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each partnership’s stated purchase price approximated the then
fair market value of the cattle. 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 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, supra
at 1237-1238; see also Cherin v. Commissioner, 89 T.C. 986, 996-
997 (1987).
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