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the outstanding amount of the note or the lesser of zero.
Section 10 also sets out IRA's "Nonrecourse Obligations".
Everything in excess of the recourse obligations--here the entire
amount of the loan--was nonrecourse, and with respect to which
amount "the payee shall look solely and only to the Collateral
for the payment and performance."
These long-term "limited recourse" promissory notes contain
provisions similar to those present in the other transactions,
i.e., restrictions were imposed on the transfer of the equipment,
and the interest of Cedilla Invest. in the equipment was
subordinated to the interests of the underlying lessees.
Accordingly, and as with the other transactions, IRA did not have
the true benefits and burdens of an owner of the equipment for
Federal tax purposes. IRA failed in its burden of proving that
any amounts representing the purchase price were actually paid
over, that legal title to the equipment never passed to IRA, that
the underlying equipment really existed or was placed in service,
and that any of the transactions were even consummated. Based on
the totality of the evidence presented, all IRA established, with
any certainty, is that it had a corporate representative execute
some (minimal) transactional documents which provided a claim for
substantial tax benefits.
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