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Examples would include a party that was not a U.S. taxpayer or a
party that was a U.S. taxpayer but had large net operating losses
available to offset income.
One such tax-indifferent party petitioner employed was the
Iowa Tribe of Oklahoma (Iowa Tribe). Because of its status as an
Indian tribe recognized by the Bureau of Indian Affairs of the
U.S. Department of the Interior, the Iowa Tribe was not subject
to Federal income tax on income allocated to it from lease strip
deals.3 The Iowa Tribe participated in approximately eight
different partnerships during the mid-1990s and received fees for
its participation as a limited partner in those partnerships. In
exchange for its “modest investment” and agreement to be the 99-
percent limited partner in a partnership, the Iowa Tribe received
a fee ranging from $17,000 to $40,000 at the closing of each
deal. The fee represented a percentage of the total commissions
received by CMA in connection with the lease strip deal. The
Iowa Tribe had no active role in the partnership and realized
that its participation allowed others to exploit its tax-exempt
status. A wholly owned CMA subsidiary and/or Crispin (CMA’s 98-
3The parties disagree over whether two lease strip deals
involving petitioner that are discussed more fully infra had
economic substance and should be respected for tax purposes. The
terms “sale”, “sold”, “lease”, “purchase”, “income”, “interest”,
“invest”, “note”, “obligation”, “lien”, and other similar terms
are used herein for convenience and are not intended as ultimate
findings or conclusions concerning the validity for tax purposes
of the deals and/or underlying transactions in dispute.
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