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The main thrust of respondent’s arguments is that
petitioner’s favorable financing is not an asset. We addressed
this contention in Fed. Home Loan Mortgage Corp. v. Commissioner,
121 T.C. 254 (2003). In that Opinion, we concluded: (1) That
the right to use money at below-market rates is a valuable
economic benefit in terms of the cost savings that can be
achieved in income-producing activities; (2) that favorable
financing is a benefit for which a third party would pay a
premium if the favorable financing were included as part of a
purchase transaction; (3) that petitioner’s favorable financing
arrangements on January 1, 1985, represented something of value;
and (4) that the differential between the market rate of interest
and petitioner’s contract rate of interest serves as a measure of
the economic value of that right on January 1, 1985. Id. at 260-
261. Nevertheless, we will briefly discuss respondent’s
arguments that petitioner’s favorable financing had no value.
1. Expectation of Income
Respondent argues that the favorable financing intangible
assets do not have any value because petitioner did not receive
any additional income or earnings from these assets. Respondent
relies on the expert opinion and testimony of Dr. Scott D.
Hakala.12 Dr. Hakala explained that “Intangible assets are
12 Dr. Scott D. Hakala received his doctor of philosophy,
economics at the University of Minnesota. Dr. Hakala is
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