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Corp. v. Commissioner, 33 T.C. 671 (1960) (loan acquisition costs
amortized over the life of a loan, regardless of the loan’s
purpose or use of funds); Rev. Rul. 81-160, 1981-1 C.B. 312,
313.21 Respondent does not dispute this assertion; instead,
respondent’s sole argument is that the loan costs at issue are
Schneider’s, not petitioner’s, and accordingly petitioner may not
deduct them.22 Thus, the question before us is whether a
20(...continued)
indebtedness” and other stock reacquisition costs, exempting the
former from the prohibition on deductions. Sec.
162(k)(2)(A)(ii); see Fort Howard Corp. v Commissioner, 107 T.C.
187 (1996), supplementing 103 T.C. 345 (1994). We assume the
amounts at issue would be exempted from sec. 162(k)(1)’s
restrictions; in any event, neither party has raised this issue.
21 Rev. Rul. 81-160, 1981-1 C.B. 312, 313, states in
pertinent part:
A loan commitment fee in the nature of a standby charge
is an expenditure that results in the acquisition of a
property right, that is, the right to the use of money.
Such a loan commitment fee is similar to the cost of an
option, which becomes part of the cost of the property
acquired upon exercise of the option. Therefore, if
the right is exercised, the commitment fee becomes a
cost of acquiring the loan and is to be deducted
ratably over the term of the loan. See Rev. Rul.
75-172, 1975-1 C.B. 145, and Francis v. Commissioner,
T.C.M. 1977-170. If the right is not exercised, the
taxpayer may be entitled to a loss deduction under
section 165 of the Code when the right expires. See
Rev. Rul. 71-191, 1971-1 C.B. 77.
22 Petitioner asserts the loan costs in question are
deductible in 1991, as opposed to amortizable over a longer
period, because they relate solely to the Bridge Loan, which
lasted fewer than 12 months during 1991. Respondent does not
contest this assertion or otherwise suggest that the payments
(continued...)
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