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present obligation at the end of the relevant deferral period.
Accordingly, there was little substance to the risk of loss that
the installment notes, in form, presented. Indeed, the financial
structure of both activities was designed to give the impression,
but not to reflect the reality, of petitioner's being at risk
with respect to the installment notes. The middle company, Proz,
was inserted into each activity solely for tax reasons;
petitioner has failed to convince us that Proz was organized or
utilized for any purpose but to avoid the adverse application of
section 465. Our overall impression of both activities is that
each is inconsistent with Congress' purpose, writ large in every
aspect of section 465, to limit a taxpayer's losses to amounts
for which he is really at risk. The structure and operation of
both activities is indicative that petitioner's principal purpose
with regard to each was the avoidance of Federal income tax. See
sec. 1.6661-5(b)(2), Income Tax Regs. Moreover, petitioner has
not shown us that his business purpose in entering either
activity exceeded the obvious purposes of tax avoidance.
Petitioner has proposed no findings that, either on a before-tax
or after-tax basis, detail his financial expectations.
Petitioner clearly paid very little attention to the activities
once they were up and running and his risk of personal liability
had been eliminated, or at least postponed. Petitioner has
stipulated that Sha-Li's bookkeeper did not tell him about the
wrong-way flow of funds in the telecommunications equipment
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