CMA Consolidated, Inc. & Subsidiaries, Inc. - Page 124

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               In actuality, Crispin, Koehler, Mallin, petitioner, and                
          others viewed the $4,056,220 Jenrich note and the $10,000 and               
          $1,000 Lexington notes as having no practical economic effect.              
          Their actions evidence that they themselves viewed the notes as             
          merely being part of the paper facade needed to support                     
          substantial tax benefits for petitioner.  Accordingly, the                  
          $4,056,220 Jenrich note and the $10,000 and $1,000 Lexington                
          notes are not considered valid indebtedness for tax purposes.               
               On the basis of the foregoing, we hold that the second lease           
          strip deal lacks economic substance and is not to be respected              
          for tax purposes.  See Frank Lyon Co. v. United States, supra;              
          Knetsch v. United States, 364 U.S. at 366; Gregory v. Helvering,            
          293 U.S. 465 (1935); ACM Pship. v. Commissioner, 157 F.3d at 231;           
          Casebeer v. Commissioner, 909 F.2d at 1363; Nicole Rose Corp. v.            
          Commissioner, 117 T.C. at 336.  Clearly, the combination of steps           
          and transactions in the second lease strip deal had no meaningful           
          purpose other than to generate tax benefits.                                
          B.  Petitioner’s Entitlement to Its Claimed Deductions                      
               Because we have held that the second lease strip deal lacked           
          economic substance, it follows that petitioner is not entitled to           
          its claimed rental expense deductions of $414,041 and $237,853              
          for its taxable years ended November 30, 1996 and 1997,                     
          respectively.                                                               








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