Saba Partnership, Brunswick Corporation, Tax Matters Partnership - Page 50




                                       - 16 -                                         

              The Partnership would recognize gain on the sale of the                 
              private placement note calculated as follows:                           
                             Cash           160.0                                     
                             Basis          33.3                                      
                             (1/6 of 200)   _____                                     
                             Gain           126.7                                     
                             BC's Gain       12.67                                    
                             FP's Gain      114.03                                    
                             Total Gain     126.70                                    
              BC's share of the gain equals its 10% ownership in the                  
              Partnership for a taxable gain to BC of $12.67 million                  
              in 1990.                                                                
              Step 4:                                                                 
              In April 1990 or later, (i.e. until there has been some                 
              movement in the value of the contingent note) BC buys                   
              50% of FP's interest in the Partnership for $90                         
              million, assuming that the fmv of the contingent note                   
              is still $40 million.  With this purchase, BC's basis                   
              in its Partnership interest is $122.67 million                          
              calculated as follows:                                                  
                             BC's initial investment     $20.0 million                
                             Gain                         12.67                       
                             Purchase of 50% of FP's                                  
         interest                     90.00                                           
         122.67                                                                       
              Step 5:                                                                 
              The Partnership distributes the contingent note to BC                   
              assuming a fmv of $40 million.  In addition, the                        
              Partnership would distribute approximately $32.72                       
              million in cash to FP which is the equivalent cash                      
              distribution to FP given its percentage ownership.                      
              Step 6:                                                                 
              BC sells the contingent note for cash.  This sale of                    
              the contingent note by BC generates the capital loss.                   








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