- 518 -
brokering the transaction which suggests he wore two hats in the
deal.
In view of the sham nature of the transaction, all
deductions and credits associated with this transaction and
claimed by IRA/Cedilla Invest. on its Federal income tax returns
are disallowed.
B. Cedilla Invest. - 1977 Domestic Transaction (Master Lease
Transaction)
This transaction involved the purported purchase by Cedilla
Invest. of various pieces of computer equipment under a master
lease in November 1977. The lease term for each piece of
equipment subject thereto was 108 months. During the term of the
lease, the lessee was responsible for maintaining the equipment
and insuring it for risk of loss or damage. The lessee
maintained the right to sublet the equipment. The purchase was
subject to the interests of lessees (end users) and lienholders.
The purported purchases were paid by cash and the delivery
of "limited recourse" promissory notes. The amount of the
downpayment was 10 percent. All of the promissory notes for the
purchase of the various pieces of equipment were identical in
nature. The notes included a deferral provision which permitted,
in the event the lease was terminated early on account of
default, deferral of payment of the balance due on each of the
notes and any accrued interest until December 31, 1991. This
Page: Previous 508 509 510 511 512 513 514 515 516 517 518 519 520 521 522 523 524 525 526 527 NextLast modified: May 25, 2011