Federal Home Loan Mortgage Corporation - Page 11

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               Section 167(g) provides that “The basis on which exhaustion,           
          wear and tear, and obsolescence are to be allowed in respect of             
          any property shall be the adjusted basis provided in section 1011           
          for the purpose of determining the gain on the sale or other                
          disposition of such property.”  See also sec. 1.167(g)-1, Income            
          Tax Regs.  Section 167(g) refers specifically to the adjusted               
          basis for determining gain provided in section 1011.  Section               
          1011(a) provides:                                                           
                    SEC. 1011(a).  General Rule.--The adjusted basis                  
               for determining the gain or loss from the sale or other                
               disposition of property, whenever acquired, shall be                   
               the basis (determined under section 1012 or other                      
               applicable sections of this subchapter and subchapters                 
               C (relating to corporate distributions and                             
               adjustments), K (relating to partners and                              
               partnerships), and P (relating to capital gains and                    
               losses)), adjusted as provided in section 1016.                        
          As a general matter, section 1011 requires the use of the cost              
          basis determined under section 1012,5 adjusted as provided in               




               4(...continued)                                                        
          intangible property.  See secs. 1.167(a)-3, 1.167(g)-1, Income              
          Tax Regs.                                                                   
               5Sec. 1012 provides:                                                   
               SEC. 1012.  BASIS OF PROPERTY--COST.                                   
                    The basis of property shall be the cost of such                   
               property, except as otherwise provided in this                         
               subchapter and subchapters C (relating to corporate                    
               distributions and adjustments), K (relating to partners                
               and partnerships), and P (relating to capital gains and                
               losses).  * * *                                                        




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Last modified: May 25, 2011