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recites: "During 1983, MIT 83 paid out $2,528,416 to employees
and independent contractors and taxing authorities." Petitioners
ignore respondent's express reservation that, "in stipulating to
transactions, [she] is only stipulating to the form of such
transactions and does not stipulate that there was any substance
to such transactions. Respondent reserves the right to challenge
particular stipulated transactions." At trial, Fred conceded
that, in making such stipulations, the parties were merely
reciting the form of the transaction.
We thus do not accept petitioners' insistence on brief that
the form described in the stipulations amounts to a concession of
commercial or economic reality. The transactions described
cannot be given effect for tax purposes, regardless of how
particular paragraphs of the stipulations may be read in
isolation.
Petitioners also argue that business transactions similar to
theirs do have economic substance. They cite cases for the
proposition that offsetting payment obligations are not per se
invalid for tax purposes. Petitioners point to Frank Lyon Co. v.
United States, 435 U.S. 561 (1978), apparently assuming that
their situation is in some way comparable. In that case, State
and Federal regulations precluded a bank from financing its
headquarters building by conventional means. Therefore,
according to a plan, the Frank Lyon Co. obtained the financing,
took title to the headquarters building, and leased it back to
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