CMA Consolidated, Inc. & Subsidiaries, Inc. - Page 119

                                       - 85 -                                         
          interests was de minimis or nonexistent.  We hold that, as of               
          September 28, 1995, petitioner’s residual lease interests had               
          minimal or no fair market value.                                            
          c.  Petitioner’s Lease Strip Deal’s Economic Profit                         
          Potential                                                                   
               As of September 28, 1995, the K-Mart and Shared equipment              
          would have had no estimated residual value, and the fair market             
          value of the residual lease interests was nominal or zero.  In              
          addition, the second lease strip deal, aside from potential tax             
          benefits, lacked any demonstrable objective, practical, economic            
          profit potential.  Accordingly, we hold that petitioner’s second            
          lease strip deal fails to meet the second prong of our inquiry              
          into its economic substance.  See ACM Pship. v. Commissioner, 157           
          F.3d at 246-248; Casebeer v. Commissioner, 909 F.2d at 1363.                
               Because of our holding, it is unnecessary to address                   
          petitioner’s argument that rental income should not be discounted           
          to present value in valuing the lease strip deal profit                     
          potential.  See ACM Pship. v. Commissioner, 157 F.3d at 259-260             
          (agreeing on this point with T.C. Memo. 1997-115).  In addition,            
          there is no need to address respondent’s argument that modest or            
          inconsequential profits relative to petitioner’s claimed                    
          substantial potential tax benefits are insufficient to imbue an             
          otherwise questionable second lease strip deal with economic                
          substance.  See id. at 258; Sheldon v. Commissioner, 94 T.C. at             
          767-768.                                                                    





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