- 18 -
Brunswick’s and ABN’s expectations that the partnerships’
operating expenses would be paid by Brunswick were met. As was
the case in ASA Investerings Pship. v. Commissioner, supra, a
portion of the partnerships’ expenses and/or losses was in fact
shifted to Brunswick through Merrill Lynch’s valuation of Saba’s
and Otrabanda’s LIBOR notes. Merrill Lynch valued the LIBOR
notes so that Brunswick fully absorbed the private placement
discount (totaling $2,250,000) incurred on the sale of the
partnerships’ PPNs and CDs. Saba I, slip op. at 33-38, 62-68.
For the sake of completeness, we note that petitioner
contends that Brunswick was unaware of Merrill Lynch’s
application of the private placement discounts. In particular,
the parties’ stipulations state:
234. Brunswick contends that it was not aware that
Merrill included a discount of $1,500,000 in
calculating the sales price of the Chase Notes, and
Brunswick contends that it was not aware that Merrill
applied such a discount in determining the value of the
LIBOR notes on their origination. Any references to
this discount in this Stipulation are not intended as a
stipulation that Brunswick was aware of the discount.
Respondent does not agree with Brunswick’s contentions.
468. Brunswick contends that it was not aware that
Merrill included a discount of $750,000 in calculating
the sales price of the IBJ CDs, and contends that it
was not aware that Merrill applied such a discount in
determining the value of the LIBOR notes on their
origination. Any references to this discount in this
Stipulation are not intended as a stipulation that
Brunswick was aware of the discount. Respondent does
not agree with Brunswick’s contentions.
Page: Previous 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NextLast modified: May 25, 2011