T.C. Memo. 2006-153
UNITED STATES TAX COURT
FEDERAL HOME LOAN MORTGAGE CORPORATION, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 3941-99, 15626-99. Filed July 25, 2006.
At the close of business on Dec. 31, 1984, P had
30 debt instruments outstanding on which it paid
effective contract interest rates that were below
current interest rates that P would have incurred had
it issued comparable debt instruments. P’s right to
use the proceeds of these financing arrangements with
below-market interest rates constitutes an economic
benefit generally referred to as “favorable financing”.
In a prior Opinion, we held that special legislative
provisions entitled P to use the fair market values of
its intangible assets on Jan. 1, 1985, as its bases for
purposes of amortization. Fed. Home Loan Mortgage
Corp. v. Commissioner, 121 T.C. 125 (2003). In another
prior Opinion, we held that the benefit of below-market
financing can, as a matter of law, constitute an
intangible asset which P may amortize if it establishes
a fair market value and a limited useful life. Fed.
Home Loan Mortgage Corp. v. Commissioner, 121 T.C. 254
(2003).
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