- 543 -
bona fide indebtedness. The note was clearly tied to a
sale/leaseback tax shelter transaction. No records were
introduced to establish that principal or interest payments were
made at any time, or that the principal had not been prepaid
directly or through the "Event of Default" under the lease, nor
was any testimony provided by either of the parties to the note
(TG or Solutions). There is no evidence that the note had any
value at the time of the transfer to Decision Holdings.
IRA also failed to present any evidence to support the
legitimacy of the lease agreement, such as records establishing
that lease payments were being made, or had ever been made, nor
was any evidence introduced regarding the underlying computer
equipment and end users, including any documents to establish
that the equipment had any value at all at the time of the
transfer to Decision Holdings.
There is no evidence that Autochthon ever made any payments
in connection with the liabilities it purportedly assumed in
connection with the sale and assignment entered into with
Decision Holdings or received any payments in connection with the
installment promissory note transferred to it.
In our opinion, Kanter simply activated a shelf corporation
(Decision Holdings) for the limited purpose of utilizing the tax-
free exchange rules set forth in section 351 and facilitating
related transfers. No evidence was presented that Decision
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