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IV. "No Negative Cash Flow Guarantee Fee"
Corbin West paid CDC a fee that it labeled a "no negative
cash flow guarantee fee" in the amount of $53,000. In exchange
for this fee, CDC agreed to make loans to Corbin West in any
amount up to $250,000 to fund any operating deficits through
December 31, 1995. Corbin West capitalized this fee and deducted
amortization expense related to this fee during the years in
issue. In the FPAA's, respondent disallowed the amortization
expense deduction related to this fee.
Petitioner provides no explanation for its treatment of this
item and fails to cite any Code section or other authority that
would allow its capitalization and amortization of this fee.
Rule 142(a); New Colonial Ice Co. v. Helvering, supra. We
therefore conclude that Corbin West is not entitled to any
deductions associated with this fee.
To reflect the foregoing,
Decision will be entered
under Rule 155.
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