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tightly controlled arrangements made between petitioner and
Twenty-First. The scenario was to "capture" a foreign tax credit
by timed acquisition and sale of ADR's over a 5-day period in
which petitioner bought ADR's cum dividend from Gallagher and
resold them ex dividend to Gallagher. Petitioner was acquiring a
foreign tax credit, not substantive ownership of Royal Dutch
ADR's. See Friendship Dairies, Inc. v. Commissioner, supra at
1067.
Petitioner argues that there were risks associated with the
ADR transaction, but neither Tempesta nor any other
representative of petitioner conducted an analysis or
investigation regarding these alleged concerns. Transactions
that involve no market risks are not economically substantial
transactions; they are mere tax artifices. See Yosha v.
Commissioner, 861 F.2d 494, 500-501 (7th Cir. 1988), affg. Glass
v. Commissioner, 87 T.C. 1087 (1986). Tax-motivated trading
patterns generally indicate a lack of economic substance. See
Sheldon v. Commissioner, 94 T.C. 738, 766, 769 (1990). The
purchase and resale prices were predetermined by Leo, and the
executing floor brokers did not have authority to deviate from
the predetermined prices even if a price change occurred. In
addition, the ADR transaction was divided into 23 corresponding
purchase and resale cross-trades that were executed in
succession, almost simultaneously, and within an hour on the
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