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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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