- 13 -
remit the excess to the lessee. Conversely, if the "depreciated
value" of the car exceeded its actual wholesale value, the lessee
would pay the difference to the lessor. We held that the
agreement in question was a lease, noting that the depreciated
value was calculated on the basis of expected depreciation of the
vehicle over the course of the lease. See id. at 569, 570. We
explained that "the inclusion of a contract provision that shifts
the depreciable loss to the extent of wholesale value away from
the taxpayer in an attempt to minimize business risks does not
control for purposes of determining whether the agreement is a
lease or conditional sales contract." Id. at 569. We further
stated that "this is not a case in which the total rental
payments paid all but a nominal amount of the cost of the leased
property." Id. at 572.
After our decision in Swift Dodge v. Commissioner, supra,
Congress enacted the Tax Equity and Fiscal Responsibility Act of
1982 (TEFRA), Pub. L. 97-248, 96 Stat. 324. TEFRA section 210,
96 Stat. 447, precluded the Commissioner from considering TRAC
provisions in determining whether an agreement was a lease until
a statute is enacted or regulations are issued. See Leslie
Leasing Co. v. Commissioner, 80 T.C. 411 (1983). After the
enactment of TEFRA, the Court of Appeals for the Ninth Circuit
reversed our decision in Swift Dodge v. Commissioner, 692 F.2d at
651. The Court of Appeals held that the agreement in question
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