Federal Home Loan Mortgage Corporation - Page 30

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          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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