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acquisition of installment contracts.4 Indeed, it would be
logical to conclude that the type and amount of these “overhead”
expenses did “originate” in ACC’s acquisition of installment
contracts. After all, this activity was ACC’s dominant activity.
If ACC had never engaged in acquiring installment contracts, most
of its expenditures for both salaries and overhead expenses would
have been unnecessary in the first place.
The majority reasons that rent and utilities were “generally
fixed charges which had no meaningful relation to the number of
credit applications analyzed (or the number of installment
contracts acquired) by ACC.” Majority op. p. 29. Again, with
the possible exception of rent,5 there are no specific findings
of fact to support this rationale. Logic would indicate that if
ACC no longer engaged in credit analysis activities, then its
need for office space would decrease, and it would take steps to
reduce its rental and utility costs. The same logic would apply
even more so to printing, telephone, and computer costs. There
is nothing in the majority’s findings to indicate that these were
4It should be noted in this regard that petitioners bear
“the burden of clearly showing the right to the claimed
deduction”. INDOPCO, Inc. v. Commissioner, 503 U.S. 79, 84
(1992).
5The majority finds that ACC had a 5-year lease that began
in October 1992. There is no discussion of the specific terms of
the lease other than the amount of monthly rent.
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