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subsidiaries (including Telesat, Alandco, Turner Foods, and a
separate banking business). On the basis of the record presented,
we conclude that FPL would have used most, if not all, of its CPG
loss within the 5-year period for reporting loss carryovers under
section 1212(a). Accordingly, although we shall not attempt to
precisely quantify the potential value of the tax benefit
associated with FPL’s investment in Salina, we are satisfied that
the potential profits associated with the investment were not de
minimis relative to the perceived tax benefit.
2. Section 752
Having concluded that FPL’s investment in the Salina
partnership was not a sham in substance, we now review the disputed
transaction on its merits. Respondent maintains that Salina
substantially overstated the amount of its short-term capital gain
by failing to treat its obligation to return the Treasury bills
that it sold short as a “liability” under section 752(a).
Section 752(a) provides:
SEC. 752. Treatment of Certain Liabilities.--
(a) Increase In Partner’s Liabilities.-–Any increase
in a partner’s share of the liabilities of a partnership,
or any increase in a partner’s individual liabilities by
reason of the assumption by such partner of partnership
liabilities, shall be considered as a contribution of
money by such partner to the partnership.
Assuming that Salina’s obligation to close its short sale
constituted a partnership liability under section 752, respondent
posits that FPL’s pro rata share of the liability would have
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