3
The sole issue for decision is whether loan origination
expenditures were ordinary and necessary business expenses
properly deductible under section 162(a)3 or whether they are
required to be capitalized under section 263.
FINDINGS OF FACT
Some of the facts have been stipulated and are incorporated
herein by this reference.
During the years in issue, First National Pennsylvania Corp.
(FNPC) was a corporation organized under the laws of Pennsylvania
and was the owner of all the stock of the First National Bank of
Pennsylvania (FNBP), East Bay Mortgage Co., and other
corporations which joined with FNPC in the filing of consolidated
Federal corporation income tax returns (Forms 1120) (the FNPC
Group). The Forms 1120 of the FNPC Group for the calendar years
1988, 1989, and 1990 were prepared using the accrual method of
accounting.
During the years 1990 through 1993, United Federal Bancorp,
Inc. (UFB) was a corporation organized under the laws of
Pennsylvania and was the owner of all the stock of the United
Federal Savings Bank (UFSB) and other corporations which joined
with UFB in the filing of Forms 1120 (the UFB Group). The Forms
3Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the taxable years in
issue, and all Rule references are to the Tax Court Rules on
Practice and Procedure.
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