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series of transactions that included the sale of an undivided
48-percent interest in the Atrium to ARICO for $17.1 million in
December 1988. Petitioner now challenges the form of that
transaction and claims that the substance of the transaction
constituted a financing arrangement. See infra sec. II.D.
Although the fact that a taxpayer retains a salable interest in a
common improvement is not dispositive of the analysis in the
developer line of cases, see, e.g., Willow Terrace Dev. Co. v.
Commissioner, 40 T.C. 689 (1963), the December 1988 transaction
strongly indicates that the Bank did not intend to recover its
investment in the Atrium through a sale of the adjoining
properties.
Lastly, we note that petitioner's reliance on the developer
line of cases is the sole reason that the basic purpose test was
applied in this case. Nothing in those cases precluded
petitioner from arguing that interests in the Atrium were
conveyed in conjunction with sales of its adjoining properties
and that an equitable allocation of the cost of the Atrium
Assets, pursuant to section 1.61-6(a), Income Tax Regs., should
be made to those interests to properly calculate gain or loss on
the conveyance of those interests. See, e.g., Fasken v.
Commissioner, 71 T.C. 650, 655-656 (1979) (when parts of a larger
property are sold, an equitable apportionment of basis among the
several parts is required for a proper calculation of gain,
section 1.61-6(a), Income Tax Regs., but that principle is not
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