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floor of the NYSE. Thus, there was virtually no risk of price
fluctuation. Special next-day settlement terms and large blocks
of ADR's were also used to minimize the risk of third parties
breaking up the cross-trades, and, because the cross-trades were
at the market price, there was no risk of other traders breaking
up the trades. None of the outgoing cash-flow resulted from
risks. Accordingly, we have found that this transaction was
deliberately predetermined and designed by petitioner and Twenty-
First to yield a specific result and to eliminate all market
risks.
To satisfy the business purpose requirement of the economic
substance inquiry, “the transaction must be rationally related to
a useful nontax purpose that is plausible in light of the
taxpayer's conduct and * * * economic situation.” AMC
Partnership v. Commissioner, T.C. Memo. 1997-115, affd. in part,
revd. in part, and remanded 157 F.3d 231 (3d Cir. 1998); see also
Levy v. Commissioner, supra at 854. This inquiry takes into
account whether the taxpayer conducts itself in a realistic and
legitimate business fashion, thoroughly considering and analyzing
the ramifications of a questionable transaction, before
proceeding with the transaction. See UPS of Am. v. Commissioner,
T.C. Memo. 1999-268.
Petitioner contends that it entered into the ADR transaction
as a short-term investment to make a profit apart from tax
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