Saba Partnership, Brunswick Corporation, Tax Matters Partnership - Page 27




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         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               






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