- 524 -
In view of the foregoing, all deductions and credits
associated with this transaction and claimed by IRA on its
Federal income tax returns are disallowed.
D. IRA-1980 Domestic Transaction (Mini Computer Transaction)
This transaction involved a purported sale of miscellaneous
equipment by FSAM to F/S, an entity affiliated with FSC, to
Horizon, and then from Horizon to IRA. Payment of $870,025 by
IRA was made primarily with a limited recourse promissory note in
the amount of $864,325. The amounts for the payments from IRA to
Horizon were equal to the amounts of the payments owed under the
lease agreement. An agreement was reached between IRA, FSAM, and
Horizon that these payments were to offset each other, so only
bookkeeping entries were made.
The interests of IRA in and to the computer equipment were
subject to the interests of prior lienholders and the underlying
lessee. The leases were assigned to IRA through the use of a
collateral assignment by F/S. The promissory note included a
deferral provision allowing IRA to defer payments on the note,
until December 31, 1995, without any interest accruing on the
deferred amount if, and to the extent, amounts of rent were not
paid to IRA. The equipment could be replaced. The recourse
obligation under those provisions in the note provided that
Horizon had recourse against IRA as of January 1, 1989, in the
amount of zero dollars.
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