- 14 -
The experts who testified at the first trial on behalf
of each of the parties valued the contingent rents and
residual value of the equipment at the end of the master
leases as follows:
Lyons Lyons
Minimum Maximum Blumenthal
Contingent rent $659,363 $925,877 $417,179
Residual value 8,135 470,074 10,000
Total 667,498 1,395,951 427,179
We adopted the view of respondent's expert, Mr. S. Paul
Blumenthal, that $427,179 was the maximum amount that would
be recouped by the unitholders. Accordingly, we found that
they could not recoup their cash payment of $954,000 and,
thus, could not realize an economic profit. This analysis
is similar to that applied in other court cases. See
Rice's Toyota World, Inc. v. Commissioner, 752 F.2d 89
(4th Cir. 1985); Estate of Strober v. Commissioner, T.C.
Memo. 1992-350; Mele v. Commissioner, T.C. Memo. 1988-409;
Dobbs v. Commissioner, T.C. Memo. 1987-361.
There are several aspects of the testimony of
petitioners' expert, Mr. Esmond C. Lyons, Jr., that should
be noted. First, the aggregate minimum economic benefit,
$667,498, and the aggregate maximum economic benefit,
$1,395,951, are both substantially less than the economic
benefit set forth in the Projections that accompanied the
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011