-256-
address the parties’ contentions with respect to this
transaction.
We conclude that the Corona transaction and the subsequent
sale of the $79 million receivable were part of a general scheme
to obtain and exploit tax attributes in that receivable using the
partnership tax rules. Mr. Lerner effectively duplicated the
built-in loss that existed in the contributed $79 million
receivable. SMP also received approximately $15 million from
Imperial as a fee for the loss that Imperial realized on the sale
of the receivable to TroMetro.
We cannot agree that the parties entered into the
transaction with any intention of engaging in a film finance
business. Indeed, Imperial’s CEO, Wayne Snavely, testified that
tax losses were driving the Corona transaction and were the
primary reason in 1997 for Imperial’s investing in the Corona
transaction. He further testified that his analysis leading up
to the Corona transaction was directed primarily to the
transaction’s tax aspects and that to that end he directed
Imperial’s chief financial officer, Kevin Villani, to get
together with Imperial’s accountants to see whether the Corona
transactions and its tax advantages worked for Imperial.
Mr. Snavely acknowledged that he had a personal interest in
the film finance business; however, his testimony indicated
clearly that film finance was not considered as a reason for
Page: Previous 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 NextLast modified: May 25, 2011