26
section 263(a).16 These cases addressed the deductibility of
costs incurred by taxpayers to expand their banking businesses by
issuing credit cards. The costs deducted by the taxpayers in
these cases included payments to "agent banks" for services
performed in screening the credit history of prospective credit
cardholders, payments to third parties for the collection of
credit data, payments to a clearinghouse for entering credit card
data on the taxpayer's behalf, and salaries paid to employees in
connection with starting up the taxpayer's credit card system,
including costs to perform credit evaluations of prospective
cardholders.
Petitioner focuses on the similarity of the type of expenses
in the instant cases. However, the holdings in the cases upon
which petitioner relies were not simply based on the "everyday,
recurring nature" of the costs at issue. Rather, the critical
factor for allowing the current deduction of certain of the
expenses in those cases was that the costs "for advertising and
promotional aids, salaries, data processing, and credit bureau
searches were merely related to the active conduct of an existing
business and did not create or enhance a separate and distinct
asset or property interest." Iowa-Des Moines Natl. Bank v.
Commissioner, supra at 879 (emphasis added). Similarly, in
Colorado Springs Natl. Bank v. United States, supra at 1192, the
Court of Appeals for the Tenth Circuit noted that "The start-up
16Petitioner also cites First Sec. Bank of Idaho N.A. v.
Commissioner, 63 T.C. 644 (1975), affd. 592 F.2d 1050 (9th Cir.
1979), in support of its assertion.
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