- 72 -
SWIFT, J., concurring: Although I would go further than the
majority and allow all of the salaries and overhead included in
the so-called installment contract expenditures to be currently
deductible, I do not dissent because I largely agree with the
result reached by the majority and with the movement reflected
therein away from the approach that would capitalize otherwise
routine business expenses.
In PNC Bancorp, Inc. v. Commissioner, 110 T.C. 349, 370
(1998), revd. 212 F.3d 822 (3d Cir. 2000), a case involving the
treatment of salary expenses very similar to those involved
herein (namely, salary expenses of credit institutions whose
officers and employees, among other things, investigate the
creditworthiness of potential borrowers), we concluded that a
portion of the salary expenses should be “assimilated” into the
capital costs of the loans that were approved.
The Court of Appeals for the Third Circuit disagreed and
held that the salaries and other expenses reflected “recurring,
routine day-to-day business” activities that did not produce
significant future benefits and therefore that the expenses were
currently deductible. PNC Bancorp, Inc. v. Commissioner, 212
F.3d at 834. The Court of Appeals resolved not to expand the
type of expenses that must be capitalized “so as to drastically
limit what might be considered as 'ordinary and necessary'
expenses.” Id. at 830.
Page: Previous 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 NextLast modified: May 25, 2011