Orange Coast Enterprises, a wholly owned subsidiary of Central Valley Ag Enterprises, acquired a 98 percent partnership share in Astropar Leasing Partnership. The two-percent partner was a partnership called STM-CIG. STM-CIG operated a lease-stripping tax shelter in which Astropar participated.
Astropar’s lease-stripping tax deductions were passed to Orange Coast and then to Central Valley. After the Internal Revenue Service (IRS) rejected the tax shelter, the agency disallowed Astropar’s reported losses for three tax years. Central Valley was left with a tax deficiency.
