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Commissioner, 94 T.C. 787 (1990), to conclude that issuing an FPAA
during the 120-day period set out in section 6223(d)(1) does not
invalidate an FPAA. Accordingly, we hold that the FPAAs for the
12/10/93 short period and the 12/31/93 short period are valid.
II. Whether the Sale-Leaseback Transaction Should Be Respected
We now turn to the substantive issue before us; namely,
whether the sale-leaseback transaction involved should be respected
for Federal tax purposes.
In essence, this case involves the stripping of income from
Andantech’s sale of the Comdisco rents (which income, for tax
purposes, passed through untaxed to Belgian citizens and residents)
and the subsequent use by Norwest (on its consolidated returns for
the years at issue) of Andantech’s losses from depreciation
deductions and interest expense related to Andantech’s purchase and
lease of the computer equipment.
A. Overview of Statutory Framework for the Transactions
We begin our analysis with an overview of the transactions
involved herein, and the statutory provisions and caselaw within
which Comdisco planned the series of transactions that petitioners
and Comdisco assert brought into play nonrecognition provisions of
the Code governing partnerships and corporations, as well as
treaties with foreign governments. This overview presupposes that
the transactions and entities are to be respected for Federal tax
purposes.
1. Andantech was organized as a limited liability company,
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