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companies such as ACC may currently expense commissions connected
to the issuance of long-term debt.
We agree with respondent that the PPM expenditures are
capital expenditures.36 As to each of petitioners’ arguments
which we rejected above, we also reject them here as applied to
the PPM expenditures for the reasons stated above. As to
petitioners’ additional argument, we reject that argument as
well. The fact that ACC incurred the PPM expenditures in
borrowing funds means that the expenditures are capital
expenditures and must be amortized over the life of the debt.
See, e.g., Austin Co. v. Commissioner, 71 T.C. 955, 964-965
(1979); Enoch v. Commissioner, 57 T.C. 781, 794 (1972); Longview
Hilton Hotel Co. v. Commissioner, 9 T.C. 180, 182-183 (1947);
Lovejoy v. Commissioner, 18 B.T.A. 1179, 1181-1183 (1930); see
also S. & L. Bldg. Corp. v. Commissioner, 19 B.T.A. 788, 795-796
(1930), revd. on other grounds 60 F.2d 719 (2d Cir. 1932), revd.
sub nom. Burnet v. S. & L. Bldg. Corp., 288 U.S. 406 (1933);
compare Anover Realty Corp. v. Commissioner, 33 T.C. 671, 675
(1960), wherein we stated:
It is not the purpose for which the loan is made
that is important. It is the purpose of the
expenditure for loan discounts and expenses. That
36 In contrast with respondent, however, we allow ACC to
deduct for 1994, under sec. 165(a), the portion of those
expenditures that was attributable to the offering that was
abandoned in that year. See Ellis Banking Corp. v. Commissioner,
688 F.2d at 1382.
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