This tax court case from 1990 involved a physician's deductions for prepaid cattle feed and income characterization—not construction law. The court remanded the case for further proceedings on whether prepaid feed expenses could be deducted under tax code section 464. While this case does not directly apply to construction subcontractors, it illustrates how the IRS scrutinizes timing of business deductions and how courts evaluate what counts as earned income versus passive income.
The IRS may challenge deductions for prepaid business expenses, especially if they span multiple tax years—keep detailed records of when expenses are actually incurred versus paid