2
because the expenditures are both recurring and
integral to the business of the banks, they are
currently deductible under sec. 162(a), I.R.C.
Held: The loan origination expenditures were
incurred in the creation of loans. These loans were
separate and distinct assets that generated revenue
over a period beyond the current taxable year. The
expenditures are not currently deductible under sec.
162(a), I.R.C., and must be capitalized under sec.
263(a), I.R.C.
Robert J. Jones, Thomas R. Dwyer, and Anthony J. O'Donnell,
for petitioner.2
John A. Guarnieri, David B. Silber, and Richard H. Gannon,
for respondent.
RUWE, Judge: These consolidated cases involve deficiencies
determined by respondent as follows:
First National Pennsylvania Corp.
docket Nos. 16002-95 and 16003-95
Year Deficiency
1988 $101,785
1990 978
United Federal Bancorp, Inc.
docket Nos. 16109-96 and 16110-96
Year Deficiency
1990 $7,863
1991 10,236
1992 18,885
1993 7,659
2Brief amicus curiae was filed for the American Bankers
Association.
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