- 238 -
2. Sham Analysis
The Dixon II opinion reveals that Judge Goffe relied upon
evidence that was both qualitatively and quantitatively
substantial in support of the conclusion that the Kersting stock
transactions in dispute were shams. Although acknowledging that
some Kersting corporations engaged in businesses unrelated to the
disputed Kersting programs, Judge Goffe concluded that the
viability and activities of the various Kersting corporations
were not determinative of whether the specific Kersting
transactions in dispute were shams. See id. at 1485-1486, 1991
T.C.M. (RIA), at 91-3028; see also ACM Partnership v.
Commissioner, T.C. Memo. 1997-115, affd. on this issue 157 F.3d
231, 260 (3d Cir. 1998).
Judge Goffe reviewed the relevant testimony and particular
circumstances of each test case petitioner and concluded that the
presence of several factors common to all of them invariably
required the finding that petitioners had no subjective business
purpose for engaging in the Kersting programs other than tax
avoidance. In particular, Judge Goffe found that the test case
petitioners entered into the Kersting programs without specific
knowledge about the Kersting corporations involved, the
industries in which they operated, and the impact of prevailing
economic conditions on their investment decisions, and without
obtaining the assistance of an independent adviser. Judge Goffe
further found that the test case petitioners entered into the
Kersting programs without regard to whether the purchase price
Page: Previous 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 NextLast modified: May 25, 2011