Derwyn J. Booker - Page 11

          T.C. 386 (1987).  First, the transaction must have economic                 
          substance; the transaction cannot be a complete sham.  Mahoney v.           
          Commissioner, supra at 1219.  Second, if the transaction is found           
          to have economic substance, the question becomes whether the                
          taxpayer was motivated by profit to participate in the                      
          transaction within the meaning of section 183.  Id.  If the                 
          transaction is found to be a sham, then the entire transaction is           
          disregarded for Federal income tax purposes, and such niceties as           
          whether the transaction was engaged in primarily for profit are             
          simply not involved.  Id.   Therefore, in determining whether a             
          particular transaction was a sham, a court should not address               
          whether, in the light of hindsight, the taxpayer made a wise                
          investment; instead, the court must address whether the taxpayer            
          made a bona fide investment at all or whether the taxpayer merely           
          purchased tax deductions.  Bryant v. Commissioner, 928 F.2d 745,            
          749 (6th Cir. 1991), affg. in part and revg. in part T.C. Memo.             
          1989-527.                                                                   
               The same two-part test is applied in determining whether a             
          deduction or credit with respect to investment in a tax shelter             
          is valid.  Illes v. Commissioner, 982 F.2d 163 (6th Cir. 1992),             
          affg. T.C. Memo. 1991-449.  A tax shelter can be reasonably                 
          defined as a transaction entered into for the purpose of                    
          generating (1) deductions in excess of investment contributions             
          claimed in a given taxable year to reduce income from other                 
          sources that year, and/or (2) credits in excess of the tax                  






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