Court Opinion

ID: 4474130
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:10:46.528687+00
Date Added: 2024-06-11T15:04:05.131555
License: Public Domain

Beghe, J., concurring in part and dissenting in part: Having joined the side opinions of Judges Ruwe and Halpern, I write on to empathize with the concerns that may underlie the majority’s view on the treatment of the overhead costs, as amplified by Judge Swift’s concurrence. It bears observing that the oft-quoted passage in the opinion of the Court of Appeals for the Seventh Circuit in Encyclopaedia Britannica, Inc. v. Commissioner, 685 F.2d 212, 217 (7th Cir. 1982), revg. T.C. Memo. 1981-255, which includes the statement that “The administrative costs of conceptual rigor are too great,” was uttered in the course of sustaining the Commissioner’s determination that the costs in issue in that case had to be capitalized. However, the Court of Appeals then suggested that the distinction between recurring and nonrecurring costs might provide the line of demarcation in some cases, but went on to observe that the distinction wouldn’t make sense when the taxpayer’s sole business was the creation or acquisition of capital assets. Although ACC’s business includes the servicing as well as the acquisition of capital assets, the relatively short average time the acquired loans remain outstanding raises questions about administrability, the costs of conceptual rigor, and whether the exercise has been worth the candle. These musings lead me to suggest the time has come to request respectfully that the Congress step in and enact some bright-line rules that will provide guidance to the business community and the Internal Revenue Service and reduce the burdens of compliance and controversy on the public, the Service, and the courts. Sections 195 and 197 come to mind as possible starting points or models. Gale, J., agrees with this concurring in part and dissenting in part opinion.