United States Tax Court

“ We have merely concluded that most of the transactions involving the financial affairs of est, a.e.c., as was the purported purchase in these cases, were sham transactions and for that reason have concluded for the purposes of a basis of WEA in the physical assets which were transferred from est, a.e.c. to WEA, the sole proprietorship of Werner Erhard, the unrecovered basis of est, a.e.c. at the time the assets were transferred to WEA is the basis of WEA in those assets. ”

“ Respondent argues that if we permit petitioners to use the unused basis of est, a.e.c., it is necessary to determine the gain or loss to petitioners from a distribution to them of the est, a.e.c. assets. ”

“ The deficiency notice with respect to the depreciation schedule for the fiscal year of est, a.e.c. ended June 30, 1981, which is the year involved in docket No. 3014-85, shows adjustments disallowing a claimed interest deduction, disallowing amortization of $974,578, and determining other income by disallowing a claimed Hopi partnership loss of $773,762, and "wardrobe" of $3,111. ”