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Under any version of the business purpose and economic
substance test, the transactions before us must be regarded as
lacking in business purpose and economic substance.
Additionally, we note that, prior to the September 1993
transactions, QTN was a dormant shell corporation, controlled by
Wolf, not a going concern.
Petitioner contends that it is entitled to the $22 million
claimed ordinary business expense deductions relating to its
transfer to Wildervank of its interest in the Trust Fund and the
$400,000 in cash. Petitioner’s apparent theory of deductibility
is that the value of petitioner’s interest in the Trust Fund was
equal to the $21.8 million balance in the Trust Fund and
therefore that when petitioner transferred to Wildervank its
interest in the Trust Fund, plus the $400,000 in cash, the
transfer should be treated as a “payment” by petitioner to
Wildervank of $22 million in exchange for the cancellation of
petitioner’s obligation on an onerous lease. In support,
petitioner cites case authority and respondent’s rulings for the
proposition that payments extinguishing lease obligations may
qualify as ordinary and necessary business expense deductions.
Hort v. Commissioner, 313 U.S. 28, 32 (1941); Stuart Co. v.
Commissioner, 195 F.2d 176, 177 (9th Cir. 1952), affg. a
Memorandum Opinion of this Court; Helvering v. Cmty. Bond &
Mortgage Corp., 74 F.2d 727, 728 (2d Cir. 1935), affg. 27 B.T.A.
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