- 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 wouldPage: 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