Harry E. Peaden, Jr. - Page 12




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                         (B) the lessee shall not be treated as the                   
                    owner of the property subject to an agreement                     
                    during any period such agreement is in effect.                    
               Respondent does not contend that the master leases are not             
          "qualified motor vehicle operating agreements".9  Rather,                   
          respondent argues that the TRAC may be considered in deciding               
          whether the substance of the lease transactions is the purchase             
          of a truck.  We disagree.  "The plain meaning of legislation                
          should be conclusive, except in the 'rare cases [in which] the              
          literal application of a statute will produce a result                      
          demonstrably at odds with the intentions of its drafters.'"                 
          United States v. Ron Pair Enters., Inc., 489 U.S. 235, 242 (1989)           
          (quoting Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 571            
          (1982)).                                                                    
               Section 7701(h) was enacted after our decision in Swift                
          Dodge v. Commissioner, 76 T.C. 547 (1981), revd. 692 F.2d 651               
          (9th Cir. 1982).  In Swift Dodge, the taxpayer, a leasing                   
          company, entered into various lease transactions.  Under the                
          terms of each lease, part of the lessee's monthly payments was to           
          be applied to the cost of the vehicle ("capitalized cost")                  
          resulting in the "depreciated value".  The lease further provided           
          that, if at the end of the lease term the actual wholesale value            
          of the car exceeded its "depreciated value", the lessor would               


          9    See the statutory definition of "qualified motor vehicle               
          operating agreement" set forth supra note 3.                                




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