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D. Payments on LIBOR Notes
On November 1, 1990, Sumitomo made a timely payment of
$1,085,255.84 to Otrabanda on the LIBOR notes. Otrabanda
amortized this payment for tax purposes and reported $23,907 of
the payment as imputed interest on its Form 1065 for the taxable
year ended June 21, 1991.
E. Distribution of LIBOR Notes to Brunswick
On November 1, 1990, Otrabanda distributed $354,523 in cash
to Skokie, $15,968,064 in cash to Bartolo, and the 4 Sumitomo
LIBOR notes to Brunswick. The partners relied on Pepe to
determine the value of the Sumitomo LIBOR notes. Pepe assigned a
value of $19,162,000 to the Sumitomo LIBOR notes, inclusive of
the $750,000 private placement discount on the sale of the IBJ
CDs. By valuing the Sumitomo LIBOR notes in this fashion,
Bartolo was relieved of the cost or private placement discount
associated with the sale of the IBJ CDs.
On November 1, 1990, Bartolo transferred $16,100,000 to
Clavicor, including the $15,968,064 received in the Otrabanda
distribution. On November 1, 1990, Clavicor transferred
$16,083,986 of the $16,100,000 to ABN to be credited against its
loan account.
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