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The Cost Savings Argument Is Not Persuasive
The majority’s final argument for deductibility is that cost
savings expenditures, such as payments to escape from burdensome
or onerous contracts, are generally deductible. See majority op.
pp. 23-24. This principle may have been limited by the Supreme
Court’s opinion in INDOPCO, Inc. v. Commissioner, 503 U.S. 79,
88-89 (1992) (identifying benefits of transformation from public
to private company, such as avoidance of shareholder-relations
expenses and administrative advantages of reducing the number of
classes and shares of outstanding stock). Moreover, the
majority’s cost reduction analysis is defective; the case relied
upon by the majority, T.J. Enters., Inc. v. Commissioner, 101
T.C. 581 (1993), is distinguishable. The payments in that case
were made each year to reduce costs that otherwise would have
been payable during each such year; the Court also noted that no
separate and distinct additional asset was acquired by virtue of
the payments sought to be deducted. See T.J. Enters., Inc. v.
Commissioner, supra at 589 n.8, 592-593. By contrast, the fees
in the case at hand entitled Metrobank to insure the acquired
deposits with the BIF for many years to come (and, as noted
above, the fees were connected with the acquisition itself).
Finally, we have held that a payment to terminate a
burdensome contract may be capitalized, if the payment is also
integrally related to the acquisition of a new long-term contract
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