- 17 -
future deposits always remained assessable by the SAIF, the
financial institution utilizing this exception was not required
to pay the exit and entrance fees as to the conversion
transaction. See 12 U.S.C. sec. 1815(d)(3)(B), (G) (1994). The
institution, however, could not during the moratorium period stop
paying SAIF assessments on the ascertained percentage of the
future deposits. The institution could switch the insurance
coverage on those deposits, if it so desired, after the
moratorium expired but only if the FDIC approved the switch and
the institution paid the requisite exit and entrance fees.
With this backdrop in mind, we turn to the relevant text of
the Internal Revenue Code. Section 162(a) generally provides
that a taxpayer may deduct "all the ordinary and necessary
expenses paid or incurred during the taxable year in carrying on
any trade or business".8 Section 263(a)(1) generally provides
that a deduction is not allowed for "Any amount paid out for new
buildings or for permanent improvements or betterments made to
increase the value of any property or estate." Whether an
expense is deductible under section 162(a) or must be capitalized
under section 263(a)(1) is a factual determination for which
8 An expense is ordinary if it is of common or frequent
occurrence in the type of business involved. See Deputy v. du
Pont, 308 U.S. 488, 495 (1940); Welch v. Helvering, 290 U.S. 111,
114 (1933). An expense is necessary if it is appropriate or
helpful to the development of the taxpayer's business. See
Commissioner v. Tellier, 383 U.S. 687, 689 (1966); Welch v.
Helvering, supra.
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