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substance to the transaction. Rose v. Commissioner, 88 T.C. 386,
410-411 (1987), affd. 868 F.2d 851 (6th Cir. 1989); Helba v.
Commissioner, 87 T.C. at 1009.
v. The Reasonableness of the Income and
Residual Value Projections
We have examined the reasonableness of projections of income
expected to emanate from a transaction as a means of evaluating its
economic substance. See, e.g., Rice’s Toyota World, Inc. v.
Commissioner, 81 T.C. at 204-207.
We are mindful that it is inappropriate to use hindsight in
determining whether residual projections were correct. However, in
1993, the public was aware that IBM was developing CMOS, which, if
and when brought to market, would affect the normal depreciation
curve. We find it difficult to believe that NEFI, being actively
involved in the financing and leasing of computers, was unaware of
the potential that such events could occur.
Ms. Grossman received three appraisals from Comdisco. Ms.
Grossman testified that she did not have “a sufficient level of
comfort” with only one (the M&S) appraisal, and she requested
additional appraisals. She admitted, however, that the MAC
appraisal provided little information. The ARI appraisal discloses
that the appraisal would be used for support of true lease
requirement related to Federal taxation and as support in the
investment decision process. The report clearly states that
industry publications such as Gartner Group, IDC, and DMC forecast
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