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financial condition of the partnership; they were essential to the
solvency of the partnership. The financial limitations placed on
Andantech made it extremely likely that the transfer of Mr.
Parmentier’s interest to RD Leasing would, as it did, take place
promptly.
Our review of the entire record persuades us that the
transactions did not take the form they did in order to afford
Andantech an opportunity to earn a profit. To the contrary, we are
convinced that the only purpose for structuring the sale-leaseback
transaction between Comdisco and Andantech, rather than directly
between Comdisco and RD Leasing, was to avoid tax that would have
been paid by NEFI on the acceleration of rental income from the
sale of the Comdisco rents had the transactions been structured as
direct sale-leaseback transactions between Comdisco and RD Leasing.
We find that Andantech acted as a mere shell or conduit to strip
the income from the transaction and avoid income for RD Leasing.
Accordingly, we hold the steps involved in the transactions at
issue lack any reasoned economic justification standing alone. As
stated, there was no apparent purpose for Messrs. Parmentier and de
la Barre d’Erquelinnes to purchase (through Andantech) and lease
back the equipment other than to facilitate the eventual transfer
of the property into the hands of RD Leasing. Andantech did not
exist before this transaction. It was created as a limited
liability company to serve as a passthrough vehicle specifically
for the transaction at issue.
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