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purposes amount to little more than window dressing for
transactions that were designed and implemented solely to
generate tax benefits for Brunswick.
B. Economic Substance
As previously mentioned, a transaction imbued with economic
substance normally will be recognized for tax purposes even in
the absence of a nontax business purpose. See Northern Ind. Pub.
Serv. Co. v. Commissioner, 115 F.3d at 511-512; Larsen v.
Commissioner, 89 T.C. at 1253. In Knetsch v. United States, 364
U.S. 361, 366 (1960) (quoting Gilbert v. Commissioner, 248 F.2d
399, 411 (2d Cir. 1957) (J. Hand, dissenting), the Supreme Court
held that the transaction in question was a sham because it did
"not appreciably affect * * * [the taxpayer's] beneficial
interest except to reduce his tax". In Northern Ind. Pub. Serv.
Co. v. Commissioner, supra at 512, the Court of Appeals for the
Seventh Circuit held that the Commissioner could not set aside
transactions which resulted "in actual, non-tax related changes
in economic position." See ACM Partnership v. Commissioner, 157
F.3d at 248; Jacobson v. Commissioner, 915 F.2d 832, 837 (2d Cir.
1990). In Horn v. Commissioner, 968 F.2d at 1237, the Court of
Appeals for the District of Columbia Circuit indicated that,
before declaring a transaction an economic sham, the court should
consider whether the transaction presented a reasonable prospect
for economic gain.
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