- 15 -
for purposes of section 465(b)(2). Melvin v. Commissioner, 88
T.C. 63, 73 (1987), affd. 894 F.2d 1072 (9th Cir. 1990). Thus,
we cannot simultaneously propose a rule that the deferral of debt
obligations into the future represents per se an “other similar
arrangement” for section 465(b)(4). The presence of deferral
provisions, however, is another factor to be considered in
deciding whether a taxpayer is protected against loss. See
Santulli v. Commissioner, T.C. Memo. 1995-458.
The instant transaction is similar to the equipment leasing
transaction in Hayes v. Commissioner, T.C. Memo. 1995-151. Hayes
involved sale-leaseback transactions by and between the Hambrose
Leasing-5 Partnership, Charterhouse, and Hambrose Reserve. As in
the instant case, Hayes involved circularity of payments and that
partnership's deferral provisions. Applying the realistic
probability test in Hayes, we held that the taxpayers were not at
risk under section 465(b)(4). We stated the following:
Moreover, there were co-extensive provisions for
delaying the rental payments and the payment of the
purchase price installments for the years 1987 through
1990. Furthermore, the responsibility of M & J, as the
general partner of Charterhouse, for the rent payments
provided an important assurance that the rents, which
would be the source of the payments by the partnership
to Hambrose Reserve, would be paid. Id.
The ultimate decision whether the taxpayer is protected
against loss “rests upon the substance of the transactions in
light of all the facts and circumstances.” Wag-A-Bag, Inc. v.
Commissioner, T.C. Memo. 1992-581.
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