Saba Partnership, Brunswick Corporation, Tax Matters Partnership - Page 24




                                       - 112 -                                        
         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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