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or 16.07 percent, made a prepayment on substantially similar
terms.
Petitioner cites various instances where the term
"substantial" refers to percentages of 5 to 15 percent, including
section 1.103-11(b), Income Tax Regs. (5 percent); section 1.148-
2(e)(2)(B), Income Tax Regs. (5 percent); section 6662(d)(1) (10
percent); and section 147(c)(2)(E) (15 percent). Elsewhere, the
term refers to percentages as high as 25 percent, section
42(d)(2)(D)(i)(III); section 6229(c)(2), and 33 percent, section
382(l)(4)(B)(i).
Clearly, the term "substantial" can cover a wide range of
values.6 Where Congress meant only to allow customary
prepayments, we do not find that 16.07 percent is a substantial
percentage. Thus, the prepayment herein does not satisfy the
exception, and the prepayment of the City Obligation with the
proceeds of the BAN's constitutes the acquisition of investment-
type property. Moreover, we are not convinced that Congress
intended that the exception should apply where, as is the case
herein, the only offerees of the prepayment opportunity were
entities who were beneficiaries of tax-exempt financing rather
than to a class of offerees that included some of these
beneficiaries. If this were the standard for the application of
See Nabisco Brands, Inc. v. Commissioner, T.C. Memo. 1995-127
at n.22.
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