- 40 - 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 equipmentPage: Previous 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 Next
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