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obtaining these operating rights constituted a capital
expenditure, stating:
The acquisition of these operating rights would
enable the petitioner to use several routes between
various points in New York, New Jersey, and
Pennsylvania. This authority constitutes an intangible
right to operate between these points and a permanent
betterment to the petitioner's existing business. The
ICC, in granting petitioner the permanent transfer,
conditioned it only on petitioner's ability to provide
the public continuous and adequate service. There is
no indication in the record of the ICC's tendency to
suspend, change, or revoke this authority. We can only
assume then that the eventual final approval by the ICC
that transferred these rights to petitioner's name was
for an indefinite period. [P. Liedtka Trucking, Inc.
v. Commissioner, supra at 555.]
In Surety Ins. Co. v. Commissioner, supra, the taxpayer
incurred costs in obtaining certificates of authority to conduct
its business as a surety in several States. We held that such
expenditures were directly related to the acquisition of the
right to conduct the taxpayer's business in these States. We
concluded that
a company initially granted certificates of authority
will not be denied renewal unless the company fails to
comply with the regulatory scheme. As such, the
license is realistically not intended nor limited to a
single year where petitioner complies with state law.
See P. Liedtka Trucking, Inc. v. Commissioner, 63 T.C.
547, 555 (1975). Accordingly, we conclude that such
expenditures may not be deducted as business expenses
but must be treated as capital expenditures. [Id.; fn.
ref. omitted.]
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