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intending to be taxed as a partnership. (Pursuant to sections 701
and 702, a partnership is treated as a flow-through entity for
purposes of Federal income taxation.) As such, if Andantech is
recognized as a partnership, its items of income, gain, loss,
deduction, and credit passed through to its partners.
2. A taxpayer is permitted to sell its right to future
income. If a bona fide sale of future income occurs at arm’s
length and for adequate consideration, then the seller of the
future income is taxed in the year of sale on the amount of
consideration he actually receives and the buyer is taxed on any
excess of income received over his purchase price. Mapco Inc. v.
United States, 214 Ct. Cl. 389, 556 F.2d 1107, 1110 (1977).
Petitioners assert that the sale-leaseback transaction between
Andantech and Comdisco should be respected, and Andantech’s sale of
the Comdisco rents to NationsBank should be considered a bona fide
arm’s-length sale for adequate consideration. On this premise,
Andantech contends it is deemed to recognize gain from the sale in
1993, the year of the sale, and the income passes through to
Andantech’s partners (i.e., Messrs. Parmentier and de la Barre
d’Erquelinnes/EICI).
3. Pursuant to section 708(b)(1)(B), a partnership is deemed
terminated (for Federal tax purposes) upon the sale or exchange of
50 percent or more of the total interest in the partnership’s
capital and profits within a 12-month period. Here, if as
petitioners assert the partnership is to be respected, Mr.
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