- 4 - essentially offsetting nature of the various lease and note payments, resulted in a protection against loss for the limited partners under section 465(b)(4). Id. at 450-452. The Court held that the limited partners in the partnership there involved, Tiger Lily, had no real economic liability on the partnership debt, and hence were not "at risk" with regard to the partnership notes. Therefore, the taxpayers were not entitled to flow- through deductions on their income tax returns for those years. Id. at 450. Both Opal Leasing and Tiger Lily were 2 of approximately 160 partnerships included in the so-called EMC Equipment Leasing Project. The Commissioner contends that the financial structure of the transaction in Opal Leasing is factually indistinguishable from the financial structure of the transactions in Thornock for purposes of section 465(b)(4). Subsequent to the decision in Thornock, this Court decided another case involving equipment leasing, Waters v. Commissioner, T.C. Memo. 1991-462, affd. 978 F.2d 1310 (2d Cir. 1992). Waters concerned taxpayers who invested in partnerships the financial structures of which were similar to those in Thornock, in that the partnerships used nonrecourse financing, guarantees, and the offsetting of lease and note payments. This Court held that the taxpayers in Waters were not "at risk" within the meaning of section 465(b)(4) with respect to their investment in the equipment leasing transaction. The Second Circuit affirmed, holding that the result was required, as in Thornock, by thePage: Previous 1 2 3 4 5 6 7 8 9 10 Next
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