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purpose, matching such expenditures to the expected life of the
related installment contracts for financial accounting purposes
but deducting them for Federal income tax purposes, at least for
1993.
III. Majority’s Approach
According to the majority: Overhead expenses must be
capitalized only if they are directly related to the acquisition
of a capital asset, and such expenses are directly related to the
acquisition of a capital asset only to the extent that they
increase on account of such acquisition. For the reasons
discussed below, I do not believe that the majority’s limitation
of overhead costs subject to capitalization to (what I will refer
to as) incremental overhead costs is an accurate application of
the law, nor do I believe that it provides an improvement to the
law relating to the treatment of overhead costs.
IV. Overhead
Overhead is, by definition, an indirect cost. See, e.g.,
Kohler’s Dictionary for Accountants 366 (Cooper & Ijiri, eds.,
6th ed. 1983):
overhead 1. Any cost of doing business other than a
direct cost of an output of product or service.
2. A generic name for manufacturing costs of materials
and services not readily identifiable with the products
or services that constitute the main outputs of an
operation. * * *
A cost is an indirect cost, and, thus, overhead, if, at the time
the cost is incurred, it is not identifiable with an individual
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