116 T.C. No. 27
UNITED STATES TAX COURT
DAVID J. LYCHUK AND MARY K. LYCHUK, ET AL.,1 Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 11794-99, 11855-99, Filed May 31, 2001.
11863-99.
A acquires and services multiyear installment
contracts as its sole business operations. A acquires
each contract at 65 percent of its face value and is
entitled to all principal and interest payments. A’s
employees perform various credit review services in
order to decide whether to acquire each contract
offered to A and, as to the contracts which A chooses
to acquire, perform additional services in paying the
sellers. R determined that all of A’s salaries,
benefits, and overhead (printing, telephone, computer,
rent, and utilities) relating to its acquisition (and
not to its service) operation were capital
expenditures. R also determined that A had to
capitalize professional fees and commissions
1 Cases of the following petitioners are consolidated
herewith: Edward C. and Virginia M. Blasius, docket No. 11855-
99; James E. and Mary Jo Blasius, docket No. 11863-99.
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