- 36 -
Here, the evidence of record and the parties' stipulation of
the following facts show a plan for the joint purchase by related
parties of partnership interests for the sole purpose of
obtaining favorable tax benefits.16 While the legal right of a
taxpayer to decrease the amount of what otherwise would be his
taxes or altogether avoid them by means which the law permits
cannot be doubted, Gregory v. Helvering, 293 U.S. 465, 469
(1935), the Commissioner may disregard transactions which are
designed to manipulate the tax laws so as to create artificial
tax deductions, Northern Ind. Pub. Serv. Co. v. Commissioner, 115
F.3d 506, 512 (7th Cir. 1997) (citing Knetsch v. United States,
364 U.S. 361 (1960), as authority for that proposition), affg.
105 T.C. 341 (1995).
In 1986, Robert A. Page produced an 11-page letter, calling
it his "epistle", in which he described what he believed to be a
favorable device for extracting corporate assets without a
16Joint asset acquisitions give rise to tax planning tech-
niques because value shifts from the present interest holder to
the future interest holder without the latter's being taxed when
the remainder interest vests in possession.
For purposes of this opinion, we take at face value the
parties' stipulated submission of Joint Exhibit No. 181-FY, in
which Mr. Page asserts that participating in the joint asset
acquisitions creates tax benefits for the remaindermen by
"extract[ing] cash from * * * [CGF and Lincoln] at an approximate
14% tax rate." Respondent asserts that this multitiered trans-
action was designed to create tax benefits for the term interest
holders, too. More specifically, respondent emphasizes that, by
participating in the joint asset acquisitions, petitioners sought
to match amortization deductions against their income on U.S.
Government securities, which they now owned indirectly through
limited partnerships.
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