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Therefore, the existing case law and statutory provision are
generally in harmony. It may also be fair to say that Congress
was aware of the Supreme Court’s holding in Millinery Ctr. Bldg.
Corp. v. Commissioner, supra, when it enacted section 167(c)(2)
for leases as part of a larger statutory package intended to
result in uniform treatment for intangibles.
We note that allocation of the acquisition cost of a leased
asset under section 167(c)(2) operates irrespective of whether it
would have been more or less beneficial to the taxpayer to
allocate otherwise. In petitioner’s situation, it obviously
would be more beneficial if 87 percent of the acquisition payment
for the vessel was currently deductible as a business expense
incurred to terminate a burdensome lease. We can think of no
reason why petitioner, as a lessee, should be treated any
differently from a nonlessee/taxpayer who acquires a leased
asset. In that regard, petitioner has not provided any
persuasive evidence showing that Congress intended to exclude the
acquisition of a leased capital asset by the lessee. Nor has it
shown that Congress intended that the lessees should be allowed
to allocate a portion of the acquisition cost of an asset to a
lease and that lessors should not be so entitled.
In summary, petitioner has not shown that there is any
reason to read section 167(c)(2) to exclude transactions where a
lessee purchases the leased asset or to read the statute as
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