17
The evidence does not separately identify the allocated
costs that were reflected in the FNPC ledger accounts used by
respondent in calculating the disallowed amounts. However,
because those ledger accounts were established in order to comply
with SFAS 91, the allocated costs reflected in the disallowed
amounts necessarily consisted of some combination of the
following: (1) Costs paid by FNBP to third parties for property
reports, credit reports and appraisals, and costs for recording
security interests, and (2) an allocable portion of the costs
incurred by FNBP for salaries and benefits of its employees (and
related costs) attributable to the following activities:
Evaluating the financial condition of prospective borrowers;
evaluating and recording guaranties, collateral and other
security arrangements; negotiating loan terms; preparing and
processing loan documents; and closing loan transactions. The
costs at issue in the FNPC cases do not include any costs
incurred in connection with unsuccessful loan efforts (i.e.,
where a loan was not originated) or any costs incurred following
a loan's origination by FNBP.
Respondent disallowed FNPC's claimed deductions for loan
origination costs in the amounts of $568,283, $392,321, and
$26,060 in taxable years 1988, 1989, and 1990, respectively.
These adjustments represent amounts (net of amortization or yield
adjustments) that were deferred by FNPC in its ledger accounts to
comply with SFAS 91 for financial accounting and reporting
purposes. The fees and costs included in determining these
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