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both the "acquisition fee" and "developer's fee" into its basis
in the property.
B. "Tax Credit Guarantee Fee"
Corbin West also capitalized a "tax credit guarantee fee" of
$90,000 into the basis of the property. This fee was for CDC's
guaranty that the property would be operated in a manner that
would ensure Corbin West's entitlement to a low-income housing
tax credit for the property. If Corbin West failed to obtain
such a credit in any year, CDC guaranteed that it would advance
Corbin West an amount equal to the amount of any loss of credit.
Petitioner has failed to demonstrate that this cost is
associated with Corbin West's acquisition of the property. Sec.
1.263(a)-2, Income Tax Regs. We therefore conclude that Corbin
West is not entitled to capitalize the "tax credit guarantee fee"
into its basis in the property.
Petitioner alternatively argues that this fee is a
deductible expense. Deductions are a matter of legislative
grace, and petitioner has the burden of showing that Corbin West
is entitled to any deduction claimed. Rule 142(a); New Colonial
Ice Co. v. Helvering, 292 U.S. 435, 440 (1934). Petitioner has
failed to cite a Code section or other authority that would
permit a deduction for this cost; therefore, petitioner has
failed to establish that Corbin West is entitled to such a
deduction.
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