Epic Associates 84-III, William C. Griffith, Jr. - Page 172




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             of cases should be based upon the purchase prices of the                 
             properties as opposed to the principal amounts of the                    
             notes.  See Brannen v. Commissioner, 722 F.2d at 513                     
             (Chabot, J., concurring).  Therefore, as framed by the                   
             parties, the first issue in these cases is whether the                   
             principal amount of the first mortgage notes issued by                   
             each partnership unreasonably exceeds the value of the                   
             properties securing the notes.                                           
             Petitioners argue that "the fair market value of the                     
             properties [purchased by each partnership] was at least                  
             equal to the amount of the debt at the time it was                       
             incurred."  They argue that the fair market value of                     
             each of the subject properties is its contract price, as                 
             established by a contemporaneous appraisal that was made                 
             by an independent, unrelated appraiser.  The appraisals                  
             reflect the sale of each property to an individual buyer,                
             rather than the bulk sale of all of the properties to a                  
             single buyer.  Petitioners argue that the promissory note                
             issued to purchase each of the properties, based upon 85                 
             to 95 percent of the contract price, is bona fide                        
             indebtedness.                                                            
                  Petitioners emphasize that "each of the nonrecourse                 
             mortgages in the partnerships was insured by an unrelated                








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