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inconsistent with the capitalization of the acquisition costs at
issue [in the FSA]”.
The legislative history of section 195 lends support to
respondent’s position in the FSA that that provision was not
intended to apply to the cost of investigating the acquisition of
a specific capital asset. H. Rept. 96-1278, 1980-2 C.B. 709, is
the report of the Committee on Ways and Means (the committee)
that accompanied H.R. 7956, which, when enacted in the
Miscellaneous Revenue Act of 1980, Pub. L. 96-605, sec. 102, 94
Stat. 3522, added section 195 to the Code. In describing the
pre-section 195 law, the committee makes the following
observation:
Expenditures made in acquiring or creating an
asset which has a useful life that extends beyond the
taxable year normally must be capitalized. These costs
ordinarily may be recovered through depreciation or
amortization deductions over the useful life of the
asset. However, costs which relate to an asset with
either an unlimited or indeterminate useful life may be
recovered only upon a disposition or cessation of the
business. [H. Rept. 96-1278, 1980-2 C.B. at 712.]
Under the heading “Reasons for change”, the committee expresses
its belief that providing “for the amortization of business
startup and investigatory expenses will encourage formation of
new businesses and decrease controversy and litigation arising
under present law with respect to the proper income tax
classification of startup expenditures.” Id. Those statements,
when read together, indicate that the committee viewed
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