-226-
we concluded that the taxpayer’s assignment of the notes to the
partnership was “not intended to have any economic significance”
and should be disregarded Id. at 11.
Similarly, in the instant case, the transaction between the
banks and the Ackerman group carried the seeds of its own
undoing: it depended upon the banks’ withdrawing from the very
partnership they purported to join. The banks’ “contributions”
to the partnership were not intended to have any economic
significance apart from transferring built-in tax losses. The
transaction, if respected, would produce tax results not
contemplated by subchapter K: staggering capital losses would be
allocated to partners in the absence of any economic losses, to
be used to shelter unrelated income not only for themselves but
also for other taxpayers to whom, for a fee, the Ackerman group
might market the losses. To paraphrase Wilkinson: We cannot
believe that a romp down the yellow brick road of subchapter K
can yield these absurd results.
G. Conclusion
We conclude that the transaction whereby the banks purported
to partner with the Ackerman group lacked economic substance.
The Ackerman group and the banks did not intend to partner in a
film distribution business. Rather, the transaction was designed
to transfer built-in tax losses to the Ackerman group for $10
million. The economic realities of the transaction align with
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