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expenses in different contexts does not require the
same result here. * * *
* * * * * * *
As previously indicated, expenditures which otherwise
might qualify as currently deductible must be
capitalized if they are incurred “in connection with”
the acquisition of a capital asset. Commissioner v.
Idaho Power Co., supra at 13. * * *
As further explained in Ellis Banking Corp. v. Commissioner, 688
F.2d 1376, 1379 (11th Cir. 1982):
The requirement that costs be capitalized extends
beyond the price payable to the seller to include any
costs incurred by the buyer in connection with the
purchase, such as appraisals of the property or the
costs of meeting any conditions of the sale. See,
e.g., Woodward v. Commissioner, 1970, 397 U.S. 572, 90
S.Ct. 1302, 25 L.Ed.2d 577; United States v. Hilton
Hotels Corp., 1970, 397 U.S. 580, 90 S.Ct. 1307, 25
L.Ed.2d 585. Further, the Code provides that the
requirement of capitalization takes precedence over the
allowance of deductions. �� 161, 261; see generally
Commissioner v. Idaho Power Co., 1974, 418 U.S. 1, 94
S.Ct. 2757, 41 L.Ed.2d 535. Thus an expenditure that
would ordinarily be a deductible expense must
nonetheless be capitalized if it is incurred in
connection with the acquisition of a capital asset.6
The function of these rules is to achieve an accurate
measure of net income for the year by matching outlays
with the revenues attributable to them and recognizing
both during the same taxable year. When an outlay is
connected to the acquisition of an asset with an
extended life, it would understate current net income
to deduct the outlay immediately. * * *
6We do not use the term “capital asset” in the
restricted sense of section 1221. Instead, we use the
term in the accounting sense, to refer to any asset
with a useful life extending beyond one year.
Metrobank chose to acquire Community’s assets. One way to
accomplish this was through a conversion transaction where assets
of an SAIF insured institution are transferred to a BIF insured
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