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expenses were deductible to the extent that they were not
incurred to facilitate the transaction at issue there.
The cases of INDOPCO, Victory Markets, and A.E. Staley all
addressed the capitalization of expenses which were incurred as
direct costs of effecting a corporate acquisition. In the
instant case, by contrast, DBTC incurred the disputed costs
before and incidentally with its acquisition. Petitioner focuses
on the timing of the disputed costs and invites the Court to
allow deductibility of these costs because they were incurred in
investigating the expansion of its existing business, before the
time that DBTC's management had formally decided to enter into
the transaction by approving the agreement. We decline this
invitation. The disputed expenses are mostly preparatory
expenses that enabled DBTC to achieve the long-term benefit that
it desired from the transaction, and the fact that the costs were
incurred before DBTC's management formally decided to enter into
the transaction does not change the fact that all these costs
were sufficiently related to the transaction. In accordance with
INDOPCO, the costs must be capitalized because they are connected
to an event (namely, the transaction) that produced a significant
long-term benefit. To the extent that petitioner relies on cases
such as Briarcliff Candy Corp. v. Commissioner, 475 F.2d 775 (2d
Cir. 1973), and NCNB Corp. v. United States, 684 F.2d 285 (4th
Cir. 1982), for a different result, petitioner's reliance is
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