                       T.C. Memo. 2008-46


                     UNITED STATES TAX COURT



     HUBERT ENTERPRISES, INCORPORATED, SUCCESSOR BY MERGER TO
         HUBERT HOLDING COMPANY, Petitioner v. COMMISSIONER
                 OF INTERNAL REVENUE, Respondent*



     Docket No. 16798-03.              Filed February 28, 2008.



          L is a limited liability company that purchased
     equipment and partially financed its purchases using
     recourse debt. L reports its operations for Federal
     income tax purposes on the basis of a taxable year
     ending July 31. On Mar. 28, 2001, L’s two members
     amended L’s operating agreement to add a provision on
     deficit capital account restoration. Under the
     provision, stated as effective Jan. 1, 2000, any L
     member with a deficit capital account following the
     liquidation of its interest in L had to contribute to L
     by the end of the taxable year, or if later within 90
     days after the date of the liquidation, funds equal to
     the amount of the deficit for payment to L’s creditors
     or for distribution to the members of L with positive


     * This opinion supplements Hubert Enters., Inc. & Subs. v.
Commissioner, 125 T.C. 72 (2005), affd. in part, vacated in part
and remanded 230 Fed. Appx. 526 (6th Cir. 2007).
                                -2-

     capital accounts. Pursuant to the provision, H, a
     member of L with a 99-percent interest therein, took
     into account its proportionate share of L’s recourse
     debt in computing its at-risk amounts under sec.
     465(b)(2)(A), I.R.C., for H’s taxable years ended in
     July 2000 and 2001.
          Held: For Federal income tax purposes, the
     provision is inapplicable to H’s taxable year ended in
     2000 because the amendment was made too late under sec.
     761(c), I.R.C., and other provisions, to be included in
     L’s operating agreement for that year.
          Held, further, H may not take into account L’s
     recourse debt for H’s taxable year ended in 2001
     because H was not personally liable for the repayment
     of that debt under sec. 465(b)(2)(A), I.R.C.



     William F. Russo and R. Daniel Fales, for petitioner.

     Gary R. Shuler, Jr., for respondent.



      SUPPLEMENTAL MEMORANDUM FINDINGS OF FACT AND OPINION


     LARO, Judge:   This case is before the Court on remand from

the Court of Appeals for the Sixth Circuit.   We filed our initial

report as Hubert Enters., Inc. & Subs. v. Commissioner, 125 T.C.

72 (2005) (Hubert I).   Hubert I was a consolidation of three

cases, and the Court of Appeals for the Sixth Circuit affirmed

our decisions in two of those cases.   See Hubert Enters., Inc. v.

Commissioner, 230 Fed. Appx. 526 (6th Cir. 2007), affg. in part,

vacating in part and remanding 125 T.C. 72 (2005).   The Court of

Appeals for the Sixth Circuit vacated the remaining decision and

remanded the case to this Court to decide, after allowing the

parties to develop the record more fully, whether the deficit
                                 -3-

capital account restoration obligation (DRO) included in the

amended and restated operating agreement of Leasing Co., L.L.C.

(LCL), a limited liability company, rendered LCL’s members payors

of last resort under the law applicable in the Sixth Circuit.

Id. at 531.   The relevant years for LCL are its taxable years

ended July 31, 2000 and 2001, and LCL’s members added the DRO to

LCL’s operating agreement on March 28, 2001, stated as effective

January 1, 2000.   LCL’s members are HBW, Inc. (HBW), a wholly

owned subsidiary of Hubert Holding Co. (HHC), and Hubert Commerce

Center (HCC).   The subject years are HHC’s taxable years ended in

July 2000 and 2001.1

     On remand, we ordered the parties to state the proper course

of action to be taken in light of the remand.   Neither party

requested any further trial, stating that the mandate of the

Court of Appeals for the Sixth Circuit was best followed through

their filing of seriatim briefs.   Accordingly, we decide the

relevant issue on the basis of the record underlying Hubert I,

with the assistance of additional briefing by the parties.   We

incorporate herein our facts as set forth in Hubert I and repeat

those facts only as necessary for a comprehensive analysis of the

relevant issue.    We hold that the DRO did not render HBW a payor




     1
       For Federal income tax purposes, HHC and HBW reported
their operations for those years on the basis of a 52- to 53-week
fiscal year ending on the Friday nearest to each July 31.
                                  -4-

of last resort under the applicable law.2    Unless otherwise

noted, section references are to the applicable versions of the

Internal Revenue Code.

                          FINDINGS OF FACT

     LCL was formed as a Wyoming limited liability company on

April 30, 1998, and was treated as a partnership for Federal

income tax purposes.   LCL operated on the basis of a fiscal year

ended July 31, and it filed Forms 1065, U.S. Return of

Partnership Income, to report its operations for Federal income

tax purposes.   During the relevant years, LCL engaged in

equipment leasing activities and purchased equipment subject to a

lease.   LCL partially financed its purchases of that equipment

using promissory notes.   Some portions of the notes were

recourse; the remaining portions were nonrecourse.

     LCL’s members were HBW and HCC.    HBW owned 99 of LCL’s 100

membership units, and HCC owned the remaining unit.    During the

subject years, HBW was a wholly owned subsidiary of HHC and a

member of its affiliated group.    HCC also was connected with that

group.

Relevant Equipment Leasing Activities

     In 1998, LCL purchased some equipment from Capital Resources

Group, Inc. (CRG).   In connection with this purchase, LCL signed


     2
       We decide the relevant issue as to HBW. As mentioned
above, HHC was the parent of HBW, and HBW was the relevant member
of LCL.
                                -5-

four promissory notes.   Two of the notes were nonrecourse; the

other two notes were partially recourse.    Neither LCL member

signed any of these notes or otherwise guaranteed repayment of

the notes.

     In 2000, LCL purchased other equipment from CRG.    In

connection with this purchase, LCL signed two promissory notes.

Both notes were partially recourse.   Neither LCL member signed

either of these notes or otherwise guaranteed repayment of the

notes.

The DRO

     Section 4.2 of LCL’s initial operating agreement (initial

operating agreement) states that “No Member shall be liable as

such for the liabilities of the Company”.    On March 28, 2001,

LCL’s two members amended and restated the initial operating

agreement in its entirety (revised operating agreement) and

stated in the revised operating agreement that it was effective

as of January 1, 2000.   The revised operating agreement is

construed under Wyoming law, and only the parties that signed the

revised operating agreement (and their successors in interest)

have any rights or remedies under that agreement.    The revised

operating agreement states that the life of LCL is 30 years from

the date of the filing of its articles of organization with the
                                    -6-

Wyoming secretary of state.3       The revised operating agreement

states that neither LCL member is required to make any additional

capital contribution to LCL.

        Section 7.7 of the revised operating agreement contains the

DRO.4       That provision states as follows:

        Deficit Capital Account Restoration. If any Partner
        has a deficit Capital Account following the liquidation
        of his, her or its interest in the partnership, then
        he, she or it shall restore the amount of such deficit
        balance to the Partnership by the end of such taxable
        year or, if later, within 90 days after the date of
        such liquidation, for payment to creditors or
        distribution to Partners with positive capital account
        balances.

Provision Concerning Potential Third-Party Beneficiaries

        The revised operating agreement contains a provision

concerning potential third-party beneficiaries.       As stated in

section 20.9 of that agreement:

        Nothing express or implied in this Agreement is
        intended or shall be construed to confer upon or to
        give any person or entity, other than the parties or
        their successors-in-interest in accordance with the
        provision of this Agreement, any rights or remedies
        hereunder or by reason hereof.



        3
       The initial operating agreement states that the term is 10
years unless dissolved earlier pursuant to the provisions of that
agreement.
        4
       A partnership (or another type of entity treated as a
partnership) typically includes a DRO in its operating agreement
so that the allocations of income, gain, loss, deduction, or
credit (or item thereof) stated in the agreement have
“substantial economic effect” within the meaning of sec.
704(b)(2). See generally sec. 1.704-1(b), Income Tax Regs., and
especially par. (2)(ii)(b)(3) thereof.
                               -7-

At-Risk Bases of HBW

     For its taxable years ended in July 2000 and 2001, HBW took

into account its proportionate share of LCL’s recourse debt in

computing its at-risk amounts under section 465(b).    Respondent

determined that HBW was not entitled to increase its at-risk

amounts on account of that debt.    Accordingly, respondent

determined, HBW was not entitled to deduct losses that it claimed

with respect to LCL’s leasing activities because those losses

exceeded the amounts for which HBW was at risk with respect to

those activities.

                             OPINION

     Petitioner argues that the DRO rendered HBW a payor of last

resort as to LCL’s recourse debt for purposes of applying the

at-risk rules of section 465(b).5    Respondent argues that HBW was

not a payor of last resort as to LCL’s recourse debt because the

DRO did not render HBW personally liable as to that debt.     We

agree with respondent.

First Subject Year

     As to the first subject year, the DRO was included in the

revised operating agreement which resulted from an amendment made


     5
       Petitioner makes no argument that HBW also may take into
account LCL’s nonrecourse debt when applying those rules. We
deem that issue to have been waived and do not decide it. See
Petzoldt v. Commissioner, 92 T.C. 661, 683 (1989); Burbage v.
Commissioner, 82 T.C. 546, 547 n.2 (1984), affd. 774 F.2d 644
(4th Cir. 1985); Wolf v. Commissioner, T.C. Memo. 1992-432, affd.
13 F.3d 189 (6th Cir. 1993).
                                -8-

on March 28, 2001.   Although the amendment was written

retroactively as effective January 1, 2000, the agreement had no

such retroactive effect for Federal income tax purposes.   LCL’s

partnership return for its taxable year ended July 31, 2000, was

required (absent an extension) to be filed by November 15, 2000,

see sec. 1.6031(a)-1(e)(2), Income Tax Regs., and for Federal

income tax purposes a partnership agreement may include as to a

taxable year only those provisions included with the agreement on

or before the unextended due date of the partnership return for

that year, see sec. 761(c); Fahey v. Commissioner, T.C. Memo.

1979-20; see also Long v. Commissioner, 77 T.C. 1045, 1078 n.17

(1981).   In addition, in the context of section 465, section

465(a)(1) requires that the amount for which a taxpayer is at

risk with respect to an activity for a taxable year be determined

as of the close of that year.   See also Callahan v. Commissioner,

98 T.C. 276, 281 (1992); Melvin v. Commissioner, 88 T.C. 63, 73

(1987), affd. 894 F.2d 1072 (9th Cir. 1990).   The amendment’s

purported retroactive effect to the earlier year also does not

comport with the annual accounting system of Federal income

taxation.   Under that system, the amount of income tax payable

for a taxable year is generally determined on the basis of those

events happening or circumstances present during that year.     See

Hillsboro Natl. Bank v. Commissioner, 460 U.S. 370, 377 (1983);

Burnet v. Sanford & Brooks Co., 282 U.S. 359 (1931); Hayutin v.
                                -9-

Commissioner, 508 F.2d 462, 474 (10th Cir. 1974), affg. T.C.

Memo. 1972-127; see also Frederick v. Commissioner, 101 T.C. 35,

39-40 (1993); sec. 1.461-1(a)(3), Income Tax Regs.   We conclude

that the DRO was not a part of LCL’s operating agreement for its

taxable year ended July 31, 2000, thus rendering the DRO

inapplicable to the first subject year.   Accord Daine v.

Commissioner, 168 F.2d 449, 451-452 (2d Cir. 1948) (and cases

cited thereat) (retroactive order of State court not taken into

account in the setting of Federal income tax), affg. 9 T.C. 47

(1947).   We turn to deciding whether the DRO applies to the

second subject year.

Second Subject Year

     The parties agree that the recourse notes signed by LCL did

not in and of themselves create personal liability for HBW.    See

also Wyo. Stat. Ann. sec. 17-15-113 (2007) (providing that “the

members of a limited liability company * * * are [not] liable

under a judgment, decree or order of a court, or in any other

manner, for a debt, obligation or liability of the limited

liability company”).   The parties dispute whether the DRO made

HBW personally liable on those notes for purposes of applying the

at-risk rules of section 465.   Petitioner argues that LCL’s

recourse creditor could in a worst case situation obtain a

judgment against LCL and cause the DRO to be enforced against HBW

so that the recourse creditor could then receive from HBW
                                -10-

payments on the recourse notes.    Petitioner asserts that Wyo.

Stat. Ann. sec. 17-15-121(a) and (c) allows a member of a limited

liability company to promise to contribute additional capital to

the company and permits a creditor of the company to enforce that

promise in order to receive payment on a debt owed to the

creditor by the company.

     As discussed in detail below, we disagree with petitioner’s

argument and assertion as applied to the facts at hand.    First,

from a factual point of view, HBW did not through the DRO make an

unconditional promise to contribute additional capital to LCL.

To the contrary, the DRO requires that HBW contribute additional

capital to LCL only if:    (1) HBW liquidates its interest in LCL

and (2) then has a deficit in its capital account.    For this

purpose, as discussed further below, LCL’s recourse creditor has

no right to force HBW to liquidate its interest in LCL to cause

an additional contribution under the DRO.    Hence, HBW’s personal

liability for repayment of LCL’s recourse debt is neither fixed

nor definite but is generally contingent on HBW voluntarily

causing a liquidation of its interest in LCL.    Even then, HBW’s

contribution of additional capital is required under the DRO only

if HBW then has a deficit capital account.    Second, even if both

conditions are met, the DRO does not impose on HBW an obligation

to contribute funds in the amount necessary to satisfy its

proportionate share of any unpaid debt owed by LCL; the DRO
                               -11-

simply requires that HBW contribute funds equal to the amount of

the deficit in HBW’s capital account, which may or may not be the

same as the amount of HBW’s proportionate share of LCL’s recourse

debt.   Third, even if HBW actually makes an additional

contribution to LCL’s capital under the DRO, the DRO does not

require that any of the additional contribution be paid to one or

more of LCL’s creditors.   The DRO states specifically that LCL

may transfer the additional contribution to its members with

positive capital accounts.

     Congress enacted section 465 to limit the use of artificial

losses created by deductions from certain leveraged investment

activities.   Section 465(a)(1) provides that a taxpayer who is

engaged in certain activities may deduct losses occurring from

these activities only to the extent that the taxpayer is “at

risk” for such activities at the close of a taxable year.

Equipment leasing, which is the type of activity involved in this

case, comes within the terms of these at-risk activities.    See

sec. 465(c)(1)(C).

     Under section 465(b)(1)(A), a taxpayer is at risk for

amounts of money and the adjusted basis of other property

contributed by the taxpayer to the designated activity.   The

basis of property, under section 1012, is generally defined as

cost and that cost is increased or decreased, i.e., adjusted, as

permitted pursuant to section 1016.   Under section 465(b)(2), a
                                 -12-

taxpayer also is at risk for amounts borrowed for use in the

activity to the extent that the taxpayer is “personally liable

for the repayment of such amounts” or to the extent that the

taxpayer has pledged property, other than the property used in

the activity, as security for such borrowed amounts.     A taxpayer

is not at risk with respect to amounts protected against loss

through nonrecourse financing, guaranties, stop loss agreements,

or other similar arrangements.    See sec. 465(b)(4).   The mere

fact that a debt of a partnership (or similar entity) is payable

in a later year by the partner does not necessarily mean that the

partner must exclude the amount of that debt from the computation

of the partner’s at-risk amount with respect to the partnership.

See Melvin v. Commissioner, 88 T.C. at 73-74.

     This case is appealable to the Court of Appeals for the

Sixth Circuit.   That court has analyzed the at-risk provisions of

section 465 in the setting of leases in three primary opinions;

namely, Pledger v. United States, 236 F.3d 315 (6th Cir. 2000),

Martuccio v. Commissioner, 30 F.3d 743, 750-751 (6th Cir. 1994),

revg. T.C. Memo. 1992-311, and Emershaw v. Commissioner, 949 F.2d

841 (6th Cir. 1991), affg. T.C. Memo. 1990-246.   In each of these

cases, the court applied the “payor of last resort” test that it

first adopted in Emershaw.   That test essentially asks in the

setting of section 465(b) whether the taxpayer has a fixed and

definite obligation to use personal funds to pay a debt in a
                               -13-

worst case scenario.   See also Pritchett v. Commissioner, 827

F.2d 644, 647 (9th Cir. 1987) (a taxpayer is not at risk if the

taxpayer’s obligation to repay borrowed funds is contingent),

revg. on other grounds 85 T.C. 580 (1985).   Under this test, if a

taxpayer is a payor of last resort, then the taxpayer is at risk

for the purpose of section 465(b).

      In determining whether the taxpayers in Emershaw v.

Commissioner, supra, were payors of last resort, the Court of

Appeals for the Sixth Circuit initially referenced a Tax Court

Opinion stating that whether a taxpayer is at risk for purposes

of section 465(b) “‘must be resolved on the basis of who

realistically will be the payor of last resort if the transaction

goes sour and the secured property associated with the

transaction is not adequate to pay off the debt.’”    Id. at 845

(quoting Levy v. Commissioner, 91 T.C. 838, 869 (1988)).    The

Court of Appeals gave detailed consideration to the

Commissioner’s argument that the taxpayers’ investment could not

be at risk because there was not a realistic possibility that the

taxpayers would ever be called upon to make payments on the debt.

Id.   The court dismissed that argument as unpersuasive and found

that the taxpayers were at risk because they could ultimately be

required to make payment.   Id. at 850.   The court concluded that

the taxpayers were payors of last resort because they might have

to pay the debt.
                               -14-

     Here, in a worst case scenario, HBW is not a payor of last

resort as to LCL’s recourse debt.     In such a scenario, LCL

defaults on the debt without any assets to repay any of the debt.

LCL’s default, however, does not mean that the recourse creditor

can simply turn to HBW to collect any part of the debt.     HBW’s

obligation under the DRO requires in part that HBW liquidate its

interest in LCL, and LCL’s default on its payment of its recourse

debt does not trigger a liquidation of HBW’s interest in LCL (or

of LCL itself).6   Nor in a worst case scenario could LCL’s

recourse creditor recover directly from HBW or compel a

dissolution of LCL so as to force a liquidation of HBW’s interest

in LCL.   The revised operating agreement states that LCL shall be

liquidated upon its “dissolution” and that dissolution occurs

“only as provided by the Wyoming LLC Act.”     Under that act, the

dissolution of a limited liability company occurs only upon the

happening of one of three events, none of which is the company’s

default on the payment of a debt.     See Wyo. Stat. Ann. sec.




     6
       Petitioner apparently assumes that in a worst case
scenario HBW will liquidate its interest in LCL and then have a
deficit capital account thus triggering the DRO. We disagree
with the assumption. As stated herein, HBW’s liquidation of its
interest in LCL is left up to HBW, and we do not assume that HBW
on its own would liquidate its interest in LCL if it was
detrimental for HBW to do so. In other words, as discussed
below, LCL could not be made to liquidate by a creditor in any
circumstance, not even by a creditor that forced LCL into
receivership or bankruptcy.
                                -15-

17-15-123(a).7    Thus, LCL’s default on its obligation to repay

the recourse notes would not entitle LCL’s recourse creditor to

compel the dissolution of LCL.8    The DRO also would not apply to

HBW if LCL defaulted on its debt and HBW had a positive capital

account following a liquidation of HBW’s interest in LCL.    Given



     7
         Wyo. Stat. Ann. sec. 17-15-123(a), provides:

     A limited liability company organized under this
     chapter shall be dissolved upon the occurrence of any
     of the following events:

          (i) When the period fixed for the duration of the
     limited liability company shall expire;

          (ii) By the unanimous written agreement of all
     members; or

          (iii) Upon the death, retirement, resignation,
     expulsion, bankruptcy, dissolution of a member or
     occurrence of any other event which terminates the
     continued membership of a member in the limited
     liability company, unless the business of the limited
     liability company is continued by the consent of all
     the remaining members under a right to do so stated in
     the articles of organization of the limited liability
     company.

Upon the happening of the last of the three events just listed,
the revised operating agreement allows the business of LCL to be
continued by the consent of the remaining member.
     8
       Nor are we aware of any provision in Wyoming law that
would allow LCL’s recourse creditor to cause LCL to liquidate to
make the DRO provision effective. See Wyo. Stat. Ann.
secs. 17-15-101 through 17-15-147. We are not unmindful of Wyo.
Stat. Ann. sec. 17-15-145. Under that section, a creditor of a
limited liability company may be able to force liquidation of the
limited liability company in certain cases if a member of that
company defaulted on a personal debt owed to the creditor.
There, however, it is not a debt of the limited liability company
that is involved; it is the debt of the member.
                                -16-

that the DRO requires additional capital contributions only when

a member “has a deficit Capital Account following the liquidation

of * * * its interest” in LCL and that no creditor of LCL could

compel a liquidation of HBW’s interest in LCL, we conclude that

HBW is not a payor of last resort because HBW is not “personally

liable for the repayment” of any of LCL’s recourse debt within

the meaning of section 465(b)(2)(A).    In other words, we conclude

that HBW is not personally liable for the repayment of any of

LCL’s recourse debt because HBW’s obligation to contribute

additional funds to LCL is not unavoidable in that HBW can avoid

contributing additional capital under the DRO simply by not

liquidating.    See Callahan v. Commissioner, 98 T.C. at 283.

     Petitioner relies erroneously on Wyo. Stat. Ann. sec.

17-15-121(a) and (c), to support a contrary conclusion.9    As


     9
         Wyo. Stat. Ann. sec. 17-15-121(a) and (c), provides:

     Sec. 17-15-121.    Liability of member to company.

          (a) A member is liable to the limited liability
     company:

          (i) For the difference between his or its
     contributions to capital as actually made and that
     stated in the articles of organization, operating
     agreement, subscription for contribution or other
     document executed by the member as having been made by
     the member; and

          (ii) For any unpaid contribution to capital which
     he or it agreed in the articles of organization,
     operating agreement or other document executed by the
     member to make in the future at the time and on the
                                                   (continued...)
                                   -17-

petitioner sees it, that section allows a member of a limited

liability company to promise to contribute additional capital to

the company and permits a creditor of the company to enforce that

promise in order to receive payment on a debt owed by the company

to the creditor.   We disagree with petitioner’s application of

this section to the facts at hand.        As stated above, the

operation of the DRO hinges on a liquidation of a member’s

interest in LCL, and a creditor of LCL has no right to compel

such a liquidation.   Further, the revised operating agreement

does not require LCL to pay the restored deficit to creditors; it

allows this amount to be distributed to members with positive

capital account balances.       Further, the revised operating

agreement does not confer any rights on a creditor of LCL.       The

agreement states specifically that nothing express or implied

therein “shall be construed to give to any person or entity,

other than the parties or their successors-in-interest * * *, any


     9
      (...continued)
     conditions stated in the articles of organization,
     operating agreement or other document evidencing such
     agreement.

                      *     *      *      *   *    *    *

          (c) The liabilities of a member as set out in this
     section can be waived or compromised only by the
     consent of all members; but a waiver or compromise
     shall not affect the right of a creditor of the limited
     liability company who extended credit or whose claim
     arose after the filing and before a cancellation or
     amendment of the articles of organization, to enforce
     the liabilities.
                               -18-

rights or remedies hereunder or by reason hereof.”     We also note

the illogic of petitioner’s argument that the DRO in and of

itself makes HBW at risk for the repayment of LCL’s recourse

debt.   As we have stated, a DRO is routinely inserted into a

partnership agreement to meet the substantial economic effect

requirements of section 704(b).   If a member of a limited

liability company is automatically “at risk” for repayment of the

company’s recourse debt simply by inserting a DRO in the

operating agreement in order to meet the requirements of section

704(b), then the at-risk rules of section 465 have little purpose

in that seemingly every member of a limited liability company is

at risk for the repayment of the company’s recourse debt.

     The limited amount of any capital contribution under the DRO

further supports our conclusion that HBW was not a payor of last

resort as to LCL’s recourse debt.     Under the DRO, HBW’s

obligation is limited to restoring the amount of any deficit in

its capital account.   However, the amount of that deficit, if in

fact one occurs, is not necessarily the same amount as HBW’s

proportionate share of LCL’s recourse debt.     Moreover, as just

noted, the revised operating agreement does not require LCL to

pay any or all of the restored deficit to creditors; it allows

LCL to distribute any restored funds to members with positive

capital account balances.
                               -19-
     We hold that the DRO did not render HBW a payor of last

resort under the applicable law.10    Instead, the person who bears

the risk of loss on a default on LCL’s recourse obligations is

LCL’s recourse creditor itself.   Such a fact is not surprising,

however, in that it is that creditor that chose to deal with LCL

in its status as a limited liability company and through the

terms of the promissory notes agreed to seek repayment solely

from the assets of LCL rather than also from the assets of one or

more of LCL’s members.   We have considered all arguments by

petitioner for a holding contrary to that which we reach herein

and have concluded that those arguments not mentioned herein are

irrelevant or without merit.   Accordingly,


                                           Decision will be entered

                                      as previously entered on

                                      September 28, 2005.




     10
       Even if we had concluded that the DRO did render HBW a
payor of last resort, we would have held against petitioner in
that it has failed to prove the amount of any additional loss
that it is entitled to deduct in this case.
