U.S. Bancorp and Its Consolidated Subsidiaries - Page 19

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          remaining amounts had to be capitalized and amortized over the              
          life of the new bonds, just as we hold the full amount of the               
          rollover charge must be capitalized and amortized over the term             
          of the Second Lease.                                                        
               There is no ground for concluding that the rollover charge             
          is currently deductible in full or for making an allocation under           
          which a portion of the charge would be currently deducted as                
          attributable to the termination of the First Lease and a portion            
          capitalized and amortized over the Second Lease.  Although the              
          apparent paradox--arising from the likelihood that the charge               
          would have been higher if petitioner had not entered into the               
          Second Lease with ICC--gives us pause, any doubts are resolved by           
          the advantage petitioner obtained, by entering into the Second              
          Lease, of being able to finance the charge over the term of the             
          Second Lease.                                                               
               In sum, we hold that petitioner's obligation to pay the                
          rollover charge is a capital expenditure that is not currently              
          deductible and must be amortized over the 5-year term of the                
          Second Lease.  Respondent has conceded that petitioner, as an               
          accrual basis taxpayer, had accrued a 1-month liability for the             
          rollover charge on December 1, 1990.  As we construe respondent's           
          concession, petitioner is entitled to an amortization deduction             
          of $53,775 for the year 1990, equal to the first installment,               
          which accrued in that year, of the obligation to pay the $2.5               






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