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reflects strongly on the ordinary, noncapital nature of all of
ACC’s related salary and overhead expenses and rebuts the
appropriateness of some complicated and rather arbitrary
adjustment under which a portion of the expenses would be
capitalized.
As stated by the Court of Appeals for the Sixth Circuit in
Godfrey v. Commissioner, 335 F.2d 82, 85 (6th Cir. 1964), the
appellate venue for these cases:
The test of an ordinary business expense is
whether it is of a recurring nature and its
benefit is generally exhausted within a year.
* * * [Emphasis added.]
Generally, the benefits ACC received were exhausted within a few
hours after a majority of the prospective installment loans were
investigated and considered.
Under section 1.263(a)-2(a), Income Tax Regs., expenses are
to be capitalized where they produce benefits to a taxpayer with
a life substantially beyond a year. Computing the average life
of all of the installment loans investigated and considered by
ACC’s employees (including the loan applications rejected or
withdrawn as well as those approved) produces an average life for
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