T.C. Memo. 1999-359
UNITED STATES TAX COURT
SABA PARTNERSHIP, BRUNSWICK CORPORATION,
TAX MATTERS PARTNER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
OTRABANDA INVESTERINGS PARTNERSHIP, BRUNSWICK CORPORATION,
TAX MATTERS PARTNER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket Nos. 1470-97, 1471-97. Filed October 27, 1999.
During 1990 and 1991, B, a domestic corporation,
realized substantial capital gains from the sale of a
number of its business units.
In 1990, B joined with a foreign bank (ABN) to
form two general partnerships, S and O. Immediately
upon their formation, S purchased private placement
notes (PPNs) and O purchased certificates of deposit
(CDs). Within 1 month, and immediately prior to the
close of the partnerships' first taxable year, S and O
sold their PPNs and CDs for cash (80 percent) and LIBOR
notes (20 percent). These transactions were intended
to satisfy the requirements of a contingent installment
sale under I.R.C. sec. 453. Relying on the ratable
basis recovery rules under sec. 15A.453-1(c), Temporary
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