No deduction shall be allowed for amounts paid or accrued for such taxes and carrying charges as, under regulations prescribed by the Secretary, are chargeable to capital account with respect to property, if the taxpayer elects, in accordance with such regulations, to treat such taxes or charges as so chargeable.

FORBES: Electing To Capitalize Expenses Can Pay Off On Sale

Plus, he'll be charged interest, accrued at 1% above the normal IRS rate, on the taxes that would have been due originally on the wrongly deferred pay.

FORBES: Strings Attached

Although the actual amount of back taxes owed have been paid, the resulting penalties and interest has continually accrued.

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