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1990. Petitioner claims overpayments of $57,775,538 for 1987,
$28,434,990 for 1988, $32,577,346 for 1989, and $19,504,333 for
1990.
When petitioner was chartered, it was exempt from Federal,
State, and local taxation, except for real estate tax imposed by
any State or local taxing authority. Pursuant to the Deficit
Reduction Act of 1984 (DEFRA), Pub. L. 98-369, sec. 177, 98 Stat.
709, petitioner became subject to Federal income tax effective
January 1, 1985. In a prior opinion, Fed. Home Loan Mortgage
Corp. v. Commissioner, 121 T.C. 129, 147 (2003), we held “that
petitioner’s adjusted basis for purposes of amortizing intangible
assets under section 167(g)[1] is the higher of regular adjusted
cost basis or fair market value as of January 1, 1985.” (Fn.
ref. omitted.) In another prior opinion, Fed. Home Loan Mortgage
Corp. v. Commissioner, 121 T.C. 254, 272 (2003), we held that
“The benefit of petitioner’s below-market financing can, as a
matter of law, constitute an intangible asset which could be
amortized if petitioner establishes a fair market value and a
limited useful life as of January 1, 1985.” The benefit of
below-market financing is generally referred to as “favorable
financing”. In this opinion, we decide whether petitioner has
1 Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue, and
all Rule references are to the Tax Court Rules of Practice and
Procedure.
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