- 531 -
into the transaction solely for tax purposes and that the real
parties at interest were A.G. and the taxpayer. Since A.G.'s
rent always equaled or exceeded the monthly payments on the long-
term note, any claim by A.G. on the note would be fully offset by
the investors' claim against A.G. for unpaid rent. Therefore,
the taxpayer was effectively protected from ever having to make
any payments on its debt obligation. Accordingly, we held that
the note did not represent genuine indebtedness or represented
that the debtor was not at risk. See id.; see also Levien v.
Commissioner, 103 T.C. 120, 126 (1994) (circularity of payments
means the debtor is not at risk), affd. 77 F.3d 497 (11th Cir.
1996).
Some of IRA's long-term notes contain several of the same
features which this Court found objectionable in Bussing. These
features were a deferral of the debt in the event of nonpayment
of rent, a debt obligation effectively canceled by an offsetting
liability for rent because of the limited recourse nature of the
note, and creditors whose presence served no valid purpose and
who had no demonstrable intention of enforcing the debt
obligation. The real parties to the debt transactions here are
IRA and FSC/FSAM and not Horizon, Pluto, or Knight. IRA's notes
are invalid in form as well as in substance.
In HGA Cinema Trust v. Commissioner, T.C. Memo. 1989-370,
this Court rejected the validity of indebtedness used to finance
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