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$1,982,825. The $1,982,825 rental deduction, in conjunction with
other items on petitioner’s 1995 Federal return, resulted in a
$404,000 net operating loss (NOL) carryover from the 1995 to the
1996 tax year. Respondent, in the notice of deficiency,
disallowed the $404,000 NOL carryover.
7. On October 31, 1996, CMACM transferred 25 percent of its
interests and obligations in the Shared end-user lease to First
Lexington Leasing, Inc. (Lexington). From 1998 to the time of
trial Lexington was owned by Asset Leasing Partners I, LP, with
Crispin and CMACM as managing general partners and the Iowa Tribe
as a limited partner. Among other things, CMACM transferred:
(1) Twenty-five percent of CMACM’s rights in the Shared
equipment, and (2) 25 percent of that portion of the Jenrich note
attributable to the Shared equipment. In exchange for CMACM’s
transfer, Lexington issued a $10,000 unsecured promissory note to
CMACM and assumed 25 percent of that portion of CMACM’s over
lease rental payment obligation to Jenrich attributable to the
Shared equipment. The promissory note had an 8-percent interest
rate and was due on December 31, 2002.
Lexington was incorporated in California during 1995 and was
wholly owned by Richard Koehler (Koehler), a friend and longtime
business associate of Crispin. Before and after the CMACM-
Lexington transaction, Koehler depended on petitioner and Crispin
for funds to keep CMA Capital Corp. operating.
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