- 115 -
hostile takeover, but rather was driven by section 453(k)(2)
which provides that the installment sale provisions do not apply
to sales of stock, securities, or certain other property which is
traded on an established market. In other words, as O'Brien
admitted at trial, the partnerships attempted to comply with
section 453(k)(2) by initially investing in the PPNs and CDs. We
are not convinced on the record presented that Brunswick
participated in these partnerships because it was particularly
vulnerable to a hostile takeover attempt during the period in
question or because the partnerships would "tie-up" Brunswick's
funds. And even if Brunswick considered itself vulnerable, it
had already taken far more meaningful and effective steps to
counter any takeover attempt.
Similarly, the partnerships did not agree to receive LIBOR
notes in partial payment for the PPNs and CDs in order to provide
Brunswick with a hedge against its interest rate risk, but rather
the partnerships accepted partial payment in the form of LIBOR
notes in an effort to ensure that at least 1 payment would be
received after the close of the taxable year in which the PPNs
and CDs were sold as required by section 453(b)(1) and to ensure
that the "total contract price" could not be readily ascertained
as required under the ratable basis recovery rules prescribed in
section 453(j)(2) and section 15A.453-1(c)(3)(i), Temporary
Income Tax Regs., 46 Fed. Reg. 10711 (Feb. 4, 1981). The fact
Page: Previous 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 NextLast modified: May 25, 2011