- 38 -
expenditures”); Ellis Banking Corp. v. Commissioner, T.C. Memo.
1981-123 (“Nor would the fact that petitioner was engaged in the
business of acquiring bank stock entitle it to deduct such
expenditures if the bank stock was a capital asset and the
expenditures were incurred in the acquisition thereof. Helvering
v. Winmill, supra.”).
We also apply the case of Commissioner v. Idaho Power Co.,
418 U.S. 1 (1974), revg. 477 F.2d 688 (9th Cir. 1973), revg. T.C.
Memo. 1970-83. There, the taxpayer was a public utility engaged
in the production, transmission, and sale of electricity.
Throughout its long existence, the taxpayer regularly and
routinely constructed additional transmission and distribution
facilities using its own equipment and hundreds of its own
employees. Respondent determined that the taxpayer had to
capitalize the depreciation on its equipment to the extent used
in the construction project. The Supreme Court agreed. The
Court noted that a goal of Federal income tax accounting is to
match income with the related expenses and observed that “‘It has
long been recognized, as a general matter, that costs incurred in
the acquisition * * * of a capital asset are to be treated as
capital expenditures.’” Id. at 12 (quoting Woodward v.
Commissioner, supra at 575; ellipsis in original). Further, the
Court noted: “there can be little question that other
construction-related expense items, such as tools, materials, and
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