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a taxpayer shall not be considered at risk with respect to
amounts protected against loss through nonrecourse financing,
guaranties, stop loss agreements, or other similar arrangements.”
(Emphasis added.) Respondent claims that Mr. Oren was protected
from loss on the loans by “other similar arrangements” within the
meaning of section 465(b)(4).
In the Eighth Circuit, to which this case is appealable, in
other circuits, and in prior opinions of this Court, the “any
realistic possibility of loss” standard has been adopted for
determining whether a taxpayer is at risk under section
465(b)(4). See Young v. Commissioner, 926 F.2d 1083, 1089 n.14
(11th Cir. 1991), affg. T.C. Memo. 1988-440; Moser v.
Commissioner, 914 F.2d 1040, 1048 (8th Cir. 1990), affg. T.C.
Memo. 1989-142; Am. Principals Leasing Corp. v. United States,
904 F.2d 477, 483 (9th Cir. 1990); Levien v. Commissioner, 103
T.C. 120, 126 (1994), affd. 77 F.3d 497 (11th Cir. 1996);
Thornock v. Commissioner, 94 T.C. 439, 453 (1990). Thus, where a
transaction is structured so as to remove any realistic
possibility of the taxpayer suffering a loss, the taxpayer is not
at risk for the borrowed amounts. Levien v. Commissioner, supra
at 126.
Petitioners argue that the any realistic possibility test is
applied only in sale-leaseback cases and should not be applied in
this case which does not involve a sale-leaseback. Petitioners
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