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were a sham and lacked economic substance. A transaction is
without its intended effect for Federal income tax purposes if it
is devoid of economic substance consonant with its intended tax
effects. Frank Lyon Co. v. United States, 435 U.S. 561, 573
(1978); Knetsch v. United States, 364 U.S. 361, 364 (1960). The
substance of the transaction, not its form, determines its tax
consequences. The transaction must have economic substance which
is "compelled or encouraged by business or regulatory realities,
is imbued with tax-independent considerations, and is not shaped
solely by tax-avoidance features that have meaningless labels
attached". Frank Lyon Co. v. United States, supra at 583-584;
Estate of Thomas v. Commissioner, 84 T.C. 412 (1985); Hilton v.
Commissioner, 74 T.C. 305 (1980), affd. per curiam 671 F.2d 316
(9th Cir. 1982).
The test for economic substance is based on objective
factors. We take into account whether the taxpayer acquired a
bona fide equity interest in the property and whether the
taxpayer had a reasonable opportunity for economic success. Levy
v. Commissioner, 91 T.C. 838, 856 (1988); Packard v.
Commissioner, 85 T.C. 397, 417 (1985). We have found the
following factors to be particularly important in determining
whether a transaction possesses economic substance: The presence
or absence of arm's-length price negotiations, Helba v.
Commissioner, 87 T.C. 983, 1005-1007 (1986), affd. without
published opinion 860 F.2d 1075 (3d Cir. 1988); the relationship
between the sale price and the fair market value, Zirker v.
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