-152-
any practicable economic effects other than the creation of
income tax losses.’” Jacobson v. Commissioner, 915 F.2d 832, 837
(2d Cir. 1990) (quoting Rose v. Commissioner, 868 F.2d 851, 853
(6th Cir. 1989), affg. 88 T.C. 386 (1987)), affg. in part, revg.
in part, and remanding T.C. Memo. 1988-341; see also Rosenfeld v.
Commissioner, 706 F.2d 1277, 1282 (2d Cir. 1983) (holding that
courts must consider “whether there has been a change in the
economic interests of the relevant parties.”), affg. T.C. Memo.
1982-263.
Viewed according to their objective economic effects rather
than their form, Generale Bank’s and CLIS’s contributions to SMP
in exchange for partnership interests were economically
inconsequential events. The banks’ purported partnering with SMP
had no meaningful economic significance other than as an
“ephemeral incident” to serve as a conduit for the banks’ built-
in losses. Helvering v. Gregory, 69 F.2d 809, 811 (2d Cir.
1934), affd. 293 U.S. 465 (1935). Moreover, the purported
partnering offered the Ackerman group no realistic economic
benefits apart from tax consequences. For the reasons described
below, we conclude that the transaction’s objective economic
reality and consequences belie its form.
1. Economic Significance of Banks’ “Contributions”
Petitioner argues that whether or not the banks intended to
enter into a film business with the Ackerman group, “all parties
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