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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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