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year in which the purchase occurred) that would entitle
petitioner to a deduction under section 162(a).
3. Petitioner Has Failed To Carry Its Burden of Proof
Without any clear understanding of the purpose of the exit
fee, I fail to see how petitioner has carried its burden of
showing that the payments (as allocable to the exit fee) are not
a capital expenditure. Petitioner argues: “The exit fee
assessment is merely a one-time payment required by the FDIC to
protect the SAIF when deposits are transferred out of the fund.”
Even if that claim were true, so what? How does it establish
that the exit-fee-allocable payments were anything other than a
cost incident to the purchase?
The purchase was an asset purchase, with Metrobank acquiring
assets relating to the main office and one branch of Community.
The assets were cash, cash items, securities, loans, various
business assets, certain records and documents, and any assets
securing liabilities assumed by Metrobank. The liabilities
assumed by Metrobank pursuant to the agreement (the liabilities)
consisted of indebtedness for deposits, secured indebtedness, and
any indebtedness for unpaid employment taxes and ad valorem
taxes.
With exceptions not here relevant, section 1012 provides the
following rule: “The basis of property shall be the cost of such
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