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interest is relevant both to determining the true substance of
the transaction and to determining whether petitioner was "at
risk" for purposes of section 465(b)(4).
We must first address the question of the economic substance
of the transaction. In support of her contention that the
economic substance of the transaction is in dispute, respondent
directs our attention to the fact that the remarketing agreement
provided for the sharing of profits between SPELI and petitioner
after the principal and interest payments have been made.
Respondent also points out that the remarketing and the
assignment agreements gave SPELI the ability to control CATCO's
possession and custody of the aircraft. Respondent finally
asserts that petitioner has failed to explain: (1) Why a
reasonable, prudent taxpayer would purchase with borrowed funds
$26,400,000 in revenue-producing assets, the aircraft, for which
the taxpayer is obligated to begin principal and interest
payments in approximately 2 years yet agree to realize only
$1,000 over the same period from a lease-back agreement; and (2)
why the settlement agreement between SPELI, CAC, and CATCO
permitted CATCO to retain $500,000 of the proceeds from the Emery
settlement even though CATCO was allegedly in default.
Upon examination of the pleadings, petitioner's motion for
partial summary judgment and the affidavits attached thereto, and
respondent's response and the affidavits attached thereto, we
believe there are genuine issues of material fact critical to the
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