The district court upheld the disallowance of Schiff's claimed ITC stating that: (1) the IRS properly applied a realistic contemplation test to § 46(e)(3)(b), and (2) Schiff and SMEC realistically contemplated that the lease of the Gulfstream would extend beyond 50 percent of its useful life. See Owen v. Commissioner, Internal Revenue Service, 881 F.2d 832 (9th Cir. 1989); Connor v. Commissioner, Internal Revenue Service, 847 F.2d 985 (1st Cir. 1988). B.

95 T.C. at 88. Under this test, written lease terms are not dispositive. See Connor v. Commissioner, 847 F.2d 985, 988 (1st Cir. 1988). Instead, all the facts and circumstances surrounding the lease are examined, see 95 T.C. at 89, to ascertain the realistic contemplation of the leasing parties when the property is first put into service, Owen v. Commissioner, 881 F.2d 832, 834 (9th Cir. 1989), cert. denied, ___ U.S. ___, 110 S.Ct. 1113, 107 L.Ed.2d 1020 (1990); Connor, 847 F.2d at 989; see also McEachron v. Commissioner, 873 F.2d 176, 177 (8th Cir. 1988) (adopting realistic contemplation test when challenged lease contains no definite term).

The general rule in tax law is that tax credits are a matter of legislative grace, and taxpayers bear the burden of clearly showing that they are entitled to them. New Colonial Ice Co. v. Helvering, 292 U.S. 435, 440, 54 S.Ct. 788, 790, 78 L.Ed. 1348 (1934); see also Rule 142(a), Tax Court Rules of Practice and Procedure, 26 U.S.C. foll. § 7453; Connor v. Comm'r, 847 F.2d 985, 989 (1st Cir. 1988) (collecting cases). III.

We calculate the length of the lease by examining the "realistic contemplation" of the parties at the time the property is first put into service. Hokanson v. Commissioner, 730 F.2d 1245, 1248 (9th Cir. 1984); see also Connor v. Commissioner, 847 F.2d 985, 989 (1st Cir. 1988); Ridder v. Commissioner, 76 T.C. 867, 875 (1981). We review the tax court's decision that "the parties realistically contemplated that the leases would last" longer than fifty percent of the useful life of the property for clear error.

2. Ps failed to carry their burden of proof to establish that the formal 12-month 1982 leases were not in fact intended to be substantially indefinite in duration. Connor v. Commissioner, 847 F.2d 985 (1st Cir. 1988), affg. T.C. Memo. 1987-223, followed. Sauey v. Commissioner, 90 T.C. 824 (1988), affd. without published opinion 881 F.2d 1086 (11th Cir. 1989), distinguished.

The Tax Court's findings of fact will only be disturbed for clear error. Manzoli v. Commissioner, 904 F.2d 101, 103 (1st Cir. 1990); U.S. v. Thompson, 406 F.2d 1006, 1009 (9th Cir. 1969); see also Conner v. Commissioner, 847 F.2d 985 (1st Cir. 1988) (emphasizing appropriateness of giving weight to Commissioner's well-established views). B. Characterization of the Legal Fee

This showing has been required despite express language in the lease limiting the term to something less than the fifty percent useful life. Schiff v. United States, 942 F.2d 348, 351-54 (6th Cir. 1991) (disregarding lease with stated two year term); Borchers v. Comm'r, 943 F.2d 22, 23 (8th Cir. 1991) (disregarding lease with one year stated term); Connor v. Comm'r, 847 F.2d 985, 989 (1st Cir. 1988) (same); Hokanson v. Comm'r, 730 F.2d 1245, 1248 (9th Cir. 1984) (disregarding lease with an implied one year term); see also Shumacher, 931 F.2d at 653 (adopting realistic contemplation test for verbal leases without termination dates). "[A] minimum duration specified in a lease is not the controlling factor in determining the length of the term of the lease for section 38 purposes."

The Tax Court's findings of fact, as in the case of the net worth method assessment, are subject to review under the "clearly erroneous" standard. United States v. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948); Connor v. Commissioner, 847 F.2d 985, 989 (1st Cir. 1988); In Re Tully, 818 F.2d 106, 109 (1st Cir. 1987). This "standard adheres with undiminished force to inferences which the judge below has drawn from facts of record."

We conclude that the better reasoned approach is to focus on the risk of loss, which, in this case, rested with Newman. McNamara v. Commissioner, 827 F.2d 168, 170 (7 Cir. 1987) (stressing "entrepreneurial risk") (citing Freesen v. Commissioner, 798 F.2d 195, 199 (7 Cir. 1986) (per curiam)). But see Owen v. Commissioner, 881 F.2d 832, 834 (9 Cir. 1989) (rejecting McNamara analysis), cert. denied, ___ U.S. ___, 110 S.Ct. 1113, 107 L.Ed.2d 1020 (1990); Connor v. Commissioner, 847 F.2d 985, 987-89 (1 Cir. 1988) (same). This, we believe, is the only way, as a practical matter, to allow non-corporate (i.e., individual) taxpayers like Newman to take advantage of the ITC provision.

For one thing, the Tax Court was obligated to give some deference to the Commissioner's view of the application of the sham in substance doctrine, and the "for profit" language, to the facts of this case. See Bob Jones University v. United States, 461 U.S. 574, 596, 103 S.Ct. 2017, 2031, 76 L.Ed.2d 157 (1983) (Supreme Court has "long recognized the primary authority of the IRS . . . in construing the Internal Revenue Code"); Jewett v. Commissioner, 455 U.S. 305, 318, 102 S.Ct. 1082, 1090, 71 L.Ed. 2d 170 (1982) (Commissioner's interpretation of tax code is "entitled to respect"); Connor v. Commissioner of Internal Revenue, 847 F.2d 985, 989 (1st Cir. 1988). Moreover, the case law and the record in this case provide ample support for the Tax Court's application of the sham in substance doctrine, as well as for the alternative ruling that the losses would not be deductible under § 108, for the following reasons, taken together.