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for the Third Circuit in PNC Bancorp requires a finding that
respondent was not substantially justified in seeking to
capitalize ACC’s loan origination/ acquisition costs. We do not
believe so.
At the time the notices of deficiency were issued to
petitioners, capitalization of employee salaries allocable to
capital transactions had, in various instances, been upheld by
the Supreme Court in Commissioner v. Idaho Power Co., 418 U.S. 1,
13 (1974), by other U.S. Courts of Appeals (e.g., NCNB Corp. v.
United States, 651 F.2d 942, 963 (4th Cir. 1981), vacated on
other grounds 684 F.2d 285 (4th Cir. 1982); Cagle v.
Commissioner, 539 F.2d 409, 415-416 (5th Cir. 1976) (fee paid to
managing partner of a partnership), affg. 63 T.C. 86 (1974);
Briarcliff Candy Corp. v. Commissioner, 475 F.2d 775, 781 (2d
Cir. 1973), revg. and remanding T.C. Memo. 1972-43), by the Court
of Claims in S. Natural Gas Co. v. United States, 188 Ct. Cl.
302, 412 F.2d 1222, 1265 (1969), and by the Tax Court (e.g.,
Norwest Corp. v. Commissioner, 112 T.C. 89 (1999); PNC Bancorp,
Inc. v. Commissioner, 110 T.C. 349 (1998); Perlmutter v.
Commissioner, 44 T.C. 382, 404 (1965), affd. 373 F.2d 45 (10th
Cir. 1967)).
The cases cited by petitioners, in which attorney’s fees
were awarded under section 7430, are readily distinguishable. In
Allbritton v. Commissioner, supra, the Commissioner’s position
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