Saba Partnership, Brunswick Corporation, Tax Matters Partner - Page 24




                                       - 24 -                                         
          contentions that the partnerships were organized and operated to            
          achieve nontax business purposes.  Saba I, slip op. at 112-117,             
          78 T.C.M. (CCH) 684, 718-719, 1999 T.C.M. (RIA) 99,359, 2272-               
          2274.                                                                       
               For the same reasons that we recited in Saba I, we reject              
          petitioner’s contentions that the partnerships were organized and           
          operated to achieve nontax business purposes.  Contrary to                  
          petitioner’s position, we have not substituted our own judgment             
          for that of Brunswick’s corporate officers.  We have simply                 
          rejected their testimony as being both self-serving and                     
          unsupported by the record as a whole.  We likewise are not                  
          persuaded that the partnerships’ relatively modest profits from             
          their short-term investments, including commercial paper,                   
          demonstrate that the partnerships were operated for a nontax                
          business purpose.  To borrow again from the Court of Appeals’               
          analysis in ASA Investerings Pship. v. Commissioner, 201 F.3d at            
          516, we observe that the partnerships could have realized profits           
          from any number of investment strategies at far lower transaction           
          costs than were incurred implementing Merrill Lynch’s tax                   
          shelter.  Further, even under the most generous assumptions, any            
          expected profits from the partnerships’ investments paled in                
          comparison to the approximately $170 million of capital losses              
          that the partnerships were designed to generate for Brunswick.              
          Saba I, slip op. at 126-127.  The minimal business activity that            






Page:  Previous  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  22  23  24  25  Next

Last modified: May 25, 2011