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substance. See Knetsch v. United States, 364 U.S. 361, 369
(1960), where the Supreme Court sustained the Commissioner's
disallowance of interest deductions on the ground that "nothing
in the Senate Finance and House Ways and Means Committee Reports
on section 264 * * * [suggests] that Congress in exempting pre-
1954 annuities intended to protect sham transactions."
Consistent with the foregoing, an analysis of the economic
substance of the CINS transactions is appropriate in the absence
of an indication in the controlling statutory provisions that
Congress intended to favor such transactions regardless of their
economic substance.
B. Section 1001 and Cottage Savings
Petitioner further contends that an analysis of the economic
substance of the disputed CINS transactions is unwarranted under
section 1001(a) and the Supreme Court's interpretation of that
provision in Cottage Sav. Association v. Commissioner, 499 U.S.
554 (1991). Specifically, petitioner maintains that section
1001(a) and Cottage Savings demonstrate that the gain or loss
realized on a sale or exchange of property shall be recognized
for tax purposes regardless of the business purpose or potential
for profit underlying the transaction.
Section 1001(a) provides that gain or loss from a sale or
other disposition of property is determined by the difference
between the amount realized from the sale and its adjusted basis.
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