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D. IRA-1980 Domestic Transaction ("Mini Computer Transaction")
On December 31, 1980, a bill of sale was executed by the
FSAM partnership in which Kanter was involved, to F/S Computer
Corp. (FS) for certain equipment. On December 31, 1980, FS sold
the equipment to Horizon for $870,025, payable with a cashier's
check for $5,700 and a full recourse promissory note by Horizon
in the amount of $864,325. The recourse promissory note included
a deferral provision allowing the payor to defer payment of
principal and interest on the note, if any amount of principal or
interest becoming due to Horizon under the limited recourse
installment promissory note of even date issued by IRA to Horizon
was not paid. Under this provision, deferral could continue
until December 31, 1995. The amount deferred would not accrue
interest. Horizon then sold the equipment to IRA, and IRA then
leased the equipment to FS. As part of the purported sale of the
equipment to IRA, IRA executed in favor of Horizon a limited
recourse promissory note. The sale to IRA by Horizon was on
December 31, 1980, and was for $872,025. The sale was subject to
all underlying leases.
In a letter of direction from IRA, FS agreed to deduct from
the rent FS owed to IRA, under the leasing agreement, an amount
equal to the monthly payments owed by IRA to Horizon under the
note from IRA. The amounts for these payments were equal.
Accordingly, the payments on the notes were bookkeeping entries.
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