Rev. Rul. 68-471

A corporate taxpayer, engaged in the manufacture and sale of various products, has developed a number of inventions which it uses in its business. The taxpayer secured and has continued to own the United States patents on some of its inventions. In connection with others, taxpayer’s applications for the United States patents have been filed. Pursuant to an election made under section 174(a) of the Internal Revenue Code of 1954, the taxpayer has deducted the research and experimental expenditures incident to the development of the inventions used in its business as current expenses in the taxable years paid or incurred.


In 1967, the taxpayer expended amounts for attorneys’ fees to obtain foreign patents on the inventions it had developed. Held, attorneys’ fees paid or incurred by the taxpayer in obtaining foreign patents on its previously developed inventions, on which it either owns or has applied for the United States patents, are includible within the meaning of the term “research and experimental expenditures” as defined in section 1.174-2(a)(1) of the Income Tax Regulations and, as such, are deductible under section 174 (a) of the Code.

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