- 17 -
which taxpayers invested] note to Softpro [in Elmco's
position] is contingent upon Finalco [in GCC's
position] discharging its obligations to June Partners.
We believe, however, that the Baldwins [in petitioner's
position] nevertheless fall within subsection
465(b)(4). [Id. at 483.]
We reject petitioners' attempt to make the same argument in
the instant case.
Petitioners' argument that Elmco would choose to enforce the
Buyer Acquisition Note is not supported by the record. Although
the instant case is fully stipulated, petitioners still bear the
burden of proof. See Rule 142(a). They, however, have adduced
no evidence that Elmco would enforce the Buyer Acquisition Note
if GCC defaults on the lease. In short, we find that petitioners
fail to meet their evidentiary burden of proving that Elmco would
enforce the Buyer Acquisition Note.
The broad indemnity agreement in the GCC Lease provides
further protection from loss to petitioner. The protection
provided by the broadly scripted indemnity clause can easily be
read to encompass losses incurred by petitioners as a result of
Elmco's enforcement of the Buyer Acquisition Note. On prior
occasions, e.g., Estate of Bradley v. Commissioner, T.C. Memo.
1997-341 and Wag-A-Bag, Inc. v. Commissioner, T.C. Memo. 1992-
581, we considered indemnity provisions similar to the one in
issue in the instant case. In Estate of Bradley, we concluded
that the indemnity clause constituted a "firewall" which would
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