- 37 -
that the Trust and the Unitholders do not have a deprecia-
ble interest in the Equipment and that the indebtedness has
no economic significance." Notwithstanding the importance
of this issue, however, the Investment Memorandum relies
solely on the Appraisal to establish the fair market value
of the equipment, despite the obvious errors in the
Appraisal and the discrepancies between the Appraisal and
the Projections.
Finally, the Investment Memorandum relies upon the
Appraisal to establish the "useful life" of the equipment,
as follows:
Further, the Appraisal indicates that the
Equipment will have a residual value sufficient
for the Unitholders to realize a profit and that
the Equipment will have a useful life in excess
of the terms of the [Master] Leases.
The Investment Memorandum notes that the useful life of the
equipment is especially important because "the 96 month
term of the [Master] Leases may be challenged by the IRS as
being for a term which is substantially all of the useful
life of the Equipment." Nevertheless, as discussed above,
the Appraisal merely states that the computer equipment
"should have an economic life of not less than 12 years"
and fails to define the term "economic life".
Page: Previous 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 NextLast modified: May 25, 2011