On January 1 of every year since 1993, Lanier Corporation has paid a $35,000 retainer fee to the law firm of Myer and Weeble (MW). MW specializes in structuring corporate mergers and acquisitions. In return for the annual payment, MW guarantees that it will represent Lanier for one year. Moreover, MW will not provide legal assistance to any business that Lanier attempts to acquire during the year. MW is entitled to keep the annual retainer regardless of the actual amount of legal work performed for Lanier. On January 1, Lanier paid the annual $35,000 retainer to MW. In August, MW structured Lanier’s acquisition of Carstron Manufacturing. MW sent Lanier a bill for $100,000 of additional legal fees in connection with this acquisition. The tax law clearly requires Lanier to capitalize the $100,000 additional legal fees as part of the cost of Carstron Manufacturing. But can Lanier deduct (rather than capitalize) the $35,000 retainer paid in January?