- 110 -
to the time of disposition. See Cottage Sav., 499 U.S.
at 557-58, 111 S.Ct. at 1506. The taxpayer's
relinquishment of assets so altered in actual economic
value over the course of a long-term investment stands
in stark contrast to ACM's relinquishment of assets
that it had acquired 24 days earlier under
circumstances which assured that their principal value
would remain constant and that their interest payments
would not vary materially from those generated by ACM's
cash deposits. [ACM Partnership v. Commissioner, supra
at 251; fn. ref. omitted.]
In accord with the preceding discussion, we conclude that
Cottage Sav. Association v. Commissioner, supra, neither mandates
that we respect the tax consequences of the CINS transactions
disputed in these cases, nor precludes a review of the economic
substance of those transactions. Moreover, based upon our review
of sections 1001 and 453, and their underlying regulations and
legislative histories, we are satisfied that Congress did not
intend to create the loophole that the partnerships have
attempted to exploit. See Horn v. Commissioner, 968 F.2d at
1238. Consequently, we will proceed with an analysis of the
economic substance of the CINS transactions.
IV. Petitioner's Contention That CINS Transactions Are Imbued
With Economic Substance
Petitioner contends that respondent's partnership
adjustments must be rejected even assuming that the economic
substance doctrine, as articulated in ACM Partnership v.
Commissioner, supra, is applicable.
An evaluation of the economic substance of the CINS
transactions requires: (1) A subjective inquiry whether the
Page: Previous 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 NextLast modified: May 25, 2011