David J. Lychuk and Mary K. Lychuk, et al. - Page 16




                                       - 13 -                                         
          amortized the installment contracts expenditures of $339,211 over           
          the expected lives of the related installment contracts for 1994.           
               ACC performed its credit review services as to approximately           
          1,824 credit applications in 1993 and approximately 2,158 credit            
          applications in 1994.  As to those applications, ACC acquired 693           
          installment contracts in 1993 and 820 installment contracts in              
          1994; in other words, ACC acquired in each year approximately 38            
          percent of the installment contracts which were offered to it.              
          The original terms of the 1993 installment contracts averaged               
          23.89 months, and their actual duration averaged 17.5 months.               
          The original terms of the 1994 installment contracts averaged 29            
          months, and their actual duration averaged 19.5 months.  Of the             
          693 installment contracts acquired in 1993, 182 had an actual               
          duration of 12 months or less.  Of the 820 installment contracts            
          acquired in 1994, 217 had an actual duration of 12 months or                
          less.                                                                       
               ACC issued a private placement memorandum (PPM) on April 30,           
          1993, offering up to $2.4 million of its subordinated asset                 


               7(...continued)                                                        
          paid or less any fees received. * * *  All other costs incurred             
          in connection with acquiring purchased loans or committing to               
          purchase loans shall be charged to expense as incurred.”  We note           
          in passing, however, that rules such as SFAS 91 which are                   
          compulsory for financial accounting purposes do not control the             
          proper characterization of an item for Federal income tax                   
          purposes.  See Thor Power Tool Co. v. Commissioner, 439 U.S. 522,           
          542-543 (1979); see also Old Colony R.R. Co. v. Commissioner, 284           
          U.S. 552, 562 (1932).                                                       





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