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on January 1, 1985, as adjusted basis. The parties agree that
there are no genuine issues of material fact relating to this
legal question. Respondent assumes for purposes of this issue
that at least some of petitioner’s claimed intangibles are
amortizable for tax purposes.
Arguments of the Parties
Petitioner claims that the special basis rules of DEFRA
section 177(d)(2) provide the adjusted basis for purposes of
amortizing any intangibles that it held as of January 1, 1985.
Petitioner contends that this result is required by the
interaction of section 167(g) and DEFRA section 177(d)(2)(A).
Thus, petitioner claims that it is entitled to amortize its
alleged intangibles at their fair market value.
Respondent argues that DEFRA section 177(d)(2) does not
provide rules for determining the adjusted basis for amortization
of petitioner’s intangibles but, instead, provides special basis
rules solely for purposes of determining gain and loss from the
sale or other disposition of property that petitioner held on
January 1, 1985. He argues that petitioner’s adjusted basis for
purposes of amortizing any intangibles that it might have held on
that date is determined under the regular adjusted cost basis
rules of the Code without reference to the special basis rules of
DEFRA section 177(d)(2). Respondent contends that petitioner
would have relatively little or no adjusted cost basis.
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