1980), the court valued the warrants
at issue for OID purposes by considering the difference between the interest rate required without the options and that actually used.
As the vast majority of loan origination costs
at issue for financial institutions fall into the above categories, the proposed regulations would allow a current deduction for these costs.
If such a claim is disallowed early in the audit process, this could lead to the filing of a suit before the end of the audit; that suit must include all items relating to the taxable year
at issue. This could lead to significant confusion and administrative problems associated with this process.