Donald L. Walford - Page 11

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          the determination, we generally look to the actions and expertise           
          of the promoters and the general partner of the partnership.                
          Peat Oil & Gas Associates v. Commissioner, 100 T.C. 271, 276                
          (1993); Hulter v. Commissioner, supra at 393; Fox v.                        
          Commissioner, 80 T.C. 972, 1007-1008 (1983), affd. without                  
          published opinion 742 F.2d 1441 (2d Cir. 1984); Gianaris v.                 
          Commissioner, supra.                                                        
               As explained below, there are several reasons to support our           
          holding that the EMS-related activity was not engaged in with a             
          dominant or primary objective of making a profit.  These include:           
          (1) The grossly inflated sale price of the EMS; (2) the lack of             
          profit objective reflected by the actions and lack of expertise             
          of the promoters and general partner of Sav-Fuel; and (3) the               
          lack of a profit objective under the factors contained in section           
          1.183(a)-2, Income Tax Regs.  Additionally, applying the approach           
          used in Gianaris v. Commissioner, supra, we find that there was             
          no reasonable possibility of a profit independent of tax                    
          considerations because the discounted cashflows (disregarding tax           
          considerations) would have been negative.  We explain our                   
          findings in detail below.                                                   
               A.   Sale Price of EMS                                                 
               A hallmark of an economically distorted tax shelter is a               
          purported transfer of ownership at a grossly inflated sale price.           
          Soriano v. Commissioner, 90 T.C. 44, 54 (1988).  Generally, the             






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