- 22 -
Furthermore, “A taxpayer is not required to use the most
theoretically correct method * * * to establish the amount of
depreciation to which he is entitled; rather, his method must be
reasonable.” IT&S of Iowa, Inc. v. Commissioner, supra at 522
(citing Citizens & S. Corp. & Subs. v. Commissioner, 91 T.C. 463,
514 (1988), affd. without published opinion 900 F.2d 266 (11th
Cir. 1990)).
Petitioner argues that the benefit of below-market interest
should be measured by the present values of the difference
between the contract interest rates on its debt instruments and
market interest rates over the terms of the loans. Petitioner
calculated that the January 1, 1985, fair market value of each
favorable financing intangible asset was as follows:
Debt Fair Market Value
G-15 $8,865,451
G-16 14,986,068
G-17 44,427,083
F-8 325,000
F-11 92,000,000
F-12 187,500
F-13 72,937,500
F-15 218,750
F-18 125,000
D-2 5,812,500
Z-2 24,389,887
Z-3 1,448,674
ND 458,071
CD-1 7,992,188
GMC A 1975 7,418,813
GMC B 1975 4,358,750
GMC A 1976 5,228,813
GMC B 1976 8,342,336
GMC A 1977 8,146,021
GMC B 1977 12,825,330
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