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The cases presented an issue of first impression because the court had never ruled on the tax consequences of an ostensible like-kind exchange involving a SILO (sale-in/lease-out) transaction funded fully by a taxpayer’s own equity contribution. The transactions did not transfer the benefits and burdens of ownership to petitioner, because they were properly characterized not as leases but as loans. Petitioner failed to meet the requirements of 26 U.S.C.S. § 1031. Petitioner was required to recognize the gain it received in 1999 on the sale of its power plants under 26 U.S.C.S. §1001. Petitioner evinced disregard of rules and regulations within the meaning of 26 U.S.C.S. 6662 with respect to ascertaining the tax consequences of the test transactions. Petitioner did not have reasonable cause and did not act in good faith within the meaning of 26 U.S.C.S. § 6664(c). Petitioner also did not satisfy requirements of 26 U.S.C.S. § 1031. Respondent’s disallowance of depreciation deductions claimed on the 2001 tax return were sustained. Accuracy related penalties were upheld. Petitioner was required to include in income in 2001 original issue discount income related to the test transactions. Petitioner was not entitled to deduct amortized transaction costs related to test transactions.