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into the contracts. Title passed to the RSC only if a third
party did not purchase the residence within that year. Thus, the
RSC did obtain the present right to acquire title to the
residences. We find that the parties treated the transactions as
resulting in possible future sales of the residences to the RSC
and not as completed, present sales.
The contracts of sale did not require the RSC to pay the
full purchase price of the residences. Under the terms of the
contracts of sale, the purchase price of a residence was its
appraised value. The RSC was not obligated to pay the full
purchase price and only paid the employees their equity in the
residences, which was defined as the appraised value less unpaid
mortgages, real property taxes, and other expenses associated
with the residences. Neither petitioner nor the RSC assumed
personal liability for the mortgages on the residences. Rather,
the RSC agreed to make mortgage payments and pay other costs of
ownership from the vacate date until a third-party sale occurred.
Petitioner reimbursed the RSC for these costs.
Respondent contends that the equity payments were sufficient
to give petitioner an equity interest in the residences. We
disagree. The equity payment did not give petitioner the
opportunity to benefit as the owner of the residences through
appreciation in the residences' value. Relocating employees
received the appreciation in the residences' value realized from
the third-party sales. Generally, the RSC paid the employees
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