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and expenses and (2) legal fees and expenses related to advice
given to the taxpayer and its board on their legal rights and
obligations with respect to the transaction, the participation in
negotiations, the preparation of documents, and the preparation
of a request for a ruling from the Commissioner on the tax-free
acquisition plan. We agreed. We found that it was in the
taxpayer's long-term interest to shift ownership of its stock to
the acquirer. See National Starch & Chem. Corp. v. Commissioner,
93 T.C. 67 (1989), affd. 918 F.2d 426 (3d Cir. 1990), affd. sub
nom. INDOPCO, Inc. v. Commissioner, 503 U.S. 79 (1992). We
stated that the expenses were capitalizable because they were
incurred incident to a shift in ownership the benefits of "`which
could be expected to produce returns for many years in the
future.'" Id. at 75 (quoting E.I. du Pont de Nemours & Co. v.
United States, 432 F.2d 1052, 1059 (3d Cir. 1970)).
Our holding was affirmed by the U.S. Court of Appeals for
the Third Circuit, which rejected the taxpayer's argument, based
on Commissioner v. Lincoln Sav. & Loan Association, supra at 354,
that the expenses were not capitalizable because they did not
create or enhance a separate and distinct asset. See National
Starch & Chem. Corp. v. Commissioner, 918 F.2d at 428-433. The
Supreme Court also rejected this argument. The Court stated that
Lincoln Savings stands merely for the proposition that an expense
must be capitalized under section 263(a)(1) when it serves to
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