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Property Cost Allocation
1UBC Land $2,161,625
2UBC 18,579,112
3UBC 11,900,811
3UBC Land 1,292,903
Respondent argues that section 1012 provides that the basis
of property is the cost of such property and that “the amount
paid for a given asset becomes the asset's cost basis and cannot
be added to or combined with the basis of other assets.”
Respondent, however, acknowledges the developer line of cases,
but asserts that those cases recognize a narrow exception to the
general rule. Respondent claims that the present case is
factually distinguishable from the developer line of cases and
that the principles of those cases “have never been applied
outside the narrow factual context in which those cases arose.”
In the alternative, respondent argues that, if the developer line
of cases “have relevance beyond their unique facts”, the present
case fails to meet the requirements set forth in those cases.
Lastly, respondent rejects petitioner's proposed allocation of
the cost of the Atrium Assets based on the fair market values of
the adjoining properties because those “values bear no necessary
correlation to the economic benefits” that were anticipated by
the Bank from the construction of the Atrium. According to
respondent, an allocation, if any, “must be based on the bank's
purpose for building the Atrium as of February of 1981 when it
made the initial commitment to build the Atrium, or at the
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