James E. Blasius and Mary Jo Blasius, et al. - Page 15

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          an * * * (ANPRM) and should not impose a moratorium on                      
          examination”), the discussions turned to the drafting of the                
          ANPRM, which was filed with the Federal Register on January 23,             
          2002, and published the following day.  See 67 Fed. Reg. 3461               
          (Jan. 24, 2002).                                                            
               Another document obtained by petitioners pursuant to their             
          FOIA request and attached to their reply to respondent’s                    
          objection to the motions is a memorandum dated February 26, 2002,           
          and entitled “Memorandum for LMSB and SB/SE [Small Business/                
          Self-Employed Division] Employees” (the LMSB-SB/SE memorandum or            
          the memorandum).  The memorandum is from the commissioners of               
          those two divisions, and the subject of the memorandum is:                  
          “Guidelines for the Application of Advance Notice of Proposed               
          Rulemaking for Intangibles Under Secs. 263(a)”.  The memorandum             
          advises:  “The rules and standards in the ANPRM are not Service             
          position and do not provide any authority for the concession of             
          [capitalization issues discussed in the ANPRM].”  The memorandum            
          notes, however, the statement in the ANPRM that “the IRS and                
          Treasury Department expect to propose [the 12-month rule]” and              
          that that rule “would be consistent with * * * U.S. Freightways             
          Corp. v. Commissioner, 270 F.3d 1137 (7th Cir. 2001), [revg. 113            
          T.C. 329 (1999)] * * * [which] recognized a ‘a one-year rule’ for           
          purposes of allowing a deduction for prepaid license fees and               
          insurance premiums.”  The memorandum states that, although “the             






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