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recognitition of a transaction that otherwise lacks economic
substance) affg. Glass v. Commissioner, 87 T.C. 1087 (1986).
A. Business Purpose
Petitioner argues that the partnerships engaged in the CINS
transaction to achieve a number of business objectives other than
to obtain tax benefits. Petitioner first contends that the
partnerships provided an appropriate investment vehicle for the
proceeds from the sale of Brunswick's Technical businesses and
Nireco stock, at a time when Brunswick was vulnerable to a
takeover attempt. The partnerships purportedly were viewed in
part as a means to "tie up" Brunswick's excess cash so that it
could not be used against Brunswick in a leveraged buy out.
Petitioner further contends that the acquisition of LIBOR notes,
with floating interest rates, provided a hedge against a decline
in Brunswick's marine sales (and lower profits) associated with
periods of rising interest rates. Finally, petitioner maintains
that the partnerships provided Brunswick with an opportunity to
establish a relationship with a large, international financial
institution consistent with Brunswick's long-term strategic
planning.
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