- 72 -
because the contract is an asset having a useful life extending
substantially beyond the close of the taxable year).
The entrance and exit fees were in addition to the
semiannual premiums Metrobank paid to the BIF to insure the
acquired deposits after the acquisition. The fees were also
several times greater than the semiannual premiums, as a
percentage of the acquired deposits. See majority op. pp. 7-9,
21.6 The exit and entrance fees therefore resemble premium
prepayments, which entitled Metrobank to insure the acquired
deposits with the BIF in future years. This would support
capitalizing the exit and entrance fees, even if they had no
connection with the acquisition of a separate asset. See Herman
v. Commissioner, 84 T.C. 120 (1985) (one-time purchase of
subordinated loan certificate, which entitled physician, upon
payment of annual premiums, to malpractice insurance coverage,
held capital investment; Commissioner conceded deductibility of
annual premiums).
6 The third of the emphasized points in Judge Swift’s
concurrence (Swift, J., concurring op. p. 31) compares the
entrance and exit fees paid by Metrocorp to acquire the deposits
of Community with the regular semiannual premiums paid by
Metrocorp on its total deposits, including both its own deposits
and the deposits of Community that it acquired. Obviously, the
ratio of the entrance and exit fees to the regular semiannual
premiums would be much higher if the regular premiums paid by
Metrocorp on its own deposits are removed from consideration.
They should be so removed if the much more meaningful comparison
of the entrance and exit fees with the regular premiums on the
acquired deposits is to be made.
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