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various grounds the tax benefits that taxpayers claimed under
lease strip deals. Until the issuance of Notice 95-53, supra,
petitioner and Crispin were contemplating the marketing of the
second lease strip deal. Following Notice 95-53, supra, Crispin
concluded it would not be possible to sell that second deal to a
third party, and instead decided to have petitioner become the
customer/user of the tax benefits from the second deal.
II. Petitioner’s 1995 Through 1997 Advances to Cap Corp. and
the December 2, 1996, Debt Conversion Transaction
A. Cap Corp. and Its Business
CMA Capital Corp. (Cap Corp.) was organized in 1989, and
until August 1995, Crispin and Koehler were each 50-percent
shareholders. During August 1995, Crispin reduced his stock
ownership from 50 percent to 9 percent, and Koehler
correspondingly increased his stock ownership interest in Cap
Corp. from 50 percent to 91 percent.
Through December 2, 1996, Koehler was in charge of Cap
Corp.’s day-to-day operations, and he would, at least weekly,
consult with Crispin about Cap Corp. After December 2, 1996,
Crispin took over Cap Corp.’s day-to-day operations. Sometime
during the middle of 1997, Koehler formally resigned his
positions as a director and a manager of Cap Corp. and
transferred some of his Cap Corp. stock to Crispin, making
Crispin Cap Corp.’s majority shareholder.
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