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[1] that the taxpayer was motivated by no business
purpose other than obtaining tax benefits in entering the
transaction, and [2] that the transaction has no economic
substance because no reasonable possibility of profit
exists.” * * *
Id. at 1237 (quoting Friedman v. Commissioner, 869 F.2d 785, 792
(4th Cir. 1989)); see also IES Indus., Inc. v. United States, 253
F.3d 350 (8th Cir. 2001); ACM Partnership v. Commissioner, 157
F.3d 231 (3d Cir. 1998), affg. in part, revg. in part, dismissing
in part, and remanding T.C. Memo. 1997-115; Salina Partnership,
L.P. v. Commissioner, T.C. Memo. 2000-352; Shriver v. Commissioner,
T.C. Memo. 1987-627, affd. 899 F.2d 724, 727 (8th Cir. 1990). Our
inquiry as to the business purpose and economic substance of a
transaction is inherently factual. See Torres v. Commissioner, 88
T.C. 702, 718 (1987).
In this case, we conclude that the sale-leaseback should not
be respected for tax purposes because (1) no reasonable possibility
for profit existed, and (2) RD Leasing was not motivated by any
business purpose other than obtaining tax benefits.
Petitioners and respondent each retained expert witnesses to
assess the possibility of profit with respect to the sale-leaseback
transaction involved herein.
a. The Experts
In total, nine experts testified–-five for petitioners and
four for respondent. Two of the experts (David Fleming for
petitioners and Dr. James Schallheim for respondent) testified as
to the economics of the transaction. In particular, each testified
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