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investigatory and startup costs in connection with the
acquisition of a new business as particularly apt candidates for
amortization because the taxpayer’s recovery of those costs
otherwise would not be available until disposition or abandonment
of the new business. The committee, thus, appears to view
section 195 as an exception to the rule that the costs of
“acquiring or creating an asset which has a useful life that
extends beyond the taxable year normally must be capitalized”, a
rule that the committee views as intrinsically fair when the
costs are not incurred in connection with the acquisition of a
business, since, in that situation, the costs are normally
recovered over the useful life of the asset. Id.
Also, because (1) ACC was in the business of acquiring
dealer installment contracts and (2) the credit analysis
activities related to specific installment contracts that had
been selected for acquisition, solely contingent on the debtor’s
creditworthiness, it is not at all clear that those activities
are not akin to the post- “final decision” “‘due diligence’
and/or ‘investigatory’ expenses” capitalized by the Court of
Appeals for the Eighth Circuit in Wells Fargo & Co. and Subs. v.
Commissioner, 224 F.3d at 889.
In light of the foregoing, we find that respondent was
substantially justified in not considering Rev. Rul. 99-23,
supra, to be controlling published guidance requiring the loan
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