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31 T.C. 918 (1959); Estate of Durkin v. Commissioner, 99 T.C. 561
(1992), supplementing T.C. Memo. 1992-325; Illinois Power Co. v.
Commissioner, 87 T.C. 1417 (1986).
3. Analysis
a. Introduction
The terms of the various agreements that constitute the 1988
Atrium Transaction are unambiguous, and we so find. Indeed,
petitioner does not argue to the contrary. Rather, petitioner
contends that “[t]he issue in this case is the characterization,
for Federal income tax purposes, of a transaction that is cast in
form as a sale-leaseback, but in which the rights created are
those of a borrower and a lender.” This Court must determine as
a threshold matter, however, whether petitioner may disavow the
form of the 1988 Atrium Transaction.
b. The Danielson Rule Does Not Apply
In Commissioner v. Danielson, supra, the Court of Appeals
for the Third Circuit held that certain taxpayers were precluded
from challenging for tax purposes the terms of certain agreements
that made purchase price allocations to covenants not to compete.
The court enunciated the so-called Danielson rule:
a party can challenge the tax consequences of his
agreement as construed by the Commissioner only by
adducing proof which in an action between the parties
to the agreement would be admissible to alter that
construction or to show its unenforceability because of
mistake, undue influence, fraud, duress, etc. * * *
[Id. at 775.]
Even assuming, arguendo, that the Danielson rule applies in cases
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