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10709 (Feb. 4, 1981), the transactions were prearranged
so that a substantial percentage of the partnerships’
"gains" were allocated to ABN--a foreign entity that
was not subject to U.S. income tax, while a substantial
percentage of the partnerships’ “losses” were allocated
to B. For the taxable years ending 1990 and 1991, B
reported capital losses of $142,953,624 and
$32,631,287, respectively.
Held: There is no meaningful distinction between
the partnerships in these cases and the partnership
determined to be a sham in ASA Investerings Pship. v.
Commissioner, 201 F.3d 505 (D.C. Cir. 2000), affg. T.C.
Memo. 1998-305. Held, further, the partnerships were
not organized or operated for a nontax business
purpose, and therefore, they are disregarded for
Federal income tax purposes.
Joel V. Williamson, Thomas C. Durham, and
Gary S. Colton, Jr., for petitioner.
Jill A. Frisch and Lewis R. Mandel, for respondent.
SUPPLEMENTAL MEMORANDUM OPINION
NIMS, Judge: These cases are before the Court on remand
from the Court of Appeals for the District of Columbia Circuit.
Saba Pship. v. Commissioner, 273 F.3d 1135 (D.C. Cir. 2001)(Saba
II), vacating and remanding T.C. Memo. 1999-359. In Saba Pship.
v. Commissioner, T.C. Memo. 1999-359 (Saba I), we reviewed
notices of final partnership administrative adjustment (FPAAs)
issued to Saba Partnership (Saba) and Otrabanda Investerings
Partnership (Otrabanda) (sometimes, collectively, the
partnerships). In the FPAAs, respondent made adjustments to the
partnerships’ tax returns for certain taxable years ending in
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