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administration of the plan.
In sum, the operative facts of these cases show that the
substance of the partnerships' employee leasing arrangements is
that Machise, and not the partnerships, was the employer of the
employees and the party who hired the independent contractors for
purposes of deducting the payroll costs at issue.
2. Lack of Economic Substance of the Employee Leasing
Agreements
Petitioners also argue that the substance of the
transactions has been given economic effect by the execution of
the financing agreements. Petitioners again are wrong. These
agreements lack economic substance and are ineffective, for
Federal tax purposes, to change the character of the transactions
at issue.32
In Levy v. Commissioner, 91 T.C. 838, 856 (1988), we listed
a number of "particularly significant" factors in determining
whether a financial transaction has economic substance apart from
tax benefits. These factors include the presence or absence of
arm's-length negotiations, the relationship between sales price
and fair market value, the structure of the financing, the degree
32In focusing on the transactions at issue, we find it
unnecessary to resolve related questions such as whether or when
the investors formed valid partnerships. See Commissioner v.
Culbertson, 337 U.S. 733 (1949). Nor need we decide whether the
partners' claimed losses exceeded the bases of their partnership
interests. See CRC Corp. v. Commissioner, 693 F.2d 281 (3d Cir.
1982), affg. in part and revg. and remanding in part Brountas v.
Commissioner, 73 T.C. 491 (1979).
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