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for purposes of determining petitioner’s adjusted basis in
tangible depreciable property. That exception is contained in
DEFRA section 177(d)(2)(B) and provides:
(B) Special Rule for Tangible Depreciable
Property.--In the case of any tangible property which--
(i) is of a character subject to the allowance for
depreciation provided by section 167 of the Internal
Revenue Code of 1954, and
(ii) is held by the Federal Home Loan Mortgage
Corporation on January 1, 1985,
the adjusted basis of such property shall be equal to
the lesser of the basis of such property or the fair
market value of such property as of such date.
The conference report accompanying this legislation states with
respect to this exception:
The conference agreement follows the rules of the
Senate amendment regarding the basis of Freddie Mac
assets held by the corporation on January 1, 1985.
However, the conference agreement provides an exception
to these general rules in the case of tangible
depreciable property held by Freddie Mac on January 1,
1985. For such property, the adjusted basis, for
purposes of both gain or loss, is to be equal to the
lesser of (1) the regular adjusted basis of the
property in the hands of Freddie Mac, or (2) the fair
market value of the property as of January 1, 1985.
This rule is primarily intended to prevent Freddie Mac
from claiming deductions based on pre-1985 depreciation
of tangible property (e.g., buildings or office
equipment) held by the corporation as of the date of
taxability. [H. Conf. Rept. 98-861, supra at 1039-
1040, 1984-3 C.B. (Vol. 2) at 293-294.]
In enacting this exception, Congress contemplated and explicitly
separated tangible depreciable property from other property,
including intangibles, that petitioner held on January 1, 1985.
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