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Petitioner’s case and ruling authority involving the tax
treatment of payments to cancel legitimate and economically
viable lease obligations are not applicable.
Further, from petitioner’s perspective, no nontax profit
potential was associated with petitioner’s role as facilitator in
connection with the purchase of the Quintron stock and the sale
of assets to Loral. As a result thereof (due only to the low tax
bases in the assets), petitioner was required to report more than
$11 million in paper taxable income. Petitioner paid $23,369,125
for the stock of Quintron and then sold to Loral the assets of
Quintron for $20,576,754 (retaining five accounts receivable with
a balance of $2,997,364). Assuming the retained accounts
receivable were fully collected by petitioner, producing a gross
profit of $204,992 on the prearranged and simultaneous stock
purchase and asset sale transactions, petitioner’s $892,943 in
expenses more than consumed any gross profit.
Petitioner’s participation in the purchase of Quintron stock
and in the asset sale to Loral is explained by petitioner’s
manufacture of the $22 million claimed tax deductions which, if
allowed, would effectively offset the tax cost associated with
petitioner’s sale of assets and which would produce to petitioner
refunds of $1,857,153 in taxes Quintron (not petitioner) had paid
in prior years. Again, from petitioner’s perspective, claimed
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