
    Emil W. Carlson, Petitioner, v. Commissioner of Internal Revenue, Respondent.
    Docket No. 43702.
    Promulgated November 23, 1931.
    
      L. F. Loux, Esq., for the petitioner.
    
      W. B. Laois ford, Esq., for the respondent.
   OPINION.

McMahon:

It is the contention of tbe petitioner that the full amount of $40,000 paid by him in 1926 to the Chicago Trust Company for its services in procuring a loan of $2,000,000 from the Metropolitan Life Insurance Company of New York to petitioner is deductible in that year as an ordinary and necessary business expense. The respondent has held that this expenditure was in the nature of a capital expenditure which is deductible pro rata over the term of the loan, and has allowed the petitioner a deduction in the year 1926 in the amount of $2,666.67.

Upon substantially similar facts the Board has heretofore held that expenditures made by a taxpayer in procuring a construction loan are not deductible in the year in which paid, but are deductible pro rata over the term of the loan. Julia Stow Lovejoy, 18 B. T. A. 1179.

The petitioner contends that Julia Stow Lovejoy, supra, is not in point, laying stress upon the fact that the expenditures made by the taxpayer in that case were paid to the same party that made the loan to the taxpayer. This is an immaterial distinction between that case and the instant proceeding. In the final analysis, the expenditure made by the taxpayer in the instant proceeding was made for the purpose of procuring the loan and the benefits of such expenditure will extend over the entire term of the loan. The expenditure is thus in the nature of a capital expenditure instead of an ordinary and necessary business expense and is deductible pro rata over the term of the loan.

See also James M. Butler, 19 B. T. A. 718; Central Bank Block Association, 19 B. T. A. 1183; A. W. Henn, 20 B. T. A. 1133; and Charles F. Bachman, 21 B. T. A. 36.

We approve the determination of the respondent.

Judgment will he entered for the respondent.  