Andantech L.L.C., Wells Fargo Equipment Finance, Inc. (f.k.a. Norwest Equipment Finance, Inc.), Tax Matters Partner, and Wells Fargo & Co., A Partner Other Than the Tax Matters Partner, et al. - Page 5




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          OPINION ........................... 53                                      
          I. Procedural Issues ................... 53                                 
          II. Whether the Sale-Leaseback Transaction Should Be                        
               Respected ....................... 55                                   
               A.   Overview of Statutory Framework for the                           
                    Transactions ................... 56                               
               B. Positions of the Parties ............. 61                           
               C. Analysis ..................... 62                                   
                    1.   Andantech Is Not a Valid Partnership and Is                  
                         Not Recognized for Federal Tax Purposes ... 64               
                         a.   Andantech-Foreign Should Be Disregarded                 
                              Because Messrs. Parmentier and de la                    
                              Barre d’Erquelinnes Did Not Intend To                   
                              Join Together for the Purpose of Carrying               
                              On a Business and Sharing in the Profits                
                              or Losses From the Equipment Leasing                    
                              Activity ................ 65                            
                         b.   Andantech-US Should Be Disregarded                      
                              Because EICI Did Not Intend To Join With                
                              RD Leasing for the Purpose of Carrying On               
                              Partnership Business and Sharing in the                 
                              Profits or Losses From the Partnership’s                
                              Equipment Leasing Activity ....... 68                   
                    2.   Andantech Acted as a Mere Shell or Conduit To                
                         Strip the Income From the Transaction and                    
                         Avoid Income Taxation and, Under the Step                    
                         Transaction Doctrine, Should Be Disregarded . 69             
                         a. Binding Commitment Test ......... 71                      
                         b. End Result Test ............. 72                          
                         c. Interdependence Test .......... 75                        
                    3.   The Sale-Leaseback Transaction Lacked Business               
                         Purpose and Economic Substance ........ 82                   
                         a. The Experts ............... 84                            
                         b.   No Reasonable Possibility for Profit                    
                              Existed ................. 89                            
                         c.   RD Leasing/Norwest Was Not Motivated by                 
                              Any Business Purpose Other Than Obtaining               
                              Tax Benefits .............. 95                          
                              i.   Presence or Absence of Arm’s-Length                
                                   Price Negotiations ......... 97                    
                              ii. The Relationship Between the Selling                
                                   Price and the Fair Market Value .. 99              
                              iii. The Structure of the Financing ... 99              
                              iv. The Degree of Adherence to                          
                                   Contractual Terms ......... 102                    
                              v.   The Reasonableness of the Income and               





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Last modified: May 25, 2011