-222-
For these reasons, we conclude that the only purpose for the
banks’ participation was to transfer built-in losses to the
Ackerman group taking advantage of the section 704(c) special
allocation rules and to subsequently market those losses to other
“investors” in the Ackerman group’s purported film enterprise.
As a result of the transaction with CDR and the section 704(c)
rules, the Ackerman group acquired $974,296,601 in claimed basis
in the receivables from Generale Bank, $79,912,955 in claimed
basis in the $79 million receivable, and $665 million in the SMHC
stock.
4. Congressional Intent
Petitioner contends that, notwithstanding these
considerations, we should respect the form of the transactions
between the Ackerman group, CDR, Generale Bank, and CLIS.
Petitioner argues that the transfer of tax basis from Generale
Bank and CLIS to Somerville S Trust is contemplated and, in fact,
prescribed under section 704(c). Petitioner concludes that
section 723 and the partnership basis rules control the outcome
of these cases.
Petitioner suggests that formalistic compliance with
statutory provisions necessarily entitles the taxpayer to the tax
benefits provided therein. We disagree.166 Under Gregory v.
166 In response to such a contention, the Court of Appeals
for the Second Circuit has stated:
(continued...)
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