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defined as all elements of a business enterprise that exist in
addition to monetary and tangible assets. Their existence is
dependent on the presence, or expectation of earnings.” (Fn. ref.
omitted.)
First, it seems clear that petitioner’s favorable financing
had a positive effect on its net income. To the extent that
petitioner’s financing costs were lower than they would have been
had petitioner financed its operations with the market rates
prevailing on January 1, 1985, its net income was enhanced.
Second, respondent does not support with legal authority his
contention that the value of the favorable financing intangible
must be based on income. Indeed, courts have determined the
value of similar intangible assets using cost savings methods.
IT&S of Iowa, Inc. v. Commissioner, 97 T.C. at 514-515; Citizens
& S. Corp. & Subs. v. Commissioner, 91 T.C. at 498.
We have already held that petitioner’s favorable financing
constituted an economic benefit that can be an amortizable
intangible asset if petitioner establishes a fair market value
and limited useful life as of January 1, 1985. Fed. Home Loan
12(...continued)
currently a director and principal in CBIZ Valuation Group, LLC.
His expertise includes: Corporate finance, restructuring and
cost of capital; valuation of securities and business interests;
valuation of intangible assets; analysis of publicly traded
securities; economic loss analyses; wage and compensation
determination; transfer pricing; and derivative securities. He
has testified as an expert in over 60 cases in U.S. District
Courts, this Court, and various State courts.
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