Saba Partnership, Brunswick Corporation, Tax Matters Partner - Page 3




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          1990 and 1991 based on alternative determinations that (1) Saba             
          and Otrabanda were sham partnerships that should be disregarded             
          for Federal income tax purposes; and (2) the partnerships’                  
          purported contingent installment sale transactions (CINS                    
          transactions) under section 453 were shams that should be                   
          disregarded for Federal income tax purposes.  Unless otherwise              
          indicated, section references are to the Internal Revenue Code in           
          effect for the years in issue, and Rule references are to the Tax           
          Court Rules of Practice and Procedure.                                      
               Petitioner in these cases is Brunswick Corporation, the                
          partnerships’ tax matters partner (Brunswick or petitioner).                
               In Saba I, we described in detail Brunswick’s divestiture of           
          certain of its business lines, its discussions with                         
          representatives of Merrill Lynch regarding a tax shelter that the           
          latter was marketing to certain U.S. corporations, its decision             
          to join with Algemene Bank Nederlands N.V. (ABN) to form the                
          partnerships known as Saba and Otrabanda, and the partnerships’             
          purported CINS transactions.  We held that the disputed CINS                
          transactions were not motivated by legitimate nontax business               
          purposes, nor were they imbued with objective economic substance.           
          Consequently, we held that the CINS transactions were shams that            
          would not be respected for Federal income tax purposes.                     










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