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nontax benefits will meet or exceed transaction costs. See Yosha
v. Commissioner, 861 F.2d 494, 498 (7th Cir. 1988), affg. Glass v.
Commissioner, 87 T.C. 1087 (1986). Modest profits relative to
substantial tax benefits are insufficient to imbue an otherwise
dubious transaction with economic substance. See Sheldon v.
Commissioner, 94 T.C. 738, 767-768 (1990); Saba Partnership v.
Commissioner, T.C. Memo. 1999-359.
Contrary to respondent’s position, we decline to analyze the
economic substance of the disputed transaction by focusing solely
on events occurring during the period December 28 through 31, 1992.
Segregating FPL’s investment in Salina into two parts, as
respondent suggests, would violate the principle that the economic
substance of a transaction turns on a review of the entire
transaction. See Kirchman v. Commissioner, supra at 1493-1494;
Winn-Dixie Stores, Inc. v. Commissioner, supra at 280. Although we
agree with respondent that Goldman Sachs structured FPL’s purchase
of the Salina partnership interest to provide FPL with a perceived
tax benefit, this factor, standing alone, is insufficient to render
the transaction a sham in substance.
Considering all the facts and circumstances, we conclude that
FPL entered into the Salina transaction to achieve a valid business
purpose independent of tax benefits. The record demonstrates that
FPL entered into the Salina partnership for the primary purpose of
enhancing the return on its short-term investments. Each of FPL’s
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