- 16 - them under their end-user leases on the equipment directly to HCA. CFP allocated 99 percent of its income from the rent strip sale with HCA to the Iowa Tribe. The net effect of the series of November 1994 transactions described above in steps 1 through 7 was for virtually all rental income realized from the rent strip sale to HCA to be attributed to a nontaxable entity (the Iowa Tribe), with the rental payments due thereafter under the existing end-user leases on the equipment to be paid to HCA. 8. About 2 days later, on December 2, 1994, CFP sold for $450,000 to Asset Residco, Inc. (Residco), CFP’s interests as to (1) the first 2 years of the master lease residual period with respect to the K-Mart end-user lease equipment and (2) the first 6 months of the master lease residual period with respect to the Amoco end-user lease satellite dish equipment. Residco, a Delaware corporation, was wholly owned by Klein (vice president of EQ and managing partner of Capital Asset Partners). CFP allocated 99 percent of the income from its sale of these residual interests to CFP’s 99-percent limited partner, the Iowa Tribe. Residco paid the $450,000 sale price for these residual interests by issuing its $450,000 secured promissory note due January 1, 1995. Residco’s note was secured by the rental payments Residco would be entitled to receive under its master lease residual interests with respect to the K-Mart and AmocoPage: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Next
Last modified: May 25, 2011