John J. Reichel - Page 8

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          during the production period.  This is evident when we examine              
          section 263A(f), which provides a narrow exception under which a            
          particular category of indirect production costs, namely                    
          interest, does not have to be capitalized until the production              
          period begins.  There would be no need for this exception if                
          capitalization were never meant to apply until taxpayers actually           
          started the production process.  As we noted in Von-Lusk v.                 
          Commissioner, supra at 213 (quoting Weinberger v. Hynson,                   
          Westcott & Dunning, Inc., 412 U.S. 609, 633 (1973)):                        
               if no costs were to be capitalized until the beginning                 
               of the "production period," then section 263A(f)(1)(A)                 
               would be superfluous.  Such a construction "offends the                
               well-settled rule of statutory construction that all                   
               parts of a statute, if at all possible, are to be given                
               The legislative history of section 263A also supports this             
          reading.  In describing the reasons for enacting section 263A,              
          the relevant section of the House report is headed,                         
          "Preproduction costs" and states the concern that then-existing             
          rules "may allow costs that are, in fact, costs of producing                
          property to be deducted currently".  H. Rept. 99-426, at 625                
          (1985), 1986-3 C.B. (Vol. 2) 1, 625.  While headings are not                
          compelling evidence of meaning in themselves, the corresponding             
          section of the Senate report clarifies and reenforces this                  
          analysis.  That section is headed "Production, acquisition, and             
          carrying costs" (emphasis added) and expresses the intent that "a           
          single, comprehensive set of rules should govern the                        
          capitalization of costs of producing, acquiring, and holding                

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