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Lines v. Commissioner, 319 U.S. 590, 593 (1943). For Federal
income tax purposes, the principal difference between classifying
a payment as a deductible expense or a capital expenditure
concerns the timing of the taxpayer’s recovery of the cost. As
the Supreme Court has observed:
The primary effect of characterizing a payment as
either a business expense or a capital expenditure
concerns the timing of the taxpayer’s cost recovery:
While business expenses are currently deductible, a
capital expenditure usually is amortized and
depreciated over the life of the relevant asset, or,
where no specific asset or useful life can be
ascertained, is deducted upon dissolution of the
enterprise. * * * Through provisions such as these,
the Code endeavors to match expenses with the revenues
of the taxable period to which they are properly
attributable, thereby resulting in a more accurate
calculation of net income for tax purposes. * * *
[INDOPCO, Inc. v. Commissioner, supra at 83-84.]
Our inquiry begins with the installment contracts
expenditures. Respondent determined and maintains that ACC must
capitalize these expenditures to the extent stated herein.
Respondent argues primarily that these expenditures are capital
expenditures because they were related to ACC’s acquisition of
separate and distinct assets; i.e., the installment contracts.
Respondent argues secondly that ACC’s payment of the installment
contracts expenditures provided it with significant future
benefits in that it was able to acquire the installment contracts
which produced income for it in later years. Petitioners
maintain that the installment contracts expenditures are
currently deductible. Petitioners agree that the expenditures
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