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occurring before January 19, 1992, the effective date of the
transaction. Norwest eventually bought such a policy.
During 1991, DBTC had 9 executives and 73 other officers
(collectively, the officers). John Figge, James Figge, Thomas
Figge, and Richard Horst worked on various aspects of the
transaction, as did other officers. None of the officers were
hired specifically to render services on the transaction; all
were hired to conduct DBTC's day-to-day banking business. DBTC’s
participation in the transaction had no effect on the salaries
paid to its officers. Of the salaries paid to the officers in
1991, $150,000 was attributable to services performed in the
transaction. DBTC deducted the salaries, including the $150,000,
on its 1991 Federal income tax return. Respondent disallowed the
$150,000 deduction; i.e., the portion attributable to the
transaction.
OPINION
Following petitioner's concession that DBTC must capitalize
most of the costs related to the transaction, we are left to
decide whether DBTC may deduct the officers' salaries and some of
its legal fees. Respondent argues that INDOPCO, Inc. v.
Commissioner, 503 U.S. 79 (1992), requires that these costs be
capitalized because, respondent states, the transaction here,
like the transaction there, involved a friendly acquisition from
which the parties thereto anticipated significant long-term
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