The Internal Revenue Service has denied the request of the Investment Company Institute of Washington, D.C. to include the tax treatment of fund launch costs in its 2001 Priority Guidance Plan to finally resolve the issue. The ICI still hopes the issue will be considered this year, but it is clear that since the IRS left it out of its business plan, it is not one of its top priorities.
In February, Keith Lawson, senior counsel with the ICI, sent a letter to the IRS requesting that the treatment of fund start-up costs be included in the IRS plan. The plan is released annually by the IRS and Treasury Department and lists the initiatives that will receive attention first in the next year. The ICI and the IRS have disagreed on the matter of fund launch costs throughout much of the 1990s, according to John Collins, a spokesperson for the ICI. The disagreement is whether the costs, particularly internal costs, of starting up a fund, should be deductible or capitalized and to what degree, he said.