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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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