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amended petition, respondent denied petitioner’s entitlement to
the deduction.
OPINION
I. Loan Commitment and Legal Fees
In its amended petition, petitioner asserted entitlement to
a deduction in 1991 for the $1,056,020 that Schneider billed
petitioner that year to reimburse Schneider for paying the loan
commitment fee.19 Also, petitioner claimed a deduction on its
1991 return for legal fees it paid to Rogers & Wells in that
year. Respondent disputes petitioner’s entitlement to both.
As a preliminary matter, we note that respondent has not
suggested that these costs are typical acquisition costs, which
must be capitalized as costs of the asset acquired. See, e.g.,
INDOPCO, Inc. v. Commissioner, 503 U.S. 79 (1992); A.E. Staley
Manufacturing Co. & Subs. v. Commissioner, 105 T.C. 166 (1995),
revd. and remanded 119 F.3d 482 (7th Cir. 1997). Petitioner
asserts that the costs at issue are loan acquisition costs, which
are capitalized as the cost of the loan and may be amortized over
the life of the loan to which they relate.20 See Anover Realty
19 Petitioner paid Schneider’s invoice in 1993.
20 We note that, to the extent the loan commitment fee and
related legal fees are treated as petitioner’s costs, they might
be considered stock reacquisition costs, the deduction of which
is generally prohibited under sec. 162(k)(1). However, sec.
162(k) expressly distinguishes between “amounts properly
allocated to indebtedness and amortized over the term of such
(continued...)
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