- 30 -
Mortgage Corp. v. Commissioner, 121 T.C. at 272. We also
concluded that the core deposit cases, which use cost savings to
measure value, “support petitioner’s position that favorable
financing is an intangible asset subject to amortization.” Id.
at 264. Rather than addressing the valuation issue presently
before the Court, respondent’s argument seems to challenge our
prior holdings.
2. Realization of Value
Respondent argues that the favorable financing intangible
assets do not have a fair market value and that any value is
hypothetical because petitioner could not transfer favorable
financing to a willing buyer. We might agree that petitioner’s
favorable financing could not be transferred by itself. However,
we have previously rejected respondent’s argument that favorable
financing could not be valued because it could not be transferred
except as part of a larger acquisition. Obviously, intangibles
such as core deposits or deposit base13 might have economic
13 The term “deposit base” represents the present value of
the future stream of income to be derived from employing the core
deposits of a bank. See Fed. Home Loan Mortgage Corp. v.
Commissioner, 121 T.C. at 262. “Core deposits are a relatively
low-cost source of funds, reasonably stable over time, and
relatively insensitive to interest rate changes.” Citizens & S.
Corp. & Subs. v. Commissioner, 91 T.C. 463, 465 (1988). In First
Chi. Corp. v. Commissioner, T.C. Memo. 1994-300, we defined core
deposits as follows:
Core deposits can be an essential part of a
commercial bank when they represent a low cost and
(continued...)
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