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does not make it a deductible expense. See, e.g., FMR Corp. &
Subs. v. Commissioner, 110 T.C. 402, 429 (1998) (section 195 does
not require “that every expenditure incurred in any business
expansion is to be currently deductible”.34 Such is especially
true here where the salaries and benefits were incurred in
connection with the acquisition of a capital asset.
We also are unpersuaded by petitioners’ third assertion that
the salaries and benefits did not generate a significant future
benefit to ACC. These costs contributed directly to ACC’s
receipt in later years of interest and excess principal income.
This income significantly benefitted ACC in that it was the bread
and butter of its operation. Because ACC’s payment to its
employees of the disputed salaries and benefits provided ACC with
such a significant long-term benefit, they are capital
expenditures. See INDOPCO, Inc. v. Commissioner, 503 U.S. 79
(1992); see also Commissioner v. Idaho Power Co., 418 U.S. 1
(1974); Woodward v. Commissioner, 397 U.S. 572 (1970); United
States v. Hilton Hotels Corp., 397 U.S. 580 (1970); cf. Colonial
Am. Life Ins. Co. v. Commissioner, 491 U.S. 244, 251 n.5 (1989)
(“the important point is * * * whether the taxpayer is investing
in an asset or economic interest with an income-producing life
that extends substantially beyond the taxable year”).
34 Nor is a cost deductible merely because it preceded the
final decision as to the acquisition of a specific asset.
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