- 98 -
several thousand square feet. There is, thus, no incremental
cost in adding a capital activity to space not fully occupied by
a noncapital activity. Likewise, there is no decrement in cost
(once having added the capital activity) of completely
subtracting the noncapital activity. Must we conclude that the
rent still is not allocable to the capital activity? The fact
that a taxpayer would incur the same overhead costs should it
discontinue a capital activity may only be evidence that it is
amenable to an economically inefficient use of space or
equipment. Short of adopting the accounting concept of direct or
variable costing as normative for Federal income tax purposes,
that does not seem to me a sufficient reason to foreclose any
capitalization of fixed overhead. If the direct or variable
costing method is to be made normative for Federal income tax
purposes, that is a job for the Secretary or the Congress, not
for us.
Besides which, as Judge Ruwe points out, the majority has
made no specific findings of fact to support its conclusion that
ACC’s acquisition activities did not give rise to any incremental
overhead. Indeed, petitioner has proposed the following finding
of fact: “ACC’s payroll and overhead costs attributable to
credit review and other tasks relating to contract acquisition
were not materially affected by whether any given installment
contract was ultimately acquired by ACC from a dealership.”
Page: Previous 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 NextLast modified: May 25, 2011