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leases of such equipment and may indicate that
the anticipated residual value will not be
realized. In this regard, we have assumed that,
as set forth in the Subscription Agreement, each
of the Unitholders is investing in the Trust with
a reasonable expectation of making a profit from
his investment. For purposes of the analysis
that follows, we have assumed that the Appraisal
is reasonable given all the facts and circum-
stances. [Emphasis added.]
The fact that "the current fair market value of the
Equipment is at least equal to the purchase price to be
paid by the Trust" is essential to Austrian, Lance &
Stewart's "understanding" concerning the reasonableness
of earning an "economic profit" from the transaction as
set out in the Tax Opinion as follows: "It is our under-
standing that: * * * (ii) the Unitholders can reasonably
expect to earn an economic profit from the Transaction
based upon the Appraisal and the anticipated cash flow
during and after the terms of the Lease". This fact is
also essential to Austrian, Lance & Stewart's conclusion
that the amount of the Trust Note will be included in the
unitholders' basis in the equipment, expressed in the Tax
Opinion in the following passage:
Based upon our review of the proposed
documents set forth above and our reliance upon
the Appraisal indicating the fact that the
Equipment will be sold by Seller for an amount
not in excess of its then fair market value, we
do not believe that there is a reasonable basis
for concluding that the Service could success-
fully apply the principles of Marcus, May or the
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