- 27 -
B.T.A. 355 (1925); Atterbury v. Commissioner, 1 B.T.A. 169
(1924).
Respondent argues that petitioner’s claimed amortization of
its alleged intangibles at their fair market values as of January
1, 1985, is “precisely contrary to the stated intent of the dual
basis rule. This rule was explicitly intended to avoid taking
pre-1985 appreciation into account for tax purposes; by
amortizing FMVs, petitioner would take such pre-1985 appreciation
into account.” We disagree. Taking amortization deductions
using a fair market value basis does not, in our view, thwart the
congressional purpose stated in the legislative history. Indeed,
as petitioner suggests, recovering pre-1985 appreciation through
amortization assures that pre-1985 appreciation will not be taxed
in much the same way as a recovery of basis does when it is used
as an offset to gain in the sale or other disposition of the
property.17
16(...continued)
adjustment from March 1, 1913, to February 28, 1954, in
the aggregate of $86,100 (41 years @ $2,100), leaving
an adjusted basis for determining gain of $8,400
($94,500 less $86,100).
17We recognize that Congress provided a different rule with
respect to tangible depreciable property. Congress did not
express any similar concern with respect to any intangible
property that petitioner might have held on Jan. 1, 1985.
Congress could have provided a similar rule for intangible
property, but did not.
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