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this section (which defines related person)”. The related
partner exception overrides the application of section 267(b)(11)
and section 1.752-4(b)(1), Income Tax Regs. Pursuant to the
related partner exception, this “relationship” between Indeck
Overseas and Mr. Forsythe is severed for purposes of determining
whether Indeck Overseas bears an economic risk of loss for any of
IPO II’s recourse liability.
We conclude that Indeck Overseas and Indeck Energy are not
related parties for purposes of determining whether Indeck
Overseas bore any economic risk of loss with regard to IPO II’s
liability for the aircraft because: (1) Indeck Overseas is not
related to Mr. Forsythe pursuant to the related partner
exception; and (2) Indeck Overseas is related to Indeck Energy
only through Mr. Forsythe, and that relationship is not
recognized for purposes of our determination. To hold otherwise
would be to allow attribution of economic risk of loss indirectly
even though it cannot be attributed directly. In the instant
case involving a recourse liability, the shifting of economic
risk of loss to achieve an increased basis cannot be accomplished
through attribution. Therefore, we hold that none of the
recourse liability incurred by IPO II with respect to the
purchase of the aircraft is allocable to Indeck Overseas.
We have considered all of the parties’ contentions,
arguments, and requests that are not discussed herein, and we
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