Ronald and Barbara Kimmich - Page 15




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          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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