ACM Partnership, Southampton-Hamilton Company, Tax Matters Partner - Page 1

                                 T.C. Memo. 1997-115                                  

                               UNITED STATES TAX COURT                                

                   ACM PARTNERSHIP, SOUTHAMPTON-HAMILTON COMPANY,                     
                         TAX MATTERS PARTNER, Petitioner v.                           
                    COMMISSIONER OF INTERNAL REVENUE, Respondent                      

               Docket No. 10472-93.            Filed March 5, 1997.                   

                    In 1988, C reported a $105 million capital gain.                  
               In 1989, M, an investment banking firm, approached                     
               C with an elaborate scheme to shelter that gain from                   
               Federal income tax.  Pursuant to M's advice, A, C, and                 
               M created an offshore partnership (P) in which their                   
               respective initial interests were 82.63, 17.07, and                    
               .29 percent.  P served as the vehicle for a contingent                 
               installment sale transaction (CINS transaction) that                   
               would create approximately $100 million of capital                     
               losses for C, a domestic corporation, and corresponding                
               capital gains for A, a foreign corporation that was not                
               subject to U.S. tax.  Pursuant to the scheme, P                        
               purchased securities and, approximately 3 weeks later,                 
               sold most of the securities for cash and LIBOR Notes.                  
               The value of the total consideration received, in the                  
               form of cash and LIBOR Notes, equaled the price that P                 
               had paid for the securities sold.  The transactions and                
               the returns connected thereto were the result of a                     

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