River City Ranches #4 - Page 93

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          transaction was a sham, the parties disagree to some extent with            
          respect to the transactions' economic substance.  They disagree             
          over whether each partnership's stated purchase price                       
          approximated the then fair market value of the sheep.  They also            
          disagree over whether the purportedly recourse long-term notes              
          the partnerships issued were valid indebtedness.                            
               For a sale to have occurred for tax purposes, the benefits             
          and burdens of ownership must be transferred.  See Grodt & McKay            
          Realty, Inc. v. Commissioner, 77 T.C. 1221, 1237-1238 (1981).               
          This test is a practical one, and there are no hard and fast                
          rules.  Instead, the transaction must be viewed as a whole, in              
          light of realism and practicality.  See Commissioner v. Segall,             
          114 F.2d 706, 709-710 (6th Cir. 1940), revg. on other grounds 38            
          B.T.A. 43 (1938); Harmston v. Commissioner, 61 T.C. 216, 228-229            
          (1973), affd. 528 F.2d 55 (9th Cir. 1976).  Some of the factors             
          to be considered are:  (1) Whether legal title passes; (2) how              
          the parties treat the transaction; (3) whether an equity in the             
          property was acquired; (4) whether the contract creates a present           
          obligation on the seller to execute and deliver a deed and a                
          present obligation on the purchaser to make payments; (5) whether           
          the right of possession is vested in the purchaser; (6) which               
          party bears the risk of loss or damage to the property; and (7)             
          which party receives the profits from the operation and sale of             
          the property.  See Grodt & McKay Realty, Inc. v. Commissioner,              

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