Santa Monica Pictures, LLC, Perry Lerner, Tax Matters Partner - Page 10

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               Relying upon certain partnership basis rules (i.e., sections           
          704(c), 743 and 754), the Ackerman group claimed to succeed to              
          Credit Lyonnais’s purported $1 billion tax basis in the                     
          contributed SMHC indebtedness and purported $665 million tax                
          basis in the SMHC stock.4  In separate transactions in 1997 and             
          1998, SMP sold to TroMetro Films, LLC (TroMetro) portions of the            
          SMHC indebtedness for much less than the claimed basis.  SMP also           
          formed another partnership, Corona Film Finance Fund, LLC                   
          (Corona) and contributed to it part of the SMHC indebtedness.5              
          SMP then sold most of its ownership interest in Corona to                   
          Imperial Credit Industries, Inc. (Imperial), for much less than             
          its claimed basis.  On its partnership tax returns for 1997 and             
          1998, SMP claimed capital losses totaling, altogether, about $300           
          million from these various transactions.  These claimed losses              
          passed through for the primary benefit of Mr. Ackerman.                     
               Corona, meanwhile, sold to TroMetro the SMHC indebtedness              
          that SMP had contributed at Corona’s formation.  On its                     






               4 Unless otherwise indicated, all section references are to            
          the Internal Revenue Code in effect for the taxable years at                
          issue and, in certain references, as amended.  All Rule                     
          references are to the Tax Court Rules of Practice and Procedure.            
               5 In our findings of fact, we use terms such as                        
          “indebtedness” or “contributions” only for convenience and not to           
          denote any legal significance.                                              




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