- 12 -
the related income is recognized. See Newark Morning Ledger Co.
v. United States, 507 U.S. 546, 565 (1993); INDOPCO, Inc. v.
Commissioner, supra at 84; Hertz Corp. v. United States, 364 U.S.
122, 126 (1960); Liddle v. Commissioner, 103 T.C. 285, 289
(1994), affd. 65 F.3d 329 (3d Cir. 1995); Simon v. Commissioner,
103 T.C. 247, 253 (1994), affd. 68 F.3d 41 (2d Cir. 1995).
Our resolution of this issue turns on whether the FEECA
expenses were "ordinary". The subsidies were. People's
benefited from them currently in that they induced customers to
purchase products from People's. Of course, People's sales may
yield future benefits, such as repeat business and sales of
related products or commodities. Those future benefits, however,
are incidental to the sales at hand.
We considered a similar issue in Fall River Gas Appliance
Co. v. Commissioner, 42 T.C. 850 (1964), affd. 349 F.2d 515 (1st
Cir. 1965). There, the taxpayers were a gas company and its
subsidiary; the subsidiary sold and leased gas appliances. We
held that the selling expenses related to the leased appliances
must be capitalized. We held that the selling expenses related
to the appliance sales were deductible. As to the latter class,
we noted that the expenses "were related to closed transactions
and were a proper charge at once against the income realized from
such transactions." Id. at 856. The same rationale applies here
to the subsidies. People's paid the subsidies to purchasers of
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