William and Arlene G. Kingston - Page 24

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            stipulation and the stipulated documents as well as in the POM.                           
            The Court of Appeals for the Sixth Circuit has observed that such                         
            a structure:                                                                              
                  minimizes the need for a large initial cash outlay by any of                        
                  the * * * partners.  It does not minimize the risk that "the                        
                  taxpayer will suffer any out-of-pocket loss if the                                  
                  transaction is unsuccessful."  * * *  The circle of                                 
                  offsetting obligations does nothing to affect this risk, let                        
                  alone eliminate it, realistically, probably, or otherwise.                          
                  * * *  [Emershaw v. Commissioner, 949 F.2d 841, 850 (6th                            
                  Cir. 1991); affg. T.C. Memo. 1990-246.]                                             
                  Finally, respondent argues that the various provisions for                          
            indemnification contained in the Purchase Agreement and the                               
            Additional Equipment Wrap Lease protected petitioner from loss                            
            under section 465(b)(4).  Upon analyzing an indemnification                               
            provision in a purchase agreement that parallels that of the                              
            Purchase Agreement in the instant case, the Court of Appeals held                         
            that such an indemnification clause did not protect the                                   
            petitioner from loss within the meaning of section 465(b)(4).                             
            Martuccio v. Commissioner, 30 F.3d 743, 751 (6th Cir. 1994),                              
            revg. T.C. Memo. 1992-311.                                                                
                  The sale-leaseback transactions in issue in Emershaw v.                             
            Commissioner, supra, and Martuccio v. Commissioner, supra, are                            
            indistinguishable from the transaction in issue in the instant                            
            case.  In Emershaw v. Commissioner, supra, CIS purchased certain                          
            computer equipment, financing the purchase with nonrecourse bank                          
            loans, and leased the equipment to end-users.  CIS then sold the                          
            equipment to Program Leasing Corporation (Program), which gave a                          




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