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argue that the sale-leaseback cases are distinguishable from the
circular payment scenario in this case, because: (1) The sale-
leaseback cases involved “identical and offsetting obligations of
the loan and rental payments” whereas no rental payments are
involved in this case; and (2) the sale-leaseback cases generally
involved depreciation deductions whereas, in this case, Mr. Oren
did not claim any such deductions. However, the facts in this
case are decidedly similar to those involved in the typical sale-
leaseback scenario. We cannot distinguish, for purposes of
section 465(b)(4), the circular arrangements found in Moser v.
Commissioner, supra; Am. Principals Leasing Corp. v. United
States, supra; Levien v. Commissioner, supra; etc., from the
circular arrangement found in this case. Accordingly, we find
that the any realistic possibility standard is applicable.
Petitioners argue that, in any event, there was a realistic
possibility that the circular chain of loan and interest payments
would be broken and that Mr. Oren would be forced to repay the
loans from Dart without collecting on the loans he made to HL and
HS. Respondent claims that petitioners are simply hypothesizing
about scenarios that might occur, none of which were likely to
occur given the peculiar set of facts in this case including the
circularity of payments, Mr. Oren’s unlimited control over the
companies, and the 375-day payment following demand provision in
the notes. Respondent also argues that hypothetical events that
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