- 85 -
Brunswick filed a Form 1120 for 1991 reporting (on a
consolidated basis) a long-term capital loss of $32,631,287
attributable to SBC's sale of the remaining Norinchukin LIBOR
note. Brunswick used $846,745 of its claimed 1991 capital losses
in 1991 and carried back $16,580,600 and $6,362,009 of the loss
to 1989 and 1988, respectively. Brunswick carried forward
$8,841,933 of its claimed 1991 capital losses.
Brunswick provided reserves for 100 percent of the tax
attributable to its reported net capital losses from the Saba and
Otrabanda transactions in its deferred tax account.
XIII. Respondent's Determinations
A. Saba FPAA
On December 30, 1996, respondent issued an FPAA to Saba.
Respondent determined: (1) The transactions financing the
purchase and sale of the Chase PPNs would not be recognized for
Federal income tax purposes for lack of economic substance; (2)
Saba would not be recognized as a partnership; (3) partnership
items would be reallocated to Brunswick (95 percent) and Skokie
(5 percent); and (4) the basis of the 3 LIBOR notes distributed
to Brunswick was $26,601,451 and the basis of the remaining LIBOR
note transferred to SBC was $7,032,954. In addition, respondent
disallowed certain deductions. First, respondent disallowed
$25,000 of a $56,050 deduction that Saba had reported for amounts
paid to N.V. Fides during the taxable year ended March 31, 1991.
Page: Previous 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 NextLast modified: May 25, 2011