- 105 -
regulatory realities. Rather, it was “shaped solely by tax-
avoidance features that have meaningless labels attached”. Frank
Lyon Co. v. United States, 435 U.S. at 583-584.
The Comdisco designed cross-border sale-leaseback transaction
had no valid business purpose, independent of tax benefits. It is
one of those no-business-purpose transactions that would not have
occurred, in any form, but for tax-avoidance reasons and, thus, is
not to be given effect for Federal income tax purposes. See, e.g.,
ACM Partnership v. Commissioner, 157 F.3d at 233-243 (sophisticated
investment partnership formed and manipulated solely to generate a
capital loss to shelter some of Colgate-Palmolive’s capital gains);
Karr v. Commissioner, 924 F.2d 1018, 1021 (11th Cir. 1991) (facade
of energy enterprise developed solely to produce deductible losses
for investors), affg. Smith v. Commissioner, 91 T.C. 733 (1988);
Kirchman v. Commissioner, 862 F.2d 1486, 1488-1489 (11th Cir. 1989)
(option straddles entered to produce deductions with little risk of
real loss), affg. Glass v. Commissioner, 87 T.C. 1087 (1986);
Rice’s Toyota World, Inc. v. Commissioner, 752 F.2d at 91 (sale-
leaseback of a computer by a car dealership, solely to generate
depreciation deductions); cf., e.g., Frank Lyon Co. v. United
States, supra at 582-584 (sale-leaseback was part of genuine
financing transaction, heavily influenced by banking regulation, to
permit debtor bank to outdo its competitor in impressive office
space).
4. The Transaction Was Not a Sale and the
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