Saba Partnership, Brunswick Corporation, Tax Matters Partnership - Page 65




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              At the time the Chase PPNs were issued, Chase was rated A-              
         by Standard & Poor's and Baa2 by Moody's Investors Service                   
         (Moody's).  The Chase PPNs were not registered under the                     
         Securities Act of 1933 and were not traded on an established                 
         securities market.                                                           
              On March 21, 1990, Chase made a timely interest payment of              
         $975,298.51 to Saba on the Chase PPNs.  Saba included this                   
         payment in its interest income on its Form 1065 (U.S. Partnership            
         Return of Income) for the taxable year ended March 31, 1990.                 
              B.  Saba's Sale of Private Placement Notes                              
              While arranging Saba's purchase of the Chase PPNs, Merrill              
         Lynch began making arrangements for Saba to sell the Chase PPNs.             
         On March 6, 1990, and March 8, 1990, Merrill Lynch transmitted a             
         Summary of Terms for the Chase PPNs to Fuji Capital Markets                  
         (Fuji) and Norinchukin Bank (Norinchukin), respectively.  Fuji               
         and Norinchukin each prepared memoranda, seeking approval to                 
         purchase the Chase PPNs, which stated that the transactions were             
         designed to provide tax savings for Merrill Lynch's customers.               
              Merrill Lynch had approached Fuji and Norinchukin regarding             
         the sale of the Chase PPNs because they were able to issue debt              
         instruments; i.e., LIBOR notes.  Although Saba would have                    
         incurred lower transaction costs by selling the Chase PPNs to a              
         money market fund, such funds were eliminated from consideration             
         inasmuch as they could not issue LIBOR notes.                                





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