Rice's Toyota World, Inc. v. Commissioner
United States Tax Court
Petitioner entered into a purchase-and-leaseback arrangement with a computer equipment leasing corporation. Pursuant to this agreement, petitioner purchased a 6-year-old computer for $ 1,455,227. The purchase price was paid in the form of a 4-year promissory note in the amount of $ 250,000 and the balance in two nonrecourse notes payable over an 8-year period. Simultaneously, petitioner leased the equipment back to the equipment leasing corporation for 8 years.
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Petitioner entered into a purchase-and-leaseback arrangement with a computer equipment leasing corporation. Pursuant to this agreement, petitioner purchased a 6-year-old computer for $ 1,455,227. The purchase price was paid in the form of a 4-year promissory note in the amount of $ 250,000 and the balance in two nonrecourse notes payable over an 8-year period. Simultaneously, petitioner leased the equipment back to the equipment leasing corporation for 8 years. The equipment leasing corporation's monthly rental payments to petitioner purported to amortize petitioner's nonrecourse note…
1Opinion of the Court
Goffe, Judge:
The Commissioner determined deficiencies in petitioner’s Federal income tax as follows:
'FYD Jline 30— Deficiency
1976 . $104,776.32
1977 . 225,531.31
1978 . 205,347.71
Pursuant to Rule 141(b) of the Tax Court Rules of Practice and Procedure,1 the Court ordered a separate trial for the sole purpose of deciding one issue. That issue is whether petitioner’s purchase and leaseback of used computer equipment was a tax-avoidance scheme lacking in economic substance which should be disregarded for tax purposes.
FINDINGS OF FACT
Some of the facts have been stipulated by the parties. The…
2Cases cited25 opinions
- Gregory v. HelveringSupreme Court of the United States · 1935
- Knetsch v. United StatesSupreme Court of the United States · 1960
- Frank Lyon Co. v. United StatesSupreme Court of the United States · 1978
- Crane v. CommissionerSupreme Court of the United States · 1947
- Helvering v. F. & R. Lazarus & Co.Supreme Court of the United States · 1939
20 more not listed; retrieve them via the Exa API.
3Cited by198 opinions
- Rice's Toyota World, Inc. (Formerly Rice Auto Sales, Inc.) v. Commissioner of Internal RevenueCourt of Appeals for the Fourth Circuit · 1985
- Rose v. CommissionerUnited States Tax Court · 1987
- Patin v. CommissionerUnited States Tax Court · 1987
- Cherin v. CommissionerUnited States Tax Court · 1987
- Waddell v. CommissionerUnited States Tax Court · 1986
193 more not listed; retrieve them via the Exa API.