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a. Advisory Fee and Put Price ............. 153
i. Banks’ Understanding .............. 155
ii. Ackerman Group’s Understanding .... 157
iii. Negotiation and Drafting Process .. 159
b. Redemption and Liquidation Rights ...... 167
c. SMP’s Conversion Option ................ 169
d. Distribution Rights .................... 171
e. Carolco Securities ..................... 174
2. Economic Benefits for the Ackerman Group ... 177
3. EBD Film Library ........................... 180
a. Petitioner’s Expert .................... 180
i. Income Projections ................ 181
ii. Cost Projections .................. 183
iii. Net Cashflows ..................... 184
iv. Valuations ........................ 184
v. Market Approach ................... 185
b. Respondent’s Expert .................... 186
i. Income Projections ................ 187
ii. Cost Projections .................. 189
iii. Net Cashflows ..................... 190
iv. Valuations ........................ 191
v. Market Approach ................... 191
c. Court’s Analysis ....................... 192
i. Reconciliation of Expert Opinions . 192
ii. Exclusion of Certain Film Titles .. 193
iii. Analysis of Expert Opinions ....... 196
iv. Conclusion ........................ 203
4. Carolco Securities ......................... 208
5. Net Operating Losses ....................... 215
6. Conclusion ................................. 216
F. Other Considerations ........................... 217
1. SMP’s Other Film-Related Activities ........ 217
2. Relationship Between the Parties ........... 219
3. Ackerman Group’s Exploitation of
Tax Attributes ............................. 219
4. Congressional Intent ....................... 222
G. Conclusion ..................................... 226
IV. Step Transaction Doctrine .......................... 227
A. Legal Principles ............................... 227
B. Parties’ Arguments ............................. 229
C. Court’s Analysis ............................... 231
D. Conclusion ..................................... 236
V. Basis Arguments .................................... 237
A. Worthlessness Issue ............................ 237
1. Contribution of Worthless Assets ........... 238
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Last modified: May 25, 2011