Saba Partnership, Brunswick Corporation, Tax Matters Partner - Page 6




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          also directed to consider whether Saba and Otrabanda are                    
          distinguishable from the partnership that the Court of Appeals              
          determined to be a sham in ASA Investerings Pship.                          
          II.  Whether Saba and Otrabanda Are Distinguishable From ASA                
          Investerings Partnership                                                    
               Petitioner asserts that the Saba and Otrabanda partnerships            
          were significantly different from the ASA Investerings                      
          Partnership, and that Saba and Otrabanda should be recognized as            
          valid partnerships and not shams for Federal income tax purposes.           
          Before addressing petitioner’s specific arguments, we briefly               
          review the factual background in ASA Investerings Pship. v.                 
          Commissioner, supra.                                                        
               In ASA Investerings Pship., the Commissioner issued an FPAA            
          to a Merrill Lynch-designed partnership whose principal partners            
          were AlliedSignal, Inc., and ABN.  The Court of Appeals held that           
          the disputed partnership would not be recognized for Federal                
          income tax purposes on the ground it was not organized to conduct           
          business activity for a purpose other than tax avoidance.  In so            
          holding, the Court of Appeals sustained this Court’s findings               
          that ABN did not share in the partnership’s profits and losses.             
          Id. at 514.  The Court of Appeals agreed that the purported                 
          partners did not share profits because “direct payments made to             
          ABN were to compensate it merely for its funding costs”, and “ABN           
          could make no profit from the transaction: any potential profit             






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