Cir

MEMORANDUM

The tax court did not clearly err in finding that C-MAC’s purchase of the Creedmoor inventory (in advance of acquiring the Creedmoor facility) was not a sham transaction. Sparkman v. Comm’r, 509 F.3d 1149, 1155 (9th Cir.2007); Coltec Indus., Inc. v. United States, 454 F.3d 1340, 1356 (Fed.Cir.2006) (“[T]he transaction to be analyzed is the one that gave rise to the alleged tax benefit.”). Dennis Wood, CEO of C-MAC, testified that C-MAC could use the inventory in its other businesses. The tax court specifically identified this testimony as “credible.” Wood also testified that C-MAC “was” using the inventory, and that he didn’t “do deals for tax advantage.” Accordingly, there was a “business purpose for engaging in the transaction other than tax avoidance.” Bail Bonds by Marvin Nelson, Inc. v. Comm’r, 820 F.2d 1543, 1549 (9th Cir.1987).

The transaction also had economic substance because, as the Tax Court found, it had “practical economic effects other than the creation of income tax losses.” Casebeer v. Comm’r, 909 F.2d 1360 , 1363 (9th Cir.1990); see also Bail Bonds, 820 F.2d at 1548 (“A transaction is a sham if it has no purpose or economic effect other than the…