- 21 -
Petitioner's scenarios are so remote and theoretical as to be
commercially unrealistic and improbable. See Casebeer v.
Commissioner, 909 F.2d 1360, 1369 (9th Cir. 1990), affg. in part,
revg. and remanding in part Larsen v. Commissioner, 89 T.C. 1229
(1987); American Principals Leasing Corp. v. United States, 904
F.2d 477, 483 (9th Cir. 1990); Waters v. Commissioner, T.C. Memo.
1991-462, affd. 978 F.2d 1310 (2d Cir. 1992).
Finally, we do not agree with the argument petitioner makes
that section 465(b)(4) should be restricted only to loss
protection guaranties that relate directly to the particular debt
obligations for which a taxpayer claims to be at risk. The total
integrated transaction and all of its associated guaranties,
commitments, and setoff provisions are to be taken together.
FSC’s guaranties constituted an integral part of the loss-
limiting arrangement that insulated Petunia and its limited
partners from any realistic risk of loss associated with this
transaction. FSC’s obligations under the Guaranty Agreement
should not be disregarded. See Thornock v. Commissioner, supra
at 451.
Due to the offsetting nature of the lease and note payments,
the presence of the Guaranty, Commitment and Side Agreements, the
presence of the suspension and setoff provisions, and the
relationships of the parties involved in the transaction, we
conclude that Petunia participated in a loss-limiting arrangement
under section 465(b)(4) and that no realistic possibility existed
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