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property”. Section 1.1012-1(a), Income Tax Regs., provides:
“The cost is the amount paid for such property in cash or other
property.” As used in section 1012, the term “cost” (cost) has
been interpreted to include any indebtedness to the seller for
the purchase price of the property and any indebtedness to a
third party secured by the property. See, e.g., Parker v.
Delaney, 186 F.2d 455 (1st Cir. 1950) (purchase money
indebtedness included in cost basis); Blackstone Theatre Co. v.
Commissioner, 12 T.C. 801, 804 (1949) (cost basis of property
acquired subject to liens for taxes and penalties includes amount
of such liens); sec. 1.1012-1(g)(1), Income Tax Regs. (cost of
property includes amount attributable to debt instrument issued
in exchange for property). Cost also includes expenses of, or
incident to, the acquisition of property. See, e.g, Warner
Mountains Lumber Co. v. Commissioner, 9 T.C. 1171, 1174 (1947)
(fee paid to attorney for examining title of property to be
purchased is part of cost of property); sec. 1.263(a)-2(d),
Income Tax Regs. (fees for architect’s services); sec. 1.263(a)-
2(e), Income Tax Regs. (“Commissions paid in purchasing
securities”), approved in principle by Helvering v. Winmill, 305
U.S. 79 (1938).
It is clear that the cost of the assets includes not only
the $400,000 premium paid by Metrobank to the RTC but also the
liabilities. The conclusion suggested by the facts before us is
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