T.C. Memo. 2003-298
UNITED STATES TAX COURT
FEDERAL HOME LOAN MORTGAGE CORPORATION, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 3941-99, 15626-99. Filed October 27, 2003.
P was originally exempt from Federal income
taxation. However, on Jan. 1, 1985, P became subject
to taxation under the Deficit Reduction Act of 1984
(DEFRA), Pub. L. 98-369, sec. 177, 98 Stat. 709.
During 1983 and 1984, when it was still exempt from
income tax, P incurred certain costs relating to its
“Freddie Mac” trade name and its trademark “Gnomes”.
In its return for 1985, P filed a statement signifying
its election to amortize its 1983 and 1984 trademark
and trade name expenditures under sec. 177, I.R.C.
Held: Sec. 177(a), I.R.C., provides an election
to amortize trademark and trade name expenditures over
a period of not less than 60 months for expenditures
“paid or incurred during a taxable year beginning after
December 31, 1955”. P’s trademark and trade name
expenditures were not paid or incurred during P’s
taxable years because P was exempt from income tax
during those years. P is not entitled to deductions
under sec. 177, I.R.C.
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