Derwyn J. Booker - Page 13

          obvious focus of the promotional materials distributed to                   
          petitioner was on the attendant tax benefits of the lease                   
          program.  The tax opinion petitioner received with the                      
          promotional materials was twice as long as the prospectus itself            
          and specifically raised the likelihood of prospective Internal              
          Revenue Service (IRS) challenge and possible litigation in the              
          Tax Court.  Furthermore, very little revenue was generated from             
          sales of sound recordings made from the subject master.  Indeed,            
          petitioner’s share of the income from sales of albums and                   
          cassettes made from the subject master in 1984 totaled only                 
          $18.57.  Nonetheless, petitioner claimed nearly $27,000 in                  
          deductions and investment tax credits in 1984 relating to the               
          master lease transaction.                                                   
               Reliance on an inflated value of the master recording is               
          another factor considered in determining whether the underlying             
          transaction has economic substance.   Independent Elec. Supply,             
          Inc. v. Commissioner, 781 F.2d 724, 728 (9th Cir. 1986), affg.              
          T.C. Memo. 1984-472, cited with approval in Pasternak v.                    
          Commissioner, supra at 900.  Disparity between the prices of the            
          master recordings and their actual fair market values is yet                
          another factor in determining whether transactions are shams.               
          Hunt v. Commissioner, 938 F.2d 466, 472 (4th Cir. 1991), cited              
          with approval in Pasternak v. Commissioner, supra at 900.                   
               Encore valued the subject master leased by petitioner at               
          $496,000 and subsequently provided petitioner with a 1-1/2-page             

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