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transactions. On April 28, 2000, CFX Financial redeemed its
preferred stock held by CFP for $94,950.82, consisting of $75,000
for the shares and $19,950.82 in dividends thereon.
C. Second Lease Strip Deal
Sometime before August 1995, Crispin asked Klein and certain
parties and/or entities involved in the first lease strip deal to
create another position out of the equipment package involved in
that first deal. Although petitioner and Crispin were planning
to market this second lease strip deal to a customer, they
changed their plans following the Internal Revenue Service’s
(IRS) issuance of Notice 95-53, 1995-2 C.B. 334, on October 30,
1995. In Notice 95-53, supra, the IRS warned it would challenge
and disallow potential tax benefits that taxpayers claimed under
lease strip deals. Due to the issuance of Notice 95-53, supra,
petitioner and Crispin concluded that it would not be possible to
sell the second lease strip deal to third parties. Because the
transactions for the contemplated deal had already been
consummated, petitioner and Crispin instead decided to complete
the second lease strip deal with petitioner as the “customer” or
ultimate beneficiary.
The wraparound lease (over lease) in the second lease strip
deal involved the K-Mart and Shared end-user lease equipment and
encompassed the existing K-Mart and Shared end-user leases.
However, the express lease term for the K-Mart and Shared over
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