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In an attempt to distinguish the instant case from Thornock
v. Commissioner, supra, and other similarly decided cases,
petitioner emphasizes the recourse nature, under New York law, of
the underlying third-party secured loan of MHLC. Petitioner
describes various scenarios under which petitioner alleges that
there would exist a realistic possibility that petitioner
ultimately would be required to make actual payments on the
partnership loan if MHLC, the third-party creditor, pursued
collection from F/S Computer, F.S. Venture, or from Petunia.
Petitioner argues that, primarily because of the recourse nature
of the Alanthus promissory note to MHLC, petitioner was not
insulated from liability on Petunia’s debt obligations.
Petitioner further argues that section 465(b)(4) should not apply
to rent guaranties.
We disagree with each of petitioner’s arguments. Analyzing
the substance of the equipment leasing transaction before us, we
conclude that petitioner and the other limited partners of
Petunia are not to be treated as at risk under section 465 with
respect to the debt obligations of Petunia. The limited partners
of Petunia were protected from any realistic possibility of
economic loss on this transaction.
5 (...continued)
collateral are applied to the outstanding debt], and,
unless otherwise agreed, the debtor is liable for any
deficiency. * * *
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