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the purchase of the hotel was decreased by $271,473.95.6 On the
basis of the evidence in the record, we find that the legal and
consulting fees arose out of, were incurred in connection with,
and were directly related to, the acquisition of the Truckee
Hotel, a capital asset. Accordingly, we hold that the fees at
issue must be capitalized.
Decision will be entered
for respondent.
6The settlement agreement essentially resulted in a reduced
purchase price for the Truckee Hotel. It appears that the
reduction in the purchase price would decrease petitioners’ basis
in the hotel.
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Last modified: May 25, 2011