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Petitioner’s favorable financing is also comparable to an
interest in a favorable leasehold, which is without doubt an
asset. Similar to petitioner’s favorable financing, an interest
in a favorable leasehold involves a lease obligation with a
rental rate less than the current fair rental value of that
particular interest. “There is no question that a leasehold may
have a value in the hands of the lessee when the fair rental
value exceeds the rent established by the lease”, New Orleans La.
Saints v. Commissioner, T.C. Memo. 1997-246 (citing KFOX, Inc. v.
United States, 206 Ct. Cl. 143, 510 F.2d 1365, 1373-1374 (1975);
A.H. Woods Theatre Co. v. Commissioner, 12 B.T.A. 827 (1928)),
and, presumably, a hypothetical buyer would pay a premium to
obtain the lessee’s favorable position in the leasehold. It is
this correlative value and premium which give rise to
amortization deductions:
A leasehold is an intangible asset that is gradually
exhausted by the passage of time. Its cost is
recoverable ratably by way of amortization deductions
over the period of exhaustion in the same manner that
costs of tangible assets are recoverable by way of
depreciation deductions. Of course, the amortization
12(...continued)
status than deposit base. For example, whereas deposit base
consists of deposit accounts which have no fixed termination date
and which are terminable-at-will, petitioner’s debt obligations
presumably have stated terms with fixed maturity dates. See
Colo. Natl. Bankshares, Inc. v. Commissioner, 984 F.2d 383, 396-
397 (10th Cir. 1993) (the Commissioner attempted to distinguish
core deposits on the basis that those intangibles do not involve
fixed-term loans with a definite life span) affg. T.C. Memo.
1990-495.
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