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taxpayer was taxable upon interest income generated by
participation in FTI A/C transactions. There we concluded that
the transactions giving rise to the indebtedness possessed
economic substance and were separable from those aspects of the
program that lacked economic substance. We cited Lieber and
Jacobson v. Commissioner, supra, as well as the other pertinent
authorities, in holding that the evidence of record, as developed
in Alessandra, demonstrated that "Each of the transactions
* * * had distinct economic utility other than any anticipated
tax benefits". Allesandra v. Commissioner, supra. We
distinguished the situation in Seykota II, where "the disallowed
interest deductions were the tax benefit to be obtained". Id.
An appeal in these cases would be to the Court of Appeals
for the Second Circuit. The Court of Appeals for the Second
Circuit explained, in Jacobson, that the deductibility of
interest in sham situations is limited to "economically
substantive indebtedness." Jacobson v. Commissioner, 915 F.2d at
840. Neither Jacobson nor Lieber (which relied on Jacobson)
suggests that interest is deductible where--
There is no debt obligation that can be separated from
the underlying * * * scheme or that was undertaken for
some reason other than the tax benefits of deducting
interest on that obligations itself. * * * [United
States v. Wexler, supra at 125-126.]
The Second Circuit's earlier opinion in Goldstein stated:
We here decide that Section 163(a) does not "intend"
that taxpayers should be permitted deductions for
interest paid on debts that were entered into solely in
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