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On May 26, 1995, respondent timely issued two affected item
statutory notices of deficiency to petitioners in which
respondent disallowed the claimed deductions with respect to the
partnership.2
This case involves two sale-leaseback transactions among the
following entities: the partnership, which engaged in the
equipment leasing business; Charterhouse Leasing Associates
Limited Partnership (Charterhouse); Hambrose Reserve Ltd.
(Hambrose); M&J Holding Corp. (M&J), the sole shareholder of
Hambrose and the general partner of Charterhouse; CIS Leasing
Corp. (CIS); and Comdisco, Inc. (Comdisco).
The Sale-Leaseback Transactions
The partnership's leasing transaction involves the sale and
leaseback of various computer equipment that it purchased in 1985
from Hambrose. Hambrose initially purchased the equipment from
Charterhouse. Charterhouse purchased the equipment from CIS and
Comdisco, the original purchasers of the equipment. CIS and
Comdisco purchased the equipment with financing provided by
various third-party lenders and subsequently leased the equipment
2 Although the parties stipulated to the timely filing of
the notices, petitioners seem to argue that it is unfair that
notice was not given sooner. However, it is clear that
respondent complied with the statute and that the notices were
timely under sec. 6229(a) and (d) because (1) there was a Final
Partnership Administrative Adjustment (FPAA) issued to the
partnership, (2) a proceeding was instituted in this Court based
on that FPAA, (3) that proceeding was decided on Aug. 3, 1994,
and became final on Nov. 1, 1994, and (4) the notices of
deficiency were mailed within 1 year thereafter on May 26, 1995.
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