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Respondent disallowed all of Lincoln's amortization deductions in
connection with owning the Lincoln term interests.
Discussion
The issue we must decide is whether CGF and its subsidiaries
and Lincoln and its subsidiaries are entitled to amortize their
costs of acquiring term interests in partnerships. Petitioners
argue that they acquired expiring interests in property, and,
since their interests are wasting assets, that they are entitled
to recover their costs through amortization deductions. Peti-
tioners go on to argue that they and the Family Trusts (meaning
the CGF Family Trusts and the Lincoln Family Trusts collectively)
engaged in arm's-length transactions since petitioners acquired
only term interests in partnerships and based their purchase
prices on present value tables then contained in the Federal
regulations.
Respondent contends that petitioners and the Family Trusts
engaged in a tax scheme whose main purpose was to extract money
from the corporations without the incidence of taxation. Respon-
dent asserts that the transactions lacked business purpose and
economic substance since petitioners had no reasonable expecta-
tion of making a profit. Respondent argues further that, since
petitioners supplied a substantial portion of the money used to
acquire the remainder interests, the substance of the transac-
tions was the acquisition by petitioners of partnership interests
B in their entirety and a carving out of the remainders to the
Family Trusts. Thus, respondent concludes that petitioners have
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