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1982); Belz Inv. Co. v. Commissioner, 72 T.C. 1209 (1979), affd.
661 F.2d 76 (6th Cir. 1981).
In examining whether the transaction between the two
petitioners was a sale-leaseback or a financing arrangement, we
find the following factors to be particularly persuasive:
Conveyance of the Liquor License
In Helvering v. F.& R. Lazarus & Co., supra, the Supreme
Court found a transaction to be a financing arrangement instead
of a sale-leaseback in part because the instrument under which
the taxpayer purported to convey legal ownership to the bank was
in reality given and accepted as security. Here, the conveyance
of the liquor license reflects a financing arrangement rather
than a bona fide arm’s-length sale. While Benavidez purchased
the liquor license for approximately $45,000, the purchase price
paid by Guaderrama to Benavidez for the liquor license was only
$10. According to Benavidez, liquor licenses in Dona Ana County
currently average between $100,000 to $200,000. While we do not
necessarily accept Benavidez’ testimony as establishing the worth
of a New Mexico liquor license, the fact that Guaderrama was
willing to hold it as collateral towards an approximately
$272,000 debt indicates that $10 is far from its fair market
value. Thus, although legal title of the liquor license may have
been transferred to Guaderrama, it was not an arm’s-length
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