- 509 -
The expected return of an investor in equipment leasing
transactions is rent and residual value at the end of the lease
term with the lessee, here generally 108 months. In contrast to
Friendship Dairies, Inc., there were no tax spreadsheets,
appraisals, or accounting letters presented by IRA to support a
claim of expected residual value which could produce a profit.
The Court has not been provided with any projections of residual
value or useful life, which certainly would be present in an
objective economic analysis.
As in Friendship Dairies, there is no persuasive evidence of
any motivation for the transactions, other than obtaining tax
benefits. The benefits herein (enormous interest and
depreciation deductions and credits) were primarily designed to
"shelter" the money reported as income by IRA from Kanter's
Prudential scheme.
Kanter testified he did not make a specific economic
analysis of the transactions. He relied on Mallin, his friend
and the promoter/broker of the deals, without any independent
evidence that the deals had economic substance. Mallin's
credibility is obviously tainted based on his relationship to
Kanter and his affiliated entities. He was not an independent
outsider.
As in Friendship Dairies, the witnesses presented on behalf
of IRA in this case were obviously biased, and their testimony
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