ACM Partnership, Southampton-Hamilton Company, Tax Matters Partner - Page 141

                                       - 99 -                                         
               When the Partnership Committee formally authorized the                 
          purchase of the Citicorp Notes, Merrill informed Colgate that the           
          section 453 investment strategy would result in transaction costs           
          of between $2.3 and $3.1 million on a pretax present value basis,           
          of which $1.3 to $2.0 million would be incurred in the contingent           
          payment sale.  The cash contributions that had to be "invested as           
          quickly as possible" in Citicorp Notes yielding 8.78 percent in             
          order for the partners to earn a reasonable return were already             
          earning 8.75 percent in an ABN deposit account before the notes             
          were acquired.                                                              
               That Colgate's treasury department did not attach importance           
          to the relative costs of the section 453 investment strategy is             
          particularly significant because Colgate would bear both the                
          transaction and remarketing costs.  Pepe testified concerning the           
          mutual understanding with respect to the five-eighths discount              
          incurred in connection with the contingent payment sale:                    
                    The transaction was performed and put                             
                    together, organized, on behalf of                                 
                    Colgate-Palmolive; therefore, the partners                        
                    understood that the cost related to setting                       
                    the transaction up should be borne by                             
                    Colgate-Palmolive, whether that's through the                     
                    partnership or through one of its partners.                       
          The allocation of these costs to Colgate was accomplished by                
          including them in the value at which the LIBOR Notes were carried           
          on the partnership books and in the partners' capital accounts.             
          When the BFCE Notes were distributed to Southampton, the other              






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