-4- of last resort under the applicable law.2 Unless otherwise noted, section references are to the applicable versions of the Internal Revenue Code. FINDINGS OF FACT LCL was formed as a Wyoming limited liability company on April 30, 1998, and was treated as a partnership for Federal income tax purposes. LCL operated on the basis of a fiscal year ended July 31, and it filed Forms 1065, U.S. Return of Partnership Income, to report its operations for Federal income tax purposes. During the relevant years, LCL engaged in equipment leasing activities and purchased equipment subject to a lease. LCL partially financed its purchases of that equipment using promissory notes. Some portions of the notes were recourse; the remaining portions were nonrecourse. LCL’s members were HBW and HCC. HBW owned 99 of LCL’s 100 membership units, and HCC owned the remaining unit. During the subject years, HBW was a wholly owned subsidiary of HHC and a member of its affiliated group. HCC also was connected with that group. Relevant Equipment Leasing Activities In 1998, LCL purchased some equipment from Capital Resources Group, Inc. (CRG). In connection with this purchase, LCL signed 2 We decide the relevant issue as to HBW. As mentioned above, HHC was the parent of HBW, and HBW was the relevant member of LCL.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 NextLast modified: March 27, 2008