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also deducted $237,853 (which was equal to the amount due CMACM
from Jenrich under the Jenrich installment note) as over lease
rental payments that it claimed to have paid to Jenrich during
1997.
D. Other Aspects of Petitioner’s Claimed Losses and
Deductions With Respect to the Second Lease Strip Deal
As a result of the second lease strip deal and CMACM’s
partial dispositions of the Jenrich note over a 21-month period,
petitioner claimed more than $4.2 million of deductions for
1995, 1996, and 1997. Petitioner did not report any income from
Okoma’s and Lexington’s assumptions of CMACM’s over lease rental
payment obligations to Jenrich. In addition to $3,620,059 of
losses claimed for dispositions of the Jenrich note, petitioner
claimed deductions of $414,041 (1996) and $237,853 (1997) for
over lease rental payments to Jenrich. In almost all of the
above-described second lease strip deal transactions, petitioner
either received or was entitled to receive an offsetting payment
equal to the amount it was obligated to pay and deducted. In
only one instance, involving the purported section 351 transfer,
did petitioner assume $215,000 of the $750,000 CAP note owed to
EQ, without receiving or being entitled to receive an equivalent
offsetting amount.
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