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have stopped the spread of losses with the effect of protecting
the taxpayer against loss. In Wag-A-Bag, we concluded that the
indemnity clause constituted a collateral agreement sufficient to
satisfy even the worst case scenario test articulated in Emershaw
v. Commissioner, 949 F.2d 841 (6th Cir. 1991), affg. T.C. Memo.
1990-246. We see no reason to view the indemnity clause in issue
in the instant case any differently.
We conclude that the circularity of payments, the book-entry
payment mechanism, and the indemnity clause in the GCC lease,
when taken together, effectively immunize petitioner from any
realistic possibility of suffering an economic loss. We hold
that petitioner is, therefore, not at risk under section 465 and
is not entitled to the deductions in question.
With respect to increased interest under section 6621,
petitioners present no argument as to why the provision should
not apply, other than contending that petitioner is at risk and,
therefore, not liable for increased interest pursuant to section
6621. Because we have held that petitioner is not at risk, we
also hold that the instant transaction is tax-motivated for the
purpose of petitioners' liability for increased interest under
section 6621. See sec. 6621(c)(3)(A)(ii). We have considered
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