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this Court said little weight should be placed on the speculative
possibility that property will have substantial residual value.
All IRA produced here was unfounded speculation. No mention of a
specific piece of IBM equipment (or peripheral) is reflected in
the testimony of IRA's witnesses.
In Hilton, positive cash-flow was indicative of profit.
Otherwise, the taxpayer had no incentive to retain property
subject to substantial debt, producing no such cash-flow. It
would be prudent to abandon the property. Tax considerations
aside, if the cash-flow was negligible, as it was here, the total
projected return, if any, of IRA was too small for it to wait
until the time the leases expired. This is certain even if only
a minimal cash investment is made, and a long period of time (9
years) occurs before any property is available for profit. As in
Hilton, there was no motivation for IRA's participating in the
subject transactions, other than to obtain the tax benefits
designed to shelter the Prudential income. IRA had no business
purpose to wait 8 or 9 years to receive property at that time,
with no reasonable prospect of substantial value, e.g. an amount
in excess of its investment. This is supported by the fact that,
by 1987, IRA no longer retained much of the property purportedly
acquired as part of the sale and leaseback transactions. Its tax
shelter incentives had expired.
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