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Trust. For example, the Investment Memorandum states as
follows:
The Trustee has received an appraisal that
the fair market value of the Equipment as of
December 14, 1982, is $5,170,392.00, which
exceeds the amount of the Trust Note. The debt
will be includible in the basis of each Unit-
holder to the extent of his liability therefor,
but if the IRS should determine that the fair
market value of the Equipment is less than its
purchase price, the basis of the Unitholders in
the Equipment would not include any part of the
Trust Note. The Unitholders' anticipated tax
losses would be reduced almost entirely or
totally eliminated.
The Tax Opinion concludes that it is more
likely than not that the Trust Note will be
includible in the Unitholders' basis in the
Equipment, but that opinion is based upon the
opinion expressed in the Appraisal that the fair
market value of the Equipment exceeds the amount
of the Trust Note.
Similarly, the Investment Memorandum states as follows:
"The appraisal indicates that the fair market value of the
Equipment as of December 14, 1982, exceeds the face amount
of the Trust Note but there can be no assurance that such
valuation will not be challenged by the IRS. * * *"
The Investment Memorandum also warns that investors
must be able to demonstrate that the fair market value of
the computer equipment is at least equal to the purchase
price, because, otherwise, "the IRS could disallow all of
the deductions expected to be available to him, including
depreciation and interest on the Trust Note, on the theory
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