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F.2d 433 (8th Cir. 1979) (collectively, credit card cases).16
Petitioners assert that the credit card cases hold that recurring
expenses are deductible under section 162(a) whenever the
expenses are incurred in the ordinary course of business.
Petitioners also point to INDOPCO, Inc. v. Commissioner, supra,
and contend that the Supreme Court acknowledged there that an
expense’s recurring nature is critical to qualifying it as
deductible under section 162(a).
We disagree with petitioners’ argument that section 162(a)
allows ACC to deduct the expenses that recur in the ordinary
course of its business merely by virtue of the fact that the
expenses are everyday and/or routine in nature. In order for a
payment to be deductible under section 162(a), the underlying
expense must not only be “normal, usual, or customary” in the
type of business involved, Deputy v. du Pont, 308 U.S. at 495, it
must be realized and exhausted in the year of payment, see
Stevens v. Commissioner, 388 F.2d at 300. Although an employer’s
payment of salaries and benefits similar to the ones at issue
will usually generate for the employer benefits that will be
realized and exhausted in the year of payment, the same is not
true when those items are directly related to the employer’s
acquisition of a capital asset such as an installment contract.
16 Petitioners also rely on Bankers Dairy Credit Corp. v.
Commissioner, 26 B.T.A. 886 (1932).
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