Federal Home Loan Mortgage Corporation - Page 12

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          section 10166 (i.e., the regular adjusted cost basis), for                  
          purposes of determining gain or loss.  Section 1011 does not                
          specify any alternative basis rules besides those contained in              
          other sections of subchapters C, K, O, and P of the Code, which             
          are not applicable to the instant cases.                                    
               DEFRA section 177(d)(2), which has not been codified, is not           
          specifically referenced in section 1011.  Nevertheless, DEFRA               
          section 177(d)(2)(A) specifically provides the rules for                    
          determining adjusted basis in property held on January 1, 1985,             
          when determining petitioner’s gain on the sale or other                     
          disposition of such property.  Thus, as to petitioner, the                  
          specific basis rules contained in DEFRA section 177(d)(2)(A)                
          replace the regular adjusted cost basis rules contained in                  
          sections 1011 through 1023 of the Code.  Since section 167(g)               
          requires that the adjusted basis for determining gain be used as            
          the adjusted basis for amortizing intangibles, it is logical to             
          conclude that petitioner must use the specific adjusted basis               
          determined under DEFRA section 177(d)(2)(A)(ii) to amortize any             
          intangibles it might have held on January 1, 1985.                          




               6Sec. 1016 provides adjustments to basis; e.g., for                    
          expenditures, receipts, losses, or other items, properly                    
          chargeable to capital account and for exhaustion, wear and tear,            
          obsolescence, amortization, and depletion to the extent of the              
          amount allowed (but not less than the amount allowable) as                  
          deductions in computing taxable income.  Sec. 1016(a)(1) and (2).           




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Last modified: May 25, 2011