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having subsequently received the tentative refund of the
investment credit carryback of $4,546 to the year 1980.
In the notice of deficiency, respondent disallowed the
losses and credits claimed by petitioners on their 1983 and 1984
returns, determining that Series 162 was not an activity engaged
in for profit and was devoid of economic substance.
In general, a transaction is effective for income tax
purposes only if its economic substance is consonant with its
intended tax effects. Frank Lyon Co. v. United States, 435 U.S.
561, 573 (1978); Knetsch v. United States, 364 U.S. 361, 365-366
(1960); Goldstein v. Commissioner, 364 F.2d 734 (2d Cir. 1966),
affg. 44 T.C. 284 (1965). In evaluating whether a transaction
possesses economic substance, the Court looks to objective
factors that indicate whether the taxpayer acquired an equity
interest in the property, and whether the taxpayer had a
realistic potential for profit. Levy v. Commissioner, 91 T.C.
838, 856 (1988); Cherin v. Commissioner, 89 T.C. 986, 993 (1987);
Packard v. Commissioner, 85 T.C. 397, 417 (1985).
The Court applied these objective factors in Barrister
Equipment Associates Series #115 v. Commissioner, T.C. Memo.
1994-205, the test case in this Court for the litigation project
involving the Barrister partnerships. In that case, this Court
held that the transactions involving Barrister partnerships
Series 115 (Series 115) lacked economic substance and were shams.
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