- 512 -
As the Court has noted in its previous opinions in this
area, the residual value of computer equipment at any given point
in time depends in part on the rate of introduction of new,
technically advanced equipment models. See Estate of Thomas v.
Commissioner, 84 T.C. at 426. Based on all of the facts and
circumstances involved, IRA's transactions resulted in net out-
of-pocket losses. Thus, the transactions lacked economic
substance because they contained no reasonable possibility of
profit exclusive of tax benefits.
No valid business purpose was served by the leasing
transactions. Kanter did not know whether any of the leasing
deals made a profit.
No evidence was presented as to succeeding leases, payments
made by IRA on the long-term notes, or payments received by IRA
from the lessees or the sale of the equipment. No corroborating
financial records to support the substance of the transactions
were provided. No witnesses testified with respect to any
business purpose. Schott did not know about the transactions
other than recognizing her signature. Freeman and Meyers, other
individuals prominently connected to IRA, did not testify.
Gallenberger, who was also associated with IRA and testified on
various aspects of the Kanter business dealings, did not testify
with respect to the Dard, Lexet, and Ben Energy transactions.
Page: Previous 502 503 504 505 506 507 508 509 510 511 512 513 514 515 516 517 518 519 520 521 NextLast modified: May 25, 2011