PNC Bancorp Inc. v. IRS Commissioner

OPINION OF THE COURT

RENDELL, Circuit Judge.

In this appeal from a decision of the Tax Court, we are asked to determine whether certain costs incurred by banks for marketing, researching and originating loans are deductible as “ordinary and necessary expenses” as provided by section 162 of the Internal Revenue Code, 26 U.S.C. § 162 (1988), or whether these expenses must be capitalized under section 263 of the Code. Two banks that were predecessors in interest of appellant PNC Bancorp, Inc. deducted these costs as ordinary business expenses. The Internal Revenue Service disallowed the deductions…