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III. Tax Returns
Petitioner claimed a tax basis for its favorable financing
equal to its claimed fair market value at close of business on
December 31, 1984. On its 1985 Federal income tax return,
petitioner claimed that as of December 31, 1984, its favorable
financing intangible assets had an aggregate amortizable value of
$456,021,853.9 Petitioner now claims that its favorable
financing intangible assets had an aggregate amortizable value of
$428,391,551 on January 1, 1985.10
OPINION
As part of the legislation that subjected petitioner to
Federal income taxation, Congress enacted a dual-basis rule for
9 On its original Federal income tax returns for the years
at issue, petitioner reported the aggregate adjusted bases of its
favorable financing intangible assets as follows:
Aggregate adjusted
basis of favorable
Year financing intangible assets
1985 $456,021,853
1986 391,552,352
1987 337,931,651
1988 283,234,501
1989 237,398,945
1990 196,718,525
Petitioner adjusted the bases of the favorable financing
intangible assets for tax benefits received and the lost bases on
retirements.
10 Petitioner reduced the value of its favorable financing
intangible assets using the valuation performed by Dr. Stephen M.
Schaefer.
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