures in writing the two books as ordinary and necessary business expenses for 1974. Respondent disallowed the claimed deduction on the ground that such costs were capital expenditures.
OPINION
Section 162 provides there shall be allowed as a deduction all ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business. Section 1.162-6, Income Tax Regs., provides that an individual in a profession may claim as deductions:
the cost of supplies used by him in the practice of his profession, expenses paid or accrued in the operation and repair of an automobile used in making professional calls, dues to professional societies and subscriptions to professional journals, the rent paid or accrued for office rooms, the cost of the fuel, light, water, telephone, etc., used in such offices, and the hire of office assistants. Amounts currently paid or accrued for books, furniture, and professional instruments and equipment, the useful life of which is short, may be deducted.
Section 263, which takes precedence over section 162,2 provides that no deduction shall be allowed for any amount paid out for permanent improvements or betterments made to increase the value of any property. Section 1.263(a)-2, Income Tax Regs., includes as 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.
Section 461(a) provides that “the amount of any deduction * * * shall be taken for the taxable year which is the proper taxable year under the method of accounting used in computing taxable income.” Section 1.461-1(a)(1), Income Taxs Regs., provides:
Under the cash receipts and disbursements method of accounting, amounts representing allowable deductions shall, as a general rule, be taken into account for the taxable year in which paid. * * * [If, however] an expenditure results in the creation of an asset having a useful life which extends substantially beyond the close of the taxable year, such an expenditure may not be deductible, or may be deductible only in part, for the taxable year in which made. * * *
Respondent contends that expenses incurred by an author in producing a book constitute nondeductible capital expenditures because they result in the creation of an asset having a useful life extending beyond the taxable year. Under this view, the costs attributable to writing a book establish the author’s basis under section 1012, and are available for future depreciation or amortization under section 167(a). Such a view, respondent argues, derives its support from Commissioner v. Idaho Power Co., 418 U.S. 1 (1974).
In Idaho Power, a public utility company claimed depreciation deductions under section 167(a) on all its transportation equipment, cars, and trucks, including that portion attributable to its use in constructing capital facilities. The Supreme Court, affirming an opinion of this Court, held that the equipment depreciation allocable to the taxpayer’s construction of capital facilities must be capitalized under section 263(a)(1). It said (418 U.S. at 16):
The purpose of §263 is to reflect the basic principle that a capital expenditure may not be deducted from current income. It serves to prevent a taxpayer from utilizing currently a deduction properly attributable, through amortization, to later tax years when the capital asset becomes income producing. * * *
On the basis of Idaho Power, the respondent argues that the books written by petitioner have a productive life extending beyond the year in which the expenses are incurred, and thus the expenditures cannot be deducted currently but must be allocated, through depreciation deductions in future years, over the periods benefited by the asset.
Whether an expenditure may be currently deducted as an ordinary and necessary business expense or must be charged to capital has often presented a perplexing question to be decided upon the facts and circumstances of the particular case. As the Supreme Court observed in Welch v. Helvering, 290 U.S. 111, 115 (1933): “One struggles in vain for any verbal formula that will supply a ready touchstone. The standard set up by the statute is not a rule of law; it is rather a way of life. Life in all its fullness must supply the answer to the riddle.”
The issue of capitalization of a writer’s expenses, or for that matter any producing artist’s expenses, has had a long and varied history. The first case appears to be Doggett v. Burnett, 65 F.2d 191 (D.C. Cir. 1933). There the taxpayer arranged for the publication of religious books and, in doing so, expended some $38,000 for their printing, advertising, and sale. The expenses also included a salary for an assistant, travel costs, and advertising in newspapers and magazines. The Court of Appeals held that such expenditures were deductible.
In May v. Commissioner, 39 B.T.A. 946 (1939), the taxpayer was employed by Columbia Pictures and the Fox Film Corp. to serve as a motion picture director and as a collaborator and writer of motion picture scripts.3 We held that certain amounts expended for entertainment, automobile operating costs, telephone, telegraph, and cable charges were deductible as ordinary and necessary expenses in his trade or business of being a motion picture director and writer.
In Shumlin v. Commissioner, 16 T.C. 407 (1951), the taxpayer, a theatrical producer, had produced 25 stage plays during a period of about 20 years. His activities consisted of choosing plays for production, bringing together playwrights, actors, and other professional participants, and supervising financial and business arrangements. Rather than requiring capitalization into particular plays of his cash outlays for travel, entertainment, and other business expenses, this Court held that such expenditures were deductible.4
In Kluckhohn v. Commissioner, 18 T.C. 892 (1952), the taxpayer was a newspaper correspondent and writer. His wife traveled to Australia and gathered material which he used in writing a book and an article. We allowed as a deduction a reasonable portion of the total amount expended by the wife in connection with the trip, i.e., that part attributable to the collection of information for use by the taxpayer in his business of writing.
The second appellate court opinion in the area was Brooks v. Commissioner, 274 F.2d 96 (9th Cir. 1959), in which a freelance research scientist incurred certain travel expenses in the course of her research. Although she did not expect to realize a present profit from the publication of her research, she argued that such expenditures were necessary to maintain her professional standing in order to be eligible for prospective salaried research appointments. The Commissioner contended that such expenses were not profit motivated and were therefore not ordinary and necessary business expenses. He also argued that the taxpayer’s travel expenses resembled a capital expenditure — that what she was in fact doing was equivalent to getting further education in order to increase her future profit potential rather than presently engaging in a profitable enterprise. The Court of Appeals for the Ninth Circuit, where an appeal would lie in this case, dismissed both of respondent’s contentions and held the expenses were incurred in good faith for the purpose of making a profit and to retain her position with a university, and were therefore deductible.
Four years later, respondent agreed in part with the Brooks decision in Rev. Rul. 63-275,1963-2 C.B. 85, which approved the deductibility of research expenses, including traveling expenses, incurred by college and university professors in their capacity as educators. See also B. Wolfman, “Professors and the ‘Ordinary and Necessary’ Business Expense,” 112 U. Pa. L. Rev. 1089 (1964). The revenue ruling makes the assumption that “where the research is undertaken with a view to scholarly publication, the expenses for such purposes can not usually be considered to have been incurred for the purpose of producing a specific income-producing asset.” The ruling permits stenographic and other expenses incurred in preparing a manuscript for the purpose of teaching, lecturing, or writing and publishing in the professor’s capacity as an academic and without expectation of profit apart from salary.
While the issue here concerns the expenses of an artist as a writer, a similar case addressed the expenses of an artist as a sculptor.5 In Rood v. United States, 184 F. Supp. 791 (D. Minn. 1960), the Government contended that sculpturing did not constitute a trade or business, thus precluding the deductibility of any expenses.6 The District Court, observing that the business of sculpturing carried on by the taxpayers included not only the actual creation of the sculptures, but also teaching, operating a gallery, and writing, held that the expenses were deductible under section 162.
The Commissioner reiterated his position on capitalization in Rev. Rul. 68-194, 1968-1 C.B. 87. The revenue ruling concerned an author, who reported income on the cash receipts and disbursements method of accounting and incurred expenses for secretarial help, art work, supplies, postage, and travel in producing and copyrighting a manuscript of literary composition but who was not in the trade or business of writing, even though the writing and publishing of the book was a transaction entered into for profit. Bootstrapping himself by Rev. Rul. 234, 1953-2 C.B. 29, the Commissioner indicated that such expenses were not deductible under section 2127 but rather were capital expenditures under section 263, the total of which was the taxpayer’s basis of the property. The ruling also described accounting procedures for amortizing the defined cost basis over the actual sales of the book.
The Commissioner’s position was again subjected to the judicial crucible in Stern v. United States, an unreported case (C.D. Cal. 1971, 27 AFTR 2d 71-1148, 71-1 USTC par. 9375). In that case, the taxpayer, who had been engaged in the field of writing for 45 years and had authored numerous newspaper stories, magazine articles, and screen plays, incurred travel expenses while researching, writing, and arranging material for a portion of his book prepared and published in 1965. The District Court, noting that the expenses were not for securing a copyright and plates which remain the property of the person making the payments (sec. 1.263(a)-2(b), Income Tax Regs.), held that the expenditures were deductible under section 162 as ordinary and necessary expenses in carrying on the taxpayer’s trade or business of writing.
Not surprisingly, the Commissioner in Rev. Rul. 73-395,1973-2 C.B. 87, published his rejoinder to the Stern opinion by declaring that it would not be followed. It was explained that he did not recommend appeal of that case because of a stipulation to the effect that “if the taxpayer was determined to be in the business of being a writer, the traveling expenses in question were ordinary and necessary.”
Revenue Ruling 73-395, supra, also set out in detail the Commissioner’s views that a taxpayer, using the accrual method of accounting, may not deduct in the year incurred all of its expenditures pertaining to the writing, editing, design, and artwork for textbooks for visual teaching portfolios. The Commissioner reasoned that expenditures which are directly attributable to producing and copyrighting8 a manuscript of literary composition result in the creation of an asset having a useful life that extends substantially beyond the close of the taxable year, and thus by reason of section 1.461-1(a)(2), Income Tax Regs., are capital in nature. Moreover, respondent’s position in the ruling is that since such expenditures must be capitalized under section 263 and depreciated under section 167(a), they are not inventoriable within the meaning of section 471.9 The ruling also noted that section 1.174-2(a)(1), Income Tax Regs., specifically excludes expenditures for research in connection with literary, historical, and similar projects from the option under section 174 to deduct, currently, research expenditures which would otherwise be chargeable to the capital account.
Shortly thereafter, Congress expressed its dissatisfaction with Rev. Rul. 73-395. In H. Rept. 94-658, 94th Cong., 1st Sess. 337 (1975), 1976-3 C.B. (Vol. 2) 1029, the Ways and Means Committee, understanding that historically tax accounting practices in the publishing industry had varied greatly and that no standard procedures had been developed, was concerned that the retroactive application of Rev. Rul. 73-395 would adversely affect practices consistently followed by many taxpayers for years. The House committee sought to make nugatory the effect of the revenue ruling by allowing taxpayers to treat their prepublication expenditures in the manner in which they had been applied consistently in the past by the taxpayer until the issuance of Treasury regulations to establish a uniform treatment of such expenditures for the entire publishing industry.
H. Rept. 94—658, supra, concerned itself exclusively with “publishers,” and not “writers.” On April 27, 1976, Senator Ribicoff proposed an amendment to H.R. 10612 which sought to provide for writers the same entitlement to treat research and other prepublication expenses as deductions against current income as the proposed bill permitted for publishers.10
S. Rept. 94-938, 94th Cong., 2d Sess. 403-405 (1976), 1976-3 C.B. (Vol. 3) 441-443, reiterated the substance of H. Rept. 94-658, swpra, and specifically addressed the issue of authors:
The committee believes that the Service’s position to disallow any deductions for authors’ prepublication expenses and its decision not to follow the ruling in Stern v. United States results in inequitable treatment for taxpayers who are professional authors engaged in the business of writing. The committee believes authors should be allowed to deduct as business expenses the essential, reasonable costs of earning income from their writing. Furthermore, the committee believes that it would be discriminatory to allow publishers to deduct expenses which authors must capitalize. Therefore, the committee believes it appropriate to provide relief from Revenue Ruling 73-395 to authors, as well as to publishers.
When the bill went to conference, the conference agreement followed the House bill with necessary technical changes. S. Rept. 94-1236, 94th Cong., 2d Sess. (1976), 1976-3 C.B. (Vol. 3) 906.
The final provision which became section 211911 of the Tax Reform Act of 1976, Pub. L. 94-455, 1976-3 C.B. (Vol. 1) 388, stated that the application of sections 61, 162, 174, 263, and 471 to any prepublication expenditure shall be administered without regard to Rev. Rul. 73-395 and in a manner in which such sections were applied consistently by the taxpayer to such expenditures before the date of the issuance of the revenue ruling. Section 2119 defined prepublication expenditures to mean expenditures paid or incurred by the taxpayer in connection with his trade or business of publishing for the writing, editing, compiling, illustrating, designing, or other development or improvement of a book, teaching aid, or similar product.
Respondent argues that it is clear from the face of the statute, as well as the legislative history, that section 2119 was intended to apply not to authors, but only to publishers. We think the question is not entirely free from doubt. We note that the conference agreement followed the House bill with necessary technical changes, and that the section uses the personal pronoun “his” when referring to the taxpayer’s trade or business of publishing. If the bill were addressing solely the corporate members of the publishing industry, the impersonal pronoun “its” would have been more appropriate. Moreover, we find the verb “publish” to be defined broadly: To prepare and issue (printed material) for public distribution or sale; to bring to the public attention; to issue a publication; and tobe the author of a published work or works. The American Heritage Dictionary of the English Language (1976).
Additionally, section 2119 refers to “expenditures paid or incurred by the taxpayer (in connection with his trade or business of publishing) for the writing * * * of a book.” Respondent, on brief, appears to argue that the expenditures of the type involved in this case would be deductible by a “publisher” which had a book written but not by a writer who had a book “published.” This argument is weaker when the dictionary definition of publishing is substituted into the section. The relevant prepublication expenditures would be those paid or incurred by the taxpayer in connection with his trade or business of (1) preparing and issuing printed material for public distribution and sale, (2) bringing to the public attention, (3) issuing a publication, or (4) being the author of a published work or works, for the writing of a book.
Section 2119 was not incorporated into the Internal Revenue Code of 1954 because it was a congressional directive halting the Internal Revenue Service’s application of Rev. Rul. 73-395 and ordering it to administer sections 61, 162, 174, 263, and 471 in accordance with the way, prior to the issuance of the ruling, that taxpayers had been treating prepublication expenditures until the Commissioner promulgates prospective regulations.
Respondent is not precluded from taking his present litigating position because petitioner has introduced no evidence regarding his accounting practices prior to the date Rev. Rul. 73-395 was issued. Nonetheless, we note that Congress specifically mandated suspension of Rev. Rul. 73-395, wherein respondent announced his decision not to follow the Stern decision which had held prepublication expenses of an author to be deductible.12
From the legislative history, we infer a concern by Congress that a retroactive application of the position taken in Rev. Rul. 73-395 — capitalizing all prepublication expenditures — would cause severe dislocations in the literary field. Congress expressly directed that the pertinent regulations were to be applied only prospectively. This provision, coupled with the prospective effective date of section 280, which was also a part of the Tax Reform Act of 1976, further weakens respondent’s position.13
Section 280(a) provides that amounts attributable to the production of a book which are otherwise deductible shall be allowed as deductions only in accordance with the provisions of subsection (b).14 Section 280(b) regulates the timing of the amounts deductible to those taxable years ending during the period during which the taxpayer reasonably may be expected to receive substantially all of the income he will receive from the book. The amount deductible for any such taxable year is the amount which bears the same ratio to the sum of all such amounts attributable to the book as the income received from the property for that taxable year bears to the sum of the income the taxpayer may reasonably be expected to receive during such period. Section 280, as enacted, applies only to amounts paid or incurred after December 31,1975, with respect to property the principal production of which began after December 31, 1975. Thus, although section 280 does not govern the resolution of this case (which concerns the taxable year 1974), it does show that Congress has,examined the area and has enacted a specific provision addressing the capitalization issue, which took effect after December 31,1975.15
As previously discussed, Congress has twice considered the capitalization question since Commissioner v. Idaho Power Co., 418 U.S. 1 (1974). It enacted section 280, which requires for taxable years after December 31, 1975, the capitalization of amounts attributable to the production of a book, while suspending the revenue ruling (and its retroactive effect) that embodies much of respondent’s litigating position. Not only has prior case law almost invariably allowed an individual in the trade or business of writing some current deductions, but commentators have uniformly favored such deductions or at least observed that they were often permitted in practice by respondent..
An article in Tax Law Review included the following:
Self-employed taxpayers are permitted deductions from gross income for all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on their trade or business. Normally, the expenses incurred by a professional writer or artist in connection with his creative endeavors are deductible under the above rule. This usually includes a percentage of studio costs, research expenses, writing tools, etc. To be a professional in this sense does not require that writing or painting be the sole or even principal occupation of the taxpayer, but it must constitute a recurring activity which is conscientiously pursued for gain. An amateur author probably has to capitalize his expenses since they are nonrecurring and therefore non-deductible; and this would have been especially so if an amateur prior to 1950 sought capital gains treatment.
Confusion still exists as to whether certain expenditures of the artist or author, such as research expenses, are currently deductible. This is so probably because earlier rulings required that the costs of producing a copyrighted work be capitalized, which apparently included only relatively insignificant amounts, such as government copyright fees, attorney fees, etc. It is suggested, however, that the rulings in this area were particularly concerned with patents and inventions, and the inclusion of copyrights was almost as an afterthought. In any event, the Commissioner reputedly has been liberal in allowing professional writers and artists to deduct legitimate costs as current expenses, provided that the taxpayer has been consistent in his accounting procedures.16
A note in Harvard Law Review stated:
Although it is not clear how expenses incurred by amateur authors and inventors were treated before 1954, the Commissioner generally allows a professional with an established system of accounting either to deduct or to capitalize according to his normal practice as long as he was consistent.17
We are not saying that a producing artist must never capitalize. Certainly there may be facts and circumstances which would require capitalization in order to clearly reflect income.18 We are simply holding that in view of the particular facts and circumstances in this case, the prior case law and the recent legislative mandates, the petitioner is entitled to deduct expenditures paid or incurred in 1974 in his trade or business of writing. Sec. 1.162-6, Income Tax Regs. See, e.g., Wesenberg v. Commissioner, 69 T.C. 1005 (1978).19 We reserve until another day any opinion relating to section 280 and respondent’s regulations pursuant to section 2119 of the Tax Reform Act of 1976.
To reflect the concessions of the parties and our conclusion with respect to the disputed issue,
Decision will be entered under Rule 155.
Reviewed by the Court.