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connection with the formation of Salina. In addition, Pallico made
the following payments on behalf of FPL:
Payee Amount Purpose
Andrews & Kurth, LLP $350,000 Legal fees
ABN AMRO Bank 1,000,000 Fees
Goldman Sachs 1,250,000 Brokerage fees
Ms. Samil recalled negotiating the $1,250,000 fee paid to
Goldman Sachs. None of FPL’s representatives specifically recalled
negotiating the fees paid to Andrews & Kurth, LLP, or ABN. The $1
million amount paid to ABN represented ABN’s fee for forming the
Salina partnership, arranging the partnership’s investments to
satisfy FPL’s tax planning objectives, and allowing ABN’s
affiliates to remain in the partnership so that FPL could pursue
its short-term investment objectives.
FPL did not deduct the fees that it paid to ABN, Goldman
Sachs, and Andrews & Kurth, LLP on its 1992 tax return, nor did it
include the amount of these fees in its Salina capital account.
The parties agree that FPL’s adjusted basis in Salina as of
December 28, 1992, should be increased by the amount of these fees.
D. Liquidation of Salina’s Original Investments
On December 28, 1992, Mr. Silverstein recommended that Salina
liquidate its existing investments so that Mr. Silverstein could
reinvest the proceeds pursuant to the MAPS investment strategy. On
the same day, Salina provided BEA with written authorization to
liquidate its investments. On December 30, 1992, Mr. Silverstein
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