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In order to determine whether an allocation of
officers’ salaries to an acquisition-transaction such
as made here qualifies as a deduction from income or
should be capitalized, the taxing authorities should
require the taxpayer to show officers’ time devoted to
the acquisition as compared to time spent on regular
work during a particular and relevant time period.
The finding made by the tax court here does not justify
capitalization of the officers’ salaries. [Id. at 889-
890 (Bright, J., concurring).]
We do not believe that our view as to the salaries and wages
at hand is inconsistent with the Court of Appeals for the Eighth
Circuit’s view as to the salaries at issue in Wells Fargo & Co. &
Subs., supra. The cases are factually distinguishable. There,
some of Davenport’s 82 officers spent a portion of their time
performing services on a capital transaction; apparently, it was
a relatively small portion, since the total salary attributable
to work performed on the transaction by all of the officers was
$150,000. The services which they performed as to the capital
transaction were extraordinary in the daily course of their
employment, and the capital transaction was extraordinary to
their employer’s business. They would have been paid the same
salaries regardless of whether the transaction was consummated.
Here, by contrast, each of the disputed employees spent a
significant portion of his or her time (in fact, in 8 of the 15
cases, all of his or her time) working on capital asset
acquisitions which occurred in the ordinary course of ACC’s
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