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1040, 1049-1050 (8th Cir. 1990), affg. T.C. Memo. 1989-142;
American Principals Leasing Corp. v. United States, supra; Levien
v. Commissioner, supra; Thornock v. Commissioner, 94 T.C. 439,
453 (1990). No single feature of the transaction generally will
control. E.g., Levien v. Commissioner, supra at 127.
We find no significant difference between the facts in this
case and those in the cases cited above. For example, Waters v.
Commissioner, supra, involved a similar leasing transaction
whereby the taxpayer purchased computer equipment from a middle
entity that purchased the equipment from a third party
to which the taxpayers leased the equipment. The third party had
purchased the equipment with nonrecourse bank loans and had
leased it to an end-user. The bank held a security interest in
the equipment and had received an assignment of the end-user
lease payments. The taxpayer owned the equipment subject to the
bank liens and the end-user lease. The lease payments due the
taxpayer from the third party "essentially matched" the
taxpayer's payments to the middle entity, which, in turn,
"matched" the middle entity's payments to the third party. Id.
at 1312-1313. Based on the following factors--matching payment
obligations, underlying nonrecourse debt, circular, matching
payments, and third party's promise of indemnification under the
lease from the taxpayer-- the Court of Appeals for the Second
Circuit concluded that there was no realistic possibility that
the taxpayer would suffer an economic loss if the underlying
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