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petitioner avers that, unlike ASA Investerings Pship. v.
Commissioner, supra, the partners shared in the profits derived
from the commercial paper.
Petitioner also argues that the Court in its original
Memorandum Opinion “made a legal error in determining that
Brunswick did not have a business purpose for forming Saba and
Otrabanda” and the Court “erred in substituting its own judgment
for that of Mr. Reichert [Brunswick’s chairman, president, and
chief executive officer] in determining whether Brunswick was
susceptible to a takeover and whether the partnerships would be
helpful in preventing a takeover.”
Respondent counters that
There is not a shred of documentary evidence
corroborating Petitioner’s purported nontax goals and
no economic analysis supports them. Brunswick never
viewed the partnerships as takeover defenses; instead
of advertising their alleged deterrent effect to
hostile acquirers, it eliminated the partnerships from
its financial statements and showed them as cash. The
LIBOR notes were useful to Brunswick only as a
repository of paper tax losses; it consistently hedged
its interest in the notes and sold them immediately
after receiving them to avoid tax. Given the
transactions’ monumental costs, Brunswick could not
expect to generate any profit and the transactions
generated only unnecessary costs. But petitioner never
considered any of the transactions’ economics because
it was buying $200 million in phantom tax losses.
We considered and rejected petitioner’s arguments that Saba
and Otrabanda engaged in the disputed CINS transactions to
achieve nontax business purposes in Saba I. Much of what we said
there is equally applicable in response to petitioner’s
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