-135-
and stock. The Ackerman group’s only point of negotiation became
directed towards obtaining representations from Generale Bank and
CLIS regarding their tax bases in the receivables and SMHC stock,
and that they had not written down their bases for tax or
accounting purposes.
Mr. Lerner’s own tax experience also gave him a general
appreciation of the tax significance of contributing high-basis
properties to a partnership and failing to make a section 754
election. In fact, Mr. Lerner marketed to Imperial, and then
implemented, a tax plan that virtually mimicked the CDR
transaction in attempting to exploit these tax aspects.
c. Nature of EBD Film Rights
Mr. Lerner testified that the Ackerman group was interested
in acquiring filmed entertainment assets and building a large
film library which “would be an extraordinary asset to hold for a
very long time.” Mr. Lerner’s testimony appears implausible when
we consider the film rights that Schedule 1.6(b) of the exchange
and contribution agreement purportedly provided. Schedule 1.6(b)
refers to “U.S. Video Film Rights”. Those purported rights,
however, did not encompass the kind of rights that one might
associate with a long-term film library investment. Indeed, the
term “U.S. Video Film Rights” seemingly refers only to video
distribution rights in the United States. SMHC did not own all
the rights to the various film titles. As Troy & Gould’s
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