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analyzing credit applications submitted by the dealers’
customers, analyzing credit reports, verifying information
provided by credit applicants (the credit analysis activities),
and purchasing the approved installment contracts from the
dealers. Those costs consisted of employee salaries and benefits
deemed attributable to the foregoing activities.
Professional Fees
The professional fees at issue in the consolidated cases
(professional fees) were payments, apparently to third parties,
relating to the creation of a bank line of credit for ACC, which
extended over 2 calendar years.
Chronology of Administrative and Judicial Developments
Regarding the Capitalization Versus Expense Issues Conceded by
Respondent in the Consolidated Cases
Cases and Public Pronouncements
On June 8, 1998, this Court issued its report in PNC
Bancorp, Inc. v. Commissioner, 110 T.C. 349 (1998), revd. 212
F.3d 822 (3d Cir. 2000), in which we held that a bank’s costs
associated with making loans extending beyond the years in which
the costs were incurred, including salaries and benefits paid to
employees, are not currently deductible under section 162(a) and
must be capitalized under section 263(a).
On March 8, 1999, this Court issued its report in Norwest
Corp. v. Commissioner, 112 T.C. 89 (1999), affd. in part and
revd. in part sub nom. Wells Fargo & Co. & Subs. v. Commissioner,
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