- 36 -
& Consol. Subs. v. Commissioner, supra at 240-241. If the
rollover fee in U.S. Bancorp & Consol. Subs. paid or incurred to
cancel the original lease covering certain property and to enter
into a new lease covering different property must be capitalized,
a fortiori fees or costs paid or incurred to modify an existing
lease covering the same property, like the expenditures at issue
here, must be capitalized. See id.; Pig & Whistle Co. v. Commis-
sioner, supra; Phil Gluckstern’s, Inc. v. Commissioner, supra.
On the record before us, we hold that petitioner must
capitalize the expenditures at issue.23
23In a footnote in petitioner’s opening brief, petitioner
advances for the first time the following alternative argument:
the lessor’s expenses paid by Basin Electric [peti-
tioner] and recouped through the special allocation of
the interest savings could be viewed as a “loan” from
Basin Electric to lessors and a repayment of such loans
through reduced rent in 1995 and 1996. * * * Under such
a characterization, Basin Electric would be entitled to
deduct the unreduced rent for 1995 and 1996 (effec-
tively allowing Basin Electric to amortize the costs
over that period).
It is well settled that the Court will not consider issues
raised for the first time on brief when to do so would prevent
the opposing party from presenting evidence that that party might
have proffered if the issue had been timely raised. DiLeo v.
Commissioner, 96 T.C. 858, 891 (1991), affd. 959 F.2d 16 (2d Cir.
1992); Shelby U.S. Distribs., Inc. v. Commissioner, 71 T.C. 874,
885 (1979). The determination of whether a debtor-creditor
relationship exists is a highly fact-specific inquiry. See,
e.g., Ga.-Pac. Corp. v. Commissioner, 63 T.C. 790, 796 (1975).
We conclude that it would be prejudicial to respondent to con-
sider petitioner's alternative argument that certain of the
expenditures at issue constituted a loan from petitioner to the
owner participants. That is because respondent had no opportu-
(continued...)
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