ABC Corporation is the object of a hostile takeover bid by XYZ Corporation. ABC incurs a total of $400,000 in attorneys fees, accounting fees, and printing costs for information mailed to ABC shareholders in its effort to defeat the XYZ takeover bid. XYZ finally concedes, and ABC remains a separate corporation. What is the appropriate tax treatment of the $400,000 in fees? Would that treatment be different if XYZ succeeds in acquiring ABC? Tax authorities you should consult include the following:

IRC Sec. 162

IRC Sec. 165

INDOPCO, Inc. v. Comm., 69 AFTR 2d 92-694, 92-1 USTC 50,113 (USSC, 1992)

U.S. v. Federated Department Stores, Inc., 74 AFTR 2d 94-5519, 94-2 USTC 50,418 (S.D. Ohio, 1994)

A.E. Staley Manufacturing Co. v. Comm., 80 AFTR 2d 97-5060, 97-2 USTC 50,521 (7th Cir., 1997)

Reg. Sec. 1.263(a)-5