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Despite petitioner's assertions to the contrary, there is
overwhelming evidence in the record that Saba and Otrabanda were
organized solely to generate tax benefits for Brunswick.
Although petitioner has attempted to downplay the significance of
the document, the Zelisko memorandum is direct and compelling
evidence that Brunswick intended to use the partnerships as a
device to generate capital losses to offset the capital gains
that Brunswick anticipated on the sales of its Technical
businesses and Nireco stock. The Zelisko memorandum, prepared
shortly after Ms. Zelisko's meeting with Merrill Lynch
representatives and well in advance of the formation of the
partnerships, describes in precise detail the steps that would be
required for the CINS transactions to generate substantial
capital losses for Brunswick's benefit. Each of the partnerships
subsequently fulfilled all of the steps outlined in the Zelisko
memorandum.
Equally compelling is the "FOREIGN PARTNERSHIP TAX UPDATE"
that McManaman prepared on April 20, 1990, in which he projected
that Brunswick would realize capital losses of $80 million and
$57 million from its participation in Saba and Otrabanda,
respectively. Significantly, McManaman's projections generally
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