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Freeport Transport Inc. v. Commissioner, 63 T.C. 107 (1974)
(Danielson rule did not apply in circumstances in which both
parties to the agreement were before the Court and respondent did
not object to the presentation of evidence varying the terms of
the agreement); Peterson Machine Tool, Inc. v. Commissioner, 79
T.C. 72, 82 (1982) (“in view of the fact that both the buyer and
the sellers are parties to this proceeding, there is even less
reason to apply the ‘strong proof’ rule”). Thus, this Court may
look to the substance of the transaction in order to determine
the correct tax consequences. See Hamlin’s Trust v.
Commissioner, 209 F.2d 761, 764 (10th Cir. 1954) (“It is well
settled that the incidence of taxation depends upon the substance
of a transaction * * * that the Government may look at the
realities of a transaction and determine its tax consequences
despite the form or fiction with which it was clothed.”), affg.
19 T.C. 718 (1953).
II. Sale-Leaseback or Financing Arrangement
The Guaderramas contend that the documents in this case
label the transaction a lease, that they clearly possessed the
benefits and burdens of ownership of Severo’s, and therefore the
transaction should be viewed as a lease. Benavidez, on the other
hand, argues that he possessed the benefits and burdens of
ownership of Severo’s and that the transaction should therefore
be viewed as a financing arrangement. Respondent also takes the
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