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carefully crafted and faithfully executed sequence of
sophisticated and costly financial maneuvers that left
little to chance or market opportunities. P used the
contingent payment sale provisions of sec.
15a.453-1(c), Temporary Income Tax Regs., 46 Fed. Reg.
10711 (Feb. 4, 1981), to report the sale for Federal
income tax purposes. In accordance therewith, P
reported a large capital gain in the year of sale; most
of this gain was allocated to A. In a later year,
after P redeemed A's entire interest, P sold the notes
and reported a corresponding capital loss, most of
which was allocated to C. The loss was carried back to
1988 by C to offset its gain. Held: The Court will
disregard the CINS transaction for Federal income tax
purposes because it lacked economic substance.
Fred T. Goldberg Jr., Albert H. Turkus, Pamela F. Olson,
William L. Goldman, Christopher Kliefoth, and Joni Lupovitz,
for petitioner.
Jill A. Frisch, Patricia A. Donahue, Edward D. Fickess,
Sheila Olaksen, Elizabeth P. Flores, Brian J. Condon, and
James M. Guiry, for respondent.
CONTENTS
Findings of Fact
1. The Contingent Installment Sale Transaction ....... 5
2. Development of Colgate's Liability
Management Partnership.................................. 10
3. The Partners ...................... 24
4. The Partnership Agreement ............... 29
5. Initial Stage of Colgate's Partnership
Strategy ........................ 35
6. Tax and Financial Accounting for the Results ...... 47
7. Final Stage of Colgate's Partnership Strategy ..... 54
8. Merrill's Collateral Swap Transactions ......... 59
9. ABN's Investment Management .............. 70
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