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of ACC’s (1) loan origination/acquisition costs and (2)
professional fees.
Nature of the Expenses Conceded by Respondent To Be Deductible in
the Year Incurred
Loan Origination/Acquisition Costs
ACC is the same S corporation that was the focus of our
report in Lychuk v. Commissioner, 116 T.C. 374 (2001), which
dealt with the 1993 and 1994 tax years of its then shareholders
(including petitioners James E. and Mary Jo Blasius). In Lychuk
v. Commissioner, supra at 376, we reported certain basic facts
with respect to ACC:
It was formed to provide alternate financing for
purchasers of used automobiles or light trucks
(collectively, automobiles) who have marginal credit.
Its sole business operation is (1) the acquisition of
installment contracts from automobile dealers (dealers)
who have sold automobiles to high credit risk
individuals and (2) the servicing of those contracts.
Its primary business activities are credit
investigation, credit evaluation, documentation, and
the monitoring of collections on installment contracts.
* * *
We have no reason to believe that those reported facts have
changed.
Moreover, the parties appear to agree that the loan
origination/acquisition costs are essentially identical in nature
to costs described in Lychuk v. Commissioner, supra at 377-381,
as incurred by ACC in investigating and acquiring automobile
dealer installment contracts with purchasers of automobiles.
Briefly, the costs at issue were incurred by ACC employees in
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