- 15 -
will control." Thornock v. Commissioner, 94 T.C. 439, 449
(1990).
In the instant case, evidence of a sufficient number of the
foregoing elements is present to lead us to conclude that
petitioner is not at risk. All of the long-term monthly
obligations of the parties to the transaction are nearly exactly
offset by payments from another party to the transaction.9 The
GCC Lease, the Buyer Acquisition Note, and Elmco's purchase note
all commence on the same date and all terminate on the same date.
It is highly unlikely, due to the circular nature of the
transaction, that any one of the parties to the transaction would
refuse to meet its obligations. As stated in American Principals
Leasing Corp. v. United States, 904 F.2d 477, 483 (9th Cir.
1990), "if one party failed to 'pay', he could only expect a
chain reaction resulting in his obligor's ceasing 'payment' as
well."
Of course, the parties to the transaction in the instant
case have no intention of fulfilling their payment obligations
with a circular stream of physical transfers. Rather, the
Depository Agreement provides a convenient, book-entry mechanism
9 The only exception, a minor one not favorable to petitioner,
is that GCC's rental payments over the last 72 months of the
lease ($11,792.70 per month) exceeded petitioner's obligations
($11,716.70 per month over the last 72 months) under the Buyer
Acquisition Note.
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