CMA Consolidated, Inc. & Subsidiaries, Inc. - Page 90

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               The consideration of whether there is a valid business                 
          purpose has been described as an inquiry into whether the                   
          transaction is motivated by profit or economic advantage so as              
          not to be considered a “sham for purposes of analysis under                 
          I.R.C. � 165(c)(2).”  Kirchman v. Commissioner, supra at 1491.              
          That inquiry has been similarly described as one where the court            
          considers whether the transaction is “rationally related to a               
          useful nontax purpose that is plausible in light of the                     
          taxpayer’s conduct and * * * economic situation”.  ACM Pship. v.            
          Commissioner, T.C. Memo. 1997-115.  This evaluation of the                  
          practicability or utility of the stated nontax purpose and the              
          rationality of the means used to achieve that nontax purpose are            
          to be evaluated in accordance with commercial practices in the              
          relevant industry.  Cherin v. Commissioner, 89 T.C. 986, 993-994            
          (1987).                                                                     
               Consideration of the economic effect of the transaction(s)             
          in question involves an objective inquiry concerning whether the            
          transaction appreciably affected the taxpayer’s beneficial                  
          economic interest, absent tax benefits.  Knetsch v. United                  
          States, 364 U.S. 361, 366 (1960); ACM Pship. v. Commissioner, 157           
          F.3d at 248.  For example, where offsetting legal obligations or            
          circular cashflows effectively eliminated any real economic                 
          profit from the transaction, the transaction was considered to be           
          without economic effect.  Knetsch v. United States, supra at 366;           






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