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all of the installment loans investigated and considered of 6.6
months for 1993 and 7.4 months for 1994.1 Because a majority of
the installment loans investigated and considered by ACC were
never purchased and because the average life of all of the
installment loans (factoring in all installment loans
investigated and considered) was not beyond one year, I believe
it would be erroneous to conclude generally that the allegedly
related salaries and overhead provided benefits to ACC with a
life “substantially beyond” one year.
(3) The salaries and overhead were not paid by ACC in
connection with any specific installment loans. Note the Supreme
Court’s words, also from Commissioner v. Idaho Power Co., 418
U.S. at 13, linking expenditures to be capitalized to specific
capital assets:
But when wages [salaries] are paid in connection with
the construction or acquisition of a capital asset,
they must be capitalized and are then entitled to be
1 My computation of the average life of ACC’s installment
loans investigated and considered (including in the “Total” loans
those installment loans rejected or withdrawn) is shown below:
Number of Installment Loans
Rejected or Average Duration Average Duration
Year Withdrawn Accepted Total of Accepted Loans of All Loans*
1993 1,131 693 1,824 17.5 months 6.6 months
1994 1,338 820 2,158 19.5 months 7.4 months
* For 1993 [(1,131 V 0) + (693 V 17.5)] � 1,824 = 6.6.
For 1994 [(1,338 V 0) + (820 V 19.5)] � 2,158 = 7.4.
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