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Issue 23. Whether IRA is Entitled to a Claimed Loss on Form 4797
of $1,073,835 for 1988
FINDINGS OF FACT
IRA reported, on line 9 of its Federal income tax return,
Form 1120 for 1988, a net loss "from Form 4797" in the amount of
$1,073,835.59 No Form 4797 was attached to the original return
filed with respondent, nor was a copy of the form subsequently
presented to respondent or introduced into evidence at trial.
(...continued)
for 1986, 1987, 1988, and 1989 from its purported transfer of
certain computer equipment to HICIP Partners. On brief,
respondent acknowledges that the HICIP Partners' income
adjustments represent an alternative position respondent took in
the event the Court found in favor of IRA on the sale/leaseback
transactions. As IRA or Cedilla Invest. acquired no ownership
interest in the equipment for tax purposes, no gain or loss would
be realized by them for 1986 through 1989 from their later
"transfers" of some of the equipment to HICIP Partners.
Similarly, in view of our holding sustaining respondent's
determination that the purportedly recourse long-term notes IRA
or Cedilla Invest. issued in the leasing transactions were not
valid debts, the Court need not decide the issue of whether IRA
realized discharge of indebtedness income upon its and Cedilla
Invest.'s contribution of certain computer equipment to the
IRAUTO partnership. On brief, respondent acknowledges that the
discharge of indebtedness adjustment represented an alternative
position respondent took in the event the Court sustained IRA.
Because IRA and Cedilla Invest. issued no valid long-term
indebtedness in connection with the leasing transactions, no
discharge of indebtedness income attributable to such
"indebtedness" was realized by them on their contribution of the
equipment to the IRAUTO partnership.
59
Form 4797 is entitled "Sales of Business Property" and,
among other things, is the form used to report the sale or
exchange of property used in a trade or business, depreciable and
amortizable property, and the disposition of noncapital assets.
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