- 20 -
2000), and Wells Fargo & Co. and Subs. v. Commissioner, 224 F.3d
874 (8th Cir. 2000), in determining whether respondent’s present
position seeking to capitalize ACC’s loan origination/acquisition
costs and professional fees was substantially justified.
Petitioners argue that respondent was not substantially justified
in litigating his position before “finally conceding” after “two
years had past [sic] since the PNC and Wells Fargo circuit court
decisions.”
(3) Because respondent did not concede the loan
origination/acquisition costs and professional fees issues until
June 10, 2002, which was months after the issuance of the ANPRM,
Announcement 2002-9, 2002-1 C.B. 536, and CCN 2002-21, and years
after the issuance of Rev. Rul. 99-23, 1999-1 C.B. 998,13
respondent “did not follow * * * [his] own published guidance,
[and, therefore, he] must meet a higher standard of proof to
rebut the presumption [of no justification] created by * * *
[section] 7430(c)(4)(B)(ii) * * * [, which he] has not met”.
B. Respondent’s Arguments
1. Loan Origination/Acquisition Costs
Capitalization is substantially justified by the Court’s
decision in Lychuk v. Commissioner, supra, which upheld the
Commissioner’s capitalization of costs identical to those at
issue in the consolidated cases; i.e., employee salaries and
13 See supra note 11.
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