- 525 -
Under the IRA/Horizon leasing transaction, the total cash
investment of IRA was less than the rent to be received
therefrom. The loss was $65,940.21. There was no evidence of
residual value or useful life presented. No business purpose was
set forth. The transaction lacked economic substance. The long-
term debt was not valid. Once again an intermediary was used for
no good reason. The transaction was a sham.
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.
E. IRA-1980 Foreign/Domestic Transaction (Alfred Teves
Transaction)
This transaction involved a purported purchase agreement
between Funding International and Funding Systems International
GmbH, pursuant to which Funding International purchased the
equipment for $931,321. It is unclear what property was being
sold because duplicate schedules of certain equipment contained
two addresses. Thereafter, Funding International purportedly
sold the property to Horizon. The purchase price in that
agreement was $4,276,701 and included additional equipment
located in Belgium. Thereafter, Horizon and IRA entered into an
agreement for sale of the property to IRA on which the payments
were identical to the amounts payable under the Funding/Horizon
agreement. The payments were circular.
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