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incurred in acquiring an asset are capital expenditures); United
States v. Hilton Hotels Corp., 397 U.S. 580 (1970) (fees paid to
a consulting firm and the cost of legal and other professional
services incurred in connection with appraisal proceeding to
value shares of dissenting shareholders in merged corporation
were capital expenditures).
Credit reports, appraisals, and similar information about
prospective borrowers are critical in deciding whether to make a
loan. It is the basis on which banks make their credit risk
management decisions. While the specific information available
when a loan is made may become outdated in a relatively short
period of time, the quality of the decision to make a loan (and
thereby acquire an asset) is predicated on such information. The
soundness of the decision to make a loan is assimilated into the
quality and value of the loan. Thus, the direct costs of the
decision-making process should be assimilated into the asset that
was acquired. See Commissioner v. Idaho Power Co., 418 U.S. at
14 (held that construction-related depreciation cannot be
currently deducted "rather, the investment in the equipment is
assimilated into the cost of the capital asset constructed.")
In Strouth v. Commissioner, T.C. Memo. 1987-552, the
taxpayers were partners in several partnerships engaged in the
business of purchasing and leasing office equipment to local
companies and professional offices. Generally, the terms of
these leases ranged from 3 to 5 years. The partnerships paid a
corporation to perform services associated with the leasing
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