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by petitioner’s casual attitude toward the bona fides of the
transactions. Crispin and petitioner failed to notice or correct
the fact that the over lease agreement did not provide petitioner
with any residual interests in the K-Mart photo processing and
Shared computer equipment. Petitioner prepared its own in-house
analysis and valuation of the over lease residual rights before
entering into the September 28, 1995, transaction with CAP.
Presumably, a reasonable review and/or appraisal would have
uncovered this fundamental flaw. Petitioner also entered into a
series of transactions over a 21-month period from November 27,
1995, through September 1, 1997, to dispose of its “lease
position” without recognizing or correcting this flaw.
Petitioner through Crispin and other employees who were also
experienced in leasing transactions cannot hide behind the
professionals who were involved in the first lease strip deal.
Petitioner engaged in a blatant scheme to obtain deductions
greatly disproportionate to its economic investment in
transactions that lacked economic substance or a business
purpose. The facts and circumstances of this case reflect that
petitioner did not have reasonable cause and lacked good faith in
entering into the transactions and claiming the deductions
regarding the lease strip deal. Petitioner’s reliance upon the
Marshall & Stevens appraisal, the Murray Devine appraisal, and
the Thacher Proffitt tax opinion (all of which had been issued to
CFX concerning the first lease strip deal and the master lease
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