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In Wells Fargo & Co. & Subs. v. Commissioner, 224 F.3d at
885-887, the Court of Appeals for the Eighth Circuit explained as
follows:
it is not proper to decide that a cost must be
capitalized solely because the fact finder determines
that the cost is “incidentally connected” with a long
term benefit. This is supported by both Lincoln
Savings and INDOPCO. * * *
* * * * * * *
The INDOPCO case addressed costs which were directly
related to the acquisition, while * * * [Wells Fargo]
involves costs which were only indirectly related to
the acquisition. * * * In this case, there is only an
indirect relation between the salaries (which originate
from the employment relationship) and the acquisition
(which provides the long term benefit * * *).
Based on the above analysis of the Court of Appeals for the
Eighth Circuit, salary and investigatory costs indirectly
relating to the acquisition of a capital asset and indirectly
providing the taxpayer with future benefits were not required to
be capitalized under INDOPCO because they did not directly
provide significant future benefits to the taxpayer. See id.
at 889.
In PNC Bancorp, Inc. v. Commissioner, 212 F.3d at 829,
involving expenses paid for credit reports, appraisals, and
salaries relating to consumer loans, the Court of Appeals for the
Third Circuit refused to conclude that --
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