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which is lower than the contract rate of interest, the obligor is
paying essentially a higher cost for the use of the borrowed
money. Alternatively, if current market rates of interest
fluctuate to a rate which is higher than the contract rate of
interest, the obligor is paying essentially a lower cost for the
use of the borrowed money. In this circumstance, the obligor
stands in a better position than other borrowers that finance at
the current market rates of interest. The important point to be
made is that an obligor’s right to use borrowed money under an
existing debt obligation may be more or less valuable depending
on the current market rates of interest. See, e.g., Dickman v.
Commissioner, supra at 337. Thus, we agree with petitioner that
the right to use borrowed money at below-market interest rates
represents a valuable economic benefit in terms of the cost
savings that can be achieved in financing income-producing
activities. It is a benefit for which a third party would pay a
premium if the favorable financing were included as a part of a
purchase transaction. Following this analysis, since
petitioner’s favorable financing involves a right to use borrowed
money at below-market rates as of January 1, 1985, we have no
trouble concluding that petitioner’s favorable financing
arrangements represented something of value as of that date.
Respondent agrees that “there is a measurable economic value
associated with the right to use money.” However, respondent
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