- 10 -
stop loss agreements, or other similar arrangements. See sec.
465(b)(4).
Petitioners contend that we should analyze the facts of the
instant case under the "worst case scenario" test articulated in
Emershaw v. Commissioner, 949 F.2d 841 (6th Cir. 1991), affg.
T.C. Memo. 1990-246, rather than the "economic reality" test used
by this Court and the vast majority of circuit courts that have
considered the issue. See Levien v. Commissioner, 103 T.C. 120,
126-129 (1994), affd. without published opinion 77 F.3d 497 (11th
Cir. 1996). To date, the Court of Appeals for the Third Circuit,
the venue for any appeal of the instant case, has yet to adopt
either test.8 Petitioners contend, however, that, based upon
Nicholson v. Commissioner, 60 F.3d 1020 (3d Cir. 1995), revg.
T.C. Memo. 1994-280, this Court should analyze the instant case
under the "worst case scenario" standard. We disagree.
Nicholson involved an appeal of this Court's refusal to
award a taxpayer attorney's fees under section 7430. See
Nicholson, supra at 1024. The Commissioner initially contended
that the taxpayer was not at risk with respect to a long-term
note used to finance a computer purchase and leaseback
transaction. See id. at 1023. In particular, the Commissioner
argued that the form of the taxpayer's transaction constituted a
8 See Golsen v. Commissioner, 54 T.C. 742 (1970), affd. 445
F.2d 985 (10th Cir. 1971).
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011