Saba Partnership, Brunswick Corporation, Tax Matters Partnership - Page 111




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         Bartolo's partnership interest in Otrabanda, Brunswick and                   
         Merrill Lynch entered into a second swap agreement.  Brunswick               
         used these swaps to hedge a substantial percentage of its                    
         interest in the Sumitomo LIBOR notes.                                        
              On November 28, 1990, the swaps that Brunswick and Merrill              
         Lynch entered into on October 11, 1990, and November 1, 1990,                
         were completely terminated upon Brunswick's sale of the 4                    
         Sumitomo LIBOR notes to BFCE.                                                
         IX.  Saba's and Otrabanda's Tax Returns                                      
              Saba filed Forms 1065 (U.S. Partnership Return of Income)               
         for the years ending March 31, 1990, March 31, 1991, and June 21,            
         1991.  Brunswick prepared the returns as Saba’s tax matters                  
         partner.                                                                     
              Otrabanda filed Forms 1065 (U.S. Partnership Return of                  
         Income) for the years ending July 31, 1990, and June 21, 1991.               
         Brunswick prepared the returns as Otrabanda’s tax matters                    
         partner.                                                                     
         X.   Brunswick's Partnership Expenses                                        
              A.  Transaction Costs                                                   
              Petitioner retained Clifford W. Smith, Jr. (Smith),                     
         Professor of Finance at the William E. Simon Graduate School of              
         Business Administration at the University of Rochester, to serve             
         as an expert witness in these cases.  Smith computed the present             
         values of the LIBOR notes that were issued to Saba and Otrabanda             






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